Category: Real Estate

Wealth and Finance
Cash ManagementPensionsPrivate BankingReal EstateWealth Management

The Mosaic of Modern Wealth: Wealth Advisers Must Keep Pace with Globally Mobile Clients

Wealth and Finance

The Mosaic of Modern Wealth: Wealth Advisers Must Keep Pace with Globally Mobile Clients

 

By Axel Hörger, CEO Europe at Lombard International Assurance

The world’s wealthiest people are on the move. According to this year’s Knight Frank Wealth Report, 26% of ultra-high-net-worth individuals (UHNWIs) are planning on emigrating in the next year. An astounding 36% already hold a second passport. For many, the ability to move their lives, families and assets freely around the world is the new norm.

This trend has been growing for well over a decade, fuelled by increased competition between countries seeking to attract the world’s wealthiest and drive investment. From France to Thailand, countries are seeing the benefit of adopting competitive tax regimes, investment-based visa schemes, and fast-tracked citizenship programmes. Since 2000, 20 EU member states have implemented these types of policies, resulting in approximately $28 billion in foreign direct investment.

For countries like Malta and Cyprus, this has led to a much-needed economic boost as thousands of wealthy individuals have invested in their local economies in return for residency or citizenship. In Portugal, attractive tax rates have in part led to a remarkable economic rebound, with GDP growth set to be one of the highest in Europe, while Lisbon and Porto consistently top the list of most attractive places to live in the world. As countries look to replicate this type of success story, global mobility is only set to increase.

But as global mobility increases so too does the complexity of managing wealth. Globally mobile clients will look to their advisers to be able to seamlessly manage their cross-border wealth, regardless of where they look to base themselves. And as many of the residency by investment programmes have a time limit, moving to a third or fourth country over a ten-year period is becoming increasingly normal. Wealth solutions for truly globally mobile clients need to be able to facilitate this unprecedented level of cross-border movement.

Advisers will also have to be aware that the globally mobile HNW and UHNW client base they are serving is expanding. In 2018, $8.7 trillion of personal financial wealth was held cross-borders – roughly 4.2% of the global total. The fabric of modern-day wealth is evolving as the sources and destinations of this wealth are set to change significantly over the coming years. For example, Boston Consulting Group predicts that by 2023, the value of Asia’s cross-border wealth will have grown by 150%.

Wealth advisers will need to keep pace with this dramatic shift and cater for the changing needs of this growing client base. Driven by continuing economic and political uncertainty in the region, HNWIs and UHNWIs from emerging markets will increasingly seek asset safety, protecting against currency depreciation, and the desire to gain stable returns through international diversification. What these clients need are wealth structuring solutions that can manage cross border wealth spread across multiple developed markets. They will also need advisers who are able to navigate effectively around any regulatory or cultural differences between markets.

The mosaic that makes up the lives of modern wealthy people is constantly shifting and being redesigned as wealth is distributed across a more diverse range of ages, genders and nationalities than ever before. What drives wealthy people around the world has never been so complex. For wealth advisers, this means greater difficulties and greater opportunities. The wealth management industry needs to understand the changing landscape that faces HNWIs and UHNWIs and offer solutions that can help them to navigate the uncertainty and complexity.

When I speak to clients, what they are looking for is comfort that their adviser has expertise across multiple markets and jurisdictions. What they want is a feeling of control over their wealth and life’s legacy wherever they are, wherever they want to be, and regardless of what lies ahead.

For more information about Lombard International Assurance, visit our website.

houses
FundsPrivate BankingReal Estate

Two Thirds of Buyers are Struck With Anxiety Fighting the Challenges of Buying Their First Home

houses

Two Thirds of Buyers are Struck With Anxiety Fighting the Challenges of Buying Their First Home

 

This year, reports revealed that first-time buyers (FTBs) account for more than half (51%) of the nation’s buying market for the first time since 1995 and with the average deposit for a first-time home now sitting at £33,000, today new research has revealed that mortgages have as much impact mentally as they do financially on first-time buyers.

According to a survey of 2,000 FTBs currently in the market for a home, commissioned by online bank Atom bank, two thirds (64%) have admitted to feeling anxiety when tackling the challenges of getting a mortgage and purchasing their first home.

A lack of education around mortgages is playing a huge part in buyers’ anxiety. Of the 64% of buyers who have felt anxious whilst looking for a house, a massive three quarters (74%) attribute being unsatisfied with their knowledge of mortgages as a key factor.

The process has become so overwhelming for some, that over a third (37%) of buyers recently considering purchasing a new property have pulled out due to the stress of it all.

3 in 5 (58%) admit that a key contributing factor to their high stress levels is saving for a large enough deposit. Though the stress is not limited to those on a lower income, as almost half (47%) of households earning more than £80,000 a year have said they’re struggling to save for a deposit. This is in spite of the fact they’re earning nearly three times the national average wage (£29,009).

Mortgage Complexity and Mental Health

The research reveals the complexity of the current mortgage process is causing first-time buyers to doubt whether mortgage companies actually understand the challenges modern buyers face.

More than 7 in 10 people (72%) who are anxious about the challenges of purchasing a home don’t think that mortgage companies fully comprehend the challenges buyers face. The consensus is heightened by the fact that more than three quarters (78%) of the nation believe the mortgage process is too complex and needs to be more consumer-friendly. More than a third (37%) of buyers – from builders to barristers – with a postgraduate degree feel dissatisfied with the mortgage process and with 7 in 10 (70%) of Brits looking to move in to their new home this year still feeling anxious about the prospect, the mortgage process proves to be daunting from start to finish.

The challenge is too much for one person’s shoulders, as a fifth (21%) of buyers going through the mortgage process by themselves have had to pull out due to stress, compared to only 6% of those going through it with at least one other person. This still takes its toll on those in a relationship, as two thirds (65%) have claimed that although they haven’t pulled out of the market, the process has given them anxiety.

Spend or Save: Where does all the money go?

The turn of the 21st century has brought a new challenge for millennials trying to save for a deposit. The average person spends £1,740 a year on amenities such as streaming and on-demand services, phone bills and electronic devices. Modern technology has also made travelling much more accessible, with the average person spending £1,152 a year on trips. Combining the two means the average person spends £2,892 a year on both exploring and everyday tech, which is more than 1% of the average UK house price (£230,292).

In efforts to balance the books, nearly half (46%) of buyers would be willing to move back home with their parents to save money. Higher earners are the most likely to move back home, as nearly half (47%) of those earning over £34,000 would move home to save money for a deposit, compared to 2 in 5 (39%) people earning under £34,000.

However, those living by themselves (69%) and former university students (53%) are least likely to move home, despite 3 in 5 (60%) students claiming that saving for a deposit is their biggest obstacle, as well as paying off their university debt which is on average £50,800.

 But moving home is just the start for some, as 2 in 5 (38%) of buyers admit that their only way of saving a large enough deposit is through financial support from either a family member or partner. The reliance on family help grows with the buyer’s age; Generation X are twice (26%) as likely as millennials (13%) to ask for financial help when they’re trying to buy.

Despite a double income, two thirds (65%) of those in a relationship say that the biggest obstacle they face is saving for a deposit, compared to half (50%) of singletons. Having children stretches finances further, as 2 in 5 (38%) buyers rely on financial help from their family or partner, compared to 1 in 5 (22%) of those without children.

Stick or Twist: Flying the nest

Over a third (37%) of FTBs look to buy in the same area they grew up, with a quarter (25%) stating that they will look to buy somewhere that’s close to their friends. Traveling may give millennials the confidence to buy a new home in the unknown, as a quarter (25%) look to move away from the area they grew up in to experience some where new, while only 1 in 10 (10%) of generation X are willing to move away from their childhood area to try something new.

A key factor behind many buyers’ move is their job as a quarter (26%) look to buy a property closer to work. Many buyers looking to change jobs are caught in a predicament, as 2 in 5 (38%) look to buy somewhere that will give them better job opportunities, but nearly half (46%) are struggling to save the deposit they need to get in to those desired areas.

 

Education, Misconceptions and Help

Millennials believe knowledge is key, as 1 in 5 (19%) stated that a lack of education is the key reason behind the stress issues for first time buyers, whereas only 1 in 13 (8%) people from generation X believe a lack of education is to blame.

The process starts with confusion, as 43% of people found it complicated to choose a company or mortgage broker to get the ball rolling, while two thirds (63%) of buyers have stated that choosing a mortgage type is the most complicated part of the process.

Half (51%) of buyers who recently pulled out of the market explained that having their documents in order was the most stressful part of the process, with their little knowledge on key terms being a key issue.

The research has revealed the most common words in the mortgage process that buyers had either never heard of or didn’t understand are:

Highest percentage of words that were never heard of

Over half the nation (52%) wish they’d been taught more in school about the mortgage process. Worryingly, almost as many people would seek mortgage advice from a parent (55%) as they would a professional (57%), despite the abundant challenges new buyers face.

The lack of education on mortgages has left buyers unaware of multiple schemes that can help first-time buyers get on the property ladder. 4 out of 5 (83%) buyers with children have never heard of a ‘Family Offset Mortgage’, over a third (37%) have never heard of the ‘Right to Buy’ scheme and nearly 4 in 5 (78%) are unaware of the ‘Starter Home Initiative’.

Mark Mullen, CEO of Atom bank, said: “Today’s findings have showcased just how much impact the mortgage process can have on a first-time buyer, before they’ve even entered the market.

“Buying a home is commonly the largest investment most people will make in their life time, which is stressful enough without worrying about the mortgage process. This makes it vital that buyers feel at ease from as early on in the process as possible. The results show that there is a real disconnect between advisors and buyers, as many people are seeking advice from their parents, who may have not purchased a property in decades.”

Real EstateWealth Management

Vent-Axia’s Energy Efficient Ventilation just the Ticket for Luxury Eco Mansion

Picture credit: © Recent Spaces

Leading British fan manufacturer Vent-Axia has been specified as part of a luxurious, £5.5m contemporary off-plan eco mansion in Kent, presently listed with Savills. The Ancona mansion in Hythe is designed to be sustainable and low impact, with three of Vent-Axia’s Sentinel Kinetic High Flow Mechanical Ventilation with Heat Recovery (MVHR) units chosen to provide quiet, energy efficient and effective ventilation and heating throughout the proposed 8,323 square foot home.

Envisaged by developer, Kelly Penson, and designed in conjunction with OnArchitecture working with energy advisors and Passivhaus consultants, Conker Conservation, Ancona is a rare opportunity in the UK to buy a luxury home off-plan. Resembling a Beverly Hills mansion but designed for the British weather, the plans show how a modern build can combine very contemporary aesthetics with sustainable living. The proposed home features cantilevered terraces with wild flower sedum grass roof coverings, three above ground floors, an indoor pool complex and gym, a master bedroom suite with magnificent panoramic sea views and a modern, stylishly-lit wine cellar.

The comprehensive Vent-Axia MVHR system, specified and designed by Built Environment Technology Ltd, harnesses geothermal temperatures for heating in the winter and cooling in the summer, all controlled via a tablet or phone. There are three ventilation zones – the garage; the ground floor including the gym and communal area between the gym and spa; and the 1st and 2nd floors, each with a designated Sentinel Kinetic High Flow MVHR unit.

“MVHR is an integral part of any Ecohome, Ancona is designed to be almost airtight making air changes via MVHR essential. Vent-Axia’s Sentinel Kinetic MVHR offers pre-conditioned air changes taking heat from outgoing air and applying it to fresh air. Ancona will be a calm, comfortable airy space which will be pollen free and help ensure good indoor air quality”, said Kelly Penson from EcoMansions. People are feeling increasing pressure from society and peers to be much more mindful of our carbon footprints and our impact on this planet. At EcoMansions we aim to provide our clients with more environmentally friendly legacies to enjoy. Our ethos is to provide luxury contemporary homes using the very best available eco friendly technology, products and materials wherever possible to provide the best achievable low energy efficiencies and therefore homes fit to endure our ever-changing climatic conditions.”

The Sentinel Kinetic MVHR units have integral humidity sensors for intelligent air quality control. The sensor increases speed in proportion to relative humidity levels, saving energy and reducing noise. It also reacts to small but rapid increases in humidity, even if the normal trigger threshold is not reached. This unique feature ensures adequate ventilation, even for the smallest wet room. A summer bypass provides passive cooling when conditions allow whilst a frost protection mode ensures maximum ventilation during the coldest periods. A digital controller is mounted on the front of the units and a remotely-wired version has also been included for each.

