By Kathleen Chu and Katsuyo Kuwako
Dec. 17 (Bloomberg) -- General Electric Co.'s property arm, which has more than $62 billion of assets worldwide, plans to invest $300 million in Taiwan in the next two years as the company diversifies its Asian portfolio.
Taiwan's property market has become attractive relative to Tokyo, where rising office prices have reduced return on investment, said Tomoyuki Yoshida, head of Japan real estate operations for GE Real Estate Corp. The nation's low borrowing costs are also a plus.
``Japan is too stable,'' Yoshida said in an interview with Bloomberg news. ``Hong Kong's market is a little too hot. Taiwan is one of the best countries to enter in Asia. You can enjoy arbitrage.''
Grade A office space in Tokyo's central business districts offers a return on investment of 3.1 percent, while similar buildings in Taipei yield as much as 5.9 percent, according to a report by Jones Lang LaSalle Inc.
GE Real Estate's Japan office, which also oversees investment in Macau and Hong Kong, bought its first property in Taiwan on Nov. 30. It paid NT$684 million ($21 million) for a 12-story office building in Taipei from Hocheng Group Corp., a bathroom and kitchen equipment manufacturer, to whom it will lease back the building.
GE Real Estate will initially focus on office and retail properties, Yoshida said, and it's studying collaborations with Taiwanese developers on condominium development.
The value of office buildings in Taipei gained 20 percent in the past year as acquisitions by investors drove up prices, according to DTZ Debenham Tie Leung, a property consulting company.
Grade A office sites are buildings no older than 25 years with total leasable floor area of more than 10,000 square meters (107,639 square feet) and more than 800 square meters per floor, according to Jones Lang LaSalle.
To contact the reporters on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net ; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net .
Monday, December 17, 2007
Thursday, December 13, 2007
Behringer Harvard Grows Office Holdings to 4.8B
DALLAS -- Commercial real-estate investor Behringer Harvard on Wednesday completed its $1.4 billion acquisition of the subsidiaries of Toronto-based IPC US REIT, boosting the office holdings in its REIT I portfolio to roughly $4.8 billion.
In tandem with closing that deal, Dallas-based Behringer Harvard said it has closed on a $500 million credit facility to help finance the IPC US REIT deal and other acquisitions. Of that amount, $300 million comes as a revolving credit facility and $200 million as a term loan. Arranging the transaction were Wachovia Securities and KeyBanc Capital Markets, part of KeyCorp.
Behringer Harvard announced its acquisition of IPC US REIT, which was traded on the Toronto Stock Exchange, in August. The purchase included $600 million paid for equity and the assumption of $800 million in debt.
The former IPC US REIT's assets span 9.6 million square feet of rentable space in major U.S. cities. They include 500 East Pratt in Baltimore; McDonald Investment Center in Cleveland; and Bank of America Plaza in Las Vegas, among others.
The acquired portfolio now is part of Behringer Harvard's REIT I Inc., a publicly registered but nontraded real estate investment trust. With the acquisition completed, REIT I now holds 76 office properties totaling more than 25.1 million square feet of rentable space.
"This is a strategic purchase that further diversifies the portfolio from a geographic perspective and at the same time strengthens its presence in existing markets such as Philadelphia, Houston and Baltimore," Behringer Harvard founder and chief executive Robert Behringer said in a statement.
Behringer Harvard, formed in 2001, also manages its Opportunity REIT I, with about $1 billion in assets; Short-Term Opportunity Fund I LP, with $200 million; and Mid-Term Value Enhanced Fund I LP, with $40 million.
In tandem with closing that deal, Dallas-based Behringer Harvard said it has closed on a $500 million credit facility to help finance the IPC US REIT deal and other acquisitions. Of that amount, $300 million comes as a revolving credit facility and $200 million as a term loan. Arranging the transaction were Wachovia Securities and KeyBanc Capital Markets, part of KeyCorp.
Behringer Harvard announced its acquisition of IPC US REIT, which was traded on the Toronto Stock Exchange, in August. The purchase included $600 million paid for equity and the assumption of $800 million in debt.
The former IPC US REIT's assets span 9.6 million square feet of rentable space in major U.S. cities. They include 500 East Pratt in Baltimore; McDonald Investment Center in Cleveland; and Bank of America Plaza in Las Vegas, among others.
The acquired portfolio now is part of Behringer Harvard's REIT I Inc., a publicly registered but nontraded real estate investment trust. With the acquisition completed, REIT I now holds 76 office properties totaling more than 25.1 million square feet of rentable space.
"This is a strategic purchase that further diversifies the portfolio from a geographic perspective and at the same time strengthens its presence in existing markets such as Philadelphia, Houston and Baltimore," Behringer Harvard founder and chief executive Robert Behringer said in a statement.
Behringer Harvard, formed in 2001, also manages its Opportunity REIT I, with about $1 billion in assets; Short-Term Opportunity Fund I LP, with $200 million; and Mid-Term Value Enhanced Fund I LP, with $40 million.
