france mulls reit law changes to allow 2-yr drop-out if 60 ... pfe...and global abs (cannes), we ......

Volume 4, Issue 89 real estate industry newsletter 22 September 2008

Debt purchase is most profitable real estate exposure, says Starwood’s Gale

The private equity firm Starwood Capital, one of many financial institutions that have set up funds to buy real estate debt in recent months, sees the segment as by far the most profitable opportunity amid weak world markets to buy exposure to property and to exploit commercial banks desperate for liquidity and to offload property debt.

Speaking at the EPRA annual meeting in Stockholm two weeks ago -. prior to the Lehman Brothers failure and the AIG bailout - Starwood Real Estate Vice-President Barden Gale said his company has been able to achieve internal rates of return with leverage in high double fig-ures in this business. He told a panel that a recent acquisition of debt backed by a Manhattan building returned IRR of over 20% without any leverage – and returns of 65% if the invest-ment was partially funded by borrowings. Gale told PFE later that large US commercial banks were even to prepared to partially fund the disposal themselves. (See p5) pfe

Continental European real estate finance for US & international investors

Keep those registrations coming in! With only 12 days to go before the first Prop-erty Finance Europe Prop-erty Breakfast on 23 May in London - focused on French valuations - preparations are running at full pitch, and the team is looking forward to welcoming you in Can-non Street. Details in on the back page of this Edition.

Meanwhile, the previously worried European sector has become a lot more active in recent weeks. This PFE, 73, reflects strong activity in the funds segment in particular. To fit in all the news and analy-sis You need to know we have temporarily dropped Guest Columns. But these are open to You to express Your views, and will be back in PFE 75.

Apropos: Advertisers please note the 26 May Edition will be a BIG issue with a print run of 21,000. Coinciding with REAL Vienna, EXPO Ita-lia, REIT Week (New York), and Global ABS (Cannes), we are delighted to have been selected as the only publica-tion included in the EXPO Italia delegate pack so that your message reaches over 21,000 European property investment professionals market in that event alone. Contact us for more details.

Property ConferenceEPRA, Stockholm p3

Property ConferenceScenari Immo., Italy p6

Colonial may pare debt by €3bn after deal p2

French real estate investment volumes halve in first half p2

Leichnitz resigns as CEO of Germany’s IVG p2

EPRA launches REIT plan, rejecting EU-REIT p3

Listed property firms must communicate role better - Fautré p5

BNP Paribas, Primonial launch €100m SCPI p13

Pino Sergio, WGFGuest Column p16

Paul RivlinPalatium lnvestmentThe PFE Interview p8

France mulls REIT law changes to allow 2-yr drop-out if 60% rule not metFrance is weighing changes in its REIT/SIIC laws to extend the exit tax for two years past the original end-2008 closing date and reduce pressure on firms faced with cutting 60%-plus single-shareholder stakes, allowing mild penalties for dropping out and re-entering before end-2010.

Jean-Paul Dumortier, president of the French listed prop-erty companies’ association FSIF, said he is hopeful that talks under way with the government may win concessions on the single-shareholder ceiling. Paris may accept levying mild penalties for firms dropping out of the REIT/SIIC regime if they cannot cut single stakes below 60%, and a two-year period in which they can re-enter without heavy penalties. After this however, the ceiling becomes a firm requirement.

“It looks as though we’ll come to an agreement by the end of the year that there could be a two-year grace period in which companies that do not reach this requirement incur only fairly mild penalties if they drop out,” Dumortier told PFE. “In re-turn we are going to have to accept that at the end of this period the ceiling requirement will be a hard rule; those who don’t meet it will be excluded from SIIC status and would have to re-apply with all the accompanying costs if they want to come back in. But this seems to us to be a fair solution.”

Companies with the most dramatic need to cut single stakes include the Morgan Stanley-controlled Compagnie la Lucette, Docks Lyonnais, Lucia, and Société Foncière Lyonnaise (see also p2). MSREF has over 90% of Lucette, which resulted from a re-floating of a portfolio it had previously taken private.

Other French SIIC sources said a serious issue faces for-eign investors having more than 10% of equity of French REIT/SIICs - in particular many struggling Spanish com-panies, such as Metrovacesa, Colonial, Fadesa and Realia.

Starting this year, dividend payments from French units will incur a 10%-15% witholding tax, cutting already fragile cash-flows and impacting their capacity to service massively high debt loads. The issue may be part of the reason for a new lobby for Madrid to introduce its own REITs law. (continued on page 26)

With financial markets in tur-moil and highly jittery last week following the collapse of Lehman and the bailout of AIG, Expo Real 2008 promises to be a very interesting and fruitful trade fair - with a raft of important issues to discuss with business colleagues. In particular, swapping experi-ences of managing, acquir-ing, disposing of real estate in the current climate will be foremost in all discussions.In a dramatic break with tradi-tion, Property Finance Europe is printing its next Edition on the first Monday of the month instead of the second, so that we will appear on Monday 6 Oct., the very day that Expo opens its doors to what is likely to be close to 30,000 people in the Munich exhibition halls. As usual we boost the PFE print run to around 7,000 for Expo Real, likely to be a 40-age Edi-tion. We also expect to gather lots of good stories to fill the pages of the subsequent Expo Real Report which, resum-ing our publication rhythm, comes out on the 4th Monday of next month, 27 October. Final-final advertising close for the bumper Expo Real Edition 6 Oct., is this Friday 26 Sep. close of business. Contact Publisher Richard Betts to get your mes-sage in the Expo Real issues. Details inside, but the easiest way is his email: [email protected]. See you there!

2008NEXT FuLL EDITION

MONDAY6 OctObEr

Continental European real estate finance... ...for US & international investors

Property Finance Europe 22 September 2008 l Issue 89 2 l

reasons and by mutual agreement with the supervisory board. Until the appointment of a successor, management func-

tions will be performed by Deputy Management Board Chair-man and CFO Bernd Kottmann, plus other management board members Andreas Barth and Georg Reul.

Supervisory Board Chairman Detlef Bierbaum said IVG is convinced the experienced management board team will con-tinue to enhance the company’s strengths and further increase its acceptance in the capital market.

The next objective is to sustainably increase the company’s prof-itability by consistently optimising its portfolio and strictly man-aging its costs while improving balance sheet ratios. IVG is well positioned in all its business areas to meet future challenges.”

PFE COMMENT: If acceptance in capital market needs increasing then the market will believe Leichnitz was obliged to step down because he wasn’t able to achieve it. That said, it is difficult to see why IVG strategy is so much worse than many other listed RE firms now suffering. EPRA fiercely defends its decision in sum-mer to take IVG out of its EPRA/NAREIT index, saying that running funds, as IVG does, interpolates an extra intermediation between real estate assets and the market, and cuts its genuine property-based income below the required 75% of total. This was prob-ably the last straw for the supervisory board. That and the 79% LTV, as calculated by JP Morgan. IVG stock was trading under €9 post-Lehman, at lows, and compared to a 52-week high above €32 and over €23 at end-07. In other words, market cap is barely over €1bn. With NAV at end-June said €27.6, this is a discount of 69%! This means that if we crack the piggy-bank we can pick up €5.8bn of assets and a €2.5bn pipeline for just over €1bn with a small takeover bid. That sounds like a bargain!

French RE investment volumes halve in first half, price falls to continue - CBRE

Commercial real estate investment volumes in France slumped by 54% in the first half of the year to €8.4bn, accord-ing to the realtor CB Richard Ellis.

“The decline has reached 60% over the Ile-de-France where €5.5bn were exchanged over the first eight months, and vol-umes decreased by a factor of three in Paris and La Défense,” according CB Richard Ellis Investment CEO Antoine Derville.

According to the Business Immo real estate portal, Derville anticipates investment volume of €11bn to €13bn for the year as a whole - investment levels near 2004. The lack of financing means that active operators focus on small transactions, with the average sale falling to €30m from €44m last year. Since the start of the year, 11 deals over €100m have been registered compared to 46 in 2007 to June. No deal over €250m has been done.

The main movers on the market are investors with solid eq-uity, CBRE said. The largest group is French institutional inves-tors with 44% of total volume, then German open funds at 15%. He said repricing is not finished, and expects the decline in prices to accelerate by the end of the year. In the absence of transactions, experts put the prime yield at 4.85% to 5.5% for offices in Paris and between 5.75% and 6.5% in La Défense. This matches levels last seen at the start of 2005.

In rentals, the demand for office space in Île-de-France has declined by 20% over the first eight months of the year to 1.5m sq.m., which portends a year of between 2.3m and 2.5m sq.m. placed. Buildings with large floor areas are the main vic-tims, with 39 transactions over 5,000 sq. m tallied for a total of

Spain’s Colonial may pare debt by €3bn after deal, talks under way on disposals

Listed Spanish property group Colonial says it may be able to reduce its debt burden by as much as €3bn after forging a pact with major creditors. And the chairman of one of its main holdings, the French SIIC Société Foncière Lyonnaise, told PFE that talks are already under way with institutional investors on cutting the Colonial stake in his unit.

Barcelona-based Colonial reached agreement with creditor banks last week to restructure existing debt through a long-term financing facility of some €6.5bn. This would entail a new credit with a 5-year bullet maturity, divestiture of its 33% in French SFL in such a way that it retains a controlling 51% interest, and disposal of its entire financial investment in Spanish builder FCC and shopping centre subsidiary Riofisa. Colonial will also submit the issue of convertible bonds of €1.4bn for approval to its next shareholder meeting.

Colonial needs to cut its current 84% stake in SFL beneath the maximum 60% allowed threshold by end-2008 to meet the SIIC 4 legislation introduced two years ago. Last year, Colonial sold a 5% to a Swiss-based family concern and to small investors.

Colonial, which swung to a first-half loss of €2.4bn from a year-ago profit, re-valued its assets dramatically downward to €10.5bn in June, in particular its stake in developer Riofisa and FCC (Fomento de Construcciones y Contratas).

SFL’s property portfolio is primarily focused on Paris office assets with focus on the central business district and at the prime end of the quality spectrum. However none of the three or four institutional buyers reported to have made due diligence on SFL recently has made a bid, and market sources say this was partly due to valuations set too high by the international banks now in charge of the Madrid-based Colonial. SFL Chairman Yves Mansion told PFE that SFL assets were ring-fenced last year in the group so that it should be relatively straightforward to value the portfolio. SFL was last trading around €46 per share, a dis-count to net asset value that Mansion puts at about €58.

For the past five months, creditors have effectively controlled Colonial while it struggles with its €9bn debt. Its main interna-tional creditors are Calyon, Eurohypo, Goldman Sachs and the Royal Bank of Scotland. Some will take over Colonial assets in part-repayment. Lenders Banco Popular and savings bank La Caixa left the group of creditors / shareholders set up in April to help the company weather its debt crisis. The rest of the banks in this domestic group, Bancaja, Caixanova, Banco Pastor, Caja Duero and Caixa Galicia, will hold onto 9.3% of Colonial for the time being. pfe

PFE COMMENT: This is an especially complicated challenge that is not yet really solved. Valuations of assets in the current environ-ment - in Paris, as elsewhere - more or less accord with the old Zen question: How long is a piece of string? In fact, Spanish banks continue to expect too much from SFL assets, and there are those in the French community that see the values falling further.

Leichnitz resigns as CEO of Germany’s listed RE group IVG Immobilien

Wolfhard Leichnitz, the CEO of Germany’s largest real estate company IVG, is to resign effective the end of this month, the company announced. It said the decision was taken for personal



www.pfeurope.eu Property Finance Europe l 3

and other closing conditions and is expected to close by the end of this year. The name of the seller was not disclosed. Host Hotels owns 117 properties with some 64,000 rooms, plus a minority interest in a joint venture that owns 11 hotels in Europe with over 3,500 rooms. ABP is the Dutch pension fund for public employees, while GIC is the real estate in-vestment company of the government of Singapore Invest-ment Corp. pfe

French hotel group Accor raises stake in Poland’s Orbis to 50%

French-based European and global hotels and services group Accor has raised to 50.01% from 45.48% its holding in the Or-bis group, Poland’s leading hotel operator.

CEO Gilles Pelisson said strengthening Accor’s holding in Poland’s historic hotel leader with its high quality assets rep-resented a unique opportunity for Accor to develop its brands - especially in the economy segment - in central Europe’s largest country, which has excellent growth prospects. pfe

THE PROPERTY CONFERENCES EPRA Annual Conference, Stockholm

Europe’s listed property body launches REIT initiative, rejects EU-REIT

The European association of listed real estate companies, EPRA, has launched its own initiative to promote REITs on the continent, backed by associations in six major European coun-tries. The move is in direct opposition to a lobby announced last year by a coalition of bodies headed by the Brussels-based European Property Federation.

EPRA is putting forward a discussion paper for its 283 mem-ber companies – the bulk of exchange-traded property groups across Europe – emphasising the need for a ‘European passport’ where national REITs are recognised in all other EU countries, and stressing harmonisation of tax treatment across borders. It rejects the EPF strategy of lobbying the European Commission for EU-wide REIT rules and guidelines, and stresses individual national diplomatic approaches to persuade governments of the benefits of the widely-recognised Real Estate Investment Trusts for their property sectors.

