intu properties plc , formerly capital shopping centres group plc , is a british real estate investment trust ( reit ) , largely focused on shopping centre management and development .

originally named liberty international plc , it changed its name in may 2010 to that of its major subsidiary , capital shopping centres , after demerging its capital & counties properties business unit to form an independent business .

the company owns or part-owns 18 shopping centres in the uk and one in spain .

the firm 's shares are listed on the london and johannesburg stock exchanges and it is a constituent of the ftse 250 index .

the company renamed itself as intu properties plc on 18 february 2013 , which was followed by the rebrand of the majority of its shopping centres under the " intu " name from may 2013 .

intu properties

glassdoor has 12 intu properties reviews submitted anonymously by intu properties employees . read employee reviews and ratings on glassdoor to decide if intu properties is right for you .
intu properties share price , latest news and opinion | city a . m .
the registrar for intu properties plc ordinary shares registered in south africa is terbium financial services .
the company history page lists out the major events in chronological order for prozone intu properties ltd .
the last ic recommendation on intu properties plc shares was hold at 293 . 90 on 24 feb 2017
intu properties plc reported annual 2017 earnings of 0 . 145 per share on feb 22 , 2018 .
specific hard copies of certain intu properties plc publications can be ordered via this website or by contacting the company .
in addition , all shareholders can register via this website to be advised of all corporate announcements by intu properties plc .
our story is one of building the scale for which intu would eventually become known . our predecessor companies acquired intu trafford centre , intu broadmarsh and the site for intu braehead , plus stakes in manchester arndale , cribbs causeway , and st david’s in cardiff . it also saw the successful opening of intu chapelfield in norwich and expansion of intu lakeside and intu metrocentre .
company ' s super - regional centers include intu trafford centre , intu lakeside , intu metrocentre , intu braehead , intu merry hill and cribbs causeway . the company ' s in - town centers include intu derby , manchester arndale , st david ' s cardiff , intu victoria centre , intu watford and intu eldon square . the company ' s spanish centers include puerto venecia , zaragoza and intu asturias . the company ' s subsidiaries include intu ( sgs ) limited , intu debenture plc , intu finance mh limited , barton square holdco limited , sprucefield no . 2 general partner limited , liberty international group treasury limited , liberty international holdings limited , metrocentre ( holdco ) limited and nailsfield limited .
intu properties plc ( lse : intu ) generated a below - average return on equity of 3 . 96 % in the past 12 months , while its industry returned 8 . 65 % . though intu’s recent performance is underwhelming , it isread more . . .
intu properties was the top ftse riser this morning , despite the group ' s profit falling by more than 60 per [ . . . ]
on monday , intu properties plc ( intu : lse ) closed at 187 . 25 , 5 . 31 % above its 52 - week low of 177 . 80 , set on jul 02 , 2018 .
intu properties plc had revenues for the full year 2017 of 616 . 00m . this was 3 . 65 % above the prior year ' s results .
as of jul 06 , 2018 , the consensus forecast amongst 19 polled investment analysts covering intu properties plc advises investors to hold their position in the company . this has been the consensus forecast since the sentiment of investment analysts improved on mar 23 , 2017 . the previous consensus forecast advised that the company would underperform intu properties plc .
1 12 / 2010 dividend cut was due to a demerger . demerger of capital & counties properties .
the latest earnings update intu properties plc ( lon : intu ) released in december 2017 showed that the company benefited from a strong tailwind , leading to a double - digit earnings growth of 18 . 61 % . below , read more . . .
retail worries spur hammerson u - turn on $ 4 . 8 billion intu deal
in 2013 , capital shopping centres group plc ( csc ) took the bold decision to establish itself as intu properties plc , and a new consumer - facing brand was born as well as the launch of the uk ' s first transactional shopping centre , intu . co . uk . at the same time , intu also formed of a joint venture with bilfinger europa to create an in - house centre management company , intu retail services .
intu properties plc owns and manages shopping centers in the united kingdom and in spain . the company is primarily a shopping center - focused business and operates through two segments , including united kingdom and spain . the
as of december 31 , 2016 , equity one’s portfolio comprised 122 properties , including 101 retail properties and five non - retail properties totaling approximately 12 . 8 million square feet of gross leasable area , or gla , 10 development or redevelopment properties with approximately 2 . 3 million square feet of gla , and six land parcels . as of december 31 , 2016 , equity one’s retail occupancy excluding developments and redevelopments was 95 . 8 % and included national , regional and local tenants . additionally , equity one had joint venture interests in six retail properties and two office buildings totaling approximately 1 . 4 million square feet of gla .
intu properties plc reported semi annual 2017 revenues of 308 . 70m . this missed the 335 . 64m estimate of the one analyst following the company . the same period last year the company did not report revenues .
if you are a shareholder in prozone intu properties limited’s ( nsei : prozonintu ) , or are thinking about investing in the company , knowing how it contributes to the risk and reward profile ofread more . . .
in this analysis , my focus will be on developing a perspective on prozone intu properties limited’s ( nsei : prozonintu ) latest ownership structure , a less discussed , but important factor . the impact of aread more . . .
existing south african shareholders whose shares are held in electronic format through trifecta ' s csdp , may trade intu properties plc shares through terbiums’s low cost telephone share dealing service by calling the team on 0860 222 213 ( sa calls only ) .
while small - cap stocks , such as prozone intu properties limited ( nsei : prozonintu ) with its market cap of ₹8 . 27b , are popular for their explosive growth , investors should also be aware of their balanceread more . . .
the business that we now recognise as intu began to take shape a long time ago . . .
intu properties plc engages in the management of shopping centres . it offers its services to the retailers , restaurateurs and leisure specialists . its activities include leasing of its investment properties , commercialization of malls and car parks , and digital shopping . it operates through the united kingdom and spain geographic segment . the company was founded by donald j . gordon in 1980 and is headquartered in london , the united kingdom .
the launch of intu . co . uk , a transactional , fashion - focused , mobile - enabled website
the merry hill shopping centre has been bought in a £407 . 7 million takeover by property group intu .
intu : lse price rises above 15 - day moving average to 186 . 35 at 16 : 50 bst
edited transcript of intu . l earnings conference call or presentation 22 - feb - 18 9 : 30am gmt
hammerson plc withdrew its 3 . 2 billion - pound ( $ 4 . 6 billion ) offer to buy intu properties plc after a growing number of its shareholders opposed a deal that would have created the u . k . ’s biggest shopping - mall . . .
intu properties ( formerly capital shopping centres group ) owns and operates shopping centres across the uk , including 10 of the top 25 . the company owns 16 . 6m sq . ft . of retail space , valued at £7bn , and attract over 320m customer visits each year . on january 15th of this year , the group announced the creation of a nationwide consumer facing shopping centre brand - intu - and officially changed its name from capital shopping centres group to intu properties on february 18th . the company has an investment plan of £1bn over the next ten years on active management projects and major extensions of existing assets involving most of its centres .
on feb 22 , 2018 , intu properties plc reported semi annual 2017 earnings of 0 . 072 per share . this result was in line with the expectation of the one analyst following the company and was the same as last year ' s results for the same period .
the deal gives intu the half share in the brierley hill - based shopping centre that had been owned by westfield .
in 2017 , intu properties plc reported a dividend of 0 . 11 gbp , which represents a 2 . 50 % increase over last year . the 17 analysts covering the company expect dividends of 0 . 14 gbp for the upcoming fiscal year , an increase of 21 . 08 % .
all intu properties plc issued ordinary shares are listed in both london and johannesburg but are registered on the appropriate share register . for shares registered in the uk , which generally are all the shares other than those held by shareholders resident in south africa , the registrar is link asset services .
shopping centre owner intu reported today that footfall at its uk businesses had increased during the three months [ . . . ]
the 17 analysts offering 12 month price targets for intu properties plc have a median target of 210 . 00 , with a high estimate of 295 . 00 and a low estimate of 155 . 00 . the median estimate represents a 11 . 32 % increase from the last price of 188 . 65 .
john whittaker , the secretive billionaire behind intu owner peel holdings , has been secretly building up a stake [ . . . ]
encouraging large flagship formats and reducing the number of smaller units will make the centre more attractive to retailers and customers , and improve the rental tone . this strategy is similar to that which has been successfully implemented at intu trafford centre and intu lakeside .
shopping centre owner intu saw record retailer demand in the first quarter of the year , as the business geared [ . . . ]
intu properties plc recognises the speed and efficiency of electronic communications and elimination of the waste and expense inherent in the production and posting of hard copy annual accounts , notices of shareholders meetings and other documents which are required to be sent to shareholders ( ’ shareholder information ‘ ) . click here for more information about electronic communications .
our multichannel model combines leasing - experiential - digital ( led ) to help retailers and brands to reach intu’s extensive , loyal customer base .
now owners of 20 shopping centres and with a growing operation in spain , intu is an independent property company , listed in london and johannesburg .
intu has posted a solid set of full - year results as the retail property firm pushes ahead with its merger with [ . . . ]
it ' s ftse 100 reshuffle time again next week - and research suggests dixons carphone , easyjet , capita and intu [ . . . ]
a 3 . 4 billion - pound takeover of british shopping centre operator intu properties ( intup . l ) by bigger rival hammerson ( hmso . l ) has been formally scrapped after hammerson was freed from its obligation to hold a shareholder vote on the deal . intu said on wednesday that its board would not post the scheme of arrangement documents for the takeover to its investors and that hammerson would no longer have to proceed with the all - share deal and put it to a vote . intu , which owns manchester ' s trafford centre , would have also been required to hold a meeting to allow its shareholders to agree to the takeover .
