Archive | Archive – world property

World property W15Oct14 – Mirvac buys Birkenhead Pt, NAB adds UK asset manager, Scotland replaces stamp duty, Sovereign funds trade in London

Mirvac buys Birkenhead Point
NAB buys into UK manager Orchard Street
Scotland replaces stamp duty
Norges Bank buys $1.2 billion London building from GIC

Mirvac buys Birkenhead Point

Birkenhead Point, Sydney.

Birkenhead Point, Sydney.

Mirvac Group has entered into an agreement to acquire the Birkenhead Point Shopping Centre at Drummoyne, 5km from the Sydney cbd, including the adjoining carparking facility & marina, for $A310 million.

CDL Hotels NZ Ltd (now Millennium & Copthorne Hotels NZ Ltd) sold Birkenhead Point to Intro International Ltd (Denis Jen) in 2004 for $120 million. It had been an asset of Kingsgate International Corp Ltd, controlled by CDL & Tai Tak Securities Pte Ltd.

Abacus Property Group & the Kirsh Group bought it in 2010 for $A174 million and upgraded the retail offer into a convenience-based shopping centre & fashion outlet centre. The 187-berth marina was in the final upgrade stages.

Mirvac said its purchase, expected to be completed in November, represented a fully let passing yield of 6.6%.

The 3.7ha waterfront site has a gross lettable area of 33,100m² and parking for 1395 cars. Moving annual turnover is $A228.5 million at $A8082/m².

Link: Mirvac Group

NAB buys into UK manager Orchard Street

National Australia Bank’s global asset management business, NAB Asset Management, has bought a majority stake in UK specialist commercial property investment manager Orchard Street Investment Management LLP from the existing partners.

The bank has 12 other global asset managers operating in all major asset classes, managing $A178 billion in 50 investment strategies.

Orchard Street has grown its assets under management from £800 million to £4 billion in 10 years.

Scotland replaces stamp duty

A new land & buildings transaction tax will replace stamp duty in Scotland next April, and Property Wire editor Ray Clancy said at the weekend he expects this to herald change in the rest of the UK.

The starting threshold is £135,000, up from the stamp duty threshold of £125,000. A marginal tax of 2% will apply to the proportion of a transaction between £135-250,000, a 10% rate will apply between £250,001-1 million and there will be a new 12% tax on properties costing more than £1 million.

The Scottish Government’s Cabinet Secretary for Finance, Employment & Sustainable Growth, John Swinney, announced the rates & bands for the tax last Thursday, as part of the draft budget for 2015-16. The proposed rates & bands are subject to parliamentary approval.

It’s the first tax created by a Scottish parliament in 300 years.

Links: Scottish Government, land & buildings transaction tax
Property Wire, Property tax set for major change in the UK

Norges Bank buys $1.2 billion London building from GIC

The Bank of America Merrill Lynch Financial Centre, London.

The Bank of America Merrill Lynch Financial Centre, London.

Norway’s state-owned investment fund based on oil royalties, Norges Bank Investment Management, bought a 54,350m² London office complex (at left, aerial shot above) for £582.5 million ($NZ1.182 billion) cash last week from the Singapore Government’s sovereign wealth fund, GIC.

GIC bought the property from Merrill Lynch & Co Inc in 2007 for £480 million.

The property, the Bank of America Merrill Lynch Financial Centre at 2 King Edward St, is a freehold office campus consisting of 4 independent office buildings occupying a 1.3ha site. It’s fully leased to Bank of America Merrill Lynch, which will continue to manage it.

The Norwegian fund also bought a 50% interest in a 42,000m² Dutch logistics property last week, through its joint venture with US company Prologis.

Norges paid €12.4 million, again with no debt financing, for the building in Born.

Link: Norges Bank Investment Management

Attribution: Mirvac, Abacus, NAB, Orchard St, Scottish Government, Norges Bank

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

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Snapshot on world property, week to 27 November 2011

Contents:

 

Centro survives

Latest from RICS internationally

 

23 November 2011:

 

Centro survives

Centro Property Group got the overwhelming votes it needed yesterday from lenders & convertible bondholders to stay in business. The lenders voted 100% in favour after 28% abstained, and the bondholders were just under 100% in favour of the scheme of arrangement which will see securityholders – 26,000 mostly small; investors with an average holding of around 37,000 securities – get A5.03c/security.

They stood to get nothing if the scheme wasn’t approved and the 2 Centro entities, Centro Property Trust & Centro Properties Ltd, were forced into receivership. The outcome is that all the assets will go to the renamed Centro Properties – Central Retail Australia – which will be owned by its secured lenders in exchange for the cancellation of debt.

The scheme still needs the approval of the NSW Supreme Court, which Centro’s former auditor, PricewaterhouseCoopers, said on Monday it would challenge.

The group was one of the major Australian property casualties of the global financial crisis and has been struggling to stay alive since the end of 2007. It sold its US assets in February for $US9.4 billion but was still not going to be able to meet its debt obligations.

It had negative equity of $A1.3 billion at 30 June this year and $A2.9 billion of debt maturing on 15 December – now cancelled, if the scheme gets court approval.

