Parkridge update: PwC confirms appointment to Cutts' collapsed business

Matthew Hammond and Rob Hunt, of PwC, were appointed joint administrators of Parkridge Holdings Ltd and Parkridge Gate Developments yesterday.

PwC said in a statement today that the business had been trying to reduce its cost base over the last two years, but had come under further pressure at this year.

Hammond said: “Cash flow pressure intensified earlier this year and long-running discussions around a refinancing broke down earlier this week.

“Following our appointment, we are reviewing the financial position and working closely with employees, lenders and subsidiaries during this difficult time.”

Parkridge has 26 employees based in London and Solihull. Parkridge Holdings is predominantly a holding company and Parkridge Gate Developments provides administration services to the group.

PwC has not been appointed administrator over any other companies in the group, some of which are in liquidation and others continue under the control of the directors.

The Parkridge group comprises a large number of companies focusing on property development with interests in the UK and overseas, including Poland, Portugal and France.

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Average house price rises 1.3% in July

The average price of a house in England and Wales rose 1.3% in July compared to the month before, figures from the Land Registry showed today, but still remains 2.1% down on house prices a year ago.

The average house price at the end of July was £163,049 compared to £166,607 a year earlier.

Unsurprisingly, the only region in England and Wales to achieve house price growth over the past year was London, with an increase in the average house price of 1.3%.

Month-on-month the strongest growth was recorded in the south west with movement of 2.2%.

The north east suffered the most significant declines both on a monthly and a yearly basis, at 2.3% and 8.8% respectively.

The most up-to-date figures available showing the number of completed house price sales declined from 52,170 in May 2010 to 46,870 in May 2011.

The number of properties sold for over £1m declined by 44% from 464 in May 2010 to 262 in May 2011.

Have you booked your delegate place for RESI 2011 yet? Taking place at the Celtic Manor, Newport, 15-16 September 2011, RESI 2011 is the event to attend for the residential market. Can you afford not to be there? Visit www.resievent.com for more information and to book your place.

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Martin Jepson to drive Brookfield's UK expansion

Hammerson’s former head of London, Martin Jepson, has joined New York-based property company Brookfield Office Properties as senior vice president, investment and development.

Jepson, who announced his resignation from Hammerson in July, will oversee Brookfield’s investment and development activities in the UK, including the 925,000 sq ft, 40-storey 100 Bishopsgate tower, being developed in a joint venture with Great Portland Estates, in the City of London.

Dennis Friedrich, president and global chief investment officer for Brookfield Office Properties, said: “Martin Jepson brings an impressive track record and extensive local expertise to Brookfield Office Properties’ operations in the UK.

“We’re committed to expanding our presence in the UK both through development as well as new, strategic property investments and Martin will be integral in these endeavors.”

Prior to his role as managing director of Hammerson’s London group, Jepson was London regional director at Taylor Woodrow Property Company and development director at Delancey.

Brookfield has interests in 109 properties totaling 78m sq ft, predominantly in the US, Canada and Australia.

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Government publishes list of £300m list of assets transferring to HCA

The government has today published a list of more than £300m of land and property assets being transferred to the Homes and Communities as a part of the closure of the UK’s eight Regional Development Agencies.

The list of 408 assets, being published by the Department for Business, Innovation and Skills, includes a wide range of properties including industrial, residential, land and office assets.

HCA chief executive Pat Ritchie said: ““Today’s announcement marks a key milestone in the RDA land and property asset transfer to the HCA. We look forward to the completion of this process, and building on our existing relationships with local partners to deliver the best outcome for local communities through future development and disposal of the former RDA assets.”  

Under the Public Bodies Bill, which is currently going through Parliament, the RDAs will ceases to exist in March 2012.

The HCA will take over the stewardship of the RDAs properties, meaning it will own and manage the portfolios at a national level.

A number of RDA coalfield land and property assets - 52 assets across 43 sites - have already transferred to the HCA as of 1 August 2011.  The transfer is expected to take place on September 19.

To view a full list of the assets being transferred click here.

