Balfour Beatty, the international infrastructure group, announces today that it has reached financial close for the £46 million NHS Ayrshire & Arran Acute Mental Health and Community Development project.

Located on a 6.5 hectare site at Ayrshire Central Hospital in Irvine, the new integrated mental health and community development will bring together a comprehensive range of outpatient and in-patient facilities. The development includes 206 single en-suite bedrooms, in a primarily single storey building, covering a total floor area of circa 16,000m2. When complete the project will achieve a BREEAM Very Good rating.

 

The project is being funded using the Scottish Government’s Non-Profit Distributing (NPD) Model. The NHS Ayrshire & Arran Acute Mental Health and Community development project has been the fastest NPD project of the current tranche of NPD projects to achieve financial close.

 

Balfour Beatty will finance, design and construct the project and operate the concession for 25 years. Construction work will commence in July 2014, with the new facility expected to be operational in summer 2016.

 

Derek Lindsay, NHS Ayrshire & Arran’s Director for Finance and Senior Responsible Officer for the project, said: “Having the right facilities in the right place is important to the people of Ayrshire and Arran so I am delighted work will start next month. During the process of reaching financial close we have worked closely with Balfour Beatty and we are confident that together we will deliver the best facility possible.”

 

Balfour Beatty Investments’ Scotland Director, Stephen Gordon said: “We are delighted to bring this project to financial close, enabling construction to get underway. Balfour Beatty has extensive experience in the PPP health sector and we look forward to working with NHS Ayrshire & Arran to provide a high-quality healthcare facility for the local community.”

 

Balfour Beatty’s US construction business awarded $156 million design and build contract for National Science Foundation

Balfour Beatty announces today that it has been selected to provide design and build services valued at US$156 million (£93 million) to construct a prestigious new headquarters in Arlington, Virginia, USA, for the National Science Foundation.

 

The National Science Foundation is an independent federal agency that promotes the progress of science, and funds scientific, mathematical and computer science research conducted by colleges and universities across the US.

 

The Class-A office and retail building in the city of Alexandria has been commissioned by Lowes Enterprises Real Estate Group on behalf of the Foundation. It will consist of two adjoined towers of 14 and 19 storeys and will include ground floor retail space with three levels of below-ground parking. Construction is scheduled to complete in 2017.

Executive Chairman Steve Marshall said: “This appointment is further evidence of a recovering market in the US where we have a good pipeline of work and opportunities. Last year we streamlined the US construction business and established a national capability centre to share best practice to help us maximise opportunities such as this. We look forward to constructing a world class building for the National Science Foundation.”

Middleast investors may spend $180bn on real estate in next 10 years

Jun 17, 2014 REIDIN.COM – Daily Dubai

 

Middle Eastern investors are expected to spend $180 billion in commercial real estate markets outside of their own region over the next decade, according to CBRE, a global property advisor.

The major increase in flows of Middle Eastern capital into global markets is emerging from the extraordinary mismatch between the lack of institutional real estate in domestic markets and the huge spending power concentrated in the region.

Europe is the preferred target with 80 per cent of the $180 billion (around $145 billion) targeted for the region over the next 10 years.

Close to $85 billion will flow into the UK, with $60 billion directed at continental Europe. France, Germany, Italy and Spain are among the key target markets.

Global real estate markets have seen significant inflow of Middle Eastern capital with $45 billion invested between 2007 and the end of 2013 – seven times the reported activity in its home market. With $20 billion invested outside their home region in commercial property in the last two years alone – there is strong evidence that Middle Eastern players are increasing their interest and investment allocations to direct real estate.

Middle East Sovereign Wealth Funds (SWFs) are now among the world’s largest and most influential sources of capital, accounting for 35 per cent of SWFs Assets Under Management (AUM) globally. When compared to Western and Asian SWFs, these funds currently allocate the smallest share (9 per cent of total portfolio) to alternative assets.

A further increase in allocation by Middle East SWFs, even by a small fraction, represents an extremely large amount of capital that would have a significant impact on the global commercial real estate market.

The average target allocation to real estate by global SWFs is 7.9 per cent. Applying this to the $2.2 trillion in AUM held by Middle Eastern SWFs gives a total close to $175 billion. CBRE has explored a range of scenarios, including faster and slower growth of AUM by SWFs; a conservative estimate puts investment in global real estate by Middle Eastern SWFs at $130-140 billion over the next decade.

Taking this figure with the expected spending of private Middle Eastern investors, as well as property companies and developers, equates to around $180 billion that will flow cross-border and into global markets over the next ten years.

