Database

Recorded property investment turnover in Central and Eastern Europe slowed further in the first quarter of this year with volumes now at levels seen earlier in the decade, according to analysts.

Levels were at approximately €220 million, a third of the volume transacted in the last quarter of 2008, according to the latest report from CB Richard Ellis. But there is optimism with several project in the pipeline, it also reports.

Lack of liquidity is having an impact on every property investment market in CEE and is therefore profoundly affecting transaction numbers, it says.

The majority of all CEE investment activity in the first three months of 2009 was in Russia and the Czech Republic. Russia’s volume was driven by several office transactions and one hotel transaction.

But lack of transparency is making it difficult to measure the markets. There is evidence to suggest that the more challenging conditions in Eastern Europe are impacting market transparency, making it more difficult to measure investment volumes accurately, the report says.

In the Czech Republic, investment figures were largely driven by Deka’s purchase of Jungmannova Plaza office building in Prague. This was the most prominent institutional transaction closed in CEE.

Meanwhile, countries that have been drivers of CEE investment volume in recent years such as Poland and Romania recorded very low property investment volume in the first quarter.

But looking ahead there is optimism in the markets. ‘What some of the low CEE investment volumes do not show is the considerable pipeline activity in some of the core markets in Central Europe. Several high quality assets are currently on the radar of institutional investors in the region, especially in the Czech Republic and Poland,’ said Jos Tromp, Head of CEE Research & Consulting.

‘In the remainder of 2009 the trading of a limited number of good quality schemes is expected to result in an upward trend in investment volumes in CEE,’ he added.

But fewer foreign investors are on the lookout. Until now, foreign purchasers have driven investments in property in CEE, usually accounting for more than 80% of all volume. But uncertainty about pricing and an inability to obtain financing have now forced many foreign buyers to the sidelines, the report concludes.

via Property investment continues to slow in Central and East Europe | Europe | News.

CB Richard Ellis today announced the results of its Rent and Yield Indices for the first quarter of 2009, broadly reporting falling rents and rising yields across Europe. Key findings included:

Rents

– Offices: Prime office rents across Europe fell in the first quarter of 2009. The CB Richard Ellis office rent index for the EU-15 area fell by 3.4% in the quarter, taking the year-on-year rate of growth to minus 4.1%. Twenty eight of the 48 locations in the survey saw prime rent falls, one location increased and 19 remained unchanged. The largest falls occurred in Kyiv (down 33% to €357 per m² per annum) and Moscow (down 20% to €918 per m² per annum). The only increase was in Zagreb, where rents increased by 0.8% to €211 per sq m per annum.

– Retail: Prime rents also fell in the retail sector. The CB Richard Ellis retail rent index for the EU-15 area fell by 1.3% in the quarter, taking the year-on-year rate of growth to 0.6% Only one location in the survey saw an increase in the level of prime rent, 13 declined and 29 remained unchanged. The largest falls were recorded in Warsaw (down 33% to €960 per sq m per annum) and Bucharest (down 30% to €1,080 per m² per annum). The single increase occurred in Birmingham, where rents increased by 9% to €1,669 per m² per annum.

– Industrial: Industrial rents also fell in the quarter. The CB Richard Ellis industrial rent index for the EU-15 area fell by 2.2% in the quarter, taking the year-on-year rate of growth to -4.6% Twenty four of the 43 locations in the survey saw the level of prime rent remaining stable, 18 declined and only one location saw an increase. The largest falls were in Dubai (down 33% to €67 per m² per annum) and Kyiv (down 22% to €64 per m² per annum). The single increase occurred in The Hague, where rents increased by 8.3% to €65 per m² per annum.

Yields

– Offices: Office yields across Europe rose in the first quarter. The CB Richard Ellis office yield index for the EU-15 area rose by 19 basis points in the quarter, and as a result is 107 basis points higher than a year ago. Thirty four of the 49 locations in the survey saw upward yield movements, two saw yields move lower and 13 remained unchanged. The largest rise occurred in Moscow with yields moving 150 basis points higher to 11.5%, with Sofia, Zagreb, Budapest, Bucharest and Belgrade each seeing increases of 100 basis points. Running counter to the general upward trend, there were yield reductions of 15 basis points in Manchester and Birmingham taking both to 7.5%.

