battle for norwegian hotel chain - property investor europe edition 07... · struan robertson...

European REITs � Non-per forming loans � Inst itutional commercial proper ty investment � French off ices � Mor tgage securit isation, CMBS/RMBS � Listed proper ty stocks � Non-l isted institutional property funds � Mortgage servicing � US capital flows in Europe � Pfandbriefe-covered bonds � Paris SIICs/REITs

Volume 3, Issue 55 Continental European real estate finance for US & international investors 24 September 2007

US sub-prime crunch may linger in Europe page 2

EPRA Athens conference, full report pages 4-6

Scenari Immobiliari, full meeting report pages 6-10

REITs to add €140bn equity in Europe page 6

Italian RE laws are hin-drance - Puri Negri page 10

Value-add funds boost per-formance - INREV page 17

Christoph HärleJones Lang LaSalle Hotels Guest Column page 16 France’s FSIF on EU REITsThe Property Associations page 20

Struan Robertson Morgan Stanley The PFE Interview page 8

The battle for control of Norwegian hotel chain Norgani turned tougher last week when the original bidder, Norwegian Property, reappeared as part owner of another firm that may have snatched the prize from an Aberdeen Property Investors counter-offer.

Battle for Norwegian hotel chainNorgani turns tougher, complex

The Scandic Group emerged as a spoiling candidate in the battle, topping Aberdeen’s higher bid. Norwegian Prop-erty may have been caught napping as it was on the verge of completing the deal, but it seems to have reacted quickly.

One of the Nordic region’s biggest hotel groups, Scan-dic revealed on September 15 that it had quietly bought a 13% stake in Norgani, paying NOK91 (€11.67) per share, a 2.5% premium over Aberdeen’s counter-bid price and a 10% premium over the original bid by Norwegian Property. The latter first bid NOK82.5 while Aberdeen topped that in mid-month with its NOK88.5 per share offer.

Scandic holds 18% of Oslo Properties, but Norwegian Property will have an option to take over 90% of Oslo, giv-ing it victory as long as no further candidates emerge.

The complex wheeler-dealing left Norgani feeling brutal-ised. “We have not negotiated any of this and we have no idea what this agreement says,” said Managing Director Eva Eriksson after Oslo Properties concluded a deal with Scandic, which makes up more than half of Norgani’s hotels. “The Norgani board is completely unwitting and has not been able to see any conditions in negotiations,” she said angrily.

Norwegian competition authorities were not immedi-ately available for comment but are likely to examine any final deal to ensure stock exchange regulations have been adhered to. Aberdeen had earlier put together a syndicate of Norwegian investors to finance the SKK500m (€64m) inital purchase, including two major banks.

It outbid the original Norwegian Property offer which val-ued Norgani at NOK3.3bn (€414m). Shareholders represent-ing 60.3% of Norgani stock had provisionally accepted the NP offer in early September prior to the API counter offer. pfe

No prizes for guessing that the entire European real es-tate industry is now focused on one event up to early Oc-tober, the giant ExpoReal in Munich, and how to survive it! The 10th International Trade Fair for Commercial Real Estate, takes place on the grounds of the New Mu-nich Trade Fair Centre from 8 to 10 October. Property Finance Europe will of course be in the thick of things, cov-ering events, moderating panels, meeting contacts new and old, sipping away at hos-pitality cocktails, and nursing sore feet after tramping round no fewer than six halls at the fair. A PFE Special Edition will be distributed widely at Expo Real and promises to be one of our largest, bumper issues yet.

Before that, the European Property Italian Confer-ence, EPIC takes us down to Rome. Immediately follow-ing we have, much closer to home, the European Business School, EBS semi-nar on property capital mar-kets at its beautiful Rhine side location to help quench our continuing thirst for knowl-edge on the German market.

NExT ISSUE: ExPOREALMONDAY

8 OCtOBER

Sub-prime impact on property stocks seen as panic over-reaction, but investors cautious Real estate should be a safe haven at times of financial market nervousness but sub-prime concerns have caused a panic overreaction, EPRA president Serge Fauré told the annual meet-ing in Athens. But major investors and bankers are concerned. Morgan Stanley’s John Carrafiell, ABP Investments’ Barden Gale, GE Real Estate’s Michael Pralle and Lehman Brothers James Blakemore were all cautious about the near term as a result of the credit crunch. (See p2) pfe

Advertisers: reach 50,000 top level decision-makers in print with PFE’s October package – ExPO REAL and RICS Special Editions

see page 5 for details

Sub-prime impact on listed property stocks frustrating – EPRA President

Real estate should be viewed as a safe haven at times of fi-nancial market nervousness, but the sub-prime concerns of re-cent weeks has caused a panic overreaction which, however, is likely to correct, says the president of the European Public Real Estate Association.

Serge Fauré told the EPRA annual meeting in Athens two weeks ago: “As real estate investors we have always viewed our-selves as one of the safest sectors on the spectrum of risk, but the market has recently been looking at us recently as another kind of hedge fund industry... This is the wrong signal to re-ceive. Real estate should be a safe haven for investment and should not be thrown away when there is a crisis.”

He added however that excesses in free markets are common phenomena and the market should be allowed to readjust freely. “Let the bubble burst; let the blood flow onto the street,” he told a panel discussion. “There was blood on the street after the Internet crisis and the Internet is still there. You have to accept that there are going to be excesses in any market. Let people make money and let people occasionally lose money. That is the rule of the market.”

Fauré added that it is highly frustrating to see the share price of his company, Belgium’s Befimmo, diving by as much as 22% recently. Nervous investors were no longer differentiating be-tween real estate companies on the stock markets. pfe

Major investors, investment bankers say US sub-prime crisis may linger

Major institutional investors and investment bankers are wor-ried about the fall-out from the US sub-prime crisis on the real estate sector in Europe, and believe that the tensions may knock on further into Europe will not be short lived.

In a panel at the EPRA annual conference, the mood among Morgan Stanley’s John Carrafiell, ABP Investments’ Barden Gale, GE Real Estate’s Michael Pralle and Lehman Brothers James Blakemore was very cautious about the near term as a result of the crisis.

“I am very concerned about the American consumer,” said Gale. “Mortgage resets are going to slap them in the face in the next year or so.” In the real estate investment market, “People are in the denial stage and we have not yet seen the repricing come through in full. What we have seen is a lack of discrimi-nations among investors. We will see a lot of volumes being re-priced but I can’t say if it is enough yet. There is a schizophrenia in the market right now and we still have to bring both sides of the brain together.”

Carrafiell said he is also bearish on the US economy for this reason, and sees this knock on into European economy, particu-larly without fairly aggressive rate cuts by the Federal Reserve.

Blakemore agreed that the US housing market remains a le-gitimate concern. “The impact on debt will flow back to Eu-rope,” he told delegates. Despite a lot of excesses in European real estate valuations, this has been nowhere near those in the US, with the possible exception of Spain.

Pralle commented: “The last few years investing in real estate were easy and good fun, but now we are seeing a repricing of risk.” While in 2002, price multiples for commercial property were around 12x, they recently rose toward 25x in many Euro-pean countries. As an investor, GE Real Estate is looking more

strongly toward central Europe, especially Poland, Czech Re-public, Slovakia and Slovenia where there is a lot of demand for retail, office and residential property assets.

On the positive side, Carrafiell noted that vast pools of capi-tal are waiting on the sidelines to come into the market. Of some $500bn in private equity industrial funds, only 12% has been invested in real estate so far, and more may move in on a discretionary basis. Debt pricing will also recover. In addition, large capital pools exist in the Mid-East, China, and Norway in particular. “The issue is not lack of capital but that investors will sit on the sidelines until the risks are repriced,” he said. “We may not fully realise the adjustment to pricing for at least another six months.” pfe

Sub-prime waves may stifle commercial property in Europe - Curzon/AEW

Shock waves emanating from the US sub-prime mortgage crisis could stifle investment activity in the European commer-cial real estate market for the remainder of this year and lead to casualties among highly-leveraged players, investment manager Curzon Global Partners says.

Curzon Chief Executive Ric Lewis said the US commercial real estate market is shutting down. “It is unlikely that Europe will be immune from the impact of the crisis as one very rarely gets this level of volatility without distress and dislocation. We hope that there is just a brief liquidity squeeze that takes the froth off the market, but this should be a wake-up call to investors.”

The so-called wall-of-money into European real estate in-vestment has been driven by high leverage. With CMBS spreads spiking and banks’ ability to securitise loans now drying up, the risk is that they will cut off cheap debt pipeline, forcing bor-rowers to abruptly curtail investment programs.

“It’s inevitable that European property yields will have to rise as in many markets they are below the cost of borrowing,” said Simon Martin, Curzon’s Head of Research and Strategy. “In this situation you need further increases in capital values as modest improvements in rental income won’t be enough… We could be in a situation such as the late 1980s and 1990s where everybody is waiting for the end of year valuations to come in and activity simply dries up in the final quarter.”Curzon / AEW Europe, together with its US and Singapore affiliates, have some €30bn in gross assets under management. pfe

Spain’s Metrovacesa spends big on London, Madrid projects amid split-up

Spain’s largest listed property group Metrovacesa has begun an office project in The City of London which could lead to a €1.4bn investment. The deal follows five operations in the Span-ish capital in which the Madrid-based company invested €260m for several office buildings and land to develop industrial parks.

Last week Metrovacesa agreed to buy London’s Walbrook Square complex from British firm Legal and General for £240m. The plan is to demolish the existing structures and erect four new office buildings. Estimated yield after redevel-opment is estimated at 7%.

The London and Madrid deals form part of the company’s aggressive expansion policy. Metrovacesa recently acquired eight buildings in Germany for €340m, and earlier this year bought

2 Property Finance Europe 24 September 2007

the London headquarters of British bank HSBC for £1.09bn. At present the company is developing 15 office projects with an investment of €1.6bn.

Metrovacesa is in the process of dividing into two entities – Metrovacesa and French unit Gecina – after a year-long civil war between the company’s largest shareholder, the Sanahuja family, and Chairman Joaquín Rivero. Metrovacesa recently re-ported first-half net profit at €1.03bn, a 65% increase compared to 1H06. Net profit before re-valuing the assets was €245m.

Because of the unusual situation surrounding the division of the company, it classified Gecina as an “interrupted activity”. Thus, not including sales from France, Metrovacesa generated €468.3m in revenue, up 12.8% from the first half of 2006. Debt was €6.5bn, down from nearly €9.5bn in December, although about half of the latter figure came from Gecina.

The company assets as of June were worth €23.4bn, a 16.4% increase year-on-year. Its main source of income comes from rents. During the first half of the year Metrovacesa – not in-cluding Gecina – invested €1.9bn into its rental business. pfe

Spanish property groups unite to form alliance to boost market confidence

Fourteen Spanish real estate companies will form an alliance to facilitate deals in Spain and abroad, and to boost investor confidence amid the current real estate sector crisis.

Although it has no name yet, the group comprises many listed Spanish powerhouses such as Colonial, Martinsa-Fadesa, Metro-vacesa, Realia, Reyal Urbis and Sacyr Vallehermoso. Unlisted members include developers Nozar, Chamartín and Rayet.

According to a statement, the first order of business will be to improve communication between the Spanish sector and in-ternational analysts and investors. The head of the alliance will be Fernando Martín, the chairman of Martinsa-Fadesa.

More details on the group’s activities are expected to emerge at the end of the month. pfe

Sweden’s state-owned alcohol retailer confirms €160m sale of 100 stores

Systembolaget, Sweden’s state-owned alcohol retailer, has confirmed it is to sell around 100 stores it owns around the country in a deal that could net the company up to SKK1.5bn (€160m) for the 170,000 sq.m. of store space. The stores being sold are in smaller Swed-ish towns and do not include its Stockholm headquarters and dis-tribution centre. Sys-tembolaget will lease back the properties. Most of the compa-ny’s 409 stores are

rented, but it wants to dispose of the more than 100 that it owns. “Our property portfolio is a side operation. By selling it we can concentrate in our core activity, retail trade,” said Systembolaget’s Managing Director Anitra Steen. pfe

Knut Kjær resigns as head of €235bn Norwegian Government Pension Fund

Knut N. Kjær has resigned as head of Norges Bank Invest-ment Management, the body that manages Norway’s massive €235bn Government Pension Fund–Global - known widely as the petroleum fund - and the bulk of Norges Bank’s foreign exchange reserves.

Kjær led the project that prepared the ground for the man-agement of the petroleum fund, which is designed to pool state-owned hydrocarbon income and support the national pension authority. He became head of the new management organisa-tion NBIM in January 1998.

The Fund was established by a separate act of the Norwe-gian parliament in 1990, and the initial capital transfer, equiva-lent to about €215m, was made in spring of 1996, since when it has grown rapidly. Total assets under management are now about €265bn, including the Norges Bank central bank’s foreign exchange reserves. pfe

Spain’s controversial property baron Banuelos boosts stake after court ruling

Enrique Bañuelos, who recently resigned as chairman of list-ed property group Astroc Mediterráneo, has increased his stake in Astroc unit Landscape to 25% as the two companies, plus unlisted developer Rayet, prepare for a three-way merger.

