. Fibra Inn Signs Binding Agreement to Acquire Its First Hotel in Mexico City
Fibra Inn, a Mexican real estate investment trust specializing in the hotel industry serving the business traveler, announced the signing of a binding agreement to purchase the Holiday InnMexico Coyoacan hotel.
The purchase price of this hotel is Ps. 468 million ($35 million), plus Ps.46.6 million in taxes and acquisition expenses. The price includes a 1,500 m2 lot, which is utilized for customer parking for groups and events arriving via bus; these rooms may be used for future room expansion. This acquisition will be paid in cash from proceeds derived from the initial public offering that took place on March 13, 2013 and has a stabilized cap rate of 9.5% calculated based on the amount of the total investment including acquisition expenses.
The Technical Committee approved this acquisition on August 29, 2013, which will represent 12% of the value Fibra’s portfolio. In accordance with Fibra Inn’s by-laws, the Technical Committee must approve acquisitions exceeding 5% of the total equity value, while the Shareholders’ Meeting must approve acquisitions that exceed 20%.
The Holiday Inn Mexico Coyoacan is Fibra Inn’s first hotel in Mexico City, which will increase its diversification and national presence. The hotel is located in Calzada de Tlalpan and has a steady client base from the government sector with a high demand for rooms and event space. There is potential growth stemming from demand in the southern portion of the city from companies within the television, laboratory, hospital and financial sectors. Fibra Inn has a sales office in Mexico City with a solid client base to strengthen its position at this hotel.
The Holiday Inn Mexico Coyoacan is a full-service hotel with 214 rooms. It has ample capacity to meet the high demand for event services with 11 conference rooms, as well as guest rooms that can be converted into event rooms in order to accommodate up to 1,800 people. It is located 20 minutes from the Mexico City International Airport, 5 minutes from Coyoacan and 15 minutes from downtown Mexico City. During 2012, the occupancy rate was 65%, ADR was Ps. 1,002 and the RevPar was Ps. 652. Of 2012 total hotel revenue, 43% corresponded to revenue from event room rentals and 6% from sales of food and beverage revenue; in addition to room revenue.
This hotel will be operated by Fibra Inn’s Hotel Operator. With this acquisition, Fibra Inn owns 18 hotels with a total of 3,336 rooms, 300 of which are under construction.
Photo: Diego Delso. Loomis Sayles Welcomes New Head of Emerging Markets
Loomis, Sayles & Company announced that Peter Marber has joined the company as head of emerging markets investments. Peter’s responsibilities will encompass emerging markets fixed income and equity investing. He will report to Jae Park, chief investment officer.
Peter joins Loomis Sayles from HSBC Global Asset Management. He held several roles during his tenure within HSBC’s emerging markets group including chief business strategist, global head of emerging markets debt, and portfolio manager. Prior to its acquisition by HSBC in 2005, Peter was founding partner, senior portfolio manager and chief investment strategist for The Atlantic Advisors. Peter was also president of the emerging markets subsidiaries at Dresdner Kleinwort (formerly Wasserstein Perella) and he began his career at UBS. He has been a faculty member at Columbia University since 1993, teaching at the Business School and School of International and Public Affairs, and has also taught at John Hopkins and Universidad Francisco Marroquin in Guatemala City, Guatemala.
Peter assumes leadership in an emerging markets product team that includes portfolio managers David Rolley, Eddy Sternberg and Peter Frick, and emerging markets senior credit strategist Elisabeth Colleran. The team is supported by over a dozen emerging markets specialists who work within Loomis Sayles trading or sovereign, credit, equity and quantitative research groups.
“As emerging markets have grown in importance we have continued to add investment professionals focused in this area. Peter’s depth of experience and expertise will help ensure we bring the full power of our firm’s resources to bear in identifying emerging markets investment opportunities for our clients’ portfolios,” said Jae Park.
Loomis Sayles has recently added four key EM resources, including Bianca Taylor, emerging markets senior sovereign analyst; Celeste Tay, Asia sovereign analyst; Li Ping Yeo, Asia senior credit analyst; Nada Oulidi, emerging markets senior bank analyst.