– Retail: Retail yields also rose in the quarter. The CB Richard Ellis retail yield index for the EU-15 area rose by 24 basis points in the quarter, and as a result is 98 basis points higher than it was a year ago. Thirty of the 42 locations in the survey saw upward yield movements, 12 remained unchanged and there were no reductions. The largest rises occurred in Bucharest (300 basis points) and Moscow (150 basis points), leaving both at 11.5%.

– Industrial: Industrial yields also rose. The CB Richard Ellis industrial yield index for the EU-15 area rose by 32 basis points in the quarter, and as a result is 120 basis points higher than a year ago. Thirty two of the 41 locations in the survey saw upward yield movements, none saw yield reductions and nine remained unchanged. As in the retail sector, the largest rises (150 basis points) occurred in Moscow and Bucharest, taking them to 13.5% and 10% respectively.

Commenting on these changes, Richard Holberton, Director, EMEA Research said: “The effects of the general deterioration in short-term economic prospects are very evident in the downward pressure on all the sector rent indices this quarter. This weakening in the rental outlook, along with loss of liquidity and higher risk premia, continues to cause repricing in the investment market. Yields continue to rise in most markets, although some parts of the UK market notably saw very modest movements and, in a couple of cases, negative shifts.”

Source: CBRE

via Rents falling and yields rising across EMEA in first quarter 2009 (EMEA).

Volumes Down but Signs of Improving Sentiment

London, 15th April 2009 – Direct investment in European commercial real estate reached €12bn in Europe in Q1 2009, down 30% on volumes in the previous quarter and 70% lower than Q1 2008, according to new research from Jones Lang LaSalle. Core Western European markets accounted for 95% of total investment volumes, whilst Central and Eastern European markets saw very little activity.

Tony Horrell, Head of European Capital Markets at Jones Lang LaSalle said: “In the first quarter of 2009 we have noted improving sentiment and increased bidding; in the last three months we have seen investors seeking high quality and long term good income. However there is a lack of good prime product and at the same time the accepted definition of the prime asset class has narrowed considerably. Whilst yields in some markets moved out marginally in the last quarter, yields in many markets remained stable, for example in the City of London, Amsterdam, Frankfurt, Hamburg, Munich and Paris. This genuine interest from some investors is a positive sign but only time will tell if key deals will sign in the coming months.”

In the UK direct commercial real estate investment volumes were €4.4bn in the first quarter of 2009, a slight upturn (4%) compared to the previous quarter, and largely accounted for by transactions in the central London market. In Germany €1.6bn was transacted in the quarter, down almost 50% on the previous quarter; the lack of transactions reflecting a ‘wait and see’ attitude from domestic investors who have not been forced into distressed selling as well as the lack of debt required to fund larger transactions. Investment activity in Central and Eastern Europe (including Russia) was limited to a handful of transactions in Q1 2009, totalling €536m.

via Uutiset. Jones Lang LaSalle.

Property investment firm Segro said Wednesday that it will issue 5.2 billion shares to raise 500.6 million pounds via a 12 for 1 rights issue. “The rights issue, combined with the increase to our gearing covenant, will help protect Segro from further falls in property values,” said CEO Ian Coull. Separately, the firm said that its fiscal-year net loss widened to 938.1 million pounds, from 73.8 million pounds a year ago, reflecting property revaluation deficits. Adjusted diluted net asset value per share fell 31.5% to 482p, mainly due to a drop in U.K. property valuations. “The global economic environment is likely to remain difficult through the course of the coming year and an early return to an active investment market is unlikely,” noted Coull (MarketWatch)

March 3 (Bloomberg) — Germany’s real estate companies are fighting for survival, with deadlines looming to refinance short-term debt that’s as much as 18 times their market capitalization while the recession erodes asset values.

