Real estate, the fever for shopping centers is rising. The report
Investor interest in commercial properties is returning, especially large, mall-style ones. According to a survey conducted by EY’s Strategy and Transactions department, approximately 60% of the credit institutions interviewed financed the retail sector in 2023, of which 75% of the resources were allocated to shopping centersthe. This is what emerges from the update of the EY Retail Property Investments Barometer Italy, already conducted at the end of 2023 and aimed at evaluating the perception and trust in the Retail asset class within the real estate market Italian, with the aim of capturing the sentiment regarding investment and management strategies, as well as the future prospects of the sector.
The survey, which in October last year had already involved the main players in the sector, in particular real estate companies, fund and real estate asset management companies and financial investors at a national and international level, was extended at the beginning of year to the main Italian and foreign credit institutions active and operating in commercial real estate financing. With the collaboration of the National Council of Shopping Centers (Cncc), EY involved in the survey the main banking institutions historically active in providing finance to the Italian Real Estate sector, thus collecting perceptions and feedback on the potential of new financing for retail real estate initiatives.
Without prejudice to the evidence collected on the side investors at the end of 2023, it is explained from the survey conducted at financial institutions, some elements are common among the audience of owner-investors of the shopping centers and the banks interviewed while on others there is still a gap, and it is by working to reduce this gap that a restart of the property market can be allowed even in the short term transactions-investments.
In fact, the survey carried out shows how, despite a general “wait and see” approach on the part of both investors and financiers, the sector is showing signs of recovery, with returns that have presumably reached their peak: this will lead to a return of interest on the part of both parties involved in the investment processes (equity and debt side), explain the experts.
Comment Marco Daviddi, Managing Partner Strategy and Transactions of EY in Italy: “The Retail Real Estate sector shows elements of solidity despite the market challenges we are experiencing, with over 60% of managers planning to return to investing in the sector in the next two years. On the management side, the focus will move on two crucial fronts: energy efficiency and the optimization of commercial spaces to strengthen their appeal gear change towards more sustainable and attractive asset management in the medium term and goes along with the requests of the financing banks, attentive to the dynamics of the sector and with a positive attitude – albeit cautious – in the presence of strong covenants and solid real estate fundamentals. Market players are preparing to navigate a complex landscape, characterized by access to selective credit which must be guaranteed by a high space occupancy rate and particular attention to efficienza energeticto assets and the outgoing liquidity of investments. The meeting point between the characteristics of the investment opportunities sought by investors and those of the financiers will be the key to the creation of long-term value in the retail industry.”
In 2023 60% of the credit institutions interviewed provided financing for retail assets, of which three quarters in favor of shopping centres, 85% of which was directed towards the refinancing of existing credit positions. According to experts, this can also be explained by looking at the forecasts for 2024 which, although they confirm what was said in the introduction, highlight how over 70% of the banks interviewed are interested in financing the asset class but in the context of operations having a “core” type investment profile, in contrast with the wishes of investors who at the end of 2023 had shown a predisposition to make investments with a higher risk-return profile, of a “value add” or “opportunistic” type.
Comment Roberto Zoiapresident of Cncc: “The shopping center industry is investing many resources to support the evolution started in recent years which concerns, on the one hand, the offer, increasingly focused on the experience, with an increase in services in addition to the traditional shopping, and on the other the real estate assets, which aim for redevelopment also with a view to greater energy efficiency, to enhance the structures and contribute to their attractiveness. The attention of the banking world, as revealed by the survey carried out with EY,. continues to be fundamental to continue this virtuous process, combining investments and effective asset management strategies to position even more core products on the market, consequently also encouraging interest in possible operations in the sector”.
