Occupational futures? Divesting real estate and corporate PFI

Property ownership can tie up large amounts of capital and management energy that business could employ more productively elsewhere. Competitive pressures, accounting changes and increasingly sophisticated occupier requirements are building demand for new and innovative ways to satisfy corporate occupation needs. The investment climate is also changing. Falling interest rates and falling inflation can be expected to undermine returns from the traditional FRI lease. In future, investment returns will be more dependent on active and innovative management geared to the needs of occupiers on whom income depends. Occupier and investor interests, therefore, look set to coincide, but unlocking the potential for both parties will depend on developing new finance and investment vehicles that align their respective needs. In the UK, examples include PFI in the public sector and off-balance sheet financing in the private sector. In the USA, “synthetic lease” structures have also become popular. Growing investment market experience in assessing risks and returns suggests scope for further innovative arrangements in the corporate sector. But how can such arrangements be structured? What are the risks, drivers and barriers?

BSkyB transformation from a new loss-making venture to a successful organisation: case study and interview with Jeremy Darroch, Chief Executive of British Sky Broadcasting Group Plc

Purpose – This paper aims to articulate strategic dilemmas faced by a Chief Executive of a highly successful company and how such dilemmas were resolved. Design/methodology/approach – The case is based on a semi-structured interview with Mr Jeremy Darroch – Chief Executive of BSkyB – and analysis of documentary evidence. Findings – It is often difficult to implement strategies that simultaneously yield high organic growth rate, innovation, and a healthy balance-sheet. The paper sheds light on how Sky has met this challenge. Research limitations/implications – The research offers a unique insight into the views of a principal strategist and articulates the background to offer context, however, because of its design the findings are not generalisable. Originality/value – Very few articles offer insight into the thinking of those with principal responsibility for design and delivery of strategy. This paper offers such an insight based on a detailed interview with a highly successful Chief Executive.

Rhetoric in international standard setting process: constructing accounting reality

The paper seeks to explore in depth the ways in which rhetorical strategies are employed in the international accounting standard setting process. The study proposes that rather than simply detailing new accounting requirements, the texts and drafts of accounting standards are artefacts, i.e. deliberately and carefully crafted products, that construct, persuade and encourage certain beliefs and behaviours. The persuasive and constructive strategies are also employed by the constituents submitting comment letters on the regulatory proposals. Consequently, the international accounting standard setting process is an ‘interactive process of meaning making’ (Fairclough, 1989). The study regards accounting as a social construct based on intersubjectivity (Searle, 1995; Davidson, 1990, 1994) and posits language as a constitutive factor in the process (Saussure, 1916; Peirce, 1931-58). This approach to the use of language and the role of rhetoric as a persuasive tool to convince others to our perception of ‘accounting reality’ is supported by the sociological work of Bourdieu (1990, 1991). Bourdieu has drawn our attention to how language becomes used, controlled, reformed and reconstituted by the social agents for the purposes of establishing their dominance. In our study we explore in particular the joint IASB and FASB proposals and subsequent regulations on the scope of consolidation and relevant disclosures that address issues of off-balance sheet financing, a subject that is very timely and of great topical importance. The analysis has revealed sophisticated rhetorical devices used by both the Boards and by the lobbyists. These reflect Aristotelian ethos, pathos and logos. The research demonstrates that those using accounting standards as well as those reading comment letters on the proposals for new standards should be aware of the normative nature of these documents and the subjectivity inherent in the nature of the text.

Mixed use urban regeneration at Brindleyplace, Birmingham and Gunwharf Quays, Portsmouth: an assessment of the impact on local and national economies

This independent research was commissioned by the British Property Federation. The report examines the local and national economic impact of two major, mixed use schemes in terms of tax revenue, household income, business rates and council tax and jobs creation. A regeneration balance sheet for each scheme is presented in the context of government policy and other related research. The report provides a comprehensive review of government policy and the role of retail and other land uses in regeneration. Highlighting the importance of national and local multiplier effects with detailed statistics drawn from a variety of sources, this fully illustrated colour research report builds up a detailed picture of economic impact of the mixed use regeneration schemes in the local economies of Birmingham and Portsmouth. The report will be of interest to property people, planners and all involved in regeneration and local economies.

