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GLOBAL REALTY CAPITAL MARKET ROUNDUP
- CIT Group Files for Chapter 11
- German investors lead foreign buyers of U.S. properties
- Skanska Plans up to $1B in new U.S. acquisitions
- Value of United Kingdom distressed properties down 45%
- China's Excellence Real Estate Group Postpones $1B Share Sale
- Judge delays Capmark's planned servicing unit sale to Buffett
- Simon Property's David Simon says capital markets improving
- Citigroup cancels $4.5M renovation of main office in Brazil
- Debt-Heavy Vornado looking for prime acquisition lifeline
- Blackstone trying to trim $5B from $20B Hilton Worldwide Debt Load
- 10,000 customers sue Countrywide and Bank of America
- Grandbridge Aquires Dallas-based Quantum First Capital
(NEW YORK, NY) -- After three months of unsuccessful attempts to stay out of bankruptcy court, the 101-year-old, New York City-based CIT Group filed for Chapter 11 protection Sunday, Nov. 1 in Manhattan federal court.
The nation's largest provider of factoring lending, crucial to national retailers, listed $65 billion of debt and $71 billion in assets. The company stated in its Chapter 11 petition it had $800 million in bonds maturing from Sunday through Tuesday, Nov. 3.
Jeffrey M. Peek
According to the The New York Times, the company's filing is considered unorthodox in that its so-called pre-packaged bankruptcy plan will enable CIT to emerge from court protection by the end of the year - but it will be under the control of its debt holders.
"The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy," Peek said in a prepared statement.
"This market-based solution allows CIT to enter into the reorganization process well-prepared and positioned for a swift emergency."
Peek himself will leave CIT Dec. 31. A replacement hasn't been announced.
(FRANKFURT, GERMANY) -- Germany leads a pack of foreign investors eager to snatch up devalued U.S. real estate properties, according to Matthias Danne, head of the real estate investment business at DekaBank Deutsche Girozentrate, one of the largest financial services organizations in Europe.
Foreign investors have spent about $2 billion on U.S. commercial properties so far this year. Nearly half of that amount came from German investors. (See chart accompanying this posting.)
Compared with past years, however, foreign investment in U.S. property is the lowest it has been in recent years, according to New York City-based Real Capital Analytics.
"Regardless of whether the U.S. has reached the bottom already or won't do so for another three quarters of a year, prices today are good compared to long-term averages," Danne told The Wall Street Journal.
(STOCKHOLM, SWEDEN) -- Skanska AB, one of the world's largest construction consultants, sees solid acquisition opportunities in the U.S. The company plans to invest between $500 million and $1 billion over the next three to four years
Mats Johannson
Skanska already has acquired a stalled prime office development just five blocks from the White House for $85 million. Completion is expected in 2011. The project is called 10th and G. Skanska plans similar projects in Boston and Houston.
Please see related articles :
- Skanska Wins $182M Design-Build Bridge Contract in DC, Oct. 9, 2009
- Skanska Signs $220M Contract as Construction Manager for $400M Nemours Children's Hospital in Orlando, FL, June 26, 2009
- Skanska Wins $134M Hospital Construction Job in Hopewell, NJ March 31, 2009
(LONDON, UK) -- Foreign investors, including some from the U.S., are looking at London's growing distressed commercial real estate markets as buying opportunities.
James Thornton
"It makes for a very liquid market," adds Thornton.
Mayfair has already teamed with Dallas, TX-based property fund manager L&B realty Advisors to invest W$250 million of equity from U.S. institutions into U.K. property over the next two years. L&B manages $4 billion of U.S. pension funds.
(HORSHAM, PA) -- Capmark Financial Group's planned $490 million sale of its commercial mortgage servicing business to Omaha, NE investor Warren Buffett's Berkshire Hathaway and Leucadia National Corp. are on hold.
Warren Buffett
Capmark, one of the world's largest commercial real estate organizations, filed for Chapter 11 protection Oct. 25. The Horsham, PA-based firm services more than $360 billion in mortgage loans.
Please see related article: Capmark's $21B Debt Load Triggers Chapter 11 Filing, Oct. 27, 2009
(SHENZHEN, CHINA) -- A crowded Hong Kong market of initial public offerings has given Excellence Real Estate Group Ltd. second thoughts about trying to raise $1 billion in the public financial market.
Excellence, the largest property developer in Shenzhen's central business district, has put its IPO plans on hold.
