Principal Real Estate Income Fund Declares Monthly Distributions of $0.135 Per Share
Another newcomer, the Czech Republic-based PPF Group, has invested about 200 million so far and is planning additional investments, according to people familiar with the matter. The company is focusing on distressed office centers, such as a 140 million portfolio bought from France’s AXA Immoselect. AXA is trying to rebalance its Dutch portfolio by selling some assets and investing in more appealing opportunities such as the 157 million Krasnapolsky Hotel in Amsterdam, says Alphons Spaninks, head of asset management for the Benelux and Nordic countries at AXA Real Estate. Meanwhile, Tishman Speyer Properties is close to buying an office building in Amsterdam for about 200 million, according to people familiar with the matter. Prices are even more attractive in second-tier markets. Yields of up to 10% can be found in Rotterdam, the Hague and Utrecht, according to Jan Willem Bastijn, head of Cushman & Wakefield’s capital-markets group. But experts also urge caution. There are a large number of obsolete office buildings sitting empty in suburban areas, many of them built with little regard for market conditions. Experts say most of these buildings have no future even at fire-sale prices. A running joke among Dutch real-estate experts is that “the Netherlands is not overbuilt, it is underdemolished.” Investor interest is picking up partly because the Dutch economy is stable compared with riskier European markets such as Spain and Italy. Credit-rating firms give a triple-A rating to the Netherlands, while its unemployment rate of 7% is below the European Union average of 10.9%, according to Eurostat. The increase in sales activity also is being fueled by the growing availability of debt financing for top-quality properties.
More real estate regulation is coming, says Dubai Land Department boss
This is not healthy and unnecessary. What we’re trying to maintain is a sustainable growth in the real estate sector over the coming five years.” What happens in Dubai’s volatile property market matters far beyond its borders; when a bubble burst in 2008-2010, pushing property prices down by more than 50 percent, the emirate came close to defaulting on its debt and financial markets across the world shuddered. As head of the Land Department, which regulates the property market and is involved in planning Dubai’s rapid growth, Sultan Butti is a key figure in efforts to avert another boom-and-bust cycle. Partly because of inflows of money from elsewhere in the Gulf, Dubai’s housing market is now rebounding strongly, with prices up over 20 percent in the last 12 months, according to analysts. The International Monetary Fund warned in July of the risk of another bubble forming. The latest official statistics suggest Dubai’s dependence on the real estate market – and therefore its vulnerability to any bubble – had not decreased. Sultan Butti said real estate transactions in Dubai had totalled AED195bn ($53.1bn) so far this year, up sharply from AED145bn in all of 2012. “The construction and real estate market now contribute to 24 percent of Dubai’s GDP (gross domestic product), and this percentage will see a slight growth this year.” But Sultan Butti, who was appointed to his post in 2006, said officials were alert to risks in the property market and taking a range of steps to reduce them. This week the United Arab Emirates central bank set limits on the size of mortgage loans for housing – although the caps were less stringent than originally planned, after commercial banks complained they could hurt business.
Nallathambi, president of CoreLogic, has been credited for overhauling the real estate information company into core segments to improve its productivity and build confidence among its clients, industry leaders and investors. At the MBAs 100th annual convention in Washington this week, E.J. Burke, chairman of the association, said this is a pivotal time in history for the real estate finance business. Reforms and challenges being discussed today will affect the next 100 years of the business, he said. A position paper by CoreLogic, which includes a Sept. 17 preface letter by Nallathambi, shows the chief executive has his hand on the market pulse. In it, he wrote the momentum behind the economic recovery will clearly hinge on the anticipated tapering of the Federal Reserves quantitative easing program. It portends additional interest rate hikes ahead. From May to September, interest rates have jumped by more than 100 basis points. Forecasters are predicting the rise in rates will cause overall origination volumes to contract as much as 50 percent. Other variables reshaping the landscape include cash sales reducing inventories and pushing up price, homebuilding starts and net-migration issues. Taken together, Nallathambi wrote: Successfully navigating through the transition in an ever-shifting regulatory market will require constant data crunching and a multi-dimensional view. QUALIFIED MORTGAGE One rule change thats getting talked up is the assessment lenders will need to make starting Jan. 10, 2014 on a borrowers ability to repay closed-end residential mortgage loans.
REAL ESTATE: CoreLogic’s Nallathambi joins 2014 Mortgage Bankers Association board
The trend accelerated after an economic slowdown resulting from the 2 1/2-year crisis in Syria next door, a drop in tourism from Gulf countries and political deadlock at home that has paralyzed the countrys institutions. The World Bank last week said it cut its forecast for economic growth this year to 1.5 percent from 2.3 percent. It said in a summary of its biannual Lebanon Economic Monitor that the Syrian conflict had so far cost the country an estimated $2.6 billion. Cumulative losses to economic activity might reach $7.5 billion by the end of next year, it said. Mountains On top of that, Lebanon is a quarter of the size of Switzerland , with mountainous areas not suitable for development and large parcels of land owned by religious establishments. Thats left a dearth of plots. There are very few plots left in the capital, according to Fares. Its normal in a capital city anywhere in the world not to have raw land to build on, he said. He estimates that more than half of Lebanons 10,452 square-kilometer area cannot be developed. Political and economic upheaval in the region has driven Gulf Arabs, Lebanese expatriates and Lebanese who want to upgrade their apartments or buy homes for their children to largely put their plans on hold.
Therefore, before investing you should carefully consider the risks that you assume when you invest in the Fund’s common shares. Securities backed by commercial real estate assets are subject to market risks similar to those of direct ownership of commercial real estate assets including, but not limited to, declines in the value of real estate, declines in rental or occupancy rates and risks related to general and local economic conditions. A portion of the distribution may be treated as paid from sources other than net income, including but not limited to shortterm capital gain, longterm capital gain and return of capital. The final determination of the source of all distributions, including the percentage of qualified dividend income, is made after yearend. Past performance is not guarantee of future results. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund. For more complete information about the Fund or to obtain a copy of the prospectus, call your financial professional, visit the Funds site at http://www.principalcef.com or call 855.838.9485. Please read the prospectus carefully before investing. The risks associated with this characteristic of closed-end investment companies may be greater for investors expecting to sell their shares in a relatively short period after completion of the initial public offering. NOT FDIC INSURED | May Lose Value | No Bank Guarantee The Fund is a closed-end fund and does not continuously issue shares for sale as open-end mutual funds do. Since the initial public offering, the Fund now trades in the secondary market. Investors wishing to buy or sell shares need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market’s value. ALPS Advisors, Inc. is the investment adviser to the Fund.