The Spanish press also reported that Astroc and unlisted Bar-celona-based developer Aisa have agreed to merge. Although the companies would not comment, in July they sent statements to stock market regulator CNMV confirming talks.

The Valencia-based Astroc holds around 56% of Rayet, which in turn owns about 10% of Astroc. Last December, As-troc bought Landscape from Banco Sabadell for €990m. Astroc then sold about 40% of Landscape’s assets to General Electric Real Estate for €650m. pfe

24 September 2007 Property Finance Europe 3

THE PROPERTY CONFERENCES - EPRA Major European countries to have REITs within three years - van Ommen

Most major European countries will have Real Estate In-vestment Trust legislation in place within the next three years, forecasts the departing head of the European Public Real Estate Association.

In one of his last official comments before stepping down, Nick van Ommen told the association’s 8th annual conference in Athens two weeks ago that he is happy with the spread of

the fiscally-transparent listed property vehicle across Europe in recent years. “In my view, you will have the REIT structure in all the major economies within three years from now,” he told around 250 delegates.

Even though regimes will become increasingly similar, he does not expect the European Union to create harmonisation from the top down. His strategy has been to offer quiet EPRA support for lobbying efforts of local real estate representative groups. He praised the efforts of the British Property Federa-tion to develop the REITA website to inform small investors about REITs, and said EPRA has set plans to support the Ger-man property federation ZIA in building a similar site, and will also offer support to France. “It is important to work on the

Here is why Italy is different in real estate terms from elsewhere in Europe: It is

the location for an enormous patrimony of property constructed in the 19th, 18th, 17th centuries, and all the way back to the beginning of the millennium before last. The extent of Italian civilised history marks it from all other countries in Europe, with the exception of Greece. It also differenti-ates Italian property stock from, for example, French. Italian real estate was not devastated in the Second World War as comprehen-sively as, for instance, Ger-man. Italy did not lay waste much of its cultural property heritage in the post-war era with utterly wrong-headed urban planning as, for exa-mple, in Britain. I grew up in a town that in the 1960s pul-led down a beautiful 17th century staging house in the high street to make way for a square red brick monstrosity of a post of-fice. God knows why. That’s not to say that Italian city planning was not, in many cases, at least as misguided, for the flipside is that Italy did not manage its property heritage at all in the post-war - until now. Italy is today in real estate terms a sunny geography in southern Europe with badly-planned cities but 26,000 mostly state-owned buildings of amazing beauty and cultural heritage that have in the main stood unused, neglected and decaying for at least 60 years.

How do you deal with this if you are the government? What do you do with

buildings that are ancient and more or less unusable, albeit elegant and beautiful? The

Ministry of Public Works set up the Demanio agency in 2001 to figure it out. Rome earlier this year passed a law to extend leases on state property to 50 years from 20, thinking this might help bring in investment capital while maintaining control. But will it? Many, such as Manfredi Catella of Hines Italy, say

no, a much more profound strategic political plan must be implemented to bring in foreign investment. The Demanio strategy is not en-ough, he says. Take a lesson from others. perhaps? With the heritage still standing af-ter 1945, Germany was very careful indeed and went ano-ther route. Bonn/Berlin has allowed freehold purchase of heritage buildings but slaps very severe restrictions on their refurbishment. Normal-ly investors have to keep the

façade but may completely reconstruct the internal floor areas for residential, office, retail. The British paradigm of the 1950s to 1970s tragically allowing a vast property heritage to be torn down to make way for new towns is not one to follow, and at least there Italy was more careful. But the nation is in a quandary now, though this has to be an opportunity too, we think. Call Elisabetta Spitz at Demanio and see if she will make you a deal on a little 18th century palace on the shores of Lake Maggiore.

It’s a difficult game this prediction busi-ness. There is, frankly, very little science

attached to prediction - even in the ma-cro-economic, monetary or real estate sectors with an ocean of expert literature, and a wealth of well-documented recent

history. Only the brave or very foolish en-gage in predictions…. which is where we come in. So it was that I climbed out on a long and treacherous tree limb in PFE 41 on February 12 and forecast euro/dollar would rise to 1.50 by year end. And they called me crazy. At the time it was around 1.25. But now look at us: 1.40-plus, here we come! Flushed with success, we are again in forecasting mood, about to dis-pense further wisdom. Here it is: The Next European Central Bank Rate Move Will Be Down… Pause for effect. This is not pri-ced in. And I was touting this view even before last week’s Fed rate cut. The real estate sector thinks the ECB is waiting only for the current crisis to blow over before raising in first quarter 2008, latest. Well, not that I am allowed to advise, but I just wanted to mention that Grandma is, even as we speak, investing my tuppence hal’penny of hard-earned savings in call options on six and nine months’ Euribor, plus a couple of the family mattress pe-setas in the Bund future. Did I mentioned our fee? Were You to follow not my words but Grandma’s actions and make a Lot Of Money, then buy a(nother) subscription to PFE and Grandma will waive the com-mission. When did you last see euro/dol-lar roaring higher, the US cutting rates fast in response to a crisis such as this broadening sub-prime-induced crunch, and the Bundesbank/ECB continuing to raise rates? The answer is: ‘never’. Keep in mind we watched the Bundesbank/ECB closely for 20 years; we know a rapid re-positioning when we see one. Er, Grand-ma does, anyway. I’d check with her but she’s on the phone to the broker.

Property from the millennium before last; Italian quandary becomes a opportunity

Allan Saunderson, [email protected]


Allan SaundersonPFE Managing Editor

one side with the market, and on the other side with the inves-tors as well,” van Ommen said.

Of the major European nations without REIT regimes, Spain and Sweden are the next jurisdictions examining introduction of the legislation. The UK, Germany and Italy introduced RE-ITs earlier this year. REITs were already in place in France, the Netherlands and Belgium. pfe

Potential for GREITs still seen at €110bn in assets by end 2010

The potential for the asset base of German Real Estate In-vestment Trusts remains enormous and it is still possible that the sector could have as much as €110bn of property on book by the end of the year 2010, sector professionals at the EPRA annual meeting heard.

Morgan Stanley’s Oliver Puhl, one of the authors of the study on GREITs conducted during 2005 and 2006 for the Financial Centre Germany Initiative (IFD), said the estimate for the po-tential remains in place, even if no GREITs have been launched yet. “I believe this number still holds true,” Puhl said. “We took the top 250 balance sheets of the corporate sector in Germany and scrubbed them down with a very fine brush.” All property assets that could not have a second use were eliminated, leaving only those suitable for managing in a listed REIT vehicle.

Considering German investible property stock, the nation re-mains very underinvested relative to GDP. “For those investors trying to track EPRA or other real estate stock market indexes it’s hard to capture Germany because there is not enough listed

universe there.” He said Germany could become the third larg-est real estate stock market in the world after the US and Japan. Using the US as a proxy shows that German listed real estate should be $70bn-$114bn in size.

Even if the three years of discussion in Germany over REIT legislation were clearly too long, it did have the advantage of putting the vehicle on the agenda of every corporate treasurer looking for the most efficient way to manage assets, Puhl added. “Instead of just wanting to keep the assets on balance sheets, what we are seeing is having strategy dialogues with many com-panies over what they should or should not do with the assets going forward,” he said.

Hans Volkert Volckens, from the Munich-based Beiten Burkhardt law firm, said the cut in corporate tax next year brings the exit tax for firms selling assets into REITs down to 15% from around 20% now, including trade tax. This – plus the need for a preparatory period - has caused delay in the launch of the vehicles.

Volckens also criticised the German government’s exclusion of residential property from the allowed GREIT asset base. “What you have to know is that foreign REITs can acquire resi-dential property in Germany but not GREITs,” he told the con-ference. “It’s up to the politicians to justify this element, which does not really make any sense.”

Volckens, also a leading adviser within the IFD, said the GREIT legislation is highly likely to be improved. “The discus-sion over the three years was originally driven by fear of poten-tial misuse and loss of tax income,” he said. “I hope that in the second round of talks we can have a serious discussion of what the market really needs, not hypothetical, theoretical fears.”

Puhl said the current sub-prime crisis does not mean the party is over for real estate investment in Germany and Europe.


� Property Finance Europe 24 September 2007

“Yes, financing is more of a challenge than it was before the summer, but large portfolio trades are still happening,” he said. “We are still positive as a firm that REIT IPOs will get done in 2008 and potentially some earlier than that.” pfe

Alstria Office determined to convert to GREIT before year end - chairman

The Hamburg-based Alstria Office, founded just over 20 months ago and first listed on the stock market in April, re-mains determined to convert to a Real Estate Investment Trust before year end since the fiscal benefits clearly outweigh the costs, says its Chairman Olivier Elamine.

He told the EPRA annual meeting in Athens that even if the GREIT law is not perfect, Alstria will benefit from the conver-sion, and remains focused on converting this year.

“Our fear as a company was that there seemed to be endless discussions to find the perfect law but we would much rather have one that is not perfect than none at all,” he said. “It makes a lot of sense to free our hands from the fiscal requirements in this way. We have no doubt that the benefit we will get from the conversion is much more than any costs we will incur.”

Alstria focuses on acquiring, owning and managing German office real estate. Elamine, French by nationality, told PFE sepa-rately that the company was founded purely to take advantage of opportunities in the segment. The group aims to expand its portfolio significantly in the next few years, making selective investments, active asset and portfolio management. The com-pany is targeting selective investments with an annual volume of €500m-€750m over the next three years. It expects acquisi-tions to originate mainly from the public sector privatisations, corporate divestments as well as portfolio restructuring by insti-tutional and private German-based investors. pfe

REITs to add €140bn of equity to European capital markets - JPMorgan

Some €140bn of new equity will be added to the European capital markets in the long term due to the growth of Real Estate Investment Trusts in Europe, forecasts investment bank JPMor-gan in a new study entitled European REIT development.

Harm Meijer, JPMorgan real estate equities analyst and co-author with Tim Leckie of a new study, said at the EPRA annual meeting: “The key driving forces behind this expansion are the introduction of REIT legislation in the major European mar-kets and the greater availability of investment grade property from private property funds, corporates and governments. On top of this, solid economic fundamentals and increasing inves-tor allocations to real estate will further support this growth.”

From 2009, European non-listed property fund terminations will accelerate, bringing a massive €26.9bn in gross assets onto the mar-ket for potential listing on the equity markets. European corporate real estate portfolios are expected to be another source of REITs.

The research forecasts REIT introduction will boost retail investors’ ownership in UK and European REITs overall. In-stitutional allocations are also expected to increase sharply. As-set allocation models point to an ideal of 15% of investment portfolios in real estate, compared with a current average of just 6% for European pension funds. This represents a potential minimum of €24bn a year in new capital flows. pfe

Coalition forms to resist changes in IFRS property reporting rules

The proposed re-writing of Financial Statement Presenta-tion under International Financial Reporting Standards, and its convergence with US GAAP, will move reporting away from the focus on a single bottom line profit figure and has profound and negative implications for the listed real estate industry, the European Public Real Estate Association (EPRA) says.

EPRA Director of Reporting Practices Hans Bruggink said that if the new IFRS rules are approved, company income statements and balance sheets will no longer show what is left after expenses and taxes. “At the moment you can see current assets and fixed assets, liabilities and equity clearly in a listed real estate company’s accounts so you can calculate your ratios at one glance,” Bruggink said in a release. Under the ‘cohesive principle’ in the new proposed rules financing is allotted a separate part of the balance sheet and the present practice of entering funds from operation and its financing in the busi-ness part would not be allowed.

Commercial real estate properties rented for five or 10 years would be considered financial assets in their entirety and rents would be presented as interest and amortisation of the lease. “The industry absolutely does not want this because the value of real estate companies is based on visible net asset value of the real estate properties. These are not like a leased car, ma-chinery or aircraft rental contact with a life of five, 10 or 15 years, bricks and mortar can extend for 50 to a 100 years.”

The changes are to be proposed jointly by the US Financial Accounting Standards Board and the London-based Interna-tional Accounting Standards Boards. Their implications have united global representative bodies for listed real estate in a coalition to lobby FASB and IASB to adopt standards that best match operational realities. Alongside EPRA, NAREIT in the US, APREA in Asia, the BPF in the UK, and Canadian and Australian associations are represented. pfe

THE PROPERTY CONFERENCES - Scenari Immobiliari

Italian property moves to adagio pace from andante in 2006 - Scenari Immobiliari

The musical term for slowly-played, adagio, was the dom-inant forecast theme of the annual conference of Italian re-search group Scenari Immobiliari in Liguria 10 days ago. Or-ganisers and speakers saw European property prices moving forward at an adagio pace.

Scenari Immobiliari President Mario Breglia said that gener-ally the European real estate market is reacting fairly well to the US sub-prime crisis so far. “Last year was defined as ‘an-dante’ (moderately slow) with signs of a slowdown especially in the residential sector, and these signs were subsequently con-firmed,” he told a news conference.

In Italian housing, forecast for the last quarter of 2007 is a decline in values. “We expect still six months of turbulence in the residential sector, and the scenario is negative since the Ital-ian market is dominated by for loan demand,” Breglia said. “We foresee that 2007 will close with a transaction decrease of 6% in volume compared to 2006. This situation is also due to the

fact that interest rates have risen and banks are more severe in granting loans.”

