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weekly investor newsletter Volume 7 | Issue 222 | 29 August 2011

INSIDE ❱❱〉

Worsening economies boost property prospects – DTZ

PEPR logistics offers €97.5m equity to shave debt

€2bn German NPL sales to start this autumn

AXA REIM 1H deals top €2bn, eyes further €3bn

Spain’s Reyal Urbis in debt conversion as losses persist

German loan limit doubles to €200m - CBRE

ECE, Metro launch 38-asset German retail park jv

Investor demand could offset distressed asset supply – RICS

French CRE investment could reach €15bn

OUT 5 sepTember223 Property

Investor Europe

Canadian Dundee raises €328m debt for GermanyNew Canadian REIT Dundee International has part-financed its €736m portfolio acquisition of north German properties through a syndicate of banks that put up €328m debt finance. Its recent IPO provided €361m in equity. (See inside pages for full story)

Germany’s Deka to take more profits on propertyGermany’s largest property funds manager DekaBank is shifting strategy to more regularly review assets and make more sales. With €22bn AUM, it is targeting annual acquisitions of €2bn-€3bn, and sales of about €1bn. (See inside pages for full story)

CA Immo 1H earnings up 53% after Europolis buyVienna listed property firm CA Immo boosted first-half earnings 53% to €112.4m, more than tri-pling net income €14.4m, and expects a strong second half. The improvement is chiefly attributable to consolidation of asset manager Europolis, said CEO Bruno Ettenauer. (See inside pages for full story)

Israel’s Brack expands in Germany, eyes listingsTel-Aviv-listed Brack Capital Properties is broadening its scope in Germany, where it has started a €500m city quarter development in Düsseldorf, and plans a second listing on the Amsterdam or Frankfurt stock exchange. (See inside pages for full story)

MS swaps Orco funds into 18.7% group stakeMorgan Stanley Real Estate Investing is to become the largest shareholder in listed CEE devel-oper and investor Orco with an 18.7% stake, via a share swap for stakes in its funds. (See inside pages for full story)

Romania lures Chinese with €150m ChinatownSEE’s largest Chinatown complex has opened 16 km from Romanian capital Bucharest, following a €150m investment by 19 Chinese businessmen. Meanwhile, Romania’s government is seeking Chinese investors. (See inside pages for full story)

PIE EXPERT SEMINARS – SAVE THE DATES!Property Investor Europe is booking a number of expert seminars in second half 2011:

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Green Property Breakfast – 6 December, London.

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Germany’s Deka to take more profits on property Germany’s largest property funds manager DekaBank is shifting strategy to more regularly review assets and make more sales, says its property management head. With €22bn AUM, it is target-ing annual acquisitions of €2bn-€3bn, and sales of about €1bn.

Thomas Schmengler, head of Deka Immobilien, told the Börsen-Zeitung newspaper that the manager has, this year, al-ready purchased 13 properties worth €576m but sold only €69m of stock. By the end of this December, Deka, the funds manager of the German savings bank system, intends to invest another €500m-€1bn and sell between €350m and €500m.

“We want to manage our portfolio more actively and take profits when they appear,” Schmengler told the newspaper. Deka has been buying consistently in an anti-cyclical manner for the last three years, and has added some €6bn AUM since the col-lapse of Lehman Brothers in September 2008. But in the future it aims to take profits more quickly, he said.

At the end of June, Deka had €11.3bn of property AUM in its ImmobilienEuropa fund, €2.8bn in ImmobilienGlobal, €965m in its WestInvest ImmoValue, and nearly €5bn in WestInvest InterSelect – giving almost €2bn in liquid assets. The Deka brand funds took in €218m net in the first half, with its Westinvest family recording outflows of €35m. pie

Paris’s Richmond seeks €75m for new partnershipParis-based private property investment and asset manager Rich-mond has instructed investment advisers Winchester Partners to identify partners to raise capital of up to €75m for a new part-nership, France Value Plus, which will invest in medium-sized secondary office assets in the Paris region that require intensive asset management or redevelopment.

Active in the French market for over 10 years, Richmond re-cently sold two older assets, including a fully-let 11,000 sq.m.

office and industrial building in Buc, near Versailles, in addition to working with partners on a major retail park development to the west of Paris. “We see real opportunities emerging to acquire medium-sized offices at sensible prices with potential to add value,” said Richmond CEO and Founder Oliver Ash said. Funding of €50m to €75m is being sought, which would enable it to acquire up to €200m of assets.

“The opportunity is mainly Paris suburban because this is ne-glected at present,” Ash told PIE. “The idea is to put together a blended portfolio of assets, some in Paris but not necessarily CBD - a mixture of income-producing, partly vacant and vacant assets, all needing work, but not just physical work. There are other 'dis-tresses' such as planning irregularities, tenant renewals and nego-tiations, re-leasing, re-positioning, use of spare land for building and so on. Dealing with older assets can be very complex.”

One major aspect will be bringing older buildings up to envi-ronmental standards, and FVP will adhere to French Grenelle II ‘green’ building rules on renovation and development. “However there is a class of assets whose life will continue for the foreseea-ble future without conversion to a HQE building because it sim-ply isn't economically viable to do so,” said Ash. “FVP can add most value to a foreign investor who wants an Anglo-Saxon ap-proach together with real local experience in squeezing value out of difficult assets.” The firm has processed 250,000 sq.m. in the last 12 years, and produced three times partner capital in that period. pie

Israel’s Brack expands in Germany, plans more listingsTel-Aviv-listed Brack Capital Properties is broadening its scope in Germany, where it has started a €500m city quarter develop-ment in Düsseldorf, and plans a second listing on the Amster-dam or Frankfurt stock exchange, says Managing Director Ofir Rahamim.

Rahamim says the company plans to float in a few years’ time when reaches €200m-€250m market capitalisation. It is cur-rently €130m, with net asset value is at €154m. “We are still too

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small,” he told German property paper Immobilienzeitung. “We hope to be able to close the gap so that investors have a clearer picture of our company.”

Marketing has begun on 120,000 sq.m. office and residential space on a 14.5 ha plot of the former Hohenzollern railroad en-gine factory in Düsseldorf. “Düsseldorf ’s housing market has proven absolutely resilient during and after the financial crisis,” Rahamim told the paper. “The demographic development is positive, the economic structure very diversified and the city is debt-free.” The plot’s original zoning plan provided for 80% of-fices but BCP succeeded in altering this to half offices and half residential. “Apartments are more valuable than offices these days,” said Rahamim. “A sale provides for higher prices per sq.m., demand for housing is high and buyers are ready to put a lot of equity into a purchase.” BCP will take 10 years to develop the 1,000 new apartments and 130,000 sq.m. office space and plans to start construction in 2012.

BCP’s target locations for the next few years are Munich, Hamburg and Cologne/Bonn. It sees good opportunities in large retail assets and rental apartments. “Over the next 18 months, we will see a lot of assets for sale in Germany, as financings from 2004 to 2007 come to term and foreign banks will want to take the opportunity to lighten their balance sheets,” said Rahamim. The company has been an active investor in Germany for six years, reaching €700m AUM. Earlier this year it acquired a €200m retail and a €73m housing portfolio in Leipzig. It also holds a 5,500-unit housing portfolio spread throughout North

Rhine-Westphalia. Parent company Brack Capital Group, co-founded in 1992 by Shimon Weintraub, is also active in US and UK real estate. pie

PIE COMMENT: A rare communication from this company that usually prefers to work ‘below the radar.’ But it is one of many Israeli institutions allocation serious capital to Germany and core to core-plus northern European commercial and residential property assets.

Canadian Dundee raises €328m debt for German assetsNew Canadian REIT Dundee International has part-financed its €736m portfolio acquisition of north German properties through a syndicate of banks that have put up about €328m in debt finance, while €361m in equity derived from proceeds of its recent IPO.

A further €58.4m flowed from the issue and sale of exchange-able notes by a Dundee International REIT subsidiary. The banks, which included Société Générale, DekaBank, Coreal-Credit Bank and Deutsche Postbank, posted the funding for more than 290 assets bought from Luxembourg-based Lorac In-vestment Management, controlled by Lone Star Funds and mostly let to Deutsche Post. The latter in April 2008 paid Deut-sche Post World Net €1bn for a portfolio of 1,200 properties.