Ancona uses geothermal ducting that feeds into the three Sentinel Kinetic MVHR units with manual shut-off dampers included for each MVHR Unit, to provide the option of geothermal or atmospheric intake air. Geothermal ducting will provide some free cooling in the summer and some free heating in the winter, which will create a wonderful clean and healthy air quality and year-round temperature in the home. In addition, pollen filters on the MVHR will help hay fever sufferers and inhabitants suffering from other allergies such as dust. Where the MVHR air outlets and inlets penetrate the thermal envelope, appropriate insulating material has been specified to ensure minimum heat loss.

EcoMansions’ goal is to create a substantial home that costs no more to run than a normal family home, even including the existence of both a pool and jacuzzi, with a predicted A-Grade (96) EPC & SAP rated living space. The project is designed with triple glazing and a solid wall construction incorporating 100% recyclable clay blocks. Materials are, wherever possible, made from or with recyclable, recycled, sustainable, low carbon footprint materials without compromising the very high specification and performance of the home. An 8kW solar PV panel system has been included in the design to help keep the low energy house inexpensive to run and provide much if not all of the electrical energy requirements for the home. Battery banks have been specified to store excess energy from the daylight hours to use at night time.

Low carbon, energy saving and clean, Sentinel Kinetic High Flow MVHR is ideal for larger homes and offers a whole building heat recovery system combining supply and extract ventilation in one unit. Warm, moist air is extracted from ‘wet’ rooms through ducting and passed through the heat exchanger before being exhausted outside and fresh incoming air is preheated via the integral heat exchanger. The unit can extract from up to fourteen wet rooms and a communal kitchen while still achieving almost 90% heat recovery. It has two fully adjustable speeds and a purge setting and its energy saving Vent-Axia DC motors further improves efficiency and carbon reductions.

The units benefit from the latest high efficiency, backward curved impeller design, ensuring the lowest possible energy consumption, ultra quiet operation and an exceptional performance range covering small one bed apartments to the largest of houses. Recognised in SAP PCDB, the lightweight MVHR unit is simple to install with a horizontal duct option for space-saving installations and a unique folding filter for removal when access is restricted. The models can be mounted vertically in a roof space or on a suitable wall and ducting can be attached to the unit horizontally, vertically or both. Left or right-hand installation further adds to its installation flexibility.

To find out more about Ancona visit https://search.savills.com/property-detail/gblhchcks180166. For further information on all products and services offered by Vent-Axia telephone 0844 856 0590 or visit www.vent-axia.com.

FinanceInfrastructureReal Estate

Arrow Business Communications Limited strengthens its presence in Scotland with a third acquisition and new office in Aberdeen

Arrow is delighted to announce the acquisition of Abica Ltd and it’s subsidiary PCR IT Ltd.

Abica and PCR are leading providers of Telecoms and IT services with offices in Glasgow, further expanding Arrow’s presence in Scotland. Abica and Arrow have much in common as both deliver a similar range of solutions from the same suppliers to customers in all industry sectors.

Arrow identified the potential of the Scottish telecoms market a number of years ago with its purchase of Orca Telecom in 2015 and Siebert Telecom in 2017. In addition to the acquisitions, Arrow has also recently augmented its Aberdeen team and moved into larger offices in the West End of the city.

All of the Directors and employees of Abica will be staying on and will work within the Arrow group, ensuring a smooth transition for all of its valued clients. David Munro and Gregory Barnett, founders of Abica, will continue to lead a number of key customer relationships and day to day activities. Gregory Barnett comments, “With Arrow’s long history of building successful businesses in the telecommunications sector, we couldn’t be happier about integrating Abica into Arrow. It bodes well for an exciting future over the coming years”.

Abica has over 650 customers and has deployed a range of solutions covering Connectivity, Mobility, IoT, and Unified Communications for both private and public sector organisations. The recent acquisition of PCR IT brought further IT capability into its solution portfolio.

Commenting on the acquisition, CEO of Arrow, Chris Russell said: “This was our third acquisition in 2018 and becomes our largest one to date. Abica further strengthens our presence in Scotland and combined with our existing business there will create a real Scottish Powerhouse. The Abica and PCR teams have a wealth of experience in delivering solutions to customers whilst maintaining the strong relationships they have built up over the years, which is exactly how we strive to conduct our business in Arrow”.

Arrow was assisted on the acquisition by both EY and Kemp Little, with Abica being advised by Sequence Advisers and Taylor Wessing.

Arrow is also delighted to announce the acquisition of European Utility Management Ltd (EUM), an Energy broker specialising in Property Development and Management companies.


Inheritance Tax
Family OfficesIndirect TaxInheritance TaxReal Estate

Number Of Retail Investors Seeking IHT Advice Set To Rise

Advisers highlight expected increased use of flexible IHT solutions for clients

More than three out of four (78%) financial advisers expect the number of retail investors seeking help for IHT planning to increase over the next three years, according to new research from TIME Investments, which specialises in tax efficient investment solutions.  The findings come as IHT receipts hit a record £5.2 billion in 2017-18 despite the introduction of an additional nil-rate band.

Six out of ten (63%) advisers also predict an increase in the number of IHT products and investment solutions to be launched in the UK.  However, whilst this will offer more choice to investors, it also comes with a health warning – 88% of advisers questioned are concerned that new products will be launched by firms that don’t have the appropriate track record and/or expertise.

Two thirds of advisers predict an increase in the use of Business Relief (formerly known as Business Property Relief) over the next three years to help people reduce their IHT liabilities.  To encourage investors to support UK businesses, the Government allows shares held in qualifying companies that are not listed on any stock exchange and some of those listed on AIM to qualify for Business Relief. This means that once owned for two years, the shares no longer count towards the taxable part of an inheritable estate and are free from inheritance tax at point of death.

The accessibility of Business Relief investments and the range of investment opportunities available help to provide flexibility in IHT planning.  Three quarters of advisers felt that the increasing use of Power of Attorney due to rising dementia rates would contribute to the growth in the use of these flexible IHT solutions.

Henny Dovland, TIME Investments’ IHT expert comments: “The number of families in the UK being caught in the IHT net is increasing.  This represents a significant opportunity for advisers specialising in IHT and intergenerational planning and is reflected in our findings that reveal more specialist products are set to be launched in this market. However, care needs to be taken to ensure any new solutions are fit for purpose.  Our specialist team has a track record of over 22 years in this complex area.”

For further information on TIME Investments and its range of products, please visit www.time-investments.com

housing investment
FundsReal Estate

Real Estate Investments Delivering Mixed Fortunes

Real Estate Investments Delivering Mixed Fortunes

Statistics from the Office of National Statistics, released this February, have shown what many experts in the property sector had been discussing for some time. With prime central London districts in desperate need of further housing, investments into this area would seemingly be a ‘no-brainer’. A large influx of property developers should be praised however it seems that their market positioning hasn’t left them in as good stead as they would have previously hoped.

It seems that many of the developers lost sight of their main audience for the projects and have left themselves in a precarious situation.in need of housing, but this housing has been developed at a price point far above the limit of those who in need of it. As planning applications frequently go to the highest bidder who has large-scale profits ahead of the need to provide ample housing.

Potential doubt over the impact that a lack of impetus from foreign investors will have across the sector, has been the topic of much speculation. With findings published by Land Registry supporting the idea that foreign investors are “shying away from the capitals market”. The figures show a 55% decrease in the number of high-end new build homes sold in London’s most select areas.

In fresh statistics (February 2018) paint a good picture of the UK market, where over the course of 2017 house prices rose by 13.7%, increasing the average UK House price to £258,580. The largest increases were found in Cambridge and the Orkney Islands at 15.7% and 18.2% respectively. These figures do not spread down into the South East where the housing market is traditionally most prosperous.

Of the areas which demonstrated the sharpest decrease, three of the top five are in Greater London, of which two are historically the most affluent areas of London in The City and Kensington & Chelsea with respective decreases of 5.3% and 10.7%. The house prices in these areas have fallen due to the trend of high-end ‘ultra-luxury’ property remaining unsold for long periods of time has been. Analysis from Hometrack has shown

Market analysis from Hometrack demonstrates how figures representing changes in asking price to agreed sale have increased as home-owners continue to take more off the value of their property to increase the likelihood of a completed sale. Over the past 4 years in central London this figure has “grown from 0.5% in 2014 to 4% today, with discounts of up to 10% registered in inner London.”

This downturn in sales has affected all parts of high-end London housing as a report by Mayfair agents demonstrates. There is a recurring pattern of exclusive housing with no residents. This couldn’t be seen in a more exaggerated fashion than when looking at The Shard, this famous building remains in the headlines for its incredible architecture, however, the infamous apartments at the top of The Shard remain unsold almost 5 years after they were initially put on the market. This is at a considerable cost of over £50m. This isn’t a unique situation, as in London alone, almost 2,000 apartments valued over £750,000 remain unsold over a year since their initial entrance into the market.

As Land Registry figures show that since the financial crash of 2008, property values have stuttered in their ability to regain the peak they hit prior to 2008. Over 10 years have passed since this peak and relatively poor performance can be seen when filtering the results by months with the highest rate of completed property sales, from 1995 onwards, there is only one single month post 2008 that features in the top 100.

This trend isn’t exclusively a problem in the United Kingdom. Prime real estate markets across Europe and the United States have suffered a fall in demand leaving the most ostentatious of properties without residents, in what the Financial Times describes as “the five-year global boom…. .appears to be ending in a global glut”

Real Estate Asset Investment
FundsReal Estate

Real Estate Asset Investment

Ethika Investments is a real estate private equity firm formed to provide investors access to a unique platform by tactically investing in opportunistic real estate assets primarily in the United States.

We invited Ethika President Jean Paul Szita to talk us through the firm and how it came to win this prestigious accolade.
Ethika Investments, an affiliate of Laurus Corporation, a real estate investment and development company that specializes in hotel and resorts, office buildings, multifamily and mixed-use properties, is a Registered Investment Advisor which specializes in management of private equity real estate funds with a vertically integrated solution.

The firm’s fund partners vary throughout each real estate cycle, but generally are a 65% /35% split between foreign and domestic capital sources.

Its clientele includes a wide variety of investors, from large institutional pensions to private sovereign wealth funds. Jean Paul explains the firm’s investment strategy and how it aims to provide these clients with the best possible financial solutions which meet their needs.

“Here at Ethika, we believe timing and diversification are the key components to any successful investment strategy.
“Therefore, our team focuses on investments in value-add and credit strategies where our team can stabilize the assets to produce dependable yields as well as upside opportunity, or provide financing that requires a deep understanding of transitional assets outside of the purview of traditional commercial real estate lenders to produce outstanding risk-adjusted yields. In today’s market, underperforming transitional assets remain attractively priced, and continue to deteriorate as distressed owners are unable to continue investing in them. After the strong acquisition period that occurred post 2009, we are finding that today is the era of strategic execution of value-add investment business plans and maximization of end value.

“Partnering with a local private equity real estate fund like Ethika provides foreign investors a trustworthy alignment of interest. Our funds also allow for vested interest as well as a clear objective, breadth of cycle-tested experience and an expansive skill set.”

It is this strategy which sets the firm apart within the financial market and highlights the suitability of its investment offering to clients, as Jean Paul explains.

“Ethika is vertically-integrated, serving both as a fund manager and real estate services provider, and working in tandem with our affiliate Laurus Corporation, we are directly involved in the management of the business plan for every investment, ensuring execution of the value-add process from start to finish.

“The company puts together entire strategies for investing that encompass everything from sourcing the asset, underwriting the asset, escrow, design, construction, repositioning, accounting, investor relations and property management, consolidating the entire process to a single operation, again minimising risk and the room for error. Ethika also has a highly diverse client base and prides itself on developing and maintaining relationships with their clients as the core of its business.

Central to the firm’s success is its experienced and dedicated staff, who are ambitious and eager to support clients however possible.

“At Ethika our staff are integral to the firm’s continued expansion, into new markets and alternative investment strategies, as we explore unique approaches to value creation while upholding our commitment to delivering outstanding risk-adjusted returns to our investors. As such we look for individuals that prioritize relationships with clients and who possess a diversified and substantial background in the industry.

“Individuals who have a history of excelling in their careers both professionally and academically and in particular, value those who have demonstrated their ability to provide leadership in their prior organizations are highly sought after, and we aim to support them and provide a working environment in which they can flourish and grow in their careers.” Within the wider financial market, while there seems to be no shortage in available capital, funds and investment managers are taking their time, carefully combing for smart deals, and adopting a wait and see approach as the market transitions.
“An experienced fund manager like Ethika Investments relishes this period in the market cycle because our team possesses a deep understanding of the nuances within the real estate marketplace and an ability to spot the pockets of opportunity, not only in the commercial office sector, but across the great real estate landscape, that will undoubtedly arise from this period of uncertainty”, Jean Paul comments proudly.