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Strong franc hurts Swiss sales in the US

Image Caption: Michael Haene imports with his brother Cliff Swiss products for their shop in Washington (swissinfo)by Marie-Christine Bonzom in Washington, swissinfo.ch

The situation has become so difficult for some distributors that they have reduced their “Made in Switzerland” selection rather than have expensive products gathering dust on shelves.

“Small and medium-sized businesses which import 100 per cent Swiss-made articles with high production costs such as cheese or chocolate have suffered the most from the exchange rate,” said François Schmidt, the commercial attaché at the Swiss embassy in Washington.
He added that there were no official figures so far, but business owners and managers were repeating the same thing everywhere. “Even bigger companies are starting to feel the effects of the strong franc.”
For Dominik Schieweck, owner of the “Schoggi” chocolate store and website in San Francisco, the weak dollar has made his situation extremely difficult despite an 80 per cent increase in sales over last year.
“The prices of my suppliers have been going up, up, up and I’ve had to react and raise my prices. My business is barely profitable right now,” he told swissinfo.ch.
“We opened the shop before Christmas 2007, right before the recession hit. My whole business plan was built on the knowledge that I wouldn’t make money for the first four years, but I was not prepared for it being that bad.”

Bruce, manager of the Silicon Valley online store Swisschocolateoutlet.com, has decided to close the website. “Our sales are down since last year and the business is not very cost-effective,” he said.
“We’re redirecting clients to our other site, and what we’ve seen is that some would still buy Swiss chocolate as they place an order for Chinese fortune cookies.”
On the east coast in Washington, Cliff Haene, co-owner of the German Gourmet store and son of a Bernese immigrant, is not feeling the pinch as much as some of his colleagues.
“We’re located in the region of the US the least affected by the economic crisis and people here have more disposable income than elsewhere,” he told swissinfo.ch. “We also have [a big] enough mix of products from other countries.”
Haene expects to suffer from the strong franc in the autumn and during the end-of-year holidays, which start with Thanksgiving in late November. The impact is already being felt though.
“People compared [our prices] with domestic yogurt, so we had to remove Swiss yogurt from our shelves – now we only offer it by special order,” he explained.

Food items are not the only products taking a pounding. An Illinois-based website that sells as part of its range frying pans and saucepans made in canton Valais is having trouble shifting its merchandise.
“Our Swiss utensils are very high-end. They’ve always been expensive, but right now they’ve become very expensive and sell very slowly,” said the online store’s manager, who wished to remain anonymous.
Chantal Aeschbach-Powell, president of the US subsidiary of the Naef toy company in Virginia, says sales of the firm’s wooden objects to museum and decoration stores have been flat since last year.
“Because of the exchange rate we had to revise our pricing up about a year ago and we re-evaluate it every three to four months,” she told swissinfo.ch.
The company is considering slashing some models from its 75-product range and wants to target a wider market. Naef recently participated for the first time in the New York International Gift Fair.

Miami-based Ira Krieger, founder of the Swiss luxury watch brand of the same name, warns that companies working the higher end of the market should be cautious.
“We have to be very careful when we raise our prices,” he said. “To keep the Swiss made label, we can’t switch production to China or elsewhere, so our only room for manoeuvre is to revise prices. But once you raise prices, you can’t lower them or you’ll be out of whack with the market when the dollar is up again.”
Maintaining margins is also a dilemma for producers and resellers, Krieger concluded.
“As we raise prices, we lose customers, others change their behaviour and reduce purchases,” he told swissinfo.ch. “A client who might have bought three watches over three to four years might now only buy one.”

Marie-Christine Bonzom in Washington, swissinfo.ch
(Adapted from French by Scott Capper)

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China picks Leeds for Olympic base

Leeds has today announced that sporting giant China will use the city as its official European pre-Games training base ahead of the London 2012 Olympics.

Around 300 athletes, coaches and support staff representing China in 11 sports will be based in Leeds as they prepare and acclimatise to English conditions before heading to London for the Games, which start on 27 July next year. The majority of the athletes will be based in accommodation at the University of Leeds.

Leeds had already announced a deal in March to be the training base for the China track and field team, but Chinese Olympic officials have decided to make the city their official European pre-Games training base for their Olympic programme.