Sponsorship opportunities available: contact [email protected]

Registration is open:contact [email protected]

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Toronto-based Dundee Realty Corporation, part of the C$65bn AUM Dundee Corporation, made the IPO of Dundee Interna-tional REIT in June solely for the German acquisition, and is the REIT’s asset manager. Completed in early August, it raised C$410m in Toronto, some two-thirds in units and the remainder from debentures. The investment and financing were simultane-ous with the REIT IPO, the largest in Canada for two years.

Dundee International REIT is an open-ended real estate in-vestment trust that focuses outside Canada and has “strong am-bitions in Europe”. Real estate in France and the UK are also in its sights. The deal, “proves once again the strong interest of in-ternational investors for the German real estate market,” Société Générale said in a statement. pie

PIE COMMENT: This remains one of the most interesting stories of the year. In reality, quite a coherent move, using a REIT vehicle for a tax efficient stock market capital raise, giving not only the fiscal effi-ciency but flexibility in the group equity allocation to the vehicle.

Morgan Stanley takes 18.7% stake in OrcoMorgan Stanley Real Estate Investing is to become the largest shareholder in listed CEE developer and investor Orco with an 18.7% stake, via a share swap for stakes in its funds. Orco also plans to sell its Russian assets, and is selling a plot on its Prague Bubny development site to a 60-40 mall joint venture between Unibal-Rodamco and Orco.

Orco said funds advised by MSREI have agreed Orco will is-sue 3m ordinary shares in a private placement, to be paid with its stakes in Orco Germany and Endurance Real Estate Fund. Fol-lowing completion - and subject to regulatory and internal ap-provals - Orco will boost its stake in Orco Germany to 87.3% and in the two resi and office sub-funds of Endurance Real Es-tate Fund to 14.8 % and 27 % respectively.

Orco CEO Jean-Francois Ott said in the statement MSREI’s experience plus Orco's CEE expertise will provide long term benefit to shareholders, bondholders and stakeholders. Orco is reinforcing its control over an Orco Germany portfolio focused on Berlin investment properties as part of its strategy of concen-trating on its core business in the four cities of Berlin, Prague, Warsaw and Budapest and simplifying the group's structure. “The contemplated sales of our assets in Russia are the next steps of this strategy," Ott said.

Separately, Orco signed an agreement for the sale of a 3.7 ha. plot on its downtown Bubny site in Prague to a joint venture with Unibail Rodamco, in which the latter will own at least 60%. Orco has for some time had ambitious plans for a major mixed urban project on the 270,000 sq.m. site on a former rail-way station. Luxembourg-based Orco, listed on Euronext Paris and in Prague, Warsaw and Budapest, has continued to restruc-ture after emerging from court protection from creditors in May 2010. pie

PIE COMMENT: MS is positioning itself to quietly exit Orco, which it can only do, at the right moment, using the liquidity in the group shares. The relationship with Orco founder and CEO Jean-Francois Ott has not been cordial in the recent past as the group only just squeezed past a collapse.

€150m Chinatown opens in Romania as govt seeks Chi-nese investorsThe largest Chinatown complex in SEE opened this summer in Afumati, 16 km from the Romanian capital of Bucharest, fol-lowing an investment by 19 Chinese businessmen of around €150m. Meanwhile, the Romanian government is itself seeking Chinese investors.

The China Town complex covers 40 ha. and hosts 3,275 com-mercial areas, 1,380 logistic warehouses, cafes, restaurants, casi-nos, banks and kindergartens, the Romania-insider portal re-ported. Romanian prime minister Emil Boc said at the opening he expects more Chinese investments in Romania, given the new law for public–private investments. A second step for the China-town project, expected to begin by the year-end, is to design and develop a traditional Chinese-like environment and metropoli-tan shopping centre. The aim is to create a multicultural shop-ping area within the next 10 years.

China Town management are Pan Jidong, a Chinese business-man who has been doing business in Romania since 1992, Alex-andru Ioan – Wang Yan, a Romanian businessman of Chinese nationality, and Shengfei Weng. Chinatown Romania Group was founded in March 2010 by 19 Chinese businessmen.

Separately, the portal reported Romanian Transport Minister Anca Boagiu presented a 25 km. private metro project to Chi-nese investors on an official visit to China this month, to cross

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Bucharest from west to east with 30 stations for an estimated investment of around €2bn by the private partner in the envis-aged PPP. Bucharest metro operator Metrorex would provide operating rights for 30 years for the line, which would be Bucha-rest’s seventh. pie

Worsening economies boost property prospects – DTZPrime European real estate is relatively more attractive as an in-vestment despite the worsening economic outlook, says realtor DTZ. Compressed government bond yields in core markets and a stable property outlook have boosted the asset class value in many markets.

Although the poorer economic outlook is expected to dampen capital growth and moderate total returns, restricted supply in prime markets is expected to keep rents broadly stable, the firm says in its Foresight – European Fair Value Q2 report. DTZ’s Fair Value Index, assessing the relative attractiveness of current pricing in global property markets, categorises markets from ‘hot’ (underpriced) to ‘cold’ (overpriced). Compression of gov-ernment bond yields has helped cut the relative return and al-though DTZ has upgraded Berlin and Frankfurt office to ‘warm’ from ‘cold’, in the latest report the CEE dominates the ‘hot’ cat-egory - notably Moscow offices and retail and Bucharest and Prague retail.

The number of European cold markets fell to 29 in 2Q11 from 46 in 1Q11 while hot markets rose to 11 from 10. “Our outlook for property returns in European markets remains large-ly unchanged and is characterised by solid income returns but weak rental growth in most markets. However, these income re-turns look increasingly attractive in the current climate of in-creased equity market volatility and very low fixed-income re-turns,” it said. pie

Austrian CA Immo 1H earnings up 53% after Europolis buyVienna listed property firm CA Immo boosted first-half earnings 53% to €112.4m, more than tripling net income €14.4m, and expects a strong second half. The improvement is chiefly attrib-utable to consolidation of asset manager Europolis, said CEO Bruno Ettenauer.

CA Immo bought Europolis, which has expanded CA Immo’s coverage in east and south-east Europe, for €272m from Austri-an cooperative banking group VBAG at the beginning of the year, taking group AUM up to €5.2bn.

“In spite of the volatile market climate, the acquisition of Eu-ropolis early in the year has enabled CA Immo group to increase its earnings considerably for the first six months,” said Ettenauer. “In the second half of the year, the emphasis will be on conclud-ing additional real estate sales in Germany and eastern Europe.” East and south-east Europe now accounts for 58% of total assets, followed by Germany with 28% and Austria with 14%.

First half rental income rose 54% to €127.5m, and net asset value per share rose 2.1% to €19.09. Investment property sales

produced revenue of €35.7m and a loss of €1.4m. and CA Immo expects to reach its sales target of €300m-€350m for the full year. However, the cost of financing the Europolis buy rose to €80m from €57.9m, producing a negative financial result at €74.9m, cutting the company’s equity ratio to 31% from 39%. pie

Swiss Allreal posts 6.7% rise in 1H profitZurich-based listed property company Allreal posted a 6.7% rise in net profit to CHF66.5m (€58m) while net asset value per share after taxes remained stable at CHF114.

It said first-half sales rose by 24% to CHF380.9m (€333m) and expects operating results for the whole year to match 2010’s record despite a 5.7% first half drop. Allreal holds a portfolio of 47 commercial and 19 residential properties valued at CHF2.8bn (€2.4bn), up from CHF2.6bn (€2.3bn) at the end of last year. Rental income grew by 0.3%. The vacancy rate fell by 0.2% to 4.6% and Allreal expects to lower it even further this year. Rent-al net yield stayed stable at 5.1%.

Development projects represent a potential investment vol-ume above CHF1bn (€874m), and the backlog of secured orders amounted to CHF1.9bn (€1.7bn) at end June, Allreal said. The volume of projects completed in 1H11 climbed 33.6% to CHF347.8m, when the firm sold 106 residential units, and the mixed-use Markthalle in Basel to Credit Suisse.

The average interest rate on Allreal’s financial liabilities is 2.52% with a duration of 43 months. It issued a 2.5% bond of CHF150m (€131m) in May in order to acquire development land and finance its projects. pie

French budget trims Scellier, ends capital gains reliefThe French government has announced a €12bn austerity budg-et that, as expected, includes a further cut in the Scellier support scheme for investment in buy-to-let housing and an unexpected abolition of capital gains tax relief on rented property and second homes.