“We consider the benefits of a single EU REIT do not out-weigh the complexity of its design and implementation,” EPRA CEO Philip Charls told the association’s annual meeting recent-ly in Stockholm. “The European Union REIT market is frag-mented and has some way to develop: a push now for an EU REIT would inevitably create further uncertainty for emerging and developing REIT regimes for many years to come.”

EPRA has the backing of property associations in Bel-gium, Netherlands, France, Germany, Italy and the UK – which all have REIT legislation in place. The EPF initiative – dubbed by some at the EPRA meeting as the ‘Rainbow Coalition’ – is chaired by a representative of the Portuguese property association and backed by Sweden’s property body as well as the European property valuers association TEGO-VA, among others.


530,000 sq.m.CBRE’s Marc-Henri Bladier noted: “This significant decline

can be explained by the cautiousness of large users and the tight supply of new, large floor areas.” New and restructured assets represent only 20% of office inventory immediately available - slightly more than 2.5m sq.m. However, future supply is more substantial and CBRE predicts around 4.5m sq.m. coming onto the market soon. However, it predicts a decrease in quality large-area supply beginning in 2010/2011. pfe

UK’s Propinvest closes €1.9bn Banco Santander purchase

Spain’s largest bank, Banco Santander, has completed the sale of its head office in Madrid to a consortium led by UK property investor Propinvest, booking capital gains of nearly €600m.

The bank, which acquired ABN Amro Bank last year to-gether with Fortis and Bank of Scotland, said in a statement it has leased back the asset for a period of 40 years, including a purchase option at the end of the period.At the time of the ABN Amro takeover, Santander said it would spin off part of its real estate portfolio to generate funds for the acquisition. The head office sale was announced in January. Since last year, the bank has generated €4.4bn from various real estate transactions. Total capital gains came to €1.7bn. pfe

Barcelona luxury housing values fall 11%, to under €5,000 sq.m.

Reflecting the overall decline in the Spanish residential mar-ket, luxury housing values in Barcelona have dropped 11% so far this year, with the average price of high-end housing down to €4,965 sq.m. as against €5,596, according to property con-sultancy Qualivida.

The neighbourhoods that showed the largest decreases were Sarria-Pedralbes and St. Gervais-Les Corts. The most afford-able district in the expensive category is Ensanche Centro, now valued at around €3,820 per sq.m.

The study also found that the time needed to close deals increased to five months from three. pfe

US’ Host, Singapore’s GIC, Dutch ABP buy six European hotels for €565m

US-based Host Hotels & Resorts, its European joint venture partner Dutch pension fund ABP and an affiliate of Singapore’s GIC Real Estate purchased six hotels comprising 1,954 rooms in France, Germany and the Netherlands for €565m.

The purchase price includes the assumption of some €434m of debt at an interest rate under 6%, the NYSE-listed Host Hotels said. The upscale hotelier, also the largest US REIT, plans to invest €80m in the properties, which are located in prime urban markets with strong room rate performance and low supply growth.

Upon closing, the European Joint Venture will be fully fund-ed and invested, owning 17 hotels with nearly 5,500 rooms in eight countries. The purchase is subject to regulatory approvals


Continental European real estate finance... ...for US & international investorsContinental European real estate finance... ...for US & international investors

“We all know the EU REIT is a tricky subject and we do not want to harm the interests of our members with advanced REIT structures.. or those seeking to introduce a new REIT regime, “Charls said.

French opposition to the EPF announcement last year was fierce, and was based on member states’ sovereignty on tax issues under the EU Treaty. EPRA initially considered participation in the EPF-led group but decided that the top-down imposition of fiscal and capital market rules by the EC would be counter-productive.

“EPRA’s objective is to seek practical solutions to resolve

the tax issues that currently hinder many cross-border, intra-EU investments by REITs incorporated in EU Member States and which target a pan-European presence,” Charls said. pfe (This completes a story originally included in PFE 88 Online Weekly)

EPRA’s REIT paper focuses on prag-matic approach, mutual recognition

The EPRA paper on fostering European REITs, released at

As you can see in this issue, the PFE editorial team is thinking of cracking

open the piggy bank and, with some spare change of around €1bn, buying IVG, a company based in the leafy, small riverbank town of Bonn, a former ca-pital of Germany. It’s a fire sale; we get nearly €6bn of assets and a €2.5bn pipe-line for our money! Seri-ously, regular readers will know of my view that the quoted real estate sector is suffering from panic and hysteria from global stock markets, and that dis-counts to NAV of 40%-60% seen regularly are nonsen-sical undervaluations. Of course, those with both courage and cash are well placed to make some moves. Sin-ce many investors were waiting for more shoes to drop before moving in, what’s the betting that the collapse of Lehman and the bailout of AIG may signal many more buyers in the market over the next few weeks? We do hear of at least one institution out there with €500m of cash seeking a SIIC in France. One knows not who or whom. Yet the question remains on the table: Act now or keep the powder dry? Deka and some other German open-end funds are acquiring direct assets ac-tively, and indeed, even if one fails to spot the true bottom of the market, perhaps it is better to begin before everyone else swamps indirect and direct with bids. Keep two things in mind: pension funds and many other capital aggregators such as sovereign wealth funds are genuinely awash with cash; and the structural shift

of real estate into the investment asset classes is, in my view anyway, irreversi-ble. On IVG, there are those who see the announced selloff of the cavern business

as a strategic mistake since it had given IVG an unusu-al infrastructure play. The funds business, bought in from Sal. Oppenheim last year is also not looking a bad purchase; there are enough major asset mana-gers out there who see the collection of third-party money through funds as a natural and useful extensi-on of real estate activities using only direct or propri-etary investment capital.

Meanwhile back in beautiful city of Stockholm… the European associa-

tion of listed property companies, EPRA, has been reflecting long and hard how to respond to requirements from European union member states about some kind of co-ordination of REIT legislation across the Eu. When Philip Charls first came in as CEO a year ago he was lobbied by the European Property Federation in Brussels to join an initiative that had already been launched in October last year aimed at persuading the European Commission to bring through new rules to establish a REIT across the Eu according to guide-lines set by Brussels. However many EPRA members were highly cautious about the initiative which was supported by the property associations of Portugal, Swe-den and initially also the uK - but also by the European Valuers Association TEGoVA and a number of other associations in the

property sphere but without any particu-larly close alliance with the listed sector. After some reflection, EPRA decided that, on the one hand, a top-down approach to establishment of an Eu-REIT was not likely to succeed and, on the other, might be damagingly counter-productive to REIT regimes in place. The French were fiercely resistant to an Eu-REIT imposed from Brussels, saying it transgressed na-tional sovereignty for setting fiscal rules. Other jurisdictions such as Germany and Italy were also extremely wary. EPF ho-wever, headed by the ebullient Michael MacBrien, was insistent that EPRA come into the coalition, which is now dubbed by many property specialists the ‘Rain-bow Coalition’.

In particular EPRA, as the association most involved with REITs, was com-

pletely unwilling to take a secondary role to EPF. Charls has therefore lobbied hard to gain the support, aside from France, of Germany, Belgium, Netherlands and now also the uK in the form of the British Property Federation. The BPF, in turn, was an original supporter of the EPF initiative and remains an active Rainbow member. The problem is that the uK position has always been one of double-bluff; even while it supported an Eu-REIT there is of course no way, given the general British attitude to Eu initiatives, that it would ultimately have followed any kind of binding legislation set down by Brussels. Perhaps it was this realisation that led BPF Chairwoman Liz Peace to decide that the new EPRA initiative was the more di-plomatic way to move forward.

Allan Saunderson, [email protected]

Allan SaundersonPFE Managing Editor

Break open piggy bank and buy IVG at bargain basement, or wait out the storm?

forward thinking



its annual meeting in Stockholm 10 days ago, focuses on a prag-matic approach towards removing existing bottlenecks in the growth of cross-border investment in the segment.

Entitled, European REITs and Cross-Border Investment, the discussion paper offers a blueprint for facilitating more efficient cross-border investment into and by European REITs. The pa-per was prepared by a panel of experts under the guidance of a group of organisations representing real estate companies and REITs across the major economies. It is intended to initiate discussion within a wide range of stakeholders.

Its main elements are:• a pragmatic approach towards removal of the existing bottlenecks

in the growth of cross-border investment in European REITs • removing the need for EU Member States to introduce ar-

tificial cross-border participation thresholds for REITs’ invest-ment to protect national tax revenues

• ensuring that REIT regimes are EC Treaty-compliant, and therefore provide planning security for national European REIT regimes

• encouraging convergence within Europe towards a uniform and transparent REIT structure for national REIT regimes.

EPRA’s initial recommendations are that EU nations mutually recognise other REIT regimes around Europe. Un-der this approach, they can enter reciprocal arrangements sup-ported by the EC and bilateral tax treaty positions to collect tax revenues and allocate them equitably among member states where the properties owned by the REIT are located.

A major advantage is that this does not interfere with exist-ing REIT regimes or any newly-emerging structures. It should also complement OECD efforts to improve the application of international tax treaties to REITs - a process moved forward on 18 July with the announcement of the approval of REIT amendments to the OECD’s Model Tax Treaty.

“The OECD announcement is a significant step forward for the property investment sector worldwide,” said Gareth Lewis, EPRA’s newly-appointed Finance Director. “The amendments to the OECD Model Tax Treaty specifically address the unique characteristics of REITs, and should now make the prospect of significant progress in reducing barriers to worldwide REIT in-vestment a reality.” If EU members adopt the tax treaty in their bilateral negotiations, REITs will be better positioned to attract global investment, he added. pfe

Listed property firms must better communicate role - EPRA’s Fautré

Listed property companies must communicate much more clearly the role they can play in value creation, and the iden-tity of their real clients, the tenants of their buildings, says the chairman of the European listed real estate association EPRA.

Serge Fautré told the EPRA annual conference 10 days ago: “I have the feeling today that we need to differentiate ourselves. Are we funds as listed companies are often referred to? Are we asset managers looking to increase return on equity in recent years...? I have the deepest conviction that we are not a fund, we are not managing third-party money. I have the deepest convic-tion that we are a company.”

Fautré said this is particularly important in the current poor capital market environment, which has hit listed real estate stocks especially hard. “We have to convince investors that mar-ket trends are one thing but what really matters is the individual

strategy, the portfolio and the clients that, so to speak, belong to each individual company,” he said.

The conclusion is that net asset value is individual to each property, depending on the company or fund that manages it. “Each NAV should in any case be derived from stock market valuations and maybe if we multiplied the number of analysts by three, then it would be beneficial for the valuers industry,” Fautré said. “If indeed we are corporations, we need to tell the market with far more transparency; we need to substantially im-prove our reporting; we need to tell them we are far better as companies than a number of private funds,” Fautré said. “This is essential if we want to raise equity.” pfe (This completes a story originally included in PFE 88 Online Weekly)

Spanish property sector said in talks with Madrid on REITs legislation

Spanish real estate companies are in behind-the-scene talks with the government with the aim of establishing real estate in-vestment trusts in the nation, according to sources at the EPRA Annual meeting in Stockholm earlier this month.

The move is a general shift in sentiment in what is now the larg-est country in Europe without REITs legislation. It does not nec-essarily respond to the dramatic decline in real estate values in the country that followed the credit crunch and the bursting of the housing price bubble over the last 12 months. However, specialists see the introduction of a Spanish REIT law helping to attract inter-national capital back into the sector in the medium term.

Companies such as Metrovacesa are among several talking with the Socialist government about introduction of REITs leg-islation. “Talks have been in progress for a little while now, but we haven’t really had any concrete response from Madrid yet,” one banker said, asking not to be identified.

The UK, Germany and Italy introduced REIT legislation last year, following by four years the introduction of REIT/SIIC laws in France in 2003 and long-established REIT regimes in Belgium and the Netherlands. The Spanish property industry has kept its distance from the broad European and international property community in recent years. However EPRA has just appointed a new Spanish board member, from Metrovacesa, and officials are hopeful this will encourage better integration of the struggling Spanish property companies.

One source said REITs should help the Spanish market to gain maturity. Price explosions in both residential and com-mercial real estate of recent years have not been matched by modern market structures. “All these developments have come too fast, and the market was much too new and imma-ture, so some of these company situations have not been ad-equately regulated,” the source said, asking not to be named. pfe (This completes a story originally included in PFE 88 Online Weekly)

Debt purchase is most profitable real estate exposure - Starwood’s Gale

The private equity firm Starwood Capital, one of many fi-nancial institutions that have set up funds to buy real estate debt in recent months, sees the segment as by far the most profitable opportunity amid current very weak world property markets to



exploit commercial banks desperate for liquidity.Starwood Real Estate Vice-President Barden Gale said the

company has achieved internal rates of return with leverage in high double figures. He told a panel at the EPRA annual meet-ing that a recent acquisition of debt backed by a Manhattan building returned IRR of over 20% unleveraged – and around 65% if the investment was partially funded by borrowings.

Gale told PFE later that large US commercial banks such as Bank of America, Wachovia, and Citibank were happy to sell commercial real estate debt off balance sheets at valua-tions as low as 75% of face value and would, in some cases, provide lending for this. The advantage to banks is to remove real estate risk exposure to the asset class and thereby save on expensive regulatory equity capital required under Basel regulations to be laid against the holdings. “It’s mainly taking place in the US at the moment and we haven’t seen very much of it in Europe yet,” Gale told PFE. “However we are certainly keeping our eye open for further reasonable opportunities since we see this as one of the most interesting and high return parts of the real estate market in the current environment.”