The deal has been agreed with the Chinese Olympic Committee by Leeds City Council, and is supported by The University of Leeds and Leeds Metropolitan University, with the initial direct financial benefit from hosting the team expected to be a minimum of £250,000.

The athletes coming to Leeds will be representing their country pending qualification in mountain biking, fencing, modern pentathlon, athletics, swimming, women’s water polo, women’s handball, women’s hockey, table tennis, boxing and taekwondo. Discussions are also ongoing regarding other Olympic sports.

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Atrium cautious on Europe as it reports NAV growth

Atrium European Real Estate today gave a cautious view of the European markets despite reporting a net asset value per share uplift of 2.7% in the first half of the year.

The central and eastern European shopping centre property company reported today that NAV per share had risen from €6.02 at the end of December 2010 to €6.19 at the end of June this year.

The NAV growth came from the second quarter of 2011 when Atrium enjoyed 2.8% NAV per share growth compared to a 0.1% decline in the first quarter.

Atrium’s growth came from strong rental income improvements. The value of its like-for-like net rental income increased by 14.5% to €85.1m, compared with the first half of 2010.

The value of its income producing portfolio also increased to €1.77bn following the €171m purchase of the Promenada shopping centre in Warsaw and a €69.1m revaluation uplift.

Rachel Lavine, chief executive of Atrium European Real Estate, said: “A number of transactions have allowed us to both ensure our development pipeline is focussed on those assets which we

believe provide the best opportunity to create value and strengthen our operating portfolio, which will also be enhanced by a number of smaller asset management initiatives.

“While we continue to be encouraged by our performance, recent events have highlighted the amount of economic uncertainty that remains and reminds us of the importance of managing our assets properly, being prudent in our approach to acquisitions and developments while ensuring we remain on a stable footing.”

Borrowings at Atrium increased to €452.6m at the end of June from €393.5m at the end of March this year as a result of the Promenada purchase and Atrium’s strategy of rebuying its debt.

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LaSalle Investment Management sells Warwick business park

The 135,162 sq ft industrial hub has 10 units and was sold to a client of CB Richard Ellis Investors. Harris Lamb acted for LIM.

Built in 1989, the Titan Business Centre is situated on the southern boundary of the Tachbrook Park Business Park development, south of Leamington Spa and Warwick town centres.

Harris Lamb director Peter Wood said: “Compression in yields on the South East industrial sector has led to increased institutional demand for prime Midlands real estate and we caught this wave when there was limited stock in the market”

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Press unswayed by “placebo” franc cuts

Image Caption: Newspapers said measures to adjust the Libor rate were symbolic (Reuters)by Jessica Dacey, swissinfo.ch

The Swiss National Bank (SNB) on Wednesday reduced official interest rates by 50 basis points to a target range of 0-0.25 per cent. It is the first time the SNB has lowered the interbank Libor rate since March 2009.

The bank said the franc was “massively overvalued at present” and it was aiming for the three-month Libor at “as close to zero as possible”.
The steps will have no more than a “placebo effect”, commented the Tages-Anzeiger.
“The measures themselves are mainly rhetoric and in their specifics so technical that only financial experts will really be able to understand them,” noted the newspaper.
“The prescription could have been made by a doctor, sitting across from a patient with a chronic illness, and not wanting to give the impression of doing nothing to help. There isn’t much he can do, so he prescribes a placebo. So everyone thinks something is being done. But the chronic suffering continues.”
For weeks the central bank had been accused of “living in the past”, and it took the meteoric rise of the Swiss franc before the Swiss National Bank decided to take action, said La Liberté.
And yet, the decision was symbolic, it said, as the Libor is anyway approaching zero per cent. “The interbank market of borrowing in Swiss francs has hardly reacted,” UBS analyst Thomas Flury told Thursday’s edition of the newspaper.
In its editorial, Le Temps agreed. “The markets reacted in the first hours but it very quickly became clear that the measures announced were symbolic, soon erased by the scale of the problems causing the rise of the franc.”
For the paper, the Swiss franc, like the Canadian and Australian dollars, are acting as refuges in a world that has “lost confidence”. 
“The franc is an anchor like the Deutsche mark before it, but it is so small that the waves from the markets risk sweeping everything else up in their path. Obviously the SNB has not exhausted all its resources, but from the tone of its communiqué, one can gauge that we aren’t going to be saved,” said Le Temps.
“The SNB has simply reaffirmed that it is ready to act and it is involved in providing oxygen for a national economy that risks losing air in the coming months.”

