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DTZ, the global real estate consultancy, has announced that it has allowed the Australian corporate real estate consultancy UGL Limited to make a bid for the firm. UGL has until 6th December to announce a firm intention to make a bid under the City Code on Takeovers and Mergers. However, DTZ shareholders need not get too excited, because UGL has indicated that minimal value will be attributed to the shares, given the level of debt in DTZ. The shares crashed on Friday from 21p to 3p and closed last night at 2.85p. DTZ is now valued at just £7.8 million, compared to almost £500 million in 2006. It had been expected that, having taken a French investment from SAS Saint George Participation who had a controlling stake with 54%, the firm would be bought by BNP Paribas. The banking crisis put paid to that hope as BNP came under pressure. In August, chief executive Paul Idzik quit after the board failed to demand a "put-up-or-shut-up warning" from SGP, and then became embroiled in a row over pay. Mr Idzik took control of the struggling agent in 2008, launching fierce cost–cutting and an emergency rights issue to prevent DTZ collapsing under its debt mountain. However, the debt is complicating takeover talks. DTZ's net debt is £64 million and it is understood bid proposals revolve around simply taking this on. DTZ has a string of repayments on its £106 million of borrowings due in 2012 and 2013. Lead creditor Royal Bank of Scotland is thought to have hired Ernst & Young to review the business. In terms of the world league of real estate consultancies the combined firm would rank third behind leader CBRE and Jones Lang LaSalle, just ahead of Cushman & Wakefield, with a revenue of £1.2 billion. The combined property services business would have approximately 24,000 permanent employees, 225 offices and operate in 45 countries. The key strategic benefit would be the bringing together of DTZ's business scale in Europe, Middle East and Asia Pacific with UGL's end to end corporate real estate and facilities management services to corporations, governments and institutions in Australia, New Zealand, North America and the Middle East. London has become less attractive for real estate investment on account of its poor outlook for growth potential, a new report has found. London fell to second place below Moscow in La Salle Investment Management's latest annual European Regional Economic Growth Index report. Low performing economic and employment growth and global financial concerns are cited as the reasons behind London's fall from grace. Moscow has leapt from 10th place to the top in just two years. Size and economic growth remain fundamental to investment potential. London does continue to perform strongly in terms of commercial property and real estate investment. The author of the report, Alistair Seaton, described a slowdown in Europe's real estate economy in 2011: "There were clear signs of a slowdown in Europe’s real estate economy during the first half of 2011, coupled with growing uncertainty surrounding sovereign debt. The debt crisis in Europe has entered a new phase, particularly in terms of fiscal integration and the single currency. The next few months will be crucial". The UK continues to be the most polarized, the report shows. London is the only UK city ranked in the top 20, while all the other cities are mainly placed in the bottom half of the table. Most UK cities did gain ground on their index placing in 2010. High risers include Edinburgh, which rose 30 places to reach 29th in the index; Leeds, which rose 21 places to reach 56th, and Sheffield, which rose 9 places to reach 86th. Regional competitiveness has gained increasing importance as cities struggle to rely on robust national economic growth to uphold their own performance. Germany and France remain strong regional competitors in Europe for real estate investment, with several cities each in the top 30. Looking for a UK Property or to commercial property in the UK, find lettings and buy a property in the UK? www.ukbusinessproperty.co.uk
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