Bank integration and co-movements across housing markets

This paper investigates whether bank integration measured by cross-border bank flows can capture the co-movements across housing markets in developed countries by using a spatial dynamic panel model. The transmission can occur through a global banking channel in which global banks intermediate wholesale funding to local banks. Changes in financial conditions are passed across borders through the banks’ balance-sheet exposure to credit, currency, maturity, and funding risks resulting in house price spillovers. While controlling for country-level and global factors, we find significant co-movement across housing markets of countries with proportionally high bank integration. Bank integration can better capture house price co-movements than other measures of economic integration. Once we account for bank exposure, other spatial linkages traditionally used to account for return co-movements across region – such as trade, foreign direct investment, portfolio investment, geographic proximity, etc. – become insignificant. Moreover, we find that the co-movement across housing markets decreases for countries with less developed mortgage markets characterized by fixed mortgage rate contracts, low limits of loan-to-value ratios and no mortgage equity withdrawal.

The impact of 21st century Arctic sea ice decline on the climate and mass balance of the Greenland ice sheet and Svalbard’s glaciers and ice caps

The Arctic is a region particularly susceptible to rapid climate change. General circulation models (GCMs) suggest a polar amplification of any global warming signal by a factor of about 1.5 due, in part, to sea ice feedbacks. The dramatic recent decline in multi-year sea ice cover lies outside the standard deviation of the CMIP3 ensemble GCM predictions. Sea ice acts as a barrier between cold air and warmer oceans during winter, as well as inhibiting evaporation from the ocean surface water during the summer. An ice free Arctic would likely have an altered hydrological cycle with more evaporation from the ocean surface leading to changes in precipitation distribution and amount. Using the U.K. Met Office Regional Climate Model (RCM), HadRM3, the atmospheric effects of the observed and projected reduction in Arctic sea ice are investigated. The RCM is driven by the atmospheric GCM HadAM3. Both models are forced with sea surface temperature and sea ice for the period 2061-2090 from the CMIP3 HadGEM1 experiments. Here we use an RCM at 50km resolution over the Arctic and 25km over Svalbard, which captures well the present-day pattern of precipitation and provides a detailed picture of the projected changes in the behaviour of the oceanic-atmosphere moisture fluxes and how they affect precipitation. These experiments show that the projected 21stCentury sea ice decline alone causes large impacts to the surface mass balance (SMB) on Svalbard. However Greenland’s SMB is not significantly affected by sea ice decline alone, but responds with a strongly negative shift in SMB when changes to SST are incorporated into the experiments. This is the first study to characterise the impact of changes in future sea ice to Arctic terrestrial cryosphere mass balance.

The Greenland Ice Sheet's surface mass balance in a seasonally sea-ice free Arctic

General circulation models predict a rapid decrease in sea ice extent with concurrent increases in near surface air temperature and precipitation in the Arctic over the 21st century. This has led to suggestions that some Arctic land ice masses may experience an increase in accumulation due to enhanced evaporation from a seasonally sea ice free Arctic Ocean. To investigate the impact of this phenomenon on Greenland ice sheet climate and surface mass balance (SMB) a regional climate model, HadRM3, was used to force an insolation-temperature melt SMB model. A set of experiments designed to investigate the role of sea ice independently from sea surface temperature (SST) forcing are described. In the warmer and wetter SI + SST simulation Greenland experiences a 23% increase in winter SMB but 65% reduced summer SMB, resulting in a net decrease in the annual value. This study shows that sea ice decline contributes to the increased winter balance, causing 25% of the increase in winter accumulation; this is largest in eastern Greenland as the result of increased evaporation in the Greenland Sea. These results indicate that the seasonal cycle of Greenland's SMB will increase dramatically as global temperatures increase, with the largest changes in temperature and precipitation occurring in winter. This demonstrates that the accurate prediction of changes in sea ice cover is important for predicting Greenland SMB and ice sheet evolution.

Probabilistic parameterisation of the surface mass balance--elevation feedback in regional climate model simulations of the Greenland ice sheet

We present a new parameterisation that relates surface mass balance (SMB: the sum of surface accumulation and surface ablation) to changes in surface elevation of the Greenland ice sheet (GrIS) for the MAR (Modèle Atmosphérique Régional: Fettweis, 2007) regional climate model. The motivation is to dynamically adjust SMB as the GrIS evolves, allowing us to force ice sheet models with SMB simulated by MAR while incorporating the SMB–elevation feedback, without the substantial technical challenges of coupling ice sheet and climate models. This also allows us to assess the effect of elevation feedback uncertainty on the GrIS contribution to sea level, using multiple global climate and ice sheet models, without the need for additional, expensive MAR simulations. We estimate this relationship separately below and above the equilibrium line altitude (ELA, separating negative and positive SMB) and for regions north and south of 77� N, from a set of MAR simulations in which we alter the ice sheet surface elevation. These give four “SMB lapse rates”, gradients that relate SMB changes to elevation changes. We assess uncertainties within a Bayesian framework, estimating probability distributions for each gradient from which we present best estimates and credibility intervals (CI) that bound 95% of the probability. Below the ELA our gradient estimates are mostly positive, because SMB usually increases with elevation: 0.56 (95% CI: −0.22 to 1.33) kgm−3 a−1 for the north, and 1.91 (1.03 to 2.61) kgm−3 a−1 for the south. Above the ELA, the gradients are much smaller in magnitude: 0.09 (−0.03 to 0.23) kgm−3 a−1 in the north, and 0.07 (−0.07 to 0.59) kgm−3 a−1 in the south, because SMB can either increase or decrease in response to increased elevation. Our statistically founded approach allows us to make probabilistic assessments for the effect of elevation feedback uncertainty on sea level projections (Edwards et al., 2014).

