“Vast weight” of institutional real estate cash
UK - There's a "vast weight" of institutional cash chasing commercial real estate in the UK, according to warehouse property firm Brixton.
"All owners of commercial real estate in the UK have benefited from enhanced values in the recent past due primarily to the positive re-rating of property as an investment medium supported by the vast weight of institutional and overseas money chasing investment property," said chief executive Tim Wheeler.
Just last month Brixton disclosed that Dutch pension fund giant Stichting Pensioenfonds ABP has a 4.92% stake.
Brixton today reported a 6% rise adjusted net asset value per share to 514 pence. There was a 6.3% valuation surplus and a 5.2% rise in investment profit. Pre-tax profits were up 2.1% at £129.4m although net rental income was down 11.8% at £44.1m.
"Brixton has sold £520m of property so far this year -capitalising on the success of the Industrious purchase by creating £70m of surplus value in 15 months - and has already reinvested £127m of the proceeds with four major acquisitions in its core markets of Heathrow and Park Royal, and an additional purchase in Manchester," Wheeler said.
Brixton also said it would probably convert to a Real Estate Investment Trust following new legislation passed in July.
It said: "The introduction of REITs from 1 January 2007 is a key event for the quoted property sector as the elimination of the tax disadvantage of investing in a quoted property company is expected to result in a greater level of interest and investment from both institutional and private investors as has occurred in other jurisdictions that have introduced REITs."