Loans defined as short-term by the 10 largest publicly traded property companies total 4.2 billion euros ($5.3 billion), according to their most recent financial reports. Patrizia Immobilien AG, Vivacon AG and IVG Immobilien AG alone owe 3.1 billion euros, part of which expires as early as next month. That’s more than five times the trio’s combined market value, which has shrunk 83 percent in the past year.

“I wouldn’t be surprised if banks pull the plug for some real estate companies in the very near future,” said Matthias Schrade, an analyst at GSC Research in Dusseldorf, Germany.

Augsburg-based Patrizia and Hypo Real Estate Holding AG, the commercial property lender bailed out by Germany, are among stocks on Schrade’s “don’t touch” list. Since 2003, 11 of the 91 companies on that list have gone bankrupt and shares of 63 others slumped even as the equity market rose.

Toxic debt from the U.S. subprime mortgage crisis has forced banks around the world to seek bailouts. While Germany said this month that Hypo Real Estate is too important to go bankrupt, none of the top 10 listed property companies is bigger than 700 million euros in market value. The prospect of some of the companies failing is turning investors away, said Matthias Born, a fund manager at Allianz Global Investors in Frankfurt who has sold most real estate shares from his 1.2 billion-euro portfolio.

Bank Scrutiny

The ratio of debt to assets is one benchmark banks watch closely. A range of up to 60 percent to 65 percent is where “banks would still be willing to give credit,” according to Olaf Meisen, a partner who specializes in real estate finance at law firm Allen & Overy LLP in Frankfurt. Seven of the 10 companies have ratios that exceed 65 percent, with Patrizia topping the list with 80 percent, according to Frank Neumann, an analyst at Bankhaus Lampe AG in Dusseldorf.

General Growth Properties Inc., the U.S. owner of shopping malls that warned last week it may be forced into bankruptcy, is saddled with $1.18 billion in past-due debt.

While most of the bigger U.S. real estate firms have received debt ratings, none of the top 10 German property firms are rated by Moody’s Investors Service or Standard & Poor’s. That doesn’t make it easier for the companies to raise funds, said Torsten Klingner, an analyst at SES Research in Hamburg.

‘Real Problem’

Patrizia, which builds and manages residential property, has 1.3 billion euros in short-term debt, of which 530 million euros are due at the end of March. The debt level could be “a real problem” and banks could possibly force the company to sell shares or into insolvency, according to GSC’s Schrade.

Patrizia Chief Operating Officer Klaus Schmitt disputes that. “We’re in talks with our banks and there are no signs a prolongation won’t work,” he said in a Feb. 20 interview.

Munich-based Hypo Real Estate, which has received 102 billion euros in public guarantees and credit from the German government, is one of Patrizia’s largest lenders, according to Sal. Oppenheim Jr. & Cie.’s Frankfurt-based analyst Sven Janssen. Hypo Real Estate spokesman Oliver Gruss and Patrizia’s Andreas Menke won’t comment.

Germany’s commercial property market froze in the second half of 2008 as financing dried up, said Tobias Just, a real estate economist at Deutsche Bank AG in Frankfurt. Prices will probably fall 30 percent this year from 2007, he predicts.

Defaults Expected

In a parliament report this month, Germany’s government singled out commercial real estate as an industry where “defaults must be expected” as the financial crisis deepens.

TAG Immobilien AG, the property firm founded in 1882 to build a railway in Bavaria, reported a 2008 net loss yesterday after writing down the value of its assets. More may follow.

Vivacon, which specializes in leaseholds of residential property, may have to write down about 140 million euros in asset value in the fourth quarter of 2008, according to SES Research’s Klingner. The company has 524.8 million euros in short-term debt and a market value of 39.3 million euros.

A Vivacon spokesman in Cologne said the company is in “promising” talks with banks to extend its short-term debt.

A spokesman at Bonn-based IVG, which owns offices, business parks and industrial property, declined to comment on how the company will refinance its 1.4 billion euros in short-term debt.