A reflection also emerges regarding the key conditions for accessing new financing, the experts further explain: credit institutions require a high employment rate (at least 90%) to finance new acquisitions or a pre-let rate above 50% and a certain exit for financing intended for value-add operations. The common ground between the prerogatives of the large property owners of shopping centers and the banks interviewed is, however, that ofand intervention policies for valorisation in an ESG key: as already demonstrated at the end of 2023 by investor-managers, also for credit institutions, an intervention policy regarding sustainability and improvement of the energy consumption performance of the centers, as well as their qualification with the highest levels of certification (Leed, Breem, Very good, etc.), is essential for the provision of new finance, which has become increasingly stringent in its requirements in line with current and prospective regulations on the subject.
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Serge Weyland, CEO of ALFI, Shares Insights on European Finance and Capital Markets
Serge Weyland, CEO of ALFI (Association of Investment Funds of Luxembourg) since January 2024, knows Belgium well after studying there at the Solvay business school (ULB) when his father was a diplomat as Luxembourg’s permanent representative to the European Union. “My father co-wrote the Maastricht Treaty. I grew up in a very pro-European environment. And I try to complete this project again today“, he says. “Fortunately we have had moments like the Maastricht summit in the construction of Europe. The euro is vital to the stability of Europe. I am not sure if we would have gone through the Covid crisis as well without the euro”, he says.
Father of four children, this 51-year-old Luxembourger worked in the banking and asset management sector (notably as CEO of Edmond de Rothchild Asset Management) before taking over the management of Alfi, which has a total of 1,400 members by him. What he getsexciting” in his new job he is “the human side, which has a foot in the management company industry in Luxembourg, exchanges with regulators and the various ministries as well as the European Commission who ask us questions about our views on the main European projects.“. Having spent almost 30 years in the private sector, he is delighted to “to take a small height” and “try to put a stone in the European finance and capital market building”.
What is your role as head of the Luxembourg investment fund association?
We have three priorities. The first: to ensure that European regulations and their transposition in Luxembourg law contribute to the development of asset management. It is a huge industry that represents 17 trillion in assets in Europe. The second: help seize new opportunities, including alternative management. And the third: to promote Luxembourg solutions in Europe and beyond outside the Grand Duchy.
What amounts are we talking about?
4.5 trillion of funds are exported outside the European Union. This is a genuine European export product. Europe is also in a good position thanks to its two main European regulations, one for general public investment funds (Ucits), and the other for alternative funds (AIFMD).
Investing according to your values: the whole issue of thematic fundsWhat do we mean by alternative funds?
Alternative management covers in particular hedge funds, ie leveraged funds, and private equity investing in unlisted companies. That’s where we find European SMEs that we want to help grow. Here we are facing one of the great challenges at the European level, which is to ask ourselves how to develop our champions of the digital or energy transition. One of the solutions relates to private debt which is often aimed at unlisted companies. We will desperately need this non-bank funding for major renewable energy, infrastructure or digital projects.
How can we secure this funding?
One of the biggest challenges is to encourage European savers and households to use their savings more in the capital markets. Because the vast majority of them are still invested in savings or current accounts. Over the past 15 years, this has represented a loss of purchasing power and stock market investments have brought in much more. Figures from EFAMA (European Fund and Asset Management Association) show that 14 trillion of savings are invested in bank accounts in Europe, including the UK and Switzerland. This is significant. This represents approximately 41% of household savings.
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“There is a risk that European savings will be heavily focused on American markets in an investment strategy with low commissions (such as ETFs, Editor’s note).
So isn’t Belgium an isolated case with its 300 billion in savings accounts?
This is true everywhere in Europe. With some excellent exceptions such as the Netherlands, Sweden and Denmark that have developed savings products, especially in the second column of retirement savings (company savings). In Sweden, almost 10% of salary is automatically deducted to be invested in pension savings in the form of an investment. With such regulation family participation in capital markets can be developed. If we work on the second pillar, we will force workers to take an interest in the capital market.
Isn’t one of the problems with investment funds the high costs?
