Intu shopping refinances debt

Intu Properties, the re-branded Capital Shopping Centres Group, is refinancing four UK shopping centres with £1.15bn of debt comprised of a sterling bond issue, fresh bilateral bank debt and a bridge facility. 

The four wholly-owned shopping centres are intu Lakeside, intu Braehead, intu Watford and intu Victoria Centre, and together are valued at a combined £2.3bn.

This takes the refinancing to 50% LTV, which is slightly reduced leverage from the existing 56.6% LTV, based on the existing seperate debt facilities for each of the four shopping centres, which amounts to £1.3bn.

Intu is arranging the refinancing through a new debt funding platform, the secured group structure (SGS), a special purpose vehicle for issuing investment grade secured debt which will become a central source of financing for Intu. All debt within the SGS will be ranked pari passu.

Intu will contribute around £200m, from existing cash and facilities, to fund the balance of the refinancing on the existing debt secured on the assets as well as to fund the estimated £60m to £70m swap break costs and transaction costs.
The bridge facility is anticipated to be refinanced through further capital markets issues as market conditions allow, while the bond roadshow will commence on Monday 4 March and the bank debt, which has already been signed, will come into effect when the bonds are issued.

The establishment of the SGS therefore will achieve a refinancing and maturity extension on about one third of the group’s debt and over 55% of Intu’s debt that is falling due within the next three-to-five years.
Intu said it anticipates the new debt issued through SCS will lower the ompany’s medium-term average cost of funding, albeit after an initial marginal increase due to cystalising swap breakage costs which will reduce adjusted, diluted NAV by circa 7p.

SCS is structured to issue debt capable of being assigned an ‘A’ category rating, ensuring ready access to medium and long-dated bond and private placement markets on an ongoing basis alongside bank debt, diversifying sources of debt and lengthening loan maturities.

Intu said the blended £1.15bn refinancing “balances flexibility with lender andbondholder credit protections”. For Intu, there is operational flexibility to contributute additional or substitute assets as well as issue further debt and fund development capex, while for creditors there is now a range of debt products to chose to invest in as well as a tiered covenant regime.

Matthew Roberts, finance director of Intu Properties, said: “We are pleased to announce the establishment of a vehicle for issuing investment grade debt which will become a central financing platform for the group.

“This robust and flexible platform diversifies the group’s sources beyond the banking markets and brings the considerable benefits of ready access to debt markets through an investment grade rating, access to longer maturities and ability to issue a range of instruments at competitive margins.”

The four Intu shopping centres have a combined retail space of 4.3m sq ft and an annual footfall of around 80m people.
The announcement was one of a flurry of major announcements from Intu Properties this morning as it unveiled its full year results, chief among them an equity raising to fund a large shopping centre acquisition. 

Switzerland tightens capital requirements on home loans

Switzerland has introduced a 1% equity ‘anti-cyclical capital buffer’ for banks offering home loans to prevent negative effects on the economy from a current imbalance caused by significant credit and house price growth over the past years.

The measure, which will take effect in September, was proposed by the Swiss National Bank and ratified by the government last week. “The imbalance intensified over the second half of 2012 and has now reached a magnitude that constitutes a risk for the stability of the banking system and thus for the Swiss economy,” said SNB in a statement. The buffer should make banks’ property loan provision relatively less attractive compared to other loans.

Swiss house prices rose by around 30% over the past 10 years, with higher growth figures in the larger cities, led by Geneva at 136%, according to Swiss property service company Wüest & Partner. The scope for an interest rate increase, which would also dampen the property loan and investment markets, is very limited, said SNB. Many analysts, including the major banks, have warned that Swiss housing is now in a bubble, the collapse of which could have gravely negative consequences for the entire economy. pie

Business investors still keen on UK commercial property market despite eurozone woes

Confidence in the commercial real estate sector in the UK has fallen back as a result of the weaker economic backdrop and ongoing euro zone crisis, according to a new survey.

Despite this fall in confidence, all groups remain committed to investing in the sector and are keen to source opportunities that can add long term value and this might be symptomatic of a perception that the market is near the bottom, the latest Commercial Property Confidence Monitor produced by Lloyds Bank Wholesale Banking and Markets and in association with the Investment Property Forum.

