Valad Defies Economic Climate

Sydney Morning Herald

Saturday January 26, 2008

Carolyn Cummins Commercial Property Editor

THE diversified property group Valad has defied the economic climate by creating a $1.1 billion opportunity fund in Britain with the Bank of Scotland as a cornerstone investor.

Despite the turmoil in credit and equity markets, the group yesterday raised an initial #150 million ($340 million) in a ratio of about 60 per cent equity and 40 per cent debt from British institutions and the BOS, which it intends to invest in property in a range of sectors.

Valad's Peter Hurley, the executive chairman, based in London, said late last night that given the state of the British property market - which was hard hit in 2007 - the group would steer clear of residential investments.

"With the Bank of Scotland as an investor we are able to take advantage of any buying opportunities. In the UK it is more about the illiquidity of the vendor - in terms of forced sales and redemptions - and how our fund can take advantage of the opportunities," Mr Hurley said. "We are confident because the Bank of Scotland does not give substantial funds blind in such tumultuous times."

Under the latest deal, Valad and the bank have equity joint ventures in continental Europe with total acquisition capacity of $2.5 billion, that have executed acquisitions of over $1.8 billion in the past two years.

"This provides the fund with certainty in relation to the availability of debt, which allows us to more effectively execute our strategy of exploiting current market mispricings and enhancing the value of acquired assets," he said.

The fund has so far raised $340 million in debt and equity. It plans to raise further capital to reach its $1.1 billion target and has an equity internal rate of return of 15 per cent or more.

Last June Valad jumped into the big league of property players when it bought the European property investor Scarborough Property Group plc for $2 billion.

Goldman Sachs JBWere said recently that Valad remained one of the most active trusts on the boards.

Last week it sold some of its British properties for more than $73 million, generating a $13.7 million profit. These were located in in London, Dorking, Enfield and Kent.

The London property was sold for about $39.06 million to the Royal College of Paediatrics and Child Health following its refurbishment.

Valad's securities yesterday rose 9.5 cents to $1.21.

© 2008 Sydney Morning Herald

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