Singapore Economy IMF launches index to avert property bubbles New webpage will be one-stop shop for data on countries' housing indicators Source: Business Times / Top Stories IN a development seen as being of global importance for recording property price movements and preventing asset bubbles and financial crises, the International Monetary Fund (IMF) yesterday announced the launch of an index to monitor prices and how these are moving across countries and relative to incomes and other factors. "The era of benign neglect of housing booms is over," IMF deputy managing director Min Zhu said, acknowledging that property prices have not until now been the subject of enough official attention matching their ability to create asset inflation and financial crises. The classic case of this linkage was during the 2008 global financial crisis, which was preceded by the US sub-prime mortgage crisis, but house price inflation has also contributed to spectacular asset booms in Japan, Hong Kong, the UK and elsewhere. China's property market is now the centre of attention in this regard.
"To share cross-country information, analysis on housing markets and discussions on the effectiveness of policy response, the IMF has launched a webpage - the Global House Price Watch - that will provide a one-stop shop for our data on housing indicators," Mr Zhu said in an IMF release yesterday. -By Anthony Rowley in Tokyo Inflation forecasts cut but cost worries stay: MAS poll Source: Business Times / Top Stories [SINGAPORE] Economy watchers have cut their 2014 inflation forecasts from a quarter ago, even as they kept growth projections intact, a recent survey by the Monetary Authority of Singapore (MAS) found. But this speaks more of the lower-than-expected inflation of one per cent in Q1. Economists, in fact, believe that domestic costs will stay high for the rest of the year due to persistent wage pressures. The 23 forecasters who responded to MAS' quarterly poll in late May had a median inflation forecast for this year of 2.2 per cent, down from 2.8 per cent in the March edition of the survey. The fall brings their median forecast in line with the government's 2014 inflation forecast range of 1.5-2.5 per cent. DBS economist Irvin Seah - who cut his full-year headline inflation forecast from 3 per cent to 2.1 per cent in April - said that the downgrades were probably to account for the larger-than-anticipated impact from last year's high base of COE (Certificate of Entitlement) premiums, as well as falling imputed rentals. With greater supply exerting downward pressure on rents in the property market, this year is likely to be the first in many years in which core inflation surpasses headline inflation, Mr Seah said. After all, the MAS core inflation - which strips out accommodation and private transport prices - is still expected to come in at 2.4 per cent this year, the latest MAS poll showed, as economists stuck to their forecasts from a quarter ago. MAS also said in its "Recent economic development in Singapore" article last week that it expects core inflation to stay elevated and average 2-3 per cent this year. External price movements should be benign - given that major commodity markets have ample supply buffers and the key countries Singapore imports from face modest inflation. But the domestic cost pressures - especially those stemming from the tight labour market - are likely to be strong and will remain the primary source of inflation, MAS said. The forecasters' inflation projections were premised upon a median growth forecast of 3.8 per cent for 2014 - unchanged from MAS' previous poll and at the upper end of the official 2-4 per cent forecast. The Ministry of Trade and Industry (MTI) said late last month it expects this "modest pace" to be supported by gradual improvement in the global economy. But the same labour market tightness that is driving wages and costs higher could also be a drag on growth in labour-intensive sectors, MTI said. A similar view surfaced in the changes in the economists' forecasts for the various economic sectors. They now expect manufacturing to grow a stronger 5.6 per cent than the 5 per cent forecast a quarter ago. Wholesale and retail trade is also expected to expand by 4.9 per cent this year - up from the median forecast of 3.8 per cent in March. But they are less optimistic about accommodation and food services - hotels and restaurants which require more manpower. The median growth forecast for that sector fell to 2.1 per cent, from 2.8 per cent in the March edition of the poll. Barclays economist Leong Wai Ho, whose growth forecast of 3.5 per cent falls below the median from the MAS survey, said: "The external manufacturing side of the economy will pick up speed as the US investment cycle moves into higher gear. However, we are a little concerned with the moderation in services sector growth, particularly in industries that are sentiment sensitive."
Looking beyond this year to the next, the forecasters polled expect the Singapore economy to grow a slightly faster 3.9 per cent in 2015, and expect both headline and core inflation to pick up to 2.5 per cent. -By Teh Shi Ning Singapore Real Estate More commercial land up for sale Source: Straits Times Sharp spike in commercial land was a striking feature of the Government's land sales programme released yesterday. The Ministry of National Development said it will release land that could supply up to 159,000 sq m of commercial gross floor area (GFA) in the next half of the year - a huge hike over the 5,000 sq m from land on the confirmed list in the first half of the year.
Vertical garden at CDL condo is world's largest Source: Business Times / Property [SINGAPORE] City Developments Ltd (CDL) has set a world record for the largest vertical garden - a feature in its condominium project completed last year. Tree House's 2,289-square-metre vertical garden has entered Guinness World Records, trumping the last record set by Keppel Land's Vertical Garden @ Ocean Financial Centre. The latter, which stands 19 metres tall and 110 metres wide, won the coveted spot last year. CDL's 99-year-leasehold condo is nestled within the Upper Bukit Timah and Chestnut Avenue private residential estate. According to URA caveats, the developer had sold 397 units at a median price of $834 per square foot during its launch in 2010.
