Popular in Course
verified elite notetaker
Popular in Real Estate
This 30 page Document was uploaded by an elite notetaker on Tuesday December 22, 2015. The Document belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 17 views.
Reviews for Portfolio-Investment-Market-UK-Commercial-Poperty---Demand-for-Crisis-Mass----Autumn-2012-
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 12/22/15
Portfolio investment market UK commercial property Demand for critical mass? UK Real Estate Advisory Autumn 2012 Introduction Portfolio transactions continue to be a strong contributor to overall direct UK real estate investment activity; accounting for £6.09bn or 20% of total volumes in 2011. The portfolio market has also continued to evolve over the last twelve months with an increase in transactional activity of loan portfolios. By including loan portfolios with underlying real estate in the UK the total value of portfolio transactions exceeded £10bn in 2011. This paper provides an overview of portfolio investment activity within UK commercial real estate markets. We analyse the key trends in both direct and loan portfolio markets, a review of the key portfolio transactions and a breakdown of the buyers and sellers. We provide a view on whether key portfolio transactions has, in our view, transacted at ‘fair value’, a ‘premium’ or a ‘discount’ plotted on a timeline. Our paper concludes by summarising the distressed debt market, the implications on portfolio transaction activity and our forecasts for 2013 in both direct and loan portfolio markets. Direct Portfolio Advisory and Transactions Loan Portfolio Advisory and Transactions John Rodgers Howard Richards Leo Zielinski Robert Young David Edmonds Andrew Orr 020 7303 3278 020 7303 3275 020 7303 3374ector020 7007 2571 020 7303 2935 020 7007 0759 johnrodgers@ howardrichards lzielinski@ robyoung@ dedmonds@ anorr@ firstname.lastname@example.org deloitte.co.uk deloitte.co.uk deloitte.co.uk Contents Contents 1 Executive summary 2 Section 1 – Direct portfolio investment market 4 Sector overviews 6 Key portfolio transactions 7 Sellers 12 Buyers 13 Demand for critical mass 14 Portfolio transaction timeline 16 The pricing mis-match 18 Discount for bulk or premium? 19 Why sell if a discount is probable? 20 Section 2 – Distressed debt position 21 Loan portfolio market 22 Our forecast into 2013 24 Selected credentials 26 Portfolio investment market UK commercial property Demand for1critical mass? Executive summary Section 1. Direct Real Estate Portfolio Market Since our last report in Spring 2011, the portfolio • This significant shift in the market, in particular market has remained a strong contributor to during the latter part of 2011 and into 2012, has overall direct transaction volumes (20%). allowed Private Equity funds (targetting higher returns) to be competitive for core plus and Portfolios continue to be an efficient means value add opportunities where they would have of trading multiple properties but portfolio otherwise been priced out by such lower cost of composition remains critical to a successful capital buyers. transaction. • Private Equity invested the greatest amount of • We tracked the sale of approximately all buyer groups in 2011 (skewed by activity 132 portfolios totalling £8.27bn during in Q3 and Q4) at 26% of portfolio volumes, 2011 (excluding portfolios under £5m). Of this, £1.54bn, across 13 portfolios. This trend has 72 portfolios sold equating to £6.09bn – this continued into 2012. Should this data include is almost identical to 2010 levels of £6.02bn recent loan portfolio transactions (excluded from across 78 portfolios. these figures), Private Equity vehicle’s contribution would be significantly higher. • So far in 2012, 66 portfolios have been marketed totalling approximately £6.10bn of which • Private Equity activity in direct real estate has £3.91bn have transacted across 24 portfolios, been driven not only due to a worsening market with a further £1.59bn currently under offer but an increase in the number of larger portfolios across 16 portfolios. being marketed (£100m+) compared to any other period since 2009. Average portfolio lot sizes • There are many themes we consider. The most so far in 2012 exceed £130m, compared to just notable is the changing dynamic of the portfolio £41m in 2011 and £57m in 2010. purchaser, in particular amongst Institutions and Private Equity who were the two key buyer • This trend has led to a greater alignment and groups in 2011. commonality of buyers within both loan and direct portfolio opportunities but limited to • Institutions had been very active in the first offerings that provide scale but similarly at two quarters in 2011 accounting for £1.15bn discounted levels to meet return hurdles. of portfolio transactions (19% of the market). A number of portfolios containing good quality • We believe the portfolio market into 2013 will properties with a location bias towards London continue to be driven by fewer transactions but and the South East traded at fair value or at larger lot sizes to capture this change in the premium prices (+/-5%) driven by competitive demand dynamic – driven in particular by bidding and a need to spend cash. Private Equity and more recently REITs. • However, since Q3 2011, institutions have • This period in the cycle represents an exciting significantly retrenched from the market with period for acquisition activity for higher cost only a few genuine ‘lower cost of capital buyers’ of capital buyers, whilst UK funds are relatively actively in the market for portfolios with capital inactive in the portfolio market. However what available to invest. Cash inflows are down – discount should vendors expect? according to the Association of Real Estate Funds the UK’s 63 pooled property funds raised just £167m in the first quarter of this year – 2012 data as at 1 September 2012. the lowest quarterly figure for eight years. • The market is less liquid than 12 months ago, exacerbated by continued Eurozone pressures which have added to an already weak debt market. This material drop in investor sentiment, amplified by limited trading volumes has subsequently put downward pressure on values. 2 Section 2. Distressed Debt & Loan Portfolios Progress has been made by Banks to reduce • Debt deals generally are larger than direct real exposure to the £212bn real estate debt mountain. estate portfolios, with lot sizes ranging from £50m to £1.5bn with often underlying assets Exposure was reduced by £15.8bn (6.8%) in 2011. spread across varying geographical locations Approximately 33% was sold through portfolios across Europe. including £1.4bn from ‘direct’ real estate portfolio sales led by administrators/receivers and £4bn • Buyers have been predominantly higher cost through loan portfolio sales. of capital buyers (relative to traditional ‘direct’ real estate buyers), including US private equity • However there is still a long way to go to vehicles – seeking scale and critical mass at addressing the legacy situation – De Montfort discounted pricing in order meet their target estimate approximately £48.3bn of UK returns. No lower cost of capital buyers property loans were in default at the end of are active in this arena partly due to risk, last year, reflecting 23% of total outstanding expertise and restrictive mandates (in particular debt including £22.8bn in breach of financial geographic & structuring). covenants and a further £19.9bn in default. • Discounts to face value have generally varied • There is a willingness amongst some banks to between 30% and 40% but this has been test alternative disposal structures to reduce highly dependent on the underlying real estate. exposure to real estate loans. In 