2012 - company has changed its name from castle mall ltd . to prozone capital shopping centres ltd . 2014 - company has changed its name from prozone capital shopping centres limited to prozone intu properties limited with effect from july 24 , 2014 . - the company symbol has been changed from prozonecsc to prozonintu w . e . f . october 07 , 2014 .
property group hammerson has made a recommended £3 . 4bn offer for rival intu , in a deal the groups say will create [ . . . ]
existing uk shareholders may trade intu properties plc shares through link share dealing services who provide an easy to use , real - time online , telephone and postal dealing service at urltoken , or telephone : 0871 664 0364 ( telephone dealing for uk calls only - calls cost 10p per minute plus network extras , lines are open 8 . 00am to 4 . 30pm monday to friday ) .
intu ' s boss has said the company will now
move forward
after hammerson called off its £3 . 4bn offer for the [ . . . ]
intu properties plc ( formerly capital shopping centres group , former liberty international plc ) owns and manages some of the best shopping centres , in some of the strongest locations , in the uk and spain . its uk portfolio is made up of 17 centres , including ten of the top 25 , and in spain it owns three of the country ' s top 10 centres , with advanced plans to build a fourth .
merry hill owner intu says it aims to accelerate major revamp plans for the giant shopping centre following its £410 million deal to buy the half it didn ' t already own .
the terbium website provides certain shareholder services online ( note : the trifecta company code for intu properties plc is ituz ) . shareholders registered in south africa can use this service to obtain details of their shareholdings . shareholders will need to follow a registering process in order to access such information . unfortunately , due to south african legal requirements , shareholders may not update records , but will be able to view their entire holding of shares globally .
intu also outlined major redevelopments at its lakeside and watford shopping centres and plans for more than 30 new restaurants at gateshead ' s metrocentre , bromley and at eldon square in newcastle .
shares in the london - listed company were down 10 . 7 percent at 464 . 2 pence at 1040 gmt , erasing most of their gains since klepierre made its original approach in march . shares in paris - based klepierre were up 3 . 9 percent . klepierre ' s decision to drop its takeover attempt leaves the company behind birmingham ' s bullring centre free to pursue its own acquisition of fellow london - listed shopping centre operator intu properties .
intuit ( intu ) has maintained stable margin growth , driven by strong revenue growth and subscriber additions . moreover , selling high - margin products has offset selling , marketing , and service expenses .
the steps that would lead us to where we are today , were taken with the demerger of liberty international plc into csc plc and capital & counties properties plc in 2010 . in 2012 styleme tv limited , the company that would form the basis of intudigital limited was acquired .
the acquisition helped boost the value of intu ' s assets to more than £10 billion . across its shopping centres it saw the number of customers increase by 1 . 3 % over the six months . 96 . 1 % of its stores are occupied . it faces the imminent closure of bhs stores , following that companies collapse this year , but intu said it had interest from other retailers in all the sites .
regency is the preeminent national owner , operator and developer of neighborhood and community shopping centers which are primarily anchored by productive grocers and located in affluent and infill trade areas in the country’s most attractive metro areas . as of december 31 , 2016 , regency’s portfolio of 307 retail properties encompassed over 42 . 2 million square feet , which includes properties held in co - investment partnerships . regency has developed 225 shopping centers since 2000 , representing an investment at completion of more than $ 3 . 5 billion . operating as a fully integrated real estate company , regency is a qualified real estate investment trust that is self - administered and self - managed .
- intudigital is run separately , which makes no sense at all as intu properties plc is a ftse 100 company but has the least say in what goes on with their own website and app ! - worst people management i ' ve ever encountered - new ideas are often shot down by management (
just do what i say
kind of thing ) - no focus on culture . everyone knows how a company treats its staff is a measure of how it views its customers . - toxic environment at intudigital makes lots of people feel on edge - uninspiring leadership
the other half is retained by australian investment group qic . the agreement is part of a £867 . 8m property deal that sees intu take over complete ownership of westfield ' s derby shopping centre and sprucefield retail park in northern ireland .
intu said that buying the other half of the £890m merry hill site in june from australian investment group qic would enable it
to accelerate re - engineering the retail , catering and leisure mix to unlock the full potential of this centre
.
csc has the physical scale to establish a strong national brand to integrate the online and shopping centre retail experience . today we are announcing a £25 million investment to create a nationwide consumer - facing shopping centre brand , intu , and a transformed digital proposition .
merry hill is the fourth biggest of intu ' s uk shopping centres , with 213 stores and 1 . 67 million sq ft of space . as well as increasing the size of its biggest stores the group plans on major improvements to the restaurant and leisure facilities at the centre .
our story is one of mergers , acquisitions , investment and growth , which has seen intu grow from its early form as the fledgling international arm of liberty life association of africa limited ( a south african financial services company founded by donald gordon in 1958 ) to a thriving shopping centre business .
csc was established in may when the real - estate investment trust liberty international split in two , which also led to the formation capital & counties properties , the london specialist . if the deal goes ahead , csc will fund it with £750m in shares for the trafford centre , which covers 1 . 9m square feet of retail space , and a further £75m cash contribution by peel in return for it receiving new shares and convertible bonds .
wherever you find an intu centre , you’ll find a vibrant focal point of the community , where people go to shop , to meet , to eat , to socialise and to be entertained – and to work . this puts us at the heart of communities , and what we do and how we behave matters .
with over £500 million of cash and available facilities , we are well positioned to take opportunities when they arise , such as the acquisition in the period of the other half of intu merry hill which adds to the considerable momentum from our active asset management and development projects , both in the uk and spain .
david fischel , chief executive of intu , said he was delighted to establish the partnership with qic at merry hill .
the transaction is a rare and attractive opportunity to acquire a further two prime shopping centres in line with our strategy to focus on the uk ' s largest and most successful destinations ,
he said .
the acquisition strengthens intu ' s position as the leading owner , developer and manager of prime uk shopping centres filling in gaps in our national coverage and extending the footprint of our nationwide consumer facing brand and digital strategy . we are delighted to establish a partnership with qic , a major global investor , at merry hill .
the 1 . 4 million sq ft shopping centre now joins the likes of manchester ' s arndale and trafford centres in the intu ' s 18 million sq ft stable of retail and leisure sites , valued before today ' s deal at £7 . 6 billion . they include 17 of the uk ' s top 25 shopping destinations .
intuit ( intu ) has continued to witness stable bottom - line growth in the last five quarters , buoyed by increased turbotax e - filed returns and a growing online quickbooks subscriber base . upselling has led to higher average revenue per return , boosting the company’s eps ( earnings per share ) . us tax reform may further drive the company’s eps .
intu today announces that it has agreed terms with legal & general property to acquire midsummer place shopping centre , milton keynes ( “midsummer place” or the “centre” ) for a total cash consideration of £250 . 5m ( the “acquisition” ) before expenses , representing a net initial yield of 5 . 1 % , based on current net rents of £13 . 4m and a nominal equivalent yield of 5 . 5 % .
the owner of birmingham ' s bullring and london ' s brent cross said on wednesday its board had withdrawn its recommendation that shareholders support the all - share takeover due to heightened concerns about the british retail sector . hammerson ' s announcement lifted its shares by 4 . 2 percent to 514 . 2 pence , but knocked intu ' s down 4 . 1 percent . shareholders had become concerned the deal would increase hammerson ' s exposure to the british retail sector , which has been hit by weak consumer demand .