SI sees the US sub-prime crisis introducing considerable un-certainty but added in a report: “The European market should suffer limited consequences … and in the second half of 2008 there will be a more decisive recovery, even in the residential sector.” Other SI forecasts for European property in late 2007 and into 2008 are:

• Signs for the office sector are still positive but it is view cautiously by fund managers and investors, and if only a very unlikely recession could halt its growth

• The industrial sector, particularly logistics, will see moder-ate growth, above all in areas close to roads and major motor-way links

• The retail sector in the major nations will not produce sur-prises, and prices should maintain current levels

• Eastern Europe retail will continue its strong growth, with intense building activity and increases in prices

• The financial squeeze is cutting borrowing to 65-70% loan to value, from prior levels up to 90%. More attention will be paid to project quality.

SI said: “The property industry is going through profound transformations, and its role within the overall economic system is becoming more and more significant.” It now represents 16.5% of GDP in the EU25, and as high as 21.5% in Spain. The prop-erty stock in the five major western European countries amounts to 17.5bn sq.m. of which 29.3% is in Germany, 20.1% in the UK, 18.0% in Italy, 16.4% in France, and 16.2% in Spain.

The volume of transactions in the Italian real estate market should rise this year by 3.9% to around €125bn. However it should pick up to 4.8% in 2008, led by retail, office and logistic. One problem particular to Italy is that the country lacks in qual-ity and number of Class A buildings, which are only 9% of the total stock. pfe

Italian real estate seen less affected by US events than other EU sectors

All speakers at the Scenari Immobiliari forum agreed that Italian real estate is not so strongly affected by the US sub-prime crisis as sectors in other EU countries.

Gregorio De Felice, chief economist at Banca Intesa-San Paolo, told around 200 participants that a slowdown does not necessary mean recession, and that inflation pressures are lim-ited. Europe is more independent from US events nowadays; European consumers are less indebted and corporate profits are fairly well balanced. In the household sector, disposable in-

come and savings positions are relatively solid. Gianluca Muzzi, from RREEF in Italy, told the conference

that around €130bn in refinancing was coming due in the next few weeks in Europe. Any difficulties should however be tem-porary while the financing institutions repriced the loans. pfe

Sub-prime shows need for supra- national surveillance - Italy’s Capitalia

The spillover of the US sub-prime problems into Europe shows the necessity of introducing a supra-national surveillance authority, says the head of real estate asset management for one of Italy‘s largest banks, supporting the views of some leading politicians.

Gianfranco Imperatori, chief executive of Capitalia IM As-set Management, told the Scenari Immobiliari annual conference: “We need a supra-national control body to keep an eye on financ-ing matters now in order to prevent this happening again.”

The crisis also shows that too many transactions had been driven by reductions in credit cost involving sophisticated fi-nancing techniques. It indicated that the industry should refo-cus on the underlying valuations of the property assets. But it also demonstrated that the Italian property sector is becoming more global and more competitive, affected increasingly by out-side influences.

Imperatori also said that Italy required new real estate infra-structure to meet modern industrial demands. “The wealth gen-erated in this country must be used to provide the right kinds of cities and the right real estate in order to make industry com-petitive again,” he said. Industry is moving away from a mate-rial, product-based economy toward a non-material economy. “This requires new ‚containers‘ so we now need to build new and different cities,“ he said. pfe

Growth of intermediate economy, network links dictate role of cities, expert says

The rise of the intermediate economy in urban environments and the growth of circuits linking individual groups of cities in industry segments have dictated the role of cities in the global economy in recent years, says one of the world‘s leading experts.

Saskia Sassen, professor of sociology at New York‘s Co-lumbia University and the London School of Economics, told the Scenari Immobiliari annual conference that the supposed loss of cities‘ share of national wealth generation in the 1970s, 1980s and 1990s obscured the fact that cities developed as pro-


“This is a very strong correction and a real shake-up but we don’t see a never-ending spiral, we see a repricing of risk,” Struan Robertson, Morgan Stanley Global Co-head of Real Estate Banking, told PFE in an interview. “A lot of cash remains ready to move into the market when it likes the pricing. Underlying corporate profits and GDP growth are going to hold very strong on the back of that deployment so that what needs to happen is that we move away from La-La Land, which is where we were in the second quarter of 2007 for the direct market, and come back to a recognition that risk should receive a return and should be priced correctly.”

Many deals are on hold, ranging from asset level deals and debt-financed buy-ers, he says, and a lot have died outside the public spotlight. An American based in Paris, Robertson sees March to May this year as the top of the market and in France picks the signal as having been the Unibail and Whitehall Funds sale of the Coeur La Défense office complex to Lehman Broth-ers for €2.1bn in March. “That deal was sold on the basis of a wonderful financ-ing environment and a very robust view on strong rental growth,” he says. Yield at purchase was 4.7%. In Germany, he cites the €2.45bn acquisition by Whitehall of a 37-asset DEGI portfolio in early May.

Robertson says the listed property sec-tor began to underperform the broader indices - after many years of relative out-performance - as early as March of this year, with Spain as the first country to experience real challenges. He cites as in-dicators Grupo Inmocaral having to reset the terms of its financing, and the cutting of the Realia initial public offering to a discount to NAV to get the company floated.

The more recent main market disturbance derived from the ‘gapping out’ of real estate financing above government paper yields and the drop in loan to value that bankers are prepared to lend. Before sub-prime nerves hit, deals were being financed at 90% LTV and a spread of only 100 basis points, while now, “it is difficult, nearly impossible, to get loan to value above 75% or 80%, and the spreads have gone out to more like 150 for that lower LTV… A lot of buyers of the higher LTV component were part of the structured finance universe which has just stopped dead in its tracks and there is no clarity in the short term.”

This has however been offset by two positive factors: “Because of flight to credit quality, underlying base rates - particularly government-related yields - have actually moved down. You may be up 50bp in terms of your spread but you are down 25bp in the underlying index so the actual cost of

debt impact has not been as significant.” Another supportive factor is the very strong takeup of

investment grade corporate debt for non-real estate indus-trials particularly in longer maturities. “What that tells us is that the cash is there, and for the right names and the right deals the market is absolutely open,” he says. “It’s not just about central banks pumping it in. There are literally enor-mous pools of cash, particularly sitting in these sovereign

funds that have been desperately trying to figure out how to deploy their capital.” One example is China taking a $3bn stake in Blackstone within three weeks because the capital sum was fairly small for Chi-na. Another is the Norwegian Govern-ment Pension Fund, which at last count pooled a massive NOK1.94tr (€249bn). “So there’s a lot of discussion that this is a liquidity crisis, and you should never un-derestimate what can happen in a liquid-ity crisis because it can spiral,” Robertson says. “But there is an enormous amount of cash out there and it’s not dependent on CDOs and financial engineering but is in the hands of a different set of people. That will be interesting to watch.”

Macro-economic factors and global linkage to the US are also shifting. “The key Morgan Stanley view is that a soft decoupling has occurred for Western Eu-rope due to increased linkages to emerg-ing markets via exports. Whereas the US remains the largest economy in the world, emerging markets themselves and their internal growth have become the sin-gle biggest marginal driver of economic

activity in the world.” He adds: “I would argue that there is a hard decoupling for the emerging markets. The stock exchanges in 2007 have had a different performance from what we saw in 1998, when an ill wind in the financial serv-ices area hit the emerging markets first.”

On the negative side, however, is London, with its strong dependence on financial services. “The second area is Spain,” Robertson says. “The Bank of Spain has been very cogniscent of the role of the pricing of residential property but also the amount of debt provided to Spanish property companies and residential developers.” The direction and momentum of Spanish housing sales will therefore be a key indicator, but the country’s banking sector is robust.

He adds: “It would be naïve to sit on your hands and wait for a few weeks and expect everything to get back to normal. This is simply not true. The world has changed. After many years of wondering when the music would stop, well, guess what? The music has stopped. But that does not mean that the dance has come to an end.” pfe

US sub-prime crisis brings correction from market peak but outlook positive due to high cash, corporate profits, GDP, US decouplingThe credit tightening arising from the US sub-prime mortgage crisis is causing a strong correction, bringing European prices down from the market peak reached at the end of the first quarter but a number of mitigating factors, including some decoupling from the US, means the medium-term outlook remains positive, says one of Europe’s leading real estate investment bankers.

The PFE Interview: Struan Robertson, Morgan Stanley

Morgan Stanley’s Struan Robertson: ”The music has stopped but that doesn’t mean the dance has come to an end.”

� Property Finance Europe 24 September 2007

ductive spaces for the intermediate economy – micro-economic productive systems linking companies in the same location.

In the five years, 1998-2003, international finance and manu-facturing grew at a relatively moderate rate of under 6% per annum, but firm-to-firm business grew on average 11% p.a., and individual sectors such as securities trading expanded by a massive 34% per annum.

A recent study identified 315 cities as key for the trading of the 43 basic commodities in the world, highlighting hitherto unno-ticed inter-city networks. “The term ‚global economy‘ should not be taken literally but should be seen as a shorthand for the grow-ing links between cities in individual, discrete circuits in certain industrial segments,” she said. “Even though it doesn‘t grow a single bean, New York is the leading trading location for coffee,” she added. Buenos Aires fulfils the same function for sunflower seeds, London for potatoes, and Shanghai for copper.

“The specialised role of a city within a sector allows the rec-ognition that the deep economic history of a place is impor-tant,” Sassen said. This has become more important in recent years than during the ‚Keynesian‘ period – prior to the Second World War – when mass manufacturing, consumerism and dis-tribution dominated the global economy. pfe

Value shifts from US sub-prime is overdue correction – Italy‘s Generali

The credit crunch spreading from the US sub-prime mort-gage crisis should be seen in Italy and Europe as an overdue correction, bringing property valuations down to a more real-istic level, says Giovanni Maria Paviera, managing director of Generali Property Investments.

He told the Scenari Immobiliari annual conference that the weight of easily available funding has forced transactions at un-realistic levels. It had covered full loan-to-value, plus profes-sional fees and “there was still some money left over”. The age of automatic valuations via discounted cash-flows plus a mar-gin has been ended. Now, property assets will revert to valu-ations dependent on macro-economic factors, the proportion of equity in financing will have to rise, and buyers will have to accept lower returns.

“Short-term investors are going to be replaced by long-term investors like us,” added Paviera, who heads the property funds investment management of the giant Italy-based insurer.

Building quality will also move up in valuation assessments, as will the potential to enhance profitability. This will inevitably mean growth in the value-added investment segment, and the reduc-tion of the proportion of investors or vehicles following lower-yielding core strategies. “This has already happened with indirect investment, and now it will move over into direct,” he said. pfe

I taly‘s Demanio sees 2,500 state properties with enhancement potential

The census of Italian state property recently completed by the Demanio agency attached to the Ministry of Public Works has identified 2,500 high potential assets in 153 cities with great enhancement potential, the agency‘s director said.

Elisabetta Spitz told the Scenari Immobiliari annual con-ference the assets comprise a small part of the 26,000 build-ings comprehensively databased by the agency in the past two years. “These could even be considered part of a single pack-age,” she said. Most are in northern and central Italy, with very few in the south.

Agenzia del Demanio was established in 2001 to assess, im-prove and sell or lease off the assets, owned by various levels of the state. It has just completed an assessment of military barracks worth €4bn, mostly in the north, that could have a second use. “This current valuation is a military valuation,” she stressed. “A real valuation for second use might well be differ-ent.” The agency will very soon launch a program of enhance-ment and divestment, due to be completed next year. pfe

Private, foreign investors need coherent government strategy – Hines Italy

Private sector and foreign institutional real estate investors are ready to cooperate in investing in Italian state assets but the government must not only develop a coherent strategy, but also open up more assets to freehold investment and discard old-fashioned or pseudo-communist agendas, says Manfredi Catelli, managing director of Hines Italy.

He said the state sector must come to the negotiating table ready to deal responsibly with investment bank advisors and major investors, or reduce the number of public property ten-ders it tries to transact. “Either there is a political strategy be-hind this country‘s real estate or we will go nowhere at all,” Cat-ella told around 200 property sector professionals at the Scenari Immobiliari annual conference 10 days ago. “Cooperation from our side is on the table. We are ready.”

He said the government must promote the feasibility of state real estate projects and discard old fashioned ideas. The program of the Demanio agency for public sector property disposals and revaluations is good but inadequate to get projects approved since the political will is lacking. “In recent years we have not built nor have we renovated, and there has been no product innovation. That‘s it. That‘s the end. We have to do something about it.”

The state wants to continue to own its property without us-ing it, and without allowing freehold investment, he said. “This

24 September 2007 Property Finance Europe �

is not an entrepreneurial solution.” One recent example was the Hines investment in the Porta Nuova project on a brownfield site in Turin, aimed at creating an environment of urban sus-tainability. The site had taken three years to assemble, and was acquired from 30 different owners. pfe

Beni Stabili restructures ready for REIT status, announces wide share buy-back

Italy’s Beni Stabili group, now a subsidiary of French REIT/SIIC Foncière des Régions, has restructured the company’s in-vestments and assets to allow it to meet the economic-patrimo-nial requirements set out in the new Italian REIT/SIIQ regula-tions from 1 January 2008.

