CBRE to buy ING real estate arm

CB Richard Ellis Group struck a deal to buy most of the real estate investment management business of Dutch financial company ING Group NV for US$940 million, making it the world’s biggest real estate investment manager.

The deal, which nearly triples CB Richard Ellis’s assets under management, ends an auction process that lasted over a year and attracted more than 40 others, including CB Richard Ellis’s chief rival, Jones Lang LaSalle Inc.

The ING real estate investment business last year generated US$305 million in revenue and includes US$59.8 billion in assets under management.

By giving CB Richard Ellis a bigger investments management base, the deal also gives the company a better chance to sell its real estate services – property management, sales and leasing, corporate services – to the newly acquired business. ‘It completes the construction of a preeminent global investment management platform,’ CB Richard Ellis chief executive officer Brett White told Reuters.

‘We now have opportunities for investors to invest in virtually the entire risk spectrum and the entire global geography. No one’s ever done that before.’

CB Richard Ellis also will benefit from the timing of the deal, which is at the point where commercial real estate is recovering from a severe downturn.

‘We’re buying a business that has already gone through the massive downturn in the industry, whatever impact that business had on profit, on asset write-down, on stress on their team, that’s all behind them now,’ Mr White said. ‘We’re buying the business at that trough valuation.’

For ING, the deal will help it pay down part of the balance left from its US$10 billion government bailout in 2008.

The CB Richard Ellis unit taking over the ING business, CBRE Investors, is a wholly owned but independently operated arm that oversees funds and individual accounts that invest in real estate.

Its clients are mostly US-based institutional investors, such as pension funds and endowments. The deal will give it access to ING’s predominately European clients.

‘It speaks to CBG’s global platform and puts the company in line with growing institutional demand to own real estate,’ Barclays Capital analyst Ross Smotrich said in a note.

CBRE Investors, which has about US$37.6 billion of assets under management, has primarily focused on properties that need upgrading before they are sold.

Date: 17 February 2011 | For the full report, please visit http://www.businesstimes.com.sg

Construction of new homes in Jan up 15%

Construction of new homes in the United States grew by nearly 15 per cent last month, but remained near levels seen since the sub-prime mortgage meltdown, official data showed yesterday.

At an annual rate of 596,000 starts, building in January was 2.6 per cent below the levels seen in the same month last year, according to Commerce Department figures.

It was a ‘quite disappointing report, despite the increase in the overall housing starts figure’, said Inna Mufteeva, an economist with Natixis, who described sentiment in the sector as ‘anaemic’.

Adding to the bleak outlook, building permits were 10.4 per cent below the levels seen in December and 10.7 per cent below last January.

But experts predicted those low rates of permitting and building would pick up as the recovery progresses.

‘(The market) should eventually be supported by the extremely low inventories of new homes and decent homes sales expected on the housing market,’ said the Natixis economist.

Date: 17 February 2011 | For the full report, please visit http://www.businesstimes.com.sg

GIC wants tasty hotel fare worth US$1.5b

The Government of Singapore Investment Corp (GIC) has tabled a US$1.5 billion offer for a group of five posh but bankrupt resorts in the US.

The distressed luxury resorts, which are owned by a group of investors including hedge fund Paulson & Co, include the Grand Wailea Resort Hotel & Spa in Maui and the famous Doral Golf Resort & Spa in Miami, where PGA golf tournaments are played.

Its lawyer Michael Sage confirmed this in comments made to Bloomberg when the GIC bid was made public at a bankruptcy court hearing in New York on Monday.

The resorts filed for bankruptcy two weeks ago on Feb 1 after the investors took ownership of them through a foreclosure.

GIC, which manages more than US$100 billion of Singapore’s foreign reserves and is currently ranked the world’s seventh-largest state investment company, already has a stake in the Chicago- based Hyatt Hotels Corp. It has also previously invested in the Westin Tokyo Hotel and the Host Hotels & Resorts group.

A GIC spokesman declined to comment on the company’s US offer.

Analysts say that GIC could be seeking to take advantage of the US dollar, which hit a new low last year against the Singapore dollar and is now valued at S$1.28.

‘It’s a very good time to go in now, when it is a low time of the cycle of the market as far as US hotel performances and values are concerned,’ said David Ling, managing director for hospitality consulting firm HVS International (Asia-Pacific).

GIC, too, typically holds a medium-to-long-term view of its assets, so they could take their time to decide when would be best to get out of the market in future, he told BT.

‘In key cities such as New York and San Francisco, for instance, hotel occupancies are moving up, people are travelling again. This is a time when many investors from Europe or elsewhere are still very cautious and may not be as aggressive. So if you have the funds available, now is a good time to take a good look at the market,’ he said.