While there are some challenges in the hospitality sector as the gap widens between buyers and sellers, office and retail are offering solid investment opportunities with a substantial upside if you know where to look.

For the office sector, positive projections for the next three years anticipate absorption of existing office space to total 175 million square feet, which is more than the past eight years combined. Jean Paul explains how his firm works to ensure that it stays ahead of market shifts in order to remain at the forefront of innovation in the industry.

“At Ethika, we diligently track trends in market level economic and real estate fundamentals and demographic shifts to predict where markets are growing, and maintain diversification across each fund. It’s important to look at opportunities that are not purely cycle-driven, selecting strong investments that take into account macro trends. Our team buys assets that are not perfectly stabilised in order to acquire properties at an attractive price. These practices place us as a leader in the investment market and build our clients’ trust in our investment judgment.” Looking at the challenges the market faces, additional interest in U.S. real estate is increasing competition, making it imperative that fund managers understand the subtleties affecting regional deals and dig deeper into secondary markets, moving beyond U.S. gateways. Ethika’s recent investments in Minneapolis, San Antonio and San Diego are cases of upside opportunity brought about by the dynamic growth in these local markets and beyond and are testimony to the success of the firm’s approach to investment.

Moving forward, an increased migration of both domestic and institutional capital into alternative investments is predicted, with the real estate market set to increase its focus on funds that strive for alpha creation, or with respect to yield driven investments, which are insulated from risks of cap rate expansion. As such Jean Paul concludes by highlighting Ethika’s focuses for the coming months, which are revolve around supporting these industry changes.
“Looking ahead, our plan is to continue to focus on our most recent fund, Ethika Diversified Opportunity Real Estate Fund II. The fund focuses on opportunistic and value-add investments in the top 30 U.S. markets, continuing to capitalize on underperforming assets priced below replacement cost with significant upside potential.

“Additionally, the firm is enhancing its focus on credit strategies with its first platform dedicated strictly to debt investments launching in Q4 2016. With more cumbersome regulations impacting the desire and ability of banks and traditional debt capital channels to lend, the market for private lending continues to grow at an exponential rate. Ethika’s specific experience in value-add real estate provides the firm a unique capability to provide borrowers with financing solutions on projects not able to fit a narrowing criteria of bank, CMBS and traditional balance sheet lenders.”

Company: Ethika Investments
Name: Jean Paul Szita
Email: [email protected]
Web Address: www.ethikainvestments.com
Address: Suite 1016, 1880 Century Park East, Suite 106,
Los Angeles, CA, 90067
Telephone: 1.310.954.2009

Investing in a post-Brexit World
FundsReal Estate

Investing in a post-Brexit World

The quicker-than-expected formation of a new government in the UK, and the surprise decision by Mark Carney at the Bank of England to hold interest rates at current levels, have helped settle nerves in the market to some extent. Likewise, investors have been buoyed by better than expected financial data from the Bank of England. But despite the positives, there remains a great deal of work to be done and the question now being asked is: what is Brexit anyway?

It is not just leaders in the EU who want an answer sooner rather than later. Investors too need certainty if confidence is to be maintained in the financial health of the UK and the EU.

And, with the UK already having lost its AAA credit rating, and UK banks being downgraded by Moody’s over fears about Brexit exposure, the economy is far from out of the woods and pressure is building on the new government.

So, where should a savvy investor be looking in the post-Brexit world? And how are property investments likely to fare, when compared to other asset classes?

Real estate, real returns?
The key advice for investors watching the Brexit drama unfold – and spooked by talk of possible referendums in France (Frexit) and the Netherlands (Nexit) – is that now is the time to diversify. Concerns over the economic implications of Brexit have already sent many investors to traditional investment ‘safe-havens’. The price of gold for example rocketed on the back of the UK’s decision to leave the EU, and has remained high since. Likewise the value of the dollar, despite taking a hit in the immediate aftermath of Brexit has since recovered strongly. And with firms like Microsoft and Morgan Stanley posting better than expected results in July, the S&P 500 and Dow Jones industrials have been driven to fresh heights recently.

So, could investing ‘over the pond’ be a solution for those concerned about Europe’s prospects?

There are definite returns to be had in the US. The Rycal Group, currently offering Carlton James investments which specialise in the development of new hospitality real estate in high demand areas, could be just the kind of investment opportunity for those looking to hedge against uncertainty in Europe.

As Simon Calton, CEO of the Carlton James Sky Watch Inn Group and Rycal Group, says, “During the referendum campaign much was made about the size of the market in the EU – an economy of some 550 million consumers. Let’s not forget though, that in the US consumers spent around $11,372 billion in Q1 20161 alone, a huge market for those willing to look beyond Europe.”

Carlton James Sky Watch Inn Group holds an investment portfolio focused on the hospitality sector in the US. It has recognised the potential of the US market for many years, and used it to deliver returns for investors averaging 17% for the last five years.

So how is this being achieved?
Carlton James has made an art of finding the real estate and hospitality opportunities that yield. Not only taking local economies into account, they also look for additional Revenue Generators such as proximity to highways, malls and other economic infrastructure.

Calton continues; “At Carlton James we understand that crisis and opportunity are just opposite faces of the same coin. The key to investing successfully is diversification, so if things are unravelling in Europe, make sure you have a stake in the US.

“Because we have pursued a policy of diversification, and built clear exit strategies into all our opportunities to mitigate risk, we can offer a real alternative during these uncertain times.

“And in spite of uncertainty in the wider economy, real estate remains a solid investment. Even in the UK, the gloomiest predictions about loss of property value pale in comparison to the loss of value on the FTSE 100 and 250 following the vote to leave the EU. And with real estate experts2 predicting Brexit could drive demand for US real estate – now would be the time to invest and get ahead of the crowd.”

For more information on Carlton James investments please visit http://www.rycalgroup.com/newinvestors

1. http://www.tradingeconomics.com/united-states/consumer-spending
2. https://www.theguardian.com/business/2016/jul/02/uk-brexit-vote-us-real-estate-market

Real Estate Fund Manager of the Month - Luxembourg
FundsReal Estate

Real Estate Fund Manager of the Month – Luxembourg

Advanced Capital Group manages four generalist Private Equity Fund of Funds: ACI, ACII, ACIII and ACIV, and additionally manages funds in the Opportunistic Real Estate and Traditional Energy sectors. This increasingly global portfolio of investments reflects the firm’s intention and ability to take advantage of investment opportunities worldwide.

“Advanced Capital is an investment firm that strives to serve its investors by prudently guiding part of their capital towards areas and sectors which, by and large, are not yet in the mainstream of an investor’s attention. Fundamentally, it’s why we are unique” writes Robert Tomei Chairman of Advanced Capital Group on the company’s website.

“As global investors our professionals predominantly spend their time gathering high-grade, real-time intelligence on geopolitical, economic, capital market and sector trends to assess relative value amongst a wide range of investments within the private market universe” he adds. On the firm’s approach to investments, the Chairman adds, “By no means a straightforward process, we are constantly vigilant of markets and conduct our own self-assessment. A depersonalised, rigorous approach which stimulates independent, intellectual debate together with a focus on thorough quantitative and qualitative analytical support, lies at the heart of our success, as is fostering a vested and highly motivated team. It is our conviction that other factors of our success are driven by sound governance and a culture based on transparency and integrity.”

Corporate Social Responsibility Advanced Capital is driven by the belief that socially responsible investing and the consideration of the wider impacts of business is a core pillar in the guardianship of assets in today’s society as well as generally being good business, concerning their four generalist funds. As such, values and activities are enshrined in their approach to the wider global milieu in which we sit. They see this as an integral driver of the firm’s success over the last 14 years.

Advanced Capital are committed to maintaining the highest standards of probity in all their activities with all stakeholders, investors, managers, colleagues, regulatory bodies, the private equity industry and the wider community as a whole. Reflecting the firm’s commitment to build sustainable investments, we adhered to United Nations Principles for Responsible Investment (UNPRI), the framework which allows us to further incorporate environmental, social and governance issues into their investment process. They are also proud and committed supporters of the globally renowned charity Oxfam in its fight against poverty and injustice worldwide and members of the Aspen Institute, the reference organisation for the encouragement of enlightened leaderships.

Maintaining a very close relationship with their investors is very important to us; their goals are at the heart of the firm’s strategy. To this end, Advanced Capital provide them and other stakeholders with continual disclosure around the firm’s portfolio investments, structure and operations and demonstrate how they work to create long-term sustainable value.

As part of this landscape, Advanced Capital endorse the Private Equity Principles of the Institutional Limited Partners Association (ILPA), the leading private equity investors’ organisation which encompasses the largest most sophisticated investors in the world.

Above all, ILPA recognises the need to establish best practices among investors and their investments managers. Its principles of transparency, governance and alignment of interest have been accurately developed with the wider goal to improve the long-term benefit of the private equity industry as a whole. Ensuring that Advanced Capital stay at the forefront of developments in global international affairs and in the latest macroeconomic trends, they support The Royal Institute of International Affairs (Chatham House), a world-leading multi-rewarded Think Tank. Meanwhile, their memberships of the Italian Private Equity and Venture Capital Association (AIFI) and European Private Equity and Venture Capital Association (EVCA) allow Advanced Capital to always keep a state-of-art domain within the private equity industry.

Private Equity Fund of Funds Since its launch, Advanced Capital’s Private Equity Fund of Funds has invested exclusively with specific, targeted, leading international managers, ensuring consistently high returns based on an appropriate level of market risk.

Advanced Capital’s prides itself on being an early mover, allocating a significant portion of its funds towards counter-cyclical distressed and debt strategies in anticipation of a market correction.

Energy

Advanced Capital Energy Fund (ACEF) is a global Private Equity Fund of Funds targeting the on-going reshaping of the energy and power industrial landscapes.

The fund explores buyout, growth and restructuring opportunities within the energy markets globally through investments in a number of leading funds across the traditional and alternative energy sectors.

Real Estate Investments

Focussing on one aspect of the work, we now take a look at Real Estate sector which is encompassed by the hard work of the firm’s Seth M. Lieberman, Chief Investment Officer for AC Private Equity Real Estate. Fittingly awarded Real Estate Fund Manager of the Month, Seth certainly boasts an impressive 32 years of industry experience in both the US and in Europe. Indeed, Seth has a wide range of industry experience ranging from business development, senior and mezzanine finance, and equity investments, to restructuring of distressed properties and debt.

Lieberman has held senior positions with UBS Investment Bank (MD), Hypo Real Estate (Joint MD), Lehman Brothers International (ED), Credit Suisse Praedium Funds (Principal) & GE Capital (Director). In addition, he has earned a B.A. in Economics (Cum Laude) from Tufts University and is a member of the Urban Land Institute Europe Executive Committee, its Advisory Board and ULI Global Audit Committee. Mr Lieberman is a board member of Kvalitena AB.

The Advanced Capital Private Equity Real Estate International Fund (AC PERE) is a Real Estate Fund with a global perspective and a focus on opportunistic and distressed debt real estate assets. AC PERE aims to capitalise on illiquid market conditions and primarily invest in distressed property and property debt investments, to deliver superior risk-adjusted returns.

Ending this article on a positive note, the last word goes to the Robert Tomei, Chairman of Advanced Capital Group, “Advanced Capital’s consistently successful track record of 14 years has placed us amongst the best performing managers in the business. Their flexible, value-oriented approach has reduced exposure to exuberant valuations and takes advantage of excessive pessimism or relatively neglected areas of opportunity. This is underpinned by the firm’s fundamental commitment to outperform markets while preserving principal”.

For further information, please contact:
Company: Advanced Capital SGR S.p.A.
Name: Seth M. Lieberman, CIO Real Estate Investments
Email: [email protected]
Web Address: www.advancedcapital.com
Address: Via della Spiga 30, 20121 Milano, Italy
Telephone: +39 (02) 3031771

Award for Innovation in Financial Law & Best for Alternative Investments - USA
FundsReal Estate

Award for Innovation in Financial Law & Best for Alternative Investments – USA

Marc, tell us a bit about Kutak Rock’s history:

Lieberman: As one of America’s first national law firms, Kutak Rock has been serving America’s investment community for more than 50 years. One of the firm’s founders, Robert Kutak, created the Kutak Commission, the first of its kind to develop a national code for lawyers’ ethics. With over 500 lawyers in more than 17 U.S. states, Kutak Rock has represented nearly every major investment bank and governmental unit in the United States, providing innovative and intensely responsive service to its finance and investment clientele for more over half a century.