The scheme was faltering until late last week, when $A90 million of debt was found to offer to shareholders, winning over the largest external shareholder, Marathon Asset Management.

The new-look listed property trust will own 43 Australian shopping centres worth $A4.4 billion. Combining that with its syndicate business, the group will have assets of $A7 billion.

 

Latest from RICS internationally

The RICS (Royal Institution of Chartered Surveyors) global real estate weekly updates, which I was having trouble connecting to initially, can be reached from this link: RICS, grew.

Want to comment? Go to the forum.

 

Attribution: Compiled & story written by Bob Dey for the Bob Dey Property Report.

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Snapshot on world property, week to 6 November 2011

Contents:

 

RICS weekly update at foot of page

Simon files case against home state for not collecting net sales tax

Goodman wins China award, has 5 new Chin projects underway

Goodman European Logistics Fund launches rights issue, group starts 3 new European projects

New Woolworths chief ponders property float, Dick Smith options, multi-channel retailing

Valad resumes growth under Blackstone ownership

RICS weekly update

 

6 November 2011:

 

The Snapshot on world property is, I think, a more effective way of letting you know about many overseas property events, succinctly, rather than trying to put a handful of them into “proper” story format… and losing the lot because I don’t have time to do that.

It’s been in abeyance since February 2004, along with most of the other Snapshots, when numerous changes were made to The Bob Dey Property Report.

 

RICS weekly update at foot of page

 

Introduced this week, at the foot of the page, is the weekly update on world property news from RICS (the Royal Institution of Chartered Surveyors; New Zealand fits into the Oceania branch of it).

 

Simon files case against home state for not collecting net sales tax

 

Simon Property Group Inc took up the battle of bricks-&-mortar retailers against internet sales on Thursday by filing a complaint against its home state of Indiana for not collecting sales tax from Amazon on sales made within the state.

Simon, biggest retail real estate owner, developer & manager in the US, filed its complaint against the state in the Marion County Circuit Court. The company said it wasn’t seeking monetary damages, but “to benefit all of Indiana’s taxpayers and the state’s bricks-&-mortar retailers, many of which are Simon’s tenants at its 27 shopping centres in Indiana….

“Amazon.com is required by Indiana law to collect & remit sales & use taxes to the state, for sales made over the internet, but has consistently refused to do so even though it is required by current Indiana laws.”

 

Goodman wins China award, has 5 new Chin projects underway

Goodman Group was awarded the Westpac business excellence award for large companies at the end of October for its performance in greater China. The company entered the China market in 2005 and has $US2 billion invested in the region.

It’s become one of the largest industrial landlords in Hong Kong, with a portfolio of about 900,000m² with a value of $US1.3 billion. Its latest development project, Interlink, is due for completion in January and is the largest industrial development in Hong Kong for over 10 years, offering 223,000m². It’s also the first building of its type to be awarded both a LEED certification and the HK BEAM Gold standard certification. In mainland China, Goodman owns & manages a portfolio of 7 warehouse & distribution facilities, with a combined value of $US215 million. Over the last 12 months, Goodman has also started 5 new development projects with a total estimated completion value of $US255 million. Goodman has a 2 million ft² (186,000m²) China land bank capable of delivering 1 million ft² of prime warehousing space.

Goodman European Logistics Fund launches rights issue, group starts 3 new European projects

The Goodman European Logistics Fund launched a €400 million underwritten rights issue last week and an €800 million debt refinance package, ensuring the fund maintains its gearing below 40%. It will refinance €400 million of secured facilities and have a €400 million unsecured facility structured to allow the fund to transition to debt capital markets to diversify its long-term funding sources. Goodman Group chief executive & fund investment committee chairman Greg Goodman said the refinancing would also provide about €500 million of investment capability, giving the fund capacity to increase gross assets to €2 billion and improving financial flexibility. The fund is continental Europe’s largest unlisted logistics fund, with €1.6 billion of logistics assets under management and a weighted average lease term of about 5 years. In the last 3 weeks, Goodman has announced planning consent for a 12,000m² facility at its Thurrock commercial park in Essex for A&N Media, which will invest £50 million in the new plant; a 78,000m² logistics centre for e-commerce retailer Zalando at the Erfurt freight terminal in the centre of Germany, pre-leased on a 16-year term; and a 45,000m² design-build facility in Hanover for Volkswagen Commercial Vehicles – Goodman’s ninth German development this year.

Link: Goodman

New Woolworths chief ponders property float, Dick Smith options, multi-channel retailing

Woolworths Ltd’s new chief executive, Grant O’Brien, mentioned a float of the group’s multi-billion-dollar property portfolio in a wide-ranging investor briefing in Sydney on Wednesday.

The property float wasn’t mentioned in company releases and didn’t extend to more than 2 paragraphs in news stories from the briefing. Mr O’Brien raised it alongside a strategic review of the Dick Smith consumer electronics business, Woolworths’ intention to become Australia’s leading multi‐channel retailer and the opening of 61 new stores this year (a net 44 after closures to a total 117).