Major businesses and London based medium to large businesses have the greatest appetite for new investment in the sector over the coming three to six months. Major businesses have become more positive, in line with August 2011 expectations, with 70% of respondents aiming to increase commitment and 10% looking to divest.

It also shows that London based medium to large businesses are looking to take advantage of attractive valuations with 4% expecting to invest and just 4% planning to divest.

‘Businesses within the commercial real estate space will be deploying their capital selectively as they manage their portfolios during a period of very little growth within the economy. Despite the pessimism there is a clear appetite for investment into the sector driven by major businesses and London based companies,’ said Lynda Shillaw, Lloyds Bank Wholesale Banking and Markets’ managing director of corporate real estate.

‘This appetite is most likely fuelled by investors’ views of long term growth when buying at today’s prices. In particular we’ve seen larger property companies divesting of assets over the past couple of years and reinvesting into both development schemes and assets with enhancement opportunities, ensuring a healthy pipeline and driving returns. We expect this to continue over the coming quarters,’ she explained.

According to the survey’s composite index, which averages the net balance scores on prospects for the sector in the next three to six months, optimism fell back for all groups with the exception of small businesses where it is unchanged. This broad decline of the index reflects a general softening of all the underlying components with the exception of anticipated portfolio returns where expectations of performance pick up a little for small and medium to large businesses.

Despite the downbeat outlook, small, medium to large and major businesses expect to see a net increase in the performance of their portfolios over the coming three to six months. Small businesses are notably more positive this survey with 25% of respondents anticipating an improvement compared to 8% in May of this year.

Medium to large businesses based in London show the sharpest increase with 46% expecting an improvement, up from 31% in the previous survey, giving their highest net balance since November 2011.

Major businesses and fund managers paint a less positive picture, with the number of fund managers expecting a deterioration outnumbering those who expect an improvement. Major businesses remain more positive than negative, although this group has seen a fall in confidence since the May 2012 survey.

In contrast to the broad expectation that portfolio returns will grow over the next three to six months, most groups mainly expect values to remain static or deteriorate during the next quarter. Some 64% of fund managers are expecting deteriorating values and 30% of major businesses do so, the largest downward shifts compared to the previous survey.

Some 64% of small businesses and 63% of medium to large businesses believe that values will stay at current levels despite expecting an improvement in their portfolio performance. This could suggest a proactive approach, with businesses working within the confines of a difficult market to identify steps to reduce costs or increase rental yields to combat falling values.

‘The confidence trends for portfolio performance suggest that investors are expecting any pick up in returns to be driven by factors other than increasing capital values. This means that effective asset management and enhancement will be the critical drivers of portfolio performance in the short to medium term. With property companies and funds still looking to invest they’ll be looking for those opportunities where value can be added to their portfolio,’ said Shillaw.

Following last quarter’s generally negative shift in expectation regarding the outlook for the UK wide property market, sentiment towards UK activity is set to weaken further for most groups. The majority of respondents have lower expectations of decline in activity in their own business sectors than at a UK market level.

London based medium to large businesses show the most significant difference with 29% expecting a pick up in their own sector compared to 8% for the wider UK property market. By contrast, medium to large businesses in the regions are slightly more positive about the possibility of pick up in the UK market at 17% at 13%.

Looking at sentiment for the UK wide property market on its own, fund managers, who are traditionally thought to lead sentiment by a quarter, are the only group to show an improvement since the previous survey, although they still sit firmly in negative territory. Some 10% of those questioned expect to see a pick up in activity compared to 4% previously. The number expecting a slowdown has also reduced slightly since May, from 50% to 44%.

Economic uncertainty and lack of demand are thought to be the main drivers of negativity, although there are some signs that these factors are leading to a reallocation of investor attention towards non-prime properties.

‘We retain a cautious outlook for the wider UK property market. Despite the fall back in confidence in London-based businesses it still remains a hot spot but overseas money is out pricing the traditional UK investor. With a shortage of appropriate stock on the market we’re seeing more companies look outside of London and the South East to acquire assets where the value add opportunities enable them to be enhanced to prime standards. In spite of the intensification of the euro area debt crisis, the exodus predicted from the region has not materialised as expected, and some respondents see opportunity and are looking to increase, albeit modestly, their exposure,’ added Shillaw.