The quality of our service and the depth of our expertise have led us to represent clients in nearly every aspect of the finance and investment space. However the firm is especially renowned for its representation of investors in the private markets, and in particular, in the private equity, venture capital, hedge fund, real estate, investment management and public finance fields.

Kutak Rock has over 100 lawyers dedicated to documenting real estate deals, and the firm has an entire team of highly-experienced lawyers who represent institutional investors in private equity, venture capital, and hedge fund transactions. In the past five years alone, the firm’s Alternative Investments Team has documented over $3 billion in transactions.

Who are the lawyers that staff your alternative investments team?

Lieberman: Our highly dedicated and experienced Alternative Investments Team is comprised of lawyers from every facet of the profession (both former large and boutique firm practitioners, as well as those with private and governmental institutional experience) and this enables them to not only know what their clients expect but also to understand what issuers expect and deem to be “market” terms.

I am the leader of the Alternative Investments Team, and am both AV rated by Martindale Hubbell, the international lawyer rating service, as well as designated as a SuperLawyer®. Other Team members enjoy similar ratings. An AV rated lawyer is a lawyer with the highest rating by Martindale, one who rates 5 out of 5 in the categories of knowledge, integrity, honesty, forthrightness and ethics. People designated as SuperLawyers® have been rated as having a skill level among the top 5% of their peers, and I and some of my team members have also been designated by Best Lawyers in America® as having skills which place them in the top 4% of lawyers. I and several of my other Team members are also Board Certified Real Estate Specialists, and as such, are recognized as having special expertise with complex real estate transactions.

The entire Kutak Rock Alternative Investment Team is highly skilled and recognized as one of the pre-eminent investment lawyer groups in the business by their clients, many of whom have provided the firm with glowing endorsements. Being recognized as superior in the profession enables our Team to secure terms not otherwise capable of being secured by other lawyers whose credibility and experience might be questioned.

Collectively the Team comprises well over 100 years’ experience negotiating and documenting deals. They have documented nearly every aspect of the investable spectrum, including management agreements, direct and indirect real estate, hedge and private equity investments and derivatives contracts. The Team is also very experienced in negotiating and documenting international transactions throughout Europe, the Caribbean, and Asia.

How does your team stay abreast of the fast paced development of the law?

Lieberman: As you say, the legal industry is a fast paced market and this experience counts for nothing if staff are not supported in their professional development. As such our lawyers stay ahead of the curve when it comes to legal developments through a multitude of hours spent in continuing legal education. Firm lawyers regularly design and present educational programs and we make sure we have access to the latest electronic data bases and periodicals and government announcements and releases.

Does Kutak Rock participate in the development of the law?

Lieberman: Kutak lawyers regularly assist government officials to design new legislation and address existing legislation that has become ambiguous or outmoded. For example the firm’s lawyers were instrumental in obtaining clarification from the SEC on whether certain governmental officials were required to register as investment advisors, and Kutak lawyers are currently working with investor organizations and government officials to make issuer subscriptions more transparent. Our dedication to public service is a bedrock precept among Kutak lawyers, and every one of the firm’s lawyers is encouraged to dedicate a substantial amount of their time to efforts which improve the profession and the lives of our clients.

Alongside this, as a practice we are always refining our negotiating techniques and terms and in response both to market forces as well as new legislation or regulation or client requests. Nothing is static in our business and therefore the firm has to adapt in order to stay ahead of the competition.

The word on the street is that Kutak Rock is an especially nice firm to work for. Is that true?

Lieberman: The experience and dedication of all of our staff has helped bring clients into the firm, and ultimately driven our success, and therefore we work hard to cultivate a supportive and engaging environment for our employees. Kutak Rock is well recognized as one of the most pleasant national law firms to work for. The firm has created an environment of respect, comradery and care almost unmatched among its peers.

As a result, our personnel turnover rate is far lower than our competitors. The firm is quite diverse, employing a far higher percentage of women partners than almost every other law firm of its size. The firm’s collegial atmosphere aids greatly in providing an environment for its attorneys to reach creative solutions utilizing areas of practice expertise beyond that of the Alternative Investment Team.

Our interdisciplinary approach to problem solving allows us to borrow from other areas of practice, whether that might be public finance, regulatory law, litigation or a host of other legal areas. Accordingly, while we attempt initially to meet specific requirements with “tried and true” approaches, when those are unable to be applied, our attorneys reach out across practice groups and geography to find optimal solutions. This caring attitude carries over to its clients, whom the firm treats as family rather than just “clients.” Thus, Kutak Rock endeavours to respond to client inquiries instantly, not in days, and to always place client interests above the interests of the firm or our lawyers. It is for that reason that many of our clients have retained us for decades.

How do you assist clients to adapt to the always changing financial markets?

Lieberman: Working closely with our clients has provided the firm with a unique and fascinating insight into the U.S. investment market. The environment for institutional investors at the present time is particularly challenging from a number of perspectives, as the low interest rate environment has propelled most institutional investors to seek yield in the private debt markets, but the overwhelming number of funds proposing to exploit those markets makes it difficult for investors to choose which funds will be among those reaching the top quartile in investment returns.

The same concerns over return are evident within equity investing: while some would say the greatest opportunities are now past us, the ingenuity of managers to find new ways to exploit the equity markets seem boundless, but the plethora of funds touting new strategies and opportunities makes it difficult for investors to separate the wheat from the chaff in choosing top quartile funds. As more money chases established top quartile funds, negotiating favourable terms with those funds has become more difficult. While law firms are not in the business of selecting one fund over another, it is especially important to choose a law firm which is sufficiently well-experienced in dealing with top quartile funds to know when to push the envelope on allegedly “market” terms. Kutak Rock is such a law firm, and is especially well-suited to represent investors who expect value for their dollar and refuse to pay the exorbitant rates demanded by the coastal or international law firms.

Ultimately the financial markets are under constant strain from the many stakeholders which comprise them, and we believe that efforts to lobby the government for more regulation will only increase regardless of the outcome of the current U.S. election cycle. Thus, we expect much more regulation from both the SEC and IRS to further define the nature and scope of Dodd Frank, and we also anticipate more pronouncements from the SEC on private fund disclosures, at a minimum.

Kutak Rock is also renowned for its modest fees—how can the firm charge rates one-third lower than its peers and still deliver quality service?

Lieberman: One major challenge our clients are facing is that they are increasingly becoming sensitive to upward pressure on lawyers’ fees, and therefore Kutak Rock has continued to benefit from such fee sensitivity. Our firm’s rates are far below those of our peers, in part due to our comparatively low overhead.

This is due to Kutak’s geographic footprint which focuses primarily on non-money centre cities across the U.S. and our back office operations that are centralised in the Midwestern U.S., where operating costs are far lower than the coasts. This advantage enables Kutak Rock to set fees a full third lower than its peers, but with no sacrifice to quality of service, a fact to which all of our clients can attest. Further, to enable our clients to better manage their legal budgets, we offer to work for flat or capped fees, and a growing number of our clients have taken advantage of these alternative fee arrangements to bring certainty to their strained legal budgets.

Despite this challenge the firm’s long and unblemished experience, coupled with the fact that its fees are one third lower than its competitors means that clients ought to conclude that their best choice for documenting investment transactions is Kutak Rock. The firm documents between $60 million and $300 million of transactions every month for institutional clients who have come to conclude that Kutak Rock is the best alternative investment law firm for their needs.

All existing clients of Kutak Rock will tell you a similar story about the lawyers with whom they work; that Kutak lawyers really care, and that caring translates into excellent and dedicated service which at the prices charged, simply have no comparison in the market.

What does the future bode for your firm?

Lieberman: Looking to the future, the firm will expand to have more offices throughout the U.S as new opportunities present themselves. It is also highly likely that we will strengthen our relationships with firms in Canada and throughout the Americas and abroad and will add numerous lawyers to further deepen our ability to fully serve our clients’ legal needs. The firm is working with securities regulators to assist in the effort to make issuers fully disclose their fees and conflicts to better assure our clients that there will be no surprises in their returns and that effort will continue for the foreseeable future.

Company: Kutak Rock LLP
Name: Marc R. Lieberman
Email: [email protected]
Web Address: www.Kutakrock.com
Address: 8601 N. Scottsdale Road, Suite 300
Scottsdale, Arizona 85253 USA
Telephone: (480) 429-7103 (Direct)

Warburg-HIH Invest Strengthens Presence in the Netherlands
FundsReal Estate

Warburg-HIH Invest Strengthens Presence in the Netherlands, France and Spain

They will work on site, heading Warburg-HIH Invest’s new country offices. In the Netherlands, Warburg-HIH Invest has agreed on a regional cooperation for the Benelux countries with Cording. The objective is to build a permanent presence in the respective property markets in order to identify market opportunities more quickly and ensure the accustomed high management standards for the company’s own local properties.

“As an international investment and asset manager, we want to position ourselves even more prominently in relevant markets. As part of this effort, we look particularly to expand our footprint across regional representations in the three countries in order to have our own contacts on the ground and increase our capacities in the respective markets,” says Andreas Schultz, managing director of Warburg-HIH Invest.

Dominique Dudan, a trained economist, will oversee Warburg-HIH Invest’s French business as a managing director from a dedicated office in Paris. She has almost 20 years of experience in the property sector and is a Fellow of the Royal Institution of Chartered Surveyors (FRICS). Prior to this role, Dudan served for four and a half years as president of Union Investment Real Estate France and three years as president of a large private equity family office. She also held leading roles at HSBC Reim, BNP Paribas and ACCOR Hotel & Resorts.

Lueneburg-born Benita von Meding will head the new Warburg-HIH Invest office in Spain (Madrid). Von Meding also has about 20 years of real estate experience with a focus on expansions and transactions in Spain from different positions inter alia with Union Investment Real Estate, Bavaria Bankgesellschaft and Immobilien Team Consulting (ITC), a service provider specialising in shopping centres.

In the Netherlands, Warburg-HIH Invest will cooperate with Cording, an internationally operating asset manager. Cording will advise and support Warburg-HIH Invest from Amsterdam in all future investment activities across the Benelux countries and represent Warburg-HIH Invest as a local contact for market participants and service providers.

Real Estate Fund Manager of the Year - USA – 2015
FundsReal Estate

Real Estate Fund Manager of the Year – USA – 2015

Generating wealth preservation, along with superior risk adjusted returns, is American’s strategy. American invests in Core, Core Plus, and Value Add apartment properties. American’s Senior Partners are experienced fiduciaries having owned and managed over $4.5 billion in apartment properties over the past 40 years.

Ann McSheehy, Senior Principal at American, says, “It’s about how well you did in keeping risk low and generating outsized returns, how well you did in improving people’s lives and neighbourhoods, how successful you  were in bringing solid alpha to co-investors, and, across all parts of the economic cycle. This is where we are differentiated, is in the quality of work that we do – we are stable and focused on wealth preservation, while we generate higher alpha for co-investors through our market expertise in deal sourcing and targeted renovations; we keep the investment stable across all economic cycles; and we make a huge positive impact on the lives of residents and neighborhoods – which allows us to bring great returns, even with an investment which has the risk profile of a bond.”

“For several generations, my family has owned and managed apartment properties, with a strong focus on strategic value add,” says Ms. McSheehy. “Through the generations, we have cleaned up and turned around neighbourhoods which were once threatening to fall to crime, but which are now leading communities in the U.S.”

Apartment Properties – the Gold Standard
Apartment properties are the gold standard of the investment world, performing well in every economic environment. McSheehy explains, “Once in a while over the years, people will ask me, are we in a bubble, and I explain to them that Apartment Properties (Multifamily) is the gold standard of an investment that performs well in every economic environment. Even in the worst or recessions or depressions, when traditional stocks and bonds perform poorly, and even private equity performs poorly, and even when just about all of the other asset classes in real estate perform badly, Apartment Properties do well.”

Over the past 30 years, investment in real estate has yielded a greater return than the S&P 500, the Dow Jones, the NASDAQ, or the Russell indices. Returns on private real estate investments in each of these periods, were higher than for publicly traded real estate, and had lower volatility, as measured by the National Council of Real Estate Investment Fiduciaries’ NCREIF National Property Index. (FTSE NAREIT U.S. Real Estate Index Returns, National Association of Real Estate Investment Trusts, S&P 500, Russell, Dow Jones, Nasdaq, FTSE NAREIT equity
REIT index.)