Mr O’Brien said he’d report further on the Dick Smith review at its half-year results in February. “Consumer electronics as a retail category has been experiencing significant challenges, particularly in relation to tightened customer spending on discretionary products, category deflation and the effects of the high $A.”

Dick Smith operates 386 stores in Australia & New Zealand, with 2011 sales up 4.2% to $A1.86 billion but ebit down 14.9% to $A26.8 million.

On becoming Australia’s leading multi‐channel retailer, Mr O’Brien said: “We are really seeing a revolution in retail as customers integrate mobile, social networking and other internet‐enabled technologies into their bricks & mortar shopping experience. It isn’t a question of online or offline, it’s about integrating the 2 seamlessly, and we are increasingly finding that our most valuable customers are ones who do both – for example, in our supermarkets business, customers who shop both in‐store & online spend 70% more than customers who only shop in‐store.”

Link: Woolworths

Valad resumes growth under Blackstone ownership

 

Valad Property Group – listed on the ASX until its takeover by Blackstone Real Estate Advisors LP in August – said on Friday it had bought a 6011m² light industrial park just north of Paris for €6.1 million for its Parc d’Activités fund, which invests in multi-let industrial estates, mostly in the Ile-de-France area. Valad’s 42 properties in France, worth €500 million, are held in 4 of its 15 funds.

Valad Property Group manages $A9 billion of property in 7 geographic regions, through 23 offices in 13 countries. Its core business is value-adding real estate, specialising in multi-let commercial & industrial property, with local asset management teams taking care of about 8500 tenants in 900 properties.

2 affiliates of Blackstone Real Estate Advisors completed their acquisition of Valad’s securities on 26 August 2011. The $A1.80/stapled security price was 56% above the closing price before Blackstone’s offer was launched, but about 33% below net portfolio value.

Valad’s results for the December 2010 half showed its predicament – gearing up to 51.3%, lenders willing to extend its $A200 million facility to the end of 2012 but an $A51 million net loss for the period.

 

Link: Valad Property Group

 

RICS weekly update

 

In this week’s edition, the RICS global real estate weekly focus is on:

Australian monetary policyEuropean monetary policyUS construction spending and new housing initiativesUK construction sentiment

Link: What’s new on RICS Global

Want to comment? Go to the forum.

 

Attribution: Compiled & story written by Bob Dey for the Bob Dey Property Report.

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Snapshot on world property, week to 31 December 2000

Latest: US retailers close, Sunrise sells old folks communities, Ken of Tokyo buys Embassy of Tahoe, Duke-weeks and JP Morgan j/v, reits can trim dividends, new Hyatt HQ in Chicago, Mitsui and Kumagai Gumi seek debt waivers, black TV businessman buys Hilton suites, mobile phone towers sale, there’s better than Ohio, US building inflation up 4.67% for year, phone & wire sites sale, fund bulks up but cost unknown, small US affordable housing boost, US property website sold, Equity Office sells one, 35-37% return target for Miami developer, Sainsbury sells Homebase, Delancey cashes up.

29 December 2000

Chicago-based department store chain Montgomery Ward closed the doors of its 250 stores in 31 states yesterday and filed for bankruptcy after 128 years in business. Weak holiday sales were the final straw for the chain, now owned by General Electric’s GE Capital. Two days earlier, Massachusetts-based discount store Bradlee’s filed for chapter 11 bankruptcy protection. It had 105 stores in seven north-eastern states and turnover of $US1.5 billion last year. Same-stores sales fell 4.4% in the year to November.

Sunrise Assisted Living Inc, of Virginia, has signed to sell nine communities containing 666 units for $US131 million to a limited partnership formed by Prudential Real Estate Investments (for Prudential, five pension funds, and Sunrise with 25% ownership and a long-term management contact). It has sold another two communities containing 133 units to Aureus Group LLC for $US28.1 million, also with a long-term management contract. Sunrise opened 27 communities this year, sold 22 for a total $US314 million, and plans to continue selling 15-20 a year. It operates 163 communities in the US and UK for 12,800 residents. Sales details show the Auereus sale averaged $US211,000/unit and $US176,000/resident, the Prudential sales $US197,000 and $US164,000, and the average overall was $US199,000/unit and $US166,000/resident. The details also showed debt on the Prudential properties was $US12 million above book value, but with a sale $US45 million above book value.

Ken Corp of Tokyo has bought the 400-suite Embassy Suites Lake Tahoe resort for an undisclosed sum, but will make the operation debt-free. The resort, managed by Hilton Hotels, opened in 1991. The previous owners filed for chapter 11 bankruptcy in 1998.

Duke-Weeks Realty Corp and JP Morgan Investment Management Inc have put together an industrial property joint venture in the Dallas area containing 430,000m² in 29 buildings, five of them under development, and 67ha for future development of another 280,000m². The two partners entered a similar joint venture in 1995, and expanded it in October from a $US248 million venture to $US790 million.

The Reit Modernisation Act comes into force in the US on New Year’s Day, cutting from 95% to 90% the minimum distribution requirement of a real estate investment trust’s taxable income.