Prime Minister François Fillon told the National Assembly parliament the measures should enable France to cut its public deficit to 4.5% of GDP next year and 3% in 2013, despite slow-er growth. It also cut its GDP growth forecast to 1.75% both this year and next.

For purchases made in 2012, the Scellier scheme will now only allow individuals to offset 16% of the acquisition cost of a new French rental property against income tax. The tax offset had already been set to fall to 18% in 2012, after being cut to 22.5% in 2011 from 25% in 2010. These rates only apply to properties meeting the BBC (Bâtiment Basse Consommation) energy effi-ciency standard, with much lower rates applying to non-BBC properties. And sources close to the government said the latest cut does not rule out a further reform of the Scellier scheme when the full 2012 budget is presented next month.

Scellier has given a major boost to housebuilding in recent years and the reduction is expected to weigh on new home sales.


Marc Pigeon, president of the FPI property developers federa-tion, predicted that home sales will fall to 80,000 units, which represents 40,000 fewer new homes than in 2010, and the loss of 60,000 jobs and €2bn of VAT revenues. "With this year's cut in the Scellier scheme, we will already sell 20,000 fewer homes, which means the destruction of 30,000 construction jobs and the loss of €1bn VAT revenues," he said.

Taxable capital gains on rented property and second homes is cut by 10% a year after five years of ownership, leading to full ex-emption after 15 years of ownership. In future tax will be levied on all gains above inflation. And while the capital gains tax rate re-mains at 19%, the additional social charges on such gains will rise from 12.3% to 13.5%, taking the total charge to 32.5%. The capital gains tax change is expected to yield the government €2.2bn in 2012, making it the largest component of the budget package. FPI said the new system will worry many private investors. pie

Spain’s Reyal Urbis in debt conversion as losses persist Amid continued market woes, Madrid-based listed real estate firm Reyal Urbis announced €161m net losses for 1H11 which, while 21% below 2H10, obliged it to carry out a €6.8m debt-to-equity conversion.

Under Spanish law, firms must file for bankruptcy if its asset value falls below half that of its capital stock value. Reyal Urbis’s value is currently negative €4.9m, with a capital stock of €2.9m. The firm’s debt is currently €3.85bn, up 1.5% on its end-2010 level, while its share price has tumbled 16% this year and is at an historic low of €0.68.

According to a statement to Spain’s stock market supervisory body, (CNMV), the board has converted €6.8m of syndicated debt into participative credit. Reyal Urbis this month announced the sale, for €25m, of the Rafael Casanova Hotel in central Bar-celona to H10, a Barcelona-based hotel operator, as part of its asset divestment strategy. pie

Deutsche EuroShop cuts fore-cast due to tax ruling Hamburg’s listed retail mall investor Deutsche EuroShop has re-duced its expectations of funds from operations by €0.08 per share to €1.40-€1.44 following a verdict by the German Federal Fiscal Court, and may relocate its HQ as a result of the decision.

If the ruling stands, the company may lose its extended trade tax deduction status and would have to provide €6.1m more for 2011 and also pay out for preceding years. The court (BFH) ruled that a limited company in a general partnership is not en-titled to extended trade tax deduction relating to participation in an asset-managing real estate partnership.

DES said it may move the headquarters out of Hamburg if the ruling stands. One-off tax provisions of €85m-€90m could be reduced by up to €50m if the group moves its headquarters to another German location. For now, the firm maintained its FFO guidance for 2012 at €1.60-€1.64, and all other key perform-ance indicator forecasts for this year. pie

Spain halves homebuyer tax to boost sales, help banksSpain’s government has announced that VAT on the new home purchases will be halved to 4% by end -December as an incentive to homebuyers and in an attempt to cut the 700,000 housing overhang and relieve banks of their €20bn real estate portfolio.

The measure would mean a saving of €8,000 on a €200,000 property. The government announced in July that general elec-tions, originally slated for March 2012, will be brought forward to November to speed up formation of a new legislature and face Spain’s worsening economic woes. The right-of-centre People’s Party, tipped to win after landslide success in regional elections in May, has pledged to maintain tax breaks beyond this year if it wins. The country’s listed residential real estate firms posted share price gains on the back of the news, with Nyesa up 8.33% and Quabit’s up 6.67%. pie

Warsaw’s GTC in 1H €38m net loss on write-offsWarsaw-listed developer Globe Trade Centre reported a first-half net loss of €38m versus 1H10 profit of €2.8m, mainly reflecting write-offs of investment properties. Chairman Eli Alroy said the euro debt crisis and its contagion to European financial markets has delayed economic recovery, particularly in southeastern Europe

This has affected SEE retail via decreased spending power and pressure on shopping-centre rents, resulting in a decrease in asset values. Nevertheless, GTC’s fundamentals are sound, especially with 50% of the standing portfolio operating in Poland, he said. “We believe that there is a substantial upside in our properties in SEE, which will materialise once the real estate cycle comes back on a growth path,” added CFO Erez Boniel.

GTC’s first-half profit from operations was €47m, and rental revenues were up 5% at €50m. The impairment loss was €38m. Meanwhile, GTC has completed the sale of its 50% stake in Galeria Mokotów to co-owner Unibail Rodamco based on an asset value of €475m, raising about €110m of free cash. It also acquired land for a 30,000 sq.m. new office building in Bucha-rest in a 50-50 partnership with Ana Group. GTC is 27.14% owned by Amsterdam and Tel Aviv listed Kardan’s GTC Real Estate Holding, and operates across CEE. pie

German alstria raises FFO guidance after €89m purchaseHamburg-based alstria office REIT has raised its full-year forecast of funds from operations to €34m from €32m after closing an €89m deal on Dutch REIT VastNed’s German portfolio this week.

Alstria expects total rental income to increase to €89m from €87m for the full year. “The rapid investment of the proceeds from the recent capital increase immediately translates into high-er revenues and FFO,” said CEO Olivier Elamine. “The increase is not only true on absolute numbers, but also translates into a


Property Investor Europe proudly presents the latest in its expert seminar series:

Italian Property Briefi ngCan foreign investors fi nd value in Italian property after fund,

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ALDO MAZZOCCOManaging Director, Beni Stabili, RomeBeni Stabili, Italy’s largest listed property company, owns €4.3bn and manages €5.9bn AUM (including funds), mainly offi ce in northern and central Italy. Sr. Mazzocco has been CEO since 2001 and is also deputy general manager of French REIT Fonciere des Régions, which bought a majority stake in 2007 in a share swap with owner Leonardo Del Vecchio. Sr. Mazzocco is newly appointed president of Italy’s main property association Assoimmobiliare. He is also a board member of EPRA, a member of RICS and the scientifi c committee of EIRE.

MASSIMILIANO ROSSIGeneral Manager, ING Real Estate Finance, MilanING Real Estate Finance is an international commercial real estate lender and part of Dutch ING Group. Sr. Rossi is the GM of the Ital-ian branch, which he set up in 2005. Since then, his team has arranged 40 fi nancings and built an investment loan portfolio of €2bn. He is also responsible for several international key clients and in charge of the company’s special projects department. He previ-ously worked for Swiss Bank Corporation, Salomon Brothers International and the EBRD.

IVANO ILARDO Chief Executive Offi cer, BNP Paribas Real Estate Investment Management, MilanBNP Paribas REIM has close to €11bn of property assets under management in Europe. Sr. Ilardo was named CEO in Italy in April. Before joining the company, he was head of fund management at Generali Group. In 1998, he joined the Corporate Finance and Real Estate department of SDA Bocconi business school and is also involved in research projects and teaching. He is a Fellow of RICS and member of the IPD Global PPFI Consultative Group.

OLAF SCHMIDTHead EMEA and Asia Real Estate Practice, DLA Piper, MilanWith 4,200 lawyers in 30 countries and 76 offi ces throughout Asia, Australia, Europe, Middle East and the US, DLA Piper is one of the largest providers of legal services in the world. Hr. Schmidt is head of the EMEA and Asia Pacifi c Real Estate Practice, representing in-ternational investors, funds and asset managers with a focus on structuring and implementation of property transactions. He previ-ously ran DLA Piper’s Italian Real Estate Practice and was elected Italian Real Estate Lawyer of the Year in 2008.

