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GLOBAL COMMERCIAL REAL ESTATE ROUNDUP
- Japan's REIT Bond Sales on the Mend
- France's Gecina REIT Sees Profit Dip
- Hawaii's Commercial Real Estate Sales Rebounding
- U.S. Commercial Real Estate Prices Remain Choppy
- Manatee County, FL Closes Its Largest Retail Sale of the Year
Japan's REIT Bond Sales Show Renewed Life
Japan's slow-moving real-estate investment trust bond market is starting to move.
Sales of REIT bonds this year totaled 124.5 billion yen ($1.46 billion), recovering from a single public sale of 3 billion yen in 2008 and none in 2009, according to data compiled by Bloomberg.
The Tokyo Stock Exchange REIT Index has gained 0.6 percent this year, while the Topix index has dropped 9.1 percent.
Property prices still need to rise for a full recovery, according to Fitch Ratings.
"New bond sales are recovering to some extent," Toru Kobayashi, Tokyo-based director of structured finance Fitch Ratings, told Bloomberg. Some REITS still face risks, he said. These need to see "improvements in property performance."
Land prices started falling in 2008 as the global crisis deepened with the collapse of New York City-based Lehman Brothers Holdings Inc., previously a lender to property investors. New lending for real estate by Japan's banks fell to the lowest in a decade in 2009, according to the Bank of Japan.
"Among some borrowers with a smaller size or inferior financial standings, we see extension of short loans or finance in the short term," Kobayashi said. "Such REITs haven't eased their finance risk."
Japanese real estate asset manager Urban Corp. filed for bankruptcy in August 2008. Japan's Ministry of Land, Infrastructure, Transport and Tourism said in August 2009 that a 500 billion yen fund would be formed to help REITs refinance their debt.
Tokyo's office vacancy rate fell in July for the first time in 2 1/2 years, to 9.1 percent from a record high of 9.14 percent in June, according to Miki Shoji Co., a privately held office brokerage.
The extra yield investors demand to own Japan Prime Realty Investment Corp.'s 1.71 percent bonds due May 2011 instead of similar-maturity government debt averaged 0.7 percentage point yesterday, according to Japan Securities Dealers Association prices. It was as high as 2.11 percentage points in April 2009, the prices show.
France's Second Largest Publicly Traded REIT Sees Drop in Profits
Bloomberg reports Gecina SA, France's second-largest publicly traded real estate company by market value, said profit declined in the first quarter after the sale of buildings reduced rental income and vacancy rates increased.
Earnings before interest, taxes, depreciation and amortization and excluding the proceeds from divestments fell to 126.9 million euros ($161 million) from 129.1 million euros a year earlier, the Paris-based company said in a prepared statement. . Net rental income dropped 2.2 percent to 143.9 million euros.
Christophe Clamageran
"The impact of disposals will continue to be seen over the coming quarters," the company said in the statement. Excluding the effects of disposals or acquisitions, revenue will "contract slightly" after new leases are signed and there will probably be a "limited" drop in rental income during 2010 as a whole..
Net cash flow fell 3.2 percent to 90.1 million euros, or 1.48 euros a share, the company said. Gecina only reports net income every six months.
The company raised 756 million euros from the sale of offices and apartments last year.
The vacancy rate rose to 5.9 percent at the end of March from 4 percent a year earlier. The rate will drop after the leasing of a new unit in Recy to LVMH Moet Hennessy Louis Vuitton SA, Gecina said.
Gecina has advanced 42 percent in Paris trading over the last 12 months, lifting the company's market value to 4.7 billion euros.
Hawaii's Commercial Real Estate Sales on the Rebound
Honolulu-based Colliers Monroe Friedlander says Hawaii commercial real estate sales appear to be rebounding. The broker's new report forecasts an end this year to a four-year downturn.
Acquisitions of the Continental Surf Hotel in April and the Hotel Hana Maui in May were among 56 sales that helped generate $354 million in commercial property transactions during the first half of the year, a 17 percent rise from $302 million in the first half of last year.
Stronger activity in the second quarter erased what had been a 10 percent reduction in sales volume through the first three months of the year, according to the report.
Michael Y.Hamasu
"Overall we anticipate an improvement over lackluster transaction activity experienced in 2009," said Michael Y.Hamasu, research and consulting director for Colliers.
Second-quarter sales included Hotel Hana Maui for $6.8 million, Continental Surf Hotel for $14.7 million, Waianae Mall for $25.5 million and land under the Home Depot for $23.2 million.
The biggest in the quarter was Lanihau Shopping Center in Kailua-Kona bought by Alexander & Baldwin for $37.5 million.
The REPORT includes sales of more than $1 million on commercial property that includes shopping centers, office buildings, hotels, golf courses, apartment buildings, agricultural land and undeveloped land zoned for commercial use.
Hawaii's commercial real estate industry peaked in 2005 when there were 431 transactions for a combined $4.28 billion. Last year's total was the lowest in more than a decade.
U.S. Commercial Real Estate Prices Dropped 4% in June
New York City-based Moody's Investors Service reports U.S. commercial real estate prices fell the most in almost a year in June as the economic recovery showed signs of faltering.
The Moody's/REAL Commercial Property Price Index dropped 4 percent from May. The decline was the biggest since July 2009, and pushed the gauge down 0.9 percent from the start of the year.
"We expect property prices to remain choppy for some time as commercial real estate markets and the broader economy continue their slow recovery from the recession," Moody's researchers said in the report.
High unemployment and concern over slowing economic growth are hampering a price rebound for offices, apartments, industrial and retail properties, Moody's said.
U.S. gross domestic product expanded at an estimated 2.4 percent annual pace in the second quarter, less than economists forecast and slower than the 3.7 percent rate in the previous three months.
The Moody's index is down 41 percent from its 2007 peak, having gained 4.2 percent from the seven-year low set in October.
James Sullivan
"In the first quarter, there was probably a little more optimism because we had evidence of retail sales rebounding to a level that was probably a little better than people expected," James Sullivan, a Cowen & Co. real estate investment trust analyst in New York, told Bloomberg, "In the second quarter, things began to slow down."
Sullivan rates mall operator Simon Property Group Inc. "outperform" and competitors Macerich Co. and Developers Diversified Realty both "neutral."
Retail sales in the U.S. trailed forecasts and consumer confidence was near an eight-month low, government and university reports said on Aug. 13.
Moody's measures overall commercial property values on a monthly basis and breaks the numbers down by property type once each quarter. The index measures the changes based on repeat sales transactions.
Manatee County, FL Closes Its Largest Retail Deal of the Year
Allris Plaza, Manatee County, FL
Sarasota real estate investor Sam Sciturro and two of his children bought the 19,000-square-foot, 91 percent leased strip center at 8320 U.S. 301 North in Parrish, FL from the original developer for $2.85 million or $151 per square foot.
The only other two retail real estate transactions for 2010 in Manatee County were for single-tenant retail properties. In March 2010, a 25,000+ square-foot property sold for $2.256 million. In July 2010, a 9,000 square-foot property sold for $1.085 Million.
"Allris Plaza is a very well-constructed, quality property," said Larry Richards, CCIM, lead listing broker in the transaction. "Its immaculate condition, prime location and nearly full occupancy rate were all key factors in Manatee County's biggest commercial real estate sale this year."
Richards adds, "As we all know, the commercial real estate transaction numbers were staggering in 2009 with national sales at 90 percent less than the peak of the market. Virtually nothing was being traded. But while Florida commercial and retail real estate transactions are still very low, sales like this - when priced right - are encouraging signs of life."
Richards is a director for KW Commercial, Sarasota/Lakewood Ranch.
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