2011 only Higher risk opportunities such as development a relatively small number of loan portfolio sites have attracted much higher discounts up to offerings had been marketed during the year 70%-80%. driven by the nervousness and uncertainty over the process, deliverability and demand. • Demand for “super large” loan portfolios is much smaller compared to mid level loan sales • Nearly 50% of the £4bn of commercial loan of between £100m – £400m where demand is portfolios sold in the UK in 2011 was accounted particularly strong – as evidence by the 20+ bids for in two high profile loan portfolios, Isobel and received on loan portfolios in this size range in Royal which accounted for approximately £1.6bn recent months. although NAMA and the Bank of Ireland also made significant contributions. • We expect further loan sales through the entry of other UK banks as well as foreign banks with • This volume is approximately 33% below that UK exposure. We may also see the entry of of the £6.09bn of ‘direct’ real estate portfolio Pension Funds and Insurance companies seeking transactions reported during the same period, to offload toxic CRE debt books. although it accounted for 75% of portfolio transactions sold by Banks. During 2012 the • We expect discounting to remain broadly volume of loan portfolio offerings with unchanged into 2013, with a potential to underlying real estate across UK and Europe improve due to competition from buyers. has substantially increased. Activity in Ireland in In some cases Private Equity vehicles may reduce particular has increased, driven by its proximity their preferred return hurdle rates to get an to the UK and commonality of both buyers and initial foothold in the market. sellers in each market. • Where there are structural issues with loan • This increased activity has allowed the loan sales or CMBS breaches/maturities which, portfolio market to evolve and mature, especially in some cases, inhibit loan sales we expect when considering there were no note worthy Banks to revert to ‘direct’ sales. This would deals to report only twelve months ago. There is be subject to securing the assets/vehicles now some confidence in the process and through an appointment of administrators or mechanics of a loan portfolio sale with banks LPA receivers and the feasibility of breaking learning from each experience. There is also much hedging instruments which can be prohibitively greater clarity on what type of loan portfolio will expensive. appeal to investors and who the likely investors will be compared to 12 months ago. Portfolio investment market UK commercial property Demand for critical mass? 3 Section 1 – Direct portfolio investment market Portfolio vs total transaction volumes and % split What happened in 2011? Millions 70,000 • We tracked and analysed 132 portfolios 60,000 sales in 2011 (116 portfolios in 2010). 24.4% 20.6% 50,000 • Transaction volumes of £6.09bn in 72 portfolios (2010 was £6.02bn in 40,000 17.3% 78 portfolios). 19.6% 30,000 20.1% 17.3% • Portfolios accounted for 19.6% of total 20,000 20.7% transaction volumes (17.3% in 2010). 10,000 • 1 in 4 portfolios marketed during 0 2011 failed to sell or were broken up and 2006 2007 2008 2009 2010 2011 2012 sold individually (1 in 3 in 2010). (so far) Property transactionsPortfolio transactions • Average portfolio lot size in 2011 of £41m (£57m in 2010 and £107m during 2006 & 2007). • Alternative sector portfolios (such as Portfolio transaction volumes 2006 – 2012 hotels, pubs & leisure) accounted for the Millions largest value (32%), followed by retail 16,000 150 (29%), industrial (23%), mixed (11%) and offices (5%). 