Aurelia Butler

LONDON (Reuters) – Aviva (LON:AV), Legal & General and M&G are ramping up investments in rental homes in Britain, betting on long-term returns in a market where housing demand far outstrips supply, even though the country’s new Labour government could impose tougher regulations.Institutional investment in Britain’s rented housing sector is playing catch up, as it accounts for just 2% of the total rented stock, as opposed to more than 35% in Germany and the U.S., according to Savills.The rented sector – which includes student housing and retirement homes – has fared better than the wider commercial property market, which is facing tough conditions after a period of soaring borrowing costs and changing working patterns.”Investors are really keen on all these living sectors, it’s a bit like the battle of the beds,” said Rebecca Shafran, head of alternative residential research at BNP Paribas (OTC:BNPQY).Aviva, L&G, M&G and Royal London Asset Management told Reuters they planned to increase their investments in rental homes in Britain by hundreds of millions of pounds. Aviva Investors has channelled 750 million pounds into the sector in the last 18 months and wants to triple that within three to four years. The company said its latest deal was with housebuilder Barratt to deliver 101 rental homes in Cambridge. Potentially stricter rental regulations are a worry but not as much as interest rates remaining higher for longer, Aviva Investors’ head of real estate investment, James Stevens, told Reuters.L&G has been amassing commitments from its insurance business and external investors to increase investment from 2025, head of residential, Dan Batterton, said. Any move towards rent controls needed to be carefully conceived to avoid deterring investors, he added.Foreign investors are also targeting Britain, with U.S. fund giants PGIM and Blackstone (NYSE:BX) recently striking big deals. Although PGIM told Reuters comparatively low returns and high construction costs posed challenges. REFORM BILLInvestors have largely welcomed the new Labour government’s pledge to “get Britain building again”.Finance minister Rachel Reeves used her first speech on Monday to promise the government would overhaul planning rules and use the private sector to deliver 1.5 million homes within five years.But investors are also awaiting details of planned legislation to provide more protection for renters, expected early in the new parliament.”We have still got the threat of more regulation potentially hanging over the sector, notably rent controls, which would suffocate capital coming into the market,” said Rick de Blaby, CEO of build-to-rent developer Get Living.One large foreign institutional investor, who declined to be named, said it had paused investment decisions on rental homes in London pending clarity on a rent cap policy.Potentially stricter rental regulations are a worry but not as much as interest rates remaining higher for longer, Aviva Investors’ head of real estate investment, James Stevens, told Reuters. The UK housing ministry declined to comment.Campaigners say there are compelling reasons for rent controls in Britain linked to inflation and wage growth.”The market is spiralling clearly out of control, and people are suffering,” said Conor O’Shea from renters’ campaign group Generation Rent.PREFERRED SECTORResidential was the most preferred sector for investment for European real estate funds as a whole in 2024, data from trade body INREV showed, with the share of their portfolios in homes rising more than three-fold in a decade to 23%.Investment into Britain’s build-to-rent sector hit 2.6 billion pounds in the first half of 2024, according to Knight Frank, the highest since it began tracking the market in 2016.”The biggest fear at the moment with investors… I’ll cut to the chase, is rent caps,” said Andrew Screen, head of residential capital markets at BNP Paribas. “I’m a firm believer that if you want to reduce rents, increase supply,” he added. More

