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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 8:31 am 
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Holiday Home Owner

Joined: Sep 2, 2008
Posts: 309
Location: Delta Quadrant
Daniel Plainview wrote:
€140MM asking price is bullshit, it'll make a yield of 6%, possibly 5%; so then they can write an article saying *huge interest in Irish property, portfolio makes 50% over asking price* etc etc

Without question... any half decent investment on the market in Dub for the last year easily exceeds the "guide" price. You're a little optimistic on 5/6%, but will make less than 7%... I've heard the bubble word used in the Dub investment market on more than 1 occasion, but how can well advised, shrewd national & international investors be wrong?? And by-the-way I need an answer - the entire thing makes no sense to me, but the sales figures don't lie. :?

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 8:52 am 
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IMF'd

Joined: Sep 13, 2007
Posts: 31312
Location: Tullamore
Locutus wrote:
Daniel Plainview wrote:
€140MM asking price is bullshit, it'll make a yield of 6%, possibly 5%; so then they can write an article saying *huge interest in Irish property, portfolio makes 50% over asking price* etc etc

Without question... any half decent investment on the market in Dub for the last year easily exceeds the "guide" price. You're a little optimistic on 5/6%, but will make less than 7%... I've heard the bubble word used in the Dub investment market on more than 1 occasion, but how can well advised, shrewd national & international investors be wrong?? And by-the-way I need an answer - the entire thing makes no sense to me, but the sales figures don't lie. :?

With interest rates at astonishing lows, the big money is more yield hungry than it ever was. Add to this the same fools looking to make up their losses by doubling down...

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 2:23 pm 
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Under CAB Investigation

Joined: Feb 19, 2009
Posts: 2507
mr_anderson wrote:
Daniel Plainview wrote:
AKAF wrote:
Daniel Plainview wrote:
€140MM asking price is bullshit, it'll make a yield of 6%, possibly 5%; so then they can write an article saying *huge interest in Irish property, portfolio makes 50% over asking price* etc etc

Not so sure about that.

Prime investment property has been trading hands at yields of 8% to 10%.


Hmmm, really? Last I heard was prime, D2, good (BBB) tenant, 6.3% gross yield -- but it's not my area of expertise. So interested to hear if I'm wrong?


Aghh it's all convoluted.
Here's an example on Grafton Street ...

http://www.irishtimes.com/business/sectors/commercial-property/grafton-street-phone-store-on-market-for-5-5m-1.1385089

Quote:
The four-storey-over-basement building is let to Hutchinson 3G Ireland Ltd, trading as 3Mobile, on a 35-year full repairing and insuring lease that commenced on January 1st, 1991, and has another 12.5 years to run. Though the premises is currently over-rented at €445,000, the rent can be reviewed only on an upwards-only basis for the remainder of the lease.
Moreover, the lease is guaranteed by Hutchinson 3G UK Holdings with an additional bank guarantee equivalent to one year’s annual rent and outgoings payable by the tenant up to a maximum of €550,000.


So you're getting a return of 7.75% for the next 12.5 years, as long as the company doesn't go bust.

But if that were vacant today, you'd probably get half that.
So suddenly the yield could change to 3.875%.

Even if you get the full rent for the next 12.5 years, what happens after that ?
If rents haven't improved, you're now getting c€200k p/a.


Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 3:00 pm 
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Too Big to Fail

Joined: Sep 13, 2012
Posts: 4667
Daniel Plainview wrote:
Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

What about repudiation of a lease in an examinership? Will the CDS "pay out" or whatever the correct term is?

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 3:54 pm 
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Posts: 2507
Eschatologist wrote:
Daniel Plainview wrote:
Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

What about repudiation of a lease in an examinership? Will the CDS "pay out" or whatever the correct term is?



No.
:)

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Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends

(i.e. company profits are directly fed, in part, by government deficits)

BANKS DON'T LEND RESERVES
As confirmed by the Bank of England


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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 4:40 pm 
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Too Big to Fail

Joined: Sep 13, 2012
Posts: 4667
Daniel Plainview wrote:
No. :)

Right, so the currently respectable returns on Irish commercial property investment are supported by:

(a) a flaky revenue stream at risk when the lease expires or the rent kills the tenant
(b) capital appreciation supported by a robust revenue stream
(c) worthless insurance policies

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 5:03 pm 
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Nationalised

Joined: Sep 29, 2010
Posts: 8231
Location: London, innit
Eschatologist wrote:
Daniel Plainview wrote:
Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

What about repudiation of a lease in an examinership? Will the CDS "pay out" or whatever the correct term is?

ehhh and whatabout the CDS of : Hutchinson 3G Ireland Ltd - not sure the parent co is the appropriate CDS


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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 8:28 pm 
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Holiday Home Owner

Joined: Jul 22, 2013
Posts: 312
Daniel Plainview wrote:
Eschatologist wrote:
Daniel Plainview wrote:
Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

What about repudiation of a lease in an examinership? Will the CDS "pay out" or whatever the correct term is?



No.
:)

However the parental guarantee will kick in :)

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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 9:02 pm 
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Property Magnate

Joined: Dec 29, 2012
Posts: 641
mr_anderson wrote:
Quote:
The portfolio is producing an overall rental income of €13.94 million, with more than 53 per cent of it coming directly from either central government or semi-state agencies. At the current asking price, a purchaser could expect an income yield of 9.53 per cent.


If the goverment wasn't blowing 12 billion a year, it might have been able to afford to buy these outright for €140 million and enjoy a 10 year pay back period.

But no, i'm applying business logic to an insane deficit spend, and ramp up the taxpayer liabilities while some entreprenhoors, probably from abroad avails of the sweet deal.

With the political vacumm the way it is, we need a taxpayers voice.


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 Post subject: Re: €2 billion portfolio on market for €140 million
PostPosted: Thu Aug 29, 2013 10:26 pm 
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Under CAB Investigation

Joined: Feb 19, 2009
Posts: 2507
slasher wrote:
Eschatologist wrote:
Daniel Plainview wrote:
Hutchison 10YR CDS (in USD) is 1.7% --- so essentially you can negate the bankruptcy risk by giving up 1.7% in yield per annum.

All depends really on your cost of funding whether it makes sense. I'd probably swerve myself. I mean, you can buy 30Yr Hutchison debt at a yield of about 6.2% and it's easily leveraged. All your giving up is the potential capital gain of the property and I'm not convinced that train is coming.

What about repudiation of a lease in an examinership? Will the CDS "pay out" or whatever the correct term is?

ehhh and whatabout the CDS of : Hutchinson 3G Ireland Ltd - not sure the parent co is the appropriate CDS



Thought tenant was Hutch UK.
Anyway the point of the CDS is to get some idea of health of parent -- and cost of insuring exposure.

Frankly, as I said, the sums don't add up unless there's strong capital appreciation.

_________________
Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends

(i.e. company profits are directly fed, in part, by government deficits)

BANKS DON'T LEND RESERVES
As confirmed by the Bank of England


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