“we are delighted to announce the completion of our merger with equity one , further establishing regency centers as the preeminent national shopping center reit , ” stated martin e . “hap” stein , jr . , chairman and chief executive officer . “with a high quality portfolio of 429 properties located in many of the country’s top markets , featuring outstanding demographics , augmented by a best - in - class development and redevelopment program , we believe regency offers a unique long - term growth profile . further , as we have stated before , we expect the transaction to be accretive to core ffo per share while preserving our sector - leading balance sheet . moving ahead , we look forward to the rapid integration of the two platforms and to creating additional value for our shareholders over the quarters and years to come . ”
trafford centre set for & # 163 ; 1 . 6bn sale to csc group
one of the uk ' s biggest shopping centre is in
advanced discussions
over a £1 . 6bn sale to a retail property group , marking another milestone for its billionaire owner , john whittaker .
capital shopping centres ( csc ) yesterday confirmed it was in talks with peel group to acquire the trafford centre near manchester . under the terms of the deal , lancashire - born mr whittaker , the chairman of peel group , would become csc ' s biggest shareholder with 19 . 9 per cent .
the transaction would be another landmark in an eventful year for csc , which owns 13 shopping centres including the arndale , also in manchester , and lakeside in essex .
csc values the trafford centre ' s property assets at £1 . 65bn , including net debt of £750m and other liabilities of £50m . this implies a net initial yield of 5 . 01 per cent . the proposed acquisition price would represent a 3 per cent discount to this external valuation . mr whittaker will join the listed retail property developer ' s board as a non - executive deputy chairman .
his shareholding would rise to 24 . 9 per cent if he converted the convertible bonds that would form part of the deal . csc confirmed it was in
advanced discussions with peel in respect of the acquisition
, but said
there can be no certainty that any final agreement
would be reached .
the company said it was also considering a placing of 9 . 9 per cent of its shares to raise funds and increase its
overall financial flexibility
and reduce its loan to value ratio to between 40 per cent and 50 per cent . following the acquisition , csc would hold four of the uk ' s top six out - of - town shopping centres .
the trafford centre , which opened in 1998 , attracts 35 million visitors a year . it houses 230 shops , including selfridges and marks & spencer , as well as 60 restaurants and bars . when the trafford centre finally opened after 27 months of construction , mr whittaker – who is worth $ 1 . 6bn , according to forbes – abseiled into the building .
for mr whittaker – whose family hold 73 per cent of the peel group – the proposed deal with csc is the latest in a meteoric career . the peel group ' s empire includes peel ports and peel airports , which holds stakes in three airports close to liverpool , durham and sheffield .
mr whittaker made his mark in the 1970s when he started acquiring industrial firms on profitable land . since he took peel private in 2004 , he has also invested in industries , including sustainable energy , hotels and utilities .
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pubs , retailers and property companies continue to be the most shorted stocks in the uk stock market .
according to data explorers’ weekly top 10 shorts & squeezes , investors have spent the past month betting against a number of ftse 250 companies .
the financial data and software company provides short - side intelligence to the investment management community , offering daily long and short institutional fund flow insight . it sources its data – roughly around three million daily transactions – from investment banks , prime brokers , lending agents , beneficial owners and hedge funds .
although the likes of rok , connaught , ocado and de la rue have been dominating the headlines due to their plummeting share prices , none of those were among the top 10 shorted stocks . this begs the question whether investors are shorting the right companies . instead , they are continuing to bet against the likes of jd wetherspoon , great portland estates and liberty international .
leading up to the release of its results last week , jd wetherspoon was one of the most shorted stocks . despite announcing that its profits have increased from £45 million in 2009 to £60 million in 2010 , investors remained unconvinced about its future as the bears continue to circle the beleaguered public house sector .
nigel parson , an analyst at evolution securities , downgraded the stock from buy to hold , lowering his share price target from 550p to 440p .
he said : ‘we have reduced our target price to reflect lower free cash flow from higher maintenance capital expenditure . wetherspoon is going to have to work very hard to make any progress next year .
' the stock has done little this year relative to the market and we see no change to this predicament as the stock now looks less cheap on cash terms . our 440p share price target remains based on 11 % free cash flow yield . ’
despite the number of shorts , jd wetherspoon’s share price has been roughly stable at just under 440p .
likewise , liberty international – recently renamed capital shopping centres ( csc ) limited – and great portland estates have seen their share prices remain stable despite heavy shorting in recent weeks , hovering around 355p and 329p , respectively .
the only other two companies that were in the both the august and september top 10 most - shorted lists were colt group and mitie . the latter has seen its share price decline over the past few months , falling from around 240p in may to just below 200p .
the share price of colt , which announced during the summer it had lost its chief operating officer , has actually been increasing over the past few weeks , climbing from around 110p to more than 120p by mid - september .
however , artemis fund manager tim steer ( pictured ) revealed he has made ‘a lot of money’ by betting against connaught in his hedge fund . ‘i started shorting it a year ago and have ridden it all the way down . it has been the top single performer in the hedge fund , ’ he said .
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amending existing domestic abuse legislation would help advisers take action when they suspect exploitation , writes natasha turner .
retirement savers are in the firing line as the government looks for ways to uphold its nhs funding pledge .
we catch up with wealth solutions managing director simon redhead as the firm celebrates its 10th anniversary .
there are lots of ifa firms out there that specialise in specific areas of advice . have you found your niche yet ?
continuing our quarterly look at the various goings on in ifa businesses across the uk , we round up the events and occurrences that have made the pages of our magazine between april and june .
if gershom chan has a single professional regret , it might be that it took him so long to realise how rewarding a career in financial advice could be .
the pensions regulator has started to crack down on companies and directors that are breaking its rules , and new powers will hopefully give it even more courage .
foreign secretary boris johnson resigns , knocking sterling as the risk of prime minister theresa may facing a leadership challenge rises .
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randa responds to perry ellis ( pery ) special committee ; confident shareholders understand $ 28 per share is greater than $ 27 . 50 per share
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westfield is set to sell its nottingham shopping centre in a £55m deal , it has been announced .
the company which owns the rival victoria centre shopping complex in the city is set to take over westfield ' s interest in broadmarsh .
capital shopping centres hopes to buy the 75 % stake in the broadmarsh centre .
the deputy leader of nottingham city council said he hoped a planned expansion of the broadmarsh shopping precinct would still go ahead .
in march , westfield submitted plans to nottingham city council for a £500m expansion of the centre .
more than 6 , 000 jobs were expected to be created as part of the redevelopment .
a spokeswoman for capital shopping centres ( csc ) said :
csc has conditionally agreed to acquire westfield group ' s 75 % interest in the broadmarsh shopping centre in nottingham .
westfield and csc are now in discussions with westfield ' s partner , possfund , about the proposed acquisition and possfund ' s intentions with respect to its 25 % interest in broadmarsh .
michael gutman from westfield said :
given westfield ' s strategic focus on major iconic regeneration schemes we have taken the view to withdraw from nottingham .
this will allow the city to make unfettered progress with its ambitions for regeneration , and westfield to focus on new schemes and opportunities similar to those at westfield london and more recently westfield stratford city .
the city council , which owns the broadmarsh lease , has been planning the redevelopment of the centre for almost two decades .
deputy leader graham chapman said :
the great thing about it is that we ' ve got got two shopping centres and people move between the two . there is a great deal of potential down in broadmarsh .
they ' ve thrown £55m at it , they ' re not going to let that lie fallow and they ' ve also got a couple of planning permissions so we ' ve got to work on getting something out of this deal .
the foreign secretary quits , telling theresa may
needless self - doubt
is leading to
semi - brexit
.
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we own and manage some of the best shopping centres , in some of the strongest locations across the uk and spain . here ' s how we got there
from investor to operator – transatlantic , makes a public offer and acquires a controlling stake in capital & counties which remains a listed company .
funded entirely by uk bank borrowings , a £20 million investment is made to acquire 14 per cent of sun life , a uk listed life insurer .
) - - regency centers corporation ( nyse : reg ) ( “regency” ) and equity one , inc . ( nyse : eqy ) ( “equity one” ) today announced the completion of their previously announced merger , whereby equity one merged with and into regency , with regency continuing as the surviving public company . the merger forms a combined company with a total market capitalization of approximately $ 16 billion . beginning march 2 , 2017 , regency will be a member of the s & p 500 index .
the completion of the transaction follows the satisfaction of all conditions to the closing of the merger , including receipt of approvals of the merger and other merger - related proposals by regency and equity one stockholders , which approvals were obtained on february 24 , 2017 .
pursuant to the terms of the definitive merger agreement entered into by and between regency and equity one on november 14 , 2016 , equity one stockholders are entitled to receive 0 . 45 of a newly issued share of regency common stock for each share of equity one common stock that they owned immediately prior to the effective time of the merger . the common stock of the combined company will trade under the symbol “reg” on the nyse , and the equity one common stock will be suspended from trading on the nyse effective as of the opening of trading on march 2 , 2017 .
in connection with the completion of the merger , the regency board of directors has appointed joseph azrack , chaim katzman and peter linneman , former equity one directors , to serve on regency’s board . mr . katzman , the former chairman of equity one’s board , will serve as non - executive vice chairman of the regency board . regency’s current executive officers will continue to serve in their current positions .
following the merger , regency now expects the combined portfolio to produce annual same property noi growth for 2017 within a new range of 3 . 0 % to 3 . 8 % . this compares to previous guidance for regency as a stand - alone entity of 2 . 25 % to 3 . 00 % . regency expects to realize annualized cost savings of approximately $ 27 million by 2018 , primarily related to the elimination of duplicative corporate and property - level operating costs . the transaction is expected to be accretive to core ffo , assuming the anticipated full cost benefits , before the positive incremental impacts of merger - related purchase accounting adjustments , and after potential dispositions . regency will update its guidance more completely when it reports first quarter 2017 results .
j . p . morgan securities llc acted as financial advisor , and wachtell , lipton , rosen & katz acted as legal advisor , to regency in connection with the merger . barclays capital inc . acted as lead financial advisor , citigroup global markets inc . acted as co - financial advisor , and kirkland & ellis llp acted as legal advisor to equity one in connection with the merger . icr , llc served as communications advisor for the transaction .
the information presented herein may contain forward looking statements within the meaning of the private securities litigation reform act of 1995 giving regency’s or equity one’s expectations or predictions of future financial or business performance or conditions . forward - looking statements are typically identified by words such as “believe , ” “expect , ” “anticipate , ” “intend , ” “target , ” “estimate , ” “continue , ” “positions , ” “prospects” or “potential , ” by future conditional verbs such as “will , ” “would , ” “should , ” “could” or “may” , or by variations of such words or by similar expressions . these forward - looking statements are subject to numerous assumptions , risks and uncertainties which change over time . forward - looking statements speak only as of the date they are made and we assume no duty to update forward - looking statements . as forward - looking statements involve significant risks and uncertainties , caution should be exercised against placing undue reliance on such statements .
