Changes afoot at Grosvenor...

Bank of Ireland has established a property finance team in Frankfurt. The team is led by Claus Proschka, formerly of Hypo Real Estate and Allgemeine Hypothekenbank, and will have a pan-European remit. The move underlines BoI’s international real estate ambitions, after it recently established a property finance business in the US.

As the Northern Rock saga rolls on, UK mortgage lenders that had frequented the now-shuttered residential mortgage-backed securities market are seeking to fortify funding lines. Alliance & Leicester, one of the country’s largest lenders, with a £41 billion ($82 billion) prime mortgage portfolio, is one operation that has been identified as perhaps having been too dependent on the RMBS market.

Pension funds line up for inflation-linked lease exposure

A flood of redemptions from real estate funds has rocked the sector in the UK, forcing leading investment houses to stop customers taking their money out. The industry hopes the worst is over, but market opinion is not unanimous that the future looks brighter. Julian Marshall reports.

The reputation of commercial real estate stocks among retail investors is sullied. With the possible exception of the internet and technology sector at the beginning of the decade, never has an industry been held in such low esteem by the investing public. But does the old adage about the retail money and smart institutional money always flowing in opposite directions hold true: is there value in European property stocks?

Chris Jolly, formerly co-head of corporate finance at Jones Lang LaSalle has joined Merrill Lynch as head of its European real estate business.

Katerina Kalfamanoli joins Colliers as director of investments and commercial leasing. She leaves Cushman & Wakefield, where she was senior surveyor, capital markets. Prior to that she was a managing director and head of agency at DTZ Greece. Spyros Raptis also joins as senior advisor and valuation professional. He previously worked at Axies Lambert Smith Hampton as senior valuer and at Savills Hellas as valuation analyst.

Testing the limits of green development

For the past five years or so, commentators have frowned at Australia’s listed property trust sector, which has consistently outperformed every other major asset class in the country, and argued that this success couldn’t last. And for the past five years they’ve been wrong.

Having bailed out the US investment banks in their hour of need, sovereign wealth funds are also turning their vast pools of cash towards real estate. Industry experts predict a doubling of investments by these funds to $10 billion within five years.

The Asian real estate investment trust (Reit) market has weathered the sub-prime storm reasonably well, but a new deal suggests that the grim credit markets are going to lead to significantly different structures this year. Specifically, much simpler ones.

Morgan Stanley will scale back its residential mortgage operations in the US in response to the continued deterioration of the mortgage markets. The firm will discontinue its UK-based residential mortgage lending business, Advantage Home Loans. About 1,000 employees in the US and the UK will be affected by this restructuring. These cutbacks were announced in mid-February.

It took six weeks but 2008 finally got its first CMBS deal in mid-February, from Morgan Stanley and Bear Stearns, who sold a $1.2 billion transaction.

Deutsche Bank has cut back staff numbers in its European commercial real estate business, letting go at least 16, including some senior management. Paolo Massi, managing director of commercial real estate for Europe, the Middle East and Africa, was let go at the end of January, as was Morgan Garfield, managing director and head of UK conduit lending. John Nacos, head of commercial real estate, Europe, remains at the bank.

Real estate’s role in corporations’ approach to improving sustainability and showing sensitivity to the environment has never been clearer. A recent survey conducted by the Economist Intelligence Unit of 1,254 senior business executives, including more than 300 chief executives, revealed the role real estate and facility strategies play in corporate sustainability efforts. Nearly half of all respondents named as their leading sustainability priority a goal that is addressed mainly through real estate-related strategies.

For those dependent on the European commercial mortgage-backed securities market for funding, the credit crunch has prompted a round of soul-searching. The market may be closed for the next six months, forcing some to look elsewhere. What will it take to prompt a revival? Laurence Neville reports.

The global real estate industry is on the brink of a green revolution. Will the cities of the future be built to be greener, creating a parallel universe of green financing instruments?

Against a backdrop of the most savage falls in UK commercial real estate values ever recorded – IPD’s UK index fell 3.6% in November and 3.7% in December – the real estate derivatives market has not been found wanting.

The number of so-called distressed and opportunistic funds has grown quickly on the back of the downturn in the property markets. Some believe these investors might be jumping the gun, as truly distressed properties remain few and far between. Market observers say the amount of cash being raised could far exceed the number of opportunities.

European CMBS forced to the brink

Green leases are slowly finding favour among tenants and landlords in the UK. With increasing energy costs and new legislation encouraging sustainable building practices, some market participants believe these contracts will become the norm. Rachel Wolcott reports.

The Kingdom of Bahrain’s Real Estate Finance company (Reef) has secured $150 million in warehouse financing to bolster its local mortgage lending activities. The facility, provided by Calyon Crédit Agricole CIB, enables Reef to diversify its funding sources. Ultimately, the mortgage portfolio could be used to back a residential mortgage-backed securitization in either an Islamic or standard format.

The Greek property sector is growing thanks to a surge in retail development. Concurrent capital markets’ liberalisation has allowed investors and developers greater access to the equity and debt markets. Phil Moore reports.