Nick Maclean, Managing Director, CBRE Middle East, said: “The ‘buy and hold’ strategy adopted by many Middle Eastern investors within their home region and the resultant lack of deal flow opportunities leaves much unsatisfied demand here. Coupled with increased confidence in global markets and the need for diversification, overseas investment has grown strongly. This trend is set to continue and with new sources of Middle Eastern capital, particularly from Saudi, set to enter the market over the next couple of years, the demand for real estate is increasing strongly.

“Since the Global Financial Crisis, SWFs from the Middle East have become one of the most significant sources of capital in the global real estate landscape. The demand from these institutions has evolved during the last few years into a sophisticated source of liquidity for many of the mature real estate markets around the world.”

Close to 90 per cent of all Middle Eastern commercial real estate investment outside of the home region in 2013 was in Europe. This is in sharp contrast to Asian capital that has become increasingly diverse geographically in the last 18 months. While there will be an increase in allocations towards the Americas and Asia Pacific regions, the majority (80 per cent) of direct Middle Eastern investment will target Europe as it offers diversification, cultural acceptance, high liquidity and market transparency.

Around $85 billion of the total allocation will be invested in the UK, with continental Europe expected to receive $60 billion – almost five times the level of direct investment by Middle Eastern investors in the previous decade. Germany and Italy are key targets with Spain, particularly the hotel sector, now a strategic destination.

France has developed close ties with Middle Eastern investors in recent years and offers a vast choice of trophy assets, so will continue to attract strong demand for core product and sectors.

Jonathan Hull, Managing Director, EMEA Capital Markets, CBRE, said: “The vast majority of Middle Eastern investors are long-term players looking for wealth preservation and strong high income-producing assets, rather than opportunistic investors playing the cycle for short-term gains.

This strategy favours prime buildings in core markets and often very large lot sizes. Offices feature heavily in their acquisitions, while in the last couple of years there has been greater interest shown in retail, as illustrated by a string of high street acquisitions in London and Paris, as well as provincial cities in the UK and France. Interest in hotels is also noticeable and extends from a historic interest in the hospitality sector in home markets.”

While some increase in interest towards the Americas is expected, the need for Middle East investors to diversify away from US dollar-dominated investments will counteract the fundamental attractiveness of real estate as an asset choice.

CBRE estimates that about 10 per cent of the capital (around $18 billion) will flow into the region. This represents an average annual investment of around $1.8 billion, notably above the $1.2 billion invested in 2013, which in itself was relatively high by recent standards.

The diversification benefits that the Asia Pacific region offers could lead to a change in strategy for Middle Eastern investors. The number of deals completed in the region has been on the increase, but how quickly that interest will crystalize into a more robust pace of acquisitions, rather than a small number of large asset deals, remains to be seen.

CBRE expects that the remaining 10 per cent of the $180 billion will be intended for allocation towards Asia Pacific.

Source: www.emirates247.com

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Accor acquires 97 hotels in Europe for €900 mln

May 27, 2014

REIDIN NL.com

Accor announced that its HotelInvest business has agreed to purchase two real-estate portfolios representing 86 and 11 hotels respectively (12,838 rooms) for a total consideration of about €900 million. “These transactions send a strong signal of our capability to rapidly implement the strategy of restructuring the HotelInvest portfolio,” said Sébastien Bazin, Chairman and Chief Executive Officer of Accor. “They are fully aligned with our selective asset acquisition criteria: hotels located in key European cities and delivering excellent operating performance in our most profitable market segments”.

The first portfolio, representing 86 hotels and 11,286 rooms across Germany (67 hotels) and the Netherlands (19 hotels) has been operated by Accor since 2007 under variable-rent leases and the following brands: ibis (29 hotels), ibis budget (31 hotels), Mercure (17 hotels) and Novotel (9 hotels). The total consideration for this acquisition is €722 million. The sellers are two funds, Moor Park Fund I and II, advised by Moor Park Capital Partners, a pan-European real estate private equity investment advisory business.

Besides, Accor has entered into exclusive negotiations with Axa Real Estate for a second portfolio representing 11 hotels and 1,592 rooms in Switzerland. This portfolio has been operated by Accor since 2008 under variable-rent leases and the following brands: ibis (5 hotels), ibis budget (2 hotels), Novotel (3 hotels) and MGallery (1 hotel).