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with 320 million customer visits and over 30 million unique visitors a year , we are the uk ' s leading specialist shopping centre owner , developer and manager . this scale and specialism gives us a unique insight into today ' s consumer and what they are looking for from their shopping experience .
for retailers : higher spend both in - store and online from enhanced footfall , dwell time and customer service . effectiveness of centre - by - centre marketing spend much improved as the unified brand reduces duplication . national awareness and marketing opportunities increased
in march trafford centre will launch free wifi , followed by lakeside in april , eldon square , newcastle , in may and all centres by february 2014 .
with over half the uk population visiting our shopping centres each year , we have the scale to seize the opportunities provided by the changes in the retail marketplace . we are investing £25 million in digital infrastructure , an ecommerce website and a new brand . we very much look forward to implementing the initiatives announced today , which mark an exciting next phase in the evolution of our market - leading uk shopping centre business , to the benefit of customers , retailers , staff and investors .
at the same time the shopping centre group hailed a ' strong set of results ' for the first six months of the year , with rental income rising £12m to £219 . 4m .
a revaluation of the site following the deal showed it was worth £35m more than expected .
the company said today :
we believe the centre presents a significant opportunity to re - engineer and update the tenant mix .
but profits for the group were down sharply in the six months to the end of june , to £48m from £262 . 3m a year ago , largely due to a £131m fall in the value of financial instruments such as interest rate swaps , compared to a £162m boost from a property revaluation last year and a £32m hike from financial instruments .
chief executive david fischel said :
we are pleased to report a strong set of results for the first six months of 2016 with a 10 per cent increase in underlying earnings per share driven by excellent growth in net rental income of 7 . 5 per cent on a like - for - like basis . we have therefore raised our guidance for full year like - for - like net rental income growth to 3 to 4 per cent .
letting activity was also very positive leading to an improved occupancy ratio of 96 per cent . our established retailers , such as zara and next , have been upsizing space and we have welcomed new lifestyle brands and international retailers at a time when the supply of quality retail space is limited . we continue to focus on strengthening and improving our prime regional shopping centres , introducing new leisure concepts and increasing the dwell time of our 400 million customer visits per year .
if you are searching for a job around your local area , use our online system .
donald gordon donates £ 20 million pounds to royal opera and wales millennium centre .
in 1957 donald gordon , a chartered accountant by profession , founded liberty life association of africa with initial capital of r100 , 000 . by the time he retired as chairman of liberty life in 1999 after 42 years in that role , the company had a stock market valuation on the johannesburg stock exchange of over rand 40 billion ( £6 billion ) . at the time liberty life was the largest listed life company and the third largest life insurance company in south africa . liberty life was also listed on the london stock exchange . sir donald co - founded the british company abbey life insurance ( abbey life ) , abbey life has since grown into one of the largest life companies in the uk and is now a major subsidiary of lloyds bank .
he was an active director of the guardian royal exchange group for 24 years from 1971 - 1994 as well as chairing on their behalf their south african subsidiary , guardian national insurance company for 32 years .
in 1980 liberty life created transatlantic insurance holdings plc , now liberty international plc , and since then sir donald has established the company as a £6 . 2 billion ( r75 billion ) shopping centre and commercial real estate business . liberty international is the third largest property company by market capitalisation ( £3 . 2 billion / r39 billion ) in the uk , with a capital investment of around £3 . 8 billion ( r46 billion ) . the assets of the liberty international group consist mainly of major shopping centres across the uk ( such as lakeside shopping centre in thurrock , the metrocentre in gateshead , braehead shopping centre in glasgow and further major shopping centres in newcastle , bromley , nottingham , watford and uxbridge ) . liberty international became a constituent of the uk’s ftse 100 index in december 2002 and is ranked in the third quartile .
a south african by birth , donald gordon is the creator and financial benefactor of the donald gordon foundation . he has also become a benefactor of british institutions and other charities such as the royal opera house , the british museum , the welsh millennium centre , sadler’s wells and the globe theatre . following his retirement in his 70th year in 1999 as chairman of liberty life , and his retirement as chairman of liberty international at the end of june 2005 , he resides in london and concentrates on the affairs of the dgf , his other philanthropic and cultural interests and his personal investments . in october 2000 at the 2000 entrepreneur of the year awards ( sponsored by citibank , the times , ernst & young and vodaphone ) in london sir donald received the entrepreneur of the year special award for lifetime achievement . other awards recognising his career achievements include an honorary doctorate of economic science from the university of the witwatersrand and an honorary doctorate in commerce from the university of pretoria . in december 1999 he was cited as “the achiever of the century in south african financial services” by the prestigious financial mail , the leading south african business journal and as business man of the year by the south african sunday times in 1968 . in june 2005 was awarded a knighthood in recognition of his services to the arts and business .
westfield had owned the centre since 2004 following the takeover of previous owners chelsfield .
westfield group co - ceo steven lowy , said :
today ' s announcement continues the strategic repositioning of the international portfolio in line with our focus on investing and operating iconic retail destinations in major world cities .
intus says the three sites will generate annual rents of £54 . 9 million to £22 . 6 million from merry hill alone .
today ' s shoppers are a tough crowd , but once you ' ve captured their loyalty they will fiercely stick by you through thick and thin . our report explores shopper behaviours and preferences and how these differ across geographies and age group .
we ' re so much more than a shopping centre landlord . we ' re redefining the role of shopping centres , using our scale , experience and expertise to create compelling experiences , in centre and online , to deliver real results for retailers , caterers and leisure operators .
it ' s not all about the big game this saturday . @ intumerryhill is giving hundreds of customers the chance to compete… urltoken
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another crackdown on business rates’ avoidance activity the welsh government is taking a lead in challenging . . .
interior designer / interior architect award - winning studio in manchester city centre with a uk . . .
peel group chairman john whittaker ' s gradual increase of his stake in capital shopping centres took two unusually large steps in separate transactions on monday and tuesday that saw his stake reach 24 . 63 % .
six hundred thousand shares were acquired through goodweather holdings , one of several vehicles that hold shares in csc on his and peel ' s behalf , at an average price of £3 . 45 a share .
whittaker ' s previous acquisitions in the past year have been in the tens of thousands , signalling the possibility that larger shareholders are now taking advantage of the csc deputy chairman ' s buying spree .
whittaker became the largest single shareholder in csc following the takeover of trafford centre in january 2011 .
csc shares were trading at 348p on wednesday , compared to a 52 - week high of 412p and a 52 - week low of 283p . ( lon : cscg )
we are delighted to have agreed terms to acquire this prime asset which addresses a gap in our uk regional coverage . as well as strong current operating metrics and good demographics , midsummer place offers considerable scope for rental growth . the acquisition fits well with our strategy of focusing on the best shopping centre destinations across the country .
completion of the acquisition is expected to take place at the end of march 2013 .
the full announcement which contains the investment rationale and key facts on midsummer place and milton keynes is available for download .
over the next three years , we are spending £600 million on developing our centres in the uk to create the market - leading shopping and leisure destinations that retailers want to be in and customers want to visit .
our considered and sustained long - term investment will continue over the next 10 years with plans to invest a further £1 . 9 billion , which will create thousands more new jobs in construction , retail and leisure and catering .
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weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions .

weather derivatives are index-based instruments that usually use observed weather data at a weather station to create an index on which a payout can be based .

this index could be total rainfall over a relevant period - which may be of relevance for a hydro-generation business - or the number where the minimum temperature falls below zero which might be relevant for a farmer protecting against frost damage .

unlike " indemnity " insurance-based cover , there is no need to demonstrate that a loss has been suffered .

settlement is objective , based on the final value of the chosen weather index over the chosen period .

if a payout is due , it is usually made in a matter of a few days with the settlement period being defined in the contract : unlike insurance contracts , there is no " loss adjustment " process . see exotic derivatives .