28 December 2000

Hotel group Hyatt Corporation is to get a 60-storey, 111,500m², $US350 million (total project cost) new headquarters at Wacker Drive and Monroe St, on the south branch of the Chicago River. It will be British architect Lord Norman Foster’s first Chicago work. Construction should start at the end of 2001 and finish mid-2004. Hyatt and affiliates will provide 80% of the required equity and take up to one-third of the tower. The Hyatt-controlling Pritzker family’s Pritzker Realty Group LLC has formed a joint venture with Prime Group Realty Trust, which will provide 20% of the equity, to develop the 5660m² site on a street which already boasts some of the world’s most impressive examples of modern skyscraper architecture.

Mitsui Construction Co has decided to seek forgiveness of ¥163 billion ($NZ3.2 billion) of debt from 12 lenders. Its negative net worth totals ¥88.3 billion.

Another Japanese contractor, Kumagai Gumi, is still working towards agreement with its banks on a ¥450 billion ($NZ8.9 billion) request for a waiver. Its share price lifted 20% on the prospect of a decision from the banks, and the shares of its biggest creditor, Sumitomo Bank, rose slightly on that prospect. Sumitomo is owed ¥234 billion and Shinsei Bank ¥100 billion.

27 December 2000

Black Entertainment Television founder, chairman, chief executive and majority shareholder Robert L Johnson has celebrated BET Holdings II Inc’s sale to media giant Viacom at the beginning of November in a scrip deal for $US3 billion, with assumption of $US570 million of debt, by buying seven Homewood Suites by Hilton properties for comparative petty cash — 989 rooms for $US95 million (at $NZ217,000/room). Mr Johnson is a director of Hilton Hotels Corp, which will retain long-term franchise and management contracts for all these extended-stay properties. The sale was to a newly formed entity, RLJ Development LLC.

Those mobile phone towers, that so concern environmentalists and people worried about radio-wave impacts, are worth a lot more than the heated air of a planning argument. Crown Castle Australia has just agreed to buy 669 of them from Vodafone Australia for $US130 million ($NZ440,000 each), with an option on another 600 over the next six years. The buyer is two-thirds owned by Crown Castle International Corp of Houston and one-third by Jump Capital, a New Zealand investment group headed by Fay Richwhite.

Associated Estates Realty Corp of Cleveland, Ohio, has continued its expansion out of the US Mid-west by selling two Ohio multi-family communities and buying a block of land on Florida’s Intracoastal Highway at Boynton Beach where it will build apartments, a marina, parking and a small commercial component. The trust still owns 32,000 residential units in 135 properties.

The Turner Corp building index, run by the biggest building company in the US, will show a 1% fourth-quarter rise to 605 points after three 1.2% quarterly rises, putting US building inflation up 4.67% in 2000. Turner increased its construction turnover from $US4.8 billion in 1999 to $US5.7 billion. Turner was bought last year by Germany’s biggest builder, Hochtief AG (which is also the major shareholder in Leighton Holdings of Australia). Ultimate controlling shareholder is the Rhine Westphalia Electricity Co, RWE.

US RealTel Inc has sold its 8870 North American sites to SpectraSite Holdings Inc of Cary, North Carolina, which now owns more than 30,000 communications sites, including 9000 mobile communication towers. SpectraSite provides shared antennae sites and outsourced network services, including owning rooftops.

KWI Property Fund I has done some more shopping to bulk itself up, without disclosing the details like price and return. Latest buys are two fully leased lowrise campus-style office properties in Austin, Texas, containing 11,200m². I questioned the reit’s failure to disclose basic details a fortnight ago, without response. But the market has giving parent company Kennedy-Wilson International a hiding — its share price yesterday of $US4.12½ compares to $US7.62½ a year ago and a year’s high of $US11.25. Total liabilities are 65% of total assets, the debt-equity ratio is 35%, and $US23 million of goodwill is the kind of intangible an outfit on the down doesn’t need.

One of President Clinton’s outgoing bill signings was the first increase in 14 years for the low-income housing tax credit programme allocation formula, which gives investors 10 years of federal tax credits. Under this formula, Lend Lease Real Estate Investments Inc, part of the Sydney-based Lend Lease Group, has structured $US2.8 billion of investments in 900 US properties. Lend Lease says the formula increase should allow an extra 30,000 units a year to be built, but the head of its housing & community investing group, Jenny Netzer, said government figures showed five million US households had worst-case housing needs.

RealEstate.com has been sold for an undisclosed price to Atlanta investment bank JP Carey, which manages assets and investments in small to mid-cap companies for institutions and welathy individuals. The website offers listings, valuation and credit research services. All the key executives have resigned.

Equity Office Properties Trust has sold the 86%-leased, 21,069m² 500 Marquette in downtown Albuquerque, New Mexico, for $US21.7 million (at $NZ2328/m²).

National Residential Properties Inc, of Miami, continues full speed ahead on a development programme which it says should generate net returns around 35-37.5%. Its projects for the next two years include apartment blocks, a subdivision, condominium and a gated community, all around 60-70 units and in the $US7-10 million range.

