After months of weighing up appropriate reform legislation for Germany’s embattled open-ended real estate funds (GOEF) industry, it looked this week as if Germany’s ruling coalition had managed to find agreement on a new set of rules for the industry, which has been plagued with uncertainty and volatile investor behaviour since October 2008.

Meanwhile, the European Public Real Estate Association EPRA vowed to continue its campaign to “liberate the German market” from what it sees as an unhealthy domination of the sector by the open-ended funds at the expense of the stock-market listed sector.

The drive by Berlin to reform the GOEF sector has been gathering pace over the last two years, but has intensified since May of last year when original proposals emanating from Berlin led to a fresh wave of investor panic leading to fund withdrawals, and ultimately, the announcement of fund liquidation by three groups – Aberdeen Immobilien, Morgan Stanley and the KanAm Group. These funds are currently unwinding their positions and have announced a series of staggered payments over the next three years to their shareholders as assets are progressively sold off. This month saw shareholders in Aberdeen’s Degi Europa receive the first tranche of 20% of their fund’s (albeit shrunken, after heavy write-downs) total value. Continue Reading

Frankfurt, May 1st, 2010

Warren Buffett, not surprisingly, is siding with Lloyd Blankfein in Goldman Sachs’ trial before the Senate in the SEC civil suit against the bank. With his company Berkshire Hathaway earning $500m in annual dividends from its $5bn stake in the investment bank, what’s not to like about his partnership with the titans of Wall Street?  Besides, as he said last week at his annual shindig in Nebraska, he would never assume to second-guess what investors on the other side of a trade he was involved in were thinking.  “They could very well be shorting a product, they do not owe us a divulgence of their position more than any reason why we need to explain what we are doing with our position.”

The Sage of Omaha is perhaps being a touch disingenuous, given his stake in the outcome and in the alleged perpetrator.  However, as a trader, he’s fully aware that moral compunctions have no place in the decision as to WHEN to enter or exit the trade.  We suspect that his views might be a little more tempered if he was paying advisory fees to the bank, presumably to act on his behalf, only to have them trade against him.

In the decisive moments of the trial, Continue Reading

To paraphrase Goebbels, to whom the quote is often attributed in a different context, when I hear the word Sustainability, I reach for my revolver.  Goebbels was talking about the ubiquitous use of the word Culture, deemed always and everywhere to be a Good Thing.  While doubtless culture has its merits, the rise of Sustainability, or Nachhaltigkeit, as the supposed panacea for all ills, carries with it the same danger of being rendered meaningless by indiscriminate over-use.

Like “liberty” or “justice”, the concept of sustainability threatens to become nothing other than a feel-good buzzword with no real meaning or substance.  If,  two years from now, the talk is still all about sustainability, it will be obvious that we are still in a deep and ongoing recession, and the real estate industry hasn’t come up with significant new ideas to get the markets moving again.  Sustainability will still be top of the agenda, but green-fatigue will have to be countered by specific commercial marketing of the individual merits of a waste-reducing, energy-efficient, employee-friendly building that can provide solid financial returns to investors and tenants. It will soon have to be more narrowly defined, if it is to continue to have any meaning. Continue Reading