One Hyde Park: £60m apartment sold and luxury retail on the market

One Hyde Park: £60m apartment sold and luxury retail on the market

6 February 2012 | By David Doyle.

One Hyde Park's last five bedroom apartment has been sold, bringing the
total volume of sales in the London luxury residential scheme to more than
£1.5bn.


The five bedroom apartment, the largest size beneath penthouse, sold to an
unnamed buyer at the end of last week. Another £40m of apartments are also
said to be under offer.


It is the last of eleven five-bedroom apartments, which are almost 9,000 sq
ft in size, to be sold in the scheme.

At the same time Project Grande, the joint venture between the Prime
Minister of Qatar's Waterknight's and Christian Candy's CPC, has bought the
last retail unit in the development to the market.

The unit, which is the first UK premises for Abu Dhabi Islamic Bank, is
being marketed by Savills for in excess of £21m, a net initial yield of
3.6%.

Project Grande said the yield is predicted to rise to 4.35% and 4.99% with
indexed rent reviews. The property is let for 14 years off an annual rent of
£800,000.

One Hyde Park's other retail units, let to Rolex and McLaren, were sold for
more than £13m and £11.5m respectively, reflecting yields of 2.91% and 3.3%.

Leicester Square site for expanded Radisson Hotel

NAMA deal paves way for giant Leicester Square hotel

30 January 2012 | By Nick Johnstone

Radisson Edwardian has bought the 0.47 acre Odeon Leicester Square site
under plans to more than triple the size of its existing hotel at the
popular tourist destination.

The property's owners, Ireland's National Asset Management Agency and
Tamarin / Real Estate Solutions have exchanged with the hotelier's parent
Edwardian Group, after its owners struck a deal with Radisson to mitigate
the impact of rights of light on the sale.



Planning Permission was granted in October 2008 for the demolition of
existing buildings and redevelopment of the Site to allow development of a
two screen cinema, a 245 bedroom hotel, 33 residential units, four
restaurants at ground floor and one at ninth floor level.

The 215,000 sq ft Make-designed opportunity was put up for sale by agents at
CBRE, Knight Frank, and DE&J Levy early last year, following instructions
from receivers at Allsop.

London & Regional, in a joint bid with Hilton Hotels Group, is believed to
have been the under bidder.

Paul Mansi, chief operating officer of Edwardian Group, said: "Leisure
experiences are at the heart of the company's DNA and we are keen to create
new and exciting offerings for the local market and the myriad visitors to
the City. Details of our plans will be unveiled in the coming weeks."

Peter Burns of sales agent CBRE said the deal would unify three key
ownerships totalling around two-thirds of an acre on the south west corner
of Leicester Square.

All parties declined to comment on the price at this stage

Commercial Property Confidence (CPCI): Let's see how the market feels 18 months on

It is now almost 18 months ago since we ran our last commercial property confidence survey. At that stage we were seeing an increasing emphasis being given to underlying property fundamentals. It is important, if not critical, to gauge the direction in which the market believes some of these key issues are moving and to this end the commercial property confidence survey aims to give consideration to these aspects: Eighteen months ago, the eProp CPCI index appeared to be struggling to find direction having effectively deteriorated, reaching a level of 42 as at August/September 2010 compared with a reading of 47 at February/March 2010. With 50 being neutral, the reading was largely negative, but nevertheless a little better than the levels of 36 and 37 registered in the same periods in 2009. The CPCI cycle trend suggests that the peak was reached in early 2006. The bi-annual eProp Commercial Property Confidence Index (CPCI) Survey is based on a mix of ten equally weighted variables comprising both `hard' and `soft' business conditions; the index reflects a six month forward projection for the commercial property sector. From a sector perspective and on a net balance basis (ranging from +100 to -100 with 0 being neutral), both the office and industrial sectors worsened marginally. The Office sector's net balance reading in August/September 2010 was at -9, down from zero 6 months prior; the industrial sector showed a reading of -22 from -1 six months prior to this. Although retail remained negative at -17 this was the only sector to have shown a small improvement on the period six months prior, where the reading was at -23. This was the sixth consecutive negative outlook for retail commencing in Feb/March 2008 albeit up from its lowest level of -42 reached in 2009. In terms of the ten issues constituting the index, seven issues remained negative, two held a positive outlook on aggregate with one aspect exactly neutral. On the positive front it was the number of leases and sales - albeit only just positive - with 5 and 8 percent of respondents respectively anticipating any improvement. Sale prices were expected to remain static, not withstanding that a net balance of 23 percent of respondents expected capitalization rates to rise. At the time, monetary policy supported this outlook given that the prime interest rate reached its lowest levels in recent history; however this too can still rise in 2012 although the any clear prognosis therefore remains murky at best. In line with the softening yields score representing the second most negative response, 23 percent of respondents anticipated that staff levels would reduce 18 months back. True to form, the factor considered most negative remained the outlook for the management of the public environment in which assets are located in. There has been a fair amount of focus on municipal management of late and it will be interesting to see if this arena is still spiraling for investors and property managers. The outlook for vacancies remained negative at -13 percent, although it has to be said that this was up from the -67 percent recorded a year back. Net operating income was anticipated to come down as evidenced by a net balance of 18 percent of respondents. Retrospectively we see that the eProp CPCI is a very useful barometer for commercial property and business conditions and has been very accurate in terms of market movement.