Britain’s second-largest supermarket chain, J Sainsbury, has concluded the long negotiations to sell the nation’s third-largest DIY chain, Homebase, to Schroder Ventures for £416 million in cash and a deferred £75million. Sainsbury has a leaseback agreement on its £259 million of freehold properties, but has them earmarked for sale too. Another 28 development sites have been sold for £219 million to Kingfisher, owner of the B&Q DIY chain. Those deals are worth a total £969 million ($NZ3.25 billion), though completion of some may be drawn out.

British property group Delancey Estates, just under 50% owned by George Soros, will sell its four provincial shopping centres for £121 million ($NZ406 million), the Milner Estates business for £25 million to a 25%-management owned joint venture, and focus investment on central London’s office and retail sectors. Delancey raised pretax profit for the September half-year by 58% to £3.9 million and earnings a share by 35% to 1.4p, but its shares are sitting on a 29% discount to the 139.5p net asset value, at 99p.

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Snapshot on world property, week to 18 February 2001

Latest: Lend Lease profit slashed, Nomura buys Bass pubs, General gets 30,000m² warehouse contract, Lend Lease sells Aurora Pl.

16 February 2001

Lend Lease Corp reported net profit down 61% to $A108.8 million on revenue up 8% to $A5.8 billion. Earnings/share fell 58% to A23.1c. The company said results were not directly comparable because the previous figures included financial services group MLC and were on a higher capital base before the group’s $A1.8 billion buyback.

15 February 2001

Japanese bank Nomura has won the bidding for Bass’s 988-pub estate in Britain, and may also be in the running to pick up its brewing business, bought for £2.3 billion ($NZ7.8 billion) last year by Interbrew of Belgian in a deal subsequently rejected by Britain’s Trade & Industry Secretary. The Bass pubs have gone for £625 million ($NZ2.1 billion). Nomura already controls 5000 UK pubs.

14 February 2001

General Property Trust of Australia will increase its portfolio to $A160 million on completion of a 30,000m², $A40 million warehouse and office at its Camellia business park in Sydney’s inner west. Australian Pharmaceutical Industries Ltd has precommitted to the warehouse, taking a 12-year lease.

Lend Lease Corp and its partner in the Aurora Place development at 88 Philip St in Sydney, East Asia Property Group, have sold the building to the Commonwealth Property Investment Trust for $A485 million.

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Snapshot on world property, week to 21 October 2001

20 October 2001

Brookfield Properties Corp has completed a $US240 million non-recourse financing on the Bankers Hall office property in Calgary at 7.2% for 12 years for a $US80 million gain on the previous finance rate. Brookfield bought the 240,000m² property for $US285 million last year, completed building the west tower, increased occupancy from 81% to 96% and bought the freehold. The company will now look for an institutional buyer for 50% of the property.

Forest City Enterprises Inc has bought Galleria at South Bay, an 89,000m² mall at Redondo Beach, California, for $US116 million in a tax-deferred exchange, using the $US121.5 million collected from the sale in August of its 67.5% interest in the 121,000m² Tucson Mall, Arizona. The Galleria mall was opened in 1985, is 96% leased and producing sales at $US400/ft2 (). Forest City plans to renovate it.

Westfield of Australia and Rodamco NV of the Netherlands used to be partners. In August, Westfield Holdings Ltd paid $US920 million for 23.9% of Rodamco North America and said it wanted management control of the 41-centre business. Rodamco has since diluted Westfield’s stake to 18% by issuing shares to a new trust. A Dutch court said this week it would get an independent panel to investigate numerous aspects of the deal.

Bainton Pty Ltd has extended its 24 September takeover offer for Tourism Asset Holdings Ltd, the holder of the Novotel properties in Australia, until 9 November.

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Snapshot on world property, week to 4 May 2003

3 May 2003

Macquarie Leisure Trust, owner of the Dreamworld theme park on the Gold Coast, has gained an $A8 million windfall through rezoning of its excess land from tourism to town centre uses. The land is on Macquarie’s books at $A12 million, but has been valued at $A20-21 million. The rezoning comes through adoption of the new Gold Coast City Council planning scheme.

2 May 2003

Simon Property Group and Westfield America Trust have won an important round against the Taubman family, which is holding out against the $US20/share Simon/Westfield hostile takeover bid. Judge Victoria Roberts has ordered that the 33.6% series B shares the Taubman family & friends own may not be voted until approved by a majority of disinterested public shareholders in compliance with the Michigan Control Share Act. That block of shares has been a key in holding the bidders out. But Taubman disagrees on how much can’t be voted, and has bolstered its position through a share buyback. The Michigan judge dismissed other parts of the Simon case, leaving the hostile bid’s outcome still very much up in the air.

Simon Property Group said it had entered into an agreement to become a shareholder in London-based Tecient Business Network, an independent services company focusing on the creation of new cost savings for property owners & their tenants worldwide, with an initial focus in Europe & Australia. Other Tecient shareholders include London property owner Grosvenor Ltd, AMP New Ventures Ltd and Corpnex Ltd.

