* Advantage seen for listed propcos in debt squeeze
* More JVs expected as cash-rich investors seek partners
By Daryl Loo
LONDON, Dec 3 Well-capitalised listed property
companies in Europe could come into their own next year,
benefiting from the lack of debt financing that continues to
plague their unlisted peers, real estate experts said on Friday.
Listed entities, such as real estate investment trusts
(REITs), have an advantage in their ability to issue corporate
bonds or shares, said John Carrafiell, managing partner of
GreenOak Real Estate, at the annual Thomson Reuters Global
Property Outlook conference.
"I can see listed property companies in 2011 breaking some
of that ice, as corporates and markets are in a healthier place
and that is the cheapest way to raise capital," Carrafiell said.
He cited as an example a deal last week by Capital Shopping
Centres CSCG.L to acquire the Trafford mall in Manchester for
1.6 billion pounds ($2.5 billion), partly paid for with 747.6
million pounds in shares and convertible bonds. [ID:nLDE6AO063]
With an estimated debt funding gap of $245 billion for
global commercial real estate in the next three years, as banks
remain unwilling to lend to the sector, experts said property
investors are desperately seeking other options. [ID:nSGE6AM00F]
A potential source of financing could come from insurance
companies, such as AXA (AXAF.PA) and Generali (GASI.MI), which
were less damaged than the banks in the financial crisis, said
Jos Short, executive chairman at Internos Real Investors.
"The hope is that insurers will come back with longer term
debt, because banks typically won't go more than five years. And
with CMBS (commercial mortgage-backed securities) completely off
the table at the moment, I hope insurers do step up," he said.
Italy's Generali, Europe's third-largest insurer, told
investors last week it plans to boost its real estate exposure
by about 24 percent to 30 billion euros ($39.6 billion), with a
particular focus on China and the United States. [ID:nLDE6AP083]
RISE OF JOINT VENTURES
The growing attraction of prime-grade UK commercial property
means cash-strapped developers could also get a boost in 2011
from a rising trend towards joint ventures, as cash-rich
investors seek refuge in the recovering sector. [ID:nLDE6B0120]
"I think the day of the joint venture is very much here. If
you're a developer who cannot afford finance to get your stalled
investment going, this model will work for them," said Nick
Brown, director of real estate transactions at Ernst & Young.
Major recent JVs include as Norway's sovereign wealth fund
taking a stake in the UK Crown Estate's Regent Street properties
for 448 million pounds, and British Land (BLND.L) teaming up
with a Canadian pension plan to build a London skyscraper.
"You also see this in the emergence of big international
conglomerate such as from India ... they have a lot of cash that
need to be invested, they want exposure to safe haven markets
and they are picking up trophy assets," Brown said.
(Reporting by Daryl Loo; Editing by Andrew Macdonald)
($1=.6402 Pound) ($1=.7582 Euro)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)