Why is that? “In a recession or a depression, companies do badly, stocks generally do badly and people lose huge percentages of their wealth in stocks and other investments as happens in every cycle; companies lay people off. Then, companies rent less office space and retail space, so those asset classes in real estate do terribly. And, far fewer numbers of people are able to afford a single family home, so those do terribly, too – they are not buying – they are renting. All of those buyers are forced to become renters – and so especially in the worst times, renter demand is robust and grows, and apartment properties perform well.” American’s principals have owned and managed apartment properties with consistent results throughout all market cycles.

Strong Tailwind Demographics
The ‘prime renting age’ in the U.S. is approximately 18-35 years old. Over the coming 10 years , the number of people “ageing out of” prime renting age is far smaller than the number of people “ageing into” this age. The net increase in individuals in prime renting age is set to increase from about 71 million people to about 86 million people. Additionally the U.S. Census projects that homeownership will decline 6-8% in the coming decade, leading to a 6.6-8.8 million new renter households.

Over the past decade, the construction of apartment properties declined. New construction is aimed primarily at the urban centres of large primary market cities, and nationally is projected to meet only a small fraction of new demand for apartments. This supply constraint creates strong fundamentals for the asset class, over and above its already strong fundamentals.

Wealth Preservation
“The investment world all agrees that apartment properties are the ultimate in Wealth Preservation,” says McSheehy. Insurance companies and other institutional investors price out the risk in apartment property investment, as having the risk of a bond. But the distinction is that, it also brings good returns. “Housing is a core human need, becoming even more of a need in bad economic times when people cannot buy and must rent.”

Triple Bottom Line – Virtue and Returns

American invests with an eye on a triple bottom line: adding value to the lives of residents; adding value the lives of individuals in the neighbourhood around the property; and adding value to co-investors. These three goals and objectives strengthen and reinforce each other, in a circle. “Neighborhoods are always in a state of change, a state of flux. Nothing in life ever stands still,” says McSheehy. “Neighborhoods are either improving or getting worse. A lot of other groups just suck cash out of properties, which essentially means that they are sucking cash out of neighborhoods, and when they do so, a large anchor property has a huge effect on making the neighborhood around it a much worse place to live.” American, in the Value Add work that it does, differentiates itself by investing capital to positively transform neighborhoods and properties, which results in jobs returning to the neighborhood, and far increased quality of life for the individuals living in these neighborhoods.

It also leads to higher returns for the co-investors who have invested in these Apartment Properties. McSheehy explains, “It is not Value Added by just buying at a low price or using unnecessary risk – rather, it is actual real, physical value which is added to the lives of residents and  to the neighbourhood. This is more work than other groups care to do. But it is how we are able to generate significant returns while maintaining the bond-like, Wealth Preservation risk profile of the investment.” “To put it in perspective: we do Core, Core Plus, and Value Add. This applies just to our active Value Add: for some of our work, we look for properties where we can turn the property around and turn the community around. Generally, we see properties that fall into disrepair, and some crime, and it obviously has a huge destabilizing effect on the entire neighbourhood around it. The ownership there had been sucking cash out of the property and not investing into the property. They haven’t been doing background or crime checks on their residents. They let in some bad apples. Then all the good people live in fear, which is most of the people. And the property looks bad as well. What we do for our Value Add, is, we buy properties like this, generally 100 apartments to about 500 apartments, and we clean them up. We put in place a top quality property management company. We put in a renovations budget, we clean up the property, we make it a beautiful place to live, a place where the residents are proud to live. “That is just one example, we do all types of value add.”

Significant Value Add Leadership in the Industry
American and American’s partners have consistently delivered IRRs above those of the industry. McSheehy explains that it is due to the far higher amount of time, focus, and hard work that the group puts into each property value add renovation. “This is something that other groups are not able to do, even if they wanted to do, which they don’t want to,” McSheehy says. “We spend months negotiating materials prices down. We pay far less than market prices for materials, whereas the rest of the industry pays about 120% of the market prices for materials in their renovations because of markups from contractors.”

American does not tie construction management fees to the cost of the renovation, as the rest of the industry does. “We are IRR driven, and when we invest with co-investors, we are compensated from the IRRs and from our portion of the good returns results for co-investors. This is a clear and transparent alignment of interest which is lacking in the rest of the industry. Our construction management fees are minimal and cover part of the staff cost for that renovation, and are not tied to renovation cost, but to how much we are actually able to increase returns for co-investors, and we don’t get paid anything significant until after the investor has received very good returns.”

Ms. McSheehy explains how renovations influence the IRR of a property. “When you run a sensitivity analysis, you see that some things do not affect the IRRs very much – actually most things don’t. However, the things that affect the IRRs substantially are, first, the amount spent on that renovation and how far those dollars go – the selection of where those dollars go, and second and most importantly, the rents that residents pay after the renovation.”

Throughout the rest of the industry, the real estate group is paid 5% of whatever they spend on a renovation, which is a direct conflict of interest with their investors. “No one will go out and spend an extra 200 hours searching for better or cheaper or higher quality materials for a renovation, or more innovative ways to make a property really beautiful and
‘breathtaking’ for prospective residents, when they are just getting paid more if they spend more,” McSheehy explains. “Even for the groups that would do so, they are directly incentivized to do the exact opposite.  “We operate from a completely different paradigm”

Typically, when a real estate group does value add, says McSheehy, “they call and say, ‘Joe, bring in the new cabinets and the sand colored carpets,’ and make a phone call to a designer if necessary for a common area. They get tiny rent increases and they call it a success, and say they are a huge success because they have done a huge volume of apartments – with no quality or high results whatsoever, for the co-investors. Or the residents. We have never had a value add renovation like that – we expect to see higher rent increases which translates directly to IRR, and we do beautiful renovations which we put huge amounts of time into. We do everything so differently. We operate from a completely different paradigm. It comes down to diligence and very hard work. There are no shortcuts.”

High IRRs and High Rents – Driven by a Deep Understanding of Human Perception 

Matt Williamson, Senior Principal with American, says, “It also comes down to the fact that we have a significant advantage, and that is the deep lifetime of renovation experience of Ms. McSheehy. The entire industry is run by men, who have a significant disadvantage when it comes to design.”

Ms. McSheehy is unique, in that she is a Senior Principal and she also leads the Value Add strategies and details. “She leads from the front, like Alexander the Great, not from a phone call from afar once a year.

The difference in the product and in the Alpha is immense,” he explains. She has studied at the number one ranking best universities and graduate schools around the world, Oxford, Georgetown, London Business School, Sorbonne, she has done Private Equity around the world and in the U.S., and she is also a cultural and style genius, the likes of which have never been seen in the U.S., Europe, London, or the rest of the world. “I remember the story about how, when she was young in the previous generation of the business, she wanted to prove a point. There was an apartment property in the Chicago area that her family had renovated and already exceeded expectations on rent increases following a renovation a few years before. She made a few inexpensive changes and increased rents by the same amount again, as they had done in the original renovation – which had already exceeded expectations. She has always had this tremendous ‘feel’ for what makes renters want to live in a place, and love to live in a place. It is far more and far different than a design perspective; it is a unique understanding of human perception and feeling and what people visually and emotionally want in a home.”

Bringing Value to Individuals
The higher returns American has, compared to its industry peers, are because “we give residents the opportunity to live in an apartment of a far higher quality than they can get in other apartment properties in the area. “In a way, it fulfils one of the important dreams of people’s lives. We are giving the opportunity to a large number of people, to live in high quality homes that they are proud of. Even if they will one day buy a home, it will never have as high of a design quality as the apartment product that we offer.”

Robust Pipeline
Able to source the most attractive deals, both on and off market, the company maintains a robust network of relationships throughout the industry, allowing it to have a strong pipeline of deals. “We typically bid on about 2% to 4% of the deals that we see,” says McSheehy. “This allows us to maintain a very high quality of product. We are focusing on key geographic locations which are outperforming in our key metrics. Over the past 40 years, these criteria have been extremely successful at winnowing out which markets will provide robust support for outsized returns relative to the very low risk of apartment properties.”

“Rocking Chair Test”
McSheehy says that the culture of American is different because it focuses on Triple Bottom Line and purpose. “As a company, we say, ‘this is our Purpose,’ ‘this is our mission, this is our impact on the world, and this is what no one else can do the way we can,’ and every day lead every day with that purpose.

“Does your work pass the ‘rocking chair’ test? Does your work pass the ‘deathbed’ test? Is what you are doing having a positive impact on peoples’ lives? This is what I believe is one of my missions in life, it is work that I have been trained in doing my entire life. Within the apartment property asset class, we do great Core and Core Plus, and Value Add, and for me, really, with all of the asset classes, and especially regarding the Value Add, it is tremendous to see the effects of our work in cleaning up entire neighborhoods, making them far safer places to live, far more beautiful places to live, places for jobs to return to, neighborhoods that flourish, and the lives of families and individuals are able to flourish. This creates actual physical Value for people in their lives, brings stable returns and stable alpha for our co-investors throughout every economic cycle, thus helping their lives, and doing our part to contributing to making our economy a more stable and healthy one.”

Real Estate Fund Manager of the Month - US
FundsReal Estate

Real Estate Fund Manager of the Month – US

At Ethika, their advisers employ an entrepreneurial investment strategy designed to consistently achieve attractive risk-adjusted returns by creating capital appreciation opportunities through repositioning, restructuring, redevelopment and intensive post-acquisition asset management of underperforming assets. As a result of their expertise, Ethika’s team has over $5 billion in diverse real estate transaction and development services experience, encompassing investment management, asset management, operational repositioning and design/development management.

As a company immersed in the real estate industry, Szita has noticed a number of trends in their industry, unsurprisingly stemming from the 2008 Global Financial Crisis. “Since the financial crisis, financing has remained conservative,” says Szita. “This is positive, as it has helped keep supplies generally in check. New construction loans, for example, were a lot easier to come by in the last cycle, which of course resulted in a market oversupply.”

“Alongside this, leverage has also remained conservative, since many deals ended up underwater during the financial crisis. This has refocused the attention of fund managers primarily to high quality assets in high quality markets – concentrating equity in the country’s Gateway and top 20-40 markets.”

With conservative financial activity now a prevailing theme across the financial landscape, many banks have remained reluctant to lend in the sector over the past number of years. However, according to Szita, this development has really paved the way for private lending. “With heavier banking regulations, from Dodd-Frank domestically to the Basel III regulatory agreement globally, requiring banks to hold more of their secured product on their balance sheet, the door has been opened for private lenders,” explains Szita. “As such, private equity real estate fund and debt fund capital has been able to step in and take the place of banks, with the opportunity to earn some attractive yields.

“The evolved lending landscape has created a great wealth of capital amongst investors and fierce competition among borrowers,” adds Szita. “Any investor that is leaning away from more core assets is finding themselves dealing with the non-banking lenders more frequently. The positive aspect is, of course, that for investors focused on value-add in non-core assets, these groups have the opportunity to be nimbler and are not as boxed in as the bank lenders have traditionally been.”

With the financial markets always being susceptible to uncertainty, Ethika’s investment process is grounded upon diversification and consequently leaves them less vulnerable to volatility. “We make sure to look at opportunities in such a way that they’re not purely cycle driven,” says Szita. “Instead, we like to invest when we see a rapidly improving market on a macro level, while identifying what we deem pockets of opportunity, be that market specific or pertaining to particular asset classes.”

“Generally speaking, Ethika prefers to buy into assets that aren’t perfectly stabilised, allowing us to acquire properties at a very attractive price. We’re generally more of the mind-set of taking a higher stabilised yield in the future, rather than pay full price today. If we can buy a perfectly stabilised asset, you don’t have a clear path to grow the value. With no room to improve the asset, you’re at the mercy of the market. Whereas with a value-add investment strategy, there is a clear path to improve the property to make it competitive, using the fact that the asset is not performing at its fullest potential to then build the value.”

2016 has been an exciting year for Ethika, primarily due to the launch of their new real estate fund at the closing end of 2015. The fund focuses on opportunistic investments in the top 30 U.S. markets that will create value through significant renovations and operational improvements. Named the Ethika Investment Diversified Opportunity Fund II, the platform is targeted to attract $250 million in equity capital from both new and existing investors, resulting in nearly $1 billion of new acquisitions over the next several years.

In sticking to their tried and tested strategy, the Ethika Diversified Opportunity Fund II will adhere to Ethika Investments’ vertically integrated investing approach that includes sourcing real estate assets with positive fundamentals in compelling locations at prices below historical values and replacement costs. The launch came on the heels of full deployment of Ethika Diversified Opportunity Fund I, which last year delivered an internal rate of return of 22.3% and a 2.1x net equity multiple to investors after investing in 17 properties across 13 different markets.