Effect of uncertainty in surface mass balance--elevation feedback on projections of the future sea level contribution of the Greenland ice sheet

We apply a new parameterisation of the Greenland ice sheet (GrIS) feedback between surface mass balance (SMB: the sum of surface accumulation and surface ablation) and surface elevation in the MAR regional climate model (Edwards et al., 2014) to projections of future climate change using five ice sheet models (ISMs). The MAR (Modèle Atmosphérique Régional: Fettweis, 2007) climate projections are for 2000–2199, forced by the ECHAM5 and HadCM3 global climate models (GCMs) under the SRES A1B emissions scenario. The additional sea level contribution due to the SMB– elevation feedback averaged over five ISM projections for ECHAM5 and three for HadCM3 is 4.3% (best estimate; 95% credibility interval 1.8–6.9 %) at 2100, and 9.6% (best estimate; 95% credibility interval 3.6–16.0 %) at 2200. In all results the elevation feedback is significantly positive, amplifying the GrIS sea level contribution relative to the MAR projections in which the ice sheet topography is fixed: the lower bounds of our 95% credibility intervals (CIs) for sea level contributions are larger than the “no feedback” case for all ISMs and GCMs. Our method is novel in sea level projections because we propagate three types of modelling uncertainty – GCM and ISM structural uncertainties, and elevation feedback parameterisation uncertainty – along the causal chain, from SRES scenario to sea level, within a coherent experimental design and statistical framework. The relative contributions to uncertainty depend on the timescale of interest. At 2100, the GCM uncertainty is largest, but by 2200 both the ISM and parameterisation uncertainties are larger. We also perform a perturbed parameter ensemble with one ISM to estimate the shape of the projected sea level probability distribution; our results indicate that the probability density is slightly skewed towards higher sea level contributions.

Ice-sheet contributions to future sea-level change

Accurate simulation of ice-sheet surface mass balance requires higher spatial resolution than is afforded by typical atmosphere-ocean general circulation models (AOGCMs), owing, in particular, to the need to resolve the narrow and steep margins where the majority of precipitation and ablation occurs. We have developed a method for calculating mass-balance changes by combining ice-sheet average time-series from AOGCM projections for future centuries, both with information from high-resolution climate models run for short periods and with a 20 km ice-sheet mass-balance model. Antarctica contributes negatively to sea level on account of increased accumulation, while Greenland contributes positively because ablation increases more rapidly. The uncertainty in the results is about 20% for Antarctica and 35% for Greenland. Changes in ice-sheet topography and dynamics are not included, but we discuss their possible effects. For an annual- and area-average warming exceeding 4.5 +/- 0.9 K in Greenland and 3.1 +/- 0.8 K in the global average, the net surface mass balance of the Greenland ice sheet becomes negative, in which case it is likely that the ice sheet would eventually be eliminated, raising global-average sea level by 7 m.

Increases in plasma sheet temperature with solar wind driving during substorm growth phases

During the substorm growth phase, magnetic reconnection extracts ~10^15 J from the solar wind through magnetic reconnection at the magnetopause, which is then stored in the magnetotail lobes. Plasma sheet pressure then increases to balance magnetic flux density increases in the lobes. We examine plasma sheet pressure, density and temperature during substorm growth phases using nine years of Cluster data (>316,000 data points). We show that plasma sheet pressure and temperature are higher during growth phases with higher solar wind driving whereas the density is approximately constant. We also show a weak correlation between plasma sheet temperature before onset and the minimum SuperMAG SML auroral index in the subsequent substorm. We discuss how energization of the plasma sheet before onset may result from thermodynamically adiabatic processes; how hotter plasma sheets may result in magnetotail instabilities and how this relates to the onset and size of the subsequent substorm expansion phase.