(Reuters) – JPMorgan Chase (NYSE:JPM) beat estimates for second-quarter profit on Friday, as its investment banking business benefited from a resurgence in dealmaking and strong capital market activity. More companies are tapping capital markets to raise funds and striking takeover deals as they become confident in the U.S. economy’s ability to avoid a major downturn, helping boost Wall Street banks’ income from fees. Investment banking fees grew 50%, compared with a low base, but were higher than the company’s earlier prediction of 25% to 30%.”While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks,” CEO Jamie Dimon said, adding that the risks included a changing geopolitical situation, which remains the most dangerous since World War II.Inflation and interest rates may stay higher than market expectations due to threats like large fiscal deficits and restructuring of trade, Dimon said. The largest U.S. bank set aside $3.1 billion in provisions for credit losses, 62% higher than the first quarter. High rates continued to benefit lending, with net interest income (NII) – the difference between what it earns on loans and pays out on deposits – rising 4% to $22.9 billion.Lending has remained healthy even as banks compete for deposits and face pressure to shell out more to depositors to store their money.The largest U.S. bank’s profit rose 25% to $18.15 billion, or $6.12 per share, for the three months ended June 30, compared with $14.47 billion, or $4.75 per share, a year earlier. It had an accounting gain of about $8 billion from a share exchange deal with Visa (NYSE:V). Excluding the Visa deal, net income was $13.1 billion compared.The bank earned $4.26 per share, stripping out all one-time costs, compared with expectations of $4.19 per share, according to LSEG.”We are encouraged by some of the economic trends that underpinned client activity in the second quarter and we remain cautiously optimistic as we head into the second half of the year,” Jennifer Piepszak and Troy Rohrbaugh, co-CEOs of its commercial and investment bank, said in a post-earnings memo seen by Reuters.TRADING BOOSTTrading was a bright spot in the quarter, fetching 10% higher revenue than last year. Revenue from fixed-income trading jumped 5% while equities saw a 21% jump. The commercial and investment banking unit’s revenue during the first half hit a record of $35.5 billion, the bank said. Earlier this year, JPMorgan merged commercial, corporate and investment banking franchises under global banking. “JPMorgan’s results showed us two things: First, investment banking and equities trading did really well compared to last year,” Opimas CEO Octavio Marenzi wrote in a note. “Secondly, we see Main Street banking beginning to sputter,” but the bank has navigated a challenging interest rate environment very well, he added.The bank’s shares dipped 0.6% in trading before the bell. They have gained 22% so far this year, but have underperformed rivals Bank of America, Citigroup and Wells Fargo.Investors are also focused on succession planning at JPMorgan. The bank’s board has identified several candidates to succeed Dimon, who is expected to step down in less than five years.The contenders include Jennifer Piepszak and Troy Rohrbaugh, who jointly run the commercial and investment bank. The others are Marianne Lake, who leads consumer and community banking, and Mary Erdoes, the head of asset and wealth management.JPMorgan’s rival Wells Fargo missed analysts’ estimates for interest income on Friday, due to higher deposit costs amid intense competition for customers’ money. More

(Reuters) -German media giant Axel Springer, which owns Germany’s popular Bild tabloid and U.S. news site Politico, is considering a split of the company together with private equity group KKR, two sources familiar with the matter said on Friday.A potential deal would separate the group’s media assets from its digital classifieds operation, handing the former to CEO Mathias Doepfner and the founder’s widow, Friede Springer, and the latter to KKR and the Canada Pension Plan Investment Board, the sources said.The Financial Times first reported on the break-up talks.The sources told Reuters that this was the most likely plan but that many details remained open. It was unclear when a decision would be taken, they added.Axel Springer founded the eponymous company in 1946 and grew it into a sprawling empire encompassing influential right-leaning media titles as well as a portfolio of classifieds websites, including jobs platform Stepstone and real estate ads unit Aviv. Billionaire Doepfner took the helm of the company in 2002. Most recently he has overseen Springer’s ambitions to break into the field of artificial intelligence, including with a partnership with OpenAI’s ChatGPT model.The planned split would not necessarily mean that Springer would be excluded from the highly profitable classifieds business, the sources said.Taking control of the unit could help pave the way for KKR to begin exiting its investment five years after it partnered with Doepfner to take Axel Springer private, they added.Springer’s planned listing of Stepstone, currently on pause due to the due to the Ukraine war and difficult market conditions, is not off the table, according to the sources.Aviv is considered another potential IPO candidate but needs more time, they added.KKR became the biggest shareholder of Axel Springer in 2019 and today own a 35.6% stake in the company.The Canada Pension Plan Investment Board owns a 12.9% stake.A spokesperson for Axel Springer, when contacted by Reuters, said all shareholders have been highly satisfied with Axel Springer’s progress since 2019, but declined further comment.A KKR spokesperson told Reuters “together we have made significant progress against Axel Springer’s digital and international ambitions, and believe in the continued success and growth of the business”. ($1 = 0.9203 euros) More

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