14,000 12,000 10,000 100 Overview 8,000 78 72 6,000 59 Out of a total of £31bn of UK property transactions 4,000 43 24 in 2011, £6.09bn of portfolio deals transacted across 72 portfolios; representing around 19.6% – almost 2,000 identical to 2010 levels of £6.02bn. 0 2006 2007 2008 2009 2010 2011 2012 During 2005 – 2008 portfolios consistently contributed (so far) between 20% – 25% of total transaction volumes. Source: Deloitte Research & Property Data 2009 and 2010 saw portfolio contributions fall to 17% of total transactions in both years. Whilst 2010 percentage contributions were in line with 2009 levels, 2010 saw an increase of £1.9bn (or 33%) in volumes with 34 more portfolios transacted throughout the year. The average portfolio lot size in 2011 was £61.7m. Disregarding the nine portfolios over £200m, which skew the data, the average portfolio lot size was £41m. This compares with £57m in 2010 and £107m in 2006 and 2007. It should be noted that our analysis above disregards recent loan portfolio sales. These transactions are analysed in Section 2 of this paper. 4 Breakdown by sector of portfolio transaction volumes 2006 – 2012 Millions What has happened so far in 2012? 16,000 • A total of 66 portfolios have been 14,000 marketed so far in 2012 totalling 12,000 approximately £6.10bn. 10,000 • Transaction volumes (outside London) 8,000 across the market are down in Q1 & Q2 2012 (by nearly 15%) but portfolio 6,000 transaction volumes are in line with 4,000 2011 levels – £3.91bn across 24 portfolios, 2,000 with a further £1.59bn currently under offer across 16 portfolios. 0 2006 2007 2008 2009 2010 2011 2012 • However, fewer portfolios have been Ofﬁce Retail Industrial Mixed Other (so far) transacted – 50% lower than 2011 levels; 48 portfolios had been transacted by this Source: Deloitte Research and Property Data time last year. 2012 data as at 1 September 2012 • The portfolio market in 2012 has been driven by fewer but larger portfolios Average portfolio lot sizes (2006 – 2012) (marketed or sold). Millions • One in four portfolios marketed so far £160 in the year have lot sizes over £100m. £140 £134m These include Merlin (£204m), Galahad (£111m), KanAm (£500m – sold), £120 £107m Hammerson Office Portfolio (£518m), £100 Steel Portfolio (£107m) and the Mercury £80 Portfolio (£205m). £61m £60 £57m • The average lot size of the 24 portfolios £40 £45m transacted and 16 portfolios under offer is £134m – over three times that of the £20 average for 2011 of £41m. £0 2010 2011 2012 2006/7 2009 (so far) Direct portfolio transaction volumes in 2011 totalled £6.09bn across 72 portfolios – 20% of total transaction volumes. The portfolio market in 2012 (so far) has been driven by fewer but larger portfolios, with 24 portfolios transacting totalling £3.91bn – 21% of total transaction volumes. Portfolio investment market UK commercial property Demand for critical m5ss? Sector overviews Sector overview in 2011 Current position in 2012 • So far in 2012 office portfolio transactions • Industrial portfolios such as Project Teal exceed £1bn – driven by two substantial London (Prologis), UK Logistics Fund (L&G and office portfolios (sold by KanAm & Hammerson). Hermes) and Triangle (LSI) dominated the However disregarding portfolios with a geographic headlines in Q3 & Q4 2011. bias towards London, office portfolios remain significantly down compared to previous years • Alternative sector portfolios (such as suggesting there is currently least liquidity in this hotels, pubs & leisure) accounted for the sector (outside London). largest in terms of volume at £1.92bn over 19 transactions in 2011 – a five fold • Mixed portfolios are likely to be on par with increase from 2010 levels. 