UPDATE 2-UK builder Countryside plans return to London stock market

* Co likely to be valued at 1 bln stg – source

* Expects minimum free float of about 25 pct after IPO

* UK housebuilders outperform FTSE in 2015

* Strong 30 pct payout target could lure investors

(Adds industry context, report, details on dividends)

By Esha Vaish

Jan 14 British property developer Countryside
Properties Plc plans to raise about 114 million pounds ($164
million) through an initial public offering, returning to the
London market after more than a decade in private hands.

The offering is likely to value Countryside at about 1
billion pounds, said an industry source, who asked not to be

Countryside, backed by private equity firm Oaktree Capital
Management, said on Thursday it would use the IPO proceeds to
reduce debt and accelerate development at several sites in

The listing, expected in February, follows a strong year for
UK housebuilders, which have benefited from a steady rise in
house prices and surging demand, partly due to government
measures that make it easier to secure a mortgage.

The homebuilders index surged nearly 29 percent
in 2015, whereas the FTSE 100 fell about 5 percent.

Persimmon Plc and Berkeley Group Holdings Plc
hit a record high, while Taylor Wimpey Plc and
Barratt Developments Plc touched their highest since
the 2008 housing bust.

More growth is expected this year as economists predict that
prices will keep rising and brokerages expect order books to
grow. Both Barratt and Taylor Wimpey have expressed confidence
for the year.

As well as building on its own land, Countryside works with
local authorities to develop public sector land – a business
that analysts say could give the company an edge over rivals as
Britain sets aside more funds for regeneration projects.

Property firm Savills estimates that 480,000 additional
houses can be built on 8,5000 hectares of public-sector land in
London – one way to start addressing the annual shortage of
around 50,000 homes in the capital.

Countryside said it would use about 50 million pounds from
the offering to speed up development of its sites in Acton,
Beaulieu, Hazel End and Rayleigh.

The company said it expected a minimum free float of about
25 percent after the IPO.

A vehicle controlled by Oaktree, some management members and
employees will also sell a portion of their stake. The company
declined to estimate its valuation.

Countryside, founded by chartered surveyor Alan Cherry in
1958, traded as a public company from 1972 to 2005. In 2013,
Oaktree bought a controlling stake in the company from Lloyds
Banking Group.

Countryside said it was targeting a 30 percent payout ratio
– making it attractive to investors.

Housebuilders offer some of the strongest dividends in the
UK market and often top it up with special payouts. The sector
is moving towards a 35 percent payout ratio, according to data
firm Markit.
($1 = 0.6960 pounds)

(Reporting by Esha Vaish and Noor Zainab Hussain in Bengaluru;
Editing by Sunil Nair, Robin Paxton and Saumyadeb Chakrabarty)

Venture capital funding for startups is down sharply in 2015

There are a lot of indicators that weve reached the peak of the VC investment cycle, said Daniel Cook, an analyst at New York research firm PitchBook Data Inc.

The number of first financings, the very first round of professional funding for nascent startups beyond money from family or friends, stood at only 1,983 financing deals as of Dec. 1, compared with 3,368 for full-year 2014, according to PitchBook. The total dollar amount for first financings figures to be flat or down: $6.91 billion recorded through Dec. 1 compared with $7.5 billion last year.

Meanwhile, money reaped through so-called exits — via the sale of startups to another company or through an initial public offering of stock — is projected to end the year off dramatically: about $64 billion on 860 deals compared with $93.77 billion on 994 deals in 2014, according to a Pitchbook analysis.

The drop in first financing indicates that the future crop of VC-backed companies will be weaker than were used to seeing, Cook said. Plus, he said, Exits are down dramatically, and the public markets are in limbo.

Demand for VC funds, however, continues strong, with investors pouring in nearly $37 billion so far this year, up from $34 billion in 2014, to get a slice of later-stage startups such as Uber and Snapchat.

Still, the slowdown for the youngest companies and waning exits indicate a general cooling, analysts said. Among the causes: the lackluster performance of major public stock markets, which provide a guidepost for valuations and an important market for venture capital firms to sell their holdings and exit their positions. Meanwhile, fundamentals in technology, a key sector among VC firms, are weakening.

John Lonski, chief economist for Moodys Analytics, said revenue for software and services was down 2.4 percent in the third quarter from the year-earlier quarter while even once-booming tech hardware saw sales rise only 3.6 percent. Those numbers are not exactly barnburners, he said.