Soros plan for ESM and EFSF to guarantee ECB loans and reduce cost of sovereign debt

How to pull Italy and Spain back from the edge

The longer-term refinancing operations launched by the European Central Bank in December
have relieved the liquidity problems of European banks, but not the financing disadvantage of the highly indebted member states. Since high-risk premiums on government bonds endanger banks' capital adequacy, half a
solution is not enough. It leaves half the eurozone relegated to the status of developing countries that became highly indebted in a foreign currency. Instead of the International Monetary Fund, Germany is acting as the
taskmaster imposing fiscal discipline. This will generate tensions that could destroy the European Union.

I have proposed a plan (http://blogs.ft.com/the-a-list/2011/11/21/the-ecb-must-step-in-to-save-the-eurozone), inspired by Tomasso Padoa-Schioppa, the Italian central banker, that would allow Italy and Spain to refinance their debt by issuing treasury bills at about 1 per cent. It is complicated, but legally and technically sound.

The authorities rejected my plan <http://www.ft.com/cms/s/0/87157274-4676-11e1-89a8-00144feabdc0.html> in favour of the LTRO. The difference between the two schemes is that mine would provide instant relief to Italy and Spain, while the LTRO allows Italian and Spanish banks to engage in a very profitable and practically
riskless arbitrage but has kept government bonds hovering on the edge of a precipice - though the last few days brought some relief.

My proposal is to use the European Financial Stability Facility and the European Stability Mechanism to insure the ECB against the solvency risk on any newly issued Italian or Spanish treasury bills they may buy from
commercial banks. This would allow the European Banking Authority to treat the T-bills as the equivalent of cash, since they could be sold to the ECB at any time. Banks would then find it advantageous to hold their surplus liquidity in the form of T-bills as long as these bills yielded more than bank deposits held at the ECB. Italy and Spain would then be able to refinance their debt at close to the deposit rate of the ECB, which is currently 1 per cent on mandatory reserves and 25 basis points on excess reserve accounts. This would greatly improve the sustainability of their debt. Italy, for instance, would see its average cost of borrowing decline rather than increase from the current 4.3 per cent. Confidence would gradually return, yields on outstanding bonds would decline, banks would no longer be penalised for owning Italian government bonds and Italy would regain market access at more reasonable interest rates.

One obvious objection is that this would reduce the average maturity of Italian and Spanish debt. I argue that, on the contrary, this would be an advantage in current exceptional circumstances, because it would keep governments on a short leash; they could not afford to lose the ECB facility. In Italy, it would deter Silvio Berlusconi from toppling Mario Monti - if he triggered an election he would be punished by voters.

The EFSF would have practically unlimited capacity to insure T-bills because no country could default as long as the scheme is in operation. Nor could a country abuse the privilege: it would be automatically withdrawn and the
country's cost of borrowing would immediately rise.

My proposal meets both the letter and the spirit of the Lisbon Treaty. The task of the ECB is to provide liquidity to the banks, while the EFSF and ESM are designed to absorb solvency risk. The ECB would not be facilitating
additional borrowing by member countries; it would merely allow them to refinance their debt at a lower cost. Together, the ECB and the EFSF could do what the ECB cannot do on its own: act as a lender of last resort. This would bring temporary relief from a fatal flaw in the design of the euro until member countries can devise a lasting solution.

For the first time in this crisis, the European authorities would undertake an operation with more than sufficient resources. That would come as a positive surprise to the markets and reverse their mood - and markets do
have moods; that is what the authorities have to learn.

Contrary to the current discourse, the long-term solution must provide a stimulus to get Europe out of a deflationary vicious circle: structural reform alone will not do it. The stimulus must come from the EU because
individual countries will be under strict fiscal discipline. It will have to be guaranteed jointly and severally - and that means eurobonds in one guise or another.

