Real Life

Some pictures of the Alte Post construction site

And the promotional video of the asset

Ginger Ale

The CMBS market is back. At least so they say. An article in the FT (which can be read here), suggests that a first 350 M€ CMBS was placed in the Netherland. That is real news, as the stall of the CMBS market is clearly one of the main concern still out there. It is becoming mainstream wisdom that there is a large debt overhang coming up, which is to a great part linked to CMBS.

The bizarre part of the press release was linked to the fact that the "CMBS" was rated AAA by all the rating agencies. This looks bizarre as usual CMBS are (use to be) made of different tranches with different rating. I was interested in getting a better understanding of the placement and went to the website of the issuer to see if i could gather additional details (the full press release is available here). And I did. The main information being that this deal was placed as one tranche to a single investor...  Being able to place EUR 350 million of debt in the current market IS an acheivment per say, however, not enough to claim that the CMBS market have reopenned.

CETERIS PARIBUS

alstria as a real estate company is very much interested in the debate relating Green Buildings and the better understanding of the fundamental of this new key development is an important factor in setting up the future strategy of the company. As part of background research work, I read recently a report called “Doing well by doing Good? Green Office Buildings”. It can be freely accessed following this link.

According to the study, it provides “the first credible evidence on the economic value of the certification of “green buildings”. The release of this report had a great impact and was widely commented by the real estate press (thus my willingness to read the study directly). You might have heard that Green Buildings command a 6% premium on rents and 16% premium on sale price. Well, this is where theses numbers come from.

Corporate Ethic

Corporate Responsibility and the Environment. This mini-doco by karma production came 3rd in the recent competition sponsored by Australian Ethical in association with the Australian Documentary Foundation.

No comments.

Quality rather than quantity

The debate about the need for more transparency in the real estate listed sector is back in the Germany. In principle there is nothing bad about the requirement for more transparency. I hope that alstria has in the past demonstrated many times its willingness to provide the market with the right set of information at the right time.

There is in my opinion a dangerous amalgam between transparency and throwing unsorted information to investors. I make a big difference between being transparent and publishing each and every data available in a company. Being transparent is not equivalent to ticking each box of a list of information that needs to be published by a company. Transparency is a dynamic and subjective notion. It is about disclosing the right information at the right time and in a way that is understandable by an investor. It is a judgment call.

The two fridges syndrome

BREEAM, LEED, HQE or DGNB. Real estate companies and real estate investors should get familiar with these logos and names, as these are the national trademarks for green building respectively in the UK (and international), US (and rest of the world), France, and Germany.

These standards will usually provide a certificate (which can be silver, gold or platinum…) by looking at the building conception and technique and compare it to a “best in class” technology in terms of, amongst others, resource consumption and greenhouse gas emissions.

Will Aristote save the real estate finance?

In the last 12 months we had numerous questions of investors on what is the Pfandbrief market (the German cover bond market) and how does this market works. I happened to run into an academic study that is a good introduction to the instrument. It is published on the web site of the VdP (Association of German Pfandbrief Banks). The study is dated February 2009, and is called “Refinancing Real Estate Loans – Lessons to be Learned from the Subprime Crisis” (full study can be downloaded following this link).

Unexpected growth

It is not unusual to use approximations for the total area of a real estate asset. Different countries use different measurement rules, and different real estate professionals measure different things (built area, lettable area, usable area...). I do not recall having ever seen a building where everyone agrees on the total area (although it might look odd, but this is also true in some instance for the number of parking spaces). It is not unusal in that respect that following a remeasurement of a property, the total area grows or shrinks by plus or minus 2 to 3% (that is the reason why real estate companies always says that their portfolio represents "around" x sqm).