Investors are pulling back on riskier investments across the financial spectrum, Lonski said, noting that borrowers in the high-yield corporate bond market, often seen as a proxy for venture capital and other risky markets, have been forced to pay ever-higher interest rates in recent months.

Meanwhile, the IPO market in general has hit the skids. The value of deals in the economy was just $36 billion through Dec. 10, compared with $95 billion for all of 2014, according to the research firm Dealogic.

Other cautionary signals for the VC sector, analysts say, are recent IPOs that saw highly touted startups trade at lower-than-expected valuations. San Francisco-based payments company Square Inc., for instance, was priced at $9 a share at its November launch, lower than the expected range of up to $13. And while the shares did shoot up 45 percent to $13.07 in the first day of trading, they had drifted down to $12.65 as of Wednesday.

Steven N. Kaplan, a finance professor at the University of Chicago, said 2014 and 2015 marked a frothy period of startup valuations that was bound to taper off. He said the rapid rise in the number of startups valued at $1 billion or more, known as unicorns, is coming to an end for the time being.

A little bit of the luster has come off a lot of the unicorns, Kaplan said. A lot of them have had trouble maintaining their values.

Some observers see a softening in the VC sector as posing risks to future innovation.

Its certainly on the decline, and its a not-so virtuous cycle, Mark Cuban, the owner of the Dallas Mavericks who made his fortune in the dot-com era with broadcast.com, said in an email interview. Fewer exits mean less money to invest in new deals.

But while most observers take a cautious approach to the sector for now, few foresee a calamitous decline approaching the dot-com crash of 2000. Pitchbooks Cook, for instance, says its more likely that the sector will slip back 2013 levels, when VC firms raised about $24 billion from investors compared with the $37 billion expected to be raised this year.

And some say its still too early even to call a peak in the VC cycle. A report by PriceWaterhouse Coopers and the National Venture Capital Association notes that the $47.2 billion invested by VC firms in startups in the first three quarters of 2015 was higher than the full-year totals for 17 of the last 20 years, indicating continued momentum heading into the current quarter. Whats more, the report notes 1,070 individual funding deals recorded in the third quarter, although 11 percent below the second-quarter figure, is roughly in line with the number of deals per quarter going back to 2011.

Tom Ciccolella, who heads PriceWaterhouseCoopers US venture capital market group, also noted that the overwhelming majority of the largest VC deals of all time, including those raising $1 billion, were done in 2014 and 2015.

I dont know if were in the sixth inning or the third or there are two outs in the bottom of the ninth, he said.

Predictions about the sector are particularly difficult these days, analysts say, because the VC sector rarely held on to startups once they were valued at billions or even tens of billions of dollars. Snapchat Inc. in Venice and Uber Technologies Inc. in San Francisco fit that category.

The sector has crossed into a new era in which companies grow to maturity in the private markets and achieve levels of revenue growth, and in some cases, profitability, not seen in the dot-com era. As a result, any funding or exit slowdown is far less threatening, analysts and observers say, because many startups have the wherewithal to continue to grow on their own.

Its a paradigm shift in the way these companies are financing themselves, said Bill Siegel, head of Nasdaq Private Market, a unit of Nasdaq Inc. that helps large privately held companies manage their shares. Its the new normal.

Still, even those who believe that its too soon to call a peak say a cautious approach to the sector is in order.

We all know were in uncharted, unprecedented territory, PriceWaterhouseCoopers Ciccolella said, recalling the dot-com crash. Its good to keep an eye on it because of where weve been.


Â2015 Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by Tribune Content Agency, LLC.


Topics: t000181653,t000156231,t000002537,t000002731,t000040342,t000023124,t000182022,t000182050,t000023142,t000023146

5 signs of employee financial stress

Photo: AP

Employees, heads up. Your boss may be watching you.

Many employers are concerning themselves with employees financial wellness far more these days than they used to, going beyond simply providing a retirement plan and/or health care benefits and offering a number of workplace assists.

Hundreds raised for charity as the beard gets the shave

“We will be fundraising all year and have lots of events planned, we have received a lot of support from local businesses and we are very grateful.”

A spokesperson for Luton Borough council said: “Luton CCG routinely funds insulin pumps in children where the patient meets national criteria (as in the National Institute for Health amp; Care Excellence (NICE) Technology Appraisal 151).

“Where a clinician wishes to prescribe an insulin pump for a child who does not meet the nationally set criteria then the clinician may put in an individual funding request putting forward a case for exceptionality.

“Luton CCG has only one record of an individual funding request for an insulin pump in a child and this request was approved.”

