What type of Commercial Real Estate you should buy during a recession? What type of CRE assets are recession proof?
For starters:
Care homes,
Nursing homes,
Medical premises
Petrol stations and
Supermarkets
Thursday, 29 April 2010
Tuesday, 27 April 2010
Medical Premises Hots Up!
There are two key factors influencing the burgeoning boom in medical premises, namely governments’ or public spending cuts and an ageing population. Sophisticated investors are not waiting for new legislations before they invest their capital. Instead, shorter bed times at hospitals, overcrowded hospitals, backlog of untreated diseases, long waiting lists, frozen staff levels and more people seeking specialist care is enough evidence to realise that the demand for private medical premises will sky rocket.
Other medical premises, like outpatient centres, are also growing in popularity. Especially, those properties that houses a broad array of services, including an ambulatory surgery center, medical imaging, physiotherapy and medical offices for orthopedic, hematology-oncology and other physicians. These types of CRE asset are what investors (and lenders) are targeting these days. According to Jeffrey Cooper, executive managing director of Savills US “Investment-grade medical premises have not been necessarily recession-proof, but it has been recession-resistant”. Undoubtedly, people cannot avoid hospital treatment, but merely prolong it.
The gold rush is not just limited to the USA and Europe, but places like Uruguay, Brazil, China and India among others, will offer significant growth and cash flow potential in time to come. The mushrooming of the Baby Boomers age population will require more medical attention and treatments, thus boasting the demand for cost-effective outpatient facilities increasing exponentially. Latest reports shows that there is an undersupply of some 600 medical premises through out the U.K.
Are you still investing in residential property? Or gearing up to capitalise on this lucrative CRE sector?
Other medical premises, like outpatient centres, are also growing in popularity. Especially, those properties that houses a broad array of services, including an ambulatory surgery center, medical imaging, physiotherapy and medical offices for orthopedic, hematology-oncology and other physicians. These types of CRE asset are what investors (and lenders) are targeting these days. According to Jeffrey Cooper, executive managing director of Savills US “Investment-grade medical premises have not been necessarily recession-proof, but it has been recession-resistant”. Undoubtedly, people cannot avoid hospital treatment, but merely prolong it.
The gold rush is not just limited to the USA and Europe, but places like Uruguay, Brazil, China and India among others, will offer significant growth and cash flow potential in time to come. The mushrooming of the Baby Boomers age population will require more medical attention and treatments, thus boasting the demand for cost-effective outpatient facilities increasing exponentially. Latest reports shows that there is an undersupply of some 600 medical premises through out the U.K.
Are you still investing in residential property? Or gearing up to capitalise on this lucrative CRE sector?
Wednesday, 21 April 2010
Distressed CRE sector under the spotlight: Hotels!
There are many key principles synonymous with achieving financial success. As a result, wealth accumulation is not only attainable by acquiring income generating assets but can also arise from spotting and capitalising on distressed situations. The spiritual law of “The Law of Opposites” enable those in the “know” to use such secret spiritual laws to tap into various sources of wealth accumulation, particularly in times of turmoil. In many cases, inside investors buy assets that others avoid. The law of opposite helps the conscious mind to focus on two universal poles (i.e. tall & short, darkness & light, opportunities & distress and so on). Such investors, waiting for times like these.
For the past three years the western financial crisis have bought stress to many hotel owners, whilst it has excited may cash rich asset managers and inside investors. As a result, the latter have been busy expanding their portfolio (hotel portfolio) and intend to continue doing so over the next three (3) years (2010-2013). By buying distressed hotel properties repossessed from lenders at massive discounts place these investors in enviable positions. The amount of high end and luxury hotel brands coming on to the market (for whatever reason) has been astonishing. Branded hotels, such as, Hilton Hotels, Inter-continental, Cumberland Hotel and Holiday Inn to name a few and offered excellent cash flow prospects to distressed buyers. About two month ago, my firm was contacted to sell 4 hotels in the UK managed by the Hilton Hotels Brand with an average 7%-8% net yield.
The 2010 outlook for some hotels owners appear to be bleaked. Many hoteliers, particularly the high end brands who have been adversely affected by the fall in Business travellers’ booking, new green legislation and price competition from budget hotels will need to rethink their product offering in order to survive. Those entering the market today acquiring distressed hotel properties at substantial discounts have a few years of growth ahead of them. Some of the big players with deep pockets who are currently buying distressed hotels includes, firms like, Phoenix based Warnick & Co, Denver based Amstar Group and Saudia Arabia Kingdom Hotel investment company owned by Prince Atwaldin Bin Talal, to name a few.
However, there are billions of distressed CRE assets floating around today and although western Governments have used asset protection policies to control and limit the flood of distressed CRE assets coming onto the market, particularly, those in the hand of commercial Banks, it is only a matter of time before there is an over supply of such properties. At the end of the day, owners of distressed hotels will have to “innovate to generate” substantial inward cash flow.
For the past three years the western financial crisis have bought stress to many hotel owners, whilst it has excited may cash rich asset managers and inside investors. As a result, the latter have been busy expanding their portfolio (hotel portfolio) and intend to continue doing so over the next three (3) years (2010-2013). By buying distressed hotel properties repossessed from lenders at massive discounts place these investors in enviable positions. The amount of high end and luxury hotel brands coming on to the market (for whatever reason) has been astonishing. Branded hotels, such as, Hilton Hotels, Inter-continental, Cumberland Hotel and Holiday Inn to name a few and offered excellent cash flow prospects to distressed buyers. About two month ago, my firm was contacted to sell 4 hotels in the UK managed by the Hilton Hotels Brand with an average 7%-8% net yield.
The 2010 outlook for some hotels owners appear to be bleaked. Many hoteliers, particularly the high end brands who have been adversely affected by the fall in Business travellers’ booking, new green legislation and price competition from budget hotels will need to rethink their product offering in order to survive. Those entering the market today acquiring distressed hotel properties at substantial discounts have a few years of growth ahead of them. Some of the big players with deep pockets who are currently buying distressed hotels includes, firms like, Phoenix based Warnick & Co, Denver based Amstar Group and Saudia Arabia Kingdom Hotel investment company owned by Prince Atwaldin Bin Talal, to name a few.
However, there are billions of distressed CRE assets floating around today and although western Governments have used asset protection policies to control and limit the flood of distressed CRE assets coming onto the market, particularly, those in the hand of commercial Banks, it is only a matter of time before there is an over supply of such properties. At the end of the day, owners of distressed hotels will have to “innovate to generate” substantial inward cash flow.
Thursday, 1 April 2010
Subscribe to:
Comments (Atom)