Real estate is one of the biggest assets which Retail Companies have the need to use these assets more intensely has become of paramount importance to management.This book has explored a number of ways in which Real Estate can be used more intensively and has used a number of very interesting corporate case studies to exemplify the conclusions It is an excellent contribution to this subject and will be a valuable tool for all Corporations in the future.
Tivoli Systems (UK) has acquired three floors at Edinburgh House Windsor Road, SLough from Hermes, Tivoli took occupation of the second floor comprising apporximately 4,458 sq ft in April on a ten year effective full repairing and insuring lease at an annual rental of £82, 472 (£18.50 psf) In a second transaction Tivoli expanded into the fifth and sixth floors of the building on similar terms subject to an option to determine contemporary with that on the other floor Tivoli Systems were represented by Nelson Bakewell whilst Colliers Erdman Lewis and Read Commercial acted on behalf of the vendor, Hermes.
The main impact of this year’s Budget is Stamp Duty increasing to 3% on + 2m direct property transactions.The main impact of this year’s Budget is Stamp Duty increasing to 3% on + 2m direct property transactions effective from 24th March unless a contract is in place prior to 1st March 1998 On the evidence of last year’s increase this will shave around 1/2% off this month’s capital returns and may represent an emerging trend If the Chancellor’s economic expectations are proved correct and we see a low inflation/slower growth environment.
Returns should still be over 15% this year, particularly as values will benefit from lower bond yields. If the Chancellor’s forecasts are right property will have another good year The economy is forecast to show c.2% growth and 2% to 3% inflation over the next couple of years in line with our base case forecast set in December Under these conditions we expect the IPD Universe to show +15% in 1998.
A two speed economy with services racing ahead and manufactured exports flagging Last July the economy appeared to be booming with windfall payments boosting consumer expenditure he Chancellor used his first Budget to attempt to take some of the steam out of the economy Seven months and three interest rate rises later things look very different Economists predict that the economy is set to slow this year but as the recent release of economic statistics show.
It will be difficult to predict the depth and speed of the downturn While growth of the manufacturing sector is already slowing down and production costs are virtually static the service side of the economy is booming. Average earnings are rising by nearly 5% a year and show no signs of slowing unemployment is at an 18 year low and retail spending is growing by over 5% Brisbane Property Conveyancing .
A year and with wage pressure in the service sector Therefore, it is understandable that the Chancellor delivered a fairly neutral Budget as he does not want to dampen the economy any further over the last month speculation of what might be included in the Budget has been fueled by articles in the press and by statements made by members of the Government concerning the poor and the inner city A focus on the poor is a focus on the inner city In the event a number of measures were put in place to eliminate the poverty trap which indirectly will benefit inner city economies.
Contrary to our expectations Stamp Duty was raised to 3%, effective almost immediately However, as can be seen in the figure, the rise in Duty last year coincided with a slow down to only 0.1% capital appreciation By comparison with the adjoining months, it can be seen that about 1/2% was shaved off capital returns in July In 1997 1% on Stamp Duty shaved 1/2% off capital returns We think that the same could happen this time, but the longer term effects on market liquidity are more uncertain.
At a time when total returns (rents plus capital growth) are running at over 15% per annum and with five year interest rates at historic lows the direct and immediate impact on market prices for many properties will probably be negligible While valuers had to deduct 1% more, the market took a view for properties in demand When Stamp Duty was increased last year there was widespread relief that the 1% rise was not higher While valuations factored in the increased duty.
The high total returns in practice smoothed any impact For good properties, the market absorbed this last time and in current robust market conditions, we expect the same to happen this time around what will be of more concern is if we are now beginning to see a creeping increase in transaction costs, which would seriously damage liquidity and pricing in weaker markets this increase will reduce the liquidity of direct property ownership.
The Adelaide conveyancing now looking even more expensive against other asset classess It will increase the impetus towards secularization and indirect property vehicles Despite the rise, Stamp Duty still compares favourably with continental markets Although the UK’s total transaction costs are very favourable compared with other tax regimes overseas investors may see this increase as eroding some of the UK’s traditional attractions of a liquid market places.
If this latest rise is an emerging trend (even at 3% Stamp Duty is still less than most of our European partners) then we may see increased transactional activity in the run up to next year’s Budget Expect increased interest in derivative instruments Certainly a 3% rate of transfer tax will cause purchasers to look seriously at ways of mitigating this liability and we can expect to see a focus on alternative methods of transferring the benefits from property related returns rather than via the direct transfer of legal ownership.
