Institutional Real Estate Europe

September 1, 2009: Vol. 3, Number 9

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From the Current Issue


And the Winner Is...

There were cheers all round when Jacques Rogge, president of the International Olympic Committee (IOC), announced in Singapore on 6 July 2005 that the XXX Olympiad would be held in London from 27 July to 12 August 2012. The 2012 Paralympic Games will follow some weeks later. The decision marked the first time that a city will host the Olympic Games for the third time; London previously hosted the Games in 1908 and 1948. “London is an Olympic winner,” said Rogge at the press conference that followed the announcement.


The Balance Is Shifting

As we enter the second half of 2009, it is clear that we remain in a dramatic period for the global economy. The outlook across developed and emerging economies is mixed, and different regions are already performing differently as a result. It is becoming increasingly probable that the global recession will be followed by a period of slower economic growth than in the past two decades unless economic policies and technological innovation move the world economy to a new growth trajectory.


Critical Mass

The REIT regime — comprising SIICs, Sociétés d’Investissements Immobiliers Cotées— that came into force in France on 1 January 2003 is widely perceived by market participants to have proved a great success. As the “SIIC Ranking by Market Capitalisation” chart below shows, there are now 45 SIICs in France, representing an overall market capitalisation of Ä33 billion and, as of 31 December 2008, Ä101 billion of property GAV.


Here and Now

One-fifth of real estate funds face refinancing in the next 12 months. Many funds are already struggling with breaches of their loan-to-value (LTV) covenants. In 2010, it is predicted that income cover ratio (ICR) breaches will start to occur, brought about by tenant defaults, reduced rents and higher vacancy rates. What is certain is that funds will find it very difficult to arrange new financing and, even if successful, will encounter higher debt costs.


Shop Talk: A Conversation with Bill Maxted

The latest edition, for year-end 2008, of the annual commercial property lending survey carried out by De Montfort University, based in Leicester, United Kingdom, lays bare the parlous state of the property lending market in the United Kingdom in the aftermath of the credit crunch. Those real estate players that are seeking to refinance “good time” loans that are coming up to maturity are now finding out the hard way just how difficult it is to find new supplies of debt — and those that do find new supplies are finding out how expensive it is.

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