ANTONIO CHIARELLOChief Executive Offi cer & Partner, Antirion SGR, MilanAntirion SGR is a new Italian fund management fi rm which promotes, sets up and manages third-party real estate funds. Believing in opportunities beyond offi ces in Milan and shops in Rome, it is currently launching the fi rst mixed seeded real estate/cash value-added fund targeting Sardinian property. Prior to joining Antirion, Sr. Chiarello was general manager of UBS Alternative Investments (Italy) SGR and head of institutional & alternative business at UBS Global Asset Management.

LISETTE VAN DOORNCountry Manager, ING Real Estate Investment Management, MilanOne of the world’s leading real estate investment managers, ING REIM manages a portfolio of €71.1bn. Ms. van Doorn rejoined ING REIM Europe in December 2009 and has 11 years’ experience in the industry. She is responsible for ING REIM Italy’s €1.2bn fund and asset management business, managing the ING Retail Property Partnership Southern Europe and ING Real Estate Italian Retail Fund. She previously held the position of MD research & strategy at ING REIM Europe and was for several years CEO of INREV.

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higher FFO per share,” which will reach €0.47, up 6%. The company expects revenues to stay stable. VastNed’s German portfolio comprises five assets in Frankfurt and Düsseldorf with total rentable space of 42,700 sq.m. pie

PEPR logistics offers €97.5m equity to shave debtAmsterdam-listed Prologis European Properties, the Luxem-bourg-based closed-end property fund, is offering existing unit holders €97.5m of new ordinary units in a further step to de-le-ver and strengthen its balance sheet.

PEPR, one of Europe’s largest owners of distribution and lo-gistics space, is offering 15.7m shares at €6.20 per unit on a pro-rata basis to existing unit holders with stakes of over 1%. The price is equal to the recent tender offer price made by the US-based Prologis group in its bid for rol, which succeeded in May. The figure is a 10.1% premium on the NAV per unit at end-une, PEPR said in a statement. Trading opened at €5.70 on Wednes-day, when the offer was announced.

The Prologis offer will reduce PEPR’s loan-to-value ratio to 47.8% from 51.1% based on end-June figures and PEPR says that for the foreseeable future it will continue to retain distribut-able cash flow to further reduce debt. In the first half PEPR gen-erated €33.6m of distributable cash flow for ordinary unit hold-ers. PEPR’s first half results showed outstanding debt of almost €1.5bn, although that had been reduced by €55.6m mainly due to the early repayment of a €51m loan.

“Over the last three years we have taken numerous steps to de-lever the business including selling assets issuing preferred equity and retaining distributable cash flow. This offering will enable ust o further strengthen our balance sheet in line with our stated objective to return to an investment grade credit rating,” said PEPR CEO Peter Cassells. The fund holds 232 buildings worth €2.8bn and covering 4.9m sq m in 11 European countries. The portfolio has 93.2% occupancy. pie

Warsaw’s Plaza says steep 1H revenue rise encouragingPolish developer Plaza Centers increased first half revenues to €28.6m from €9.5m in 1H10, while assets have grown to €1.48bn (€1.43bn). The improved position was helped by in-creased income from property in the CEE and US and revalua-tion of investment property.

“We have seen encouraging signs in the investment market with transactional activity higher, particularly in the last six months, showing evidence of yield improvement,” said Plaza Centers President and CEO Ran Shtarkman. The company says it is in a robust position to continue acquisition and develop-ment programmes and had €750m working capital, up from €713m at end 2010. Gearing is stable at 57% of total assets.

Plaza has 36 assets including 30 projects under development in CEE and India as well as investments in the US and invested €39m in the first half. It financed development of its tenth project in Poland, the 40,000 sq.m. Torun Plaza, in the country’s

north, scheduled for completion before end-2011 and 78% pre-let. The company also completed its first scheme in Serbia and expects to complete developments in India by the year end.

In July, Plaza’s joint US subsidiary EPN completed an off-market takeover bid for outstanding units in Australian listed trust EDT Retail Trust which has a US$1.4bn portfolio and will now be delisted from the Australian stock exchange.

Plaza is dual-listed on the London and Warsaw stock exchang-es, is an indirect subsidiary of Israeli public company Elbit Imag-ing, and is a member of the Europe Israel Group, controlled by founder Mordechay Zisser. pie

New hotel concepts pushing hospitality chains to innovateDespite the expansion of international hotel brands, individual hospitality real estate concepts are operating successfully, draw-ing on unique interior design and local products to assert their market position – particularly in smaller cities, say hotelforum organisers.

Michael Widmann, co-Initiator of the hotelforum conference that takes place on the sidelines of Expo Real in early October, noted that between 1950 and 2000 international brand hotel concepts constantly expanded their presence in European cities. “In recent years we see a trend towards more individualized con-cepts.” Independent, very individual hotel concepts like Gast-werk in Hamburg, Cortiina in Munich or Vienna’s Hollmann Beletage have gained a strong market position, added Widmann, MD of Austrian PKF hotelexperts.

International operating hotel companies have recognised this trend and opened more design-oriented brands – with the result that successful individual concepts are starting to form small group operations by opening additional locations. Examples are 25hours, citizenM and wombat’s. Parallel to this is the expansion of the Motel One hotel group across Europe.

Hotelforum, a European hospitality conference for hotel and real estate professionals, takes place for the ninth time on 6 Oc-tober at hotel Bayerischer Hof in Munich. pie

ECE, Metro launch 38-asset German retail park jv German retailer Metro Group’s property unit is forming an joint venture with Hamburg-based shopping centre developer and op-erator ECE to manage 38 retail parks throughout Germany.

The new venture, Metro-ECE Centermanagement, will com-bine the asset management operations of Metro Properties with centre management, marketing and leasing expertise of ECE, the companies said in a statement. Metro Properties, until recently Metro Asset Management, will contribute 36 retail parks to MEC and ECE will provide two. However, ECE CEO Alexan-der Otto said that MEC is looking forward, “to opportunities to take over further centre management duties and refurbishment projects”. The proposed merger is subject to antitrust approval which is expected in September and MEC will commence busi-ness on 1 October.


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SILVIO ESTIENNEPresident & CEO, ING Real Estate Investment Management, ParisOne of the world’s leading real estate investment managers, ING REIM manages a portfolio of E71.1bn. Prior to joining ING REIM in July 2008 as MD of the French offi ce, M. Estienne was General Secretary of Promogim, a French developer of residential properties. He was CFO and COO with responsibility for strategy and fi nance in various real estate fi rms. Engineer of the Ecole Centrale de Lyon, he holds an MBA of the HEC School of Management, Paris and an MBA from the Sloan Fellows Program of the Massachusetts Institute of Technology, USA.

ROLAND FuCHSGeneral Director, Head of Paris Branch, Landesbank Hessen-Thüringen (Helaba), Paris With a workforce of 6,000 and total assets of €180bn, Helaba is one of Germany’s leading landesbanks – based in Frankfurt and Er-furt. It maintains a full branch in Paris since 2009 but has been serving French companies, banks and insurers since 1995. Hr. Fuchs has almost 20 years’ experience in pan-European RE fi nance. He joined from WestImmo where he was head of origination for conti-nental Europe, and global head of international credit. He now heads the Paris branch and its real estate activities.

DIANE BECKERPartner, Head of International Investment, Catella Property France, ParisCatella Property Group is a leading European real estate transactions advisor with operations in 14 countries which has advised on E50bn of property deals in the past fi ve years. Ms. Becker has headed International Investment since 2007 and been partner at Catella France since 2002. She previously worked as Senior Advisor in International Investment at Catella UK and prior to that at Atis Real Auguste Thouard in Paris. She holds a Master of Economy and Politics from Ruhr University, Bochum, Germany.

RAPHAEL TREGuIERManaging Director, Cegereal, ParisMajority owned by Germany’s Commerz Real, a unit of Commerzbank, Cegereal is a French core offi ce REIT/SIIC listed on Euronext NYSE with a portfolio worth some E861m and external leverage up to 50%. In charge of general management, M. Treguier’s main mis-sion is to develop and expand the portfolio. He has 12 years’ experience in real estate and corporate fi nance, previously working in the acquisition team at GE Real Estate. He holds a master’s degree in management from the Paris Dauphine University.

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Metro Group is present in 688 locations in 30 countries and Metro Properties, which generated €698m EBIT in 2010, is re-sponsible for the retailer’s property management, development and construction in Europe and Asia. Outside Germany, Metro Properties also acts as facility manager for other companies, par-ticularly in Eastern Europe.