The writer is chairman of Soros Fund Management. His latest book is 'Coming Soon: Financial Turmoil in Europe and the United States'

South African real estate a good bet

Investors see Commercial Real Estate as a good bet

Despite our fragile economy, investors are bullish on the prospects for commercial real estate industry in South Africa, said respondents to a last year's poll by SA Commercial Prop News. As 2011 came to a close, some commercial real estate experts found promising signs in often troubled markets. Over the last two years, JSE listed property funds that are heavily committed to commercial portfolios have outperformed almost every other class other than precious metals and raw materials such as iron ore. Latest performance figures from listed property funds confirm that office portfolios have taken a harder knock from job losses and a slower economy than their industrial and retail counterparts. The Retail and Industrial market is gaining interest from investors amid a mixed bag of property-related economic fundamentals such as improvement in employment, infrastructure and business expansions. "Investors continue to view these sectors as an attractive play in delivering steady cash flows driven by solid rental demand," said David Louw, editor of SA Commercial Prop. "As a result, investors view these sector as a hotbed for further investment activity."

Greek Debt Deal Falls Short of What’s Needed to Save Euro: Bloomberg View - Bloomberg

At some point, possibly in the next several weeks, Europe will run into a major flaw in its plan to shore up the region’s finances: Some euro-area governments, such as Greece, simply aren’t going to be able to pay their debts.

The sooner Europe’s leaders recognize this and take appropriate action, the less expensive the solution will be.

This week’s main event in Europe has been a standoff between Greece and its private creditors over the terms of a “voluntary” debt-relief deal. Agreement is crucial to avert a Greek default on a 14.4 billion euro payment due March 20, and to keep open the financing spigot from the European Union and the International Monetary Fund.

Whatever the outcome of those negotiations, though, it won’t solve Greece’s debt problem. TheEuropean Central Bank, the IMF and other official creditors aren’t taking part in the deal, so it will affect only private creditors. They hold about 200 billion euros of Greece’s 338-billion-euronet government debt. In other words, even the 50 percent writedown Greece is seeking will reduce its debt burden by only 100 billion euros, or less than 30 percent.

That’s not enough. Any country’s solvency is a function of its debt load, interest costs, growth rate and fiscal policy. In Greece’s case, assuming an interest rate of 4 percent (the rate it may get out of the debt talks) on its remaining 238 billion euros in debt, and using the IMF’s projections of economic growth, the government would have to run a primary budget surplus(not counting interest payments) of 3.2 percent of gross domestic product indefinitely just to keep its debt burden stable.

Primary Surplus

Don’t count on that happening. Greece has managed to run a primary surplus that large in only six of the past 24 years, when economic growth was much stronger. To meet such a goal now, it would have to reduce its deficit by some 10 billion euros a year, the equivalent of about two-thirds of its spending on social programs.

Portugal, which is not currently in line for debt relief, faces a similarly daunting task. To maintain a stable debt burden, it would have to run a primary surplus of 2 percent of GDP, something it has done in only two of the past 16 years.

The dire state of the two governments’ finances raises a troubling question at a time when German Chancellor Angela Merkel and French President Nicolas Sarkozy are trying to fast- track a new fiscal compact for the 17-nation euro area: How can the agreement, which seeks to toughen budgetary discipline, restore confidence in Europe’s finances if at least two of its signatories are insolvent from day one?

It’s possible that Merkel and her ideological soul mates at the ECB are hoping that, by keeping strapped governments dependent on official financing, they’ll have more power to push through austerity measures. Problem is, heavy debt loads are making the budget-cutting measures much more painful than they need to be -- and probably too painful to put in place.

The likely result: slower growth, greater dependence on official creditors and bigger losses for European taxpayers down the road. Not to mention the deleterious effect the ongoing uncertainty will have on the finances of core euro-area countries, European banks and ultimately the ECB itself. At any moment, doubts about the euro’s survival could trigger a financial catastrophe.

A quicker and more honest reckoning would stand a better chance of stopping the rot and creating the conditions for a successful fiscal union. We have advocated writing down the debts of Greece and Portugal by 70 percent and 40 percent, respectively, leaving them with the much more realistic task of achieving primary surpluses of about 1 percent of GDP. This can be done only if official creditors take losses alongside their private counterparts. With all euro-area governments on a solvent footing, the ECB could then step in with credible guarantees to recapitalize banks and calm market jitters.

All these elements will eventually be needed if the euro is to survive. Enacting them now would dramatically increase the chances of success.

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