Vivacon has slumped 86 percent in the past year, leading a decline in German real estate shares. IVG fell 83 percent. Patrizia lost 65 percent, cutting the company’s market value to 74 million euros, compared with its 1.3 billion euros in short- term debt.

‘Against the Wall’

Still, lenders may prefer to extend loans and demand higher interest rates, Bankhaus Lampe’s Neumann said. Earlier this month, Eurocastle Investment Ltd., a property fund managed by Fortress Investment Group LLP that invests in Germany commercial real estate, extended a 236 million-euro loan after agreeing to increase interest payments by 75 basis points, or three quarters of a percent.

Royal Bank of Scotland Group Plc, the biggest government- controlled U.K. bank, last week reported a full-year loss of 24.1 billion pounds ($33.9 billion) and said it would shift 540 billion pounds of mortgage-backed securities and other assets to a new unit. RBS owns about 22 billion pounds of real estate loans secured by properties worth less than the amount loaned, analysts at JPMorgan Cazenove Ltd wrote in a Feb. 19 note.

“Banks can’t afford to drive real estate companies against the wall,” Neumann said. “They have other problems at the moment than to cash in real estate portfolios.”

To contact the reporter on this story: Claudia Rach in Berlin at crach1@bloomberg.net

Source: Bloomberg

Kiinteistömarkkinat saavat tänä vuonna karmivan kylmää kyytiä.

Alan suurin konsultti Catella Property Group ennustaa, että kauppojen määrä puolittuu viime vuodesta. Pääkaupunkiseudun toimistot tyhjenevät kiihtyvää vauhtia.

Syksyllä yleistyvät pakkomyynnit. Isot velaksi ostetut kiinteistösalkut alkavat polttaa näpeissä niin, että rahoittajan täytyy etsiä uusi omistaja – ja se näkyy hinnoissa.

Kauppojen määrä romahti jo viime vuonna 40 prosenttia. Tänä ja ensi vuonna Catella arvioi volyymin jäävän 1-2 miljardiin euroon, ja siinäkin on tekemistä tammi-helmikuun perusteella.

– Myyjän ja ostajan hintakuilu kaventuu tuskallisen hitaasti, kuvailee tilannetta Catellan toimitusjohtaja Michael Schönach.

Harva myyjä on valmis hyväksymään ennusteen, jonka mukaan kiinteistöistä maksetaan tänä vuonna sijainnista ja laadusta riippuen 15-30 prosenttia vähemmän kuin 2008.

Arvio nojaa vertailumaiden kehitykseen.

Pankit vaarallisen varovaisia

Toistaiseksi pankit ovat vältelleet haltuunottoja ilman varmaa tietoa uudesta sijoittajasta. Rakennuksia ei haluta omiin taseisiin, joten pitkämielisyyttä riittää.

– Pankit ovat vaarallisen varovaisia, kun eivät halua näyttää väistämättömiä tappioita. Parantuminen edellyttäisi sairauden myöntämistä, Schönach täräyttää.

Hän uskoo kiinteistöjen pakkomyyntien yleistyvän syyspuolella. Joidenkin isojen portfolioiden omistajien talous on jo nyt niin kyseenalainen, että pankki voisi vaatia realisointia.

– Tilanne kriisiytyy, jos ulkomaiset pankit kansallistamisen tai haltuunoton seurauksena vetäytyvät, Schönach varoittaa.

Suomen tilanne ei ole vielä niin epätoivoinen, että ulkomaiset sijoittajat palaisivat. Ulkomaisia sijoittajia saattaisi houkutella se, että pankit alkavat jättää uudistamatta lähivuosina erääntyviä lainoja, joita annettiin vuosien 2005-2007 buumissa. Se johtaisi aktiivisempaan kaupankäyntiin ja laskisi hintoja.

Myyntimotivaatio noussee myös kunnissa, joiden kiinteistösalkut kiinnostavat sijoittajia vakaan vuokrakassavirtansa vuoksi.