The decision to adopt the SIIQ regime will be taken by the company board as soon as the legal timetable allows. The board has also decided to propose to shareholders a share buy-back up to the maximum permitted by law of 10% of the issued capital - given that the company does not already hold any au-thorised shares.

This buy-back will run over 18 months from the date of the shareholder resolution, authorises the board to buy back stock when their value is significantly different from net asset value, and will involve a maximum of 191m ordinary shares. The buyback will be at a maximum equal to the average market price in the three trading days prior to the date of each transaction, plus 20% and, in any event, may not exceed €1.15 per share. The minimum price may not be more than 5% lower than the average market price in the 30 trading days prior to each transaction.

Separately, Managing Director Aldo Mazzocco told the Scenari Immobiliari conference that the group has a 45% debt ratio, and that property leases are in good shape so that the fallout from US sub-prime so far has been negligible. “We have been saying that prices can’t continue to rise at 30% per year so it is time that we go back to normality,” he said. “If there’s a fresh wind blowing, we will have to take cover, but this is a wind that we saw coming so we think that we will come through it all right.” pfe

Italy‘s hotels, retirement homes, car parks present opportunity – De Meo

The Italian hotel sector presents good investment opportu-nities since it is underdeveloped and dominated by family-run properties which are badly run and small, Beni Stabili Hotel Managing Director Massimo De Meo told the Scenari Immo-biliari annual conference.

The company expects to invest around €1bn in this sector and in retirement homes over the next three years, and is also planning to convert to Real Estate Investment Trust (REIT/SIIQ) status soon to provide fiscal benefits for profitability.

“The hotel sector in Italy is blurred, with the majority of assets family-owned and on average about 80 rooms in size, so there is no coherent tourist offering,” he said. “We believe that the situation cannot go on like this... We expect a strong participation of foreign hotel chains taking out those who are managing hotels in a dilettante manner.”

BSH is a subsidiary of Beni Stabili, the new Italian unit of French REIT/SIIC Foncière des Régions after the merger earlier this year. De Meo, who has been its MD since June, said the new REIT/SIIQ structure will give it a similar profile to the US REIT

Marriott International. Italy passed legislation creating REITs at the start of last July, retroactive to the beginning of the year.

De Meo added that Italy also needs more conference centres to attract major events, and these require services to be built in the immediate vicinity. BSH will boost its activity in retirement homes since the sector is also very underdeveloped in the nation. pfe

Italian property laws, lack of product hindering business – Pirelli‘s Puri Negri

The head of Italy‘s largest listed property company, Pirelli & Co. Real Estate says the current credit tightening due to US sub-prime concerns is not as great a hindrance to business as the lack of prod-uct on the market, and an overhaul of national property legislation is needed to attract more major foreign investors into Italy.

Carlo Alessandro Puri Negri told sector professionals at the Scenari Immobiliari conference recently that the current crisis is different from prior periods of market tension. “This crisis is different as the system has lost control of structured debt, which has never happened before,” he said. “If banks do not know where the debt is, or whether it is good or bad, they will simply wait before extending any more credit.” But the situation should clarify itself soon.

The cost of debt will rise but interest rates will decline, he added. Spreads of property financing rates over government paper have widened but needed in any case to readjust. How-ever, the easy period of property investment is over – charac-terised over the last three years by the ability to acquire, hold and do nothing but still achieve a significant capital gain. “Now, good companies with solid structures and low debt levels will have significant opportunities,” Puri Negri said.

He sees two major variables in valuations going forward: the lack of construction land and built product, and the develop-ment of the macro economy, which “seems to be going well enough.” Governments across western Europe are encounter-ing political difficulties freeing up more greenfield sites due to environmental concerns but the brownfield sites are almost used up. “Either we will have to change the rules or build higher, or we will have to decide that all buildings more than 50 years old can be fundamentally restructured... The lack of product is a significant reason why the current property outlook is nega-tive,” he told delegates.

Puri Negri regretted the absence of new, large property com-panies in Italy and said that firms should look not only at organ-ic, internal growth but also mergers or acquisitions to achieve size. “We ought to think about this,” he told the conference.

Italy needs more property funds and much improvement of its recent REIT legislation that, unlike most other similar re-gimes, requires full tax on capital gains from property invest-ments. “I don‘t understand why we should be taxed. The invest-ment money will simply go to countries where there is no tax on capital gains,” he said. Apart from Hines, very few major foreign institutional investors are active in Italian development projects. “With the current legislation that we have, internation-al developers will never come,” he added.

Turning to Europe, Puri Negri said he would be scared to be active in the Spanish residential market where capital valuations have soared and the market is over-supplied. Spanish housing vacancy rates of 20% compare to only some 6% in Italy. By contrast, Germany presents an opportunity since housing is selling at 20% below replacement cost, while construction costs around Europe are rising at a rate of 8-10%. pfe


EUROPEAN REITSFinance Minister Padoa Schioppa signs Italian REITs/SIIQs into law

Italian Finance Minister Tommaso Padoa Schioppa finally, on September 7, signed the decree introducing Real Estate In-vestment Trusts in Italy. The text is basically the same as that presented in a decree in June but allows for unlisted as well as listed REITs, and divides supervision between the stock ex-change regulator Consob and the Bank of Italy.

Listed and non-listed real estate firms are to be treated dif-ferently, and in spring Italy‘s main stock market raised the mini-mum capitalisation for the admission of real estate companies to the regulated Expandi stock market to €200m.

This decision to widen supervision has been taken on the back of pressure from real estate funds operators but the Italian central bank will only intervene when the REIT/SIIQs (Società d’Investimento Immobiliare Quotata) interact with real estate funds since they qualify as a collective saving tool. In all other cases, the SIIQs will be under the vigilance of Consob as per all listed companies.

To be eligible for SIIQ status, companies pay an entry tax of 20% over a five-year period on the capital gain on rental prop-erty. At least 80% of total revenues must derive from property lease income, and SIIQs are required to distribute at least 85% of profit in dividends. Equity stakes by a single shareholder in a SIIQ will be restricted to 51%, while at least 35% of capital must be in free float - owned by shareholders having, individually, no more than 1% of total voting rights. pfe

Europe has 23% of global REIT market cap but 42% of property stock - EPRA

Europe now accounts for just 22.6% of the global market capitalisation of Real Estate Investment Trusts estimated at €754bn, despite having 42.3% of the world’s underlying assets in the direct commercial property market.

The small 4.9% of European listed real estate assets compared to total property stocks suggests great potential for growth.

The figures are included in the second edition of EPRA’s Global REIT Survey, presented at the association’s annual con-ference two weeks ago. EPRA research director Fraser Hughes said the survey builds significantly on the first edition in 2004, and now covers 31 countries in Europe, Asia, Africa and the Americas. “We can see an increasing adoption of REIT legisla-

tion in Europe and this … points to significant growth in the sector in the future.” pfe

France’s Klépierre said to be eyeing major stake in Carrefour Property

French shopping centre REIT/SIIC Klépierre is planning to acquire a significant share in Carrefour Property from listed French retail giant Carrefour which is aiming to raise €3bn by listing 20% of its real estate unit in 2008.

The French weekly Challenges said ownership of about 60% of Carrefour’s massive property portfolio, worth an estimated €20bn-€24bn, is to be transferred to Carrefour Property, and the parent group plans to retain strategic and operational long-term control, retaining an 80% stake in the unit. Carrefour sold its European mall portfolio to Klépierre in 2004.

Separately, Klépierre this month inaugurated its 240th shop-ping mall in the French city of Angouleme, and announced it is buying a project to build a shopping centre in Budapest from Futureal Real Estate Holding. Klépierre expects to invest €229m in the mall project, which has already received €111m of investment. It expects net rent of some €14m.

Klépierre, which is majority owned by the French banking giant BNP Paribas, is buying the minority holdings of BNP Paribas and Axa REIM in the subsidiary Ségécé. Klépierre has purchased the 10% interest held by one of Axa REIM‘s cus-tomers for €20m, and has agreed to buy BNP Paribas‘ 15% in-terest by the end of 2008 for €30m. Klépierre’s property assets total €9.1bn. pfe

Unibail Rodamco sees no fallout from sub-prime crisis, plans expansion

Europe‘s biggest REIT, Unibail Rodamco, is planning to expand aggressively and fears no major fallout from the sub-prime credit crunch.

“One should not underestimate the potential financial im-pact, but our property fundamentals are very sound today,” Unibail Rodamco Chief Executive Guillaume Poitrinal told Re-uters recently. “We are also well tailored to cope with whatever the market throws at us.”

Poitrinal said the company would be concentrating on the 14 European countries where it is already established, ruling out a move into newer markets. Unibail Rodamco would mainly focus on France, Spain, the Netherlands and Sweden. He said 75% of



PROPERtY FINANCE EUROPE - BULLEtIN BOARD

one of the two largest and most important events in the European calendar.More info: www.exporeal.net

October 11 - 13, thursday-Saturday 13th CEREAN Conference, Bucharest, RomaniaThe annual meeting of central, eastern and southeastern European real estate associations. More info: www.cerean.com

October 17-19, Wednesday-FridayGlobal Real Estate Finance Summit, MonacoOpal Financial Group‘s 3rd Annual Global RE Finance Summit focuses on the most relevant issues of CMBS, RMBS and Covered Bonds in European, US and emerging markets.More info: www.opalgroup.net

October 17-19, Wednesday-FridayInternational Hotel Conference 2007, Rome This event brings together the international hotel in-dustry, and also sees the inaugural Hotelier‘s Global Citizen Award presented in recognition of leadership in the segment.More info: www.internationalhotelconference.com

October 18, thursday IEIF Coloquium, ParisOne day colloquium in French language by the IEIF group on the French real estate market, and its develop-ing group of indices.More info: www.ieif.fr

October 23-26, tuesday-Friday NCREIF Annual Conference 2007, Palm Beach, FloridaThe annual conference of the US non-listed real estate funds association.More info: www.ncreif.com

October 25-26, thursday-Friday 7th German Share Initiative conference, FrankfurtNow extended to a two-day conference, this brings together the major German real estate companies to present strategies to investors.More info: www.initiative-immobilien-aktie.de

September 24-26, Monday -Wednesday REIT World UK 2007, LondonA three-day REITs-specific event examining the growing European REIT market from every sector perspective.More info: www.terrapinn.com/2007/reituk/

September 25, tuesdayIPD Germany seminar, Chamber of Commerce, Frankfurt This half-day seminar starting at 1:45 p.m. will look at the use of property derivatives in portfolio manage-ment.More info: www.ipdglobal.de

September 27-28, thursday-FridayEuropean Property Italian Conference, RomeEPIC, dedicated to Italian real estate relations with in-ternational finance, can be considered an open house where all stakeholders have an opportunity to share ideas, build and consolidate networks, expand their knowledge and develop strategies for new business. More info: www.epic.it

September 29, SaturdayEuropean Business School annual congress, Oestrich Winkel, GermanyUnder the theme, Real Estate Capital Markets - Trends and Perspectives, the annual EBS-Immoblienkongress will host 200 guests by invitation only to its annual event in the castle Reichartshausen on the Rhine near Wiesbaden. More info: www.ebs-immobilienkongress.de

October 4-5, thursday-FridayEurocatalyst 2007, MadridFive-year anniversary for the Eurocatalyst group fea-tures a day on the Spanish mortgage market, discus-sions on globalisation, including branding across bor-ders, leveraging distribution, product expansion from super-prime to sub-prime and funding convergence. More info: www.eurocatalyst.com

October 8 - 10, Monday-WednesdayEXPO REAL 2007, 10th International Commercial Property Exposition, Munich Germany’s largest real estate trade fair, now become

Diary dates upcoming in 2007

Unibail Rodamco‘s business is in retail property, including 95 shop-ping centres, which are reliable performers even in a downturn.

In addition, Unibail Rodamco has the lowest loan-to-value ratio in the combined group‘s history - at about 25% of its €24bn prop-erty portfolio, and thus has the option to boost indebtedness to 40-45% to fund a share buyback without hurting its credit rating.

Poitrinal said Unibail Rodamco plans to add another 20 shopping centres by 2010, but would do this via organic growth rather than through acquisitions. “We have 1.5m sq.m. in the pipeline and we will devote time to increase that,” he said. pfe

Realia’s SIIC de Paris buys Paris office asset from Germany’s DEGI for €118m

SIIC de Paris, a French REIT subsidiary of Spanish property company Realia, has bought a major office building in the busi-ness district of Paris for €117.7m from the German property fund DEGI. DEGI bought the building in June 2004 for €84m

The building is currently leased to energy group EDF (Elec-tricite de France) until April 2013. DEGI said the strong dy-namics of the French office market was reflected in the share price of DEGI’s fund, which rose by €0.37 after the disposal.

Realia bought French property developer and manager SIIC de Paris (formerly Société Financière Immobanque) in May last year for €586m and has since invested €570m in new real estate projects. SIIC de Paris‘ real estate projects have a surface area of 137,000 sq.m. in the main business areas of Paris. pfe

Fall in risks in French hotel properties seen benefiting Foncière des Murs

Société Generale analysts say the French SIIC/ REIT Fon-cière des Murs is set to benefit from diversification and a fall in risks related to hotel properties.

