Quille's perspective

: Jim, how does MGPA view 2010?

James Quille : Pretty cautiously. We are sitting on about $2.5 billion in dry powder in Europe and Asia at the moment but I think the big question for us is where does value sit? With the exception of Japan, pretty much round the world we’ve seen the bottom in most sectors and most cities but I think we are really just through the first act of a two-act play. The government stimulus that has pumped masses of liquidity into the market has I think perhaps created a false dawn and we need to see what happens to the economies when that tap is turned off during 2010.We still have a pretty deep pipeline in Asia but we can’t satisfy ourselves yet in a context of the uncertainty that is probably ahead of us for the next 12 months.

PERE: You have a track record for entity-level acquisitions. Do you see entity-level acquisitions as a possible play in Asia at the moment?

JQ: It’s harder because the nature of Asia is less mature. Public to private deals are very difficult and hostile takeovers are virtually impossible. Free floats by public companies and the family-nature of ownership means that public-to-private deals are very difficult. In the private space, however, we are tracking opportunities in Australia and in Japan.

PERE: Let’s talk Japan then, what are you seeing there?

JQ: I think there’s an interesting opportunity to invest in second-tier developers with good management teams or assets but poor balance sheets. There may be an opportunity to invest in the debt side or to recapitalise the balance sheet and use the platform to help capitalise on some of the distress we see coming through there.

PERE : How are your conversations with investors evolving at the moment?

JQ: This time last year, the fear among LPs was palpable. That has since quieted down. But there is a necessity to communicate far more regularly with investors to help them go through the processes they must go through with their boards in terms of providing the right information. I also think as an industry we need to promote a more transparent benchmarking tool for LPs and I think in turn that will make us lift our game too.

PERE: What sort of fund structures do you see working in the immediate future?

JQ: There is a lot of talk at the moment about club deals but I actually don’t see a major shift in the structure and type of vehicle that is already in the market. We might be in a black spot in the market in the moment but deals don’t hang around for too long so if you’ve capacity to actually execute on a club deal is slow, I don’t think it can work.

PERE: How are you feeling about the lending community currently?

JQ: The spreads are good for them and not so good for us. Obviously you need to keep lenders as involved with your strategies as you would with your LPs to be able to successfully tap the market for refinancings and new debt. Credit committees have gone through a shock horror in a number of markets so it’s understandable that they are going to question your underwriting and your performance.