Medium to large principals, medium to large businesses outside of London and fund managers are anticipating an increase over the next six months. Fund managers see the biggest opportunity for growth and expect to increase their holdings by 0.52%. The proportion of fund managers investing in the euro zone is also set to increase from 50% to 54%.

For the fourth consecutive quarter since its introduction to the survey, residential letting has been identified by most groups as the property sector that is expected to perform the best over the coming three to six months. Fund managers are backing offices whilst major businesses believe that house building will offer the best returns. When questioned about which sector respondents will focus on in the next three to six months, house building comes to the fore for small businesses and major businesses. Fund managers will focus on offices whilst medium to large businesses intend to focus on the residential letting market.

Asian sovereigns drive surge in European capital inflows

Net investment into European commercial real estate rose 36% in 2012, with London still the world’s most active centre and stoking hopes of recovery in some distressed property markets, including Ireland and Spain, says realtor Jones Lang LaSalle. The surge was driven by an 80% rise in inflows from Asia, mainly from large sovereign wealth funds.

Large Asian sovereigns, as well as those from the Middle East - plus cash-rich Canadian pension funds - have become increasingly active in European property, initially focusing on the best assets in London but increasingly looking further afield. Chinese state-backed fund Gingko Tree was the partner for Deutsche Bank’s RREEF on its purchase of a high-quality office block in Manchester, reports say. Asian inflows could rise further in 2013 as Chinese and Taiwanese insurance groups, now able to invest in overseas real estate for the first time, begin to investigate offshore markets, JLL said in its latest global capital markets research report. 

London was the busiest city for property deals, with $31bn of commercial property transactions in 2012, some 20% more than New York, which had a stronger final quarter. However, investors were also attracted to deals in Germany, France and Sweden, as well as distressed property markets, including Ireland and Spain, which saw a rise in deals in the final quarter of the year. That could signpost an increase in activity in 2013 as overseas investors eye higher-risk investments with the potential for higher returns.

Despite the rise in capital inflows into Europe from outside the region, the overall volume of property sales across Europe, Middle East and Africa fell 4% in dollar terms for the year to $159bn, JLL said. Owners seeking a safe haven for capital chose to hold onto assets for longer. JLL earlier predicted that global property deals could rise to $500bn from $443bn last year.

During the final quarter of the year Europe recorded eight cross-border deals larger than $500m. Norway’s government pension fund, the world’s largest sovereign fund with some €466bn, was one of the most active, acquiring the Meadowhall shopping centre in Sheffield and the Uetlihof office development in Swiss capital Zurich, headquarters of Credit Suisse.

GlobeSt.com - BlackRock, Swiss Re Agree on $7.5B Fund Deal - Daily News Article

GlobeSt.com - BlackRock, Swiss Re Agree on $7.5B Fund Deal - Daily News Article

XYNO PROPERTIES

Press Release

16 May 2012

Xyno Properties announced today an investment into the Corporate Headquarter Building of the BMW Group in Switzerland. The building is Located within the BMW Corporate Campus in Dielsdorf, Canton of Zurich, Switzerland w7ithin a 15 minute drive to both the Zurich International Airport & downtown Zurich and is classified as Class “A” Commercial Office Space. The Property houses the Financial Services Group and senior management of BMW Group Switzerland.  

The physical characteristics of The Property are a total of 6,072 square meters / 65,334 square feet of office space within a 3 story building, constructed of contemporary design with innovative use of stone, steel and glass. The office space is flexible and adaptive to a wide range of alternative uses. The land is comprised of Parcel Number 1822 containing a total of 5,160 square meters / 55,542 square feet / 1.27 acres zoned commercial/industrial. Typically, Swiss commercial properties provide little parking. The BMW Property however, provides 76 parking spaces beneath the building and 20 above ground spaces.

