Good morning. Here’s your daily round-up of the latest news and views from EG and a collection of industry-relevant headlines from the nationals.
Ratings agency S&P says Avison Young has missed two payments on a $325m (£256m) senior term loan – the loan taken out in 2019 to help buy GVA Grimley – and is now in default.
AY, however, says it was anticipating the downgrade and had already been in talks to restructure the loan. The Toronto-based firm says it has halved its debt burden and secured fresh capital from its existing lenders.
“Avison Young has finalised a milestone transaction with its financial partners to significantly strengthen its balance sheet and infuse new capital to invest in its client solutions, team, and global operations,” said a spokesperson for AY.
“This transaction is an exciting step forward for Avison Young and will allow the company to better serve its clients and partners well into the future. With an improved financial foundation, Avison Young is well equipped to grow and continue providing innovative solutions as the commercial real estate market recovers in the coming years.”
AY has been seeking to shore up its finances and business for almost two years, launching a redundancy programme in the UK, US and Canada in November 2022 in a bid to cut some C$25m (£14.6m) of costs.
Elsewhere, Universities Superannuation Scheme has pumped £100m into Thriving Investments (the ESG-focused fund manager formerly known as PfP Capital) to help it expand its Picture Living platform to more than 2,000 homes by the end of this year.
Picture Living was set up as a £330m joint venture between USS and Thriving Investments in 2018. Since its launch, the PRS platform has amassed a portfolio of around 1,800 single-family and multi-family home.
The jv has a target to deliver 20,000 homes in the next decade, which would mainly consist of single-family homes.
And Hammerson this morning completed its planned disposal of £500m of non-core assets with the sale of Aberdeen’s Union Square to Lone Star for £111m. The price reflects an 8% on the most recent valuation of the 520,000 sq ft mall, but an opportunity, said Hammerson, to strengthen its balance sheet and to reinvest in its core portfolio.
Meanwhile, in the ever headline-grabbing world of flex, new data from Carter Jonas and Office Freedom reveals which regional cities are leading the way when it comes to flexible workspace provision.
Reading, Aberdeen and Cambridge are cultivating “significant niches” in the sector, said the pair.
Reading has recorded a 62.6% spike in desk costs over the past three years, a figure boosted with the opening of the Elizabeth Line. Last year, desk rates reached £309 per month, up significantly from 2020 when costs came in at £190.
In the national newspapers this morning, council debt levels caused by their investment in real estate was revealed by the Chartered Institute of Public Finance and Accountancy with four district councils in London’s commuter belt accumulating £4.2bn of debt.
Woking, Spelthorne and Runnymede, all in Surrey, and Eastleigh in neighbouring Hampshire have the highest debt-to-income ratios in the country. The four owe debt between 700% and 1,500% of their annual income.
Administrators of collapsed lender Fortress Capital Partners are pursuing money from the sale of properties in Dubai and Spain linked to the founder’s daughter, Cameron Reading.
Administrators at Begbies Traynor, which was appointed over Fortress in September, have established that Reading has a number of property interests in Dubai and Spain. Begbies is in negotiations with Reading’s advisers over part-repaying the loan from the sale of the properties. However, the administrators expect to recover less than half the loan.
Better news in the world of competitive socialising as Red Engine, the group behind Flight Club and Electric Shuffle sees sales rise by 28% to top £100m in 2023. The group, which has 25 venues, plans to open eight more this year, including in the US, with openings planned in New York, Philadelphia and Washington
Talking of competition, the supermarkets are going head-to-head with Lidl and Aldi claiming that British supermarkets are “weaponising” planning to stop their expansion plans. According to The Grocer, competitors to Aldi filed 77 objections to its planning applications between 2020 and late 2022, as well as launching 12 judicial reviews. The figures are similar for Lidl.
And house prices have largely stopped falling, according to Financial Times analysis of OECD data. Across the 37 industrialised OECD countries, nominal house prices grew 2.1% in the third quarter of 2023 compared with the previous three months, up from near stagnation at the start of last year.
Only about one-third of those countries reported a quarter-on-quarter decline in the latest period, down from more than half at the start of the year.
And for those looking for a big read ahead of this week’s EG Interview, The Times caught up with the man planning to turn London’s BT Tower into a luxury hotel, Tyler Morse, for confirmation that the revolving restaurant would be making a comeback.
All of the news from EG, plus a selection of headlines from the nationals:
Thriving Investments gains £100m for PRS expansion
Avison Young defaults on $325m loan
Lone Star buys Union Square for £111m
Which regional cities are carving a new niche in flex?
GRE Finance agrees loan for City fringe office refurb
Birmingham council rejects city centre tower plans
Lululemon upsizes Covent Garden flagship
Grosvenor calls for National Retrofit Strategy
Edinburgh nightclub and bar set for PBSA makeovers
COMMENT: How to handle stress in your debt portfolio
Residents count the £4bn cost of councils bad property bets (£)
Fortress administrators chase money from sale of properties (£)
Flight Club Group hits the bullseye with rising sales (£)
Global house prices rebound as economists predict turning point (£)
UK ministers must ‘move faster’ on net zero energy reforms, warns infrastructure tsar (£)
Lidl and Aldi cry foul as British supermarkets ‘weaponise’ planning (£)
Fund to hand out £4.7bn from axed HS2 northern section to smaller projects (£)
Tyler Morse: the property tycoon turning the BT Tower into a hotel (£)
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