2011 levels following completion of the Chrome Portfolio (£103m) in August 2012 and Henderson’s • Sale & leasebacks continue to dominate Mercury Portfolio (£184m) in November 2012. the market accounting for 17% of all portfolio transactions throughout 2011 – • Retail portfolios are currently down in part driven predominantly led by Tesco, Sainsburys & by fewer sale of leasebacks by foodstore operators Whitbread. such as Tesco (relative to previous years). The Junction Fund’s Star Portfolio (£254.5m) is the largest retail • Office & mixed portfolios were warehouse portfolio to be transacted for 2-3 years significantly down from previous years (sold to Hammerson). with the lowest trading volumes out of all sectors at £314m (£1.41bn in 2010) and • More industrial portfolios have been marketed than £684m (£1.23bn in 2010) respectively. any other sector in 2012 (1 in 3 portfolios). Sector blend of portfolios marketed so far in 2012 Sector blend of portfolios sold in 2011 16% 31% 28% 40% 17% 5% 15% 11% 12% 23% Retail, £982m Ofﬁce, £1,070m Industrial, £905 Mixed, £711m Other, £2,437m Retail, £1,755m Ofﬁce, £314m Industrial, £1,411 Mixed, £684m Other*, £1,927 This data includes portfolios available, withdrawn under offer and sold (as at 1 September 2012) * This category includes other sector groups such as hotels, student housing, pubs, leisure and car showrooms 6 Key portfolio transactions Mixed portfolio overview Whilst there was negative press surrounding the sale at the time, a large number of the assets were secondary/ Liquidity rating: Fair (depends on weighting towards tertiary in nature and relatively illiquid (if marketed less favoured sectors). individually). We therefore regard the sale as a success and should lead to similar sale structures going Mixed portfolio transactions totalled £684m in 2011 – forwards. almost half compared to that recorded in 2010, £1.23bn. So far in 2012, Standard Life’s Alpha Portfolio was sold In 2011, 10 portfolios sold out of the 26 mixed portfolios to Westbrook. Whilst unconfirmed due to confidentiality we understand the price achieved was around £42m for marketed. A number of portfolios were withdrawn 13 of the 14 properties marketed. including CBRE Investors Marine and Conway Portfolios (£52m & £70m respectively) and Standard Life’s George SWIP’s £82m Torch Portfolio comprising 15 office and Portfolio (£65m), withdrawn following an abortive industrial assets was withdrawn in June 2012 following transaction with Delancey & Chester Properties. competitive interest being received on only the industrial element. Development Securities & William Pears Group The largest success in 2011 was LBG’s sale of Flagstaff to Telereal for £45m. It was the first property portfolio completed their acquisition of the Chrome Portfolio (£103m) in August 2012 from NAMA. Henderson have aggregation of its kind, with 35 properties comprising sold the £184m Mercury Portfolio comprising 24 assets national and multi sector properties in different with a broad spread across retail, office & industrial to Receiverships. Mountgrange & Patron (Deloitte advised). Location Number of Portfolio Sector bias properties Price Yield Vacancy AWULT Vendor Purchaser Date Cavalier Mixed No Bias 23 £79.35m 10.85% 18% 8.9 years Anglo Irish Under Offer Current & Cavalry (industrial (Combined (blended) Portfolios bias) Quoting) Mercury Mixed South East 24 £184m 9.12% 21% 8.5 years Henderson Mountgrange Nov 12 Portfolio Bias (Caspar & Patron (JV) Fund) Chrome Mixed London Bias 38 c.£103m 6.50% n/a 8.4 years NAMA William Pears Aug 12 Portfolio Group Orchid Mixed No Bias 7 £30.4m 6.8% None 9.5 years Thread CBREi Jun 12 Portfolio (retail bias) needle Torch Office/ South East 15 £82.1m 9.14% 4% 5.6 years SWIP n/a Withdrawn Portfolio Industrial Bias (Quoting) (Jun 12) Alpha Mixed No Bias 14 c.