Tuesday, December 11, 2007
Goldman Cashes in on Subprime Meltdown
How Goldman Won Big
On Mortgage Meltdown
By Kate Kelly
From The Wall Street Journal Online
The subprime-mortgage crisis has been a financial catastrophe for much of Wall Street. At Goldman Sachs Group Inc., thanks to a tiny group of traders, it has generated one of the biggest windfalls the securities industry has seen in years.
The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year ended Nov. 30, according to people familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. On Tuesday, despite a terrible November and some of the worst market conditions in decades, analysts expect Goldman to report record net annual income of more than $11 billion.
Goldman's trading home run was blasted from an obscure corner of the firm's mortgage department -- the structured-products trading group, which now numbers about 16 traders. Two of them, Michael Swenson, 40 years old, and Josh Birnbaum, 35, pushed Goldman to wager that the subprime market was heading for trouble. Their boss, mortgage-department head Dan Sparks, 40, backed them up during heated debates about how much money the firm should risk. This year, the three men are expected to be paid between $5 million and $15 million apiece, people familiar with the matter say.
Under Chief Executive Lloyd Blankfein, Goldman has stood out on Wall Street for its penchant for rolling the dice with its own money. The upside of that approach was obvious in the third quarter: Despite credit-market turmoil, Goldman earned $2.9 billion, its second-best three-month period ever. Mr. Blankfein is set to be paid close to $70 million this year, according to one person familiar with the matter.
Goldman's success at wringing profits out of the subprime fiasco, however, raises questions about how the firm balances its responsibilities to its shareholders and to its clients. Goldman's mortgage department underwrote collateralized debt obligations, or CDOs, complex securities created from pools of subprime mortgages and other debt. When those securities plunged in value this year, Goldman's customers suffered major losses, as did units within Goldman itself, thanks to their CDO holdings. The question now being raised: Why did Goldman continue to peddle CDOs to customers early this year while its own traders were betting that CDO values would fall? A spokesman for Goldman Sachs declined to comment on the issue.
The structured-products trading group that executed the winning trades isn't involved in selling CDOs minted by Goldman, a task handled by others. Its principal job is to "make a market" for Goldman clients trading various financial instruments tied to mortgage-backed securities. That is, the group handles clients' buy and sell orders, often stepping in on the other side of trades if no other buyer or seller is available.
The group also has another mission: If it spots opportunity, it can trade Goldman's own capital to make a profit. And when it does, it doesn't necessarily have to share such information with clients, who may be making opposite bets. This year, Goldman's traders did a brisk business handling trades for clients who were bullish on the subprime-mortgage-securities market. At the same time, they used Goldman's money to bet that that market would fall.
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On Mortgage Meltdown
By Kate Kelly
From The Wall Street Journal Online
The subprime-mortgage crisis has been a financial catastrophe for much of Wall Street. At Goldman Sachs Group Inc., thanks to a tiny group of traders, it has generated one of the biggest windfalls the securities industry has seen in years.
The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year ended Nov. 30, according to people familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. On Tuesday, despite a terrible November and some of the worst market conditions in decades, analysts expect Goldman to report record net annual income of more than $11 billion.
Goldman's trading home run was blasted from an obscure corner of the firm's mortgage department -- the structured-products trading group, which now numbers about 16 traders. Two of them, Michael Swenson, 40 years old, and Josh Birnbaum, 35, pushed Goldman to wager that the subprime market was heading for trouble. Their boss, mortgage-department head Dan Sparks, 40, backed them up during heated debates about how much money the firm should risk. This year, the three men are expected to be paid between $5 million and $15 million apiece, people familiar with the matter say.
Under Chief Executive Lloyd Blankfein, Goldman has stood out on Wall Street for its penchant for rolling the dice with its own money. The upside of that approach was obvious in the third quarter: Despite credit-market turmoil, Goldman earned $2.9 billion, its second-best three-month period ever. Mr. Blankfein is set to be paid close to $70 million this year, according to one person familiar with the matter.
Goldman's success at wringing profits out of the subprime fiasco, however, raises questions about how the firm balances its responsibilities to its shareholders and to its clients. Goldman's mortgage department underwrote collateralized debt obligations, or CDOs, complex securities created from pools of subprime mortgages and other debt. When those securities plunged in value this year, Goldman's customers suffered major losses, as did units within Goldman itself, thanks to their CDO holdings. The question now being raised: Why did Goldman continue to peddle CDOs to customers early this year while its own traders were betting that CDO values would fall? A spokesman for Goldman Sachs declined to comment on the issue.
The structured-products trading group that executed the winning trades isn't involved in selling CDOs minted by Goldman, a task handled by others. Its principal job is to "make a market" for Goldman clients trading various financial instruments tied to mortgage-backed securities. That is, the group handles clients' buy and sell orders, often stepping in on the other side of trades if no other buyer or seller is available.
The group also has another mission: If it spots opportunity, it can trade Goldman's own capital to make a profit. And when it does, it doesn't necessarily have to share such information with clients, who may be making opposite bets. This year, Goldman's traders did a brisk business handling trades for clients who were bullish on the subprime-mortgage-securities market. At the same time, they used Goldman's money to bet that that market would fall.
To Read More- Click Here
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