Scrap DB to Save Public Pensions, Says Think Tank

The UK’s local government pension schemes (LGPS) should move
from defined benefit to defined contribution (DC) by 2018 to escape an impending
funding crisis, according to a leading think tank.

“It would be a tragedy if the LGPS were to be forced to make the move to DC.”In a report published yesterday, Michael Johnson, research
fellow at the Centre for Policy Studies (CPS), claimed the 89 public pension
funds in England and Wales that make up the LGPS faced a “cash flow crisis” and
remained unsustainable in the long term–despite plans to increase efficiency
through pooling.

The LGPS’ cash flow “faces a perfect storm,” Johnson wrote, due
to pressures resulting from underfunding, declining prospects for future
returns, an aging membership, and a “crippling” accrual rate.

According to March 2013 valuations, the 89 pensions were
roughly 80% funded on average. However, individual funding ratios ranged from
56% to 101%–and the pensions are not all valued in the same way.

The LGPS was overhauled at the start of 2014, moving from a
final salary to a career average defined benefit (DB) system. But Johnson
argued a defined contribution structure, with individuals taking on investment
and longevity risk, was the only way to ensure local authorities’ pensions were
sustainable. He cited the National Employment Savings Trust as a potential
provider of DC services: “There should be no need for taxpayers to fund another
administrative structure.”

“The LGPS has been allowed to become a staggeringly inefficient, self-serving empire.”Karen Shackleton, consultant to a number of local authority
pensions with AllenbridgeEPIC Advisers, agreed that the LGPS’ funding situation
had to be addressed, but said it would a “tragedy” if local government workers
lost out on DB guarantees.

“There comes a point where we have to ask, ‘What are we going
to do about this?'” Shackleton said. Some LGPS funds face the prospect of a
negative cash flow in the near future, she warned, as job cuts lead to lower
employee contributions while demographics push liabilities higher.

“DC is the obvious answer,” Shackleton added. “But it would be
a tragedy if the LGPS were to be forced to make that move. We are talking about
[employees] that are not paid a lot of money.”

The prospect of smaller DC pensions for such workers could put
pressure back on the government through the welfare system if pension savings
are insufficient, Shackleton argued.

“It is likely that the outcome would be much worse for
pensioners if the LGPS moved to DC, but better for the government,” said William
Bourne, director at consulting firm City Noble. “I understand that the world is
moving that way but pensioners will lose out.”

“Why is the LGPS where it is? It’s largely down to government policy over the last 20 years.”Bourne agreed with Johnson’s assertion that LGPS funding was
unsustainable, but claimed there were other solutions than the radical move to
DC, including a change of accounting measure. Using the government actuary’s methods
of calculating unfunded pensions, Bourne said, would reduce much of the
shortfall in local authority pensions.

Johnson also claimed that collaboration between LGPS funds was
“not necessarily the panacea that many believe.” While he supported UK Chancellor
George Osborne’s plan to create six large “British Wealth Funds” from LGPS
assets to lower costs and improve economies of scale, Johnson said such a move
would not bring about the “transformational change necessary to put the LGPS on
a sustainable footing.”

“The LGPS has been allowed to become a staggeringly
inefficient, self-serving empire,” Johnson wrote, “the interests of those who
work within it, or provide services to it, riding roughshod over the interests
of its membership, employers, and taxpayers, as well as common sense and
economic rationale.”

AllenbridgeEPIC’s Shackleton defended local authority pension
funds, however, arguing that in most cases the investments had been well run
despite limited resources.

“Blaming the situation on the authorities is misplaced,”
Bourne added. “They have done a pretty good job. Why is the LGPS where it is?
It’s largely down to government policy over the last 20 years. If you look at
the numbers, the returns have been pretty good.”

Read Johnson’s report, “LGPS
(2018)”, in full.

Related: London United
amp; UK
Government Said to Target £30B Public Asset Pools

Nick Reeve | nreeve@assetinternational.com | (44) 207 397 3827

New year, new financial outlook: Tips for 2016

  1. Listen

    New year, new financial plans: Ruth Hayden shares 2016 tips

You didnt win the lottery, so now what?Karen Bleier | AFP / Getty Images file

Subscribe to the MPR News with Kerri Miller podcast

January is the ideal time to take stock of your finances and make a plan for your money, according to financial educator Ruth Hayden.

Obama Seeks to Boost Financial Assistance for States’ Medicaid Expansion

The Obama administration is proposing to extend a financial sweetener the federal government offers states that expand their Medicaid programs, in a bid to persuade more to do so before the president leaves office.