The recent turbulence in financial markets, particularly in the property sector, is likely to benefit stocks with good visibility and moderate risk, they said. “Foncière des Murs seems to corre-spond to this profile, except for the liquidity aspect,” the SG ana-lysts said. Interest in the stock could be further fuelled by future acquisitions, particularly in Italy, through the retirement homes sector or through the hotels unit Beni Stabli Hotels.These factors could help boost the share price. Société Generale has a “buy” recommendation and €27 target on Foncière des Murs. pfe

French REIT/SIIC Eurosic sees NAV up 17.7% in first half at €57.1 per share

French REIT/SIIC Eurosic said its net asset value per share rose 17.7% to €57.1 in the first half of 2007, as the valuation of its portfolio grew to €1.4bn.

The better results were boosted by the acquisition of Vec-trane and several assets of the Groupe Caisse d’Epargne. On a pro forma basis, excluding acquisitions and disposals, NAV per share was up 6%. The underlying value is €2.2 per share includ-ing associated rights.

The company raised its target for the valuation of its portfo-lio to € 3.5bn by 2011.

Eurosic’s strategy is to continue to develop office properties

while also diversifying, especially into distribution buildings. It is targeting full year rental revenues of €50m.

The company’s main shareholder is Nexity, which holds a 31.88% stake. Vectrane operates in the office and leisure sectors of the property market in France. pfe

Hammerson hunting for shopping centre acquisitions in France - Business Immo

The listed European real estate company Hammerson, a REIT that operates mainly in the UK and France and is listed on the London Stock Exchange and Euronext Paris, is looking to expand its portfolio of shopping centres in France.

Gérard Devaux, managing director at Hammerson for conti-nental Europe, told the property portal Business Immo, “Ham-merson is on the look-out for shopping centre acquisitions. We have just acquired a holding at the centre of Grand Maine, a 22,000 sq.m. shopping centre located in Angers, for a total sum of €66m… We are also candidates for the purchase of regional shopping centres when opportunities present themselves.”

Hammerson invests in and develops shopping centres, re-tail parks and prime offices, with a portfolio valued at £7.5bn. Devaux noted there are few of opportunities in French retail property, and said Hammerson is also focusing on developing its retail business parks. The recent acquisition of two retail park projects is expected to be followed by new acquisitions before the end of the year.

Devaux said he is confident about Hammerson’s ability to select property assets for acquisitions against the cycle. “In the weeks to come, we are going to find ourselves in a more selec-


tive market where a certain number of investors - in particular the funds that rely on strong leverage - will be less aggressive,” he told Business Immo. pfe

GREIT candidate Fair Value sets year-end stock market flotation

The Munich-based Fair Value Immobilien plans to float its shares on the stock exchange in the fourth quarter after complet-ing its September acquisition of shares in 14 closed-end property funds currently managed by the company IC Immobilien.

The stock placement is a requirement for the company’s an-ticipated conversion into a German real estate investment trust based on the diversified commercial property assets acquired with the fund shares. This REIT would initially include Fair Value’s participation in 14 closed-end property funds that are managed by IC Immobilien.

A vote by the fund investors to swap their fund shares for shares of Fair Value was held in August. A majority approved the plan at only seven of the funds, although more than 3,000 IC fund investors favoured the share swap overall. pfe

LISTED REAL ESTATE

AXA REIM sells industrial portfolio to Scarborough for €143m

The European Industrial Partnership, a fund managed by AXA Real Estate Investment Managers, has agreed the sale of a portfolio to Scarborough Continental Partners for more than €143m. The multi-let portfolio, with over 233,000 sq.m. of business space and circa 200 tenants, comprises three proper-ties in France and seven in the Netherlands.

This is the first major deal since Scarborough was acquired by Valad Property Group in July. From the initial bids submit-ted following a competitive sales process, five investors were selected for a final round of negotiations with EIP, and the suc-cessful bidder selected on the basis of highest price.

AXA REIM’s Ralph Wood, EIP Fund Manager, commented: “This sale is the first from the EIP portfolio and took advantage of strong European capital markets to exit from certain assets and to optimise added value on behalf of investors.” Nick Jones, partner in Cushman & Wakefield’s cross-border team, comment-ed: “This sale reflects the very strong interest amongst interna-tional investors in the European industrial sector which is offer-ing attractive returns compared to other asset classes.” pfe

Austria’s Immoeast doubles pre-tax net in first quarter of 2007/08

Immoeast, a listed subsidiary of Austria’s Immofinanz, raised its operating profit before interest and tax by 37% to a record €93.1m in the first quarter of its business year that ends 30 April 2008.

The company was unable to avoid the stock market slide in its sector but is recommended for purchase by many investment banks on the basis of performance, said executive board mem-ber Norbert Gertner.

Earnings before tax rose by 100.7% in the reporting period of 1 May-31 July to €114.1m, while revenues climbed by 72% to €62.3m, despite an increase in development projects without current cash-flow. Equity rose by 78.1% to €7.76bn following a capital hike in May and will remain above 50% through next January, even with committed investment projects, an advan-tage in view of credit tightening and rising interest rates.

Targeted investment for the business year is €6bn, of which €3.1bn was invested in the first quarter. This brought property assets to at least €10bn, with fair value including firm commit-ments now at €10.19bn in 426 objects with 5.41m sq.m. of rental space in mid-2007.

Immoeast’s market capitalisation rose by 60.5% to €8bn in the year to 31 July, although the share price fell in the first business quarter. Net asset value (NAV) rose by 25% in 12 months to €10.50 a share. Profit per share was €0.13 in the first quarter of 2007/08, up by €0.09 from the comparable year-earlier period.

Chairman Karl Petrikovics projected more record figures for coming quarters. A significant contribution to strong results is now being made by a strategic investment shift to profitable markets in south-eastern Europe and the former Soviet Union, plus strengthening of the retailing sector and increased expo-sure in real estate development. pfe

Patrizia falls out of German bourse mid-market MDAX segment

The share of Cologne-based property trader and manager Patrizia Immobilien as been downgraded by stock exchange operator Deutsche Börse to the SDAX index segment of small stocks from the mid-market MDAX index.

Assignment to the DAX index categories is based on such factors as market capitalisation and freely trading shares.

Patrizia was replaced in MDAX by machinery manufacturer Tognum. The relegated share of the real estate company re-placed that of DAB Bank in the SDAX line-up.

Separately, Patrizia announced cooperation on development projects with state bank Landesbank Baden-Württemberg, to which it sold an 8,000 sq.m. plot in Frankfurt. pfe

Spain’s Anjoca to invest €2.5bn on expansion, prepares stock listing

Privately-held Galicia-based property group Anjoca said it plans to invest €2.5bn on projects abroad over the next three to five years, and during this time expects annual revenue to reach €500m compared to €150m earned last year. Should market conditions improve, Anjoca will prepare a stock market listing.

Anjoca has offices in La Coruña, London and Tangier but plans to expand into Mexico, Brazil, Costa Rica and northern Europe. Of the total investment, it has slated around €2bn on residential projects, €300m on shopping centres, €150m on ho-tels and the remainder on geriatric centres.

A property development and management group, Anjoca is one of many Spanish companies with roots in housing devel-opment and construction in the 1960s. The company is led by Angel Jove, the brother of ex-Fadesa Chairman Manuel Jove, and has a current property asset base worth around €1bn.

In recent years, it has changed direction to diversify away from residential development and to invest in other business


areas. The group currently operates in most of Spain , including the Balearic and Canary Islands. pfe

Spain’s Colonial to wait for market calm before sale of French SFL stake

Spanish property group Colonial said it will wait for the best possible moment in the market before selling part of its stake in French unit Société Fonciére Lyonnaise. It had been speculated that the listed Colonial would sell 10% of SFL this month but the company will postpone the sale until market conditions improve.

According to a new French law, shareholders of listed prop-erty groups cannot hold more than 60% of the capital, thus Colonial will need to sell off around 20% by January 2009.

Recently, Colonial said it plans to generate €1bn in revenue over the coming months from property sales and capital gains from selling the stake in SFL. A large part of the revenue will be used to reduce the €8.5bn debt the group has amassed after listed real estate firm Inmocaral bought and merged with Colonial.

Colonial bought smaller listed rival Riofisa and a 15% stake in construction company Fomento de Construcción y Contra-tas, running up a high proportion of debts which have made lending banks somewhat nervous. Colonial was required to re-schedule debts recently, in light of tensions in credit markets, and has threatened to move its base to France.

Separately, privately held Nozar has increased its stake in Colonial to 12.3% after buying a small stake valued at around €158m. Nozar, which operates in the residential, office, hotel and shopping centre markets, is slowly becoming an important

player in the Spanish real estate sector. It also holds 25% of Va-lencia-based Astroc Mediterráneo. Nozar Chairman Juan Car-los Nozaleda was recently named the new chairman of Astroc after Enrique Bañuelos resigned.

It is expected that Bañuelos sell pieces of his 30% stake in Astroc to either Nozar or Spanish developer Rayet. pfe

Finland’s Citycon completes €329m purchase of Helsinki shopping centre

Finland’s Citycon has completed the purchase of the Iso Omena shopping centre in the suburbs of Helsinki for €329m. Iso Omena is Finland’s fifth largest shopping centre, consisting of 49,000 sq.m of retail premises and brings Citycon’s portfolio of Helsinki region centres to eight.

The initial net yield stands at 4.5% and Citycon ex-pects that to show a clear increase in the future because of planned redevelopment and commercial improvements. Citycon financed the purchase through a €300m credit fa-cility with a group of Nordic banks.

The centre has capacity to expand by 7,000 sq.m and includes 120 stores and restaurants. The rental value weighted average lease length is over three years. 2006 sales totalled €200m to 8.4m visitors. Following the acquisition, Citycon will own a total of 32 shopping centres in Finland, Sweden, Estonia and Lithua-nia, with a gross leasable area of some 660 000 sq.m. As the deal was closed, Citycon revealed that ING Clarion Real Estate Securities bought a 5% stake in the company. Is-raeli company Gazit-Globe is the biggest shareholder. pfe


Greece’s Eurobank Properties seeks €350m euro rights issue

Eurobank Properties hopes to get approval this month for a rights issue in favour of existing shareholders, and the real estate portal Reporter.gr said the issue will be in the order of €350m.

The company intends to invest the proceeds within 24 months after the completion of the rights issue. The company’s two largest shareholders EFG Eurobank Ergasias and Lamda Development controlling a combined 65% stake, have commit-ted to retain their stake for the whole period up to the comple-tion of the rights issue and for six months after the trading debut of the new shares.

Eurobank’s board proposes that the rights issue price may exceed the stock’s price on the record date.

Separately, Eurobank said it has signed a promissory contract to buy nine retail and office properties for a total of €51.6 million and a total area of 17,077.78 sq.m. The proper-ties are in the Greek cities of Athens, Iraklion and Larissa The

present investment of €51.6m, was acquired from EFG Eu-robank Ergasias and will be financed through a proposed share capital increase of the company. All the properties will be leased to Eurobank EFG Group companies. pfe

Spain’s Realia buys EDF headquarters building in Paris for €118m

Listed Spanish real estate firm Realia has bought the of-fice building in Paris now housing French utility Electricité de France for €118m. EDF’s lease in the building runs until 2013.

Realia, which recently debuted on the Spanish stock market, operates mainly in Madrid and Paris. Since buying French unit SIIC de Paris in May 2006, Realia has invested around €570m into French properties.

Last month Realia said that its first-half net profit amounted to €94.1m, 14% higher than the same period in 2006. The in-

Jones Lang LaSalle Hotels this month celebrates 10 years of establishment

in Germany. It has been a decade char-acterised by strong swings in the hotel markets, and also by a fun-damental transformation of the sector. From 1997 until the end of 2006, some €6.6bn has flowed into in-vestment in German ho-tels. The annual volumes have varied from €130m, recorded in 1999, to €2.3bn which flooded into the country last year - a record sum. The investor land-scape has also undergone a complete transformation over the last decade. In the first few years, the investors were above all domestic, mainly open- and closed-end property funds focused fairly exclu-sively on hotel assets with lease contracts in place. The number of deals themselves were limited. We opened the doors of our operation on 15 September, and between then and 1999 only one single hotel transaction over €100m was done: the sale of the Sheraton Frankfurt Airport for DM300m, which we advised upon. The subsequent year however saw more than 10 single deals transacted, having a combined volume of €592m - at the time an absolute record. However, today, the situation looks very different. In 2007 to date, we have registered investment in

German hotels worth more than €1.5bn, including 19 single transations and no fewer than four portfolio deals.

Since the end of 2001, Jones Lang LaSalle

Hotels has located its German headquarters in Munich, and now hast seven staff. The Frankfurt office has also been built up over the years and now numbers six staff. Since I began in 1994, my own responsibilities have gradually expanded and they now include, since July, central and western Europe. The baton for Germany has thus been handed over to Ursula Kriegl. Since 2004, inter-

national investors such as private equity companies and investment banks have taken a much stronger interest in the German hotel investment so that for the first half of this year they were clearly the dominant players, with deals worth more than 90% of the total transacted. Howev-er, it is noticeable that after the restruc-turing phase in the German funds sector, domestic investors have boosted their own interest in hotel assets once again. International investors whose acquisi-tion activity was fairly strongly driven by the availability of low cost debt are likely to reduce their activities in the near fu-

ture in the aftermath of the tightening of credit conditions sparked by the US sub-prime crisis. Increasing credit costs have put pressure on yields, making in-vestment in hotel real estate less attrac-tive for those rely heavily on debt to fund their purchases. Investors in general are thus likely to be less aggressive than in the recent past.