1 May 2003

General Growth Properties Inc, the 2nd largest US regional mall owner with an interest in 159 malls, increased funds from operations by 31.3% in the 1st quarter on revenue up 34.4% to $US368 million and net operating income up 34% to $US247 million. Occupancy was up 1.3 points to 90.4%, sales/ft² fell from $US356 to $US345, average rent for new/renewal leases fell from $US34.99/ft² to $US32.90/ft², average rent for all leases fell from $US29.90/ft² to $US26.70/ft², largely attributable to 2 portfolios, JP Realty and Victoria Ward, taken over late in 2002.
Website: General Growth Properties

Best Western International added 78 hotels to the brand in the 1st quarter, 41 of them outside North America. The chain has more than 4000 hotels.
Website: Best Western

Starwood Hotels & Resorts Worldwide Inc went from a US16c/share profit in the March 2002 quarter to a US58c loss, the slump mostly attributed to a $US104 million aftertax charge associated with the expected sale of an 18-hotel portfolio. Total revenue was down slightly at $US1.07 billion, same-store revenue/available room (revpar) worldwide fell 1.7%. Timeshare (vacation ownership) revenue rose 14.4%. Worldwide same-store ebitda (earnings before interest, tax, depreciation & amortisation) fell 18.8% to $US156 million, total ebitda fell 26% to $US186 million (compared to a 2002 figure of $US250 million which included $US24 million of forex gains from the Argentine peso devaluation), timeshare ebitda rose 20% to $US22 million. Total ebitda margin fell from 25.3% to 21.1%, and same-store North American margin fell from 26.7% to 22%. Chairman/chief executive Barry Sternlicht found some positives: “There are signs that spiralling fixed costs may be moderating in areas like property insurance, terrorism insurance, energy and real estate taxes. Our brand development pipeline remains strong & growing, despite worldwide turmoil. I remain optimistic for the back half of this year, assuming the Sars crisis dissipates.”

Equity Office Properties Trust’s 1st quarter earnings/share fell 27%, from US48c to US35c, on a 30% drop in net income to $US141.7 million, attributed to lower occupancy levels, lower lease termination fees and $US600 million of asset sales. President/chief executive Richard Kincaid said Equity Office, the biggest of all reits, expected a slow recovery starting later this year. Funds from operations fell 16% to US73c/share on a 4.7% fall in revenue to $US870.3 million. Office occupancy has fallen from 90.7% at March 2002 to 88.6% in December and 87.2% in March 2003. Industrial occupancy (a portfolio Equity Office is selling down) fell from 92.3% to 89.3% to 86.6%. The trust’s leasing statistics (all gross) show a 14.8% decline in new/renewing rents versus expiring/terminated leases. Terminated leases averaged $US35.18/ft², 23% above the $US28.58/ft² for expiring leases and 31% above the rate for new/renewing leases of $US26.84. For continuing tenants, the average fall in rent was 6.1%. Property operating margins fell from 66.6% to 65.5%.
Website: Equity Office Properties Trust

Californian private equity firm Kohlberg & Co is to buy publicly traded US camping ground operator Thousand Trails Inc (mostly from a New York private equity firm, Carl Marks & Co) for $US113 million, at $US14.50/share, a 55% premium to market, according to The Deal.com. Thousand Trails runs 59 camping grounds and has a membership of 112,000, declining at 4%/year. 46% of members are pensioners.

Lend Lease Corp has opened what it says is Australia’s “1st 5-star greenhouse office building,” an $A112 million 18,700m² property with a 600m² 8-storey atrium which Lend Lease developed at Millers Pt, Sydney, as its head office and sold to the Deutsche Office Trust. It will be known as 30 The Bond, part of a new destination named after the area’s old bond stores. The other Bond properties are 3 heritage buildings and a residential building, all owned by Delmo. Among 30 The Bond’s features, 30% lower CO2 emission than a typical office building through the use of chilled beam airconditioning, also a 1st for a commercial building in Australia; 100m-long floorplates; a façade with sunrooms & operable louvres. The greenhouse rating is by Australia’s Sustainable Energy Development Authority. Jose de la Vega, who heads family company Delmo, was the catalyst for some of Sydney’s leading waterfront developments such as the Finger Wharf at Woolloomooloo, Walsh Bay and the Colgate Palmolive conversion in Balmain.

Equity Residential, the largest publicly traded apartment company in the US with investments in 1027 properties containing 221,249 units, increased 1st quarter earnings nearly 50%, from US28c/share to US41c/share, and funds from operations by 14% to $US192.1 million, or 12.3% to US64c/share, on total revenue down 1% to $US486.1 million. On a same-store basis of 191,278 units, revenue fell 3.5%, expenses rose 7.7%, net operating income fell 9.6%. During the quarter Equity Residential bought 3 properties containing 920 units at a 7% cap rate and sold 17 properties containing 4000 units at a 7.6% cap rate.
Website: Equity Residential

Host Marriott Corp, the largest US lodging real estate investment trust, lost US16c/share in the 1st quarter, compared to a US3c/share loss in the March 2002 quarter. It attributed the decline to the Iraq war & generally weak economy, resulting in less group & business travel. The net loss rose from $US8 million to $US43million on revenue up from $US787 million to $US805 million. Same-store revenue/available room(revpar) fell 5.5%on a 2.4% fall in average room rate & 2.3-point occupancy fall. Operating profit margin fell 3-8 points and comparable hotel-level ebitda (earnings before interest, tax, depreciation & amortisation) fell 3.9 points. The company is forecasting a 6-8% revpar fall in the 2nd quarter, 2-3% for the full year.