Date: 16 February 2011 | For the full report, please visit http://www.businesstimes.com.sg

Trump Entertainment Agress to Sell Atlantic City Marina Casino to Landry’s

Trump Entertainment Resorts Inc., the casino company taken over by bondholders through bankruptcy last year, agreed to sell the Trump Marina Hotel Casino to Golden Nugget owner Landry’s Inc. for $38 million.

The transaction is expected to be completed in the second quarter and is subject to a working capital adjustment, Atlantic City, New Jersey-based Trump Entertainment said today in a statement. Landry’s, a restaurant group taken private by its management last year, operates Golden Nugget casinos in downtown Las Vegas and Laughlin, Nevada.

Trump Entertainment has been attempting to sell the Marina for years, including an unsuccessful series of renegotiated deals with Coastal Marina LLC, controlled by Richard T. Fields, who sought to turn it into a Margaritaville casino resort. Marc Lasry, chief executive officer of New York-based Avenue Capital Group, Trump’s largest shareholder, told New Jersey regulators in July he was seeking a buyer for the casino.

Press of Atlantic City reported Landry’s efforts to buy Trump Marina last week.

Landry’s plans to renovate the Marina this year and rebrand it a Golden Nugget resort, CEO and owner Tilman Fertitta said today in a separate statement.

Atlantic City gambling tumbled to $3.57 billion in 2010 from a peak of $5.2 billion in 2006 — before Pennsylvania and Yonkers, New York, allowed slot machines. Competition has intensified with new casinos in Delaware, Maryland and West Virginia. Six of Atlantic City’s casinos went through bankruptcy or restructured debt during the financial crisis, and development has stalled.

Date: 15 February 2011 | For the full report, please visit http://www.bloomberg.com

Playboy Mansion Valued at $54 Million in Lawsuit

The Playboy Mansion, the 29-room home, movie studio and corporate throne of Playboy Enterprises Inc. founder Hugh Hefner, is worth $54 million, or 45 times what the publisher claimed on its books, a shareholder lawsuit said.

Hefner, 84, and Playboy Enterprises are hiding the true value of the company’s assets in an effort to take it private without paying a fair price for the minority stake that Hefner doesn’t own, according to an amended complaint filed Feb. 4 in Delaware Chancery Court in Wilmington.

The information sent to minority shareholders describing the deal “seems designed to intentionally mislead, or at a minimum, confuse Playboy’s public shareholders,” lawyers for the shareholders, Charles A. Germershausen and Feivel Gottlieb, said in the complaint.

The lawsuit, originally filed in July, is one of at least two from shareholders challenging Hefner’s takeover attempt. Hefner has offered $6.15 for each share he doesn’t own, according to the lawsuit. Through two classes of stock, Hefner controls 69.5 percent of Playboy’s voting power. The Playboy Mansion is located in Los Angeles.

Abi O’Donnell, a company spokeswoman, declined to comment on the lawsuit.

The shareholders are seeking an injunction to prevent Playboy from closing the proposed buyout, which the board approved last month after a special committee of directors negotiated with other bidders, including FriendFinder Networks Inc., owner of Penthouse adult magazine.

The $54 million appraisal may be accurate, according to Syd Leibovitch, president of Bel Air-based Rodeo Realty Inc.

“It could be worth $50 million,” Leibovitch said in a phone interview. “It’s a huge lot. It’s about 17,000 square feet of living area in the main house and all together 20,000 square feet. In my wildest dreams I couldn’t image it being any lower than $40 million.”

The highest sale price in 2010 for a home in the greater Los Angeles area was $50 million, according to Leibovitch.

“That $50 million house was just a mile and a half from the Playboy Mansion, and the Playboy Mansion is better,” he said.

Date: 12 February 2011 | For the full report, please visit http://www.bloomberg.com

Washington Property Value Gains Beat New York as Jobs Boost Office Prices

Washington office property values advanced the most last year among six major U.S. markets as employers added jobs and investor demand boosted prices, according to CoStar Group Inc.

Office building prices climbed 15 percent in the U.S. capital city and 6 percent in New York, the only other city to show an increase, the Washington-based commercial real estate data provider said today. Values in Chicago fell the most in the group, 22 percent, and in Los Angeles they dropped 17 percent. San Francisco prices declined 13 percent, and Atlanta’s slipped 2 percent.

Well-leased properties in Washington and New York are attracting investors as the economies in those cities recover from the recession. New York employment increased by 41,800 jobs in 2010, the state’s Department of Labor said on Jan. 20. The Washington metropolitan area gained 57,500 jobs over the same period, according to the U.S. Bureau of Labor Statistics. The data are not seasonally adjusted.

