Morgan Stanley Buys U.K. Real Estate Loans From Ireland’s NAMA

Morgan Stanley (MS) bought a portfolio of loans backed by properties and development projects in London and Manchester, England, from Ireland’s National Asset Management Agency for an undisclosed sum.

“We’re pleased to be at the forefront in acquiring loan portfolios from NAMA and we look forward to generating value for our investors,” Brian Niles, European head of Morgan Stanley Real Estate Investing, said in an e-mailed statement.

Morgan Stanley, based in New York, acquired the loans for about 65 million pounds ($103 million), or a 70 percent discount, Property Week reported in November. The trade magazine said that West Properties, the company run by Donal Mulryan, will continue to manage the real estate for Morgan Stanley.

The Saturn portfolio consists of about 220 million pounds of loans to West Properties. The debt was acquired by NAMA, which was established to purge Ireland’s banks of 74.2 billion euros ($98.3 billion) of troubled commercial real-estate loans.

Morgan Stanley spokesman Hugh Fraser declined to comment and Mulryan wasn’t immediately available.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

 To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

Why You Might Not Want to Invest in Retail Real Estate

These numbers are for the UK but they illustrate a trend that is going on in all of the advanced countries:

*£6bn – Online spending in the UK in 2004

*£23bn – Online spending in the UK 2010

*£1.3 bn – Level of m-commerce in the UK 2011

*£19bn – predicted level of m-commerce in 2019

*15,000 – reduction in town centre stores between 2000-2009

* 6.5% fall in number of town centre shops by 2014

We’re going through a structural change in the whole retail market, one that should be making retail real estate itself less valuable.

Another set of numbers is that roughly 10% of UK retail sales now take place online: and roughly 10% of UK retail space is now empty. That’s long term empty, not just the short term emptiness caused by the turnover in tenants.

Yes, of course, it’s always going to be true that there will be deals in the market. Certain locations aren’t going to go out of style, there may well be further moves from High Street locations to out of town developments and so on. But we have come to a natural break point in the development of the market.

It’s long been a standard assumption that as incomes rise then we’ll all buy more things. More things being bought means the need for more places where things can be bought. But it’s that connection that is now being broken by the online retailing.

Another way of putting this is that yes, we sure are at the bottom of a real estate cycle (it’s far too depressing to think that we’re not at the bottom, are still on the way down) but we’ve also got this structural change in the specific retail segment. It’s entirely possible that as and when the domestic and commercial real estate markets perk up again that the retail part of it will be left behind. For over and above the cyclical effects we have that structural effect impacting on the retail segment.

Newly Imposed Tax on Home Purchases of $3.2 Million (2 Million Pounds) or More in the United Kingdom has some Questioning the Outcome

RoadFish.com men’s lifestyle and finance magazine today discussed the ups and downs of Great Britain’s newly imposed increase on property tax. RoadFish.com understands the goal behind the decision, but wonders if the increase will serve to deter prospective luxury-home purchases and work in the opposite favor.

RoadFish.com

According to Chris Spillane of Bloomberg Business Week, the United Kingdom’s Chancellor of the Exchequer, George Osborne, recently decided to require an increase in the taxing of home purchases within Great Britain that total $3.2 million (2 million pounds) and above, from 5% to 7%. Spillane suggests that this 2% Stamp Duty Land tax increase may damper the purchases of luxurious abodes in the top London neighborhoods.

For folks looking to buy and sell property within the U.K., regular government taxes will continue to be charged on homes less than $3.2 million. Naturally there are neighborhoods that fall within every price range. On the higher end, properties located within the Royal Borough of Kensington and Chelsea has an average asking price of around $3 million. Purchases made in less luxurious neighborhoods and on less expensive houses will not see any additional increase. Estate agents are available to guide potential homeowners or home sellers within the current U.K. real estate market.

Business Week goes on to report that in addition to the higher tax, which became enforced on March 22nd, the government will also charge a 15% tax on all properties worth over $3.2 million being purchased by a business or company looking for a loophole through the tax system. Property economist at Capital Economics in London, Paul Diggle, is quoted in Business Week’s article as saying, “There’s the potential that it will skew the market more toward those wealthy overseas purchasers. There’s a large share of people who are homegrown, well-off residents who this will affect more.”

RoadFish.com’s Senior staff writer is quoted as saying, “On the one hand, the Chancellor will definitely pull in some more taxes from the wealthy. No doubt about it. And of course the folks who are well off are in a much better position to be hit with a tax increase than the middle or lower classes. However, I do wonder whether this inflated tax on luxury home purchases will sway would-be buyers from actually buying down, to avoid the 2% increase. I suppose only time will tell if this tactic will be advantageous.”

James Chapman, Becky Barrow, and Rob Cooper of the Daily Mail UK referred to the heightened tax as a “tax grab on the wealthy,” and further reported that Osborne stated that the clampdown will help raise “five times more.” The Daily Mail article quoted Chancellor Osborne as saying, “It is fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more.” The article reports that in November, 121 homes were bought for more than $3.2 million, and 98 were in London.

The above-mentioned Business Week article reported that according the Land Registry, approximately 1,620 properties worth over $3.2 million were sold last year in England and Wales combined. Business Week states that a report issued by independent global residential and commercial property consulting firm, Knight Frank LLP, revealed that luxury-home prices in central London reached new heights in March 2011. Knight Frank LLP claims that the boost was a result of wealthy overseas buyers seeking safety by investing in property in “one of the world’s most resilient property markets.”

About RoadFish.com

RoadFish.com is an online men's lifestyle and finance magazine targeted toward men in their 30’s and 40’s that have already attained a moderate level of success in life, and are striving toward more. It goes over current events of interest to this group, such things as exciting adventures, making money, consumer interests, hot chicks, andtraveling abroad, as well as ways to make more and save more money. It is a publication owned by Purpose Inc.

Property Specialist Eyes Distressed Opportunities

Co-founded by managing director Russell Platt in 2002, Forum, a London-based real estate specialist, is seeking a new investor base of global pension funds and the global rich, particularly the super-wealthy in Asia.

Forum, with $6bn of assets under management, charges an asset management fee of 1-1.5 per cent plus 20 per cent of profits – a cost structure that is coming under increasing pressure as institutional investors question the value such managers provide.

“There are legitimate grievances that the pension fund industry has about fee structures and we’re attuned to those,” says Mr Platt.

What value does Forum provide? The group is an independent global real estate investment management and corporate finance group with 60 people spread across its offices in London, the US (Santa Fe and Greenwich), Hong Kong, Tokyo, Beijing, Singapore and Mumbai.

Despite being a real estate investor, Forum does not buy property. “What some folks do is buy buildings. What we try to do is buy real estate operating companies,” says Mr Platt.

Forum is used to dealing with very large investors. TIAA-Cref, the US investment fund and annuity operation, agreed to back Forum’s first Asian fund launched in 2004. “We owe our existence to their early sponsorship,” says Mr Platt.

It also counts the large Dutch schemes, ABP and PGGM, among its current clients, and provides “white label” property strategies for a number of large fund managers.

Looking to the future, Forum has no immediate plans to launch any new funds. “A fund comes with a lot of benefits,” says Mr Platt, “but it comes with a lot of restrictions too.” The most onerous, he adds, is the specific time window in which to make investments.

As a way around this, Forum is seeking new investment partners to form investment “clubs”, with a specific focus on European distressed property assets.