Rutley (See LSE:DPE) Share Discussion Threads

[lbo] 27/3/2007 15:19

Rising rates shifting focus in commercial property markets

THE rising interest rate curve has prompted a major shift in investment focus by property experts with the emphasis shifting from prime office properties in centres such as London to Paris, to the Nordic markets and Luxembourg.

A new report on the global property investment market from Bank of Ireland Private Banking estimated that Irish investors spent somewhere in the region of €11bn on property in 2006, with the Irish, UK and European markets as the favoured locations.

However with interest rates on the up, it is no longer a simple matter of buying with borrowed money and taking your profit from a higher rental margin.

This is particularly the case in the UK, with prime-office yields at 4.5pc and lower, compared with the five-year cost of funds at around 6.4pc.

So with interest rates now outstripping rental yields in many countries the experts at BoIPB advise a more selective approach.

Negative

"The core-office markets that we feel have the strongest rental growth prospects include Paris, the Nordic markets and Luxembourg.

They state the London office market also has the potential for strong rental growth, but the negative yield spread makes it a very difficult market.

The report says that the Dublin core-office market should continue to see strong rental growth rates and strong occupier demand which has been boosted by limited supply in the city centre and a buoyant economy. Unfortunately they add, the current prices discount much, if not all, of the potential gains.

The report also identifies markets to be avoided.

"We are increasingly nervous about the UK and Spanish office markets from a pricing perspective.

"We see no compelling reason to invest in Italian office markets and are not convinced about the merits of Eastern European office markets in general.

Over the long-term, the report states, retail commercial property markets may offer value as European consumer spending is expected to grow quite strongly over the next five years.

"In terms of retail markets, we like the French and Nordic retail markets, while Spanish retail still displays considerable momentum. It also describes that Italian retail market as interesting.

The UK retail market is treated with caution while the Irish core-retail market is described as being very expensive, despite producing amazing returns last year - up over 25pc.

[lbo] 20/2/2007 17:41

Prosper from German property, urge analysts
Tuesday 20th February 2007: 11:00By Scott SinclairPROPERTY investors fed up with an "overstretched" UK market could do worse than look to Germany, say analysts.


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Investing in UK bricks and mortar has reaped rewards over the last decade but some observers now suggest the market is becoming saturated.

Instead, they are touting German property as the place to invest, citing economic growth last year and the lowest rates of unemployment in four years as proof of a blossoming nation.

Stuart Law, chief executive of Assetz, says the growth potential in German property is finally starting to bear fruit.

"Germany is a new market for most overseas investors and it will take time to develop, so I would advise taking a ten year view rather than expecting instant returns," he says.

"However, the growth triggers investors have been waiting for are starting to occur, with prices in some residential areas seeing small rises after years of declining or static prices."

Oliver Jackson, commercial director at World Capital Partners, adds: "The UK property market is dangerously overstretched, wage inflation is significantly lower than house price inflation, and interest rates are creeping up.

"So people are looking abroad to invest in property, as the market out there is rising faster than the UK market has done over the past 10 years."

Alex Ross, manager of Premier Asset Management's Pan-European Property Share fund, says his investments in Germany – around a quarter of his portfolio - are proving profitable.

"Most of my focus is now on continental European property where the medium term outlook is very attractive," he says.

"This is because of the positive yield gap. It is positive in continental Europe against a negative in the UK.

"The reason a quarter of my portfolio is in Germany is because the country is in the middle of its cyclical curve at the moment.

"For instance, office rent in Germany is at a five-year low and, in Frankfurt, rent has fallen by around 35pc in the last three years.

"But this is now tailing off and we're starting to see some rental growth kicking through. In fact, in the fourth quartile of last year, rent in Frankfurt was on the increase.

"Germany is now where the UK was around three years ago."

[lbo] 19/2/2007 12:38

Germany has risen to one of the world's top three destinations for private equity investment in the Private Equity News annual survey of financial sponsors.

[lbo] 03/2/2007 15:56

Nice breakout on the chart. How high this goes short term is anyones guess but the bubble will burst IMHO

[lbo] 19/12/2006 17:44

German business ends year upbeat

December 19, 2006 09:53
A survey has shown that business confidence in Germany rose unexpectedly in December.

The widely watched business climate index, calculated each month by the Munich-based economic research institute Ifo, rose to 108.7 points in December from 106.8 in November, Ifo said in a statement.

The increase took analysts by surprise. Consensus forecasts had been for a steady Ifo index reading after the barometer returned to its highest level in 15 years in November.


For its monthly survey, Ifo polls about 7,000 companies about their assessment of current business and their expectations for the next six months. A breakdown of the data showed that the current sentiment sub-index rose to 115.3 points in December from 113.9 in November. At the same time, the expectations sub-index also increased, rising to 102.5 points from 100.2.

[lbo] 14/12/2006 13:16

"The Rutley European Property Fund is targeting a 12pc-a-year return for investors"

[lbo] 14/12/2006 12:43

Knight Frank to float a £600m European fund
By Jim Pickard, Property Correspondent

Published: November 6 2006

Knight Frank, the estate agency, is planning to build up a £600m portfolio of European property through the flotation of a new investment fund.

It is understood that Rutley Capital Partners, Knight Frank's private equity arm, is seeking to launch the fund on the main London stock market in the coming weeks.

The group hopes to raise £200m which - with typical gearing of two parts debt to one party equity - gives it a £600m to spend.

The move comes amid a surge of new investment on the continent by an array of international investors, notably from the US and the UK.

Investors have been drawn by the clear arbitrage between the cost of debt, at about 5 per cent, and commercial property yields of 6 per cent or higher. In Britain and North America this margin no longer exists for many grade-A properties.

Rutley European Property Limited, which will be listed in London and on the Channel Islands Stock Exchange, is currently a private company based in Guernsey and owned mainly by institutional investors.

Its target is commercial property in Germany, Switzerland, Belgium, the Netherlands and central Europe.

The group has recently bought or put under offer 12 properties for £108m in Germany and Poland. It is in the process of buying other properties worth £167m in Poland, Belgium and the Czech Republic. The overall yield on this portfolio is more than 6.8 per cent.

The flotation will raise money through an issue of convertible ("C") shares, while existing shareholders in REPL will receive ordinary shares. To avoid diluting the existing shareholders, the C shares will be held as a separate pool until this new money is 75 per cent invested in properties. A further £465m of property has been identified as acquisition targets for the C share pool.

REPL expects to invest the whole of the portfolio by the summer of next year. Under the group's structure the eventual portfolio will be gradually wound down between 2010 and 2013, with the properties sold and the proceeds distributed to shareholders.

The placement agents on the fund are Cenkos Securities and Knight Frank Corporate Finance. Knight Frank is one of Britain's most successful estate agents firms.

[zuke2] 25/6/2003 22:36

Now "THAT" IS art!

[zuke2] 25/6/2003 22:11

Looks like a bad accident to me !

[panagos] 25/6/2003 22:10

barren......good work.....love the pic

[panagos] 14/5/2003 11:43

i like waffles