28 April 2003

Reco Bay NSW Pty Ltd, ultimately a subsidiary of the Government of Singapore Investment Corp (GIC)’s real estate arm, lodged its $A60 million, $A1.80/share bid today for Ipoh Ltd, owner of the Queen Victoria Building, The Strand and Galeries Victoria retail centres in Sydney, which Reco Bay intends to retain, other assets in China which it might retain and assets in Adelaide & Wellington – the 6281m² 4-level Old Bank Buildings restored in 1999 – which Ipoh had begun marketing and Reco Bay still intends to sell. The offer price represents a 19% premium over Ipoh’s price in the 3 months preceding announcement of the bid in March and 2% premium on net asset value. Reco Bay said an investment in Ipoh over the past 4 years would have generated a 1% total return/year versus 10% by the S&P/ASX200 property accumulation index. NTA fell 8% to $A1.77 and the dividend was cut from A15c to A10c in 2002.

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Snapshot on world property, week to 8 February 2004

4 February 2004

Orient-Express Hotels Ltd, registered in Bermuda, has bought into Hosia Co Ltd, the Hong Kong holding company which owns & operates 5 Pansea hotels in South-east Asia (Luang Prabang, the ancient royal capital of Laos; Koh Samui on the Gulf of Siam in Thailand; in the former palace of the Shan Province governor in Rangoon, Burma; Siem Reap, Cambodia, near the Angkor Wat temples; and on the Bali beachfront). Orient-Express owns & operates 37 luxury hotels & restaurants, plus the Eastern & Oriental Express tourist train which operates between Singapore & Bangkok and the Road to Mandalay cruise ship on the Irrawaddy River in Burma. Orient-Express chairman James Sherwood said previous attempts over the years to buy in Asia met “either asking prices (which) did not correspond with earnings potential or the competitive environment was poor as a result of excess capacity.” Orient-Express is curious in another way: Its policy is not to promote brand names, “believing that individual names allow higher room rates to be achieved than brand names.” The deal allows Hosia owners Stanislas Rollin & Robert Molinari to develop several properties over the next 5 years, after which Orient-Express can acquire 100% of their company. Meanwhile, Orient-Express will inject $US8 million through a 5% convertible loan, which can be converted to 25% equity in 3 years at a 50% premium to today’s paid-up capital. A put/call option will be exercisable on the balance at the 5th anniversary, based on 8x average ebitda in 2007-08, less debt.
Website: Orient-Express Hotels

The Mirvac Group has bought a 3.77ha industrial property at Villawood, south-west Sydney, from Visy Industrial Plastics for $A14.75 million. Visy has a 15,882m² office/warehouse and will get a 7055m² high-stud warehouse built, then lease back the whole property for 12 years with fixed annual rental growth. The acquisition is at an 8.6% initial yield. Mirvac bought an adjoining 4ha last October, and recently bought industrial properties at Dandenong in Melbourne and Prestons in Sydney.

Forest City Enterprises Inc plans to develop a $US2.5 billion mixed-use project called Brooklyn Atlantic Yards in downtown Brooklyn, New York, whose main attraction would be a new sports & entertainment arena for the Nets NBA basketball team. The long-term development plan for the whole project is to have 200,000m² of office space, 30,000m² of shops, 4500 middle-income residential units taking up 400,000m², and 2.7ha of parks & open space. Bruce Ratner, president & chief executive of Forest City Ratner Companies, is leading a group of investors who have agreed to buy the Nets for $US300 million. The development site is next to Atlantic Terminal, New York’s 3rd biggest transport hub, where 9 subway lines & the Long Island railroad converge.

ING Real Estate has agreed to buy Baring Capital Partners, the China business of Baring Private Equity Partners, which manages the China Property Development Fund & a listed Hong Kong fund focusing on the Beijing property market. The development fund is invested in 2 projects totalling 400,000m² in the north-east Beijing district of Chaoyang.

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Snapshot on world property, week to 21 July 2002

20 July 2002

International real estate funds manager Starwood Capital Group LLC has closed its sixth investment fund (the Starwood Global Opportunity Fund VI) at $US567 million. It intends investing in office, housing for old people, industrial, retail, mixed-use, residential land development & corporate transactions in the US, Britain, Western Europe & Japan, and by March had a $US485 million portfolio (using $US145 million of its equity). The group also owns Starwood Hotels & Resorts (including the Sheraton chain). Chairman & chief executive Barry Sternlicht told Private Equity Online: “The spread between US cap rates & interest rates is perhaps the widest we have seen in decades. We are also seeing disruption in the real estate markets following last year’s dramatic economic downturn, and financing for new projects is as difficult as it’s been in 15 years.”

