The following Insider comments page is designed to provide a short opinion on topical subjects that we consider to be of particular relevance to both existing and potential clients of JCRA.

JCRA produces hedging strategies that are designed to minimise the threat to profitability... Cont.

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JCRA provides an independent valuation and benchmarking service... Cont.

Hedging FX risk on European Property Investment

In search of higher yields than those available in the UK, increasing numbers of property companies are investing in the eurozone.

Many do not consider the risk to their investment of an adverse movement in the EUR/GBP exchange rate. However, those that do are sometimes surprised to discover that, due to the interest rate differential between the eurozone and the UK, the FX market effectively pays them to hedge. Conveniently, this allows them to protect against a depreciation of the EUR, while simultaneously increasing their IRR.

This opportunity will continue for as long as eurozone interest rates (as opposed to rental yields) remain below those in the UK and should be carefully considered by any UK-based investor, preferably at the same time as borrowing facilities are negotiated.

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