The Greenwich, CT-based Starwood, a private investment firm founded in 1991 by Barry Sternlicht, has completed more than 200 transactions encompassing assets over $19bn. Gale joined in February after several years running global real estate for the Dutch pension fund ABP. pfe (This completes a story originally included in PFE 88 Online Weekly)

THE PROPERTY CONFERENCES Scenari Immobiliare, S. Margherita Ligure, Italy

Italian real estate market to grow 0.9% in 2008, outpacing Eurozone peers

Italy’s real estate market is weathering global market turmoil in 2008 better than its largest western European peers, with transaction values in all sectors - residential and commercial -

growing by 0.9% to €127.6bn, says Italian research firm Scenari Immobiliari.

In the report European Outlook 2009, presented at Scenari’s annual conference in Santa Margherita Ligure 10 days ago, it said the next hardiest market is France, with transaction value to grow 0.7% to €168bn, followed by Germany with an increment of 0.5% to €188bn. Spain is staring at a building glut-induced -4.7%, followed by England at -1.1%. Meanwhile emerging European markets continue to expand, led by Bulgaria and Romania.

Spain’s collapsing transaction values are concentrated in resi-dential and tourism - expected to shrink by 8.6% and 8.7% re-spectively after advancing at nearly digit clips in the two years prior. Its retail and office markets continue to hold stable. By contrast, retail asset transactions are simply growing less quickly than before but will still register a 6.8% increase for 2008. Offic-es will likewise end up in positive territory, with 3.4% growth.

In Italy, where the market experienced less froth on the up cycle, business plods on more slowly than in the previous two years. The industrial sector performed best, with total transac-tions expanding 3.3% to €4.6bn. The retail sector grew 2.6% to €7.8bn, and offices grew 2.0% to €7.6bn.

Housing, which makes up 82% of total real estate invest-ment, expanded by 0.7% in value though the absolute number of transactions fell by 13% to 700,000, a level not seen since the beginning of the decade. Especially hard hit were medium-low cost houses priced below €250,000. Young couples and immi-grants that have made up as much as a third of the residential market in recent years are being squeezed by higher commod-ity prices, the economic downturn, and stringent credit criteria from banks. New construction constitutes 18% of residential market supply. Uptake is 80% and sinking. Yields on residential rentals have dipped to 5% over the last two years, and remain high compared to the spending capacity of occupants.

Scenari says market troubles will continue to buffet middle and lower level European properties in 1H09, while high-end properties should generally hang on to their value. Interna-tional investors are showing greater interest than before in top location offices. However, the credit squeeze will continue to winnow development and urban regeneration projects. The in-dustrial sector is stabilising, with demand increasing for cheap

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spaces and innovative offerings. The real estate industry now accounts for 16.7% of the GDP for 27 European countries, Scenari said. pfe

PFE COMMENT: The main reason for the slightly better outlook for housing in Italy than in other large western European countries is that the domestic banks were never really involved to a large de-gree in uS mortgage-related derivatives. Thus, they are suffering much less than counterparts in the uK, Germany or France from the direct effects of the sub-prime induced crisis, even if inter-national funding relationships are tightening as the ripples from the credit crunch continue to widen. In broad terms, the Italian household should be a relatively good risk - at least in the current environment.

Top office stock in European city centres give better returns, Class C in crisis

Yields are ticking upward for Class A offices in many major European cities, although there is a much variation between lo-cations, finds Italian research firm Scenari Immobiliari.

Its European Outlook 2009 report noted that despite loom-ing economic stagnation, European vacancy rates in top loca-tions are still declining and rents rising, with the exception of Paris, Madrid and Barcelona. The average office vacancy rate in Europe is 6.5%, with Frankfurt on the high end with just over 14%, and Moscow on the low end at 5%.

Lower grades of office space, however, are stagnating or slumping. The flight to quality is particularly pronounced in Ita-ly, where the supply of high grade office space is restricted and Class C office space is in full-blown crisis. Just 10% of the total office stock in Italy are Class A and two thirds are Class C.

However, Manfredi Catella, Hines Italy CEO, told Scenari’s annual conference in Santa Margherita Ligure that the estimate for Class A offices is overly generous, and the real percentage is closer to 2%. He complained class designations in Italy are too often given without objective criteria, and are not comparable to those in other countries with the same grade.

Catella is currently redeveloping a large section of downtown Milan, where Class A offices make up the largest portion of its mixed-use Porta Nuova project. Porta Nuova is one of the few active projects scheduled to deliver new office construction in the medium term in downtown Milan where offices are often converted residential stock. Demand for high grade space is ex-pected to remain strong. By contrast, uptake for new offices in non-prime locations is just 40%.

Scenari found that 25% of the office stock in the UK and France are Class A and a little over a third are Class C. Ger-many’s office supply, whose 275m sq.m. of surface area is more than 1.5 times the size of the other countries’ in the study, is 20% Class A and 47% Class C. Spain’s office supply is 18% Class A and 41% Class C. pfe

European retail supply grows 15% in 2008, now triple 1990 supply - Scenari

Shopping centres continue to spring up at a double digit clip across Europe, according to the Italian research firm Scenari Im-mobiliari’s European Outlook 2009. Europe’s shopping centre supply will reach 112m sq.m. in 2008, more than a 15% gain over

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The PFE Interview Paul Rivlin, Palatium Investment Management

Paul Rivlin, joint CEO of Palatium Investment Man-agement, told PFE in an interview that capital constraints on banks, particularly those that have embraced Basel II regulations in Europe, means that private pools of capi-tal have the opportunity to independently offer funds to the market. Palatium is the former Eurohypo Asset Man-agement, based in London, and Rivlin, along with joint CEO Neil Lawson-May, were senior execu-tives before they left earlier this year. Bernd Knobloch, who resigned earlier this month as Eurohypo chairman, is a non-executive director of Palatium but Rivlin says there is no business link with the German bank, and Eurohypo is not an investor.

The Palatium mission is to provide mezza-nine financing at the top of the finance struc-ture at a higher proportion of total value than banks wish to finance. It aims to bring capital together with needy property borrowers, and the listed sector is high on the list of poten-tial clients. Palatium aims to provide investors with, “fund opportunities designed to deliver above-average returns but with a strong em-phasis on risk management,” and to open in-vestment into high-yielding property debt.

Rivlin says Palatium will focus first on two products, a ‘high octane’ tranche between 75% and 90% of the loan-to-value, and a lower-yielding fund focused on the 60%-75% tranche. “There are different segments of the mezzanine space,” he told PFE on the sidelines of the EPRA meeting. “If you say that banks are prepared to lend 60% comfortably, then there is a space between 60% and 75% and between 75% and 90% that is uncovered. We saw that we could deploy quite substantial amounts of money in all of those, so it is much more an issue of how much investor demand there is and how quickly it comes through.”

Palatium is in a pre-funding stage. Rivlin believes the process will be gradual and will depend on market percep-tions of asset pricing while the credit crunch continues. While a total funds’ size of €1bn could be a useful target, the group is pleased to aim first for committed capital of around €200m. “What we need to have is a degree of confidence that the market has finally reached a clearing price,” Rivlin says.

Prior to the credit crunch, banks in Europe were prepared to lend up to 90% of asset values. The situation in the US was always different, with banks lending a lower proportion of total, and more use of structured finance. However the credit crunch and Basel II are likely to change that. Explain-ing the concept of a mezzanine fund to the EPRA meet-

ing, Rivlin said that prior to the sub-prime problem CMBS was functioning well as a commercial real estate financing tool. But after banks’ bad experience in having to make high provisions against real estate lending or even sell exposure, they will limit themselves for a long time to maximum 65% LTV credits. “But also the structural change through Basle II means that it’s going to be very expensive for banks to

use a lot of own capital to provide loans at below treble-B ratings levels,” he added. “The loan-to-own kind of policy in the US is much more difficult with European enforcement rules. You can also get much better returns there: People look at 20% IRRs which are not available in Europe - but that is going to be the structure of future banking here too, of future debt fundings.”

In corporate debt, mainly unsecured bank lending or capital market finance, most list-ed property firms are trying to hold onto the credit lines and are negotiating with bankers to make sure there are no misunderstandings, he said.

“Actually the issue is only partly to do with what the banks are prepared to do,” Rivlin told the meeting. “The real question is: what are equity providers going to do - and where will the new equity come from? I have heard people saying there is plenty of equity around.

Well yes, but that’s based on performance over a number of years with fantastic un-geared growth. What is the return expectation of equity going forward? Is it going to be pos-sible for public companies to raise money in public offer-ings or are they going to have to turn to other providers of equity, either preferred equity through one of the funds or to other kinds of joint ventures? Are we going to see the in-tegrity of the public company structure that we have known for such a long time carry on?”

The mergers and acquisitions market will also become interesting when the current tough times look to be end-ing, he said. “One interesting question is if we are going to see quoted companies converge with private companies or diverge. We are all operating in one market with more or less the same skills, so what are the features of quoted companies that distinguish them, and are they features that help or hinder? Is that a capital structure where investors will accept quite a low return on equity in return for sta-bility, and does that confer competitive advantage? On the other hand, if you can’t raise the new capital and you are in a structure without much flexibility because the rules are tight and where shareholders and regulators are constantly around you - is the compensation enough? pfe

Credit crunch may make banks more cautious on real estate lending, giving opportunity for funds to fill mezzanine financing gapAccess to capital for real estate companies is likely to shift quite significantly as a result of the current storm sparked by the credit crunch, and private funds have an opportunity to step into the debt financing gap if banks are unsure about resuming widespread and unsecured lending, says one of the leading European specialists in the field.

Palatium Investment’s Paul Rivlin: “The real question is: what are equity providers go-ing to do - and where will the new equity come from?”



2007. By end 2009, another 22m sq.m. of shopping space will be added to the total, topped by Russia, Ukraine, Spain and Romania.

Malls are getting larger as well. The average dimension this year is 22,400 sq.m., 15.6% larger than in 2007. About 10% of centres are 50,000 sq.m. or more, and tend to be concentrat-ed on city peripheries. The most common dimension 10,000-25,000 sq.m., or 35% of the total.

Performance is not keeping up with new construction in western Europe however. Rents in the best locations are stable, while rents in less desirable properties have begun to sink. Ac-tivity in Spain is coming to an abrupt halt. While many projects launched during years of economic expansion continue to buoy construction in 2009, yields have been compressed to 4.5% and recent economic troubles are putting a stop to further specula-tion in the sector.

Despite diminishing returns, large scale distribution is ex-panding in France, where a number of top locations in city cen-tres are being renovated. Germany is benefiting from higher purchasing power among consumers but the high level of inter-est among investors is compressing yields.

In Italy, where purchasing power has flagged for several years, the retail market has slowed considerably. The value of goods exchanged will grow by 2.6% in 2008 and is expected to contract in 2009. That compares to 50% growth from 2000 to 2006. Large distribution in Italy continues its march, particular-ly in the south, and now accounts for 45% of retail. Rents and property prices continue to climb for small shops, while they are falling for large distribution outside major cities. pfe

Gabetti’s Giordano sees 25% decline in Italian major city housing sales

Ugo Giordano, CEO of the Italian real estate agency chain Ga-betti Property Solutions, has warned of a wide-ranging contrac-tion in the Italian residential market, predicting that housing sales in large cities like Milan and Rome would sink 20%-25% in 2008.

At the Scenari Immobiliari Forum in Santa Margherita Lig-ure, he contradicted the prevailing wisdom that high-end resi-dential is more robust than medium and low end - rejecting conclusions in studies of recent months by Scenari itself, Cush-man Wakefield, and Tecnocasa. Giordano sees prices falling 10% and transactions contracting by 20% in the segment. He expects nationwide housing sales to fall by 15%, and says the length of time to sell a home has grown to eight months from just six months in 2007. Closing prices are on average 15% low-er than the asking price.

Giordano said retail also is poised for challenging times, ced-ing advantage to older, more established shopping centres. “In southern Italy, food has become a greater household expense than non-foods,” he told the meeting. “That is because people will forgo everything else before food.” Southern Italy has at-tracted several retail mall developments in recent years.

Giordano does not expect the market climate to improve in 2009. He said prices in the industrial sector are falling dramati-cally, particularly general logistics facilities located far from city centres. Demand is currently favouring locations near rail and specialised facilities.

Giordano pointed to the office sector however as a significant window of opportunity. He said 80% of demand is for Class A, whereas supply falls dramatically short at only 10%. Yields on offices are rising though rents are holding stable for now.

Separately, the president of Italy’s largest association of

agents, the 14,000 member FIMAA, predicted on the sidelines of the conference that 15% of real estate agents would be out of work within six months. “There is an epidemic in the real estate sector,” Bruno Paludet said. “As with all epidemics, there will be a number of deaths. It is a process of natural selection and only the healthy will survive.” pfe

Italian REIT/SIIQ attracts €1.3bn assets despite troubled parent Aedes

The maiden REIT/SIIQ project of struggling Italian fund manager Aedes successfully collected €1.3bn worth of property assets backed by €680m in debt, which are now undergoing due diligence, according to CEO Massimiliano Morrone.