weather derivative

figure 1 - a weather derivative table quoting prices of may 2005 contracts . source : chicago mercantile exchange weather - i™ .
a weather derivative is a futures contract - - or options on that futures contract - - where the underlying commodity is a weather index .
keep up with the latest weather derivatives and weather risk management news on our blog .
a weather derivative is a financial instruments which are used to help a company or organisation reduce the risks associated with adverse or unusual weather conditions . they work just like most other derivative contracts except the underlying asset ( which is a weather condition such as rainfall , temperature or snowfall ) has no value with which to price the derivative contract .
covers the meteorological , statistical , financial and mathematical issues that arise in the pricing and risk management of weather derivatives . written by consultants who work within the weather derivative industry , this book is packed with practical information and theoretical insight into the world of weather derivative pricing .
a derivative is a financial contract that gets its value from an underlying asset . options offer one type of common derivative . read answer > >
a . zapranis and a . alexandridis , “modelling and forecasting cat and hdd indices for weather derivative pricing , ” in
weather derivatives - modeling and pricing weather - related risk | antonis alexandridis k . | springer
a selection of articles and research papers on weather derivatives and weather risk pricing and structuring .
a weather derivative is a financial instrument used by companies or individuals to hedge against the risk of weather - related losses . the seller of a weather derivative agrees to bear the risk of disasters in return for a premium . if no damages occur before the expiration of the contract , the seller will make a profit . in the event of unexpected or adverse weather , the buyer of the derivative claims the agreed amount .
originally published in 2005 , weather derivative valuation covers all the meteorological , statistical , financial and mathematical issues that arise in the pricing and risk management of weather derivatives . there are chapters on meteorological data and data cleaning , the modelling and pricing of single weather derivatives , the modelling and valuation of portfolios , the use of weather and seasonal forecasts in the pricing of weather derivatives , arbitrage pricing for weather derivatives , risk management , and the modelling of temperature , wind and precipitation . specific issues covered in detail include the analysis of uncertainty in weather derivative pricing , time - series modelling of daily temperatures , the creation and use of probabilistic meteorological forecasts and the derivation of the weather derivative version of the black - scholes equation of mathematical finance . written by consultants who work within the weather derivative industry , this book is packed with practical information and theoretical insight into the world of weather derivative pricing .
originally published in 2005 , weather derivative valuation covers all the meteorological , statistical , financial and mathematical issues that arise in the pricing and risk management of weather derivatives . there are chapters on meteorological data and data cleaning , the modelling and pricing of single weather derivatives , the modelling and valuation of portfolios , the use of weather and seasonal forecasts in the pricing of weather derivatives , arbitrage pricing for weather derivatives , risk management , and the modelling of temperature , wind and precipitation . specific issues covered in detail include the analysis of uncertainty in weather derivative pricing , time - series modelling of daily temperatures , the creation and use of probabilistic meteorological forecasts and the derivation of the weather derivative version of the black - scholes equation of mathematical finance . written by consultants who work within the weather derivative industry , this book is packed with practical information and theoretical insight into the world of weather derivative pricing . show more
weather derivatives are financial instruments that can be used for risk management purposes to hedge against losses due to adverse , unpredictable weather . in contrast to other derivative products , the underlying asset - such as frost , rain , temperature and wind - has no direct value with respect to the price of the weather derivative .
m . cao and j . wei , “weather derivatives valuation and market price of weather risk , ”
s . d . campbell and f . x . diebold , “weather forecasting for weather derivatives , ”
m . cao and j . wei , “pricing the weather . risk weather risk special report , ”
the party that sells a weather derivative bears this risk for a premium and stands to earn a profit if the weather remains relatively stable , predictable or normal . if the weather does turn bad , then the party that purchases the derivative claims the agreed upon amount . as one would expect , temperature is the most commonly used underlying weather factor , 18 degrees celsius ( 65 degrees fahrenheit ) is a standard baseline from which deviations are measured , but any other measurable weather - related event can be used as an underlying factor for a weather derivative .
a spatial approach to addressing weather derivative basis risk : a drought insurance example nick d . paulson and chad e . hart jul 2006
a credit derivative is a financial asset in the form of a privately . . .
nobel weather associates helps companies protect against the negative impact that weather can have on their expenses and revenue .
speedwell weather is a uk - based firm that provides world - wide weather data , forecasts , software and consulting services to the energy and weather derivative markets . the firm is a recognized leader in the weather markets , with a strong following in europe and a growing presence in other parts of the globe .
weather derivatives are used to hedge the risks of inclement weather conditions . they are measurable and essentially triggered by actual weather conditions making them a predictable form of risk management .
in 1997 , the first over - the - counter ( otc ) weather derivative trade took place , and the field of weather risk management was born . according to valerie cooper , former executive director of the weather risk management association , an $ 8 billion weather derivatives industry developed within a few years of its inception .
current users of weather futures are primarily companies in energy - related businesses . however , there is growing awareness and signs of potential growth in the trading of weather futures among agricultural firms , restaurants and companies involved in tourism and travel . many otc weather derivative traders also trade cme weather futures for purposes of hedging their otc transactions .
even in our advanced , technology - based society , we still live largely at the mercy of the weather . it influences our daily lives and has an enormous impact on corporate revenues and earnings . until recently , there were very few financial tools offering companies protection against weather - related risks . however , the inception of the weather derivative —making weather a tradeable commodity—has changed all this . here we look at how the weather derivative was created , how it differs from insurance and how it works as a financial instrument .
investors who sell weather derivatives agree to take on the risk for a premium . investors will profit from these transactions if weather conditions remain normal . if the weather changes unexpectedly , the company that bought the derivative collects an agreed - upon amount . to trade these products market participants will use weather forecasts to predict how the weather conditions will affect the current and future market . weather market players are from a variety of industries and other participants include hedge funds , institutional firms , and brokers .
weather derivative is a new risk management tool which can be widely used in the financial market to avoid the impact of bad weather effects and control the weather risks . the first weather derivative was introduced in the us in 1997 and the size of the market now exceeds 8 billion dollars . weather derivatives are different from traditional financial derivatives as their underlying asset such as temperature , humidity , and precipitation , which cannot be traded in the market , so ordinary pricing models such as black and scholes formula is not applicable in pricing weather derivatives . as a consequence , the valuation of weather derivatives is generally carried out in a lot of paperwork . weather derivatives can be based on any meteorological index , such as temperature , rain , wind , and snow , while the most commonly used weather variable is the temperature .
heating degree day and cooling degree day derivative contracts are among the most common types of weather derivatives . the chicago mercantile exchange provides a platform for buyers and sellers of weather derivatives and offer temperature , rainfall , snowfall , frost and hurricane derivatives contracts .
china’s climate varies drastically because the country is large , and weather events affect the profits of many of its industries . as a new risk management instrument , weather derivative market is developing rapidly . so the introduction of weather derivatives can bring significant benefits to various weather - affected industries in china . as weather is not a tradable asset , it is a relatively complicated task to make a “fair” pricing model for them . in order to enable the weather derivative market and bring significant benefits to various weather - affected industries in china , it is essential for the new market , especially in china , that a transparent and reliable approach to pricing is put in place so that the participants can feel secure in their transactions .
protection against undesirable weather events , like , for instance , hurricanes and droughts , has been offered by insurance companies . in the recent decades , the securitization of such weather insurances has taken place , and nowadays one can trade weather derivative contracts at the chicago mercantile exchange ( cme ) , or more specialized weather contracts in the otc market . at the cme , one finds derivatives written on temperature and snowfall indices , measured at different locations worldwide . the market for weather derivatives is emerging and gaining importance as a tool for hedging weather risk .
stephen jewson works for a financial consultancy where he manages a group that produces commercial software and meteorological data for the weather derivative industry . he has published a large number of articles in the fields of fundamental climate research , applied meteorology and weather derivatives . show more
as the underlying asset of the weather derivative is non - tradeable these instruments cannot be priced in the same way as more traditional derivatives . there is no standard model for valuing weather derivatives similar to the widely used black - scholes formula that is used to price many equity options and similar derivatives . as such they are more prone to modelling risk than other types of derivative products .
weather is determined by an independent historical weather provider . julia receives money if there is any rain ( more than zero ) on her wedding day !
weather derivatives , developed in the 1990s , fill an unmet need in the economy . the weather impacts roughly 20 % of the u . s . economy . agriculture , energy , travel , and construction are examples of industries in which weather plays an especially important role . but unexpected weather rarely results in price adjustments which entirely make up for lost revenue . weather derivatives allow companies to hedge against the possibility of weather that might adversely affect their business .
in 1997 , weather derivatives began trading over - the - counter ( otc ) , and within a few years , they had become an $ 8 billion industry . the chicago mercantile exchange ( cme ) lists weather derivative contracts for a few dozen cities , the majority of them in the u . s . some hedge funds treat weather derivatives as an investment class . investors who like weather derivatives appreciate their low correlation with traditional markets .
asc 815 - 10 notes that it
defines derivative instrument , addresses the pervasive scope of this topic , and specifies the primary accounting for derivative instruments within this topic ' s scope .
it further notes the following information regarding the entire 815 topic :
learn about weather derivatives , a financial instrument that makes temperature a tradable commodity .
analysts look at historical weather patterns - - temperature , rainfall and other things - - develop averages , and quantify the risk that weather will deviate from the average .
weather derivatives are different from insurance , because they ' re linked to common weather events , like dry seasons , or a warm autumn , that affect particular businesses .
asc 815 - 45 provides guidance on the financial accounting and reporting for weather derivatives .
