The measures to limit the spread of the Covid-19 virus had an important impact on the global economy, and consequently on our company.
As practically all shops of our retail tenants have in the meantime reopened, we have a clearer view on the impact up until now.
Diversified real estate portfolio, different markets
Leasinvest Real Estate has a well-diversified real estate portfolio spread across the Grand Duchy of Luxembourg (53%), Belgium (31%) and Austria (16%), and is present in the asset classes offices (46%), retail (48%) and logistics (6%).
The assets in Austria are exclusively retail assets. As it was the case in Belgium, all essential shops, such as supermarkets, pharmacies, etc. remained all the time open (31% of our Austrian rental turnover). Since 14 April, DIY-shops and retail spaces below 400 sqm have been reopened, in their turn representing 24%. The other stores followed on 1 May and since 15 May the catering sector is also finally operational again. The footfall in Frunpark Asten reached 65% on average in March and April in comparison with 2019, while a rise of 6% was recorded in May, compared to May 2019, and an ex-aequo for the month of June.
GRAND DUCHY OF LUXEMBOURG
The impact on our Luxembourg real estate portfolio is mainly situated in the retail segment, of which food (incl. food for pets) and DIY however represent over 30%. As it was the case in Belgium, DIY-stores could reopen as of 20 April, representing 19% of the Luxembourg retail rents. The rest of the stores could also reopen as of 11 May, and catering finally as of 29 May. The borders remained however closed, refraining mainly our Knauf shopping centers, located in the Northern frontier zones, from reaching cruising speed till 15 June, date at which borders were reopened in practically all European countries. Since that date, an important rise in footfall compared to 2019 was also here recorded.
The real estate portfolio in Belgium mainly comprises long-term leased office buildings, that explains the very limited impact (some retail buildings and business centers).
Impact on the rental turnover
Leasinvest already announced that different tenants, mainly in the retail segment, asked for a compensation to bridge the difficult lockdown period. Leasinvest always had a constructive approach and entered into consultations with tenants that requested rent reductions for solid reasons. The negotiations have been finalized for a large part of the tenants, but are still ongoing for another part. In total, the negative impact on the rental income of the second quarter of 2020 is estimated at ca. € 4 million. This amount is expected to slightly increase in the third quarter, as a limited number of sectors (e.g. catering) are clearly more heavily hit than others.
Valuation of 10%-participation in the public BE-REIT Retail Estates
It has become clear that retail parks have proven their strength during the corona crisis. On the one hand, because of the feeling of security, and on the other hand, because of their particular range of products and the speed of shopping, specific to retail parks.
The participation of Leasinvest in Retail Estates is valued at the closing price of each quarter, which led to a depreciation of € 49.3 million recorded on this participation in the first quarter of 2020. This valuation was based on a closing price of € 47.40, while the price of the Retail Estates-share has recovered over the last couple of weeks to a level of € 59.90, allowing the company to reverse on 30 June 2020 an important part of the depreciation booked on 31 March, namely € 16.9 million.
Impact on the debt ratio
Traditionally, the debt ratio is the highest on 30 June throughout the financial year, because of the dividend payment in May, which causes a temporary increase in debt ratio by ca. 2.5 per cent points. The debt ratio remains below the 60%-threshold because of the recovery of the price of the Retail Estates-share (cf. supra) and the fact that no major changes in value on the real estate portfolio are expected.
The half-year financial report 2020 will be published on 19 August 2020 after closing of the stock exchange, and will as of then be available on the website www.leasinvest.be.
|For more information, contact|
Leasinvest Real Estate
Michel Van Geyte
On LEASINVEST REAL ESTATE SCA
Leasinvest Real Estate SCA is a Public BE-REIT (SIR/GVV) that invests in high quality and well-located retail buildings and offices in the Grand Duchy of Luxembourg, Belgium and Austria.
On 31/03/2020, the total fair value of the directly held real estate portfolio of Leasinvest amounts to € 1.11 billion, spread across the Grand Duchy of Luxembourg (53%), Belgium (31%) and Austria (16%).
Moreover, Leasinvest is one of the most important real estate investors in Luxembourg.
The public BE-REIT is listed on Euronext Brussels and has a market capitalization of € 542 million (value on 1 July 2020).
WE Charity lays off staff, looks to sell Toronto real estate in wake of scandal – National Post
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“We have a very hard-working and dedicated team in North America and the U.K. and over 100 staff leading our international development work overseas. We are grateful and thankful for the contribution they have made around the world.”
These changes come after months of intense public scrutiny of WE Charity, its affiliated for-profit organization, ME to WE, as well as the family ties between the WE organization and Prime Minister Justin Trudeau and Finance Minister Bill Morneau.