This may well lead to different mechanisms for obtaining exposure to property returns and even reconsideration of the standard mechanisms for property lending Whilst it is likely that a variety of schemes will be used to avoid the Stamp Duty charge Regulation for this purpose may well not be left until the next Budget.
We must wait for the May White Papers While several measures indicated the Government’s intention to favour public over private transport as we anticipated in our pre- Budget note the key measures affecting property will probably be found in the Transport White Paper due in May The Chancellor did not introduce new forms of transport related tax such as the much heralded parking tax at this stage traditional Conveyancing and The changes announced to capital gains tax seem far less radical than was envisaged In simple tenns they appear to make two principal changes tapering relief for individuals depending on the period .
Which the asset had been held The detail of the Chancellor’s Statement will take several days to digest Therefore we will follow up this superficial reaction with a more considered paper in the course of the next week looking in more detail at the impact of CGT and Stamp Duty for long term investors and some of the more technical issues such as the new rules for Corporation Tax on rental income.
It is possible that in response to Principal’s income support, Investa may offer POF unit holders a higher amount. If this does not occur, and in the absence of another counter bidder, we believe that we will be advising investors to accept Investa’s bid and/or sell on the market prior to the expiration of IPG’s current offer.
As we suggested in our last note, Principal has ‘sweetened’ its proposal in response to Investa’s increased offer. Principal is now offering income support of up to US$8.4 million to the extent required to enable POF to distribute 14.0¢ per unit per year to investors. (Assuming the PREIA proposal goes ahead). Investors still have three options: effectively replacing the investment characteristics of POF per IPG’s bid.
Accept PREIA’s proposal This option is suitable for investors who believe that with the proposed changes, OF will be able to extract more value for investors than Investa, the timing of the offers may mean some decrease in POF’s price before it climbs again to reflect the PREIA proposal’s benefits has agreed in a binding deed to provide income support to support distributions Up to $3.9 million (equal to the upfront acquisition fee payable by POF under the Acquisition Deed), representing up to 0.6¢ per unit.
Further amounts equal to the asset management and acquisition fees payable at the time of the claim to Principal (the first year’s fee having been waived), representing up to 0.25¢ per unit. PFS is only obligated to provide the above income support to the extent required to ensure POF is able to distribute 14 cents As per the comments in our note dated 16 July 2003, we still feel that it remains line ball between the two offers (IPG and PREIA) like Enact Conveyancing Melbourne.
For any further developments and updated recommendations and course of action during the offer period The new markets have the support of key industry analysts, BSX and the PIR Research Group commenced initial industry consultation in relation agribusiness market in early 2002 and believe their efforts will be well supported by brokers, buyers, sellers and analysts.
That whilst BSX initially aimed to create a viable listed environment for agribusiness assets, a genuine need also exists to establish a viable market for unlisted property. PIR Research Group spokesman Mr Tim Bennett said: In addition, the PIR Research Group’s research and ratings process has highlighted an urgent a source of up to date project information, and valuations.
Need to provide investors with a superior valuation and liquidity mechanism, post the implementation of FSRA. a source of up to date project information, and valuations. Mr. Dunphy said, “The development of new markets for managed investments will require hard work.
But holds great potential for both investors and project managers alike Mr Dunphy said the BSX initiative would not have been possible without the market managed investments in property and agribusiness He continued, Managed investment models have been used widely for managed equity funds agribusiness related investments The potential success of unlisted assets of this nature will be improved by the creation of a liquid market and by the disclosure benefits provided.
It will provide investors with a simple method of buying and selling these securities using licensed brokers and a licensed stock exchange it will provide both investors and managers with an invaluable liquidity and valuation mechanism The market will be provided with research data on all projects listed on BSX in the form of an information service or so called ‘blue book’ service.
Mr. Dunphy stated that PIR Research Group is currently working closely with BSX to develop the new markets Importantly, however, the PIR Research Group will not be involved in the execution of listing applications retain its staunch research independence in relation to all BSX listed projects Mr Bennett concluded like Expert conveyancer Brisbane.
The availability of PIR Research Group research and market data Over time , indices will be developed which will allow far deeper research on the market sectors will also open the way for professional investors to acquire assets in this class. New research services will be created that will be comprehensive easily accessible, affordable, clear, concise, and specifically aimed at individual investors and their advisers Reliable data will be a significant platform for the development of a sound.