“The reason people aren’t as comfortable with a Chicago and L.A. is because their economies just aren’t doing nearly as well as, say, D.C.,” said Chris Macke, senior real estate strategist at CoStar. “It all comes back to perception and perception driven by the economy, and that’s what drives the investor demand or amount of dollars chasing the amount of deals.”

The value of commercial real estate sales in the New York metropolitan area almost tripled in 2010, to $16.3 billion, according to New York-based Real Capital Analytics Inc., which tracks global commercial property transactions. The Washington area was second-highest in the U.S., with $12 billion in sales of office, apartment, retail, industrial and hotel properties, a 156 percent jump from 2009.

Date: 12 February 2011 | For the full report, please visit http://www.businesstimes.com.sg

Brookfield Office Projects Lower FFO as Leases Expire

Brookfield Office Properties, owner of lower Manhattan’s World Financial Center, forecast 2011 funds from operations below analysts’ estimates as lease expirations in New York and Boston may result in new deals at lower rents.

FFO this year will be $584 million to $609 million, or $1.05 to $1.10 a share, the New York-based company said today in its fourth-quarter earnings statement. Analysts projected $1.13 a share, the average of 12 estimates in a Bloomberg survey.

Brookfield may be hurt by a Goldman Sachs Group Inc. lease expiration at 1 New York Plaza in Manhattan and the end of a deal at 75 State Street in Boston, according to James Sullivan, an analyst at Cowen & Co. who cut his rating on the stock today. The company also is facing a 2013 expiration of 4.6 million square feet (427,000 square meters) of space rented to Bank of America Corp. at the World Financial Center.

“Lease expirations in Boston and New York are having a bigger effect than we expected,” Sullivan wrote in a note, reducing his rating to “neutral” from “outperform.” “Also, we were disappointed that the company did not confirm more leasing progress at the World Financial Center.”

Brookfield said it expects same-property net operating income to fall 1.5 percent this year, partly because of two lease rollovers in New York and Boston.

The company is expecting 933,000 square feet of leases to expire this year at its lower Manhattan properties, according to the company’s fourth-quarter supplemental earnings statement. It expects 4.9 million square feet to expire in 2013.

“Filling this space is a priority for us this year,” Chief Executive Officer Richard “Ric” Clark said on a conference call. “The timing of our lease expiries allowed us to effectively skate through the worst of the economic crisis while continuing to maintain steady growth in our earnings.”

Besides the expirations, Brookfield also has to contend with 4.4 million square feet of new offices rising at the World Trade Center, just to the east of World Financial Center, to be completed in 2013.

Clark said on Nov. 4 the financial center’s attractiveness to tenants will be enhanced by the rebuilt World Trade Center, with its Santiago Calatrava-designed mass transit hub connecting Brookfield’s waterfront buildings to downtown’s core, and by a rising number of young New Yorkers living in the area.

Office availability in lower Manhattan was 13.4 percent at the end of January, up from 11.5 percent a year earlier, broker CB Richard Ellis Group Inc. reported on Feb. 9. Landlords were seeking $38.14 a square foot, up 1 percent from a year ago. In Midtown, the biggest and most expensive U.S. office market, the January availability rate was 12.4 percent and the asking rent was $55.82.

Date: 12 February 2011 | For the full report, please visit http://www.bloomberg.com

Home prices are down in almost half of US cities

HOME prices fell in almost half of US cities in the fourth quarter as the number of foreclosures rose to a record, hurting the confidence of buyers.

The median price of a single-family home dropped from a year earlier in 71 of 152 metropolitan areas tracked by the National Association of Realtors, the group said in a report on Thursday. Prices in Cumberland, Maryland, tumbled 20 per cent, the biggest decline, followed by a 14 per cent drop in Kankakee, Illinois. The median price nationwide rose 0.2 per cent to US$170,600, as cities including New York and Boston posted gains.

Mounting foreclosures are depressing home values and discouraging buyers who don’t want to make a deal if they believe prices have further to fall.

The S&P/Case-Shiller index of home values in 20 cities fell 1.6 per cent in November from a year earlier, the biggest 12-month decrease since December 2009, data released last month showed.

‘The flow of homes into foreclosure remains extremely high,’ said Zach Pandl, an economist at Nomura Securities International in New York. ‘The housing market is in very poor shape.’

Big cities where employment is growing saw gains, according to the Realtors group. The median price of a single-family home in the New York metropolitan area climbed 4 per cent. The Washington region had an 8.1 per cent increase and prices in the Boston metropolitan area rose 4.2 per cent, the report said.

Federal Reserve policymakers described the US real estate market as ‘depressed’ in a Jan 26 statement following the end of a two-day meeting in Washington. The central bankers said that declining home values continued to depress consumer spending that accounts for about three-quarters of the world’s largest economy.

The number of homes in foreclosure in December rose to a record 2.2 million, according to Lender Processing Services Inc. Including foreclosures and late payments, there were 6.87 million non-current mortgages, the company said.