The federal ethics commissioner is investigating whether Trudeau and Morneau violated the Conflict of Interest Act over the Liberal government’s decision to hand the administration of the Canada Student Services Grant program to WE Charity.
Both the prime minister and finance minister have apologized for failing to recuse themselves when cabinet approved the recommended agreement.
Last month, WE Charity voluntarily suspended all of its Canadian corporate and school board partnerships after many announced they were cutting ties with the organization.
The charity has also cancelled all “WE Day” activities for the foreseeable future and is shifting its WE Schools learning programs to a digital-only format.
Al-Waheidi said the resulting hit to the charity’s financials, coupled with the effects of the pandemic, has prompted a need for a new and “refocused” vision.
The changes and staffing reductions mean office space for the organization will also need to be reduced, she said.
Brookfield Asset Management reports Q2 loss as real estate portfolio revalued – Times Colonist
TORONTO — Brookfield Asset Management Inc. has assembled a huge pile of cash and funding commitments from its partners to take advantage of huge opportunities that will arise for it as a result of the COVID crisis, executives said Thursday
Chief executive Bruce Flatt told analysts Thursday that Brookfield currently has US$77 billion available to deploy as opportunities arise over the next 12 months as a result of the COVID-19 pandemic.
“The most important is that many countries around the world will have to off-load spending onto the private sector and sell assets,” Flatt said.
He said that bodes well for Brookfield’s infrastructure and renewable businesses, which make money from buying, selling and managing those types of assets for institutional investors such as sovereign wealth funds and pensions.
In addition, Flatt said Brookfield will be able to provide the private sector with capital that will be needed as governments around the world wind down pandemic programs.
Brookfield has several ways to fill that need, he said, including US$12 billion of commitments to a fund for buying discounted debt issued by financially distressed businesses.
Its flagship funds for property, infrastructure, renewable and private equity investments will also be in position to be buyers or sellers depending on the conditions, he added.
Brookfield said its infrastructure and renewable energy businesses are positioned to take advantage of two merging trends in communications and solar technology.
Bahir Manios, managing partner of the Brookfield infrastructure group, said “we’re currently witnessing a once in a 100-year investment upgrade cycle” as telecom operators replace old equipment with wireless and fibre networks to meet demand in an increasingly online world.
“Historically, these investments were funded by telecom operators. Given increasing demands on their capital, these operators are now seeking new funding partners,” Manios said.
Brookfield’s data infrastructure business already owns a portfolio of cell towers in six countries and data centres in 14 countries as well as fixed and wireless networks serving more than 2.5 million residential and enterprise customers.
In addition, Manios said, Brookfield sees an opportunity to supply some of the additional energy that will be required by computer data centres over the next decade — estimated at 30 gigagwatts (30 million kilowatts)
“We’re exploring the potential to bundle data centres and renewable power and provide a turnkey green data centre solution,” Manios said.
Earlier, the company reported a US$656 million net loss in its latest quarter, ended June 30, as it revalued its real estate portfolio lower amid the pandemic.
Brookfield holds large interests in several publicly traded partnerships, including a 53 per cent stake in Brookfield Property Partners, which reported last week that it had been significantly affected by closures in its hospitality and retail assets due to the pandemic.
The company, which keeps its books in U.S. dollars and has many operations outside Canada, said the loss attributable to shareholders amounted to 43 cents per diluted share.
A year earlier, it had a profit of $399 million or 24 cents per diluted share.
“The good news is that those operating businesses that were impacted are now all recovering, and the balance of the year should be better,” Brookfield said Thursday in a letter to shareholders.
This report by The Canadian Press was first published Aug. 13, 2020.
Companies in this story: (TSX:BAM.A, TSX:BPY.UN, TSX:BIP.UN, TSX:BEP.UN)
Many residential real estate what-ifs during pandemic – Real Estate News EXchange
Keeping perspective on the Canadian residential real estate market during the COVID-19 pandemic and what to expect for the rest of 2020 was the focus of a recent Altus Group webinar.
“COVID created a 10-month sales year” due to a lack of April and May activity, said Altus Group Data Solutions vice-president of product management Matthew Boukall. “How we’re seeing the market rebound indicates pent-up demand, that was in the market prior to COVID, is coming back where supply exists.”
Factors affecting residential markets during the pandemic have included: closed sales centres and fewer open houses; increased unemployment; mortgage approval challenges, as banks became more cautious; fewer new project launches; consumers obeying stay-at-home messages from government and health authorities; and general COVID-19 and economic uncertainty.
Low housing inventory levels have continued in Eastern Canada.
In Western Canada, slower sales have allowed supply to increase, particularly in Alberta where the economy continues to struggle.