ECE also launched its first pan-European real estate fund in July, designed to target shopping centres in Germany and central Europe and expected to have a gross asset value of €2bn once fully invested, the fund was launched through newly established fund management company ECE Real Estate Partners. pie

Investor demand could offset distressed asset supply – RICSProperty coming to market from forced sales is set to increase worldwide according to the UK’s Royal Institution of Chartered Surveyors, but demand for these assets from specialist investors has also grown and in some places exceeds supply.

Ireland, Spain and Italy are expecting the most foreclosures, while Brazil, Malaysia and Russia will see the least according to the RICS Global Distressed Property Monitor. Distressed prop-erty coming to market is expected to increase in 15 of the 25 countries surveyed during 3Q11. All but four territories report-ed rising interest from specialist funds and demand could exceed supply in 11 of the countries surveyed, including Germany, Po-land and Russia. However supply will still be greater than de-mand in Spain, Portugal, Italy and the UK, RICS says.

The increase in investor appetite may reflect “a measure of con-fidence in the outlook for the real estate sector despite the vola-tile economic context,” said RICS Chief Economist Simon Rubinsohn, although he adds the results show generally negative numbers, “especially for those markets where the economic pain is most intense.” pie

French CRE investment could reach €15bn – BNP REFrench commercial real estate investment could reach €14bn-€15bn this year, returning to its long-term average, BNP Paribas Real Estate says. Investment rebounded 42% to €12.1bn last year after a sharp contraction in 2009.

But activity is still likely to be constrained by investors' focus on core assets. "Although capital is returning to the market, in the vast majority of cases investors are looking for secure assets, leading to the creation of a two-speed market," BNP RE said in a study.

French investment rose 37% to €5.2bn in the first half. Office accounted for 65% of the total, and the sector is expected to continue attracting investors in the second half as a result of the relative security of office assets and the recent increased volatility of financial markets. Competition for prime Paris CBD office assets has forced yields down to around 4.7%, which is likely to prove a low point for the market, with investors now starting to look instead for quality assets outside the CBD or in the near suburbs, BNP RE said.

Ile-de-France office take-up is forecast to rise to 2.2m-2.4m sq.m. this year from 2.15m sq.m. last year, as the creation of around 40,000 new jobs boosts demand. The vacancy rate could therefore decline to 7% by end-year from 7.3% currently. In the first half take-up rose 4% to 1.14m sq.m. but lettings fell in Paris itself as users were attracted by the lower rents available in the inner suburbs. Take-up in the La Défense business district rose 6% to 59,000 sq.m. but remained well below the 10-year average of 95,000 sq.m. pie

UK’s SEGRO cuts vacancies, eyes Europe expansionUK property company SEGRO posted a 6.1% drop in first-half net rents to £135.5m and a slight increase in NAV per share. But CEO David Sleath told PIE that key to performance is the im-proved vacancy rate

“Continental Europe is a key part of the portfolio that will grow and which has major opportunities for the company,” said Sleath, who in spring took over as head of the company from long-tiime CEO Ian Coull. SEGRO had 38 lettings on the Eu-ropean mainland during 1H11, with strong demand around key cities in Germany and France and across Poland. The rate of re-tention among tenants with lease breaks or expiries rose to 83% from 66% at end-2010. Portfolio vacancies dropped to 11.4% and to 8% from 8.9% in continental Europe, making up 30% of the portfolio.

In Germany, 29% of SEGRO’s continental portfolio, the fo-cus has been on re-letting space returned after retailer Karstadt Quelle’s insolvency. Germany’s stronger economy boosted occu-pier demand and vacancies are now 8.1%, down from 11.5%. In France, the portfolio’s 80% bias towards Ile de France region around Paris helped move the vacancy rate to 3.1% from 6.7% at end- 2010. Occupier demand in Poland, is “resilient” Sleath said. However the logistics market is competitive and the va-cancy rate increased to 3.4% from 2.6%.

SEGRO’s priorities in continental Europe remain operational performance and increasing the portfolio in key locations. It has a continental development pipeline of nearly 1.5m sq.m. of which only 170,113 sq.m. under way. However, SEGRO Conti-nental Europe MD Andrew Gulliford said that despite the exist-ing development potential the firm is keen to build positions in Paris, Hamburg and Rhine Rhur and may make further acquisi-tions. pie

€2bn German NPL sales to start this autumn Some €2bn German non-performing property loans should be sold this year and at least three larger deals are in the pipeline which will “hit the market by mid- or end-September,” says Jörg Keibel, president of the German Association for Credit Acquisi-tion and Servicing (BKS).

Since the start of the financial crisis in 2008, investors have been waiting for banks to divest their NPL packages in order to lighten balance sheets, but until recently only small packages


were traded. An exception was a €370m NPL portfolio acquisi-tion by US investor Colony Capital in mid-August. However, specialists do not see this deal as the starting signal. “Size is not everything,” said Volker Oehls from commercial real estate servicer Situs’ told German newspaper Immobilienzeitung. A syndicate formed by Eurohypo, Helaba, Berlin Hyp and Ar-chon Capital Bank Deutschland, a Goldman-Sachs subsidiary, sold the loan.

Christoph Schalast, law professor at the Frankfurt School of Finance & Management, and an NPL specialist, sees a more concerted commitment to NPL sales as a market instrument. “The current drivers for banks to sell NPLs are the upcoming Basel III regulation and their tightened equity and liquidity standards as well as clients’ solvency issues in a recession,” he told PIE. “We have had rumours about the three large deals to hit the market ‘any time now’ for months.” German NPL volume in was estimated recently by PricewaterhouseCoopers at €225bn. pie

Madrid office investment lull belies higher prospects – SavillsMadrid’s office investment summer lull occurred early, and 2Q11 was one of the quietest on record, says realtor Savills. Only €40m in investments changed hands although deals still in hand could push the full-year total to €700m, similar to 2010.

But with a first-half total of €150m there is some way to go, Savills says. Deals upcoming include Alfredo Mahou Tower on the AZCA business park, north of the CBD on Paseo de la Cas-tellana. Savings bank Caja Madrid owns one of the iconic twin leaning KIO Towers at Puerta de Europa and may sell the build-ing to listed property company Realia, which owns the other tower and is best positioned to buy it. Savills also cites rumours of disposal of other buildings on AZCA business park, notably Picasso and Titania towers, the latter integrated with an El Corte Ingles store. The retailer also owns Titania tower which Savills says it may sell to focus on core activities.

Madrid office yields in second quarter remained at 1Q11 lev-els: 5% to 5.25% in the CBD or lower for some prime proper-ties, although buildings in the periphery’s more consolidated ar-eas are yielding 6.5% to 6.75%. pie

CEE retail lead among stag-nant 2Q values - CBREProperty values on average remained almost unchanged across Europe in second quarter, but a diverse range of performance across sectors shows that regions with retail and central and eas-term Europe were the two favoured acquisition themes, accord-ing to realtor CB Richard Ellis

Regionally, CEE saw strongest capital growth with a 0.9% in-crease on 1Q11, owing to strong demand from investors. Invest-ment volumes were resilient in the Nordic region and France, maintaining values, CBRE says in its European Valuation Moni-tor report. The Netherlands performed worst with negative 3.6%, owing to a weak office sector. While capital values as a whole grew 0.1% quarter to quarter, the result could be attrib-

uted to the 0.8% growth of retail property which offset respec-tive falls of 0.3% and 0.6% in office and industrial. France saw the best retail performance, with values increasing 1.9%, but re-tail improved in all markets except southern Europe, Ireland and The Netherlands.

“The absence of any strong general movement in either rents or yields last quarter, and the economic uncertainty caused by the deteriorating news on Greece and other peripheral economies, saw a divergence in property value performance across both sec-tors and regions,” said Andrew Barber, CBRE Senior Director of EMEA Valuation and Advisory Services. A clearer pattern of change is emerging with stronger economic areas such as the Nor-dic markets, the UK and CEE seeing positive value changes. “Economic momentum remains very uneven with fiscal strains within the Eurozone continuing to loom large,” he said. pie

Bottlenecks reduce for Ger-man core investments – CBRE The financial markets have re-opened for large volume core real estate investment in Germany, with domestic banks focusing on more conservative business strategies, while foreign banks look to more entrepreneurial lending featuring higher loan-to-value-ratios and portfolio financing, says realtor CB Richard Ellis.