The municipality of Dielsdorf is located in the northwestern sector of the Swiss canton of Zurich and is the capital of the district of Dielsdorf. Dielsdorf is the Swiss corporate headquarters for a number of other large international companies such as Chromos, Fuji Film and Honeywell. Although the municipality is comprised of only 5,506 residents, Dielsdorf provides a workplace for over 2,000 employees. Dielsdorf is well connected to the extensive Swiss public transportation system by rail and is accessible to four major bus lines. The major highway going north out of Zurich (Route 17) passes through Dielsdorf. Freeway access to Autobahn N1, the main

Swiss artery is 5 miles south, and access to Autobahn N51 is 4 miles northeast. Zurich is 13 miles south and the Zurich International Airport (Kloten) is 11 miles to the east.

The company believes that the investment will create value in it's portfolio and will enhance the current income and growth potential.

Interested parties can contact Xyno Properties at: Onyx Worldwide AG onyxagnewsletter@onyx.co.im

More information about Xyno Properties at: http://xyno-properties.com

Real estate opportunities in Africa

02 May 2012

Africa’s collective GDP in 2020 is expected to reach $2.6 trillion, with $1.4 trillion in consumer spending and 128 million African households that have discretionary income. Africa’s collective GDP in 2020 is expected to reach $2.6 trillion, $1.4 trillion consumer spending with 128 million African households with discretionary income. This is according to a report entitled: Lions on the Move – The progress and potential of African economies by McKinsey Global Institute. This is according to a report entitled: Lions on the Move – The progress and potential of African economies by McKinsey Global Institute. The report reveals that Africa’s future growth will be supported by external trends such as the global race for commodities, Africa’s increased access to international capital and its ability to forge new types of economic partnerships with foreign investors. Furthermore, the long-term growth of Africa’s economy will be lifted by internal social and demographic trends, particularly Africa’s growing labour force and the related rise of the middle class consumers. McKinsey notes that for companies, the report analysis suggests that four groups of industries together will be worth $2.6 trillion in annual revenue by 2020. These are consumer-facing industries (such as retail, telecommunications and banking), infrastructure related industries, agriculture and resources. Meanwhile, the Annual Broll Property Report notes that Sub-Saharan Africa continues to experience an increase in demand for real estate solutions in a very complex structure of emerging markets. Construction in these locations is booming and some South African retailers and property developers who have been eyeing these growth trends have made an early entry into these real estate markets. In Nigeria, thanks to rapid urbanisation, consumerism and a growing middle-class, demand for retail space has increased during the past 12 months. The backlog of formal upmarket retail developments has brought new proposals and it is estimated that 250 000 square metres of Gross Lettable Area of retail space will come on stream during the next 24 months. There is demand for office space with new developments mostly comprising A Grade offices. South African and international retailers are reportedly continuing to enter the retail market in Ghana with a basic line shop rental for shopping centres commanding rentals priced between US$35 to US$65 per square metre per month. Accra Mall measuring 20 000 square metres in Ghana is the only premier shopping centre in Ghana attracting 7 million shoppers a year. New office developments in Ghana are leaning towards A Grade type prime locations and these are expected to have basic rentals of between US$35 and US$40 per square on completion. In Namibia, the supply of retail space has declined while demand sales have remained stable. Demand for space varies between 150 square metres to 500 square metres and leases escalate at 8 percent annually, according to Broll. At the Gauteng Chapter Breakfast of the South African Council of Shopping Centres on Leasing in Africa, Dave Bennie, Africa Retail Leasing and Consulting for Broll said it is much easier to do business in Africa where you do not need a visa and there is ease of travelling to that particular country. Namibia and Zambia were cited as relatively easy to operate in while Mauritius was said to be overtraded. Construction in Sub-Saharan Africa is booming and some South African retailers and property developers who have been eyeing these growth trends have made an early entry into these real estate markets. Bennie points out that Nairobi in Kenya has good infrastructure, lots of new modern residential apartments and the area is poised for growth. He says retailers wanting to trade outside of South Africa need to assess the market and partner with locals as well if they are to succeed. On Nigeria, he says Lagos is a tough place to do business in as property and land generally cost more than they would in New York City in the US. As a result, he explains that property rentals are high and landlords require rentals to be paid for a year in advance. This expensive location will become a mega-city in Africa, he says. While signing deals is important, Bennie urges South African businesses wanting to trade outside borders