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BPT direct real estate funds insignificantly impacted by drop in equity markets
22 January 2008
After a dismal 2007 the global equity
markets have had a serious drop of around 15% in the beginning of
2008.
During 2007 the American economy
experienced difficulties arising from the "sub-prime crisis", which
might lead the USA into an economic recession should consumers and
corporations cut back on expenditures. Furthermore the tight
monetary policy could exaggerate the problem, and now central banks
globally have stopped talking about tightening and begun talking
about recession fear or at least slowing growth. The problems in
the US have had a spill-over effect on other areas, and as the US
economy is the largest globally, a slowdown in the US is expected
to affect global growth.
Central banks in the US as well as the
UK have already begun a reduction in official rates, and this trend
is predicted to continue with other central banks following
suit.
Investments in direct real estate funds
such as BPT Secura, BPT Arista, BPT Hansa and BPT Optima, are not
specifically influenced by the turmoil in the equity markets. We
expect some higher credit premiums from banks in the short end of
the yield curve; however, the official rates have come down meaning
that the net result is more or less at the same level as before the
crisis. The BPT portfolios are generally financed with long term
financing with the financials of the funds being intact, and
furthermore the income is normally indexed.
On a long term basis the highest risk
for direct investments is the level of vacancies. In this respect
BPT is quite confident with our tenants being well-known,
international and well- capitalized companies. BPT has exposure
only to prime location and high quality commercial properties with
a very well-diversified customer base.
All in all, in line with what BPT has
mentioned in our fund prospectuses and previous investor
communication; direct fund investments in the commercial real
estate market have very attractive risk/return characteristics and
very low correlation with the turbulent develop-ments in the equity
markets.
For additional information
feel free to contact:
Senior Portfolio Manager, Bent
Kristensen
Phone +45 33 69 21 83
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Email
Managing Director, Stig
Mølsted-Møller
Phone +45 33 69 21 85
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Email