Suhdanteista ei ole opittu

Kun nykyinen finanssikriisi jo raivosi täysillä, maahan valmistui ennätysmäärä uutta toimistotilaa.

Pääkaupunkiseudulla on paraikaa rakenteilla 140 000 neliötä toimistotilaa, vaikka vajaakäytön uskotaan kimpoavan 12,5 prosenttiin tänä vuonna. Miljoona tyhjää neliötä koko 8,3 miljoonan neliön kannasta on masentava lukema. Espoossa vajaakäyttö on jo nyt huikeat 14 prosenttia.

Mitä pitäisi tehdä, etteivät samat virheet toistu noususuhdanteessa?

– Voimakkaampi regulaatio tappaisi markkinan. Julkisen vallan keinoiksi jäävät ennakoiva rahapolitiikka, joka ei enää ole kotimaisissa käsissä, ja valtion finanssipolitiikka. Oikein ajoitetut koronnostot auttaisivat hallitsemaan kehitystä niin, että projektit eivät riistäytyisi käsistä, Schönach sanoo.

Kehittäjien omassa riskienhallinnassakin on parannettavaa.

Onneksi taantuma karsii ahneet, kiinteistöjen kehittämisestä viis veisaavat sijoittajat.

– Jäljelle jäävät tosiammattilaiset, Michael Schönach arvioi ja muistuttaa, että tuotto on jatkossa luotava vanhanaikaisesti eli kiinteistön manageerauksen tuomalla arvonnousulla.

Source: Kauppalehti

Marknaden för fastighetsaffärer har kollapsat.Bankerna har stoppat sin utlåning och de utländska köparna har övergett Sverige. Om ett halvår kommer tvångsförsäljningarna, tror fastighetskonsulten Jones Lang Lasalle

“Marknaden är förlamad sedan Lehman Brothers gick i konkurs i höstas. Vår bedömning är att transaktionsvolymerna har minskat med cirka 85 procent under de två första månaderna det här året jämfört med samma period år 2008″, säger Daniel Gorosch, chef för fastighetstransaktioner på Jones Lang Lasalle.

De utländska bankerna vill inte längre finansiera köp av svenska fastigheter, och hos de svenska storbankerna är det också stopp. I de få fall där bankerna ändå beviljar lån blir de väldigt dyra.

Dessutom har bankerna sänkt belåningsgraden rejält.

År 2007 kunde man finansiera upp till 85 procent av en fastighetsaffär med banklån.

I dag ligger belåningsgraden på maximalt 60 procent för de få fastighetsköpare som blir betrodda av banken.

Läget förvärras av att de horder av utländska investerare, som har köpt svenska fastigheter de senaste åren, nu har lämnat Sverige.

“Prisfallet har gått snabbare på andra europeiska marknader än i Sverige. Vi ligger efter i priskorrektionen. Därför söker utländska investerare i allt högre utsträckning investeringsmöjligheter på marknader där priserna bedöms ha bottnat”, säger Daniel Gorosch (bilden).

Enligt Svenskt Fastighetsindex föll värdet på svenska fastigheter med 8 procent förra året. Det är första gången sedan början av 1990-talet som priserna backade. Och prisfallet väntas fortsätta.

“Vi räknar med att priserna fortsätter ned. Det finns risk för ett större fall, framför allt för så kallade sekundära fastigheter i sekundära lägen. Men det är oerhört svårt att bedöma var det bottnar”, säger Daniel Gorosch.

I Sverige finns det högbelånade ägare till fastigheter 160 miljarder kronor, enligt en kartläggning som tidningen Fastighetsvärlden har gjort.

Det innebär att belåningen ligger på över 70 procent.

Många av dessa fastighetsägare kommer att råka illa ut när fastighetspriserna nu faller samtidigt som andelen outhyrd yta ökar.

Marknaden har ögonen på tre utländska fastighetsbolag, med fastigheter till ett sammanlagt värde på 36 miljarder kronor. De har råkat illa ut i spåren av finanskrisen.