to ensure that they check their health, things such as getting a Yellow Fever Vaccine are very important. “More importantly, doing business in Africa should be seen as an adventure, one needs a strong heart and will and lots of patience,” says Bennie. South African retailer Woolworths aims to open 16 stores in African countries this year taking the total number of stores to 60 in the current financial year. The new stores will be larger than current ones and the retailer expects to be trading in 104 stores on the African continent (outside South Africa) by June 2014. Woolworths is currently trading in 12 countries. Click here to read more about the Woolworths expansion into other African countries and here about real estate investments in Africa. Glenn Gilzean, Woolworths Group director for retail operations, says Woolworths have the advantage of having traded on the continent for many years and is well placed to expand its footprint. “We are very mindful of the competition for limited retail space and the need to deliver a compelling shopping experience to different customers in a range of territories.” However, Gilzean says finding the ideal entrepreneurs to “set up shop with” (as they enter into joint ventures with partners in African countries) remains a challenge to doing business in other African countries. Asked what he thought was fuelling retail growth in Africa, he says he believes the Group’s Pan African expansion will deliver a meaningful profit contribution. A number of factors have spurred the interest in African countries including the growth of consumer spending, which now accounts for more than 60 percent of the African GDP and is expected to increase with the growth of the upper and middle income groups. South African retailer Woolworths aims to open 16 stores in African countries this year taking the total number of stores to 60 in the current financial year. “The appetite for formal retail is another factor and we are well resourced to meet the needs of the aspirant African consumer,” says Gilzean. At a GIBS Forum in Illovo, Johannesburg on Taking Advantage of Opportunities in Africa, Jason Krause, managing director of International SOS South Africa says there is no one size fits all approach to minimising risk in African economies. He notes that lack of awareness and preparedness of what happens in other African economic markets remains a risk factor for many businesses wanting to trade outside their own countries. While opportunities are seemingly endless in Africa, the continent is also the most risky location to do business in. These include infectious diseases, opportunistic crimes and other health issues. Krause says malaria is seen as a huge threat followed by road accidents, but notes that the type of industry one is in determines the risks. He says for those wishing to jump on the Africa economic opportunities bandwagon, it is important to increase awareness among shareholders regarding the chosen country to do business in Africa and protecting employees heading these businesses is necessary to taking advantages in Africa. “It’s all about knowing the risk, preparation and managing the risk posed by doing business in that country.” Dave Butler, managing director, Southern and East Africa Control Risks, says Africa has become an investment destination of choice and with its young working population, the continent is poised for further growth. Butler says business opportunities exist in sectors including infrastructure, consumerism and telecommunications, and South Africa and its businesses are well placed to take advantage of these opportunities. He explains that businesses face risks including government change, which signals risks to long-term investors, contract negotiations, red tape and corruption. Silke writes that with 900 million consumers on the continent, the problems and pitfalls in doing business in Africa are quickly being outweighed by the promise of a market clamouring for goods and services. It is, however, important that one does research before investing outside of their known economies. Planning and practise all form part of preparing to enter uncharted territory and taking advantages of economic opportunities in Africa. Butler says if one is thinking of expanding into Africa, they should: 1. Know exactly where they are going – understand the country and its politics. 2. Know your partner, ask questions such as who is behind the company and what companies' or partners’ original source of wealth is. Do a thorough due diligence. 3. Protect your reputation against allegations of corruption and bribery by remaining ethical in all business dealings. Daniel Silke, political analyst and author of the book entitled 'Tracking the Future – Top trends that will shape South Africa and the world', writes that in a world looking for the next investment frontier, the African continent stands out as the next major contributor to global growth. Africa will soon be courted by global corporates from more mature developed markets as the scramble for opportunities in Africa continues. Silke writes that with 900 million consumers on the continent, the problems and pitfalls of doing business in Africa are quickly being outweighed by the promise of a market clamouring for goods and services. He adds that Africa stands on the cusp of a critical opportunity and is well positioned in a world less dominated by the West and more open to input and influence from the developing world. – Denise Mhlang