White House officials said President Barack Obama will ask Congress to include three years of full federal funding of expansion for any state that extends eligibility for the program to most low-income residents. Officials…

What do financial journalists think of ‘The Big Short’?

The idea here was pretty simple. With “The Big Short” getting some Hollywood love at today’s Oscar nominations — it received nominations for Best Picture, Best Director, and Best Adapted Screenplay — I’d chat up local business/financial columnists and gurus for their impressions of the movie. Impressed, distressed, bored … whatever.

As Paul Krugman,one of the few in the press who foresaw the financial crisis, wrote about the movie: “You don’t want me to play film critic; you want to know whether the movie got the underlying economic, financial and political story right. And the answer is yes, in all the ways that matter.”

Quickly my problem became this: Almost none of the locals had seen it. There’s no law requiring anyone to be a movie buff. But after three weeks on screens all over town and very good to enthusiastic reviews, you’d think people with, presumably, a higher-shy;than-shy;average interest in how The Great Recession went down and who saw it coming would find time and invest $10 in a ticket.

Fitch Upgrades Brandywine’s Ratings to Investment Grade; Outlook Stable

NEW YORK–(BUSINESS WIRE)–Fitch Ratings has upgraded the Issuer Default Rating (IDR) for
Brandywine Realty Trust (NYSE: BDN) and its operating partnership
Brandywine Operating Partnership, LP (collectively, Brandywine) to
BBB- from BB+. A full list of rating actions follows at the end of
this release.

The Rating Outlook is Stable.


The ratings upgrade for Brandywine to investment-grade centers on
Fitchs expectation of the company reducing leverage to the mid-6x range
in 2016 and sustain this level for the foreseeable future. Fitch expects
proceeds from announced 4Q15 dispositions, combined with additional
sales in early 2016, to be used primarily to reduce debt and fund
development, primarily FMC Tower, which should be delivered in mid-2016.

Upon stabilization of FMC Tower, Fitch expects the companys leverage to
sustain in the low- to mid-6x area. Fitchs current ratings have
moderate tolerance for BDNs leverage increasing above 7.0x due to share
buybacks and/or new development. The companys portfolio of CBD and
suburban office properties has continued to strengthen as highlighted by
higher occupancy and improved leasing that has bolstered continued
decent same-store net operating income (SSNOI) growth. These credit
strengths are mitigated by a UA/UD ratio that is low for the rating,
moderately weak fixed-charge coverage relative to investment-grade
peers, and lease-up risk related to FMC Tower.


Brandywine has capitalized on a robust sales market in the past 12
months, publicly announcing the sale of over $700 million in assets
during 2015. The sales have not only monetized non-core assets, but have
also reduced BDNs secured debt stack by $236 million, accelerating the
de-levering of the companys balance sheet well beyond Fitchs near-term
expectations. Pro forma for the announced transactions, Brandywines
leverage was 6.8x at Sept. 30, 2015.


The companys liquidity coverage is 0.8x when considering Brandywines
unfunded development pipeline, the largest portion of which relates to
$229 million of unfunded costs for FMC Tower. The company expects to
fund these costs, upcoming debt maturities and recurring capital
expenditures with the aforementioned asset sales. Fitch defines
liquidity coverage as liquidity sources divided by liquidity uses.
Liquidity sources include unrestricted cash, availability under
unsecured revolving credit facilities and projected retained cash flows
from operating activities. Liquidity uses include pro rata debt
maturities, projected recurring capital expenditures and development


Brandywines unencumbered asset coverage of unsecured debt (net of
readily available cash) was 1.8x at 3Q15, which is low for the BBB-
IDR. Fitch views asset coverage of unsecured debt above 2.0x as more
consistent with an investment-grade profile. This ratio remains level
assuming stabilization of an unencumbered FMC Tower by YE17 at an 8%
yield, pro forma for dispositions of unencumbered assets announced in
2015 and expected in 2016.


The companys fixed-charge coverage was 1.9x for the LTM period ended
Sept. 30, 2015, relatively unchanged since 2012. Coverage has been
burdened by elevated recurring maintenance capital expenditures due to
relatively slowly improving office fundamentals. Going forward, Fitch
expects coverage to improve to the mid-2.0x range due to manageable
lease expirations and the company disposing of lower-growth, higher
capital-intensive assets.


Brandywines office portfolio is focused in the Mid-Atlantic United
States, with Pennsylvania and greater Washington DC generating 81% of
3Q15 NOI. The Pennsylvania portfolio is well-diversified across various
submarkets, with the Philadelphia central business district representing
the largest submarket at 35% of NOI. Fitch expects the company to
continue growing its footprint in the CBD and metro regions over the
medium-term while reducing exposure to slower growth suburban properties
in New Jersey, Delaware, Richmond and California.