Alongside their investment strategy, Ethika have a number of other features which allow them to distinguish themselves from their competitors. As Szita outlines: “As a vertically-integrated investment firm, we not only serve as a fund and capital manager, we can service every investment that we do,” explains Szita. “In taking on a value-add investment, we can very quickly put a strategy in place that encompasses everything from sourcing the asset, underwriting the asset, escrow, design, construction, repositioning, accounting, investor relations and property management, consolidating the entire process to a single operation, again minimising risk and the room for error.

“Moreover, the midsize niche that we’re in is also a true differentiator,” adds Szita. “A typical deployment for Ethika usually sits between the $15 to $50 million mark. We’re nimble and can take on these sorts of assets and stabilise them, increasing value on our net multiple goal of 2.0x over the fund’s investment.”

As a result of their success, Ethika has grown to provide a highly diverse client base, and building and maintaining relationships with their clients is at the heart of everything Ethika does. “Our fund partners vary throughout each real estate cycle, but are generally a 65/35 split between foreign and domestic capital sources. We service a wide variety of investors, from large institutional pensions to private sovereign wealth funds.”

Despite the shifting road ahead, Ethika remain confident that their company will continue to strive and find the pockets of opportunity that may come along the way. “Of course, we will be primarily focusing on our new fund throughout the course of 2016,” says Szita. “While growth pace has slowed significantly, we still strongly believe that of all the major economies in the world, the U.S. still has the best underlying monetary policy and pricing fundamentals for growth and strong investment returns moving forward.”

Company: Ethika Investments
Name: Andres Szita
Email: [email protected]
Web Address: ethikainvestments.com
Address: 1880 Century Park E #1016, Los Angeles, CA 90067
Telephone: +1.310.954.2009

Real Estate Fund Manager of the Month
FundsReal Estate

Real Estate Fund Manager of the Month

The firm’s Senior Management Team has extensive experience investing in high-yield investments throughout Europe and has advised and managed in excess of €10 billion of real estate, acquisition, capital markets and restructuring transactions throughout the world.

With offices in Switzerland, Luxembourg and the Czech Republic, and local partners in over 20 locations throughout Europe, they are strategically positioned to utilize their global financial experience and local market expertise to source off-market deals and actively manage the entire investment process to provide solid returns for our investors and strong economic assets for the communities.

Marc E. Cottino is the founder of M&A Property Investors, established in late 2009 in London and Zurich, and his job is focused on developing relationships with financial partners with the view of implementing Club Deals to co-finance the firm’s pipeline deals. M&A Property Investors activities, visions or investment strategies they evolve quickly according to economic changes, so it is important to not lose the cap and make turn errors from the past into success. “Quick reactions and “Deja-vue” situations can be a strong driver to consolidate experience toward new successes”

In 2016 he celebrates 18years of industry experience and throughout professional life he has discovered that the elements needed to realise a good investment must not be complicated or hazardous. On his firm’s portfolio, he said that “we team up with European Real Estate promoters from Portugal to Czech Republic, people different for cultures and languages, we do require few important facets, Professionalism, Transparency and Will to share ventures with us. Money and profits come later” he says in an in-depth interview.

Giving an insight into the work Cottino does behind the scenes, he outlines his main responsibilities and says that “at 62 I am the old stager with tremendous will and commitment as a teenager who rules the corporate strategy, who links relationships with investors, bankers, wealth managers, family offices or any other institutional investors partnering with
M&A.”

“I carry the responsibility of millions Euro invested in tangible assets thousands of kilometres away from each other, and I have passed unintentionally through the crisis’s peak without anguish or distress which I am proud of it. To avoid failure, I carefully listen to the market trends, including smiff off-market deals opportunities in niche markets to source unique investments for my partners.”

Career

“I began my career in London at 24 in early 1977 as a junior commodities trader. Years later I moved to Paris evolving to a well-known financial firm who specialised in Capital Market Instruments, which really a great experience” enthuses Cottino when asked about his experience prior to his role in M&A Property Investors. “In 1990 an Anglo-French financial firm offered me to manage the Madrid branch, so I spent 4 years in that beautiful City. In 1995 I was asked to manage the Private Banking Division of a private bank in Switzerland, which was a really boring job for a guy like me” he adds.

 “In spring 1998 a Real-Estate promoter asked me to loan-finance a luxury residential building in downtown Lugano. I was seated over multi-millions portfolios of Swiss francs, but the question was how to finance the promoter instead of selling bank instruments? Due my experience, I quickly set-up an investment vehicle and subscribed my clients, so in one-week I raised 7 Million Swiss francs and I financed the promoter. The development was a nice trophy project, indeed all magazines wrote positively about it, the investment was great, the asset was sold in short time and return was
excellent. At the end of the story I was fired by the bank because I was not on-line with the bank’s investment ‘policy” Cottino tells.

Continuing on the theme of his career, Cottino explains that he quickly set-up a structure in Luxembourg thanks to the investors who cashed excellent returns and supported him. He started his new venture in Real Estate by applying Private-Equity techniques. In 1999, he began doing investments in Baltics States, in Hungary in Italy and in Côte d Azur. He divorced from his partner in mid-2007 and took an extended period of sabbatical leave until 2010.

“Meanwhile, the world went bankrupt, the RE bubble deflated and prices dropped. When the economic recovery shyly restarted in 2010, the banks had no money to finance RE investments, promoters were in search of Equity Partners, but I was ready and rested not stressed. It was the perfect timing for a second round. Since end 2010 up to today I have launched 21 investments across Europe, estimated at 340 Million Euro and I’m expecting to reach 1 Billion global Investment at the end of 2016” Cottino continues.

How has the firm has changed?

Since Cottino has worked at M&A Property Investors, “the industrial world has changed after the great turmoil. Many factors have contributed to complicate our daily life” says. Developing this point, he goes on to say bureaucracy has
increased and “more heavy financial transactions are more complicated than ever, we may say we do live in a world of Compliance officers, legions of controllers, banks become policemen, there is less room for business or improvisation
as there was preciously. Jumping on a good deal is now harder, and this makes Cottino really worry for future generations.

M&A Property Investors’ financial performance

When asked about M&A Property Investors’ financial performance and the reasons behind its success, Cottino says we have seeded in 2011 and had a harvest in 2015 in Prague, the result being a compounded return of 21.3% yearly on equity-investment. “We at M&A Property are fast growing because we were able to invest in the right place at the right moment, in some growing market niches as Prague where the market is growing consistently, in Portugal where the country is recovering, in Luxembourg a crumb in the heart of Europe growing at two digits and in Switzerland before the country collapsed. Once more, big appraisers edit excellent intelligence reports but ‘smaller’ has still a great role and in
M&A Property” Cottino reveals.

Challenges working across the European market

Concerning the challenges and opportunities M&A Property Investors face working across the European market, the response from Cottino is that it is less complex now as the firm mainly deal with a network of business lawyers established in all the main capitals. He goes on the say that their partners in Israel, Portugal, Russia and Germany share the same sentiments with his native country Luxembourg. “Is beautiful work all together among different cultures, in this old Europe with his values and contradictions. In M&A team we have 5 different nationalities including an American, probably the most integrated person everywhere” Cottino says which is frankly “a miracle”.

Company ethos and culture

When asked about the ethos behind the firm and whether there is a certain culture that defines the company and how to do you ensure these values are maintained, Cottino responds by saying, “the question is profound and deserves attention, I have Jewish origins and culture. My ancestors have travelled centuries ago from Turkey to Thessaloniki, to Genoa via Istanbul or Alexandria to Rotterdam with perennial virtues on their heart, as well as modesty and respect for the world. With these values you can challenge the world for ever, that’s why I am impressed to teach to my team to transmit these values to our partners. The response is worth more than a greedy investment.”

The future

While Cottino does not consider M&A Property Investors to be unique, he does underline that he probably runs one of the leading-hedge firms who specialise in alternative investments as real-estate, but he still has a lot to learn from his numerous competitors. Developing this remark, he says, “each one has its own skill, the market is wide and great for everybody. Every year new competitors come-out, others die, but we survive and our partners make the difference among the crowd.”

The last word must surely go to Cottino who outlines his future aspirations, “my team and I aspire to reach 1 Billion global “Capex” across Europe by the end of the year, which mean managing global investments for such a target by injecting one-third of equity. Beyond 2016 we will consider listing the company in the London AIM market.

“Work with serenity, bet on the mid-long term targets, share values, abandon greedy methods, create tangible economy, we have assisted in the II° half 2000 at the wildest ravage of the greedy way-of-management, the world economy went partially destroyed. We have a long way ahead to regain, so let’s change the approach. “

Contact Details

Company: M&A PROPERTY INVESTORS Ltd

Name: Marc E. Cottino

Email: [email protected] 

Web Address:  www.mapropertyinvestors.com

Address: M&A PROPERTY INVESTORS Ltd.

Immeuble Liberté, 4,Place de Paris – 4th floor, L-1930
Luxembourg

Telephone: +352 661 32 50 16

 

 

 

 

New Swedish Real Estate Joint Venture
FundsReal Estate

New Swedish Real Estate Joint Venture

The listed property company Balder has together with the Third Swedish National Pension Fund decided to enter into a joint venture for investments in residential properties in Sweden. Housing market forecasts shows a great demand for residentials

The new residential company will focus primarily on investments in new production of rental properties in growth areas in Sweden. Except the three metropolitan regions, also growth areas with positive population development are in focus. The residential properties that are produced shall focus on environmently friendly production.

“It is very positive and important to co-invest with a player as the Third Swedish National Pension Fund that has a long-term view on investments as we have”, says Erik Selin CEO and main owner in Balder.

AP3 doesn´t have investments in residential properties today, despite being a large player in the real estate sector.

­”We see good opportunities in developing our Swedish property portfolio with residential together with Balder, which is a well established company in the sector. The strong population growth expected in Sweden means a great need for new production of residentials”, says Kerstin Hessius, CEO Third Swedish National Pension Fund.

The deal is subject to approval from the Swedish Competition Authority and the deal is expected to close during the first quarter in 2016.

Balder in brief. Fastighets AB Balder is a listed real estate company which shall meet the needs of different customer groups for premises and housing through local support. Balder’s real estate portfolio had a value of SEK 39.9 billion as of 30 September 2015. The Balder share is listed on Nasdaq Stockholm, Large Cap.

Third Swedish National Pension Fund (AP3) is one of five buffer funds in the Swedish national pension system. The fund has the Riksdag’s mandate to manage the Fund’s assets to the greatest possible benefit for the pension system creating a high return at a low risk level. AP3 has a return of 9.3 percent on average per year over the last five years. The corresponding figure for the income index is 2.4%, which means that AP3’s return has greatly contributed to the pension system. As of 30 June 2015 the fund managed SEK 304 billion.

ARC Real Estate Income Fund Completes $359mn Exit Transaction
FundsReal Estate

ARC Real Estate Income Fund Completes $359mn Exit Transaction

The fund’s sponsors are Al Rajhi Capital Company and RA Bahrain B.S.C.(c) (formerly known as Arcapita Bank).

Since its inception in 2010, the fund acquired assets in the logistics, retail and warehousing sectors in United Arab Emirates and Saudi Arabia. In the last two years, the fund delivered an average annualized yield of 7.2 percent and distributed an annual yield in excess of 9 percent, with approximately 18 percent growth in net asset value.

The King & Spalding team on the sale transaction was led by New York and Dubai partner Benjamin Newland and included Dubai and Riyadh partner Nabil Issa and Abu Dhabi counsel Moustafa Said. All are members of the firm’s Middle East and Islamic Finance Group.

Celebrating more than 130 years of service, King & Spalding is an international law firm that represents a broad array of clients, including half of the Fortune Global 100, with 900 lawyers in 18 offices in the United States, Europe, the Middle East and Asia. The firm has handled matters in over 160 countries on six continents and is consistently recognized for the results it obtains, uncompromising commitment to quality, and dedication to understanding the business and culture of its clients.

 

Mortgage Pricing: Time to Take Action?
FundsReal Estate

Mortgage Pricing: Time to Take Action?

Although the Bank of England Monetary Policy Committee August vote suppressed hawkish dissent, the quarterly inflation report showed a rising confidence amongst businesses and consumers. Wage growth is picking up; private domestic demand is growing and is deemed to remain robust. All of these set exceptions for the economy to expand this year, making 2016 the likely year for an interest rate rise.

The outlook of higher rates is making both mortgage lenders and mortgage-holders nervous. According to figures from the British Banker’s Association homeowner remortgage activity in July rebounded strongly showing lending was up 29% year-on-year. As lenders update their remortgage interest rates and fixed rate loans remain cheap, homeowners are rushing to secure new mortgage deals.