There is a marked decline in interest on debt in the long-term sector and very good refinancing conditions via Pfandbrief-cov-ered bonds, which offer 3.1% over 10 years, CBRE said in a study. “The current financial market environment for property investments continues positive, despite the recent turbulence on stock and bond markets,” said CBRE’s Dirk Richolt. “The rising risk premiums .. are indirect consequences of the stock quota-tion upheaval of European government bonds and the massive stock losses of banks.” He expects some banks to revert to more cautious lending but sees an overall widening of credit margin spreads between low Pfandbrief-viable LTV ratios and second-tier risks. “Despite rising risk margins, interest receivable should stay low in the medium term,” he added.

The flight towards real assets, such as gold, commodities and real estate, is reflected in the appetite for residential property, CBRE said. This trend “is true for institutional as well as private investors in commercial and residential assets,” said Jan Linsin, CBRE’s German research head. With demand exceeding supply in some segments, he expects further price hikes. pie

AXA REIM 1H deals top €2bn, eyes further €3bn AXA Real Estate Investment Managers has invested €2.13bn for clients in Europe during 1H and has second half deals worth €3bn in hand. But the focus of investment has shifted away from France to other core European markets, in particular the UK.

The group, which has €39.4bn AUM, said it completed 80 deals in the first half including €1.19bn of acquisitions and €939m of sales. This compared to €2.7bn of transactions for 2010 in total. However, while 19% of acquisitions took place in France, compared to 18% in 1H10, 46% were in the UK, up


from 25%. Furthermore, 60% of sales encompassed French as-sets, a change that AXA says reflects particular client strategies.

First half deals included the €1.4bn sale for AXA France of a half interest in seven Paris assets to the Norwegian Pension Fund and its asset manager Norges Bank Investment Management, plus AXA Real Estate’s Development Venture III’s commitment to develop an office complex at Balard, south-east Paris, for the French Ministry of Defence. “With a further €3bn of deals al-ready at various stages of due diligence, we expect to continue our strong momentum for the rest of the year,” said AXA Real Estate’s Anne Kavanagh. pie

Danish Sjælsø in DKK116m 1H loss, closes PolandListed Danish developer Sjælsø is to close its Polish operation and expects to report a full-year loss of DKK200m (€26m) against a previous forecast of a flat year. It reported a first half loss of DKK807m after writedowns and provisions of DKK691m.

Sjælsø is feeling the effects of the market’s financial instability. Rising levels of activity throughout 2010 with an increase in turnover and renewed optimism continued until this June, re-flected by growing foreign investor interest in Copenhagen. However, Sjælsø said in a statement that financial sector uncer-tainty, the risk of bank collapses and pressure on Danish banks to reduce property exposure escalated in August. Due to the risk of a renewed downturn, it called an extraordinary meeting to consider Poland in particular.

In Poland, Sjælsø is involved in a downtown shopping centre at Elblag in the North, and a residential project at Wilanow in Warsaw. Sjælsø’s lenders will not support completion of the projects by the company alone and finance is being extended to allow them to be sold enabling the division to be closed. Polish activities have been written down by DKK250m. Weak pros-pects in the Danish market also mean there is a risk that projects will complete later than scheduled and it has also written these down by DKK171m. pie

German logistics on target for record year - BNPPTake-up of warehouse and logistics property in Germany exceed-ed 3.37m sq.m. in the first half, the best half-year performance for the past 10 years, and is on track for a record full-year, says realtor BNP Paribas Real Estate.

The take up figure, 78% up on 1H10, was boosted by, “the bright economic climate which impacts directly on the demand for space in warehouse and distribution complexes,” said BN-PRE Head of Industrial Investment Hans-Jürgen Hoffmann. Large-unit deals were another reason for the strong result, in-cluding three lettings to online trader Amazon. Deals involving lettings over 20,000 sq.m. accounted for more than 20% of the turnover.

While North Rhine-Westphalia excluding Dusseldorf and Frankfurt posted a 300% increase in take-up, Dusseldorf and Frankfurt doubled theirs, and Berlin and Hamburg both saw

45% increases. Rents have also grown with Munich’s €6.20 per sq.m. out in front and Hoffman says there is “at least a possibil-ity that top rents may climb somewhat further in the second half.” Although second-half turnover may be down because of the large volume of deals already done, BNPRE expects the full year to be a record, probably above 5m sq.m. pie

German new apartment permits rise 28% in 1HGerman apartment building permits rose by 27.9% to 108,600 in the first half, sustaining a rising trend started in 2009, accord-ing to the Federal Statistical Office Destatis. Most growth was realised in single and multiple-family homes, both above 30%.

Permits for new commercial development also rose by 9.3% to 96.2m cu.m. in total inner space volume, driven by private sec-tor demand, which climbed by 13.5% to 88.2m cu.m. Public building permits dropped by 22.5% to 8m cu.m. Permits for office and administrative buildings rose by 26.3%, those for fac-tory and workshops even by 40.7%. pie

France may further cut Scellier buy-to-let supportThe French government will this week announce a €10bn budg-et package that is likely to include a further cut in the Scellier support scheme for investment in buy-to-let housing.

Following recent turmoil in financial markets and zero second quarter growth, the French government is looking for €5bn-€10bn of budget measures, to reassure markets that it remains on course to cut its public deficit to 4.6% of GDP next year and 3% in 2013, The package is likely to be at the higher end of this range, according to French newspapers.

President Nicolas Sarkozy is keen to avoid a general hike in tax rates, so the government is expected to boost revenues through further cuts in tax breaks, increases in some charges paid by com-panies, and tax hikes for the very wealthy. Its autumn 2010 budget package included a 10% reduction in a number of tax breaks, including the Scellier scheme. A further cut is likely to feature in the package to be announced later this week.

Scellier currently allows individuals to offset 22.5% of the ac-quisition cost of a French rental property meeting the BBC (Bâ-timent Basse Consommation) energy efficiency standard against income tax over nine years. The tax offset is 13.5% for non-BBC properties. For investments made in 2012, the allowance is set to decline to 18% for BBC properties and 9% for other properties, but this could be further reduced. Named after the parliamentar-ian that proposed the scheme, Scellier has given a major boost to new home sales in recent years. Developers argue that cutting the scheme will hit sales and that any additional tax revenue will be offset by reduced VAT receipts and the cost of increased con-struction unemployment.

The government is also expected to increase capital gains tax on undeveloped land and second homes. Such assets are cur-rently subject to the full capital gains tax rate of 19% for the first five years of ownership, but the taxable capital gain is reduced by


10% a year thereafter, leading to a full exemption after 15 years of ownership. The budget package could also include a reduction of the PTZ+ interest-free loan currently available to all first time buyers, by limiting the measure to poorer households. pie

Switzerland is most expensive building location – EC HarrisConstruction costs in Switzerland are more than 25% higher than anywhere else in the world. With eight countries in the top ten, Europe continues to be the most expensive continent in which to build. A challenge for western economies will be to se-cure the raw material for future projects, according to UK’s EC Harris Built Assets Consultancy.

In its annual report on construction costs across the globe, EC Harris found that Denmark is the runner-up to Switzerland, fol-lowed by Sweden, Ireland, France, Australia, Germany, Austria, Belgium and Canada. Eastern European prices were generally cheaper, especially in Bosnia, Macedonia and Bulgaria. Costs are likely to drop further in those countries that received a bailout from the IMF, as a demand for construction services will inevita-bly fall due to an absence of available capital.

“It’s no surprise to see that Switzerland and the Scandinavian countries are the most expensive places to build as high labour costs and the need to import materials are all combining to drive prices up,” said EC Harris’ Mathew Riley in a statement. “The interesting element is that we’re now starting to see signs that developing na-tions are closing this gap as they continue to invest in significant new-build programmes to fuel further GDP growth.” During the economic downturn global supply chains have shifted their focus to meeting the demands of economies like China and India and are likely to continue to prioritise them over the coming years as they offer the greatest revenue growth opportunities. pie

Trigranit wins €160m Poznan rail hub in time for 2012 footballHungarian CEE developer Trigranit has been given the green light to begin construction of its €160m Polish transport hub in Poznan with Polish Public Railways. The first part of the invest-ment, the railway station, will be finished in May 2012 in time for the European Football Championships

Foundations of platforms 1-3 have been in place since June and prefab station building for the 5,500 sq.m. Poznań Główny station will take only a couple of months, Trigranit said in a statement. The entire integrated transport centre will be ready in 2H13, including the 60,000 sq.m. new shopping centre with some 230 tenants to be called Poznań Główny City Center.