Some quarters were relieved by the measures however. Industry, tourism, politicians and the government welcomed the intervention.
“Finally the National Bank is taking action, say representatives of the export industry and tourism. Yet fears of a new appreciation of the franc are great,” wrote the Tages-Anzeiger newspaper.
The SNB must remain firm, businesses say. “Keep printing money until the franc is considerably weaker," one company boss told the paper. A tourism entrepreneur from Graubünden urged the National Bank to set a target course and stick to it.
The Blick tabloid called it a “smart move”. “Much ado about nothing? No!”, said its editorial. 
“The fact that the National Bank is no longer watching the franc get stronger has made speculators stay away from the franc. It is cheap to criticise the bank because nobody can know how deep the euro and the dollar would have dropped,” it said.
But it’s the rate at which the franc has been rising that is so worrying and the fact that there is no end in sight to the debt crises in Europe and the United States and related currency risks, noted the Neue Zürcher Zeitung.
The SNB now faces a dilemma, warned the newspaper.
“Until a real, structural solution to these crises is found, investors have every reason to flee government bonds and to put their money in the franc market instead. As long as the franc keeps growing in attractiveness as a place of stability in a system of flexible exchange rates it is probable that it will continue to strengthen, bringing the investors profits,” it predicted.
“A fundamental change would only come about if the Swiss economy collapsed, making franc investments no longer stable, or if the bankers succeeded in stopping expectations of a further rise in the franc’s value.”

Britain's Financial Times noted that the “S3 currencies” – the Swiss franc and the Canadian and Australian dollars –  have gained in prominence in terms of daily turnover in global currency markets and in the composition of central banks’ foreign exchange reserves.
Writing in the British newspaper, UBS foreign exchange strategist Mansoor Mohi-uddin said the S3 currencies were now “ruling the roost”. They are increasingly traded in foreign exchange markets, as they “represent an alternative group of ‘shadow currencies’ for investors wishing to take directional views on the world’s three leading economies: America China and Germany”.
“In short, the Swiss franc and Canadian and Australian dollars allow investors to hold a core European currency without the eurozone’s debt burdens, a North American currency without America’s fiscal baggage … and a shadow currency for China’s economy without capital controls or currency pegs.”
But he warned that the situation could “cut both ways”, with a risk of the eurozone debt crisis engulfing other countries and dragging down the Swiss franc too.

Jessica Dacey, swissinfo.ch
(With input from Urs Geiser)

The Swiss franc is a so-called “safe haven” currency, which means that investors and speculators buy it when other currencies, including the euro and the dollar, are under pressure.
The franc has gained 25 per cent in value against the euro and the dollar over the past four years.
The Swiss National Bank has emphasised that it does not pursue an exchange rate target, but consistently bases its monetary policy on its legal mandate.
This mandate stipulates that “the SNB is required to ensure price stability, while taking due account of economic developments”.
Starting in March 2009 the SNB intervened in currency markets. But after pumping in 15 per cent of GDP in May 2010 to little effect as the Swiss franc surged during the first round of the Greek debt crisis, it dropped them in June 2010. 
These forays led it to a loss of SFr21 billion last year, its biggest ever, and its chairman, Philipp Hildebrand, has faced calls to resign.

The SNB reported a consolidated loss of SFr10.8 billion ($13.5 billion) for the first half of 2011.
Losses on the bank’s foreign currency positions amounted to some SFr9.9 billion.
This was mainly due to exchange rate-related valuation losses of around SFr11.7 billion.
A year ago at this time, the bank recorded a much smaller loss of SFr2.78 billion.
The SNB result depends largely on developments in the gold, foreign exchange and capital markets. Because fluctuations are common, it is not possible to make accurate predictions for the rest of the year.

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