Recent evidence is showing that although the BBR is flat, the fixed rates were starting to increase with both the average two-year fixed rate and five-year fixed rate going up by 60 BPS and 50 BPS respectively (source: Moneyfacts).

Due to rising acquisition costs, customer retention and associated pricing are imperative for mortgage lenders to achieve their business objectives. For those lenders that intend to capitalise on current market conditions, offset higher costs for their own funding and be well positioned for the demand surge, now is the best time to prepare for pricing and retention challenges.

As the competition intensifies, lenders ought to have a well-defined portfolio optimisation strategy. A strategy, which will provide them with an array of tools and insights allowing:
· To build an in-depth understanding of unique borrower types based on market and lender’s data.
· To improve product pricing and channel strategies by understandings multiple intricacies of customer segments.
· To take a definitive and timely action when the market conditions change, leading to time and cost saving.
As the lending boom this summer is continued and re-mortgaging is the evident leader, now might be a good time to review pricing strategy.

Property Investors Are Encouraged to Buy Property Abroad
FundsReal Estate

Property Investors Are Encouraged to Buy Property Abroad

Nearly half (46%) of property investors are keen to take advantage of the strong pound to buy property abroad, according to new research by FXcompared Intelligence, the research division of money transfer comparison site FXcompared.

The study, commissioned in the aftermath of the Conservatives securing a majority in the recent general election, shows how a combination of financial factors are persuading property investors that now is the time to seek opportunities abroad for higher returns.

Almost a quarter (23%) of respondents are considering buying property abroad in the next 12-18 months due to the stronger economic climate for business and residential lettings in foreign countries, while the Conservatives winning the general election is also a significant factor with one in five (20%) stipulating this as a prime reason.

Easier access to mortgage funding (22%), changes to UK Stamp Duty and property tax (16%), access to pension funds (14%) and better mortgage deals abroad (12%) were noted as key drivers towards foreign property purchases post party election.

The research demonstrates that now is the ideal time to invest in property overseas due to the perfect storm of financial factors that means investors can get the best possible value for money.

Nearly a fifth (19%) are looking to invest in multiple properties at one location, while the same number (19%) think coastal locations offer the best return on investment.

A quarter (25%) are now focusing on bigger properties as they seek to capitalise on the current opportunities in the market especially as a stronger pound has made it more affordable.

Better weather (48%) is still the main lifestyle factor when considering foreign property ownership, but how easy the location of the property is to reach (42%), and finding an up-and-coming area (21%) are also aspects influencing decisions. While investors are looking for value for money, they are also keen to explore locations that offer them the chance to enter the foreign lettings market.

In 50% of cases, currency and exchange rates were either the main factor (16%) or had some influence on the decision (34%) to make an investment.

Daniel Webber, Co-Founder & Managing Director, FXcompared, said: “With unprecedented opportunities for overseas buyers given the low euro, property investors believe they can get more bricks and mortar for their money abroad.

“Over the next 12-18 months we could see a trend among residential and commercial property investors, focusing heavily on major European countries such as Spain, Portugal, Italy and France.

“Aside from the financial reasons for pursuing foreign property ownership, lifestyle choices are still playing a big role too, with better weather and transport links major factors when choosing where to buy investment property.”

In terms of turn-offs, 43% are not interested in investing in countries where there is heavy regulation, while a lack of language skills (23%) and fears over how the property purchasing process (29%) works in certain countries are also causes for concern.

Revolutionising Real Estate Investment
FundsReal Estate

Revolutionising Real Estate Investment

Founded by Dr. Thomas Schneider, Emmanuel Lumineau and Adalbert Wysocki, BrickVest is revolutionising real estate investment by bringing together property owners, developers and investors for online, direct, transparent access to global real estate.

The platform will launch this summer, offering unprecedented access to the European and North American real estate markets from as little as €1,000. The fundraising is backed by angel investors from the real estate and technology industries, including Harvard University Professor in Real Estate Finance, Richard Peiser.

The founders are using their collective experience of more than 40 years investing in the real estate and technology sectors to seize a unique opportunity to create innovative investment products. In a market dominated by a few financial gatekeepers, these industry transforming products will significantly increase the level of transparency while reducing the costs of sourcing, structuring and managing investments.

BrickVest’s Chief Investment Officer Dr Thomas Schneider says the real estate investment industry has long been gated by the same group of major players. With the launch of the company’s online investment platform, BrickVest is smashing through an opaque marketplace creating access never before given in the space. For investors seeking a wide range of risk adjusted transparent and easy to understand investments, BrickVest is that opportunity without incurring huge, unnecessary fees.

Most existing real estate peer to peer funding options act as a brokerage service for investors. Instead, London-based BrickVest provides full investment manager services. This includes complete governance, as well as ratings and underwriting services through its proprietary technology. “This comprehensive service has never before been available to investors other than the major real estate players,” says Schneider.

Commenting on why he has backed the platform, Peiser said: “After reviewing the concept presented by the founding team, it was clear that BrickVest has the potential to become the defacto online real estate investment platform globally. A multitude of financial services have been fundamentally altered by the use of web technology and BrickVest will do the same for real estate investment.”

Property Transactions in  Consumers Hands
FundsReal Estate

Property Transactions in Consumers Hands

In response to an alarming 76% of UK consumers who have had a negative experience with an estate agent, Strawberry Star’s clients will now be able to choose how much of the commission fee they pay, depending on their experience of the service.

• London-based property consultancy Strawberry Star reveals 76% of UK consumers have had a bad experience with an estate agent, with a staggering 88% in London stating so
• In a bid to respond to UK-wide consumer discontent, Strawberry Star launches to market with a market first: consumers will only pay the commission fee they think is appropriate for the service received
• Tomorrow, firm launches nationwide survey of UK consumer sentiment towards estate agent services revealing overwhelming national dissatisfaction
• National ombudsman statistics outline a quarter (26%)1 of national estate agent complaints were issues surrounding communications failures
• With £700m worth of property acquired, the firm plans to expand further with the launch of offices in Singapore and Hong Kong

The launch brings an industry first to the consumer property market, testament to the firm’s overriding commitment to service over sale. This contracted promise extends from pre-sale interaction to post sale management of all owner/investor/occupier needs, whether this be performance based or service led.

With over 4 million people in the capital alone contributing the highest levels of national discontent, the launch of tomorrow’s report underpins the rationale behind Strawberry Star’s market defining offer. Championed by Dorian Beresford – CEO – Strawberry Star has placed an overriding level of attention on the relationship value behind the sale or purchase of a property, as opposed to purely the transactional value it holds.

In support of this, the Estate Agent Evaluations report reveals just over 7.5 million people across the UK feel the number one frustration towards estate agents is the agent’s overriding interest in receiving commission over finding the right property for their client, with one in five respondents in London stating so (18%).

Moreover, the current state of the property market sees customers bound by lengthy contracts that only account for the performance element of a transaction. These contracts must be adhered to if the agent achieves a sale or let, regardless of whether the client’s requirements are truly fulfilled, or if the calibre of customer service was acceptable or not.

Strawberry Star CEO, Dorian Beresford, said: “Consumers both at home and overseas continue to be dramatically underserved by their agents. The level of unsatisfied customers here in the UK is astonishing and representative of the frankly abysmal service delivered by many in the industry. We feel it is our obligation to redress the balance and put the power back into the hands of the public by literally putting our money where our mouth is. No tie-in periods, no false promises and if the client is not delighted by our service they get to choose how much of our fee to pay.”

With all global operations driven from a Central London head office and a further 25 UK offices in the pipeline, the firm has commissioned nationally representative research to ensure an in-depth understanding of the consumers they stand to serve. Aware of the emotively loaded nature of a “home move” or property investment, the research champions a suite of insights that unveil the true state of consumer sentiment towards UK property services.

Key findings unearthed in Estate Agent Evaluations include (using nationally representative population figures):
• Over 4.4 million consumers felt an estate agent had broken promises
• More people in London have had a bad experience with an estate agent than any other part of the UK – with 88% stating so
• Nearly one in 10 (9%) of the UK felt there was a lack of transparency from an estate agent – equating to over 4.4 million people
• There is a generational difference in the quality of service, with 8% of 25-34 year olds feeling pressured into purchasing a house by an estate agent – twice the national average
• 15% of the London population felt an estate agent broke their promises. More than any other region in the UK
• In a regional comparison, the research found that Strawberry Star’s leading launch market, London, was the least satisfied with an estate agent, with a remarkable 88% admitting to a bad experience when looking for a property – over 4 million people

Motivated by the fact that almost one in 10 UK consumers felt an estate agent did not listen to their requirements during their search for a home, Strawberry Star has placed their commitment to fulfilling the pre and post move requirements for each of their clients over all profit based objectives.

In response to the report findings, Beresford continued: “We put people over property and ensure every single one of our clients – whether owners, occupiers or investors from the UK and abroad – feel that they are receiving a personalised service and are dealing with people that genuinely care about what matters to them. This commitment stands throughout every stage of the buying, moving, selling and letting process.”

The global launch was cemented with the opening of their Singapore office. Supporting an existent presence in Hong Kong, the Singapore office will champion the firm’s dedication to delivering the company’s Asian clients a sustained “on the ground” service.

The UK continues to be an incredibly popular property hotspot amongst Asian investors with Singapore and Hong Kong based investment now accounting for 90% of international purchases in the London new build market alone. Strawberry Star’s expansion into Singapore aims to confront the cultural, geographical and legislative challenges that face overseas investment into the UK.

Having facilitated over £500 million of investment into the London property market, the development of the Asian arm of the business is a significant stage of Strawberry Star’s global expansion programme. This is set to include an enhanced regional presence in the UK along with offices in India, China

Since 2009, Strawberry Star has acquired £700 million worth of property. Throughout this period, the firm has facilitated £500 million in aggregate investments and continued to provide an end-to-end service for fund, acquisitions, development, new homes sales, lettings and property management.

Bankrate: Mortgage Rates Show Little Movement
FundsReal Estate

Bankrate: Mortgage Rates Show Little Movement


These results are according to Bankrate.com’s weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.

The average 15-year fixed mortgage slipped to 3.04 percent while the larger jumbo 30-year fixed mortgage inched lower, returning to the record low of 3.92 percent. Adjustable rate mortgages were mostly lower, with the 5-year ARM sliding to 3.06 percent and the 7-year ARM stepping back to 3.27 percent.

A disappointingly weak monthly jobs report and more concern about economic weakness kept a lid on mortgage rates this week. The uncertain timetable for Federal Reserve interest rate hikes has mortgage rates in a holding pattern. However, mortgage rates are holding at some of the lowest levels, not just of 2015, but in nearly two years. With home sales still sluggish and any material growth in household income yet to materialize, the attractive mortgage rates are one inducement that could get buyers off the sidelines, particularly with the likelihood of higher rates later in the year.

One year ago, the average 30-year fixed mortgage rate was 4.47 percent. At that time, a $200,000 loan would have carried a monthly payment of $1,009.81. With the average rate now at 3.82 percent, the monthly payment for the same size loan would be $934.19, a savings of $75 per month for anyone refinancing now.

Tax Changes Bad News for Second Home Owners
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Tax Changes Bad News for Second Home Owners

The Chartered Institute of Taxation (CIOT) has voiced concern over the proposed withdrawal of the principal residence election for all taxpayers. The Institute believes that HM Revenue & Customs’ (HMRC’s) plans to extend capital gains tax (CGT) to non-residents in certain circumstances may have a significant impact on UK residents with more than one property.

The proposed changes were originally mooted in the Chancellor’s Autumn Statement last year as a way to improve fairness in the UK tax system. The Government plans to extend CGT to non-residents when they sell their UK residential property. Non-residents will be able to claim principal private residence (PPR) relief but to ensure that this relief does not undermine the proposals the Government intends to withdraw the ability of any one with more than one residential property, including UK residents, to choose his or her main residence by election, leaving it to HMRC to determine, based upon “demonstrable” evidence, which of the owner’s properties is his or her main residence.

Stephen Coleclough, CIOT President, said: “The withdrawal of the principal private residence election is a much wider issue, affecting many UK residents with two homes, not just non-UK residents with residential property here. This is for a good reason – many people live in one place for work during the week and another during the weekends and holidays, often meaning the lines are blurred as to which is the person’s or their family’s primary residence. If the plans were to go ahead, then UK residents could be faced with CGT charges on their first or second properties, with no certainty as to which is which.

“If the Government wants to change the principal private residence election, or the rule generally, there should be a free standing consultation on that issue. There may be perfectly good reasons why they do want to change – we have recently seen evidence of MP’s using the rules to ‘flip’ their principal private residence repeatedly.