Bloomberg-compiled data shows investor fatigue has formed over Hong Kong IPOs of Chinese property companies. Twenty-five of them have raised money since the beginning of 2003.
"For property companies, there is indigestion because there are so many of them and it's hard from a distance to distinguish them," Arnout van Rijn, chief investment officer of Robeco Hong Kong Ltd., tells Bloomberg. "It becomes too much of a matter of just competing on price."
(INDIANAPOLIS, IN) -- Although Simon Property Group Inc.'s third-quarter profit dropped 9.7 percent, company CEO David Simon, tells analysts in a conference call, he sees continued improvement in the capital markets and even from its retailers.
"It's getting tougher to maintain our historical lease spread," Simon told the analysts. He didn't anticipate leasing spreads would turn negative.
Still, the nation's largest shopping center developer reported a profit of $112.1 million or 38 cents a share, down from $124.1 million 50 cents a share a year earlier. Funds from operations fell to $1.38 a share from $1.61 previously. Revenue dropped 1.1 percent to $924.9 million.
As of Sept. 30, 2009, the company had $4 billion in cash on hand, up from $2.9 billion in the second quarter. Simon Property Group also has over $3 billion available on its revolving credit facility, the company reported.
(SAO PAULO, BRAZIL) -- New York City-based Citigroup Inc., which has received $45 billion of taxpayer bailout money to date, has canceled plans for a $4.5 million renovation of three floors at its 18-story office building owned by the bank in downtown Brazil.
The renovations would have included an area for entertaining clients and a landscaped terrace called a suspended garden. The U.S. government owns 34 percent of Citigroup's common stock.
The Wall Street Journal reports the renovations would have transformed the building's 17th floor of offices into a dedicated area for meeting and entertaining important clients, primarily corporations and wealthy individuals.
(NEW YORK, NY) -- After a 10-year buying spree, New York City-based Vornado Realty Trust faces $2.7 billion of unsecured debt that bondholders can demand be repaid in 2011 and 2012.
The Wall Street Journal notes that in a letter to investors last spring, Vornado chairman Steven Roth told investors, "With 20/20 hindsight, we should have sold everything non-core. But we hesitated as the knife started dropping, and now it's too late."
Last month, Standard & Poor's lowered the company's outlook to negative and cited debt concerns.
Vornado CEO Michael D. Fascitelli has told New York City financial analysts the company is looking for "an acquisition that will transform Vornado," according to the WSJ.
Fascitelli also said retail "might be one of the greatest buying opportunities" for Vornado at this time.
(NEW YORK, NY) -- Blackstone Group LP is trying to shave $5 billion from the $20 billion debt load currently carried by Hilton Worldwide, its single biggest investment in 24 years.
Blackstone president Hamilton E. "Tony" James is talking with lenders, trying to restructure the corporate debt of the New York City-based private equity firm, according to Bloomberg.
Blackstone is reported to be trying to contribute $800 million of new equity to buy back debt at a discount. The firm also wants to extend debt maturing in 2013 to 2016, while converting some junior slices of debt into equity.
In a recent conference call with analysts, James said, "You can effectively rewrite history by changing a company's capital structure and reducing its leverage."
The Hilton Hotel chain was founded by Conrad Hilton in 1919. the chain owns or manages 2,900 hotels with 490,000 rooms throughout the globe.
(WASHINGTON, DC) --
Rep. Edolphus Towns (D-NY)
Towns and his staff specifically are looking for leads that will show a number of lawmakers and government officials were given favorable terms for mortgages, possible in exchange for political favors, according to DSNews.com.
The House committee's investigation comes as a class action lawsuit filed by 10,000 former Countrywide customers gets under way in New York City. The suit alleges Countrywide and Bank of America destroyed and then recreated documents relating to the customers' subprime mortgage loans.
The suit alleges the banks' practices violated the federal Racketeer Influenced and Corrupt Organizations Act known as RICCO.
(CHARLOTTE, NC) -- Grandbridge Real Estate Capital LLC is spreading out in Texas.
The Charlotte, NC-based wholly owned subsidiary of BB&T Corp., has purchased Quantum First Capital of Dallas, TX for an undisclosed sum.
Stuart Wernick
The company also has re-entered the Louisville, KY market with the acquisition of BFG Realty Advisors and its loan servicing portfolio of about $400 million.
Grandbridge itself has a servicing portfolio of about $24.8 billion representing nearly 100 capital providers.
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