Trust’s acquisition of an additional 20% interest in Bank West Tower The proposal is expected to increase both earnings and distributions to unit holders AOF’s moderate risk profile office sector focus and management team will be preserved The creation and appointment of Ronin Funds Management Limited as RE for AOF – effectively creating an internally managed structure.
AOF be re-branded Ronin Property Trust (RPT), and will comprise part of the listed vehicle Ronin Property Group (RPH) RPH will acquire a 50% interest in Ronin Partnerships Limited, The establishment of Ronin Property Services Under the proposal one unit in the Ronin Property Trust (RPT) will be stapled to one share of Ronin Property Holdings (RHL), and the two will trade together as a single security.
Ronin Property Group (ASX code RPH) Implementation of the proposal requires a 50% AOF unit holder approval AMP Life currently holds 21.3% of units in AOF and will have full voting rights In conjunction with this, a resolution will be put to AOF unit holders to update the constitution effect the stapling of RPT units and RPH shares principal shareholder in Ronin Partnerships is the proposed Chairman of RPG Peter Murphy to be the CEO.
Best property conveyancer in Sydney other key Henderson employees will also transfer to the Group AOF’s current Manager has outlined the following benefits to unit holders Increase in forecast FY04 DPU to 9.7¢ from 9.4¢ Reduced MER to 28bps (annualised) from between 49-64bps per annum.
Exposure to corporate earnings Strong Management proposition, with a track record in new business creation AMP Henderson will facilitate the transition via the waiving of its Management from 1 July until the proposed unit holder meeting in early September 2003 transition of corporate, personnel and property to RFM AMP Henderson will receive $31.0 mill for AOF’s management rights resulting in net.
Savings of between $3.2 -$5.5 mill per annum RPG will subscribe to 50% of Ronin Partnership for $1.0 mill, which will be used to working capital needs After months of speculation, AOF now finds itself the subject of an official takeover bid albeit a friendly one from “outside” the sector At a simplistic level, the proposal offers AOF unit holders increased EPU/DPU – largely driven by a reduced MER leverage to corporate business activities. RPH’s wholesale funds management business will provide a degree.
International exposure, although AOF’s current Manager has made it clear that the Trust will not acquire inferior quality overseas assets that are dilutive to portfolio quality. We consider this a positive move given the recent advances of fellow premium office trusts in search of higher/inferior quality income streams Admittedly, the friendly nature of the takeover bid provides a slight disincentive to a counter offer as well as AMP Life’s significant holding in AOF. But nothing is concrete The current proposal – sees borrowings increased by $31.0 mill and the management expense line removed from our model This increases our valuation by 2-3¢.
A hostile takeover bid from another Trust – would eliminate the $31.0 mill payment to Henderson’s, and enable portfolio’s income to be valued using a different terminal yield and discount rate Under this scenario the valuation of AOF in the hands of a third party increases to above $1.35. Our advice to AOF unit holders is to do nothing at this stage.
The timing of the unit holders meeting in early September provides ample scope for the preparation of counter offer. PIR will continue to monitor this issue closely update unit holders with any further developments. In light of the new developments it is possible that PREIA will sweeten its proposal further We will continue to evaluate the proposals as additional information comes to hand will update our recommendation prior to the expiry of the Investa offer As suggested in our last note, investors have received a more attractive proposal from PREIA and a higher bid from Investa.
If PREIA’s alternative proposal is supported, PREIA will only charge a management fee equal to the costs of operating and managing POF This arrangement will deliver the same benefit to investors as what would have been achieved if PREIA was able to proceed with the internalisation POF’s management Internalisation, however is not possible as 75% of unit holder approval would be required Enact Conveyancing Agency Adelaide.
Which has stated it will not support the PREIA proposal currently holds 30.97% of the POF units conditional on Investa increasing its relevant interest in POF units to not less than 37.5%25 Post this announcement, Investa’s unit price has fallen by 3¢ price and that no further price increases will be considered We do not feel that Investa can afford to pay too much more for POF and our numbers are showing that after a 7¢ per unit.
3¢ increase initially and another 4¢ recently We have reviewed our figures on both the PREIA alternative proposal and the increased IPG offer and still see the two as line ball In relation to the PREIA proposal, our minds have been eased somewhat regarding the asset quality of the proposed US assets we are all too conscious of the 50% support that PREIA will need in order to implement its alternative proposal.
