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BHS collapse reveals property nightmare; FdR mulls €700M Paris asset sale

Gauging Supply Chain Risk In Volatile Times

The Commercial Real Estate (CRE) Sector Feels the Impact of the Coronavirus

Credit Analytics Case Study Poundworld Retail Ltd

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BHS collapse reveals property nightmare; FdR mulls €700M Paris asset sale

The property nightmare behindBHS collapse

The businessstory that has gripped the British press this week has been the collapse of the88-year-old department store chain BHS. The retailer, which had about £1.3 billionin debt, including a £571 million pension deficit, filed for administration earlierin the week, The Telegraph reported.

Muchof the coverage has focused on outrage over the behavior of British retail tycoonSir Philip Green, who sold the beleaguered company last year to Retail Acquisitionsin questionable financial shape, but an article in the Evening Standard callsattention to the thorny question of BHS' giant real estate portfolio.

RetailAcquisitions believed that it was getting its hands on "a real-estate goldmine" when it bought BHS, which has 164 stores covering around 5.5 millionsquare feet, according to the report. However, administrator Duff & Phelps admittedthis week that the property became a thorn in the side for Retail Acquisitions,which has struggled to sell off assets. Various theories have been offered as towhy this is the case, according to the report: Retail Acquisitions' lack of bigproperty experience, the poor quality of the assets and even Brexit leading to aslowdown in the British transaction market.

Manyof the stores are "tired — some to the point of exhaustion," accordingto an opinionpiece in Property Week. The publicationtips potential buyers for the assets, such as South African billionaire ChristoWiese, backer of discount retailer Pep & Co; and retail chain Sports Direct.

Therewas yet more bad news for the U.K. retail market this week as 116-year-old fashionchain Austin Reed went into administration, Reuters reported.

France and Spain

* is reportedlyconsidering the sale ofthe Tour CB 21 skyscraper in Paris' La Defense district. The property is valuedat around €700 million.

* is eyeing an acquisition pipeline of €1 billion, Property Investor Europe reported,citing Spanish publication Expansión.The assets being considered include department store El Corte Ingles properties.The store chain plans to sell 200 nonstrategic assets worth €1 billion in a projectdubbed Operation Batman, as reported earlier.

Hotels

* Anactive week for large deals in the hotel world as a unit of China's HNA Group Co.Ltd. agreed to buy CarlsonHotels Inc., the company that operates the Radisson brand and roughly 51.3% of . The financialterms were not disclosed, but Bloomberg News reported that "people with knowledgeof the matter" had said in March that a sale could garner about $2 billion.

An eye on earnings

* 's first-quarter revenuesrose by 0.8% €322.8 million.

* reported a 4.7% increase in first-quarter revenues to €321.5million, which the company said was largely attributable to its health care propertyinvestments.

* 's for the year ended Feb. 29fell to £25.8 million from £34.8 million a year ago. EPRA EPS came in at 17.1 pence,down from 23.9 pence a year earlier.

* reported that gross rental income had risen to €63.3 millionin the first quarter, up from €46.1 million in the same period in 2015. The companyattributed the increase to its acquisition of Sektor Gruppen AS in 2015.

In other news

* Investmentin European commercial property was down by 40% in the first quarter compared witha year ago, according to research from Real Capital Analytics. A total of €46.7billion of property transacted during the quarter, with investment falling in allof the major commercial markets of western Europe.

* Thenumber of planning applications for residential towers in London submitted in 2015was up a whopping 853% compared with 2008, the year that Boris Johnson became Mayor,accordingto Estates Gazette. Developers submittedplans for a record-smashing 111 towers last year, the report said.

Now featured

: Istanbul, Turkey, appearsto be rising through the ranks of global cities to take its place as a major hubfor business, tourism and culture. International real estate pundits have praisedits strong demographics and ambitious infrastructure development plans. But arecross-border investors taking action, or is Istanbul's importance just conceptual?

: S&P Global Market Intelligence presentsa weekly rundown of recent significant management and board changes and personnelmoves in the European and Asia-Pacific real estate industries.

French real estate companies toppedthe competition with an indexed year-to-date total return of 7% for the year sofar. Meanwhile, six out of the bottom 10 SNL-covered European real estate companiesby year-to-date total return are headquartered in the United Kingdom.