a derivative security in which an investor hedges against the future state of the weather . for example , two investors may enter a weather derivative , where one investor pays the other if rainfall in a given place over a given period of time is above a certain amount . likewise , the other investor pays if the rainfall is below the agreed - upon amount . one of the most common weather derivatives is a weather future , in which the buyer is required to pay the seller $ 20 for each day in a given month that the daily temperature is below 65 degrees ( a heating degree day ) or above 65 degrees ( a cooling degree day ) , depending on the nature of the contract . a weather future allows a business to hedge against potential losses resulting from an unexpected change in weather . energy companies are some of the most common sellers of weather derivatives .
examples of their use could be a ski resort who hedge against the risk that snowfall is too light to allow them to open their slopes ( so they buy a snowfall derivative which pays out if snowfall is below a pre defined level ) , a farmer may buy a weather derivative to hedge against the risks of frost or drought impacting their crops and a power company may hedge against the risks that the weather is warmer than average in winter and their customers don ' t use their heating as much . effectively all these examples provide the company buying the derivative wit an opportunity to smooth their earnings over a period of adverse weather which would usually have affected them financially .
weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to minimize risk associated with adverse or unexpected weather conditions . just as traditional contingent claims , a weather derivative has an underlying measure , such as : rainfall , wind , snow or temperature . nearly $ 1 trillion of the u . s . economy is directly exposed to weather - related risk . more precisely , almost 30 % of the u . s . economy and 70 % of u . s . companies are affected by weather . the purpose of this monograph is to conduct an in - depth analysis of financial products that are traded in the weather market . presenting a pricing and modeling approach for weather derivatives written on various underlying weather variables will help students , researchers , and industry professionals accurately price weather derivatives , and will provide strategies for effectively hedging against weather - related risk . this book will link the mathematical aspects of the modeling procedure of weather variables to the financial markets and the pricing of weather derivatives . very little has been published in the area of weather risk , and this volume will appeal to graduate - level students and researchers studying financial mathematics , risk management , or energy finance , in addition to investors and professionals within the financial services industry .
a . zapranis and a . alexandridis , “wavelet analysis and weather derivatives pricing , ” in
j . svec and m . stevenson , “modelling and forecasting temperature based weather derivatives , ”
a . swishchuk and k . cui , “weather derivatives with applications to canadian data , ”
doing something about weather : weather derivatives have helped companies control financial risk for nearly a decade . now that they ' re trading on a mercantile exchange , sales are really taking off
e . platen and j . west , “a fair pricing approach to weather derivatives , ”
in fact , it is more important that the model is statistically significant for weather derivative pricing . we compare the predicted values obtained by our stochastic model with 100 , 000 simulations to the actual observations for zhengzhou over year 2013 ( see figure
mda earthsat is the premier source of specialized weather products for global weather risk analysis . users of these products include such varied industries as energy , food , retail , insurance , banking , and government . our products appeal to anyone who must manage and minimize their weather risk .
learn why most exchange - traded funds ( etfs ) are not considered derivative securities and the special circumstances when this . . . read answer > >
swiss re announced that it has entered into a weather derivative contract with the international development association ( ida ) , the arm of the world bank that helps the world ' s poorest countries . under the terms of the contract , swiss re will pay out up to usd 5 million in the event that malawi ' s farmers suffer from a drought - related shortfall in maize production . with this transaction , the ida backs its first - ever weather derivative contract with the government of malawi .
a broad range of weather derivative products are available including options , futures , forwards and swaps . most are traded over - the - counter ( otc ) although there are some traded electronically on indexes like the chicago merchantile exchange ( cme ) . the cme offers weather derivative products that “offers trading opportunities related to temperatures , snowfall , frost and hurricanes . the products are based on a range of weather conditions in more than 47 cities in the united states , europe , canada , australia and asia , with the hurricane products geared to nine us regions . ” ( cme group 2011 ) [ 1 ]
this weather derivative contract is just one instrument as part of a world bank effort to deliver customized financial solutions and help members plan efficient responses to catastrophic events . the use of weather derivatives are most effective as part of a broader risk management strategy ,
said gloria grandolini , director of the world bank treasury ' s banking and debt management department .
weather derivatives are usually structured as swaps , futures , and options based on different underlying weather indexes . some commonly used indices are hdd , cdd , precipitation , wind , and snowfall . for the sake of clarity , we focus our analysis on derivative products whose underlying is the level of cumulated daily temperatures over a given period , the hdd and cdd .
international business machines corp . ( ibm ) subsidiary the weather company will move its headquarters to atlanta .
h . geman and m . - p . leonardi , “alternative approaches to weather derivatives pricing , ”
m . moreno , “riding the temp , ” weather derivatives , fow special supplement , december 2000 .
insurance is still required to protect against major weather events , like tornadoes , hurricanes , and floods .
nobel weather associates uses patented risk management tools and internal company data to manage the affect that weather has on your cash flows . the program has been proven throughout the united states . regardless of your exposure , nobel weather’s strategies will be tailored to meet the specific needs , circumstances and risk tolerance of each client .
in 2008 , volume skyrocketed with the launching of otc weather auctions [ 3 ] . not only has temperature - based weather volume grown , but other weather products have also seen success . business in the cme group hurricane products - now in their second year of trading - has increased dramatically . also , two new online exchanges - stormexchange and weatherbill - have driven the weather derivatives market from mainly energy traders to a whole new set of end - users . both firms have been successful in speaking to end - user traders that are affected by day - to - day weather conditions . these firms have been successful in educating and monatizing their weather risk and structuring over - the - counter weather deals that are customized to their needs .
getting a
weather waiver
when a storm threatens can save your trip – and your travel budget .
f . dornier and m . queruel , “caution to the wind . weather risk special report , ” in
in 1999 , the chicago mercantile exchange ( cme ) took weather derivatives a step further and introduced exchange - traded weather futures and options on futures—the first products of their kind . otc weather derivatives are privately negotiated , individualized agreements made between two parties . but cme weather futures and options on futures are standardized contracts traded publicly on the open market in an electronic auction type of environment , with continuous negotiation of prices and complete price transparency .
swiss re has pioneered weather risk transfer instruments in developing countries , starting in india in 2004 with a programme reaching over 350 000 smallholder farmers . in the meantime , the company has become a leading solution provider in weather and weather contingent commodity price structures with a share of more than 30 % in the worldwide weather risk markets . under its climate adaptation and public sector business development programmes , the company fosters the use of modern risk management instruments , such as weather derivatives and insurance - linked securities , to the benefit of non - oecd countries .
companies whose business depends on the weather , such as hydro - electric businesses or those who manage sporting events , might use weather derivatives as part of a risk - management strategy . farmers may use weather derivatives to hedge against a poor harvest caused by too much or too little rain , sudden temperature swings , or destructive winds .
to learn more about how you can change the way weather impacts you call ( 781 ) 783 - 3207 .
p . alaton , b . djehiche , and d . stillberger , “on modelling and pricing weather derivatives , ”
weather derivatives are financial instruments that can be used by organizations or individuals as part of a weather risk management strategy to reduce risk associated with adverse or unexpected weather conditions . farmers can use weather derivatives to hedge against poor harvests caused by drought or frost ; theme parks may want to insure against rainy weekends during peak summer seasons ; and gas and power companies may use heating degree days ( hdd ) or cooling degree days ( cdd ) contracts to smooth earnings .
in this study , a unified approach to pricing is established for the weather derivative marketplace , and we mainly worked on a stochastic modeling to describe the behavior of the temperature choosing as underlying for the hdd call weather derivative . through taking zhengzhou , for example , we establish a stochastic model by the 62 - year historical temperatures in zhengzhou and use the monte carlo method for the hdd call pricing . the model describing the stochastic behavior of the temperature is validated on the basis of temperatures observed during year 2013 . as shown by the monthly evolved relative errors , the proposed mean - reverting ornstein - uhlenbeck model can reasonably describe daily temperature data of zhengzhou in the aspects of the mean , volatility , and mean reverting speed . therefore , the mean - reverting ornstein - uhlenbeck model , on the basis of 62 year of data of temperature , in zhengzhou , enabled us to simulate a temperature weather derivative contract .
f . perez - gonzales and h . yun , “risk management and firm value : evidence from weather derivatives , ”
f . e . benth and j . šaltytė benth , “the volatility of temperature and pricing of weather derivatives , ”
m . moreno and d . bari , “temperature stochastic modelling and weather derivatives pricing : empirical study with moroccan data , ”
m . mraoua and d . bari , “temperature stochastic modeling and weather derivatives pricing : empirical study with moroccan data , ”
in general , weather derivatives cover low - risk , high - probability events . weather insurance , on the other hand , typically covers high - risk , low - probability events , as defined in a highly customized policy . for example , a company might use a weather derivative to hedge against a winter forecasters think will be 5° f warmer than the historical average ( a low - risk , high - probability event ) . in this case , the company knows its revenues would be affected by that kind of weather . the same company would also most likely purchase an insurance policy for protection against damage caused by a flood or hurricane ( high - risk , low - probability events ) .