“Changes to how primary residency is decided should not be hidden behind an obscure consultation, aimed at bringing a narrow group of non-residents in to the charge. These points should be considered in an open and grown up manner, and we urge the Government to think again on this issue.”

Housing Market Sees Sustained Demand in April
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Housing Market Sees Sustained Demand in April

Despite a fourth consecutive monthly fall in new property coming onto the market in April, 26% more chartered surveyors reported increased agreed sales, according to the latest RICS Residential Market Survey.

The latest figures reveal a constrained property market, which continues to be marred by weak supply and high demand; while respondents across nine UK regions reported declines in new property for sale coming onto the market, the average number of homes sold per surveyor hit 23 – the highest since February 2008.

In the month that also saw new lending regulations brought into effect (the Mortgage Market Review), respondents reported that the average ‘perceived’ Loan to Value (LTV) ratios among first time buyers climbed to 86% and potential new buyer demand remained firm with 20% more chartered surveyors reporting an increase in new enquiries.

Significantly, there does now appear not just a broadening out in the recovery away from the capital, but also increasingly upbeat responses on the likely price trend going forward. In the North West, 62% more chartered surveyors predict prices over the next three months will rise, rather than fall, and in East Anglia the figure is 57%. By comparison, in London 49% more respondents conveyed similar expectations (down from 61% in March).

In the rental sector, there continues to be modest growth in tenant demand although greater mortgage availability and the ‘Help to Buy’ Scheme have seen the appetite to rent lose some momentum in recent quarters. Even so, the shortage of property also continues to be felt in this area, with new landlord instructions broadly flat and rent prices over the next 12 months expected to increase by around 2%.

Simon Rubinsohn, Chief Economist RICS, said: “House prices in general look set to remain firmly on the upward trend, although interestingly, there are some tentative signs that the price momentum in the London market may begin to slow in the second half of the year.

The critical issue for the market remains the lack of second hand supply with our numbers suggesting that the picture is, if anything, getting worse. It is too early to conclude whether this will undermine the positive trend in transactions volumes, but clearly the absence of properties to buy will ultimately be a factor in influencing the ability of people to move homes.

That said, despite the disappointing trend in instructions, a net balance of 33% of surveyors expect to see sales levels increase as we head into the summer.

Prime London Resi Fund Ticks all the Boxes
FundsReal Estate

Prime London Resi Fund Ticks all the Boxes

In contrast, PCL is a global capital whose international appeal remains undimmed and buyers have little reliance on credit. It has enjoyed growth of 9% per annum since the swinging 60s. These returns can be boosted by investment into the booming private rented sector (PRS), which now represents 40% of the market.

Accessing this highly desirable asset class and building your own buy-to-let portfolio, however, may seem a pipedream for most investors and savers. Average prices in the two most prime boroughs which make up PCL, The Royal Borough of Kensington and Chelsea and The City of Westminster, have now reached almost £1.5m.

Aside from the entry price, mortgages are increasingly expensive and difficult to obtain whilst inflation pushes up running costs. Not to mention the hassle of finding a tenant, on-going management and cash flow worries. Becoming a buy-to-let landlord can quickly lose its appeal.

Owning bricks and mortar directly, though, is not the only way into the market. One route is buying shares in a listed developer. The fate of companies such as Taylor Wimpey or Barratt is tied to the housing market, meaning you get exposure without hassle. However, their focus is nationwide rather than on high performing areas like PCL. There are other downsides. Investment is not asset backed and factors outside market performance can jeopardise returns.

Another option is residential property funds, which are backed by solid assets and avoid the wild gyrations of equities. Since the 2007 down turn, they have carved a place in a balanced portfolio. No longer commercial properties’ kid brother, residential is becoming the preferred choice. These funds allow investors to enter the market at a far lower ticket price and without the stress.

Thanks to changes in the 2014 Budget, issued in detail just a few days ago, residential funds have just become more attractive. Those which qualify as having Genuine Diversity of Ownership are set to be excluded from CGT charges to be felt by every foreign buyer from April 2015. In fact, by virtue of undertaking a ‘genuinely commercial activity’ residential funds are exempted from all the new levies including higher rate 15% SDLT and the Annual Tax for Enveloped Dwellings.

For UK residents, these funds are shortly to become more tax efficient. ISA investments do not attract income tax or CGT. In July, the allowance increases to £15,000 and the new ISA (NISA) will be introduced, investable in any combination of cash and shares. This includes qualifying listed residential funds. A few options exist in this space; HouSA investments track the Halifax house price index and the recently launched London Central Apartments II (LCA II) will invest in a portfolio of Prime London property for the PRS.

The drawbacks? Your money is tied to the performance of property. It can be lost if the market falls. Also, beware the liquidity trap. Whilst open-ended funds offer liquidity, money is held back to cover redemptions so you may not get the property exposure anticipated. Some funds have suspended redemptions when investors flood in to withdraw money in a falling market, with disastrous consequences, epitomised by New Star’s UK Property Trust. A closed-ended structure does not have this problem but investors need a medium term horizon (typically 5 to 7 years) as money is locked up for this period.

This is usually no problem for SIPP investors and, despite Chancellor Brown’s famous 2006 U-Turn, you can actually put money into residential via your SIPP, benefiting from 100% tax relief. Whilst only a few funds are structured to accept SIPP money (such as LCA II) they generally offer solid investment returns.

With cash holdings generating almost no returns; volatility and high risk from equities and the sky high entry price attached to direct buy-to-let purchases in PCL, investors have struggled with where to lock up their hard earned savings. However, thanks to a good package of Government backed tax incentives, residential property funds in PCL tick all the investment boxes making buy-to-let investment the domain of the smart saver rather than the exclusive province of the very rich.

For further information visit www.londoncentralportfolio.com.

London Housing Costs Threatening Competitiveness
FundsReal Estate

London Housing Costs Threatening Competitiveness

Despite London firms’ optimism about the economy having soared to its highest level since the end of 2010, there is increasing concern about the negative impact of housing costs and the lack of good quality affordable housing, according to the latest CBI/KPMG London Business Survey.

The latest quarterly survey of 154 London business leaders shows that 70% of firms are more optimistic about the prospects for the economy in the next six months, 44% higher than last year. 51% of respondents are optimistic about their own business prospects, which has been consistent for the past ten months. More than half of London firms (56%) are continuing to increase their headcount, with only 18% maintaining a recruitment freeze. The number of businesses hiring only where essential has fallen from 70% last year to 59% in this survey.

But one of the biggest threats to competitiveness is the cost of housing in the capital. A quarter of those surveyed highlighted it as a risk to London’s ongoing competitiveness compared to other world cities and the second biggest threat to international competiveness, after the general cost of doing business.

The vast majority of London businesses surveyed (83%) feel that there is a lack of good quality affordable housing in the city, with half (48%) saying that this has increased their costs. Two-thirds of respondents (61%) list housing costs and availability as having a negative impact on recruitment of entry level staff, with half of respondents saying the same thing for mid-level managerial employees and a quarter (23%) for senior staff.

Firms highlighted various other negative effects on business growth, with 42% saying that they are having to pay a premium to attract and retain staff, 41% claiming they have experienced issues with people being unable to afford to live in the local area and 24% saying employees were having to move away from the local area because off housing costs and therefore having to leave their job.

The majority of firms said they had not considered relocating their company because of high housing costs but a worrying 16% said they had.

Sara Parker, CBI Director London, said: “As growth begins to bed down London firms are feeling increasingly optimistic, taking on new employees and planning to expand over the next year. But the lack of affordable quality housing is becoming a real headache for London’s businesses and their employees.” 

 

Richard Reid, London Chairman of KPMG, said the housing crisis in the capital is starting to have a serious impact on businesses, especially SMEs who cannot afford to inflate wages in order to keep up with the runaway housing market. “Our small and start up business community is essential to keeping the Capital dynamic and innovative, attracting foreign investment to London,” said Reid, “but as the average income of people purchasing their first property is now £47,000 – it is simply beyond the balance sheets of most small businesses and the pockets of their employees.”

Two-thirds of respondents (64%) plan to expand their businesses over the next year, down slightly from 73% six months ago. Of those looking to expand 62% are looking to do so in London and outside the UK.

Housing Crisis to Spread
FundsReal Estate

Housing Crisis to Spread


By 2018 the South of England will face a combined shortfall of at least 160,000 homes a new report from international real estate adviser, Savills has claimed. The report identifies that local planning authorities are simply not planning enough new homes to meet the growing housing need.

In a new report, Planning: Countdown to the Election, the Savills planning team has examined locally planned targets across the South East, South West and East of England. Their analysis found that these regions will be short of 91,323 homes when targest are compared to need. Furthermore, this number does not take into account the additional demand that will continue to spill out from London.

The difference between house prices in London and the South East is now higher than it has ever been and this is expected to translate into increased demand overflowing into the Home Counties and to locations as far afield as Cambridge, Brighton, Reading and Oxford.

Savills has identified key migratory hotspots around London and concludes that the majority are already facing their own local housing shortfalls. The firm is calling for local planning authorities to form an ‘arc of cooperation’ around London, working towards solutions that look beyond individual local authority boundaries to maximise housing delivery.

“Local planning authorities need to act with urgency and in cooperation with neighbouring authorities to plan for the scale of housing delivery now needed right across the South of England,” says Savills Planning Director, David Jackson. “Currently planned targets fall well below the projected need, without accounting for the issues of years of undersupply at a local level. Add to this the projected flows of demand from London and there is a real crisis looming.”

England currently needs 240,000 new homes a year according to Town and Country Planning Association estimates. Translating this national figure down to the local level, Savills has identified particular hotspots where planned levels of housing are well below levels of need: the annual shortfall peaks in Brighton & Hove at over 700 homes, followed by Luton at over 500, Epping Forest around 400 and Elmbridge at over 350 each year. Authorities within the more affordable, lower demand areas to the east of London (Thurrock, Dartford, Gravesham) are amongst the few planning to deliver relatively high levels of new homes. Conversely, in Surrey, Berkshire and Buckinghamshire, where there is higher demand from Londoners, housing targets are well below the rate required. (See full table attached.)

“We need to plan larger scale developments as a matter of urgency to meet local need and anticipated London overspill,” says Savills Planning Director, Jonathan Steele. “Without this we face a growing housing shortfall, with affordability an inevitable consequence.

“The Chancellor’s recent commitment to a new ‘garden city’ in Ebbsfleet, with an initial 15,000 new homes is welcome, but it is a drop in the ocean – the equivalent of just four months’ requirement for housing in London. New towns or Garden cities alone are not therefore a panacea. A long term commitment is required by government and other agencies to unblock infrastructure and other constraints to ensure that rates of housebuilding achieve a sustained and substantial increase.”

Multi-manager Yousefian Joins Charteris
FundsReal Estate

Multi-manager Yousefian Joins Charteris

Charteris Treasury Portfolio Managers Limited is pleased to announce the appointment of the highly experienced multi-manager, Tony Yousefian.

Yousefian joins the firm from City Financial, where he managed the EFA OPM Fixed Interest Fund and the EFA OPM Property Portfolio Fund. Formerly Chief Investment Officer of OPM Fund Management, Yousefian joined City Financial in April last year following the acquisition of OPM Fund Management Ltd by City Financial.

Yousefian will continue to manage the £9.5 million EFA OPM Property Portfolio Fund in his new role at Charteris. The Fund, which has delivered a return of 6.1% over the year to 28 February, against a sector average of 2.37%, will continue to be managed according to the same investment mandate and objectives. Way Fund Managers will continue to act as the Fund’s Authorised Corporate Director.

Commenting on the appointment, Charteris Chief Executive Officer and Fund Manager, Ian Williams, said: “We are absolutely delighted that Tony has decided to join us at this exciting stage in the firm’s evolution, and that the EFA OPM Property Portfolio Fund will be coming to Charteris with him to take its place alongside our existing fund range. Tony brings more than 25 years of fund management experience to his new role at Charteris, and we look forward to Tony playing a fully active role in our efforts to build the Charteris fund range, and to broaden our wider investment proposition.”

Tony Yousefian is equally delighted with his new role. He said: “With 35 years’ experience in the Equity and Fixed Income markets, Ian is one of the most experienced and most talented managers working in the fund management field today. I am thrilled to be joining Ian and the team at this time. I would like to wish all my former colleagues at City Financial the very best for the future, and am looking forward to the challenge ahead.”

Andrew Williams, Chief Executive Officer at City Financial said: “We’d like to thank Tony for his contribution and wish him well for the future.”