If Investa does not accumulate enough units to change the responsible entity of POF but does get enough units to block the PREIA proposal this is assumed to be approximately 37.5%, as not all unit holders vote we see a potential stalemate situation. However, we feel that Investa has acquired too many POF units to just give up, and that in this case it would.
Probably make another play at POF after PREIA’s competing proposal was rejected Unit holders should note that in this situation there may be some decrease in POF’s price Investors continue to have the three options that we have been detailing Readers are encouraged to refer to our previous notes on the web for further background information relating to IPG’s bid and PREIA’s alternative proposal Subscribers are also encouraged to monitor our website for updates to our recommendation.
Made a cash offer of $0.85 per unit for all remaining AGH shares According to TTPA the offer is final i.e. will not be increased subject to number of conditions including the approval of TTPA and SEA shareholders TTPA gaining a 75% ownership stake in AGH TTPA supported the recent decision to sell AGH’s major property assets depreciation inspection.
But does not believe AGH should be wound up TTPA will not make a decision regarding AGH’s future until its directors complete their strategic review of operations AGH’s independent directors are in the process of reviewing the offer and intend to advise unit holders upon completion Prior to the uncertainties that have dogged performance in recent times.
AGH’s good performance was largely driven by the development of quality assets The stock is a corporation first and a passive trust second difficult to see opportunities such as George Street arising over the medium term particularly given commercial markets location in the valuation cycle. A possible course of action may be for the Group.
Continue its operations but to shift its focus towards adding value to smaller assets competitive pressures in this domain are fierce and AGH has a cost of capital disadvantage Prior to the offer PIR’s valuation was $0.80 – 6% below market, although with a track record of not distributing income and little transparency going forward our beta and terminal yields were adjusted to accommodate our perception of the stocks risk.
For investors seeking a “clean & easy” exit, a cash payment free of brokerage and stamp duty is worth considering AGH currently has 75% (approx) of its assets in cash possibility of a “one of” distribution has been mentioned – although this appears unlikely given major shareholder TTPA’s desire for AGH to continue operating.
Given TTPA’s current level of holding, the emergence of a counter bidder appears most unlikely And despite TTPA’s comment suggesting its offer is final may be some short term price appreciation in the stock, providing investors with the opportunity above the offer amount. With the offer open until 14 November 2003 our current recommendation to investors is to HOLD We will be reviewing this position upon receipt of any additional information with investors advised to monitor PIR’s website for any further developments.
PRX has proposed the acquisition of a 48.5% interest The Manager has cited an enhanced distribution profile additional liquidity and the increased likelihood of institutional support as the key benefits of the proposed acquisition Centro and Watt will undertake Management of the portfolio in a joint venture arrangement.
Big box” retail centres located in California, USA Total NLA is 313,000 sqm – 70.0% of which is leased to anchor retailers including The portfolio is to be acquired on an initial yield of 7.4%, with PRX proposing to fund its $162.1 million investment depreciation schedule fees.
Distributions stand to be increased from the previously forecast 6.96¢ to 7.25¢ in FY04, and 7.45¢ in FY05 Our biggest criticism of PRX has been its subdued growth prospects, given its a relatively high cost of capital and a shrinking pool of suitable domestic assets add liquidity and improve portfolio quality & diversification. Covering all angles.
International investment typically brings inherent currency, management and due diligence risks Management has stated that Centro’s decision to partner with Watt was carefully made We will be interested to see whether Watt’s private nature restricts its ability to contribute property/asset management expertise to the standard we have come to expect of Centro, PIR was initially concerned about Watt’s experience pertaining only to California, however Management has assured us that the Joint Venture agreement restrictive and does not prevent PRX from independently acquiring assets. Centro also has the ability to terminate the Joint Venture agreement WCJV will charge a 40 bps funds management fee on the US assets, although this will be significantly rebated for the first three years.
Management fee that relates to PRX’s interest in WCJV to avoid double-charging In terms of due diligence, Centro Management is said to have been informally looking at the US market for the past 10 years once came close to acquiring a large portfolio of convenience centres Although firm, the portfolio’s initial yield (7.4%) is comparable to similar assets within the Californian market supported by the valuer’s cap rates Looking forward, population growth, particularly in southern.