Foto cedidaMike Kerley, PM of Henderson Horizon Asian Dividend Income Fund. Is the Yield Trade Over?
The US Federal Reserve’s plan to gradually reduce its bond-buying programme, combined with a significant move higher in US 10-year treasury yields, has prompted investors to rethink allocations based on low growth, low interest rates and high liquidity. This has led to increased volatility across a number of asset classes, including Asian equities, which have fully participated in the downturn. Is this the first indication that the yield trade has run its course?
The sell-off in US treasuries has been understandable but the case is less clear for equities. Although the valuations of equities are impacted by expectations of long-term interest rates, the attraction for most income seekers is the comparison of dividend yield with the rates available for cash on deposit. Comments made recently by Ben Bernanke suggest that short-term interest rates are likely to remain low for some time, given the still weak (but improving job market) and low inflation and as a result the appeal of dividend yield over cash is still very much in place.
Asia also offers some distinct advantages over other equity income strategies. With the yield from some traditional sources compressed to unattractive levels, we believe that dividend growth will become an increasingly important driver for income strategies. Underlying economic growth is expected to remain robust, especially compared to the anaemic recoveries seen in most western economies. This should provide superior earnings growth and hence higher dividend growth over time. The structural argument is even more compelling. Asian companies have changed in the last 10 years and now share similar characteristics to their western peers. Capital expenditure is more rational and as a result cash generation compares favourably with companies in the US and Europe. This excess cash has been used to pay down debt and now many companies sit with net cash on their balance sheets. In the years to come we expect more and more shareholder enhancing announcements such as special dividends, share buybacks, and capital reductions. Most importantly, we think regular dividend distributions will rise because pay-out ratios (the percentage of net profit paid out as dividend) are at record lows.
The chart below shows how dividends across Asia have failed to track earnings over the last three years as companies have been reluctant to increase dividend distributions in a volatile period. This illustrates how immature the dividend theme is in the region but it is encouraging to see the number of companies that have raised dividends in the last nine months given a more benign global environment. With companies continuing to accumulate cash we believe this more positive trend will continue and the gap between earnings and dividends will close. We would not be surprised to see dividend growth outstrip earnings growth in Asia over the next five years.
Source: Bloomberg, Monthly data rebased to 100 from 29.07.05 to 31.07.13.
In addition to the changes in the corporate sector, we believe government policy and increased maturity will drive structural demand for yield. Asian consumers currently hold significant levels of cash, mainly held in bank accounts on deposit. As the penetration of financial services such as insurance and wealth management increases over time and government initiatives improve the social safety net, the need to hold cash will recede. As this money gradually finds its way to more sophisticated savings vehicles, the need for yielding assets will increase significantly.
In summary, we believe the recent weakness in Asian markets is an opportunity to acquire the region at valuations that look compelling compared to history and relative to other equity markets. The positive story for Asian income remains in place both from a cyclical and structural standpoint. Short-term interest rates are likely to stay low for some time ensuring that the premium of dividend yield over cash rates remains attractive. The yield trade is not over, it’s just cheaper than it was!!!
Mike Kerley is manager of the Henderson Horizon Asian Dividend Income Fund
Driehaus Capital Management announces the launch of the Driehaus Event Driven Fund as of August 26, 2013. A new liquid alternative offering, the mutual fund seeks low correlations to major asset classes while providing lower volatility than the S&P 500 Index with superior risk-adjusted returns.
The fund will be managed by K.C. Nelson, who leads the Driehaus Long/Short Credit Team. Mr. Nelson and his team currently manage distinct event-driven trading strategies in their long/short credit funds. According to Mr. Nelson, “We have found that event-driven trades often exist because of the complexity of the capital structure, the nontraditional nature of the investment opportunities, or the unwillingness of investors to participate in trades with binary outcomes. We believe this creates opportunities for positive asymmetric returns with low correlations to the equity and credit markets.”