18 July 2002

ProLogis will spend more than $US200 million creating a network of 5 super-regional distribution facilities for Unilever Home & Personal Care, so Unilever can deliver anywhere within the US in a day. The facilities in Georgia, Pennsylvania, Texas, Illinois & California will replace 15 existing distribution centres over the next 3 years and contain 450,000m² of floorspace. Unilever expects a 15% efficiency gain on the network it established through the merger of 3 companies in 1997 and is forecasting a 7% saving in transport, administration & facility costs.

Hotel company Host Marriott Corp’s second-quarter net earnings were halved, from $US49 million to $US24 million, on revenue down 7.4% to $US920 million. Basic earnings/share fell from US17c to US6c. Funds from operations fell 30% to $US100 million, and from US55c to US36c/share. The company expects revenue/available room (revpar) for the full year to fall 2-4%.

Lend Lease Real Estate Investments Ltd has got 10 new investors in its British Lend Lease Retail Partnership through secondary-market purchases from 2 limited partners which collected £75 million by reducing their holdings. The partnership, 1 of the biggest limited partnerships in Britain, now has more than 30 UK and overseas institutional & pension fund investors. It owns the Touchwood shopping centre at Solihull and 25% of Bluewater in Kent.

15 July 2002

Ohio-based real estate investor & developer Forest City Enterprises Inc has been added to the Russell 1000 index, which ranks the 1000 largest US stocks by market capitalisation. Forest City’s market capitalisation was $US1.9 billion. Its $US4.5 billion portfolio includes shopping centres, apartment communities, office buildings and hotels in 8 main markets.

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Snapshot on world property, week to 23 September 2001

23 September 2001

Hong Kong Science & Technology Parks has cut the rent for local start-up technology companies from $HK13/ft² to $HK8/ft² ($NZ44.56 to $NZ27.45/m² ), is offering new participants in its incubation programme one year rent-free, and will now admit companies that have been running for several years and spin-offs from established companies. The organisation has had 96 companies through its programme, with 70 completing and now operating independently. It has 23 participants now and wants 70 by next June.

A New York Times article on Friday was inconclusive about dispersal of business units in the wake of the 11 September terrorist attack. Lower Manhattan financial firms are scattered through other parts of New York, but also across the Hudson River in New Jersey, and up Long Island Sound in Connecticut. Some say they will return to Manhattan, others that they will spread their offices.

22 September 2001

Here’s a deal most unlikely to win short-term approval: the Bin Laden Group of Saudi Arabia has offered to buy cash-strapped Pakistan International Airlines’ 50% of Pakistan International Airlines Investment Ltd, which owns four hotels in New York (the Roosevelt, near Grand Central Station on Madison Avenue at 45th St), Paris, Dubai & Riyadh. The non-airline business lost $US21 million in the first half.

Lend Lease Corp Ltd announced a restructuring on Thursday, with Bovis Lend Lease Worldwide chief Ross Taylor appointed global chief executive, real estate solutions, and Lend Lease Asia Pacific chief David Ross appointed global chief executive real estate investment management, both reporting to group chief executive David Higgins. The solutions business comprises design, project management, construction and development. The investment management side takes in strategy & co-ordination, employee resource planning, cross-border investment initiatives, performance standards.

Perth-based Bunnings Warehouse Property Trust has gained 15.6% on independent revaluation of 10 properties over 1998 IPO valuations, and 10.4% on book valuations, to $A102.4 million. The trust’s net asset backing has risen A6c to $A1.08. The trust revalued another 10 properties in May, to similar effect. Management company directors were impressed mostly by the strength of the Victorian properties. Of the six Victorian properties, one was valued on a 9.7% yield and the other five on 9.5%. The New South Wales, Perth & two south-eastern Queensland properties were all valued on 9% yields.

Deutsche Office Trust of Australia has completed 10 new leasings in the retail services precinct of Melbourne’s Southgate complex, and three in the arts & leisure precinct. The retail services leases: 84.1m² medical centre, $A475/m², 10 years; 114m² pharmacy, $A1000/m², 5+5 years; 82.3m² optometrist, $A814/m², 10 years; 132.7m² newsagency, $A735/m², 5+5 years; 28.5m² money exchange, $A1579/m², seven years; 20m² drycleaner, $A1500/m², five years; 31.2m² TAB “concept store designed to attract young professional punters”, $A1278.85/m², three years; 85m² Mocca expresso bar in office lobby (sounds like the Royal SunAlliance Centre arrangement), $A824/m², seven years; 28.5m² Orange mobile phone outlet, $A1400/m², five years; 95.8m² photo shop, $A783/m², eight years. Arts & leisure: ground-floor 50m² confectionery maker Suga, $A1000/m², seven years; mid-level 55.8m² new retailing concept Flaschengeist, $A627.24/m², eight years; prominent ground-floor location restaurant by associates of the centre’s successful PJ O’Brien’s Irish pub, $A1245/m², 12 years. Flaschengeist will offer an exclusive range of boutique liqueurs, spirits, wines, gourmet oils & vinegars, customers can sample the products and choose designer bottles & corks for packaging.

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