He said on the sidelines of the Scenari Immobiliari confer-ence in Santa Margherita Ligure recently that the SIIQ, called Nova Re, is poised to become Italy’s second REIT.

Listed retailer IGD converted to the status in April, while other major players withdrew their aspirations - including the listed office letting company Beni Stabili and the bank Intesa Sanpaolo. Nova Re will be Italy’s only real estate investment vehicle that intends to re-open to new capital every year.

Aedes purchased 78% of the listed Nova Re for €18.7m in May to act as a container for its SIIQ/REIT project assets and thus bypass an IPO. The assets transferred consist of office, re-tail and industrial properties throughout northern Italy, 90% of which fit the core profile as rental properties. They come from


Partners has raised its controlling stake in exchange-traded al-stria office REIT of Hamburg to 61% from 54%.

“Captiva 2 Alstria Holding S.à r.l. has informed us that it has increased its combined direct and indirect holdings in alstria’s share capital from 54% to 61%,” the Hamburg-based first Real Estate Investment Trust said.

Captiva 2 Alstria Holding is a fund managed and advised by Natixis Capital Partners. The change in stakeholdings has no effect on Alstria’s REIT status.

The Hamburg company buys, owns and manages office real estate in Germany, where it has 92 properties valued at €1.9bn with combined rental space of 953,000 sq.m.

Alstria cited plans to build significantly on its portfolio with selective investments. pfe

PFE COMMENT: Regular PFE readers know of our multi-culti delight in the simple fact that the French became the first to launch a German REIT in the shape of alstria. Given bombed-out stock price levels, Natixis would be badly advised NOT to boost its shareholding, particularly given that Germany has no limita-tions on single holdings that might jeopardise alstria’s REIT status above 60% as it would back home in France. The company’s stock was last trading just over €10, compared to a 52-week range up to a high of €14.10. However alstria has weathered Hurricane Sub-Prime relatively well compared to many peers.

LISTED REAL ESTATE

Patrizia sells mixed German portfolio for €79m, underpinning profit targets

Augsburg-based Patrizia Immobilien, a listed German resi-dential property investor, has sold 381 real estate units in Dres-den and Munich in two separate transactions totalling €78.5m that will help it to make its year’s net profit targets.

Dresden’s Altmarktkarree 1, which has 318 residential and 39 commercial units, was purchased by Patroffice, a company in which Patrizia holds a stake of 6.25% alongside two foreign in-stitutional investors. Patrizia said it will retain property manage-ment of this asset. The second package, with 24 units located in Munich’s central Prinzregentenstraße, was sold as a portfolio to a Spanish investor. pfe

Mann bid for Germany’s Polis is not targeted at full control - chairman

The takeover bid for German listed commercial property group Polis by the privately-held Karlsruhe-based Mann group is not gen-uinely aimed at 100% ownership but has been instituted only due to the legal requirement to do it, says the Polis chairman.

Alan Cadmus told PFE on the sidelines of the EPRA meet-ing that the original portfolio owner Mann is required to make a full offer to Polis shareholders after breaching the 30% thresh-old, raising its stake to 31.6% from 27.8%. “This is simply a pro-forma offer, and there really is no intent to take full con-trol,” Cadmus told PFE.

Mann also said in a statement in early September that it has no strategic goals in making the bid required by law. Polis has

Aedes itself as well as 10 partners in northern Italy. Nova RE’s current capitalisation stands at twice its net asset value at €24m, and expects to register a capital increase of roughly €620m in January or February 2009. pfe

Non-listed funds provide highest RE flexibility - Generali Italia’s Paviera

The head of Generali Real Estate in Italy, Giovanni Maria Paviera, says the group decided to focus its property activities in non-listed funds as a means to maintain flexibility. Generali recently concentrated its global real estate management in a new Paris-based company.

Speaking at the Scenari Immobiliare conference, Paviera said the choice to form a real estate fund manager was because of its flexibility compared to direct ownership of assets, funds’ in-creased liquidity and more measurable performance. Generali is steering clear of listed funds however due to their tendency in France and Italy to oscillate to levels below net asset value.

Generali created its Italian real estate arm in 2006 to actively manage its own and third-party property as a new, strategic line of business. In December of that year, it transferred 49 assets worth €687m as seed for its Fondo Scarlatti. In February 2008, Generali nearly doubled the size of that fund by adding another 18 properties. The closed-end fund now contains mainly offices and retail assets, with 75% of its value concentrated in Milan and Rome, and is due to expire in 2010.

Paviera, head of Generali Immobiliare Italia, was present-ing the strategy of Italy’s largest insurer in a panel session. He added that Generali and other insurers are barred from REIT/SIIQ investments under Italian regulations - because the au-thor of the regulation governing institutional investments for insurers omitted REIT/SIIQs from the definition of the real estate asset class.

The revelation deals a blow to an already struggling new in-vestment vehicle in Italy, which has only found two adherents since the legal category came into effect in January. Meanwhile, potential institutional investors, like banks and insurance com-panies, are increasingly transferring property assets to actively managed investment vehicles, like funds.

Generali Immobiliari now has €7.5bn in assets under man-agement. It is a major fund manager in Italy, and specialises in large cap funds. In addition to the Scarlatti Fund, it manages the €1bn Eracle fund, reserved for institutional investors of the banking group Banco Popolare, and is launching the €400m Cimarosa fund by the end of the year.

Generali Properties was launched in Paris on 1 September to extend its investment vehicle management internationally. The main activity will take place where the insurer has an international presence, but will also look for investment opportunities in other markets such as the US, the UK, and eastern Europe. The parent company has a global assets under management of €23bn. pfe

EUROPEAN REITS

France’s Natixis lifts stake in German alstria office REIT to 61%

A fund managed and advised by France’s Natixis Capital





only around 26% of stock in genuinely free float. Some 15% of equity is held by the NL-based Bouwfonds, 8% by Connecticut-based hedge fund Contrarian Capital Management, 5.5% by the French Cofitem Cofimur, 5.3% by the Australian Perennial In-vestment Partners, 4.7% by a Darmstadt company, and 3.2% by the Danish Danske Invest.

The offer, which runs until 13 October, is pitched at €10 per share. This is below the €14.19 calculated by Polis at the half year mark, and is just below its current stock price of €10.3, giv-ing current market capitalisation of €110m. Polis was floated in early 2007 at €14.5, and owns 31 German commercial proper-ties worth about €300m.

However another informed source, not attending the meet-ing, said the poor state of capital markets and the very low share price of Polis and other real estate companies, could make the case for taking Polis back off the market in a public-to-private action. One hindrance to this is the fees paid at the time of flotation. “They paid quite a lot of money at the time to get this portfolio listed that you have to think twice before taking it off the public market again,” the source said. pfe

PFE COMMENT: Public-to-private should be at least the flavour of the month if not the year, given the disastrous capital market assessment of real estate at present. The indomitable Alex Moss, now with Macquarie Capital, opined in a side session at EPRA’s annual meeting that the market in the past has often been basi-cally right, and that asset prices have fallen to match stock price assessments. We remain however deeply sceptical, seeing a large over-reaction at present, amid hysteria and panic - particularly post-Lehman. Based on our view, investors should be preparing to move in fast once the bottom is reached. Indeed, those that

have to do with institutional capital allocators such as pension and sovereign funds report that they genuinely are awash with cash…but still waiting. More shoes still have to drop.

Spain’s Afirma fails to convince new auditor that it can survive

Despite listed Spanish real estate company Afirma’s progress in reducing risk, its new auditor has expressed doubts about its ability to stay afloat amid the current credit crisis.

Ernst & Young said that while Afirma has lowered its debt, un-certainties abound and it needs more time to re-evaluate the situ-ation. The prior auditor PricewaterhouseCoopers, also expressed doubts and criticised the company’s debt restructuring plan.

Afirma suffered a loss of €181m in 1H08 compared to a €34.8m loss a year earlier. At the time, the company, formerly known as As-troc Mediterráneo, said the real estate sector had evolved unfavour-ably and it did not anticipate any short-term improvement. Afirma is in talks with creditors to merge several loans into a syndicated loan it secured in 2006 worth €667m to buy unlisted real estate firm Landscape. Its total debt is nearly €1.3bn.

Separately, one of Afirma’s units, Brasil Real Estate New Proyect Participaçones, is searching for partners to develop a $10bn tourist resort in Brazil. The catch is that the 13 luxury hotels and resorts, three golf courses and six residential estates encroach on land controlled by indigenous tribes and the plans have been frozen for nearly 30 years. Afirma inherited the project from Astroc, which joined the Brazilian venture last year. pfe

SAVE THE DATE!

DATE CHANGE : NORDIC PROPERTY BREAKFAST

Next in the series, provisional dates for 2009:16 January - Emerging Eastern Europe Property Breakfast27 March - Italian Property Breakfast15 May - French Property Breakfast26 June - German Property Breakfast

Due to quarterly reporting announcements by many listed real estate �rms in the Nor-dic region on or around 24 October, PFE will now host the Nordic Property Breakfast in

London on Friday 28 November. We apolo-gise for any inconvenience this may cause for attendees‘ planning.

To pre-book your place for PFE‘s Breakfast series, or for sponsorship, contact:Gaby Wagner, Co-Publisher, t +49 69 7191 896 33, m +49 173 3177 191, e [email protected]

Local Intelligence - Global Audience

WHEN: Friday 28 November 2008, 8:30 a.m. - 11 a.m.WHERE: City of London, Canada Square, Canary Wharf

l October 23, thursdayIEIF Colloquium, ParisEntitled Global storm : what does it mean for real estate, this French language event by the IEIF Institute for Real Estate and Property Company Savings brings together some 250 profes-sionnals in a twice annual event.More information: www.ieif.org

l October 27-29, Monday-WednesdayEuropean Alternative & Institutional Investing Summit, Monte Carlo, Monaco Opal Financial Group’s 8th annual Summit brings together in-stitutional investment and private wealth management pro-fessionals for discussion on investment challenges and oppor-tunities in traditional and alternative investments.More information: [email protected]

l October 29-30, Wednesday-thursdayEuropean Real Estate Opportunity and Private Fund In-vesting Forum, LondonThis annual event run by IMN brings together the opportunity end of the property investment community to discuss sophis-ticated real estate investment strategies. More information: www.imn.org

l November 4-9, tuesday-SundayMeeting Point, Barcelona The 12h International Real Estate Show & Symposium is one of the largest trade fairs and congresses on Spanish real estate. The BMP Symposium offers more than 40 sessions and 130 speakers in panels on various real estate themes. More information: www.bmpsa.com

l November 6-7, thursday-FridayAnnual Convention of Property Investment Prospects, Hämeenlinna, FinlandThis forum for gathers major Finnish and international real es-tate professionals and investors in the Russian, Baltic and Finn-ish markets. Key themes are business foresights and potential in Russia and Europe, and the impacts of climate change. More information: www.propertyinvest.fi.

l November 19-21Wednesday-FridayNAREIT Annual Convention, San Diego, CAThe largest event on the NAREIT calendar, this year widening its focus with more international panels, including some on Europe.More information: www.nareit.com

l November 19-21Wednesday-FridayMAPIC, CannesMAPIC is a unique event in the retail real estate industry, and one of the two largest in Europe. Last year it attracted over 2,300 retail developers and more than 1,050 exhibitors from 71 countries with a comprehensive range of retail projects. More information: www.mapic.com

l September 22-23, Monday-tuesdayCoreNet Global Summit, BerlinThe summit, for the first time in Germany, will focus on the theme Productivity Puzzle – Redefining the Work Environment. Corenet represents corporate real estate managers. Among others, Berlin Mayor Klaus Wowereit is scheduled to speak.More information: www.corenetglobal.org

l September 24, WednesdayICSC Baltic States Retail Real Estate Conference, Vilnius The International Council of Shopping Centers’ Baltic States National Committee is holding its first conference Baltics Re-tail: What Comes Next? It will focus on trends, retail regenera-tion and a panel discussion.More information:www.icsc.org

l September 25-26, thursday-Friday European Property Italian Conference, RomeDedicated to Italian real estate’s relations with international fi-nance, EPIC is an open house where all stakeholders can share ideas, build and consolidate networks, expand knowledge and develop strategies for new business. More information: www.epic.it

l September 26, Friday SEE Real Estate : Emerging market trends in Southeast Europe, Bucharest, RomaniaThe conference will bring together about 50 experts from all over Europe, who will examine key real estate market drivers around the southeast European region.More information: www.easteurolink.co.uk

l October 6-8, Monday-WednesdayExpo Real 2008, MunichThe International Commercial Property Exposition is one of the two largest real estate trade fairs in the European calendar, along-side MIPIM in March. In 2007 Expo Real attracted 1,823 exhibitors from 43 countries and 23,800 visitors from 77 countries. Interest-ing to see how the attendance patterns shift for the 2008 event.More information: www.exporeal.net

l October 13-15, Monday -Wednesday 14th Annual CEREAN Conference, IstanbulAnnual conference of the organisation for emerging eastern Eu-rope real estate associations. International investors and multi-national finance companies can identify real estate development and construction opportunities in Turkish and CEE projects.More information: www.cerean2008istanbul.com

l October 15-17, Wednesday-Friday 6th Annual International Hotel Conference, RomeMorris Lasky’s annual event brings together hotel industry ex-ecutives to discuss trends and deal making, building and main-taining successful hotel strategies in development, finance, franchising and operations.More information: www.ihconference.com



Diary dates upcoming in 2008

PROPERTY FINANCE EUROPE - BULLETIN BOARD




Germany’s Design Bau forecasts doubled residential sales for 2008/09

Design Bau, a German residential developer based in Kiel, paid a bonus dividend of €1 a share based on higher sales in its 2007/2008 financial year and predicted at least a doubling of turnover to €110m in the current year.