Trades within the Driehaus Event Driven Fund will have a defined catalyst that will unlock the value of the trade in the near to intermediate term. “By combining the credit, equity and derivatives resources across our firm, we’ll identify opportunities globally to source mispricings in long, short and arbitrage trades based on hard catalysts, such as product launches, earnings releases, restructurings, and corporate actions,” said Mr. Nelson.
While the event-driven space has been a significant segment of the alternatives universe for more than two decades, relatively few liquid alternative event-driven funds are available to investors. “We believe investors will appreciate access to a liquid and transparent vehicle for a strategy that offers a differentiated market exposure,” said Rob Gordon, President and CEO of Driehaus. “We also expect investors to take comfort knowing that the fund is offered by a firm that has proven itself in the liquid alternative space and is managed by a team with significant experience with event-driven trades.”
BBVA Compass announced thatGabriel SanchezIniesta has been named its new chief information officer following Sergio Fidalgo’s appointment as Spain-based head of Applications & Architecture for BBVA Group.
Until now, Sanchez Iniesta served as BBVA Group’s Multichannel Technologies director. A native of Madrid, he was responsible for developing the multichannel architecture BBVA developed in many countries across its global footprint and the core banking platform it currently uses in Spain. He came to BBVA Group in 1997 following several years with Accenture.
Fidalgo, who was in charge of BBVA Compass’ Technology and Support Services unit for five years, successfully led a major transformation of the bank’s legacy technology into a core banking platform that enables real-time transactions. American Banker called it an “epic” project and “one of the largest bank core overhauls in the U.S.,” while one analyst told the Houston Business Journal it had the makings of a “game changer” for the banking industry.
Sanchez Iniesta inherits that ground-breaking platform and is well-positioned to lead the next phase of the bank’s technology growth, which will focus on multichannel banking, said BBVA Compass President and CEO Manolo Sanchez.
Wikimedia Commons. James Boyne deja su puesto de COO en Calamos Investments por la filantropía
Calamos Investments, announced the planned departure of James Boyne, President and Chief Operating Officer, effective September 30, 2013. Until that time, Mr. Boyne will act in an advisory role and assist the company in the orderly transition of his duties and responsibilities.
Boyne joined Calamos Investments in April 2008 and served in a number of executive positions since then. He has decided to pursue a leadership position in the non-profit sector, focusing on the betterment of children and young adults. Boyne and his family will be relocating to Steamboat Springs, Colorado.
“I appreciate Jim’s leadership during his tenure at the firm and wish the best to him and his family,” said John P. Calamos Sr., Chairman, Chief Executive Officer and Global Co-Chief Investment Officer.
The firm does not plan to replace the role of President and COO, and Boyne’s responsibilities will be assumed by other senior leaders at Calamos, including the firm’s Executive and Operating Committees.
Foto cedidaBen Wallace & Luke Newman de Henderson. Seeing Things in absolutes
Fear and greed have been powerful motivators over the past few years, with investors gripped in turn by panic about the health of the global economy and optimism that central banks have done enough to promote growth. From concerns about the burden of government debt in the western world, to the US ‘fiscal cliff’ leading up to the start of 2013, whichever way the pendulum has swung, investors have followed.
The past few months, however, have seen the steady emergence of a different trend. We first saw it at the start of 2012, when stocks were pricing almost entirely on market sentiment. At that time, the importance of economic newsflow far outweighed the detail of individual stocks. Since then, share pricing correlations have steadily fallen and the dominant macro-economic themes that have driven investors to buy or sell over the past few years are no longer overshadowing stock-specific drivers to quite the same degree.
Source: Bloomberg, CBOE S&P500 Implied Correlation Index (indicating the expected average correlation of price returns of the stocks that comprise the S&P500 Index), as at 7 August 2013
A market where prices move in tandem, such as we saw in the period prior to 2012, limits the opportunities for stock-pickers like us to generate active returns. The lower the correlation in share price movements, the greater the opportunity to find stocks capable of generating higher or lower returns than the market average. This gives room for independent stock characteristics to play a bigger role, providing more opportunities to generate profits from long and short stock-picking ideas.