The Polish rail company, PKP, is contributing 4 ha. of land, with TriGranit engaging the required finance for the integrated transport centre. The two signed an agreement for its develop-ment in July last year. Hungarian majority-owned property in-vestment, development and management company TriGranit has operations in seven CEE countries, a portfolio of completed trophy assets and a pipeline of over €4bn of major mixed-use developments, plus a number of PPP investments. pie

Ukraine developer Devision in new Kiev mall Commercial and residential Ukraine developer DeVision has completed financing with Oschadbank of a shopping and enter-tainment centre, the third phase in its Domosfera multifunc-tional project in Kiev, and expects to open the centre in 3Q12.

DeVision COO Oleg Ponomarev said in a statement having Oschadbank of Ukraine as its financial partner for the 38,000 sq.m.Shopping and Entertainment Centre construction boosts the project’s status and ensures the mall will be commissioned on schedule. It will have grocery and home appliances/electronics hypermarkets, a 70-store shopping gallery, and entertainment area with multiplex cinema, children's entertainment, bowling, billiards, restaurants and food court. Letting agent Jones Lang LaSalle is negotiating with anchor tenants, and its strategic con-sulting department is drawing up a fourth-phase concept to be-come the project’s connecting element.

After opening the new SEC, the three-star hotel-apartment complex Ramada Encore and class B+ office centre, the total area of Domosfera will reach 129,533 sq.m, - including the already successful Domosfera Shopping Center. DeVision has since 2008 been part of investment group B&S Holding Group (Aus-tria), which has healthcare, service, retail and real estate interests in countries including Austria, Switzerland, Russia, Lithuania and Cyprus. pie

Atrium in build-to-sell Auchan hypermarket in PolandListed CEE shopping centre specialist Atrium European Real Es-tate has agreed to develop a 20,000 sq.m. hypermarket for French international retailer Auchan at its 74,000 sq.m. Felicity retail development in Lublin, Poland.

Felicity Mall, under development on a 17 ha. site on the east side of Lublin and due to open in 2013, is Atrium’s first major development since the economic crisis. CEO Rachel Lavine said in a statement the Auchan partnership is an endorsement of the scheme and broadens its long relationship with Auchan into new territories, adding that Felicity continues to attract interest from many other international and Polish retailers.

Jersey-based closed investment company Atrium, listed on Eu-ronext and in Warsaw, currently owns some 153 shopping cen-tres worth €1.51bn across eight countries, including 19 opera-tional malls in Poland, with a development portfolio worth €635m at end-2010. The main focus is on Poland, Czech Re-public and Russia with a presence in Hungary, Romania, Slova-kia and Latvia. pie

40 European funds now in in-frastructure – DeloitteEuropean fund managers are catching up with other regions in their understanding of infrastructure as an investment, and more and more capital is being allocated to the asset class, says global auditing


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firm Deloitte. Around 40 funds are now distinct infrastructure managers, compared with two or three some five years ago.

The increase in active limited partnerships is one of the most significant developments, Deloitte said in a report entitled: The fork in the road ahead; an in-depth analysis of the current infra-structure funds market. “Looking back five or six years, there were probably only two or three investors actively educating and encouraging investment by LPs in their funds; with Macquarie Group managed funds recognised as the market leader,” it said. “Today, there are over 40 distinct infrastructure fund managers in Europe alone .. who primarily invest in operating or second-ary infrastructure assets (as opposed to ‘greenfield’ or new build infrastructure assets). While some .. are independent operators, many are still backed by the large investment banks.”

Infrastructure is now seen as a distinct asset class in the alterna-tives space. However, the level of understanding among LPs is different, with Australia and Canada leading the way followed by the UK and Netherlands. “While the rest of Europe is catching up, elsewhere, for example, within Asia, there is continuing edu-cation to familiarise LPs with the characteristics and appeal of the sector,” the study said.

As a result of this dramatic increase in competition for investor funds, infrastructure fund managers have changed structures to ac-commodate a more aggressive stance. This has ranged from sub-stantial falls in asset management fees and ‘carry’, to the creation of more co-invest rights. “But, most noticeable is the elongated times-cale it now takes for infrastructure funds to move from producing a fund-raising memorandum, to appointing a placement agent, to delivering road shows, to finally getting to a first close. pie

vienna’s Immofinanz boosts net 60% in 2010/11Vienna’s listed group Immofinanz posted a 60% rise in net prof-it to €313.5m for its 2010/11 financial year to end-April, and will propose a dividend of €0.10 to its shareholders’ meeting on 28 September.

“Following the successful completion of restructuring, the company is now focused on the optimisation of the operating business,” Immofinanz said in a release. Rental income rose 6.9% to €579m on its 1,600 standing investments that have a carrying value of €8.5bn. Valuations improved over the 12 months by €149m to a negative €34.7m, resulting also from non-cash for-eign exchange effects, while the revaluation of properties in Aus-tria, Germany, Poland and Russia produced positive results. Fi-nancial results deteriorated somewhat.

Net asset value reached €5.71 as of 30 April. Including potential dilution through the stock issue for the 2011 convertible bond, this was €5.36. Its share was last trading around €2.35 in the latest round of stock market nerves last week. Results of operations for fourth quarter 2010/11 rose to €148m from €35m in the prior year’s comparable period. Immofinanz also cut overhead costs after integrating holdings in Constantia Packaging and Aviso Zeta.

In the 2011/12 financial year, the firm will continue to focus on optimisation in accordance with its defined strategy, and on four core segments and eight countries. “The sale of selected properties outside Immofinanz business segments and reinvestment of pro-ceeds in high-quality properties will further strengthen the portfo-

lio. The company intends to sell its fund investments and minor-ity holdings over the medium term and thereby gradually strengthen the investment and balance sheet structure,” it said. It also plans to expand development and accelerate completion and acquisition of projects in train as well as selectively reactivate pipe-line projects. Group business activities are concentrated in retail, office, logistics and residential in Austria, Germany, Czech Repub-lic, Slovakia, Hungary, Romania, Poland and Russia. pie

PIE COMMENT: This is a major milestone for Immofinanz, which continues to battle the scandals of the past and the poor view of capital market investors of Vienna’s handling of its own and other financial de-bacles in recent years. The strong profit growth bears witness to the strong management team it has built, plus of course the recovering east European marketplace where it is one of the largest active developers and investors.

Atrium European boosts 1H pre-tax by 9% Listed shopping CEE centre investor Atrium European Real Es-tate, controlled by the Israeli Gazit Globe group, boosted pre-tax profit by 8.9% in the first half to €113.7m, with EBITDA up 12% to almost €56m.

Commenting on 1H11 results, CEO Rachel Lavine said: “We once again made strong progress with our operational and finan-cial performance. A number of transactions have allowed us to both ensure our development pipeline is focused on those assets which we believe provide the best opportunity to create value and strengthen our operating portfolio, which will also be en-hanced by a number of smaller asset management initiatives.”

EPRA net asset value per share rose 2.8% to €6.19 from end-March, and the income producing portfolio climbed to €1.77bn after the €171m acquisition of the Promenada shopping centre and a revaluation increase of €69m – and against €1.51bn at end-March. Atrium’s development and land portfolio was valued at €615m, down from €630m; borrowings rose to €453m from €394m. Total portfolio occupancy rose to 96.6% from 94.7%. Atrium said its cash balance remained strong at €210m; albeit down from €341m in March, it provides ample resources for its acquisition and development strategy.

“While we continue to be encouraged by our performance, recent events have highlighted the amount of economic uncer-tainty that remains and reminds us of the importance of manag-ing our assets properly, being prudent in our approach to acqui-sitions and developments while ensuring we remain on a stable footing,” Lavine added. “With that in mind, I remain optimistic about Atrium’s future and look forward to maintaining the posi-tive momentum achieved during the first half.” pie

PPP opportunities in €244bn German refurb backlog – IvGGermany's growing backlog of work to refurbish or replace office stock could total €244bn, says Bonn listed group IVG. This could mean incredible opportunities for the building and real estate sector, mainly using public-private structures.


Following the construction booms of the 1970s and 1990s many buildings are hitting 20- or 40- year life cycle peaks and refurbishments and replacements of non-residential property and infrastructure for public administration and companies will total at least €244bn over the next five years of which €204bn is for public administration and €40bn for corporate buildings, IVG’s head analyst Thomas Beyerle said in a new study. This is a burden that will overwhelm some firms, and many regional au-thorities will struggle with renovation costs.