The company, which buys and develops residential properties in the posh suburbs of Berlin, Hamburg, Lübeck and Potsdam, sold property for €48.7m, up €11.2m from the previous year.

In the second quarter of the current year, June-August, the company sold 354 units of housing and land. This brought sales in the first half-year to 364 units, or 78% of the volume of 488 units done for all of 2007/2008. pfe

Spain’s Sacyr Vallehermoso aims to sell Repsol stake

Listed Spanish builder and real estate leader Sacyr Valle-hermoso, hard-hit by the Spanish property crisis, is looking to divest assets, including its 20% stake in Spanish oil giant Repsol, to increase cash flow as it struggles with plunging revenues and debts of €18.3bn as of June.

Shares in Sacyr Vallehermoso, Repsol’s largest sharehold-er, soared on the news of the sale of the stake which has a market value of some €4.5bn. Sacyr Vallehermoso’s revenue fell 80% in 1Q08.

The company is currently leasing the offices of the 236-me-tre-high, 48-floor SyV Tower, one of four skyscrapers being built on football club Real Madrid’s former training grounds. Seventeen floors will hold 21,400 sq.m. of office space; those remaining will house a 500-room, five-star hotel. pfe

NON-LISTED PROPERTY FUNDS

French SCPI property funds take net €516m in first half, 11% rise on 1H07

French SCPI property funds took in a net €516m in capi-tal during the first half of the year, or €680m in gross terms, around 11% less than in 1H07. However, the value of their assets rose to reach a total capitalisation of €17.8bn, a rise of 11%, according to the property fund association ASPIM and the IEIF research institute.

Several factors explain the relative stability of the SCPI (So-ciété Civile de Placement Immobilier) environment amid the weak real estate and capital markets, including offering higher savings returns and having less exposure to credit conditions. Some 26 financial institutions in France currently manage 127 funds, which are primarily targeted at private individual savers.

SCPIs have consistently taken in at least a net €400m during the first half of every year since launch in 2003. Most invest-ments focus on the classic diversified funds, with 80% of assets invested in office, followed by those investing in retail real estate assets at around 24% of total.

Among the fund managers, UFG is the market leader, managing funds capitalised at around €5bn, ASPIM and

IEIF concluded. The main banks normally at the head of the SCPI capital col-

lection - Crédit Agricole, BNP Paribas and Société Générale - took in virtually no capital into these vehicles following the launch of the OPCI competing vehicle seen by many firms to offer more advantages to retail and institutional investors alike. pfe

BNP Paribas, Primonial launch new €100m SCPI called Primopierre

BNP Paribas, the third largest manager of SCPI property funds in France, has obtained permission from the AMF regu-latory authority to launch a new fund targeted at investing in commercial property in France, the company said.

The fund, to be called Primopierre, will target equity of €100m and will be a partnership between BNP Paribas REIM and Pri-monial. Strategy will be to focus on a ‘classic diversified’ asset based. The institutions said the first investments are in an ad-vanced stage of negotiation for amounts above €10m each. pfe

ING RE Select’s Eurosiris hits €750mING Real Estate Select said its European fund of funds,

Eurosiris, launched in 2006 and designed to provide investors with balanced exposure to the European property market, has reached €750m in signed commitments from investors.

“Our target was to reach €1bn within three years of launch and we are on track to reach that goal,” ING’s head of Euro-pean fund management said.

ING RE Select is the investment manager’s multi-manager business. Established in 2000, it managed assets of €5bn as of end 1Q08 on behalf of more than 100 institutions. pfe

German retail property funds again buying specialty malls - Hahn report

Germany’s open-ended property investment funds have tak-en a strong new purchasing interest in specialty retailing malls after having spurned this market throughout 2007, says prop-erty group Hahn’s annual report on retail real estate.

In 1H08, retail property funds spent €450m to buy German specialty retailing centres. This was 40% of the investment vol-ume of this type of asset, although no open-ended property fund bought into a specialty mall the previous year.

The overall volume of investment in such centres, however, declined 41% in 1H08 against the year-ago. The 2008/09 Hahn report was prepared with the help of realtors Jones Lang La-Salle and Dr. Lademann & Partner. pfe.

Credit Suisse Benelux wins Ahold pension fund equity mandate

Dutch retailer Ahold has awarded Credit Suisse Benelux a €140m private equity fund of funds investment mandate from its pension fund. The mandate will enable Ahold pension fund


order of 25%,” it said.The falls in sales volume will be higher - at about 30% - in

Marseilles, but lower in cities such as Lyons and Toulouse - probably around 15% only. However, the association added that prices have remained relatively stable, even if marked by a slight decline across all the largest cities of France. pfe

Spain‘s Zapatero offers credit line to combat rental housing market slump

Spanish Prime Minister Jose Luis Rodriguez Zapatero has launched a credit line to support the rental housing market, but said months of hard times still lay ahead.

Developers who rent out their properties will qualify for a €3bn official credit line. He also plans to allow the creation of listed property investment funds eligible for tax breaks.

“These are concrete moves to make the property sector more competitive at the same time as we encourage the rental market and provide liquidity to companies with big stocks of prop-erty assets,” Reuters reported him as saying. “The measures themselves aren’t very significant. The most important thing is that he’s recognising the economy is weak,” Jose Luis Martinez, economist at Citigroup, said. pfe

to create its own tailor-made private equity programme with the help of Credit Suisse, which will manage the mandate.

“Despite the downturn in the market stemming from the credit crunch, Dutch institutional investors are increasing their allocations to private equity for the long term because of the stable returns and diversification benefits this asset class offers,” Credit Suisse said. pfe

RESIDENTIAL PROPERTY

French notaries see up to 30% fall in existing home sales in first half

The French notaries association, which sporadically publishes figures on residential sales, said existing home sales in the first half of the year experienced an ‘extremely substantial’ decline in volume across the major cities in the nation.

“Even if it is necessary to wait until 30 September to have complete certainty, the first half of this year has been charac-terised by a very substantial fall in volume in existing homes in all the large cities of the provinces, a decline that is likely to be above that announced in various media already, and on the





Global Property Research’s final constituents of the GPR 250 index series, which will become effective as from 22 September, constitute the basis of the grafics below. The GPR 250 index is a free float weighted index that tracks the performance of the 250 lead-ing and most liquid property companies worldwide. Companies are selected on uS dollar trade volume of the share in the past 12 months. Only companies with a free float market capitalisation above uS$ 50m and a free float of at least 15% are eligible for inclusion.

The constituents are: Allreal Holding, Alstria Office REIT, Atrium European Real Estate, Babis Vovos, Be-fimmo, Beni Stabili, Big Yellow Group, British Land, Brixton, CA Immobilien Anlagen, Capital & Regional, Carpathian, Castellum, Citycon, CLS Holdings, Cofin-immo, Colonia Real Estate, Conwert Immobilien In-vest, Corio, Dawnay Day Sirius, Dawnay Day Treve-

ria, Derwent London, Deutsche EuroShop, Deutsche Wohnen, DIC Asset, Eurocommercial Properties, F&C Commercial Property Trust, Fabege, Foncière des Ré-gions, GAGFAH, Gecina, Globe Trade Centre, Grainger Trust, Great Portland Estates, Hammerson, Hufvuds-taden, Icade, Immobiliare Grande Distribuzione, Im-moeast Immobilien Anlagen, Immofinanz, Invista Foundation Property Trust, Is REIT, IVG Immobilien, Klepierre, Kungsleden, Land Securities, Liberty In-ternational, Mapeley, Mercialys, Minerva, Nieuwe Steen Investments, Norwegian Property, ProLogis European Properties, PSP Swiss Property, Quintain Estates & Development, Segro, Shaftesbury, Silic, Société de la Tour Eiffel, Songbird Estates, Sparkas-sen Immobilien, Sponda, Swiss Prime Site, The unite Group, unibail-Rodamco, VastNed Offices/Industrial, VastNed Retail, Wereldhave, Wihlborgs Fastigheter, Workspace Group



REPORTS/STUDIES

Small to medium-sized retail parks seen as defensive play - JLL

Investors in continental Europe are targeting small- to medi-um-sized retail parks as a defensive play in the challenging retail environment, consultant Jones Lang LaSalle said.

Although overall retail warehousing transaction volumes fell to €2.7bn in 1H08 from €5.5 billion a year earlier, the retail parks sub-sector increased its share of total retail investment volume to 18% in 1H08 from 11%. As a result, total retail investment deal volumes rose slightly in 2Q08, including seven of over €50m.

Germany was the most active market in continental Europe in 1H08, as it was in 2007, accounting for 26% of the total vol-ume transacted. Sweden was the second most active with 15%, followed by France with 12%. But with the credit crunch grip-ping western Europe, investors are increasingly looking at CEE with its strong fundamentals and steady yields.

“Looking ahead, we believe that yields will move more in line with the cost of debt, although we expect demand from in-vestors to remain good for the consolidated, high quality, small- to medium-sized retail parks,” said JLL’s Mike Bellhouse. pfe

Outsized yield increase on cards for German property - Henderson Global

Yields on German real estate will show a comparatively strong rise through the end of 2009 because this national market has now become integrated with foreign markets after booming cross-border business in 2006 and 2007, says Hend-erson Global Investors.

Starting from the mid-2008 level, yield should rise by 60 basis points by end 2009, with the middle of next year an ideal en-try time, the UK real estate asset manager said. Two-thirds of the capital invested in German real estate in the last three years came from abroad.

This growing internationalisation will double volatility within the property business cycle. While the average yield fluctuation within a German cycle in the past has been only 50 basis points, the swing will increase to 100 basis points in this cycle, “a re-markable change by German standards,” said Stefan Wundrak, HGI’s research manager.

German yields since 1990 have been highly stable but often too skimpy for foreign investors. “A change is shaping up there,” HGI said, adding that prices are still too high in Germany and, unless they fall, investors will flee to buying opportunities in Britain.

HGI anticipates an increase in Germany’s 4.9% entry yield for office buildings to 5.4%-5.6% in Hamburg and Frankfurt, and more in some B locations. It expects the best total returns after the price correction to come from offices in Hamburg, Munich and some regional centres, where the average will reach 7%-10%. By contrast, total returns by IPD definition for German commer-cial property between 2003 and 2007 had been only about 2%.

With the new volatility, HGI sees mid-2009 as the right time to buy into the German market because prices by then will have weakened from selling by investors who had taken positions at high prices in 2006 and 2007.

HGI also saw potential for rising German office rents, which are low compared with those of Britain, France and Spain. pfe

Study links house prices to German economic growth - IW

Cologne’s industry-financed Institute of the German Econ-omy said that changes in German residential property prices affect the pace of the country’s economic expansion.

Examining historic data from 10 large countries, a study by IW found that residential prices explain 6% of the fluctuation in the expansion of the general economy. In Germany, it showed that a 1% decline in property prices in one year corresponds with a 0.5% dip in gross domestic product when compared with GDP’s long-term trend.

This is because people feel poorer when their property prices fall and therefore curtail their consumption, the researchers said. This effect also works in reverse, with changes in the develop-ment pace of the general economy, inflation and money-market interest rates influencing real estate prices. pfe

German, other low-beta markets, favoured medium-term - Invista

Less risky property markets such as Germany are best posi-tioned to deliver attractive risk-adjusted performance medium term as investors reassess their attitudes towards price and risk.

Low-beta markets such as Germany, Italy, Benelux and France offer diversified investment opportunities where returns can be enhanced over the medium term through active asset manage-ment, Invista Real Estate Investment Management said.

“Our research indicates which markets are expected to fare better over the medium term, and in our opinion, are better positioned to deliver attractive risk-adjusted returns. Despite re-cent weak economic data, we believe the German property mar-ket should consolidate its position as a key investment target for diversified investors,” Invista’s research head said.

Small, less liquid property markets, such as Portugal and Hungary, with higher levels of expected pricing volatility, fell in the rankings of Invista’s annual European Property Market Relative Attractiveness ranking, as did previous outperformers Spain and Ireland, which are seen experiencing a pronounced slowdown in economic growth over the next five years. pfe

La Défense vacancies cut by major leasing transactions in summer

In the space of a few weeks in early summer, several major leasing transactions took place in the western Paris La Défense office complex, bringing vacancy rates significantly lower in some of the high rise towers there.

According to the French property portal Business Immo, Axa Reim has leased space in Opus 12 and this is now com-pleted. Insurance company AGF has taken 8,300 sq.m. at a price of €570 per sq.m. and is even taking over some of the accompanying utility costs.

The Training Company IFPASS has also rented nearly 5,000 sq.m. of office in the building Realtys, an independent devel-oped building in La Defense. The rental is priced at €390 sq.m. for the year and is nine year fixed term lease.