But even if the German investors in-crease their investment activity

again, it is most unlikely that we will see an investment market as it was a couple of years ago when property funds - open ended and closed - were the strongest investor type in German hospitality. In the years 1998 to 2003, German property funds accounted for 41% (1998) to 84% (2002) of total hotel investment volume. Since then, they have been limiting their hotel investments in Germany and in Eu-rope as well, due to heavy competition from the more aggressive investors such as private equity firms, but also because of to cash withdrawals by their own capi-tal providers. Nowadays, although inter-national investors still dominate the Ger-man hotel investment market, domestic institutional investors are returning, even if their return to the sector is still careful. They could increase their pace if activ-ity from private equity companies turns out to be limited. And with cash inflow of €1.5bn in the year to July German open-ended funds have some money waiting to be spent. ch

Domestic investors gradually returning to German hotel property sectorBy Christoph Härle, Managing Director Jones Lang LaSalle Hotels, central / western Europe

Guest Column

Christoph Härle

1� Property Finance Europe 24 September 2007

crease in revenue from rentals sparked the income boost. Sales rose 11% year-on-year to €446.8m, largely thanks to the office market in Madrid and Paris via unit SIIC de Paris. Around 77% of the total revenue derived from the office building sector. pfe

NON-LISTED PROPERTY FUNDS

Growth of value-add, opportunistic boosts overall funds performance – INREV

The growing number of value-added and opportunistic in-stitutional real estate funds in Europe, combined with the influ-ence of these two investment styles, has resulted in the property funds sector increasing its out-performance relative to direct real estate, the latest INREV Quarterly Research Report shows.

In the last five years, the INREV Institutional Vehicles In-dex has produced an average five year annual return in euro of 13.9% compared to 9.0% for the Investment Property Da-tabank’s pan-European Index, which tracks direct property performance. INREV analyst Casper Hesp commented: “The increasing number of higher-risk strategy value-added and op-portunity funds that have joined the INREV Index in the last few years reflects the underlying trend in the European real es-tate funds market and means their influence on industry-wide performance is growing,”.

The INREV Index now covers a total of 206 funds with a total asset value net of leverage of €153bn. Of these, institu-tional vehicles make up 84% by number and 54% by value.

The report also provides, for the first time, results of sub-in-

dices calculated from the INREV Index by style, sector, single country vs multi-country and by net asset value. These results show the performance without the influence of retail investor funds which are included in the main index.

In addition, INREV said the last quarter represented a new landmark for the INREV Database, as it passed the milestone of over 500 funds with a gross asset value of €347.4bn. pfe

Aberdeen Property’s Pan-Nordic fund buys €140m portfolio in Gothenburg

Aberdeen Property Funds Pan-Nordic has bought a prop-erty portfolio in the western Swedish city of Gothenburg for €140m. The portfolio of 100,000 sq. m in Gothenburg and Mölndal consists largely of offices, but also includes some resi-dential units and retail space.

The acquisition fits into the fund’s strategy to build up a well-diversified portfolio of properties in the Nordic countries, along with limited exposure in the Baltic States. Sweden is a key sub-market for Aberdeen Property Fund Pan-Nordic, which plans to allocate a substantial portion of its invested capital to Swedish properties. Following the acquisition, the fund’s portfolio com-prises 20 properties in Sweden, Norway, Finland and Denmark.

Trygve Sletteberg, Fund Manager for Aberdeen Property Funds Pan-Nordic, said: “Our forecasts indicate that the Swed-ish and Nordic property markets will remain buoyant vis-a-vis the rest of Europe in the immediate future. Pan-Nordic has in-vested more than €770m in the Nordic property … The fund’s aim is to reach a target investment size of minimum €1.5bn in the region within a two year period.” pfe



Union Investment Real Estate invests €130m in Turkish mall venture

Union Investment Real Estate, the Hamburg-based property funds of the German cooperative banking sector, has invested €130m in a venture with local developer Multi Turkmall to de-velop a shopping centre at Kayseri in Anatolia.

The downtown mall with 66,500 sq.m. of rental space will open the end of 2009 in the provincial capital of 600,000 popu-lation, known in antiquity as Caesaria. The project will be as-signed to the assets of the property fund, UniImmo: Europa.

Union Investment is already participating in a similar project in Mersin and developing a Media Markt outlet in Istanbul. pfe

Germany’s KanAm fund buys Cartier’s Paris headquarters for €380m

Open-ended German property investment fund KanAm grundinvest has paid €380m to acquire the four-segment Paris office building, Cité du Retiro, which is almost entirely rented to jeweller Cartier as its worldwide headquarters.

The building complex in Paris’ 8th Arrondissement has us-able space of 21,000 sq.m. and 260 parking places. pfe

Commerce Grundbesitz buys Prague office property from Quinlan Private

German property investment group Commerz Grundbesitz, a unit of Commerzbank, has bought the Charles Square Center office property in central Prague for its open-end public prop-erty fund, hausInvest global, from Dublin-based international private equity and property investment group Quinlan Private for €90m.

The nine-storey building has gross lettable area of some 20,000 sq.m., with 15,000 sq.m. of office space and the rest, retail and gastronomy.

“Since we acquired the Metropole shopping centre in 2004, we have been closely monitoring Prague‘s downtown property market. Over time, the office segment became more interesting for us,” says Hans-Joachim Kühl, Commerz Grundbesitz board member in charge of property acquisitions. With very limited supply of modern office buildings in Prague’s inner city, the acquisition was an opportunity to “strengthen our commitment on the dynamically growing market of Prague.” pfe

Portfolio sales of German open funds make slight loss in 2006

The average total return obtained by open-ended real estate funds on German commercial property sold in large portfolio transactions in 2006 was a loss of 0.9%, says a study by the In-vestment Property Databank.

IPD analysed transactions made by 15 open German funds, using the whole IPD databank of €54bn, 51% of it in open funds. It found a slight increase in performance of 0.4% in 2006 transactions. Half of the 1.5 percentage point difference between the lower return and higher performance was attrib-

uted to depreciation of the fund assets, the rest to the terms of sales. This difference was very strong for office buildings.

IPD also found a negative total return in 2006 for the whole benchmarked databank as well as for the open-ended funds. “The result even surprised us,” said IPD research director Björn-Martin Kurzrock, adding that only successful deals have been announced. The culling of portfolios is important and necessary, however. “Many funds now have the opportunity to perform better with a more modern inventory,” he said. pfe

WestLB fund Westfonds concludes investors’ voting on property sale

Westfonds, a property fund managed by state savings bank WestLB, seeks to sell the assets of 29 closed-end property funds before the end of the year in a transaction that could bring €1.5bn if all 46 real estate assets are disposed of.

Investors were asked to approve the sale in a voting period that ended 13 September after a 24-hour extension. Approval has now been obtained from investors in 21 funds, said West-fonds’ business manager, Axel Pissarreck.

Around 22,500 investors were asked to vote starting 6 August and 84% have responded so far. In an initial vote taken before a 31 August deadline, a required majority of at least 75% of inves-tors approved the sale proposal at only 15 of the 29 funds.

Westfonds expected to obtain 50% approval for all of the funds but not the 75% majority at every one. pfe

REAL ESTATE ASSET MANAGEMENT

UK’s St Martins planning five-year expansion for European portfolio

The UK property development and asset management com-pany St Martins Property Group aims to expand its European portfolio over the next five years.

St Martins CEO Nigel Brown said the company will con-centrate on the search for new markets and acquisition of new assets. St Martins’ investment portfolio currently totals more than £2.8bn. St Martins has operations in the UK, Europe and Australia. It recently acquired the large commercial and recrea-tion centre Cevahir, in Istanbul.

St Martins also said it has signed a contract with CB Richard Ellis - CPMS for three years management of its French portfolio, which has a total surface of 125 000 sq.m. The portfolio, which is essentially made up of property assets in the Paris region, gener-ates rental revenues of €32m, with a total value of €430m. pfe

UK investor AAIM pays €700m for German Gemini retailing portfolio

British investor Active Investment Management has paid Curzon Global Partners/AEW Europe €700m for the Gemini portfolio of Sinn Leffers clothing and Praktiker hardware retail-ing outlets in Germany.

Comparing the seller’s historic acquisition prices of €650m to the current deal price cited by AAIM’s legal agent, DLA Pip-

er, the seller must have earned €50m on the same objects in two years. With rental space of 400,000 sq.m., the Gemini transac-tion with AAIM is the largest retailing property deal announced this year in Germany.

AAIM also purchased three continental European shopping centres in June for €500m located in Germany, Hungary and Czech Republic. The Gemini purchase brings the British firm’s deal tally to €1.2bn for the summer.

These portfolios “offer strong long-term cash-flows under-pinned by prime high street and out-of-town retail property,” said AAIM executive Robert Whitton. “Germany is in a period of recovery; 10 years of rental decline has ended and created a low base for rents and producing an outstanding property investment opportunity.” pfe

Boultbee Sweden, Heimstaden in talks to form commercial property JV

Swedish real estate firms Boultbee Sweden and Heimstaden are in talks to form a joint venture to pursue mixed commercial targets for purchase and aim to make their first purchase in the coming few months, Heimstaden said.

Boultbee Sweden specialises in shopping centres and Heim-staden in domestic property. “We’re specialists in different types of properties and the fit is excellent,” said Heimstaden’s Pontus Rode.

Boultbee has awarded Heimstaden a contract for the adminis-tration of private apartments included in its purchase of Centrum-kompaniet. Heimstaden will take responsibility for 1,200 tenants living in four shopping centres in the Stockholm region. pfe

RESIDENTIAL PROPERTY

Spain lucky if house prices stagnate after 190% 9yr gain - Reuters roundup

Having gained 190% since 1998, Spain, one of the world’s hottest property markets, has finally succumbed to high lending rates, oversupply of a million homes in the past four years and prices that are up to 30% overvalued.

Economists told Reuters in a roundup of Spanish hous-ing prospects that residential property prices will be lucky to only stagnate. “If we’re lucky, we’re entering a period of house price stagnation around the level of inflation, which will include price falls,” Fernando Encinar, a director of Spain’s biggest online property advertising site Idealista.com told Reuters.

Price declines could be sharper, and drag on longer if firms continue to flood the market with new homes. “There is potential for panic,” said economist Susanna Garcia at Deutsche Bank in London.

Tens of thousands of Spanish construction workers are likely to lose jobs as residential construction slows. This could cut the country’s economic growth one full point in 2008 and end Spain’s long outperformance of Eurozone peers. Nearly a third of all concrete and asphalt covering Spain was laid in the last 14 years, as the former European economic backwater built homes and infrastructure and took per capita income to a level now close to the EU average.

The government’s national figures have not registered a

price fall yet, reporting a 5.8% increase in prices for the sec-ond quarter over 2Q06.

Prime Minister Jose Luis Rodriguez Zapatero, who faces an election next year, assures Spaniards and foreign holiday home owners that the property market will have a soft land-ing, unlike previous meltdowns in the 1990s and 1980s.

On Spain’s Mediterranean, holiday villas have mush-roomed as hundreds of thousands of Britons and Germans bought property in the sun on easy credit.

Over 80% of Spaniards’ wealth is tied up in property, the highest level in Europe. Only 40% of Spanish home owners have a mortgage but over 90% of the loans are on variable rates, making Spaniards more exposed to rising interest rates than other Europeans. pfe

German mortgage lender Interhyp lowers 2007 forecast, takes stock hit

The SDAX-traded share of Munich mortgage lender Inter-hyp shed 25% of its value after the company reduced its 2007 performance forecast to reflect sinking demand and falling in-terest rates. The shares of mortgage banks Aareal and Hypo Real Estate have also declined dramatically in the undertow of the liquidity crisis in the UK home loan bank Northern Rock.

Interhyp projected an operating result before tax and interest of €27m on lending volume of €5.7bn. This compared with its original forecast of €32m EBIT on at least €6bn in lending volume. The share price shed a quarter of its value to around €64.49 last week after the market was unnerved by a depositor

10 September 2007 Property Finance Europe 1�


Dorian Kelberg, CEO of the French Federation of Property and Land Companies (Fédération des Sociétés Immobilières et Foncières, FSIF)), told PFE in an inter-view that the initiative lacks legitimacy and a legal basis within European Union treaties.

Several associations have formed an EU REIT Coali-tion designed to lobby the European Commission, Euro-pean Parliament and member states for a EU REIT law. The group is due to launch its campaign at the Barcelona Meeting Point real estate conference in November, and in-cludes the European Landowners’ Organisation, the Eu-ropean Property Federation, RICS Europe, TEGoVA - the European Group of Valu-ers‘ Associations, and ULI Europe - the European organisation of the US-based Urban Land Institute. Elected chairman is Joaquim Ribeiro, Chief Financial Officer of Lisbon-based shopping centre devel-oper Sonae Sierra.