Both acquisitions will be accretive to Accor’s EBIT in 2014. Based on pro forma 2013 figures, the relative contribution of owned hotels to HotelInvest’s net operating income will increase by around fourteen points to 68%. One of the key objectives for HotelInvest, the leading hotel investor in Europe, is to raise this proportion to more than 75% over the medium term.

Source: Accor

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UAE to build 28,000 new hotel rooms by 2016

Jun 02, 2014

REIDIN NL.COM

The overall UAE tourism and hospitality market is expected to witness positive and stable growth rates for the next three to five years supported by over 28,000 new hotel rooms that are expected to be built in the emirates by 2016, said a report.

Dubai and Abu Dhabi are spearheading the hotel rooms construction activity in the emirates comprising almost 50 and 31 per cent of the development pipeline, respectively, stated JLL Hotels & Hospitality Group in its latest Hotel Intelligence Reports for the UAE and Abu Dhabi.

The impact of increased visitor arrivals to the UAE was reflected in improved performance of city hotels as well as resort locations. Of the UAE’s 590 hotels totalling more than 93,000 rooms, Dubai and Abu Dhabi account for 86 per cent of current hotel supply in the country.

International operators control about 68 per cent of the total hotel room inventory and the majority of supply is concentrated in the upscale (4 and 5 star) segment.

According to JLL, Dubai remains the market leader by trading performance and tourist arrivals, where successful growth strategies to diversify the tourism demand base have enhanced its image as a premium global tourism destination.

The city is expected to continue on its sustainable growth path with a balanced demand and supply dynamic in the short to medium-term, said the property expert in its report.

JLL pointed out that the UAE capital had witnessed selective recovery in hotel performance across the city. As Abu Dhabi’s tourism and leisure offerings develop, the hospitality sector is poised to witness growth in the medium to long term, it stated.

Abu Dhabi’s hotel demand has been driven by strong performance in the corporate and MICE segments, but the Abu Dhabi Tourism and Culture Authority (ADTCA) has increasingly focused on developing the emirate as a leading destination for leisure tourism.

According to JLL, the number of tourists in the emirate has increased gradually since 2004, from less than one million to approximately 2.8 million total visitors in 2013. The larger tourist numbers, along with an average length of stay of 3.13 nights, resulted in almost 5.31 million guest nights in 2013.

The Northern Emirates, in particular Ras Al Khaimah and Fujairah, have emerged as key getaway destinations registering rapid growth in tourist arrivals. Continued marketing efforts and completion of master-planned projects in these emirates will be key drivers to establish their position as a tourist destination.

Chiheb Ben-Mahmoud, the executive VP (Head of Hotels & Hospitality Group) Middle East & Africa at JLL, said: “The synergies in strategies between key drivers, such as airlines, travel sectors underpin the increasing popularity of the UAE as a tourist destination.”

Such synergies, he noted, are executed in attracting new markets, by way of destination marketing by tourism authorities, coupled with introducing direct air connections to the those markets.

“There has been an increase in hotel development activity over the last two years due to the encouraging signs in the tourism sector and wider economy. With increased investor confidence, older projects have been revived and new projects announced with international operators constantly trying to increase their hotel footprint in the UAE,” he added.

Source: www.tradearabia.com

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Balfour Beatty, the international infrastructure group, announces the disposal of its 50% interest in the University Hospital of North Durham PPP project (“Durham”) and its 100% interest in the Knowsley Building Schools for the Future (BSF) project (“Knowsley”) for a total consideration of £97 million, generating total gains on disposal of £51 million. The proceeds from these transactions exceed the Directors’ valuations by £44 million, representing an uplift of 82%.

These transactions are in line with Balfour Beatty’s strategy to recycle equity invested in its portfolio, and further demonstrate the quality of the investment portfolio and its ability to generate value for shareholders. The proceeds will be used to invest in new and existing projects, in areas that align with the Group’s target geographies and market sectors.

 

The sale of Knowsley for £42 million is unconditional and is expected to complete shortly. The sale of Durham for £55 million remains subject to the right of the co-shareholder to exercise its rights of pre-emption at the proposed sale price, with completion expected to occur by mid-July. Both assets are being acquired by funds managed by Dalmore Capital Limited, with consideration to be paid in cash in full on completion of each transaction.

 

Commenting today, Balfour Beatty Executive Chairman, Steve Marshall, said: “These disposals are in line with our strategy to generate income from our Infrastructure Investments business through disposals, thereby releasing cash for future investments and delivering value for our shareholders. The transactions demonstrate the quality and liquidity of our portfolio, and show again a substantial premium to the Directors’ valuation.”