It can be something of a challenge to overcome some investors’ ingrained preference for bond funds, particularly for those who lost money in the post-Lehman Brothers crash (15 September, incidentally, marks the five-year anniversary of when the company filed for bankruptcy). Bond markets have come under abnormal and sustained pressure in recent months, however, as markets consider the implications of the US Federal Reserve’s plan to start pulling back on its $85 billion per month bond-buying programme.
This has left investors looking for other options for their money in a low growth, low interest rate world. Absolute return funds, which are generally considered to sit somewhere between a bond fund and an equities fund in terms of potential risk are, in our opinion, an attractive halfway house.
For our Absolute Return strategies, the long and short books are equally important and, as always, the key is getting the right mix of holdings. It is an intrinsic part of our management style to be very proactive in scaling positions on the fund. The portfolio is divided into our core long book and a tactical short book, which allows us to move quickly when responding to market events, or when looking to exploit what is a diverse investment universe. Our willingness to utilise this flexibility to adjust the net and gross position has enabled us to generate consistent positive returns, while helping to preserve capital and minimise volatility.
January 2013 marked the first time in some years that we moved the gross exposure above 100%, a statement of confidence that it was a sensible time to put investors’ capital to work. At the time we took some material long positions to more defensive areas of the market that displayed very safe and secure dividend-paying characteristics, such as HSBC and Vodafone. HSBC in particular seemed very well positioned, with a recent dividend increase suggesting that future earnings might be quite good.
Financials has been quite a busy area for us in 2013, across both long and short books, given the sector’s sensitivity to economic data and monetary policy. Central banks have taken extraordinary measures in the past couple of years, directing the risk-free rate to help restore confidence in the economy and to make other asset classes more attractive. While we would not ordinarily choose to go long in miners, a number of resources stocks also seem unduly out of favour, given management changes and improvements in capital expenditure.
The fall in share pricing correlations hopefully marks an end to what has been a lingering hangover from the financial crisis, at least for the time being. In a perfectly efficient market, all investment decisions would be based on rational and measurable factors, with share price volatility driven primarily by the fundamentals of individual companies. Markets certainly aren’t perfect, but in this environment, we believe that an actively managed long/short strategy with an absolute return focus can play an important role for cautious investors.
Vincent Oswald, cofundador de Azure Partners. (Foto cedida por Azure. Los fondos de fondos de microfinanzas, “una inversión de atractivos retornos”
Azure Partners’ team offers one of the longest track record investing in microfinance and combines a total of 24 years of direct microfinance field experience combined with solid entrepreneurial background. For the co-founders of Azure Partners, Jack Lowe and Vincent Oswald, launching funds of funds was a natural step after managing the largest microfinance debt fund at BlueOrchard Finance from 2004 to 2008.
As explained byOswald, in an interview with Funds Society, microfinance provide an excellent investment case:
De-correlated investment
Stable returns and low volatility
Fast growing markets
Access to the real and informal economy
Vast social impact
Azure Partners, a swiss based investment advisor specialized in microfinance, advises two microfinance funds of funds:
– Azure Global Microfinance Fund (AGMF) is the first fund of funds managed by professional from the microfinance investment industry. It offers a diversified exposure to different investment funds with specific microfinance strategies, from traditional debt funds, to balanced debt and private equity funds, to Private Equity funds.
– Azure Microfinance Private Equity Fund (AMPEF) which aims to focus on investing in strong locally managed microfinance Private Equity funds focused on specific countries or regions with a hands on approach. The fund will combine 20% co-investments with 30% secondary purchases and 50% primary funds to deliver strong returns to our investors.
Respect to its investment process, Oswald said that they have a 5 steps investment process. “In comparison to more traditional fund of funds, we also conduct Due Diligence of underlying Microfinance Institutions in our portfolio, especially for Private Equity funds. This is a key part of our analysis and a clear added value to the decision process”.
Asked if the fund has a charitable side, the co-founder of Azure reply that investing in microfinance has a vast impact. “By its activity and type of clients, Microfinance generates an impact for millions of micro-entrepreneurs in the countries where we invest in”.