The Insurance Company AIG, which owns a tower in the




complex, has also taken 11,000 sq.m. of office space in Tower B, owned by the Quebec provincial property asset manager SITQ. The Canadian investor is also in the process of renting the en-tirety of Tower T1 which contains 60,000 sq.m. and a part of the Building B which has another 10,000 sq.m. and is renting it to a CAC 40 major energy group, which has not been named.

Earlier in the first half of 2008 another 5,500 sq.m. of of-fice situated in the building Linea was rented out to a number of smaller companies and the average price for the space was pitched at €380 sq.m. per year. pfe

Spanish shopping centre sector shows weakness - Jones Lang

Despite a record number of new Spanish mall openings this year through August, the price has fallen by 5%-10% and could decline further as debt-burdened owners chase liquidity, con-sultant Jones Lang LaSalle said.

During the first eight months of the year 21 projects opened with three now in the second phase, amounting to 564,000 sq.m. in gross rentable area, but most of these projects were con-ceived five or more years ago at the height of Spain’s boom.

Forty-three percent of the new malls are located in towns of fewer than 50,000 people and 38% in cities with 50,000 to 150,000 people. Andalusia, Madrid, Valencia and the Basque Country have seen the largest increases in retail space this year.

Fewer projects are expected to come to market from 2009 onwards, not only because of the country’s economic crisis, but

because of increased distribution of shopping centres around the country. Next year should start with an estimated 14.2m sq.m. in GRA divided among 620 shopping centres, or some €700m in retail space.

Yields in retail during the first half were 4.5%, and have since begun to rise. Investors are looking at prime products with yields of between 5.25% and 5.5%. pfe

Poland, Czech RE markets seen cooler, Slovakia still strong - Bank Austria

Poland, the Czech Republic and Slovakia, all EU members since 2004, have seen the subprime crisis make financing more conservative and real estate projects more expensive, though Slo-vakia’s building spree is expected to continue through this year.

Poland trails Russia as the main destination for commercial prop-erty investment in the entire CEE/SEE/CIS region, with the Czech Republic third. But volumes have dropped, UniCredit Group’s Bank Austria said. In Poland, investment fell to €3.1bn last year from €4.6bn and by 28% to €1.1bn in 2H07. No rapid recovery is seen as investors and sellers await a clearer picture of market trends.

Slovakia, set to join the EU’s euro common currency next January, is expected to see economic growth slow to 6% next year from forecasts as high as 10 % this year, but Bank Austria said this year’s double-digit construction boom is seen continu-ing in the second half.

In the Czech and Polish office and shopping centre markets, some projects in their well-stocked pipelines could be delayed

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from their French holdings this may negatively impact their pres-ently rather sensitive cash-flow model scenarios.

Spanish court takes over debt case for Martinsa Fadesa units

A mercantile court in the Spanish province of Galicia has agreed to protect six companies controlled by troubled property group Martinsa-Fadesa from bankruptcy, only weeks after the same court made a similar decision concerning the listed mother firm.

The units in question, Jafemafe, Inmobiliaria Mar Plus, Fecler, Inomar, Town Planning Consultores and Construcciones Pórti-co, face liquidity problems similar to those of their owner, whose shares have not traded since July due to its financial instability.

Martinsa-Fadesa recently hired US investment bank Houli-han Lokey to lead talks with creditors to refinance its €5.2bn debt, as well as auditor Deloitte to map out a viability plan for the divestment of assets and the company’s future.

The company’s assets are valued at around €10.8bn. pfe

Whitehall will make LEG NRW its German platform

The Whitehall real estate fund of US investment bank Goldman Sachs plans to make the newly acquired LEG housing company of the state of North Rhine-Westphalia its “strategic platform for further investment in the residential property field in Germany.”

Whitehall reaffirmed its support for the social policy provi-sions the state insisted upon before it sold the housing author-ity, which owns 93,000 apartments. The sale of large blocks of housing is not planned, it said.

“Sales at the moment are only anticipated as part of normal portfolio management,” said Whitehall. pfe

Helaba provides €300m Hamburg office financing for Luxembourg’s Alpina

Helaba, the German state bank in Hessen-Thüringen, is financing two Hamburg office buildings for Luxembourg fund organisation Alpina Real Estate with a loan of €71.5m, part of the latter’s €300m real estate investment in Germany, Austria and Switzerland.

Helaba manages its domestic real estate business from its head offices in Frankfurt and Erfurt, focusing primarily on Hamburg, Munich, Berlin and the Rhine-Main and Ruhr con-urbations. pfe

Spain RMBS delinquencies rise again in 2Q08

Delinquency rates in the market for Spain’s residential mort-gage-backed securities (RMBS), an early indicator of mortgage loan defaults, deteriorated further in 2Q08.

“Weighted-average delinquencies greater than 60 days past

under the changed financial conditions. The Czech office market is well developed, dominated

by Prague, with total supply of modern offices put at 2.2m sq.m. Average vacancy rates have already edged up from 6% at end-2007. In Poland, demand for Warsaw office space has risen sharply, bringing vacancy rates down to 3.1% by last year and prime rents up to over €30/sq.m./month. New space of 400,000 sq.m. is forecast both this year and next, putting rents under some pressure.

In the smaller Slovakian market, office space in Bratislava has doubled in four years to around 750,000 sq.m., with the average vacancy rate stable at around 5%. Price competition is increas-ing. Prime rents have stabilised at around €18/sq.m/month.

Dense Czech shopping centre supply is led by Prague - over-taking Vienna with 672 sq.m. per 1,000 inhabitants - and more in the pipeline. Competition has risen sharply. Regional retail is also well developed.

Poland has some 5.7m sq.m. of modern retail space, with ap-proximately 1.5m in Warsaw, with developers now focusing on medium- and small-sized towns.

Robust demand from Czech retailers and industry for mod-ern logistics space has spurred a development surge, with space seen reaching 3.7m sq.m. by year-end, pushing up vacancy rates and slightly depressing rents.

In Poland, the logistics and industrial market has been boom-ing since 2004, with space almost quadrupling to 4m sq.m. and a further 900,000 sq.m. under construction. In Slovakia, such space almost doubled to around 1m sq.m. from 2004 to 2007 with demand coming from the auto and retail sectors. pfe

DEBT FINANCING/BANKING

Spain’s Metrovacesa taps Lazard to renegotiate debt

Listed Spanish property group Metrovacesa hired US invest-ment bank Lazard to renegotiate its €4bn debt with creditors as it faces two key repayment deadlines by around November.

On 31 October, Metrovacesa owes ₤240m which it used to buy the Walbrook Square office site in London’s financial district. By 27 November, it must refinance the ₤810m it borrowed from HSBC to buy the British bank’s London headquarters.

Metrovacesa said it received interest for stakes in its key British assets, but gave no details. Likely suitors are Middle Eastern and German property funds.

Metrovacesa’s gross asset value rose in 1H08 to €12.9bn, with a debt to asset ratio (LTV) of 53%. The property portfolio holds 75% of the total assets which are valued at €9.7bn.

Following an internal battle among shareholders, the Sana-huja family emerged with 80% of Metrovacesa and used com-pany shares to back the loans it used to finance operations. But amidst the sour market, Metrovacesa shares have dropped in value by 35% this year. pfe

PFE COMMENT: More than a few specialists in the European real estate community see Metrovacesa’s calculation of €4bn in debt as somewhat disingenuous. In reality, the company is a unit of the Sanahuja family holding which is running a credit line said to be in double digit billions. This entire calculation links into deep and profound thinking taking place over French SIICs; if Spanish real estate companies can no longer reap tax-free dividend income




due represented 1.58% of the outstanding pool balance, up from 1.07% in 1Q08, while weighted-average delinquencies greater than 90 days past due represented 0.83% of the outstanding pool balance, up from 0.50% from 1Q08,” said a co-author of a report by Moody’s rating agency.

The total outstanding portfolio balance of Spanish RMBS surged to €123.8bn in 2Q08, a 42.51% increase over the previous year.

“The deteriorating performance observed in the indices is likely to continue, especially for younger vintages.

House prices are likely to end the year 2% lower than at the end of 2007. This trend will remove some of the equity cushion from later vintages, but older vintages will be less affected,” said Moody’s economist Nitesh Shah. pfe

Primary EMEA CMBS volume dives in first half - Moody’s

Commercial mortgage-backed security and multi-family issuance in 1H08 dropped 91% in Europe, the Middle East and Africa from 2007’s record €35bn, given market tur-moil, ratings agency Moody’s said.

“Moody’s has revised its expectations for 2008 full-year primary issuance down to €10bn, which is significantly below Moody’s initial expectations of €30bn at the start of 2008,” said Moody’s Oliver Moldenhauer, an assistant vice president and analyst.

For the remainder of 2008, Moody’s ex-pects the market to witness sporadic trans-actions without a clear issuance trend, con-tinuing the pattern of the first half with just five recorded transactions against 38 in the year-earlier period.

Moody’s expects a slow market recovery in 2009, but rejuvenation will depend on future investor sentiment toward structured finance investments in general and the region’s com-mercial mortgage loans specifically. pfe

Hypo Real Estate sells asset management unit to Sal. Oppenheim

German property financier Hypo Real Estate has sold asset-management subsidi-ary Collineo to private bank Sal. Oppenheim of Cologne for an undisclosed amount.

Subject to several closing conditions and regulatory approval, the transaction is ex-pected to be completed by year’s end or early in the first quarter of 2009.

With a Dortmund-based staff of 22, Col-

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Continental European real estate finance...

launched the third of its Focus Park shopping centres in Po-land and secured a further nine sites in Poland as well as sites in Bulgaria and Ukraine.

The €110m, 28,000 sq.m. shopping centre in Zielona Gora, a regional administrative capital in western Poland, has around 115 shops and restaurants and a cinema and opened fully let. A further three Focus Parks are under construction, to total some 112,000 sq.m.

Parkridge’s central and eastern European team has secured a further nine sites in Poland equal to around 300,000 sq.m. of retail space and sites in Bulgaria and Ukraine.

Focus Park developments will be located in medium-sized cities with populations of 75,000-400,000. Other Polish projects underway include Gliwice, Piotrkow and Jelenia Gora.

Parkridge operates across all sectors of the property develop-ment and investment market, focusing on development in the industrial warehousing, business centre, retail warehouse, shop-ping centre, residential and leisure sectors, and has around €5bn of developments underway. pfe

lineo provides financial services for structured financial prod-ucts, with emphasis on portfolio management of mortgage and asset-backed securities and collateralized debt obligations in Europe and the US. The company also advises German and foreign investors on a range of financial products.“The sale of Collineo Asset Management will enable us to further round off the profile of the Hypo Real Estate Group,” said Tom Glynn, an HRE board member. The bank now con-centrates on commercial real estate lending and the financing of the public sector and infrastructure projects. pfe

EMERGING EASTERN EUROPE

Parkridge in third Polish shopping centres, secures Bulgaria, Ukraine

UK private development and investment company Parkridge

Rising real estate prices and deteriorat-ing financing conditions have persuad-

ed many foreign investors to take a break from their German shopping spree. Foreign investment fell 41% in the first six months after peaking at €13bn in 2007. Are foreign investors withdrawing or just catching breath? The residential real estate market in Ger-many continues to offer great potential for de-velopment and strong prospects for returns. Thanks to a price level that remains low by in-ternational comparison, Germany’s appeal as a place to invest is intact, even though the tide has changed. Quick portfolio purchases on borrowed capital are no longer just the thing. Appearing more often now are large investors with a buy-and-hold strategy and a long-term in-vestment horizon. Apart from uS and Brit-ish buyers, investors from Austria, Switzer-land, the Netherlands and the Scandinavian countries are increasingly moving in. The advantages of the German residential real estate market are obvious: It is the largest in Europe, with nearly 40m housing units. The ownership ratio of 43% lies well below the Eu average of 60%. The population de-cline forecast will have no negative impact for the foreseeable future. In the medium term, demand for rental accommodations will rise as residential building declines.

Single-person households are on the rise, with an increase of 2.6% in all households anticipated by 2025. Living space averaged 86.3 sq.m. in 1998; that requirement had risen to 93.1 sq.m. by 2006.

This effect doesn’t apply everywhere.

A discrepancy is wid-ening between regions that are growing and those that are stag-nating or shrinking. Among the growing regions are Germany’s main population cen-tres, which are deriving more than the average advantage from the

demographic trend that is drawing elderly people back into the urban orbit. Particu-larly medium-sized cities such as Münster, Bonn, Oberhausen, Leipzig and Dresden have strong development chances be-cause they offer more moderate real estate prices than those of more important prop-erty markets such as Munich, Frankfurt, Hamburg, Berlin, Düsseldorf and Cologne. Only in regions with favourable economic and demographic trends will rising rents and property prices reflect the growing shortage of living space, offering inves-tors opportunities for attractive yields. Se-lecting real estate investments from a geographic vantage point will therefore be critical to a successful investment strategy. A narrowing selection of suitable property

investments also leads to another effect. The predominance of large property trans-actions typical of past years is diminishing, while the number of small- and medium-sized transactions is increasing.