Kelberg, who has played a leading role in lobbying for REITs legislation in France, told PFE: “I am irritated to see initiatives like this which, in the context of Europe, is lighting a fire that will be difficult to extinguish af-terwards.” Some associations in the Coali-tion have never been involved in discussions about REITs in recent years, he notes. “In our view, only one organisation at European level is legitimate to act in this regard, and that is EPRA (European Public Real Estate Association).” Over the last few years, EPRA has also coordinated a tax transparency committee, best prac-tices of IAS norms and a think-tank for comparison and har-monisation of the different REITs’ status in Europe.

Kelberg adds there is no basis in current EU legisla-tion to achieve a single EU law for REITs across member states. “In European legislation we have the principle of subsidiarity. Tax matters, and especially fiscal rules relat-ing to property, do not form part of the competence of the European Commission to decide. This lies within the exclusive competence of the member states.

“With regard to REITs, you have today a number of re-gimes that are in effect based on the same system in terms of their fiscal rules but which take into account the unique characteristics and the fiscality of individual countries - Eng-lish, German, Italian, Belgian, Dutch, and French. Each one of these member states determines for its own territory the application and the details of the rules for these fiscal re-gimes. This is in other words the principle of subsidiarity.”

A further problem lies in the way in which the EU is managed. Even if property fiscal laws did not fall under the subsidiarity rule, it would be inappropriate, says Kelberg, to attempt to impose an EU-wide law. Only around 15 of the current 27 EU member states are interested in having a

REITs regime or have introduced it into legislation. “Who then are the counterparties in the other countries, who are going to determine voting in an unanimous form for the adoption of the law?” he says.

Where the EU does have responsibility is to verify REIT regimes in terms of community principles, he notes. It has the right to verify that any regime is not misused to provide hidden state fiscal support to the property sector. It also needs to determine if there is equivalent treatment for dif-ferent operators - freedom of competition in the market.

“We do not perceive any problems in these matters,” he says. “All European firms are at liberty to come and profit from the SIIC regime for real estate activities in France (Société d‘Investissements Immobiliers Cotée, REIT/SIIC). We currently have Belgian companies like Warehouse de Paw, Dutch like Corio, Eurocommercial Properties or Vastned Retail, and English firms like Ham-merson, together with French groups that have SIIC status and are quoted on the Paris stock exchange. This is not a system reserved for French firms, or a special group.”

He continues: “We are working between the countries on a harmonisation between different regimes within a consultation process coordinated by EPRA. About a year ago we started discussing in an infor-mal working group and now have a system to exchange experiences… Over the last two years other REIT regimes have been

created: the Italian, English and German, while the Span-ish are currently thinking about it and the Dutch are in the process of making some fundamental adjustments. We can help others countries like Portugal if it’s necessary for the leader of the negotiation to obtain a REIT regime. We can give documentation about the impact of our status to explain the positive effect on the economic system over the last years. The system we have in place via harmonisa-tion through dialogue between systems, is working… One should never mix up the doors and commit to going down the wrong route. We are on the good path.”

In any case, he adds, aspects important for real estate investors have to be discussed in a global context. “The discussion is in any case not only European, it is global because we are having the same talks at the level of the OECD where all European countries are taking part, plus the United States, Australia and Japan.” The aim is to allow an investor to work with an industrial strategy in the same manner, no matter which continent he is on.” pfe

French listed property association sees EU REIT Coalition objectives as unworkable, harmonisation via EU legislation as impossible The initiative planned by a number of European professional property associations to lobby for Euro-pean Union-wide legislation on Real Estate Investment Trusts is misguided and interferes with inten-se activity already taking place to achieve harmonisation of national regimes, says the chief executive of the French REITs association.

The Property Associations: French Federation of Property and Land Companies (FSIF)

French FSIF CEO Dorian Kelberg: “EU REIT Coalition lighting a fire that will be difficult to extinguish afterwards.”

This Property Finance Europe series looks at national and transnational real estate associations and the implications of their activities for European property investment.

in developing a residential complex of 1,800 homes on 380 ha in the north of Bucharest, local media report. The project is part of an approximately €2.5bn investment program for con-struction of 16,000 homes in Bucharest and surrounding area.

Copper Beech has already launched the first residential tranche, a 16-storey block of 156 flats on a 5,500 sq.m. site near Plumbui-ta Lake in the Colentina area of Bucharest. The Blue Tower project will be completed by mid-2009 with total built area of over 25,000 square metres. The average price per built-up sq.m. is from €1,400-1,580 and 110 flats have already been sold to in-dividuals, companies and international investment funds. Funds for the Colentina project have come from the company‘s own resources and a €14m credit from Alpha Bank.

Copper Beech has about 600 ha of land in the acquisition phase, and it expects its investments in residential development to reach €350m by end-2008. pfe

Australia’s Goodman Group in Czech, Polish logistics developments

The Australian-listed global industrial property group Good-man Group, formerly Macquarie Goodman, is developing a 21,494 sq.m. warehouse and 3,295 sq.m. office area in the Czech Republic in Jazlovice, greater Prague.

Logistics service provider Hellman-PKZ, which will lease 9,638 sq.m. of the facility, contacted Goodman for additional customised warehouse space near its current logistics facility in Jazlovice and Goodman proposed a total off-balance solution.


panic at Northern Rock. Interhyp founder and chairman, Rob-ert Haselsteiner commented: “Because of the US crisis, inves-tors are avoiding risky engagements and increasingly buying the best quality on the bond market, namely government bonds and covered bond Pfandbriefe… The strong demand for bonds in turn causes falling interest rates.”

In a related development reported separately, the number of German house building permits fell by 38% in the first half of 2007, including a halving of permits for single-family and two-family houses. In a response to the collapse of this market, Kampa, the country’s market-leading manufacturer of prefab-ricated houses, announced a layoff, blaming the abolition of a federal grant for house ownership. pfe

UK house prices negative in AugustUK house prices turned negative in August for the first time

since October 2005, according to a survey by the Royal Institution of Chartered Surveyors. They fell by 1.8% against August 2006.

Demand continued to weaken as rising interest rates weighed on affordability. The trend was most prevalent in the West Mid-lands, the Northwest and East Anglia. London is yet to be af-fected by credit market turmoil and remains the region with the strongest price growth in England.

New buyer enquiries declined for the ninth consecutive month and at the fastest pace since August 2004, with potential buy-ers remaining cautious as the rising interest rate impact filters through. Some 37% more Chartered Surveyors reported a fall than a rise in new buyer enquiries compared to 27% in July. New buyer enquiries fell across most regions as demand faltered.

New instructions to sell property fell for the third month in succession. Confidence in household finances remains strong, and vendors seem to be under little pressure to sell. The stock of unsold property on surveyor’s books declined by about 10% from year ago levels. pfe

DEBT FINANCING/BANKING

Spain’s Santander Central Hispano to sell properties to finance ABN buy

Santander Central Hispano, Spain’s largest bank, is expected to sell its real estate assets to help finance its €19.9bn takeover of Dutch bank ABN Amro.

It’s been estimated that a total price tag for SCH’s 44 build-ings throughout Spain – excluding the company headquarters in Santander in northern Spain – could fetch around €4bn, provid-ing the bank with around €1.4bn in capital gains.

The bank said it already has received some offers for its build-ings, and will be evaluating bids throughout the month. pfe

CENTRAL & EASTERN EUROPE

Cyprus-based Copper Beech in €2.5bn Romanian residential development

Copper Beech, an investment group headquartered in Cyprus and controlled by UK investors, plans to invest around €800m

On completion, the warehouse will be purchased by ALEF, the European logistics fund launched by Goodman in December 2006. Goodman will also develop two more 4,979 sq.m. and 6,877 sq.m. warehouse units next to Hellman-PKZ’s unit. The development allows for expansion options up to 21,494 sq.m. or for multi-tenant use.

Goodman said the Czech Republic is an attractive location for the warehouse sector due to good land availability, an ef-ficient road transport system and cost-effective labour, and as a distribution hub for neighbouring countries such as Germany, Italy and Slovakia.

Separately, the Eurobuild portal reported that Goodman Po-land is developing warehousing in Modlniczka outside Kraków, Poland. Goodman bought 31.5 ha of land 3 km from the local airport in Balice and is planning a 158,000 sq.m. complex, with work due to start at the beginning of 2008 on a first phase of 18,500 sq.m. This investment is put at €80m. The group is also currently developing warehousing for NYK Logistics in the Po-morska Special Economic Zone in _ysomice, near Toru_. pfe

ProLogis plans warehouses in Poland At its celebration of 10 years of European operations, ProLogis

announced it has plans to develop over 1 m sq.m. of warehouse space in Poland, Eurobuild portal reports. The company has a port-folio of 1,147 m sq.m. of completed warehouse space, 338,000 sq.m. under development and 1.106m sq.m. at the planning stage.

Among other projects, work is to start this year near Szc-zecin (40,000 sq.m. in Goleniów), a location hitherto lacking in warehousing. Also planned are warehousing developments in Warsaw, Janki, Nadarzyn, Sochaczew, Rawa Mazowiecka,

Wrze_nia, Piotrków Trybunalski, Stryków, B_dzin, Wroc_aw, Chorzów and Gda_sk. Other cites the developer is looking at include Rzeszów, Lublin and Bydgoszcz. ProLogis is also active in other CEE countries including the Czech Republic, Romania, Hungary and Slovakia. pfe

€1.8bn Romanian urban development Baneasa gets under way in Bucharest

Privately held Baneasa, owned by businessmen Gabriel Puiu Popoviciu and Radu Dimofte and the Agronomy University, plans to open its €150m plus Baneasa Shopping City in spring 2008.

The new mall is located in the Baneasa Commercial Area, part of the Baneasa Project. Construction started last year, and Bane-sa Developments said letting is 100% complete.

Baneasa Investments, the developer of the €1.8bn Baneasa mixed urban development project, is a partnership between the University of Agronomical Sciences and private investors.

Separately, Banesa managing partner Michael Lloyd told newspaper Ziarul Financiar the project will be profitable from next year thanks to overall development of the market and con-struction and rising rental prices. When the project is finished in five years, a profit of over €400m is projected.

Baneasa boosted investments in the project by 50% this year to €1.8bn, allowing 50% more housing units to be developed and Baneasa Business & Technology Park expanded to around 250,000 sq.m. of offices. Baneasa shareholders intend to de-velop real estate projects in other major cities of Romania in subsequent years, and are weighing expansion into other south-east European countries. pfe


Redevco Europe, EMCT in joint venture to invest €500m in Romanian malls

Holland’s Redevco Europe has set up a retail development joint venture with Romanian developer EMCT Romania, Ro-manian Retail Developments, which is due to begin operations at the end of this month. Redevco is the property investment and development company of the Dutch Brenninkmeijer fam-ily-owned C&A store chain, and one of the Netherlands’ big-gest property funds.

The new company plans to develop projects of some. 25,000-100,000 sq.m. GLA in some of Romania’s most important and attractive cities. Total investment over the next five years is ex-pected to exceed €500m. Redveco Central Europe Managing di-rector Jörg Bitzer noted Romania’s commercial property market is booming and the fact that Romania has the lowest per-capita shopping centre space in Europe shows its opportunities for high-quality mall development.

RRD will develop primarily for Redevco’s own property portfolio. Current projects, Sun Plaza Bucharest and Siret Plaza Galati will continue to be developed by EMCT Romania. pfe

Orco buys Budapest office for Endurance Fund, Polish residential

Orco Property Group’s Endurance Office and Retail Fund has acquired Arena Corner Office Centre in Budapest, Hun-gary from developer Raiffeisen Ingatlan for €63m. The build-ing, delivered in August, has a leasable area of 28,000 sq.m. and minimum rentable area of 140 sq.m.

The Endurance Real Estate Fund for Central Europe is a Luxembourg–regulated, closed–end umbrella fund with four sub-funds focused on office and retail, housing and hospitality.

Orco also received a building permit for a new residential investment project in Poland. The 18,535 sq.m. development of nine four-storey buildings is in the Targówek district of north-ern Warsaw, bordering Brodnowski Forest. The project is ex-pected to be completed in the 2009 third quarter.

Separately, brokerages Patria Finance and Atlantik FT said in notes to clients that Orco will discuss buying back up to 5% of its shares at its 5 October annual general meeting. Orco has said it bought 98,316 of its own shares in July and August for €10.2m. pfe

UK’S Parkridge in Polish shopping centre projects with over €1bn end value

Developer Parkridge Retail, part of UK private development company Partridge, has opened its flagship Focus Park project in Rybnik, the first of seven shopping-entertainment arcades it is building in Poland over the next few years.

The other projects include Focus Parks in Bydgoszcz (€60m), opening March 2008, Zielona Gora (€43m) due to open August 2008, Gliwice (€100m) projected to open in the 2010 first quar-ter, Jelnia Gora (€38m) to open in the 2009 first half, Bialystok (€27m) and MultiPark Swidnica.

