Is the industry just sensibly keeping calm and carrying on as Michel Barnier continues to lob brickbats at Theresa May’s Brexit plans – or fiddling (increasingly nervously) while Rome burns?
After the EU chief Brexit negotiator’s speech this Wednesday laid out in painful detail why the EU is so opposed to the “lose, lose game” of the Brexit negotiations, it is tempting to think the latter, and that those in the former camp, who think it’ll all come good in the end, are just deluding themselves.
But we’ve been here before. Actually, we haven’t moved from here for the past year and a half – and perhaps that’s why we’ve given up worrying about where ‘there’ is and against the odds, the deals just keep on coming.
This week, we reveal that Evans Randall is poised to clinch the Clerkenwell Collection portfolio from the little-known Sheinman family for £190m to £200m, underlining the continuing allure of the right properties at the right price, particularly in the capital. Meanwhile, Hammerson has just sold a 50% stake in its Highcross shopping centre in Leicester for £236m to an Asian investor (not bad going given the state of the retail market) and the management team of The Collective Old Oak, backed by Deutsche Bank and Capital Re, has just bought out the remaining 75% stake in its co-living scheme, valuing it at £125m.
There is no shortage of stuff coming on to the market either, and we’re not talking tiddlers or distressed assets; we’re talking big-ticket trophy schemes. Ballymore Group is clearly feeling pretty bullish: it has put One Embassy Gardens on the market for circa £160m. Ditto M&G, which is pondering the sale of Heights Brooklands business park in Weybridge for around £150m.
Then there are all the overseas players eyeing a piece of the action. Samsung is looking to partner with UK modular housing companies with a view to embedding smart tech in modular homes, US investor Harrison Street is set to enter the UK BTR sector via a tie-up with Apache Capital Partners and Saudi asset manager Sedco Capital has picked up two UK assets – a logistics scheme in Yorkshire and an office scheme in Berkshire.
You wouldn’t think that we face the very real prospect of a no-deal or blind Brexit. Let’s just hope we’re not in Rome…
Retail fund reform
While Brexit has not had the feared impact on deals, it has distracted the FCA from the task of reforming the rules governing retail funds. When the regulator published its discussion paper in February 2017, it promised to come up with reforms by the end of the year. The good news is that they are finally here. The bad is that they need finessing and don’t go nearly far enough.
The fear is that in their current guise, they could result in funds being suspended unnecessarily. There are also concerns that there is nothing on the development of less liquid funds that could offer retail investors a better return. As independent consultant John Forbes puts it, retail investors should have access to “a deposit account, not just a current account”.
If the industry wants to avoid another lockdown on retail funds, it will need to make a stronger case to the FCA – or things could be even worse next time around.