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Global Commercial Real Estate Roundup
- UK's Second Largest REIT Sees Sharp Drop in Value of Shopping Centers and Offices.
- Foreign Bank Loans PMZ $25M for 3 Boston Area Hotels.
- Singapore Sovereign Wealth Fund GIC Plans $3B IPO in September.
- MGM Resorts International Plans New Casinos in Macau.
UK Recession Slices Property Values at British Land Co.
No Hip Hip Hoorays at British Land Co. these days. The United Kingdom/s second-largest real estate investment trust reports the value of its shopping centers and offices grew at a slower pace in the past three months as the economic outlook worsened.
Bloomberg reports the rise in the London-based company's values slowed to 1.4 percent in the company's fiscal first quarter through June following increases of 7.5 percent and 8.2 percent in the previous two quarters.
A recovery in the British commercial property market is losing steam as the country implements the biggest austerity measures since World War II, Bloomberg reports.
Values fell 44 percent nationwide in the two years from mid-2007 before beginning to recover in August last year, according to Investment Property Databank Ltd. The 0.5 percent gain in June was the smallest since values started to rise.
"Risks to the global economy seem to have increased in recent months," Chief Executive Officer Chris Grigg said in a prepared statement. "We remain alert to the potential impact of the fiscal measures needed to address budget deficits not only in the U.K., but across Europe."
British Land's retail properties increased the least, with department stores rising 0.1 percent and its retail warehouses, which make up 31 percent of the company's assets, advancing 0.6 percent. Retail rents didn't grow at all during the period, the company said.
Malcolm Frodsham
Office values gained by 2.4 percent, boosted by a shortage of top quality space in London. British Land is talking to potential partners to build a skyscraper nicknamed the Cheese Grater in London's main financial district.
"The early rapid recovery is behind us now, which suggests we may be heading for the doldrums," Malcolm Frodsham, IPD's research director, Investment Property Databank Ltd., said in a prepared statement.
Foreign Bank Provides $25M to Refinance 3 Boston Area Hotels
To hear Peter Berk tell it, the realty capital market has returned to the U.S. hospitality market. Berk is president of New York City-based PMZ Hotel Finance Group.
An unnamed foreign bank has provided $25 million in new financing for PMZ's Crowne Plaza Natick, Hampton Inn Natick and Holiday Inn Somerville in Boston's metro area.
Numerous U.S. and foreign lenders vied to provide the loan, Berk says in a prepared statement. He didn't disclose loan terms. The three hotels contain over 625-keys and 40,000 square feet of meeting space.
"The lender that provided this financing was attracted to the stable performance of the hotels, strong brand affiliation and strength of the Boston market," Berk says. "It is just another sign that capital has returned to the hospitality market."
Singapore sovereign wealth fund GIC Eyes $3B IPO in September
The biggest initial public offering in more than a decade in Singapore could come to market in early September, according to Dow Jones Newswires. If successful, it would dwarf CapitaMalls Asia's $2.02 billion IPO launched last year.
Singapore sovereign wealth fund GIC could raise as much as $3 billion in what could be the second largest such share sale in the city-state's history. Dow Jones Newswires' Samuel Holmes reports.
The real-estate arm of sovereign-wealth fund Government of Singapore Investment Corp. plans to raise the money through its growing overseas assets, according to people familiar with the matter.
The planned IPO shows that capital-market activity in Singapore is picking up and companies are getting more aggressive in tapping the market, amid a strong rebound in the domestic economy, Dow Jones reports.
A person familiar with the situation said that J.P. Morgan and Citigroup have been mandated as the global coordinators for the offering, while UBS, China International Capital Corp. and DBS are the book runners.
GIC Real Estate, which invests globally in real estate and real-estate-related assets outside Singapore, is planning to list mainly its ProLogis assets in Japan and China in addition to some of its assets in South Korea, a source in a position to know told Dow Jones.
In 2008, GIC Real Estate bought ProLogis's interests in Japan and China for $1.3 billion, in a bid to consolidate its existing portfolio in Japan and get a platform to expand its logistics property business in China.
In late 2004, GIC RE acquired the Star Tower, a 45-story office building in Seoul, from Lone Star Funds.
The estimated value of these assets is about $9 billion currently, the source told Dow Jones.
GIC Real Estate manages a multibillion-dollar portfolio of direct and indirect property investments with close to 300 investments in more than 30 countries.
GIC, its parent, manages Singapore's foreign-exchange reserves. It is the world's fourth-largest sovereign-wealth fund in terms of money managed, according to a recent report by Deutsche Bank. GIC's portfolio is valued at more than $185 billion.
MGM Resorts Plans New Macau Casinos Despite Second-Quarter Loss of $884M
Despite a second-quarter loss of $883.5 million, MGM Resorts International, the biggest casino operator on the Las Vegas Strip, plans to build "multiple properties" in Macau as it expands in Asia.
"We are starting to assert ourselves" in Macau, the world's biggest gambling hub, Chairman and CEO Jim Murren said in a Bloomberg TV interview. "We will have more properties in Asia over time."
As room rates bottom again, MGM continues to write down the value of its $8.5 billion CityCenter joint venture with Dubai World.
Sheldon G. Adelson
MGM's Macau venture has the smallest market share of the six casino operators in the only city in China where they are legal. Macau casino revenue surged 70 percent in July from a year earlier to 16.3 billion patacas ($2 billion), and has doubled in the three years ended December.
"The month of June was a turning point for us" as revenue at MGM's available Las Vegas rooms increased year-over-year for the first time since October 2007, driven by luxury resort gains, Murren, said in a separate interview with Bloomberg.
"That cut us deeply in 2008 and 2009, and now we're starting to see a recovery."
The venture with casino billionaire Stanley Ho's daughter Pansy Ho, MGM Grand Paradise SA, on Aug. 2 said it agreed to a $950 million loan to refinance existing debt and provide added liquidity.
"MGM has the capability to execute in Macau, but that will require a sophisticated senior management team that knows Asia very well and can help them access Asia's capital market," Jonathan Galaviz, an independent gambling industry strategist, told Bloomberg.
"Steve Wynn and Sheldon Adelson have demonstrated the ability to be versatile and agile in the Asian market. The question is can a large corporation like MGM have that same maneuverability?"
MGM's loss in the three months ended June was $883.5 million, or $2 a share, compared with $212.6 million, or 60 cents, a year ago, the company said in a prepared statement. It booked a $1.12 billion reduction in its CityCenter valuation, its second major write-down.
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