The GSA is BDNs largest tenant and contributed 6.9% of annual base rent
(ABR) for the quarter ended Sept. 30, 2015. Excluding the GSA, the
remaining top 10 tenants generate only 17.8% of total base rent, with no
tenant representing greater than 2.9% of ABR. The tenant base is also of
strong credit quality with 6 of the 20 largest tenants rated investment
grade by Fitch (Fitch does not rate the other 14).


Operating fundamentals have been improving, with cash same-store NOI
growth of 3.0% during the first nine months of 2015. Fitch forecasts
growth to advance into the low single digits towards the end of 2017,
driven by stronger leasing and same-store core occupancy sustaining in
the mid-90% area, consistent with the 94.2% rate as of Sept. 30, 2015.
Year-to-date GAAP leasing spreads have been a solid 6.7%, although
tenant allowances and leasing commissions per square foot per lease year
have been volatile and have been slightly above the companys long-term
average over the last six quarters.


Brandywine has a well-laddered lease maturity schedule with limited
near-term rollover. 22.8% of base rent expires through 2017 and
management has been proactive in renewing leases well in advance of
expiration, which has contributed to higher than expected
leasing-related capital expenditures.

Preferred Stock Notching

The two-notch differential between BDNs IDR and preferred stock rating
is consistent with Fitchs criteria for corporate entities with an IDR
of BBB-. Based on Fitch research titled Treatment and Notching of
Hybrids in Nonfinancial Corporate and REIT Credit Analysis, these
preferred securities are deeply subordinated and have loss absorption
elements that would likely result in poor recoveries in the event of a
corporate default.


The Stable Outlook reflects Fitchs expectation that BDN will reach
targeted operating metrics and maintain them at appropriate levels
through the rating horizon.


Fitchs key assumptions within our rating case for the issuer include:

–Low single-digit same store growth in 2016 and 2017;

–Dispositions of $354 million through the balance of 2015 at 7.4% cap

–Net dispositions of approximately $700 million in 2016 at 7.1% cap
rate, and none in 2017;

–No acquisitions in 2017;

–(Re)development expenditures of $109 million, $292 million, and $95
million in 2015 – 2017, respectively;

–Recurring maintenance capex of $31 million, $50 million, and $42
million in 2015 – 2017, respectively;

–$300 million unsecured issuance in 2017 to refinance note maturity;

–Approximately $230 million in secured debt repaid via net proceeds
from 2015 asset dispositions, $130 million mortgage note refinanced in

–All $100 million Series E preferred stock repurchased and retired in


The following factors may have a positive impact on Brandywines ratings
and/or Outlook:

–Fitchs expectation of leverage sustaining around 6x (leverage at
Sept. 30, 2015 was 6.9x);

–Fitchs expectation of fixed-charge coverage sustaining above 2.5x
(coverage for TTM ended Sept. 30, 2015 was 1.9x);

–Unencumbered asset coverage of unsecured debt (based on a stressed 9%
cap rate) maintaining above 2.5x (asset coverage was 1.8x as of Sept.
30, 2015).

The following factors may have a negative impact on the companys
ratings and/or Outlook:

–Fitchs expectation of leverage sustaining above 7x;

–Fitchs expectation of fixed-charge coverage sustaining below 1.5x;

–Actions indicative of the company prioritizing equity stakeholders
ahead of creditors, such as further stock buybacks and/or speculative
development starts.


Fitch has upgraded Brandywines ratings as follows:

Brandywine Realty Trust

–IDR to BBB- from BB+;

–Preferred Stock to BB from BB-/RR6.

Brandywine Operating Partnership, LP

–IDR to BBB- from BB+;

–Senior unsecured line of credit to BBB- from BB+/RR4;

–Senior unsecured term loans to BBB- from BB+/RR4;

–Senior unsecured notes to BBB- from BB+/RR4.

The Rating Outlook is Stable.

Additional information is available on www.fitchratings.com

Applicable Criteria

Corporate Rating Methodology – Including Short-Term Ratings and Parent
and Subsidiary Linkage (pub. 17 Aug 2015)


Treatment and Notching of Hybrids in Non-Financial Corporate and REIT
Credit Analysis (pub. 25 Nov 2014)


Additional Disclosures

Dodd-Frank Rating Information Disclosure Form


Solicitation Status


Endorsement Policy