£42m c.10.5% 14% 8.0 years Standard Westbrook Feb 12 Portfolio Life Edinmore Mixed No Bias 8 £39.9m 10.56% 11% 4.3 years Edinmore & Conygar Dec 11 Portfolio Buccleuch Atlas Mixed London & 11 £31.37m 10.57% 22% 8.3 years CBREi Marchmont Nov 11 Portfolio South East Oyster Mixed No Bias 6 £15.27m 10.07% None 8.3 years DTZim Highcross Oct 11 Portfolio Flagstaff Mixed No Bias 35 £45.0m 11.00% 4% 8.2 years LBG Telereal Sep 11 Aurous Office/ South East 7 £81.15m 8.22% None 5.5 years SWIP Internal Sep 11 Industrial Transfer Ben Cleuch Mixed Scotland 11 £20.30m 9.10% 30% 2.9 years Bonntoun Highcross Jun11 Regent Office/ London 113 £425m 4.50% Varied 150 years The Crown Norges Apr 11 Street Retail (25% Estate Portfolio share) Greenridge Office/ No Bias 13 £40.8m 10.37% Less than 7.5 years Alderley Rockspring Apr 11 Industrial 2% Group Marine Mixed No Bias 15 £70m 7.70% 7% 6.8 years CBREi n/a Withdrawn Portfolio (Quoting) (MNOPF) (Jan 11) Conway Mixed No Bias 23 £52.25m 9.50% 16% 5.2 years CBREi n/a Withdrawn Portfolio (Quoting) (MNOPF) (Jan 11) Portfolio investment market UK commercial property Demand for critical mass? 7 Industrial portfolio overview There have been several high profile industrial portfolios traded over the last six months including – Project Teal Liquidity rating: Good (£215m), UK Logistics Fund (£314.7m) and Triangle (£265m). These portfolios have on the whole sold to Private Equity Industrial portfolios in 2011 accounted for £1.41bn, vehicles with Teal & Triangle selling to Blackstone and UKLF selling to a JV between Segro & Moorfield. 23.2% of all portfolio transactions by volume. A total of 41 industrial portfolios were marketed of Segro are continuing to sell some of their non-core industrial assets following the sale of GL6 to L&G which 22 sold (1 in 2) with 17 either withdrawn or (IPIF) for £38.22m in September 2011. So far this broken up and sold individually. The remaining year, Segro have sold a portfolio to Ignis comprising 2 portfolios remain available in 2012. Interestingly, five industrial estates (predominantly south east) for there were more industrial portfolios marketed in £80.2m and four industrial estates to Harbert for 2011 than any other sector – accounting for £204.5m. Threadneedle have also acquired 10 of the 17 properties within the Galahad Portfolio for £111m in approximately 1 in 3 portfolios. August 2012. Location Number of Portfolio Sector bias properties Price Yield Vacancy AWULT* Vendor Purchaser Date Gold Industrial South East 5 £12.45m 10.3% 6.1% 3.6 years Aviva Private Oct 12 Portfolio Investor Eyas Industrial No Bias 7 £19.25m 8.75% 17% 4.2 years Hermes n/a Broken up Portfolio (Quoting) (Oct 12) Galahad Industrial No Bias 10 £111m 8.90% 11% 3.2 years Segro Threadneedle Aug 12 Lear Group Industrial No Bias 88 c. £105m n/a 24% Less than Lear VBRi (M7 Real Jun 12 (transfer) 3 years Group & Estate) Nationwide Merlin Industrial Midlands 4 £204.5m 7.4% 20.4% 4.3 years Segro Harbert & May 12 & North (NNIY) Canmoor West Heritage Industrial No Bias 12 £18.7m 11.7% 17% 2.0 years Irish Bank M7 Real May 12 Portfolio Resolution Estate Biffa S&L Industrial No Bias 8 £22.75m 6.50% None 30 years Biffa Waste n/a Withdrawn (Quoting) Services (May 12) Segro 1 Industrial South East 5 £80.2m 7.34% Less than 6.7 years Segro Ignis Feb 12 5% Project Teal Industrial No Bias 10 £215.00m 8.00% None 8.7 years Prologis Blackstone Dec 11 Eden Industrial No Bias 6 £26.19m 10.65% 12% 6.7 years Receivers Harbert & Dec 11 Portfolio Canmoor Triangle Industrial No Bias 18 £265.0m 7.25% None 8.3 years London & BRE/Rhombus Dec 11 Portfolio Stamford (Blackstone) UK Logistics Industrial No Bias 12 £314.7m 6.23% 16% 15.55 UKLF Segro & Dec 11 Fund years Moorfield Spencer Industrial No Bias 44 £75.2m 8.00% 41% Less than Spencer Hansteen Dec 11 Portfolio (1) 5 years Holdings Holdings Plc Spencer Industrial No Bias 44 £74.8m 8.50% 17% Less than Spencer Hansteen Dec 11 Portfolio (2) 5 years Holdings UKLP The Rose Industrial No Bias 5 £25.5m 7.30% 9% 6.75 years KF IM Aberdeen Sept 11 Portfolio GL6 Industrial London 6 £38.22m 6.42% 20% 2.7 years Segro L&G (IPIF) Sept 11 Axis Industrial London 6 £23.0m 7.18% 12% 3.78 years Henderson Mayfair Jun 11 Portfolio & SE Capital Cyrus Industrial London 7 £50.4m 7.14% 12% 