As part of the previous CMU (Capital Market Union) which aims to develop capital markets within the European Union, very important regulatory work was carried out to force fund and asset managers to be extremely transparent in terms of costs of. But it is true that in certain European countries that have structured the second pillar in the form of insurance products, there is still a challenge to accumulate costs. The average cost has fallen even if there are still variations. The difficulty is to make such a comparison. We cannot compare a passive ETF that doubles the American S&P 500 index with a fund whose objective is to invest in European SMEs, which requires a lot of work. I would also like to say that our industry is much more regulated than most other fields. Look at real estate or car marketing. No one is surprised by how much their car salesman or real estate agent earns for skills that don’t always exist.
Yes, your invested money can “change the world”. This is what we call impact investing.So ETFs have the lowest fees?
We should not forget the fact that there is no management information in passively managed ETFs since we follow an index. This works very well when the markets are rising. On the other hand, when they are more volatile, it is useful to diversify your portfolio. The passive management products that have performed well are the dominant American products such as the S&P 500 which includes 100% American stocks. MSCI World is 70% invested in US stocks even though it is supposed to be a global index. Due to the rise of technology stocks such as the Magnificent 7 (with Tesla, Microsoft, Apple, etc.) there is a particularly strong American bias in these indices. A low commission investment strategy (such as ETFs, Editor’s note) risks directing European savings heavily towards American markets. We need to develop savings products or incentives to redirect them towards the European economy.
What routes are planned?
The report of former Italian Finance Minister Enrico Letta, which aimed to lay the groundwork for the next legislature of the Commission and define the objectives of the capital markets (SCMU), outlines several ways. He discusses the development of the 2nd retirement pillar and possibly considering tax incentives to invest in Europe. We could imagine differentiated tax measures depending on the destination of the investment. I am sorry to see protectionist trends emerging on the capital markets in Europe.
Do you have examples of conservation?
For a fund, especially private asset funds, to be eligible for life insurance in France, it must be domiciled in France. France used the tool of life insurance to finance the French economy. We should take inspiration from this type of mechanism but apply it on a European scale. All European funds should be eligible. Conservatism should not be national but European for all savings products.
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We need a European telework regime.”
Ireland is a competitive location for the fund’s activity. What are you doing to avoid losing market share?
Luxembourg and Ireland are similar in many ways as pan-European fund distribution houses. Luxembourg funds are distributed to 80 countries. Ireland covers slightly less. Luxembourg has 4,300 billion in Ucits funds (traditional management) and around 2,000 billion in alternative management, which has developed very strongly. Some of the activity was previously located outside Europe, which generated jobs. Ireland benefited most from the increase in ETFs investing in the United States, thanks to favorable tax treatment with the United States. On the Irish market, a single player, in this case BlackRock, represents almost 1000 billion in assets.
I think that Luxembourg today has a variety of strategies that are not comparable to what we see in Ireland.
Has Ireland benefited more from Brexit?
It is not necessary. Different countries benefited from Brexit. Germany benefited from the relocation of banking licenses, France was able to attract some asset managers, especially in Luxembourg in alternative management and a little insurance. It was evenly distributed.
Brexit costs the British economy 100 billion pounds a yearThere is no war between the places?
I would say that there is healthy competition between financial centres. Specialization at the European level makes sense. The least, again, is national protectionism. This is not healthy for the development of Europe and it is not good for European savers because it involves additional costs.
Isn’t the development of the Luxembourg market hindered by the difficulty of hiring people with the necessary skills?
Finding talent is indeed a challenge. We are recruiting further and further within the European Union and even outside the EU. Covid has also changed the situation due to the development of telework. As a cross-border region, Luxembourg sometimes competes with other financial centres. And the reason for this is tax conventions between European countries and European legislation regarding teleworking. To take advantage of the tax system in Luxembourg, you will need a maximum of 35 teleworking days. A person living in Trier, Germany could benefit from working for a bank in Frankfurt as they will not be subject to the 35 day telework limit. This is a matter that Europe must work on because this limit creates tension on the job market. And this is not necessarily in line with the objectives to reduce the carbon footprint. There needs to be a real European telework regime. There were bilateral negotiations. But this is not enough. The same problem arises in other cross-border regions.