“We do not see the fund as charitable, as it delivers a credible financial return to its investors. However, we pay high attention to our investments social impact. Therefore, we developed our own Social Performance rating to analyze the funds we invest in and include it in our investment decision process”.
He also explained that they have atop-down / bottom-up approach in selecting their investment opportunities. “Usually, debt funds offer a worldwide exposure to microfinance markets and we focus in choosing the best one for the fund”.
He added that regarding the regional and private equity funds, they perform region and country analysis in order to chose the country, which will fit the investment allocation and diversification requirement of the funds. “We will then look for opportunities in these regions/countries. The fund managers looking for investors in their funds also directly contact us”.
Oswald explained that their fund is focus on microfinance activity only and in that sense, is very sector focus. Each product they advise has its own specific regional, country and single fund exposure limits.
At the end of June, AGMF had 6 investments positions, presenting indirect access to 169 Microfinance Institutions in 48 countries, providing financial services to more than 670.000 micro-entrepreneurs in the world. “For AMPEF, we are in fund raising mode and we plan to make 10 to 15 investments”.
In terms of sales policy, “for AGMF we use a combination of banking platforms (large banks promoting our fund to their clientele) and fundraising companies with a geographic focus. For AMPEF, we have signed a number of fundraising agreements also with geographical focus. We obviously also use our personal networks acquired through our years of activity in the investment world but we do not internalize investor relations or fundraising”.
AGMF has currently more than $6M of AuM and is expected to reach over $20 million by the end of the year. For AMPEF they are looking to raise $100 million in the course of two years.
Oswald believes that compared to other similar funds, “the funds of funds in microfinance offers a differentiated investment strategy to deliver attractive returns while managing the risk efficiently. It provides an active regional and country allocation, an exclusive access to secondary opportunities, access to smaller more innovative funds, access to regional funds, access to opportunities dedicated only to microfinance investors. In that sense, it’s an ideal product for an investor seeking a global exposure to the microfinance investment universe”.
They invest only in funds, holdings or SPVs. They do not do direct investments into Microfinance Institutions except co-investments. The YTD performance of AGMF is 0.92%, which represents 2.21% annualized. The back tested performance presents a 5% – 6% net return in USD once the fund will reach its target size. For AMPEF they are targeting a relatively net return to investors.
Despite the crisis, international fund management companies have grown almost continuously within the Spanish market in recent years. With the exception of some periods in which their assets have fallen (as was the case in early 2012), collective investment institutions of foreign companies which are available for sale in Spain have doubled their assets under management in a period of three years. As Inverco’s latest estimates indicate, the assets of foreign CIIs in Spain would be around Euro 60 billion ($80 billion) as at the end of June. This figure doubles the Euro 30 billion estimated by Inverco in late 2009.
Inverco, which performs its estimates with the data from the CII’s from which it receives information (in this case, extrapolating data from 24 fund management companies with Euro 45.5 billion in assets under management, which are approximately 75% of the total), estimates that figure as the amount traded in assets amongst all domestic customers, both retail and institutional. The data shows an increase of 13.2%, a total of Euro 7 billion, in the first half of the year. The capital gain is comparable to that managed by national fund managers, which, according to Inverco and Ahorro Corporación, during the first half of the year saw asset gains of almost Euro 10.6 billion, i.e. around an 8.5% growth.
A 30% share
Inverco estimates that the total CII assets marketed in Spain, both national and international, would be close to Euro 200 billion (137.5 billion managed by domestic companies, and 60 billion by foreign ones, according to data as at the end of July). According to this information, foreign managers have achieved close to a 30% share of the Spanish market, the highest in history. That figure would be lower when using data from the CNMV ( National Securities Market Commission), which takes into account all fund management companies; according to its latest available data, as at the end of March 2013, the securities supervisor estimates the assets managed by international asset management companies at 44.5 billion. Even so, foreign CIIs would have a weight in the industry of around 20%, which is four times higher than the March 2009 share (7%). And the money keeps rolling into them: in total, the amount of net subscriptions to foreign collective investment schemes which facilitate their data to Inverco stood at Euro 2.9 billion in the second quarter of 2013.