7.5 years Henderson Orchard Street Jun 11 Portfolio & SE Project Blue Industrial No Bias 8 £65.0m 8.69% 19% 4.14 years Saint SWIP Mar 11 (Industrial) Martins NKU Industrial No Bias 6 £18.6m 8.8% None 4.89 years DTZIM Boultbee Feb 11 Portfolio 4x4 Industrial No Bias 4 £32.0m 8.03% 18% 6.6 years Liverpool DTZim Jan 11 Portfolio Victoria * Average Weighted Unexpired Lease Term (AWULT) 8 Retail portfolio overview Other notable portfolio transactions in 2011 include Zurich Assurance’s Shopping Centre portfolio sold to Liquidity rating: Good New River for £68m; and the New York Portfolio sold to Threadneedle for £85.5m, comprising Retail portfolio sales accounted for one of the highest 156 (predominantly) retail properties. in terms of volume at £1.75bn (29%) in 2011. In 2012, there have been a number of portfolios This volume only accounted for 13 portfolio marketed/transacted. The most notable is the Junction transactions providing an average lot size of £135m. Fund’s Star Portfolio comprising five retail parks The data has been skewed by a number of substantial totalling c.£254m – the largest retail warehouse portfolios including three Tesco sale & leasebacks portfolio for 2-3 years. totalling £855m (Tesco undertook circa £1bn of sale & leasebacks in 2010). Location Number of Portfolio Sector bias properties Price Yield Vacancy AWULT Vendor Purchaser Date Star Retail No Bias 5 £254.5m 7.00% 3% 11.8 years The Hammerson Oct 12 Portfolio Warehouse Junction Fund Granite High Street No Bias 6 £9.95m 8.50% None 8.1 years Rockspring F&C Oct 12 Portfolio Retail Arden High Street No Bias 7 c.£17.8m 9.60% Less than 6 years Receivers Cannon Jun 12 Portfolio Retail 2% (LBG) Estates Herd High Street No Bias 44 c.£40m 9.50% Less than Less than Receivers LaSalle/ Mar 12 Estates Retail 10% 5 years (LBG) Flodrive Tesco (S&L) Supermarket No Bias 11 £450m 4.90% None 40 years Tesco Trintiy Jan 12 College Westfield Shopping No Bias 3 £159m Unknown Various Unknown Westfield Hermes REIM Feb 12 (3 shopping Centres (33% – Group centres) 50% share) New Bond High St Retail London 3 £300.0m 3.00% None Unknown NAMA Bernard Dec 11 St Portfolio Arnault Tesco (S&L) Supermarket No Bias 3 £46.56m 4.90% None 20 years Tesco L&G Aug 11 Zurich Shopping No Bias 4 £68.0m 8.00% 4% Unknown Zurich New River Jun 11 Centres Assurance New York High St Retail No Bias 156 £85.5m 6.10% Unknown Unknown Receivers Threadneedle Jul 11 Tesco (S&L) Supermarket No Bias 21 £685.0m 4.70% None 25 years Tesco Tesco Mar 11 Pension Scheme (JV) Sainsburys Supermarket No Bias 3 £125.0m Confidential None 25 years Sainsburys Prupim Jan 11 (S&L) Junction Fund’s Star Portfolio is the largest retail warehouse portfolio marketed for 2-3 years. Portfolio investment market UK commercial property Demand for critical mass? 9 Office portfolio overview The most notable office portfolios in 2011 were the two St Martins “Project Blue” portfolios comprising Liquidity rating: Weak (outside London) a Regional Office Portfolio sold to F&C and Area Property Partners for £65.4m and the South East Office Office portfolios are significantly down from previous Portfolio sold to Rockspring for £47.78m. Prupim also years accounting for the lowest volume of all sectors at purchased the Apia Portfolio for £51.15m from Warner £314m (7% of total portfolio volumes), with only nine & Aviva. office portfolios sold. The average office portfolio lot size was £35m. So far in 2012 there have been two substantial London portfolios traded, including the KanAm portfolio sold to By comparison we recorded a total of £1.4bn of office Malaysian Sovereign Wealth for £500m; and Brookfield portfolio transactions in 2010 – skewed partly by White acquisition of Hammerson’s London portfolio for Tower (£671m). £518m. These two portfolios alone account for over three times the total office portfolio volumes for 2011. Regional