Parkridge Retail said its development program makes Parkridge one of the largest shopping centre developers in Po-land, having delivered over 225,000 sq.m. of space, with an end value in excess of €1bn. pfe

Aldesa of Spain debuts in Poland with Krakow-Zablocie office project

Aldesa Poland, a subsidiary of the Spanish Aldesa group, is planning to build a modern office building in Krakow’s Zab-locie district. Diamante Plaza is the first such investment in this area and the company’s first project in Poland, the Construction Poland portal reports

Construction is due to begin this month. The company is cur-rently demolishing old warehouses on a plot near the campus of An-drzej Frycz Modrzewski Krakow University College, where it plans to build the office project for completion in the 2009 first quarter.

The company said Zablocie has a dearth of office build-ings, and it believes that the area will undergo dynamic growth over the next few years, giving rise to an entire office-residen-tial quarter. pfe

Bulgaria, Romania real estate prices seen falling in three years

The leading Bulgarian newspaper Standart forecasts that real estate prices in Bulgaria and Romania will start to fall in the next two to three years.

Quoting experts, Standart said the current property crisis set off by the sub-prime issue in the United States would inevitably makes it way to the Balkans. Adding to a possible looming price crisis, real estate brokers warn the present building boom in Bulgaria and Romania may see supply outpace demand if just already announced construction projects all go ahead. pfe


US developer Polimeni withdraws from Romania after losing UK funding

The booming Romanian property market has seen its first failure, as US commercial and retail developer Polimeni Interna-tional, which announced €300m in investments, has withdrawn from Romania after losing funding for the development of its first commercial projects in Satu Mare and Galati. newspaper Ziarul Financiar reported.

Polimeni’s pullout is not necessarily connected to the sub-prime crisis in the US because the funding was from a UK fi-nancial institution, according to Stefan Gheorghiu, former head of Austrian investment fund Europolis’ local office and hired by Polimeni to run its Romanian operations. He told Ziarul Finan-ciar Polimemi withdrew from Romania with around €0.5m in losses.

Polimeni, based in New York, is controlled by US business-man Vincent Polimeni and operates on the US and Polish mar-kets. The company has developed 13 projects in the US and four in Poland, where it holds another ten plots of land on which it intends to develop shopping centres with total invest-ments of over €150m. pfe

Turkish Opus building €700m residential complex in Romania

Turkish property development firm Opus Project & Devel-opment has started construction of a residential complex on a 100 ha site in Stefanestii de Jos, north of Bucharest, an invest-ment of some €700m.


The Cosmopolis project, to include 4,600 to 6,000 homes, is Opus’ first foreign investment, local media report. Founded only this year, Opus is controlled by the Turkish Buyukhanli family whose construction company is involved in several Turk-ish residential, retail and hotel projects.

Commenting on the impact of US sub-prime, Opus Presi-dent Ahmet Buyukhanli told Romanian newspaper Ziarul Fi-nanciar: “Within the context of the world crisis, the Romanian market remains the least affected due to the quality of mort-gage lending and the scale of the market. pfe

Bulgaria’s Prime Property sells Sofia block to Cyprus buyer

Real estate investment trust Prime Property has sold a residential development in Sofia to the local unit of Cyprus-registered Cleeves Sofia.

The price for the six-floor residential building with a built-up area of 2,071 sq m. was not disclosed.

Prime’s portfolio also includes a fully-tenanted office building in Sofia, a mixed-use scheme near the capital‘s central train station as well as a further three sites in Sofia earmarked for residential and

retail schemes. On the Black Sea coast, Prime is developing the Lighthouse holiday village and the Coral holiday complex. pfe

Sofia contemporary industrial space reaches 1,200,000 sq.m. - Colliers

There is now a total stock of 1,200,000 sq.m. of contem-porary owner-occupied and speculative industrial space in the area of the Bulgarian capital Sofia, according to new Colliers International Bulgaria research.

This figure includes warehouse, manufacturing and flex build-ings. Of the 1,200,000 sq.m. of total inventory, 160,000 sq.m. is speculative, with warehouses the overwhelming majority of that space. The historic lack of contemporary industrial space, say Colliers in their new Bulgaria Industrial Market Overview for the second half of 2007, has forced many occupiers to choose a build-to-suit solution.

Colliers also report that Plovdiv is becoming an attractive destination for industrial facilities because its strategic location is well-suited for nationwide distribution activities. Total stock there is of 450,000 sq.m. in owner-occupied and speculative industrial space.


Bulgaria’s third largest city, Varna, is also catching up, with a to-tal stock of 300,000 sq.m. in owner-occupied and speculative in-dustrial space. The new Logistics Park Varna will deliver an extra 80,000 sq.m. in speculative warehouse space over the next couple of years. Atanas Garov, Managing Director of Colliers Bulgaria, said, “European Union regulations and requirements are creating a need for modern industrial space in Bulgaria. We expect levels of demand in this market to increase steadily.” pfe

Bulgarian capital Sofia‘s real estate company to be offered for sale

Sofia’s municipal real estate company, Sofiiski Imoti, the Bulgarian capital’s biggest land owner, is to be put up for sale. The Sofia Municipal Privatisation Agency (SOAP) said a com-pany will be selected to assess Sofiiski Imoti‘s legal affairs and prepare a sell-off appraisal.

Three candidates have applied for the advisory contract: Kambourov&Partners; a consortium of Sabev&Partners, Legal Company AD and Yavlena Compact; and a tie-in comprising Georgiev Todorov and Nord Consulting.

The Municipality of Sofia is owner and/or principal of mul-tiple trade companies, land plots and commercial establishments independent of any state-owned or private entities. pfe

Cyprus Central Bank cuts permitted property loans margin to 60%

The Central Bank of Cyprus is aiming for a soft landing for the country’s overheated property market by imposing tougher limits on banks property loans advances, especially for holiday homes or speculative land purchases and loans directed at non-residents.

The Financial Mirror said the central bank has sent a new directive to all banks informing them that the new margin for loans to buy land, holiday homes or a second housing unit have been reduced from 70% to 60% of the value of the land or property, whichever is applicable. For first-time home buy-ers, the margin has been kept at 80%, but banks have been urged to refrain from providing loans on the 80% margin to non-residents. pfe

Slovenia to introduce valuation office to give property owners assessed values

Slovenian owners of real estate will be able to learn the value of their property in the second half of 2008, according to Ales Seliskar, head of the national Surveying and Mapping Author-ity, quoted by the Slovene Press Agency.

Values will be determined by a mass real estate valuation of-fice. The office, a part of the Surveying and Mapping Authority, has some 30 employees from numerous fields and is currently analysing the movements of real estate prices in the last three years, its head Dusan Mitrovic said.

Mitrovic believed that mass valuation will bring transparent data on the price of real estate and also enable a register of properties in Slovenia. The register is to be completed by the end of the year and become functional early next year. pfe

Slovenian housing apartment stock rises to 812,00 at end-2006

The number of apartment units in Slovenia at the end of 2006 stood at more than 812,000, while 21,000 were under con-struction, according to the national Statistics Office.

The average net floor area of an apartment stood at 76 sq.m., 1 sq.m. more than in 2002. The average net floor area of a newly constructed apartment unit was meanwhile 114 sq.m.

The biggest number of apartment units was completed in 2006 in central Slovenia (28%), while only 1% of all of the finished apartments were located in the Zasavje region. Half of the apartment units in Slovenia are located in urban areas and they have an average net floor area of 71 sq.m. Apartments in rural areas are meanwhile 10 sq.m. bigger on average. pfe

REPORTS/STUDIESStrong international interest in Nordic properties persists - Newsec

Strong interest in Nordic properties among international investors is persisting, according to the latest issue of a Nor-dic Report by the research group Newsec. “The strong Nordic economies have resulted in the rental markets really taking off now. And this is contributing to the attractiveness of the Nor-dic property market,” said Marie Bucht, Managing Director of Newsec Advice.

Sweden accounts for nearly half of the Nordic property market. The country’s strong growth, with successful export in-dustries and increased incomes, clearly carries more weight than rises in interest rates. “One factor affecting international inves-tors’ interest in Swedish properties is that the rental market has really taken off at last and become immensely strong,” Bucht said. “Vacancy rates are falling and rents are moving upwards, especially in the most attractive segments and locations.”

The picture is generally similar in the other Nordic prop-erty markets, said the report, prepared before the US sub-prime credit crunch affected markets. “After the first half of 2007, the transaction volume on the Swedish property market stands higher than at the same stage in the record year of 2006,” Bucht said, but indicated the rest of the year was difficult to judge. “The overall judgement of the Nordic Report is still that trans-action volumes will remain high for the whole of 2007.”

Finland’s property market is expected to have another strong year although the total transaction volume is unlikely to be reach the record turnover of €5.6bn in 2006. In 2007 the direct yield re-quirement in the most attractive locations is expected to stabilise at levels starting to approach those of the Swedish market.

The Norwegian economy is now close to maximum resource utilisation. Rents have risen markedly in the first half while va-cancy rates, especially for office, hotel and retail premises in Oslo, are very low and rents are reaching new record levels. Interest in Norwegian properties among international investors is rising steadily. However, yields are now expected to turn upwards dur-ing the last part of the year as a result of rises in interest rates.

Newsec said the Danish property market has taken off once again, especially as regards offices in Copenhagen. The transac-tion volume may not match last year’s record figure of €8.5bn, but several major property deals are expected to take place in Copenhagen during 2H07. pfe



Spanish developer Urbas has named José Luis Sevilla as its general director… Invesco Real Estate is reorganising its Paris bureau. Paul Joubert becomes Head of European Transactions as well as director of the Paris bureau. Tom Emson will be Head of Transactions-France. Guy-Young Shin joins the company as Research Analyst, leaving her position at Atisreal. Christopher Terestchenko joins as Investment Analyst, leaving his position at RCG… In Germany, Andreas Stücke has been appointed to serve a second term as secretary general of residen-tial property association Haus & Grund Deutschland. Stücke has served in this position since November 2003 and will continue there until October 2013…Segro has announced a number of changes to its management structure. In the UK, three business units are being introduced to replace the existing six regions. The three new units will be the Slough Trading Estate headed by Kevin O’Connor; London headed by Phil Redding; and The Regions headed by Gareth Osborn. Follow-ing the implementation of the new structure John Heawood will leaving Segro… A Group Business Development function is being established to focus on our major customers and market segments, and will build on areas of recent success in Corporate Partnering, Big Box Logistics and Data Centres. This new function will report to Chief Executive Ian Coull and will be headed by Walter Hens, cur-rently Managing Director, Continental Europe. SEGRO is recruiting a new COO for continental Europe… In Paris, Pierre Goffinon becomes deputy managing di-rector in charge of contracting and development at Silic. Sylvain Vene takes over as deputy managing director in charge of assets and investment… Pascal Maury is joining BNP Paribas Immobilier as director of human resources in France… Lars Heese has been promoted to the top management of retailing property asset manager Hahn Asset Management of Bergisch-Gladbach. Heese switches from Redevco Services Deutschland… Multi Development-C Italia, a unit of the Dutch based Multi, has strengthened its Italian team with the appointment of Giovanni Lazzari as commercial director. He moves over Progetti Commer-ciali, and will be responsible for overseeing commercial activities of the Italian property portfolio, which represents a combined investment value of €750m… The supervisory board of Eurosic had been reorganised. Hervé Denize, deputy managing director of Nexity, has been named chairman of the supervisory board. Daniel Karyotis, chairman of Banque Palatine, will take up the position as vice- chairman… Peeter Kinnunen started in Kungsleden’s Transaction & Analysis function on 1 September. He joins from property transaction consultant Newsec Investment. Earlier in the year, Marielle Almgren and Anna Alsborger were hired. Almgren is a real estate economics graduate of the Royal Institute of Technology, Stockholm. Alsborger joins Kungsleden from Catella Corporate Finance… Thierry Pozzo joins Mobilitis as deputy director general, responsible for developing consulting activities. He was previously director at DTZ and con-sultant at CBRE Bourdais… In London, Henderson Global Investors has ap-pointed Andrew Friend fund manager of its German Shopping Center Fund. He will move to Frankfurt and manage the fund from there starting in March 2008. Friend previously managed the Retail Warehouse Fund and achieved an average annual yield of 18,9% since launch… Grégoire Lecomte joins Savills in Paris as director of the industrial and logistics department. He leaves his position as regional director Keops Île-de-France Nord et Ouest…. Jennifer Almond joins King Sturge Paris as Senior Surveyor in the Expertise department, leaving Cushman & Wakefield… Olivia Josset joins Gemofis to lead the Île-de-France Ouest agency, replacing Fabrice Amic, who will be responsible for the Paris Rive Droite agency… Bruno Dufraisse joins Promeo as secretary general... Didier Ferracani Barranque, independent property advisor, takes over from Michel Renouard as president of the association Immobilier & perspectives. Ana de Brye, former legal director, will replace Didier Ferracani Barranque as vice-president... GE Real Estate France has appointed Marianna Nitsch to the post of legal director, France. Nitsch, who is Austrian by nationality but has English as a mother tongue, moves over from Biogen Idec, a world leader in biotechnology. Jones Lang LaSalle Asset Management in Germany has appointed Christine Wegner to the new service business area Retail Asset Management. She moves over from EPM Assetis. The company plans to in January to open a new office in Berlin focused on residential property. pfe

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