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.
Birmingham City Council meets today to discuss the budget drawn up to salvage its financial position. Included in those budget plans are hikes to council taxes, a reduction in services and a plan to raise cash from property disposals.
But chief executive Deborah Cadman told EG that there will be no “arbitrary fire sale” of council assets, insisting that asset sales must be done in a way that does not compromise the council’s ambitions for the city’s future development.
“We have a very clear strategy about disposal and what we have had to do is accelerate that strategy,” said Cadman. “I would say it has made us think differently. It has made us think creatively and it has made us think more strategically than we would have done previously.”
The strategy for Unite is to build more beds, says the student housing provider after reporting a record set of results. Chief executive Joe Lister said there was a “significant growth opportunity” for the business as the supply and demand imbalance of student accommodation remains acute.
The firm reported a 13% increase in revenue to £184.3m in the year ended 31 December 2023.
While student housing soars, it is a tougher time for the traditional housing market. Housebuilders saw their share prices dip as a Competition and Markets Authority investigation was launched into suspected anti-competitive behaviour.
The CMA is investigating eight of the UK’s major housebuilders – Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry – after discovering that they could be “sharing commercially sensitive information”.
While the report hit out at the housebuilders, the UK planning system also came in for a grilling, with the CMA labelling it “complex and unpredictable”.
Chief executive Sarah Cardell said: “Housebuilding in Great Britain needs significant intervention so that enough good-quality homes are delivered in the places that people need them.
“Our report – which follows a year-long study – is recommending a streamlining of the planning system and increased consumer protections. If implemented, we would expect to see many more homes built each year, helping make homes more affordable.”
In the national newspapers this morning, Morrisons was revealed to have appointed Deloitte to investigate a potential sale of its bakery business. The retailer is understood to be in early talks with private equity firm Endless, which owns Hovis, over the sale of Rathbones bakery, a factory in Wakefield that supplied baked goods to Morrisons’ supermarkets.
Morrisons has owned Rathbones since 2005 when it rescued it from administration.
Any potential deal would help Morrisons pay down its £5bn debt pile. Last month, the business agreed a deal to sell almost 337 of its petrol stations to Motor Fuel Group for £2.5bn.
Staying in the world of retail, Homebase owner Hilco Retail is seeking a new owner for the troubled DIY and garden chain it bought for £1 in 2018. The turnaround specialist is understood to have held discussions with the Range and B&M European Value Retail about a possible sale.
Homebase has 170 stores across the UK.
Elsewhere, a promise to deliver an annual return of 11.25% to the University of California in return for $4.5bn (£3.5bn) of new investment into Blackstone Real Estate Investment Trust has led to the investor’s liability to the university more than doubling.
As the fund lost value last year, Blackstone’s liability to the university has grown to $560m. In late December 2022 and January 2023, Blackstone received a $4.5bn investment from the University of California that helped BREIT meet a spate of redemption requests from other investors.
BREIT recorded a 0.5% loss in 2023, its first annual loss since its launch in 2017, putting Blackstone significantly behind on its promised return.
But JP Morgan Chase boss Jamie Dimon remains positive on property, saying that most owners of commercial real estate will be able to “muddle through” the current environment, refinancing and putting more equity in where needed. If, he caveated, there isn’t a recession.
If interest rates go up and there is a recession, there will be more commercial real estate problems — and some banks will have a bigger problem in this sector than others, Dimon said.
And, if you want to accompany your morning news update with a little audio delight, why not tune into the latest episode of EG’s School of Hard Knocks podcast in which Canary Wharf Group’s Jane Hollinshead reminds us to play nice because this industry is small and one day you are bound to be sat across from someone you will definitely wish you were kinder to.
All of the news from EG, plus a selection of headlines from the nationals:
Acute student housing shortage keeps Unite focused
ECF equity injection takes firepower to £400m
Brum is open for business, insists Cadman
LISTEN: School of Hard Knocks: Canary Wharf Group’s Jane Hollinshead
EX-IWG manager to help office occupiers with cycling strategies
Barsad doubles down with Southampton beds
Deal time reaches record high
Wolverhampton consults on city development plans
ARC Uxbridge gets two new tenants
Housebuilder stocks dip on CMA investigation
Desperation for a home drive fake claims on rent applications (£)
Top of the shops: Why M&S is still the nation’s No 1 (£)
Freddie Mercury’s London house up for sale for £30m (£)
Morrisons explores sale of bakery business (£)
Bank of England deputy governor calls for more research into non-bank lenders (£)
Britain’s gummed-up planning system (£)
Blackstone’s liability to University of California doubles on property fund losses (£)
Spending on UK social housing will “save taxpayers money” (£)
Homebase up for sale for second time in four years (£)
Dimon says commercial real estate problems to stay contained if no recession (£)
Bank of Ireland stock sinks as provisions for commercial real estate rise
DWS says real estate woes offer opportunities
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