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Tuesday, 7 December 2010

'Mouthwatering...'

13th December 2009, 'a rollercoaster year for UK commercial property...But prices bottomed this year and are rising.' Why then, did Barclays chose to sell our portfolio at that time having waited a year since their initial plan to gain control of the portfolio in Dec '08? Was it because they knew they could get a good price precisely because the market had turned and was rising? Morrough states that yield plays an important role in determining why the commercial property market was rising when the economy was still gloomy; 'his fund yields just under 8% - mouthwatering...'; the Birakos portfolio was producing a yeild of 8.28% in July '09 according to the CBRE valuation...how mouthwatering is that?
Note Morrogh's statement that 'the ability of the manager to sniff out bargains is paramount.' Our 'bargain' had been 'attractively valued' by Threadneedle’s 'preferred valuer' CB Richard Ellis who also acted as the Receiver in the portfolio sale. Yet CBRE's pessimistic valuations of the Birakos portfolio were at odds with it's published 'Monthly Index' for November '09 which showed the strongest total returns (3.4%) in the history of the CBRE Monthly Index and that 'all property capital values rose by 2.7% over the month'. David Wylie, Head of Economics & Forecasting at CBRE said "The turn around in investor demand since the middle of the year ('09), has seen a surge in the performance of commercial property, with year to date total returns now turning positive...The very strong returns seen in recent months seems destined to continue into next year, given the strength and depth of current investor demand."






A further example of the close relationship between the bank and Threadneedle, in fact Barclays holds 20% of the total equity raised. Threadneedle has an 'exclusive arrangement with Barclays Wealth', 'already has deals lined up' and sees opportunities in retail...
Threadneedle have confirmed ownership of the properties but have declined to comment further on their relationship with either Barclays or CBRE or on how they were initially made aware of the pending portfolio sale.

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