Serge Weyland, CEO of ALFI, Shares Insights on European Finance and Capital Markets
Binance Founder Changpeng Zhao Sentenced to 4 Months in Prison, Contrasting with FTX’s Sam Bankman-Fried’s 25-Year Sentence
A Tale of Two Crypto Titans: Binance Founder CZ and FTX’s Sam Bankman-Fried
- A longtime battle between cryptocurrency titans was brought to a close in federal court this past week when Binance founder Changpeng Zhao was handed a sentence of four months in prison.
- The criminal judgment was in stark contract to the 25-year prison sentence FTX’s Sam Bankman-Fried received.
- The crypto kingpins shared a pulpit for years from which they preached the power of decentralized, digital currencies to the masses, but the difference in prison sentences highlights how they were nothing alike in business or in personal dealings.
Former FTX CEO, Sam Bankman-Fried (L) and Zhao Changpeng (R), founder and chief executive officer of Binance.
Image Source: Mike Segar | Reuters | Benjamin Girette | Bloomberg | Getty Images
An arch rivalry between one-time crypto titans was brought to a close at a federal courthouse in Seattle on Tuesday when Binance founder Changpeng Zhao was handed a sentence of four months in prison. A month earlier, on the opposite coast in downtown Manhattan, FTX’s Sam Bankman-Fried received a 25-year prison sentence for his crimes.
It seemed an underwhelming and somewhat anti-climactic finish to a protracted battle between Zhao and Bankman-Fried, two men who were legendary adversaries, as well as key stewards of the $2.2 trillion crypto sector.
A Story of Contrasts
For years, Binance’s Zhao and FTX’s Bankman-Fried preached the power of decentralized, digital currencies to the masses. Both were bitcoin billionaires who drove Toyotas, ran their own global cryptocurrency exchanges, and spent much of their professional careers selling the public on a new, tech-powered world order. They envisioned an alternative financial system comprised of borderless virtual coins that would liberate the oppressed by eliminating middlemen like banks and the overreach of the government.
Ultimately, their starkly different prison sentences highlighted the stark contrasts in their business and personal lives.
FTX founder Sam Bankman-Fried leaves the U.S. courthouse in New York City.
Image Source: Amr Alfiky | Reuters
“Comparing CZ and SBF, both figures emerged as prominent in the cryptocurrency sector but under vastly different circumstances,” said Braden Perry, a former senior trial lawyer for the CFTC.
“The nature of their alleged crimes reflects different aspects of the ‘dark’ and illicit corners of crypto: CZ’s case seems to focus on regulatory and compliance failures, while SBF’s case hinges on direct financial misconduct and deception,” Perry said.
While Bankman-Fried’s case involved allegations of fraud and misuse of customer funds, Zhao’s case involved charges of regulatory violations and breaching international financial sanctions.
Changpeng Zhao, former CEO of Binance, arrives at federal court in Seattle, Washington.
Image Source: David Ryder | Bloomberg | Getty Images
Personas and Public Perception
Differences between the two former CEOs extended beyond their legal predicaments. Their personal lives and public personas revealed contrasting characteristics.
While Zhao exuded a sense of control and professionalism, Bankman-Fried appeared more disheveled and overwhelmed. Their outward appearances, mannerisms, and even legal strategies showcased their divergent personalities.
The Aftermath
Despite their divergent paths, both Zhao and Bankman-Fried faced significant consequences. Zhao, facing fines and forfeitures, will continue to be one of the wealthiest people in the crypto industry, retaining his stake in Binance. Bankman-Fried, on the other hand, saw his crypto empire collapse into bankruptcy and his personal wealth reduced to zero.
FTX, Bankman-Fried’s former company, is now in bankruptcy court in Delaware, aiming to recover funds and make customers whole.
Though their fates diverge, the tales of Binance’s Zhao and FTX’s Bankman-Fried serve as cautionary tales in the world of crypto and highlight the broader challenges the industry faces in achieving mainstream acceptance and transparency.
Source: [Respectable News Website]