Living is becoming more expensive for Germans, and residential property is

becoming more lucrative for investors. The average annual yield on German residential property will rise in coming years to 7.8%, even reaching 8.8% in preferred urban lo-cations. By comparison, the average yield across Europe is estimated to reach only 7.9%. The favourable long-term outlook for yield will encourage investors to prolong the average period during which they hold their residential property in Germany to 5-10 years. The longer an acquired residen-tial portfolio is held, the more important strategic property management becomes. It allows investors to develop and improve their property portfolio over the long term. The potential for raising asset value - be it with innovative portfolio management or with a change in strategy - calls for com-prehensive market expertise, which only a local real estate company can offer. The outsourcing of asset management to a lo-cal partner gives foreign investors many advantages. They can plan their income and expenses more securely and make firm calculations for the performance of their property portfolio. In this way, the German residential property market will remain attractive to them - especially as a place for long-term investment. ps

German residential property market enters next round as foreigners pauseBy Pino Sergio, CEO, WGF Westfälische Grundbesitz und Finanzverwaltung

Guest Column

Pino Sergio

Continental European real estate finance...

gen_gb.indd 1 9/07/08 10:24:37



Buyukhanli sees an appetite for new towns in Bucharest’s suburbs, with the wealthier seeking residential complexes in-cluding facilities such as swimming pools or tennis courts.

Since the company purchased the plot in 2005, prices have increased dramatically and Buyukhanli does not expect any significant drop in the future.

The company, set up in 1953 to build luxury residential projects and hotels in Istanbul and Antalya, plans to continue to develop projects in northern Bucharest due to the area’s potential and the proximity of the two international airports, but may also acquire land in Bucharest city centre.

Buyukhanli Group decided to enter Romania, its first foreign country, last year due to the low land prices and high demand for living units. It is also targeting Ukraine and Moldova. pfe

Austrian Erste Bank’s Immorent to buy Bucharest area developments

Immorent Romania, the local branch of Austrian Erste Bank’s property leasing, development and investment division, is negotiating the purchase of a five ha. plot near Bucharest, where it plans to develop a retail park.

The company is also about to start a property project worth €300m and has a €100m budget to buy land countrywide for further property projects. The first project, Smart City, is to be developed in northern Bucharest and will include offices and apartments.

Immorent Managing Director Bogdan Cernescu told the Business Standard portal that negotiations are easier than in past years, because people who borrowed money to purchase land have to sell to pay off debts.

The company has operated in Romania since 2005. Im-morent plans to increase sales by 52% this year. Leasing con-tracts signed by Immorent this year total €120m, while assets were worth some €55.7m at end-June.

In Hungary, Immorent has signed a €44m financing deal with WhiteStone Investment for developing its Solaris City multi-functional shopping and entertainment centre in Budaors, the Eurobuild portal reports. pfe

Hungarian developer CEU-Reality in €200m mixed Budapest project

Hungarian property management services, investment and development company CEU-Reality is working on a €200m project to create a new city centre in Ujpest, on the border of Budapest’s northern districts IV and XIII.

The Karolyi Istvan City Center will include 1,300 flats, shopping, entertainment and cultural facilities, a theatre and sports centre and 40,000 sq.m. of office space in towers up to 17 storeys.

Construction is due to finish in 2011. The first phase of four residential buildings with 292 apartments will be partly completed by year-end and is already over 90% sold.

A new bridge spanning the Danube, with another expected nearby by 2013 has spurred investor interest in the area. The project will become the centre of the entire North Pest region, CEU-Reality founder CEO Tamas Jarosi told CEE construc-tion and investment journal CiJ. pfe

UK’s Willbrook to invest €900m in Bucharest multifunctional complex

UK commercial and residential property company Will-brook Management International, which focuses on central and eastern Europe, plans to invest €900m in a 400,000 sq.m. complex in the Pipera neighbourhood north of Bucharest which will include some 200 apartments, a business centre, an exhibition hall and a hotel.

The company will also invest €100m in another project in Timisoara, west Romania, including office spaces, apartments and a hotel, and it plans to develop a residential complex in Bucharest. It is also interested in constructing a wind energy park and an ecological farm in Dobrogea, southern Romania, local media reported. pfe

Czech ECM rejects UNESCO request to cut Prague skyscraper height

Prague-listed Czech developer ECM refused UNESCO’s request that it cut the height of its planned skyscrapers so that they do not spoil the Prague skyline, saying the guidance for shorter towers was only a recommendation and that the Prague Assembly has the final say.

ECM plans to build one 104 m. and one 75 m. building at Pankrac, Prague 4, seen as a major future commercial centre, while UNESCO’s world heritage committee recently decided the buildings should not exceed 60 and 70 m.

Environmental group Arnika says ECM’s refusal means Prague risks deletion from the UNESCO world heritage list. But ECM Vice-President Tomas Vlcek told Czech newspaper Lidove noviny that it expects the assembly to uphold a recent zoning decision. Prague’s chief heritage conservationist Jan Knezinek has agreed to the ECM project, the paper reports.

Meanwhile, ECM said it plans to raise €4.19m in a new share issue to boost its capital following a 1H08 loss of nearly €20m. Luxembourg-based ECM was established in 1991 by Milan Janku who is its majority owner via a Dutch fund.

As well as the Czech Republic, ECM also operates in Rus-sia, Poland and China. At end-August, the company’s portfo-lio consisted of 13 developer and nine investment projects covering an area of over 518,000 sq.m. pfe

Turkey’s Buyukhanli in €700m resi-dential development near Bucharest

The Buyukhanli Group, a luxury residences specialist in Turkey, is investing around €700m through its development subsidiary in a residential project on a 1.08m sq.m. plot in a village on the outskirts of northeast Bucharest.

The Cosmopolis project, with a planned 4,600 apartments and houses, commercial and office buildings and a health club, is due for completion by 2014.

All 565 apartments in Cosmopolis’s first phase for delivery this year have been sold at promotional prices, and half the apartments in the second phase are also sold, the subsidiary’s chairman Ahmet Buyukhanli told The Diplomat Bucharest magazine.



Ireland’s Menolly starts mixed-resi-dential project in central Warsaw

Menolly Poland, the Polish arm of the Irish residential and commercial property developer, and general contractor Warbud have started work on their Nowe Powiśle project in downtown Warsaw, facing the Vistula river.

Along with the University Library, the forthcoming Ko-pernik Science Center and the planned new buildings for the Warsaw Academy of Fine Arts, Nowe Powiśle is expected to redefine the image of this part of the city.

Nowe Powiśle will have 298 apartments and penthouses plus garages, with stores and services on the ground floors. It will also renovate the early 20th century Powiśle Power Plant, converting it into a shopping centre, art galleries and restaurants. Close by will be a new luxury spa hotel and a new Class-A office building, Warsaw Voice Real Estate newsletter reports. pfe

Russia’s IFC Metropol plans €500m Montenegro island resort

Russian financial company IFC Metropol plans to develop a €500m resort on the Montenegro island of Sveti Marko on the Adriatic once operated by Club Med.

One of Russia’s top investment groups, IFC Metropol pur-chased the island and real estate in the nearby town of Becici

from Serbian travel agency Putnik.The company will also invest “considerable funds” in the

overhaul of Putnik-owned hotels and property in Becici, Zlatko Cvetkovic, Putnik’s executive director, told Bloomberg.

The Metropol group of companies, founded in 1995 with the break-up of the Soviet Union, has interests in both the financial and industrial spheres spanning broking, asset man-agement, investment banking, banking and investments.

The company operates in Russia, France, Japan, China, Ser-bia, Cyprus and Britain.

In 2006, Serbia’s privatization agency invited bids for an island that was once jointly operated by Putnik and France’s Club Mediterranee. Montenegro became an independent state in 2006 following a referendum on succession from Serbia. pfe

Polish Buma starts €150m office centre in Krakow

Polish office and residential developer Buma Group has be-gun building the Quattro Business Park in Malopolska’s capital Krakow, to be the biggest office complex in Malopolska.

The investment is put at some €150m. Four 14-storey build-ings will be erected, offering over 48,000 sq.m. of office space plus parking.

Construction will be in four stages up to 2012, with the first building to be ready by the 2009 fourth quarter, said Buma Group President Jacek Michalski.

Continental European real estate finance for US & international investors

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rooms in nine Polish cities, for international hotel chains Accor (Novotel and Ibis); Envergure Group, today Louvre Hotels Group (Premiere Class, Campanille and Kyriad); and Qubus. pfe

SocGen’s developer Sogeprom to build shopping centre in Romania

French banking group Societe Generale’s development sub-sidary Sogeprom is in the process of designing and authoris-ing a shopping centre in Bacau, to be developed in partnership with another unnamed French company.

Thibault Mesnard, part of the Sogeprom Romania team, told Bucharest financial newspaper Ziarul Financiar that Sogeprom has bought the plot for the project and established an office in Bucharest. It aims to develop shopping centres, offices and housing, both in Bucharest and in the rest of the country.

Sogeprom operates in all property markets including prop-erty development, commerce, corporate real estate and busi-ness parks, as well as private accommodation and thematic residences. It is present throughout France as well as in Ger-many, the Czech Republic and Romania. pfe

US fund JER Partners plans central Europe expansion

US private equity fund manager JER Partners announced it is setting up an office in Prague to spearhead a real estate investment drive into central and eastern Europe.

The fund has hired three former senior GE Real Estate di-rectors with wide experience of the region to head the office, whose work will target investment in Poland, Hungary, Ro-mania, Bulgaria, Slovakia, Serbia, Croatia, Turkey and Czech Republic.

“This is a dynamic and pivotal time in JER’s history,” said Malcolm Le May, JER president. “We are in the midst of a sig-nificant period of accelerated growth with an expanded reach and greater diversity of investment vehicles.”

JER Partners is a division of New York-listed J.E. Robert Companies, which has offices across North America, Europe and Latin America.

The fund has invested more than €10bn in partnerships with firms including: Goldman Sachs, Lehman Brothers, CS First Boston, Deutsche Bank, G.E. Capital, and Cargill. It currently manages three private equity funds that have approximately €800m of committed capital in funds invested in portfolios, real estate, commercial mortgage-backed securities and loans, and operating companies in the US, Canada, Mexico and west-ern Europe. pfe

Aberdeen’s DEGI buys Romanian shopping centre for €140m

DEGI, part of Aberdeen Property Investors, has bought Iris shopping centre in Titan, Romania for about €140m, the second recently completed transaction in Romania by the former investment division of German group Allianz, recent-

Buma Group, set up in 1991, comprises companies in of-fice and residential development, property development, and the manufacturing and the design and erecting of proprietary Buma building systems. pfe

Israel’s Nanette in €115m Hungarian residential development in Budapest

Israeli-owned Nanette Real Estate Group, listed on London’s AIM, has signed a preliminary agreement to buy through a sub-sidiary a 3.24 ha. plot in Budapest’s 9th district for a €115m residential development, its eleventh project in Budapest.

Nanette plans to develop 1,800 apartments with about 90,000 sq.m. of net saleable area. and puts total estimated sales at completion at €145m. Nanette will finance initial ac-quisition from existing cash resources and is in the process of obtaining bank finance. Lehman Brothers had an option to participate as a 50% partner in the project.

Nanette is currently involved in 28 projects comprising a total of 24,000 apartments across Croatia, Hungary, Poland and Ukraine. pfe

Israeli Asim, Tidhar to develop all-season resort in Bulgaria

Tel Aviv-listed Asim Real Estate and Israeli real estate group Tidhar announced a partnership with the Bulgarian Invest-ment Group, which is owned and managed by Britons living in Bulgaria.

The aim is to develop an all-season resort in Razlog, a ski town in southwestern Bulgaria, in a much-needed boost for the country’s declining property market.

The group will invest €250m to create Razlog Village All Sea-sons Nature Resort. The project will include eight hotels of varying styles. All hotels will have 1,500 rooms. Construction will begin in 2009 and the first guests are expected in 2012.

The investment was a shot in the arm for the Bulgarian real estate and resort market which has been badly hit by the global credit crisis.

According to a study by Bulgarian Properties, a top real es-tate agency which works exclusively with foreign clients, holi-day property sales in Black Sea and mountain resorts dropped 40% in the 1H08 compared to 2007. Foreign investment in property dropped 17% to €727.1m over the first half of 2008, according to the Bulgarian Central Bank. pfe

Warsaw’s Echo to build another Novotel hotel in Poland

Warsaw-listed Echo Investment is building a new Novotel four-star hotel in Łódź city centre on a 1,450 sq.m. site near another Echo Investment project, Ibis Hotel, in a deal worth €15m, with leading Polish hotel group Orbis, now majority-owned by Accor of France.

Construction will start in 2009 for completion in 2011. Echo Investment, a commercial and residential developer

and property manager, has to date built 15 hotels with 2,200




backward nation, Albania’s new allure is its underdeveloped market, relative closeness to Israel and close relations with neighbour Italy, said Koby Dayan, general manager of Israel’s Adal Holdings, possibly the Jewish state’s biggest investor in Albania.

He said Adal is constantly attracting new partners and in-vestors for its Albanian projects. These include a 250-room hotel in the Albanian port of Vlore which when completed would be leased to a leading international hotel chain and a plan to build 1,000 holiday homes near the port. The group led by Adal and Israel’s Ashtrom Corporation has also offered to deepen and upgrade the port which was built by Italians.

