Industry Report Card: European Real Estate Companies Facing Uncertainty Over Rising Interest Rates Jan 07

Standard & Poors, January 2007

Abstract
Yield compression has continued across European real estate markets. A strong and sustained flow of public and institutional investment capital into commercial real estate and the low interest rates of recent years have bolstered property asset values. This has strengthened the balance sheets of rated European real estate companies, despite higher debt levels and relatively stable rental returns. This is because their portfolios are revalued at lower investment yields (capitalization rates). With interest rates now rising in Europe, however, some uncertainty has emerged about the near-term outlook for the performance of, and investor support for, real estate companies. Fundamentals such as rents and occupancy have lagged behind asset price increases and capitalization rates have remained at unsustainably low levels. While...

Companies mentioned in this report are:
- Unibail-Rodamco
- Societe Fonciere Lyonnaise S.A.
- Jones Lang LaSalle Inc.
- Klepierre S.A.
- Derwent London PLC
- Cofinimmo S.A./N.V.
- Gecina
- Befimmo S.A.
- Rodamco Europe N.V.
- Atrium European Real Estate Ltd.

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

- Unibail-Rodamco
- Societe Fonciere Lyonnaise S.A.
- Jones Lang LaSalle Inc.
- Klepierre S.A.
- Derwent London PLC
- Cofinimmo S.A./N.V.
- Gecina
- Befimmo S.A.
- Rodamco Europe N.V.
- Atrium European Real Estate Ltd.

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