Landic Property, till 40 procent ägt av isländska heter värda sammanlagt Negativ spiral Negativ spiral Stodir som har ansökt om konkursskydd, är ett av problembarnen, enligt Fastighetsvärlden.

Landic äger fastigheter för 16 miljarder kronor runt om i Sverige och har anlitat fastighetsrådgivaren Catella och investmentbanken UBS för att analysera portföljen och hitta en köpare.

Royal Bank of Scotland, som numera ägs till 68 procent av den brittiska staten, äger fastigheter i Stockholm till ett värde av 16 miljarder kronor via dotterbolaget Nordisk Renting.

Den tredje stora utländska spelaren med problem på den svenska marknaden är danska Centerplan, som gick i konkurs i höstas. Centerplans svenska portfölj är värderad till 4 miljarder kronor.

Under högkonjunkturen tvingades många utländska fastighetsköpare att söka sig utanför de centrala storstadsområdena för att hitta attraktiv avkastning och spännande investeringar. Det är den här typen av fastigheter som spås drabbas hårdast av prisraset.

“I många fall har bankerna säkert rätt att redan nu dra tillbaka sina lån och ta fastigheterna i pant. Men än så länge har fastighetsägarna tillräckligt starka kassaflöden för att täcka upp för ränteinbetalningarna, och då låter bankerna bli. Men vi kommer att få se tvångsförsäljningar när vakanserna ökar samtidigt som hyresgästerna får allt svårare att betala sina hyror”, säger Daniel Gorosch.

Source: di.se

LONDON, February 25 (Fitch) Fitch Ratings has today downgraded property company Atrium European Real Estate Ltd’s (Atrium) senior unsecured rating and Long-term Issuer Default Rating (IDR) to ‘BB-‘ (BB minus) from ‘BB+’ respectively. The Rating Outlook on the Long-term IDR is Negative. The Short-term IDR has been affirmed at ‘B’.

The downgrade reflects Fitch’s concern that the deteriorating economic  environment in Central and Eastern Europe (CEE) will lead to greater negative
pressure on Atrium’s tenant portfolio and ultimately its rental income. Fitch believes there is now an increased risk of tenant defaults and a greater need to
offer lease incentives to existing tenants because of worsening economic conditions. This concern is exacerbated by the fact that a majority of Atrium’s
tenants earn revenue in local currencies but pay rent in euros or US dollars, which has become increasingly difficult as the depreciation of CEE currencies
has accelerated in recent months. In addition, there has been a significant curtailment of the development programme as a result of projects becoming
economically unviable. This means that rental income from the development portfolio is now less than Fitch initially anticipated. The agency believes that
Atrium’s Fitch-adjusted EBIT/net interest cover ratio (NIC) could now deteriorate over the next two-to-three years. The agency also notes that
interest rates have fallen significantly in recent months and that this will lead to a marked decrease in interest income given the company’s high cash
balance. This negative carry could be another factor which causes Atrium’s NIC ratio to come under pressure. However, Atrium’s NIC ratio may improve somewhat if it chooses to buy back either its 2006 bonds or convertible bonds.

The Negative Outlook is mainly driven by the challenging conditions affecting commercial property companies in CEE and the possibility that this could result in even greater pressure on Atrium’s tenant portfolio than currently anticipated. Fitch will continue to monitor Atrium closely for signs of further
negative pressure on rental income during 2009 and 2010.

However, Atrium’s ratings are supported at their current level by the company’s liquidity position, with cash of EUR1.4bn as of 30 September 2008 able to support committed development spending of EUR426m, and significant covenant headroom. As of 30 September 2008, Atrium’s loan to value ratio stood at 4.6%, well within the covenant level of 60%, and its property portfolio was valued at EUR2.78bn. This marks a decrease of 5% from the EUR2.93bn valuation as of 30 June 2008. Atrium also benefits from little refinancing risk in the medium term with its next debt maturity, of EUR54m, in 2011 and a maturity of EUR554m in 2013 when bonds mature.