weather derivatives are similar to but different from insurance . insurance covers low - probability , catastrophic weather events such as hurricanes , earthquakes , and tornados . in contrast , derivatives cover higher - probability events such as a dryer - than - expected summer .
corporations use weather derivatives to hedge their risk that bad weather will cause a financial loss . for a cereal company , bad weather might be a drought , which would cause wheat prices to go up . for a home heating company , it could be warm days in november , which could lower demand for home heating oil . and for an amusement park it could be rain .
in order to avoid excessive payouts on the contract due to extreme weather , the options often come with the maximum payoff . suppose
as a result of the affect of normal variations and extreme or catastrophic events of weather and climate , a growing number of businesses and government entities are seeking out methods to manage their exposure to weather risk , which include the use of derivatives , insurance products and changes in their operations . this course provides a comprehensive and technical treatment of the valuation and risk management of weather derivatives .
one climate index for weather derivative is known as heating degree days or hdd . under hdd contracts , each day the daily mean temperature falls below a predetermined reference point over a specified period , the amount of the departure is recorded and added to a cumulative count . the final figure determines whether the seller pays out or receives payment .
the weather derivative contract with the world bank is a prime example of an ex - ante disaster risk management strategy designed to mitigate the financial impact of drought for a country such as malawi that is heavily dependant upon the income from its agricultural production ,
said juerg trueb , swiss re ' s head of environmental and commodity markets .
insurance does not protect against the reduction of demand resulting from a slightly wetter summer than average , for example , but weather derivatives can do just that . since weather derivatives and insurance cover two different possibilities , a company might have an interest in purchasing both .
weather derivatives typically have a basis to an index which measures a particular aspect of weather . for example , an index might be the total rainfall over a specified period in a specific place . another can be for the number of times the temperature falls below freezing .
f . e . benth and j . saltyte - benth , “stochastic modelling of temperature variations with a view towards weather derivatives , ”
f . e . benth and j . šaltyte - benth , “stochastic modelling of temperature variations with a view towards weather derivatives , ”
a preliminary assessment of the utility of seasonal forecasts for the pricing of u . s . temperature based weather derivatives risk management solutions 2004
asu 2016 - 05 , effect of derivative contract novations on existing hedge accounting relationships — a consensus of the fasb emerging issues task force ( issued march 2016 ; effective december 15 , 2016 , for public entities ) .
the value of a cme weather futures contract is determined by multiplying the monthly hdd or cdd value by $ 20 . in the example above , the cme november weather contract would settle at $ 4 , 160 ( $ 20 x 208 = $ 4 , 160 ) .
in the late 1990s , people began to realize if they quantified and indexed weather in terms of monthly or seasonal average temperatures and attached a dollar amount to each index value , they could in a sense
package
and trade weather . in fact , this sort of trading would be comparable to trading the varying values of stock indices , currencies , interest rates and agricultural commodities . the concept of weather as a tradeable commodity , therefore , began to take shape . ( for related reading , see : how do you trade the weather ? )
until recently , insurance has been the main tool used by companies for protection against unexpected weather conditions . but insurance provides protection only against catastrophic damage . insurance does nothing to protect against the reduced demand businesses experience as a result of weather that is warmer or colder than expected .
a . zapranis and a . alexandridis , “modelling the temperature time - dependent speed of mean reversion in the context of weather derivatives pricing , ”
b . dischel , “black - scholes won ' t do . weather risk special report , ” energy and power risk management , october 1998 .
we use the monte carlo method to generate a set of paths and for each of these paths we calculate the payoff . then , the average of the payoffs from all the generated paths will represent the expected price of the derivative .
asc 815 - 15 provides guidance for embedded derivatives that may be included in
[ c ] ontracts that do not in their entirety meet the definition of a derivative instrument , such as bonds , insurance policies , and leases .
to our knowledge , little literature has been developed for the temperature model of henan province , which is the most important state granary in china and is also a major financial market of china . in order to ensure food security , it is necessary to transfer the weather risk of henan province into financial markets through developing weather derivatives . so the main objective of our research is to take the first step to construct weather models for developing weather derivatives in henan province . we construct a temperature model for the first time for zhengzhou ( see figure 1 ) , which is the capital of henan province .
brockett et al . [ 8 ] applies the indifference pricing approach in a mean - variance setting to valuate weather derivatives . davis [ 12 ] introduces the marginal utility approach to pricing of weather derivatives , which is based on hedging in correlated assets and modelling of the index as a geometric brownian motion . platen and west [ 13 ] suggest using a world index as a benchmark for weather derivatives pricing . equilibrium theory has also been a popular approach for pricing weather derivatives . cao and wei [ 14 ] apply this to analyse us temperature futures ( see also hamisultane [ 15 ] for a more recent study ) .
the daily average temperature is calculated by averaging each day’s maximum and minimum temperature from midnight - to - midnight . given a weather station , let us note by
a . zapranis and a . alexandridis , “weather derivatives pricing : modelling the seasonal residuals variance of an ornstein - uhlenbeck temperature process with neural networks , ” in
p . l . brockett , m . wang , c . c . yang , and h . zou , “portfolio effects and valuation of weather derivatives , ”
the risks businesses face due to weather are somewhat unique . weather conditions tend to affect volume and usage more than they directly affect price . an exceptionally warm winter , for example , can leave utility and energy companies with excess supplies of oil or natural gas ( because people need less to heat their homes ) . or an exceptionally cold summer can leave hotel and airline seats empty . although the prices may change somewhat as a consequence of unusually high or low demand , price adjustments don ' t necessarily compensate for lost revenues resulting from unseasonable temperatures . ( for related reading , see : what impact does weather have on my investment in the weather industry ? )
get access to recent and historical weather settlement data for active and recently expired contracts in the u . s . , canada , europe , asia , and austrailia .
it is estimated that nearly 20 % of the u . s . economy is directly affected by the weather , and the profitability and revenues of virtually every industry—agriculture , energy , entertainment , construction , travel and others—depend to a great extent on the vagaries of temperature . in a 1998 testimony to congress , former commerce secretary william daley stated ,
weather is not just an environmental issue , it is a major economic factor . at least $ 1 trillion of our economy is weather - sensitive .
here , we should mention that the temperature of the physical formation process is extremely complex , especially for complex regional climates of china ; the study on the technical design temperature option is not enough and still worthy of more in - depth theoretical exploration and practices . we should develop more weather models for each geographic region for the weather derivative market in china . in addition , it is also necessary to further develop more precise temperature models for weather derivatives pricing . many other mathematical tools , such as wavelet functions , b - spline functions , and polynomial function , can be used for a more accurate modeling of temperature data . it would be interesting to treat carefully the jumps of temperatures due to extreme phenomena by integrating a term which describes their behavior within the stochastic model . this will make it possible to improve the performance of the daily scale modeling . in the end , we emphasize that it is also important to construct accurate weather models for other weather factors , such as the rain , the snow , or the fog , since the risks implied by these factors also deeply affect economic development of china .
the main users of weather derivatives are energy companies as demand for their products can vary drastically due to extreme weather conditions . the agricultural industry is the second main user of such instruments although other purchasers include firms arranging major sporting ( outdoor ) events and even tour operators . hedge funds are reputedly also major investors in this alternative asset class .
you can buy weather derivatives as an individual , but you ' ll want to consider the trading costs carefully to ensure that your risk of loss is worth the expense .
w . härdle and b . lopez cabrera , “infering the market price of weather risk , ” discussion paper , sfb 649 , humboldt - universität zu berlin , 2009 .
for european cities , cme ' s weather futures for the hdd months are calculated according to how much the day ' s average temperature is lower than 18° celsius . however cme weather futures for the summer months in european cities are based not on the cdd index but on an index of accumulated temperatures , the cumulative average temperature ( cat ) .
the weather derivatives market trades both over - the - counter ( otc ) , through brokers , and over an exchange , cme group . however , there is a direct interplay between these two marketplaces . weather trades are very often confirmed otc , and then
given up
to the cme for clearing . in this case , counterparties strike a bi - lateral transaction using a broker then process the trade through the cme , using established credit facilities to speed execution . [ 1 ] . the major weather brokers are :
we focus on catastrophe bonds , insurance - linked securities , alternative reinsurance capital , insurance & reinsurance linked investments . we also cover life , weather risk and longevity risk transfer .
the cereal company and the amusement park might buy futures contracts with an underlying weather index based on rainfall . the home heating company might want contracts based on a temperature index .
finally , weather risk is also unique in that it is highly localized , cannot be controlled and , despite great advances in meteorological science , still cannot be predicted precisely and consistently .
the weather market has grown tremendously over the last few years and participants trade over - the - counter and exchange - listed products at cme . the first weather derivative deal was in july 1996 when aquila energy structured a dual - commodity hedge for consolidated edison co ( con ed ) . the transaction involved coned ' s purchase of electric power from aquila for the month of august . the price of the power was agreed to , but a weather clause was embedded into the contract . this clause stipulated that aquila would pay coned a rebate if august turned out to be cooler than expected . the measurement of this was referenced to cooling degree days measured at new york city ' s central park weather station . if total cdds were from 0 to 10 % below the expected 320 , the company received no discount to the power price , but if total cdds were 11 to 20 % below normal , con ed would receive a $ 16 , 000 discount . other discounted levels were worked in for even greater departures from normal [ 2 ] .