Condominium apartment and land sales
Condominium apartment sales were down 15 per cent from 2019 levels through Q1 and Q2 2020 in Vancouver, despite strong sales through the first two months of the year and increased activity in June.
New condo prices have dropped by three per cent.
While the Greater Toronto Area (GTA) averaged 10 to 15 new condo launches per month in recent springs, that number was down to three during the height of COVID-19 restrictions this year.
After a strong start to 2020, year-to-date sales are now 32 per cent below 2019 levels due to dropoffs in April and May. However, new condo prices have still risen by 12 per cent.
In Montreal, Boukall cited slower sales in 2019 and through early 2020 after incredible growth in condo demand in 2017 and 2018.
Land sale activity and dollar volumes are down across the country, other than Calgary, but Boukall said it’s too soon to say if that’s entirely related to the pandemic.
“Developers are seeing uncertainty and are likely to pull back some of their sales volumes.”
Western Canada market snapshots
Vancouver was feeling the impact of government policies meant to slow rapidly rising house prices prior to COVID-19. While prices have trended lower, they’re still a challenge for many consumers.
Foreign investment activity has been lower and long approval timelines and high development charges have made it challenging to bring new projects to market.
On the upside, COVID-19 restrictions were less severe in Vancouver than in other parts of Canada and sales launches during the pandemic shutdown saw reasonably strong demand.
Improving affordability and new supply should bring buyers back to the market, while incentives have attracted consumers and improved sales.
Edmonton’s challenges include weak demand for multifamily ownership the past two years. Prices may have declined as far as they can go, however, and more supply is shifting to purpose-built rental to satisfy demand.
No new inventory has been brought to the market as pre-sales have been challenging amid existing unsold inventory.
A plus for homebuyers is that Edmonton has the most affordable housing stock among major Canadian cities.
Resale activity has been recovering and demand for family-friendly housing options, such as townhouses, has been strong. Investment in public infrastructure is improving the viability of Edmonton’s downtown.
A larger supply of new homes in Calgary’s suburbs is creating more competition and price pressure, while an increasing supply of new purpose-built rental product may be dissuading condo unit investors.
Townhouse demand has been robust in new greenfield communities in Calgary. Downsizing and empty-nester demand remains strong, and a resale recovery could boost the market this fall.
Sales activity was less impacted by COVID-19 in Calgary than in other cities.
Eastern Canada market snapshots
High development charges, long approval cycles and construction challenges have made it harder for developers to bring projects to the market in the GTA.
Rising prices, particularly in apartment condo product, is making some regions unaffordable.
Historically low resale inventories are pushing buyers into the new home market, particularly downtown. Despite new supply, the rental market remains very tight with continued upward pressure on rents.
Ontario’s Greater Golden Horseshoe (GGH) region, including Kitchener-Waterloo and Hamilton, has less focused demand than in the GTA and new projects generally face a slower sales pace at launch.
Office demand and job growth remains focused in downtown Toronto, which means long commutes for those living in this region as transit infrastructure continues to lag demand.
Resale prices remain comparably affordable and better-supplied in the GGH than in the GTA. Available land for family-friendly townhouse and single-family housing is also in greater supply and more affordable.
Flexible work environments and an increase in working from home could shift the nature of housing demand throughout the GGH.
“In the medium term, those that can work from home may start to shift where they look for housing, certainly if they’re in Toronto or Vancouver,” said Boukall.
Construction delays resulting from COVID-19 restrictions will impact deliveries of new homes in Montreal. Pending government policies targeting housing affordability and a potential foreign buyer tax could impact the market in 2021.
Real estate prices remain much more affordable in Montreal than in Vancouver and Toronto. Resale inventories remain very tight, which could push more consumers to new housing.
The housing market for empty-nesters and downsizers should also remain robust.
Elevated construction activity, particularly for purpose-built rental properties, will deliver a significantly higher number of units in 2021.
Looking to 2021
COVID-19 has resulted in a significant increase in unemployment, particularly among younger people and those in lower income brackets. That could impact ownership demand, pushing more people to affordable rental product.
Rental investors also face challenges due to layoffs and rising unemployment, small business bankruptcies, declines in household discretionary income and consumer confidence, and more stringent financing conditions.
This could reduce condo sales.
While housing starts are expected to be negatively impacted this year, it’s anticipated they’ll rebound in 2021.
Government support programs may be hiding the true impact of the pandemic on the economy and consumers. Boukall believes the housing market could be negatively affected as these programs end.
Global factors that will have a more significant role in the Canadian housing market over the next two years are: a decreased number of immigrants and international students due to travel restrictions; and uncertain economic growth and demand for exports.
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