Unadjusted, there were 404,000 home sales in December, the first gain after three consecutive declines, according to the Realtors association data. That level matched the unadjusted sales average for all of 2010. In 2009, sales averaged 413,000 a month.

This year, existing home sales probably will gain 7.9 per cent to 5.3 million from a 13-year low of 4.91 million in 2010.

Date: 12 February 2011 | For the full report, please visit http://www.businesstimes.com.sg

Blackstone Buys Majority of Hotel Del Coronado

Blackstone Group LP agreed to buy a majority stake in Strategic Hotels & Resorts Inc.’s Hotel del Coronado to help restructure the debt on the Southern California resort that was the backdrop of the film “Some Like it Hot.”

Strategic Hotels formed a joint venture with Blackstone Real Estate Advisors and KSL Resorts, investing an undisclosed amount of cash into the luxury hotel and converting a portion of the existing debt into equity, Chicago-based Strategic said in a statement today. Deutsche Bank AG provided $425 million in debt financing. KKR & Co. sold its 41 percent stake in the hotel as part of the transaction, according to Kristi Huller, a spokeswoman for the New York-based firm.

The 670-room Hotel del Coronado, located on 28 acres of oceanfront property near San Diego, has hosted 11 U.S. presidents and celebrities including Marilyn Monroe, Madonna and Brad Pitt, according to its website. The transaction values the hotel at about $590 million, Strategic Hotels said. That is less than the $745 million the company bought it for in 2005, said Alan Reay, president at Irvine, California-based Atlas Hospitality Group.

“The San Diego market has started to rebound, and more importantly, the luxury hotel sector has rebounded very strongly,” Reay said in a telephone interview. “For Blackstone this is an excellent investment. The Coronado is an irreplaceable asset. It’s world famous. They are getting in at a much lower price than what Strategic purchased it at.”

Luxury hotels have shown the biggest increases during the recovery of the last year, after being hurt more than their cheaper competitors by the recession. Occupancy at high-end hotels climbed to 66 percent in 2010 from 61 percent the prior year, according to Smith Travel Research Inc. That compares with a 64 percent occupancy rate in 2010 for all hotels in the top 25 U.S. markets.

Date: 08 February 2011 | For the full report, please visit http://www.bloomberg.com

New-Home Recovery Seen as Post-Super Bowl Selling Season Starts

Homebuilder executives and economists predict a post Super Bowl bounce in demand for residential construction as Americans turn their attention from football to another national pastime: house hunting.

The chief executive officers of six of the 10 largest U.S. homebuilders cited the potential of a sales comeback in the spring, traditionally their strongest season, during conference calls in the last four weeks. Housing forecasts from Fannie Mae and the Mortgage Bankers Association show the new-home market will begin a rebound that will last through at least 2012.

A revival in demand for new houses after record-low sales in 2010 may bolster a U.S. economy that’s 19 months into a recovery. Residential construction is a key factor in gross domestic product because it requires the manufacturing of home components such as stoves, cement, tile and furnaces. Richard DeKaser, an economist at Boston-based Parthenon Group, said he expects the homebuilding industry will this year make its first positive contribution to GDP since 2005.

“The spring market is going to be the first test of the proposition that there’s an underlying improvement in new-home fundamentals,” DeKaser said in an interview. “If we don’t see the needle move, it will be very discouraging.”

New-home sales probably will rise 20 percent to 385,000 this year, said David Crowe, chief economist for the National Association of Home Builders in Washington. Fannie Mae, the world’s largest mortgage buyer, projected an 18 percent gain, and the Mortgage Bankers Association estimated a 10 percent advance, according to forecasts posted on their websites.

Spring is a popular time to buy because house hunters often want to have their home finished by July or August, before the start of the U.S. school year in September, said John Burns, CEO of John Burns Real Estate Consulting Inc. in Irvine, California. The weekend after the Super Bowl is traditionally when prospective buyers start looking, he said in an interview.

“If that’s a good weekend for the builders, then we’re going to have a good spring, and if we have a good spring, we’ll have a good year,” Burns said. “That’s the way it’s played out for years.”

Residential investment probably will increase 9.6 percent in 2011 after five years of declines, based on the median forecast of 30 economists at a Federal Reserve Bank of Chicago symposium in December. Housing starts likely will jump 17 percent to a three-year high of 688,000 in 2011, led by a gain in the construction of single-family houses, said Crowe of the National Association of Home Builders.

“The sales pace for new homes will improve as we move through the spring, unless something comes along to derail the economy,” said James Wilson, director of research for JMP Securities LLC in New York. “Demand seems to be coming back.”

Date: 08 February 2011 | For the full report, please visit http://www.bloomberg.com