CB Richard Ellis, a commercial real estate services firm, is expanding its financial business in the U.K. to include brokering property derivatives. Martin Samworth, managing director in London, said commercial property owners, hedge funds, asset managers and lending houses have expressed interest in using the instruments for hedging and speculation. "A group of clients has been looking into it for some time," he said, declining to name the interested investors.
Samworth said he expects the majority of trades to be swaps on the returns of commercial property referencing the Investment Property Databank U.K. index, with maturities between three and five years. The firm will broker the deals with GFI Group, but neither organization will take a principal position in the deals. Both Samworth and Paul Ogden, head of product derivatives development at GFI Group in London, are now talking to prospective counterparties, but declined to name specific firms.
Both said the trades will be used by property owners to increase exposure to the best-performing sectors, by hedge funds to take a view on property assets and by lenders to hedge loan books. CB Richard Ellis aims to arrange its first trades for investors in the coming months. Samworth said the majority of trades will be done in the U.K. because the IPD is more sophisticated in Britain, but he expects the European and U.S. markets to catch up.