explanation : here is an explanation in the case of weather insurance , which basically says that such analysis applies past experience to current positions , as your own text indicates .
burn rate
generally refers to the rate at which something like a contract ( or maybe an insurance reserve ) for example is consumed . burn analysis burn analysis is the simplest form of weather derivative pricing . it involves taking historical values for the index ( which may be based on raw , cleaned , or enhanced data , and which may have been detrended in some way ) and applying the financial contract to them . depending on the quality of the data used to calculate the historical indices used , burn analysis may give a useful first indication of the mean and range of possible payouts of a weather derivative contract , and can be done simply in a spreadsheet . the disadvantages of burn analysis are that it may not capture the possible extremes and may be unduly influenced by individual years in the historical record . it can also not be extended easily to analyse a portfolio of contracts . i am also pretty sure no insurance company would ever refer to
burn rate
in reference to fire insurance .
also , since the contract is index - based , buyers of weather derivatives do not need to demonstrate a loss . in order to collect insurance , on the other hand , damage must be shown .
we present our findings as follows . in the next section we review the basics of the cme market for weather derivatives . next , in section 3 , our temperature model with seasonal stochastic volatility is defined and analysed . section 4 contains results on the futures price dynamics for some commonly traded products at the cme . some empirical considerations of our model and its applications to weather derivatives are presented in section 5 .
shane joined nobel weather associates in 2010 at its inception under the name snowcast solutions . during that time , he has been focused on developing the analytics , product capabilities , and patent expansion . ( continue reading )
this is the first book to cover all the meteorological , statistical , financial , and mathematical issues that rise in pricing and risk management of weather derivatives . abstracts of public administration , development , and the environment
in contrast to the various outlooks provided by government and independent forecasts , weather derivatives trading gave market participants a quantifiable view of those outlooks ,
noted agbeli ameko , managing partner of energy and forecasting firm enercast .
the remainder of the paper is organized as follows . we introduce the basic concepts of weather derivative in section 2 . section 3 proposes a seasonal mean and volatility model that describes the daily average temperature behavior using the mean - reverting ornstein - uhlenbeck process . the unknown parameters of the process will be estimated with 62 years of daily average temperature from zhengzhou ( 57083 ) meteorological station . then we discuss the pricing model of hdd option based on the temperature forecasting model and price the hdd option with monte carlo simulation in section 4 . section 5 explains findings of our research and contains concluding remarks .
the main purpose of this paper is to present a feasible model for the daily average temperature on the area of zhengzhou and apply it to weather derivatives pricing . we start by exploring the background of weather derivatives market and then use the 62 years of daily historical data to apply the mean - reverting ornstein - uhlenbeck process to describe the evolution of the temperature . finally , monte carlo simulations are used to price heating degree day ( hdd ) call option for this city , and the slow convergence of the price of the hdd call can be found through taking 100 , 000 simulations . the methods of the research will provide a frame work for modeling temperature and pricing weather derivatives in other similar places in china .
broadly speaking , cme weather futures and options on futures are exchange - traded derivatives that , by means of specific indexes , reflect monthly and seasonal average temperatures of 15 u . s . and five european cities . these derivatives are legally binding agreements made between two parties and settled in cash . each contract is based on the final monthly or seasonal index value determined by earth satellite ( earthsat ) corp , an international firm specializing in geographic information technologies . other european weather firms determine values for the european contracts . earthsat works with temperature data provided by the national climate data center ( ncdc ) , and the data it provides is used widely throughout the over - the - counter weather derivatives industry as well as by cme .
asc 815 , derivatives and hedging , provides comprehensive guidance on derivative and hedging transactions . it sets forth the definition of a derivative instrument and specifies how to account for such instruments , including derivatives embedded in hybrid instruments . in addition , asc 815 establishes when reporting entities , in certain limited , well - defined circumstances , may apply hedge accounting to a relationship involving a designated hedging instrument and hedged exposure . hedge accounting provides an alternative , special way of accounting for such relationships . asc 815 also provides guidance on how reporting entities determine whether an instrument is ( 1 ) indexed to the reporting entity’s own stock and ( 2 ) considered to be settled in the reporting entity’s own stock . such a determination will dictate whether an instrument should be accounted for as debt or equity and the appropriate accounting for the instrument . finally , asc 815 addresses the accounting for non - exchange - traded weather derivatives . the codification also provides certain industry - specific derivatives and hedging guidance , but such guidance is included in the industry sections of the codification .
the advantages of these products are becoming increasingly known : the trading volume of cme weather futures in 2003 more than quadrupled from the previous year , totaling roughly $ 1 . 6 billion in notional value , and the momentum of this volume continues to increase .
when not managing a weather derivatives exchange , i am a senior business analyst / consultant helping businesses organize and develop digital solutions to reduce operational & regulatory risk . i specialize in specifying requirements for large data integration projects for capital markets , custody and risk management .
mr . noyes founded nobel weather associates under its original name , snowcast solutions , in 2010 . this new business leveraged bill’s trading experience and was spawned while running mac’s property maintenance services , a regional snow removal company in the chicago area . ( continue reading )
list of figures list of tables acknowledgements 1 . weather derivatives and the weather derivatives market 2 . data cleaning and trends 3 . the valuation of single contracts using burn analysis 4 . the valuation of single contracts using index modelling 5 . further topics in the valuation of single contracts 6 . valuation of single contracts using daily methods 7 . modelling portfolios 8 . managing portfolios 9 . introduction to meteorological forecasts 10 . the use of meteorological forecasts in pricing 11 . arbitrage pricing models 12 . risk management 13 . modelling non - temperature data appendices references index .
temperature futures may be used by energy producers to hedge their demand risk ( see perez - gonzales and yun [ 7 ] for a study of weather hedging of us energy utilities ) . other typical users of such futures contracts for hedging purposes are electricity retailers , holiday resorts , producers of soft drinks and beer , or even organisers of outdoor sport events , and fairs . also investors have seen the potential in weather derivatives as a tool for portfolio diversification , since the derivatives are not expected to correlate significantly with the financial markets ( see brockett et al . [ 8 ] ) .
list of figures ; list of tables ; acknowledgements ; 1 . weather derivatives and the weather derivatives market ; 2 . data cleaning and trends ; 3 . the valuation of single contracts using burn analysis ; 4 . the valuation of single contracts using index modelling ; 5 . further topics in the valuation of single contracts ; 6 . valuation of single contracts using daily methods ; 7 . modelling portfolios ; 8 . managing portfolios ; 9 . introduction to meteorological forecasts ; 10 . the use of meteorological forecasts in pricing ; 11 . arbitrage pricing models ; 12 . risk management ; 13 . modelling non - temperature data ; appendices ; references ; index . show more
a classical approach that was used to derive the price of a temperature derivative is the performing of simulations based on historical data , known as hba ( history burn analysis ) . hba is very easy to calculate since there is no need to fit the distribution of the temperature or to solve stochastic differential equations . however , this method can only price the contract roughly since the assumption is not correct usually . it is apparent that the temperature time series is not stationary but contains seasonality , jumps , and trends [ 1 – 4 ] , so this method is bound to be biased and inaccurate .
since temperature exhibits strong and clear seasonality , the mean - reverting o - u process is proposed in most weather derivatives literature . dischel [ 15 ] argued that the classical black - scholes - merton pricing approach cannot be directly applied in weather derivatives pricing . he is the first person who proposed a continuous stochastic model in temperature forecasting . dornier and queruel [ 16 ] use a more general arma model than the ar ( 1 ) model proposed by [ 17 ] , where benth and saltyte - benth fitted norwegian data by modeling the dat variations with a mean - reverting process where the noise process is modeled by a generalized hyperbolic levy process . instead of the fbm used in their previous work , they expanded the work of dornier and queruel . in order to rectify the rejection of the normality hypothesis , zapranis and alexandridis [ 18 ] replaced the simple ar ( 1 ) model by more complex ones . their results from the dat in paris indicate that , as the model gets more complex , the noise part draws away from the normal distribution . swishchuk and cui [ 19 ] applied two daily average temperature models to canadian cities data and derived their derivative pricing applications . göncü [ 20 ] proposes a seasonal volatility model that estimates daily average temperatures of beijing , shanghai and shenzhen using the mean - reverting ornstein - uhlenbeck process and then derive analytical approximation formulas for the sensitivities of these contracts . their results verify the convergence of the monte carlo and approximation estimators .
weather contracts on u . s . cities for the winter months are tied to an index of heating degree day ( hdd ) values . these values represent temperatures for days when energy is used for heating . the contracts for u . s . cities in the summer months are geared to an index of cooling degree day ( cdd ) values , which represent temperatures for days on which energy is used for air conditioning . both hdd and cdd values are calculated according to how many degrees a day ' s average temperature varies from a baseline of 65° fahrenheit ( the day ' s average temperature is based on the maximum and minimum temperature from midnight to midnight ) .