Despite reservations about the publicly available data, IVG says sees a latent refurbishment volume of €23bn for private sec-tor offices over the next five years, as well as €12bn for retail space and €5bn for hotels. Its estimates that the volume of refur-bishments and replacements needed by municipalities including city states is €136m while the states require €27bn and the fed-eral government could expect to spend €41bn.

Because many public sector buildings have been neglected for budgetary reasons there is a need to catch up, IVG says. Any fur-ther delay will escalate costs, owing to additional wear and tear. “The ultimate cost of neglect may be far higher. Therefore, apart from raising investments to a sustainable level in the coming years the backlog of required refurbishments must be urgently attended to.” Financing remains the bottleneck and IVG points to public-private partnerships as one way forward providing incredible op-portunities for the construction and real estate industry. pie

Acquisitions help Dutch Corio IH direct profit up 10%Netherlands-listed retail property company Corio increased first half rental income by more than 11% to €196m on 1H10. The company’s direct profit was up nearly 10% to €133.8m but sta-ble at €1.46 per share.

New acquisitions in Italy, Spain, Germany and Turkey ac-counting for €21.3m of the increased rent roll. NAV per share was down to €44.86 compared to €46.10 at end 2010. Corio said in a presentation that the direct result should show further growth and the full year is expected to be in line with 2010's €2.88 per share. “This outlook reflects today’s expected interest rate developments, expected rent indexation, letting and renewal results and higher occupancy level in Corio’s current strong retail portfolio. It also reflects the anticipated effect of properties due to come into operation in 2011,” it said.

Corio has €9.9bn in property assets under management, 96% of which is retail, increased €221m to €7.2bn including upward val-uations of €8.7m and acquisitions of €156m. Its project pipeline totals €3bn of which €1.15m is fixed and committed. Corio plans to sell €360m of non-core properties in the Netherlands, France and Germany, most of which before the end of the year. pie

Copenhagen office investment up despite vacancy rise – CBREDenmark’s economy is expected to return to growth following recent setbacks and second quarter office investment in Copen-hagen rose 150% on 2Q10 to €200m, says realtor CB Richard

Ellis. Office yields have compressed slightly and now range from 5% to 5.75%.

There is growing evidence that new leases are being agreed at relatively high rents, says the CBRE Copenhagen Office Mar-ketView report. Prime rents have risen by about 1.5% to DKK1,700 (€228) per sq.m. yearly, although there is no sign of rental growth in the secondary market as yet. Net absorption went into reverse, releasing 44,000 sq.m. and pushing the sec-ond quarter office vacancy rate to 8.6% (1Q11, 7.9%), inter-rupting a downward trend that started in started in mid-2010.

No major completions or new office projects started in 2Q11 and little construction is under way. Most current projects are for owner occupation or are pre-let. However, several projects are ready to be activated, CBRE said. pie

German DIC Asset sees stable 1H, plans €300m Frankfurt's listed commercial property investor DIC Asset posted stable first half net profit at €6.2m and funds from operations slightly down to €20.1m. It confirmed FFO forecast of €40m-€42m for the year, and said acquisitions could reach €300m.

“We envisage acquisitions of at least €200m-€300m for 2011 as a whole,” said Chairman Ulrich Höller in a results statement, adding the group in the second half anticipates further improve-ments to results from letting performance. First half new lettings and renewals were up by 18% to 137,800 sq.m. in floor space. Tenancy rate remained stable at 86%. Net rental income fell 11% to €52.2m, mainly due to reduced portfolio size following disposals and the placement of DIC’s first investment fund.

Assets under management rose to €3.2bn from €3.1bn. “We will commence with the first construction stage of the MainTor project, which is already sold," said Höller. In a forward-deal, DIC sold the €50m Primus building to Frankfurt-based private investor Carlo Giersch before start of construction.

Average interest rate on debt fell to 4.45% from 4.56%, with 7% of debt to be refinanced over the next 12 months and an average term of 3.6 years. DIC took out €40m in loan facilities related to the acquisition of two Kaufhof department store prop-erties, financing the larger part out of cash. The equity ratio rose to 30.5% from 28.6% at the end of 2010. pie

Tamar European rolls €80m pbb financingTamar European Industrial Fund, a Guernsey-registered, closed investment firm listed in London, has rolled over an €80m fi-nance facility with Germany’s pbb Deutsche Pfandbriefbank, completing its €174m refinancing objective for this year.

TEIF’s pbb facility, due to have matured this November, has been extended by 3.5 years but reduced to €80.4m from €88m following the sale of an asset in Trondheim, Norway. The fund currently has leverage of 64.2% and a cost of financing at 5.84%. The current average cost of debt across the fund is 6.54%. Rob Brook, Managing Director of Fund manager Tamar Financial Service, said the deal concludes refinancing and provides the


fund with, “a stable platform from which it can move forward with its strategy to dispose of its Scandinavian assets and rein-state the dividend.”

Tamar European Industrial had a portfolio worth £254m at the end of March of which 34% was in France and 24% in Nor-way. It is also invested in Belgium, Sweden, Germany, the Neth-erlands and Finland. The revamped and revised fund formed out of Kenmore European, Tamar European Industrial Fund focuses on the UK, western and northern European markets, and was established in December 2009 with financial backing from The Tavistock Group. Headed by Rob Brook and supported by Neil McMyn, it includes the former senior management team of the European businesses of Kenmore. pie

Deutsche Wohnen doubles IH net, ups 2011 forecastGerman listed housing group Deutsche Wohnen doubled consoli-dated first half net profit to €16.9m, while recurring funds from operations climbed 40% to €0.35 per share. Since July 2010 it has acquired 5,300 residential units, and now manages 48,206.

CEO Michael Zahn said the good performance allows the group to raise its full-year forecast for recurring FFO by around 10% to €0.55 per share. DW, which also manages some 447 commercial properties, owned real estate worth €2.77bn at the half year mark, and had net liabilities of some €1.76bn. It thus maintained it loan-to-value ratio at 60.7% in spite of net acquisitions and unchanged valuations. Although the dividend for 2010 of €0.20 per share was paid out in 2Q11, it increased the EPRA NAV, which reflects the intrinsic value of the company, by 1.2% to €11.92 per share. Its stock was trading around €9.70 last week.

Since June 2010 DW has invested around €240m in acquir-ing residential units. “With the acquisitions of the past few months we were able to strengthen our portfolio, especially in the core regions of Berlin, Rhine-Main and Rhine Valley South,” Zahn said in a statement. “Here we can observe a posi-tive development in the market and, as a result, we can see high

potential for lettings but also disposals.” Deutsche Wohnen increased single disposals by 22% in first

half over 1H10, selling 623 units for €49.4m with an average margin of 38%. Another 1,269 units with a transaction volume of €38.3m were sold to institutions. In addition to lower interest rate charges and further acquisitions, the primary reason for the positive development in earnings was a very good performance in property management, it said. The average in-place rent in the letting portfolio rose by 2% to €5.53 per sq.m. The vacancy rate was cut to to 1.8% from 2.8%. pie

PIE COMMENT: Analyst Ulrich Geis at Germany's DZ Bank said the results were very strong, and held his buy recommendation, with a fair value at €12.50 per share. “The good results were operationally triggered and above expectations,” he wrote, citing the rise in average rent of the core regions and reduced vacancies. The rise in the average new-letting rent showed the enormous top line upside in DW's port-folio of up to 18%.

TAG doubles assets to €1.9bn, raises NAv forecastHamburg-based listed group TAG in the first half nearly dou-bled real estate volume to €1.9bn via takeover and first-time con-solidation of Colonia Real Estate and other acquisitions. It raised its full-year net asset value guidance to €8.75 per share from €8 and confirmed its earnings before tax forecast at €50m-€60m.

“Our strategic goal remains the long-term growth of share-holder value,” said CEO Rolf Elgeti in a statement. The integra-tion of Cologne-based Colonia continued better than expected, with savings and synergies incurred through the merging of ad-ministrative units and international asset and property manage-ment, said the company.

First half rental income also doubled to €39m, earnings before taxes rose to €33.7m from €6.2m. and revenues increased to €72.7m to €39.8m. Current EPRA NAV per share is at €8.19, up from €6.67. pie

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