Diversification and product offers
According to experts, this trend of capital raising and growth is due to several factors, including the smaller business volume of international institutions in Spain, which allows them greater potential for growth, and the strong commitment which private banks have made since last year to international funds domiciled in for example, Luxembourg, as a way of diversifying against the risk of peripheral countries.
The gradual return of investors to mutual funds, encouraged by the improvement of the economic situation but also by the decision by the Bank of Spain of penalizing “extratipados” (extra high interest rate) deposits earlier this year, also explains the positive dynamics of international, as well as of the domestic CIIs. The fund management companies surveyed also point out the innovative supply of products, which is in line with market developments. By type of products, the fall of extratipos on deposits and on the Spanish risk premium has led investors towards absolute return funds or actively managed fixed income as the great alternative, as well as towards those which distribute income and dividends. Those institutions which are active in such funds, such as Deutsche Asset & Wealth Management, JP Morgan AM or Swiss & Global AM, are amongst those which are attracting more deposits (see table).
The leading management company in terms of new deposits was BlackRock, with Euro 885 million. “These results demonstrate the strength of our global platform which allows us to offer innovative solutions in any asset class, in any investment style or in any geographical region. Such flows also reflect greater investor confidence in the recovery of the global economy”, says Armando Senra, CEO of the aforementioned management company in Latin America and the Iberian Peninsula.
Trend Continuity
The question which follows the semester’s figures is whether this rate of growth in foreign CIIs marketed in Spain can be maintained. Some market sources believe that it will not remain the same in the coming months, due to the mark left by the falls in emerging market bond funds which had been set up as an alternative to conservative funds, and which will cause further rejection by investors in the coming months. Thus, some experts talk of a slowdown in inflows from here to the end of year, but are more optimistic regarding their evolution in the long term. “It is important for the industry to grow as a whole, both the domestic and international fund management companies, to avoid cannibalization preventing the sustainable growth of companies,” says an expert.
INTERNATIONAL ASSET MANAGERS WITH MORE INFLOWS IN SPAIN. Second Quarter 2013
Asset Manager
Net inflows (Euro million)
BlackRock Investment
885
Franklin Templeton Investments
716
JP Morgan AM
422
Swiss & Global AM
257
Deutsche Asset & Wealth Management
239
Source: Inverco. Estimates for June 30th, with data from 24 asset managers with Euro 45.5 billion in AUMs.
Wikimedia CommonsPhoto: Ikiwaner. The Effects of Rising Bond Yields on Markets
Investor risk appetite is getting depressed by the renewed rise in treasury yields in developed markets. In contrast to the correction in May/June, credit and commodity markets are holding up well. Real estate equities are having a hard time, while emerging market assets continue to struggle.
In this enviroment, ING Invesment Management scaled back their position in global real estate to neutral. Rising (real) interest rates in developed markets weigh relatively heavily on real estate equities as funding costs increase for this more leveraged asset class.
Real estate is very sensitive to the rise in treasury yields
Correction in equities, real estate and emerging markets
The renewed rise in government bond yields of developed markets has clearly started to weigh on investor risk appetite. With 10-year treasury yields in the US, UK and Germany increasing by 20 to 30 basis points in the past two weeks, especially equity and real estate markets have started to correct. The most probable reasons behind this are fears of an erosion of growth prospects and higher funding costs.
Also, emerging market (EM) assets have seen another round of downward pressure as higher US treasury yields further increased the risk of intensifying capital outflows. Especially emerging market currencies suffered last week, but also EM debt and equity markets underperformed their global peers.
Notable differences compared to last correction
At first sight, these dynamics look similar to the market evolution that occurred in late May and June. Some interesting differences are also visible below the surface, however. Most notable is the substantially higher resilience that is seen in credit and commodity markets. Both have hardly lost performance over the past two weeks, while they fell significantly during the May-June correction. Also, cyclical equity sectors are holding up quite well, while a notoriously “high beta” region like Europe is outperforming in equity space.
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