Market Worth Trading pursues an opportunistic investment style both in terms of choice of geographical region and specific asset selection. Internal investment policies are reviewed on a continuous basis as market circumstances develop.
Prevailing market conditions have created what might be described as a perfect storm in terms of buying opportunities. There are a number of different factors which in combination are producing a rise in the number of distressed sellers on the supply side, whilst simultaneously restricting the number of buyers able to enter the market to take advantage of those opportunities:
- Short term pressure on land values profits are due to temporarily depressed markets. This is further exacerbated by the fact that input prices (such as fuel, etc) have not fallen to the same extent as revenues from other assets.
- Tightening credit policies of many lenders due to the credit crunch. This means that some companies are struggling to obtain the cash flow finance their businesses need to operate.
- Down-valuations of plant and machinery owned by enterprises. This creates unfavourable adjustments in debt / equity ratios, which can result in lenders demanding further capital from Institutions
Despite these short term cyclical pressures, the majority of enterprises remain profitable on an EBITDA basis (even at lower output and higher input prices); however, when debt comes into the picture, the current conditions of tight credit and higher lending rates in the all sectors is representing a unique window of opportunity for cash buyers.
Negotiating new loan terms (for example, in cases where existing loan agreement is due for renewal) is also particularly challenging in the current market. Rates on new loans for companies in an unfavourable equity position can be high. This creates opportunities on the income side for investors because bank interest rates in the current climate (especially on more distressed debt) can be significantly higher than standard rental rates. By purchasing land, it is possible for investor's to achieve premium rental rates (after building) whilst providing valuable assistance to the community (Demand for housing).
Of course, not every deal will make sense for all parties concerned, but by casting a wide enough net, it's possible to find some fantastic opportunities in the current market climate.
To find out more please contact Market Worth Trading. The number of our UK office is +44 203 086 7959 and we will be happy to discuss your requirements directly. If you would prefer us to contact you, please complete the form to the right of the screen.
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