office portfolio volumes are significantly down suggesting there is least liquidity in this sector outside London. Location Number of Portfolio Sector bias properties Price Yield Vacancy AWULT Vendor Purchaser Date Hammerson Office London 5 £518m 5.20% c.10% (ex 8 years Hammerson Brookfield Jun 12 Portfolio devt. sites) Kan Am Office London 2 £500m 5.50% None 10.5 years KanAm Malaysian Jun 12 Sovereign Wealth Dimension Office South East 4 £8.425m 13.93% None 4.4 years Aberdeen Threadneedle May 12 Portfolio City Office London 4 £12.15m 6.98% None 3.1 years Land & US Private May 12 Portfolio Equity Investor Holdings Apia Office No Bias 3 £51.15m 9.06% None 4.9 years Apia Prupim Jun 11 Portfolio Polaris Office South East 5 £30.0m 9.13% Less than 6.4 years Henderson Praxis May 11 Portfolio 2% (part) Project Blue Office No Bias 7 £69.0m 8.59% 32% 4.8 years Saint Martins F&C May 11 (Regional) Project Blue Office South East 4 £47.96m 9.45% 19% 8.5 years Saint Martins Rockspring May 11 (South East) London office portfolios have been dominant in 2012 accounting for over three times the total office portfolio volumes in 2011. Howeverregional office portfolio volumes remain significantly down. 10 Alternative sector (other) portfolio overview The vast majority of these transactions have been sale & leasebacks including Enterprise Inn, totalling Liquidity rating: Good (covenant dependent) £85.3m across three portfolios, two Whitbread (Premier Inn) portfolios totalling £90.3m and two Other Sectors such as hotels, student housing, pubs, Pendragon Car Showroom portfolios totalling £64.4m. leisure and car showrooms have been leaders by Societe Generale also sold a portfolio of Virgin Active gyms for £175m to British Land. portfolio volume sales during 2011. This has accounted for £1.91bn or 32% of total portfolio volumes with 29 portfolios marketed of which 19 sold. The largest portfolio to trade in 2012 within this category was the Sentrum Portfolio; comprising 3 data This is a four fold increase from 2010 levels of c.£400m. centres in Woking, Croydon and Watford for £719.5m acquired by Digital Realty Trust. Location Number of Portfolio Sector bias properties Price Yield Vacancy AWULT Vendor Purchaser Date Steel Fire Control No Bias 5 £107m 6.31% None 20 years + Receivers (LBG) n/a Withdrawn Portfolio Centres (Quoting) (Sept 12) Sentrum Data Greater 3 £719.5m 7.5% 20% Varied Sentrum Data Digital Realty Jul 12 Portfolio Centres London Centres Trust Gala Casino Casinos No Bias 23 £205m n/a None n/a Gala Casino Rank Group May 12 (subject to CC) Nido Student Student London 3 £420m 6.25% n/a Direct Lets Blackstone Round Hill Apr 12 Housing Housing Capital Portfolio Galaxy Pub Pubs No Bias 918 £422m n/a None Management RBS Corporate Scottish & Dec 11 Portfolio agreements Finance Newcastle (tenant) Principal Hotels No Bias 6 £98m 4.00% None 175 years Principal Pramerica Dec 11 Hayley (ground net) Hayley Group Real Estate Portfolio Ltd Newcastle Student Newcastle 2 £23.24m 5.62% None 20 years Aviva LaSalle Dec 11 Student Housing Portfolio Apple Pubs No Bias 5 £9.58m 8.19% None 14 years LPA Receivers OLIM Dec 11 Portfolio Mint Hotel Hotels No Bias 8 £600.3m n/a None Management Orr Family Blackstone Sept 11 Portfolio agreements & Uberior Ventures Slug & Pubs South East 11 £16.2m 8.50% None 18 years Administration Private Sept 11 Lettuce & London Investor Portfolio (1) Premier Inn Hotels South 7 £53.80m 5.50% None 25 years Premier Inn LaSalle Sept 11 Portfolio (S&L) Virgin Active Health No Bias 17 £175.0m 7.30% None 25 years Societe British Land Aug 11 Portfolio Clubs Generale/Virgin Slug & Pubs No Bias 18 £18.29m 8.29% None Varied LPA Receivers Unknown Jul 11 Lettuce Portfolio (2) El Gordo Car No Bias 12 £37.13m 7.00% None 15/20 years Pendragon Schroders Apr 11 (PPH1) Showrooms
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'