Other projects are construction of a 49-storey building that would be the tallest in the Albanian capital of Tirana. pfe

Greek firms keep up real estate investment pace in Bulgaria, Romania

Greek companies and financial institutions have invested over €2bn in Bulgaria and some €3.5bn in its northern neigh-bour Romania in 1H08.

The investments were mainly in real estate properties with other investments primarily in banking and telecommunica-tions, the Greek financial newspaper Imerisia said. The in-vestments made Greece the fourth largest foreign investor in both countries.

In the latest real estate deals, Eurobank Properties, a subsidi-ary of Greece’s third-largest bank Eurobank EFG, said it paid €90.8m to buy Bulgaria’s Arcon Constructions which is build-ing a 32-storey office building in central Sofia. The building is scheduled for completion in 2011. Greek constructor GEK will make a €26m investment in Bulgaria’s Borovets which is build-ing a luxury resort scheduled for completion in 2010. pfe

DEALS/TRANSACTIONS

SEB Asset Management fund buys offices in Düsseldorf, logistics in Spain

SEB Asset Management, a Frankfurt property unit of Scandina-vian bank SEB, paid Munich builder DIBAG Industriebau €21.7m for a Düsseldorf office building fully rented to ThyssenKrupp Real Estate and acquired a Spanish warehouse near Madrid.

ly acquired by Aberdeen. The 60,000 sq.m. retail complex covers a total area of

around 100,000 sq.m., and also includes a 30,000 sq.m. com-mercial centre due to open this summer.

CBRE/Eurisko said the acquisition demonstrates the ongo-ing appeal of the Romanian market, which saw €903m worth of deals in 1H08, almost equal to the €999m a year earlier.

Last year, DEGI bought three office buildings for €110m from the UK portfolio of Charlemagne Capital. pfe

Immoeast sells two Warsaw office properties to Vienna Insurance

Vienna-listed Austrian Immoeast, the main Immofinanz subsidiary that invests in eastern European property, has sold two large office buildings in Warsaw.

The Mistral and Passat properties in the fast-growing Jer-ozolimskie Business Corridor were acquired by the Vienna Insurance Group. The companies agreed not to disclose the price. Immoeast acquired Mistral in January 2006 and Passat in March 2007.

The two adjacent properties have a combined 23,300 sq.m. of usable office space, with a 100% occupancy rate. Immoeast said the solid development of the rental market in central Eu-rope, particularly in Warsaw, has had a positive impact and institutional investors’ interest and transaction volume on the property investment market has noticeably increased. pfe

Israeli real estate investors turn eye on Albanian projects for first time

Israeli real estate investors, already active elsewhere in former communist eastern Europe, are now focusing on Al-bania with a growing list of projects under development.

“Albania may soon become the new mecca for Israeli real-estate developers,” the Jerusalem Post newspaper said. “The fall of communism and the creation of market economies in these areas have created vast real-estate opportunities, and local (Israeli) companies have not fallen behind in taking advantage of them.”

The Albanian Ambassador to Israel told the newspaper Al-bania is keen for Israeli real estate investment to help build better homes for Albanians and improve the country’s under-developed tourism industry and resorts. Once Europe’s most

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The Theodorpark building in Düsseldorf-Rath is being as-signed to the traded retail property fund SEB ImmoPortfolio Target Return, a German open-ended mutual fund.

The five-storey building, built in 2002, has 9,743 sq.m. of office rental space and becomes the 33rd property of SEB ImmoPortfolio Target Return, which invests in 11 countries.

SEB Asset Management also raised its stake in the Spanish logistics segment, buying a warehouse in Ciempozuelos for its traded, open-ended SEB Global Property Fund.

SEB Asset Management has assets of €132bn under man-agement, making it one of Germany’s leading real estate fund managers. pfe

Munich’s SHB buys German retail SHB Gruppe, a property asset manager based near Munich,

said it purchased a portfolio of 18 retailing assets - which pro-duce annual net rent of €6m - for €80m in the German states of Bavaria and Baden-Württemberg from a well-known devel-opment company.

The properties have 44,000 sq.m. of gross lettable area. About 90% of the completed properties are already rented for 10-15 years to retail chains Lidl, C&A, Aldi and Rewe.

Of those still being developed, the last should be completed in autumn 2009. The portfolio is being placed in a fund which will go on the market in the next few months.pfe

Spain’s Coperfil RE sells Madrid Logispark building to SEB for €29m

Coperfil Real Estate, a developer and manager of investments in logistics, retail complexes and mixed-use complexes, said it sold a 35,000 sq.m. Logispark building at Ciempozuelos in the province of Madrid to Swedish Financial Group SEB for €29m.

The deal makes SEB, which purchased two other warehous-es in the park from Coperfil a few months ago, the owner of all the buildings constructed in the first phase of this park. Coperfil will manage the property on SEB’s behalf.

SEB also awarded Coperfil property management contracts for two logistics buildings it purchased recently in Henares corridor, north of the capital. The first phase of Logispark Ciempozuelos is leased to international companies. pfe

France to introduce REIT law changes(continued from front page) The French witholding tax on SIIC dividends was introduced

in 2007 with SIIC 4, and was dubbed by some the ‘Spanish Law’. But it has not been influential because Spanish owners had not required French units to pay high dividends while home markets were in strong condition and cash-flows were good.

This year however, they need the dividend paymentss to serv-ice debt. Any fiscal reductions at source in France will hit hard.

“This clearly crept under everybody’s radar screen but it is going to be a big blow top some of these Spanish companies because they were all used to getting a tax-free dividend,” one Paris source said, asking not to be named.

“Companies like Metrovacesa and Colonial are crippled if they can’t get their dividend because that constitutes a huge part

of their income and is part of the security for their loans which they took when they bought the French SIIC stakes in the first place!” the source added.

The problem is exacerbated since debt servicing costs for many Spanish listed property firms are already sky-high. Metrovacesa and other assets held by its controlling Sanahuja family, such as Sacresa and its remaining stake in French SIIC Gecina, have combined debt in double-digit billions, and debt servicing costs are around some €900m annually, far above current income. Metrovacesa, where the Sanahuja family took majority control last year, reports only around €4bn of out-standing debt on its balance sheet.

“The banks are caught up in this,” the Paris source said. “Colonial is smaller but it faces the same situation; it owns the majority of SFL and this has turned out to be worth not nearly as much as they think…

“Then bring on top of all these problems the fact that there is going to be a witholding tax on their dividend income from France, and that they might lose their REIT status and pay corporation tax into the bargain, and it gets nasty.”

The French accounting community reckons that the equity volume required to be floated if all remaining SIICs were to try to sells shares and meet the single-shareholder limit would be in excess of €2bn. In the current market, where almost all real estate quoted companies are trading at vast discounts to net asset value, this would amount to a fire sale and would be value-negative.

Spanish concerns over the loss of income from French units is one reason its listed property groups have started seri-ous lobbying of the government to introduce a REITs regime (see elsewhere in this issue). Even without an EU-REIT, an interim stage may be for Spain to introduce REITs to support listed real estate through the current crisis, eventually aiding re-crea-tion of the sector around defunct players.

If a Spanish company owns equity in a French REIT but also qualifies for that fiscal status at home, then the dividend may be allowed as a pass-through so long as the final distribu-tion - to a shareholder of the Spanish entity - is taxed on the ultimate income.

In France, firms such as Lucette are more likely to accept the loss of SIIC status and the imposition of corporation tax than they are to sell large amounts of equity into very de-pressed stock markets in order to meet the single shareholder rule, the French community believes.

The main disadvantage of falling out of the regime is the loss of the ‘exit tax’ privilege which is a halving of capital gains tax on the difference between book and market value of assets acquired for the SIIC portfolio. In a declining market however, this potential capital gain will be dramatically lower than it might have been over the last four boom years in Eu-ropean real estate - and may be non-existent.

One Paris source said: “There’s not going to be any capi-tal gains there so some players who might have got hurt like MSREF’s Lucette and others that won’t qualify after the end of the year are unlikely to have any capital gains to shelter - so it’s a fools game; it doesn’t matter.”

“The good side to all of this is that it will force the stock market to behave normally, to have real liquidity and to stop having controlling shareholders who have simply hindered the free market flow. And actually, it’s a good thing that all this is happening at time of a crisis because it will be a lot less pain-ful and therefore encourage people to try and normalise these companies and their shareholdings.” pfe




Jones Lang LaSalle German CEO Christian Ulbrich has been named to the JLL main board and also head of Europe, Near-East and Africa. Starting in January, he will will replace Alastair Hughes who takes charge of Asia-Pacific… Hans-Fabian von Bassewitz will head Cologne’s newly-launched Treuinvest Fonds, which is developing two project funds with Canada’s Hallstone. Bassewitz moves over from HPC Capital, Fondshaus Hamburg and Fundus... Marcus Opitz has resigned from the supervisory board of Germany’s IFM Immobilien after serving for 2-1/2 years. Pål Berg of Norway’s Havfonn, part of an investor group that holds a large stake in IFM, has been invited to take Opitz place… Ton Hillen and Bert van der Els will be appointed directors of Heijmans as of 1 October. Van der Els moves up from heading the Tech-nical Services division urgers Ergon, and Hillen is currently President of Heijmans Property Development… the Royal Institution of Chartered Surveyors is enlarging its team in Frankfurt am Main. Ute Schweikart was appointed at the start of the month to take responsibility for membership and marketing… French SIIC Fonciere des Regions has announced that Massimeo de Meo is resigning from the management board and all other reponsibilities within the group. De Meo had a key role in repositioning FdR’s Italian unit Beni Stabili, and in setting up Fonciere des Murs Italy, the new arm focused on hotel investments… Catalyst Capital has appointed Maureen Mahr von Staszewski as its new head of origination and acquisitions for Germany. This follows the recruitment of Hans Stuckart from German Fund CGI, appointed earlier this year as Catalyst’s head of asset management… Pembroke Real Estate, the property investment and development advisor for Fidelity Investments, has appointed Simon Fisk as chief financial officer. Before joining Pembroke, Fisk was managing director for German-based Hypo Real Estate and was a key member of senior management of the bank’s Europe / Middle East division... Savills said its Paris office has hired four new members for its investment team. These include three associ-ates from CBRE - Boris Cappelle, Etienne Pax and Thomas Canvel - while Tristam Larder has transferred from Savills’ London office. They will be working with existing head of department Pascal Rupert… Schroder Property has appointed Ubbe Strihagen as director of business development for the Nordic region, reporting to Mike Clarke, Schroders’ head of property distribution. The hiring follows the appointment of Christoffer Sundberg as Schroders’ head of Property Fund Management for the Nordic region in July… Strihagen moves over from Aberdeen Property Investors, and will work closely with recently-appointed John Harding, business development director and Schroders’ client relationship team based in Copenhagen… JER is continuing its accelerated growth plans, hiring a team based in Prague to expand its operations in Europe. Well-known industry veterans Karim Habra, Christopher Zeuner and Petr Kosar have agreed to join JER Partners to focus on establishing a platform in Central and Eastern Europe. The three move over from GE Real Estate, where they were responsible for growing GE’s real estate operations in the region… Jones Lang LaSalle announced that Petra Blazkova is to join as an Associate Director in the European Research team. She joins from King Sturge, where she held the position of Senior Associate and managed the London based European Research team of six researchers… Michael Montebaur, member of the Management Board of Union Investment Real Estate, is leaving the company with effect 31 January 2009 to set up his own business. His replacement will be announced shortly. Also leaving the company at the end of the year is Rolf Zarnekow, head of asset management for the European and North American core markets… On the initiative of the Supervisory Board of Heijmans it has been agreed that Jacques van den Hoven will resign from the Board of Management as per 1 October 2008. Heijmans intends to appoint Gerrit Witzel, former chairman of the Strukton Groep, as new member of the board… In Paris, The Carlyle Group has appointed Agnès Riban and Olivier Petreschi as co-heads of acquisitions in France. They will be responsible for the investment into the new fund Carlyle Europe Real Estate Partners III in France and Benelux… GE Real Estate announces the promotion of Mike Bryant, previously MD of public markets origination at GE Real Estate UK, to the newly created position of MD, International Debt, GE Real Estate International… Bryant will report directly to Mark Hutchinson, President and CEO of GE Real Estate International… Gregor Drexler has been appointed MD of Vivico Real Estate, moving over from the Austrian CA Immo Group, which took over Vivico in January 2008. Since March 2008 the real estate economist is also member of the Vivico executive board... King Sturge has appointed Tomasz Strzyżewski as Associate Director and Head of office in Katowice, Poland… Atrium European Real Estate has appointed Nils-Christian Hakert as COO. He moves over from Unibail-Rodamco… Philippe Depoux, currently deputy MD at Société Foncière Lyonnaise, is joining Generali Immo-bilier France, reportedly with the aim of ultimately succeeding Anne-Marie de Chalambert as the head of the operation... Alban Liss, director of investment at Generali Immobilier France, is moving over to the international dividision Generali Immobiliare as head of investments... In Paris also, Eric Pinon is joining Colony Capital as financial director Europe, and will report directly to Sébastien Bazin, head of Colony Capital Europe… Martine Schaming is joining DTZ in Paris as director of HR in France. pfe

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