"We have continuously pushed the boundaries with breakthrough sustainable designs and features as well as state-of-the-art technologies," said CDL deputy chairman Kwek Leng Joo. -By Lynette Khoo World's largest vertical garden in Singapore Source: Channel News Asia / Singapore SINGAPORE: A "Tree House" in Singapore has entered the record books as the world's largest vertical garden. The Tree House condominium in Upper Bukit Timah and on Chestnut Avenue features a 2,289-square-mvertical garden on its facade. City Developments Limited announced on Wednesday that it was officially recognised by the Guinness World Records. Its green features make it a soaring success as well, and are expected to help save over S$500,000 in energy and water savings annually. CDL said the vertical garden reduces the estate's carbon footprint by filtering pollutants and carbon dioxide out of the air. It also reduces the building's heat absorption such that residents whose homes are insulated by the green wall could see air-conditioning energy savings of between 15 and 30 per cent. Mr Kwek Leng Joo, CDL deputy chairman, said: "We have continuously pushed the boundaries with breakthrough sustainable designs and features as well as state-of-the-art technologies. “With the eco-inspired Tree House, CDL has not only created a place where residents are proud to call home but more importantly, a green icon which placed Singapore in the world map."
- CNA/ec http://www.businesstimes.com.sg/specials/property/vertical-garden-cdl-condo-worlds-largest-20140612
http://www.channelnewsasia.com/news/singapore/world-s-largest-vertical/1146276.html Holland Village mall: Parking, rents among top worries Source: Straits Times A mall set to be built in the heart of the leafy Holland Village could make the charming enclave even more vibrant and popular. But businesses are concerned about disruptions in the interim and the possibility of higher rents - and some residents want to preserve the complexion of the place. Holland Village shops should innovate: analystsSource: Channel News Asia / Singapore SINGAPORE: Property analysts say existing shops at Holland Village will have to innovate and keep pace with changing demands when a new mixed-use development in the area opens in the future. Authorities announced on Tuesday that a commercial and residential plot at Holland Road is being released as part of the Holland Village Extension plan, as unveiled in the 2014 Master Plan. Mr Sam Thambi and his family have been running their magazine and newspaper business, Thambi Magazine Store, at Holland Village for over three generations since the 1940s, and they have practically become an icon of the area. But with a new mixed-use development coming up, Mr Thambi said he has some concerns about how that might impact business. "Having new buildings -- well it's inevitable, we can't stop developing, we have to grow. At the same time, if we can come up with an idea to still retain this village atmosphere -- which we've already lost more than 50 per cent of it -- I don't know how they can do it, but if we can retain it, then it'll be very good. “Somehow I’ve bonded with this area, I had offers at other parts of Singapore, but I've never wanted to go,” he said. Property analysts said the new development is likely to bring more footfall to the area, which may also translate into higher shop rentals. Competition from new outlets could also lead to existing landlords wanting to spruce up -- another reason why rentals might rise. “For certain trades, they probably have to innovate themselves, to make sure they're keeping pace with the demand and supply and also the kind of changes taking place in the area, because you may attract many different kinds of shoppers or people who visit the place. “To cater for that kind of new demand, the tenants will always have to innovate to make sure they can actually provide value-added service. So that is another way to justify the higher rental,” said Associate Professor Sing Tien Foo from the National University of Singapore’s Department of Real Estate. But some existing outlets say they are confident that customers will still patronise them in the long-run. Faizal Ahmad Rajah, operations manager at Barossa Bar, said: "Probably because it's a new thing at Holland Village, so at the beginning it'll probably affect the business. “But because knowing Holland Village and the atmosphere on its own, the guests will probably come back." Observers say the new mixed-use development could see a variety of essential services including clinics, dentists as well as education centres, along with more food and beverage outlets to complement the existing offering. The new mixed-use development will also provide more housing options for people, with an estimated 580 residential units. But some property analysts say the units are likely to be small, being either two-room or studio apartments, which may be more appealing to younger households. Ku Swee Yong, CEO of Century 21 Singapore, said: “There hasn't been any significant development for the several hundred apartments that have been launched within a five-minute walking distance from Holland Village in the last five years. “One MRT station away up north and one MRT station away down south, and prices have already gone as high as over S$2,000 per square foot. “So we would expect the developer who is bidding for this to be pricing their residential component, estimated at 580 units, at above S$2,000 per square foot when they open for sale. “The commercial units would be worth around S$4,000 per square foot type of value, and that would mean that the total bid price for this piece of land may be as high as a billion dollars. “That would also then help some of the older existing properties increase their value, because of the potential of the attraction of this new development at Holland Village. “I would recommend investors to focus on looking at properties around Holland Village, probably focusing on the freehold properties that are now priced at about S$1,300 to S$1,400 per square foot -- they should be able to see significant capital gains in the future.” The commercial and residential site is expected to be launched in December. - CNA/nd
http://www.channelnewsasia.com/news/singapore/holland-village-shops/1146198.html Tiong Seng to make precast tunnel parts Joint venture with Japanese firms eyes Singapore and Malaysia markets Source: Business Times / Companies HOME-GROWN construction group Tiong Seng Holdings has signed a joint venture (JV) agreement with two listed Japanese companies to manufacture and supply precast tunnel segments for the Singapore and Malaysia markets. Its chief executive officer, Pek Lian Guan, said that this will enable the company to target the growing pipeline of mass rapid transit projects and infrastructure construction in Singapore, in tandem with the Transport Ministry's plans to expand the rail network here. The deal was signed behind closed doors at Pan Pacific Hotel between Tiong Seng's unit, Robin Village International; Geostr Corp, a consolidated unit of Nippon Steel & Sumitomo Metal Corp; as well as Marubeni-Itochu Steel Pte Ltd, a Singapore subsidiary of its steel trading parent company of the same name.
The JV company will be owned by Tiong Seng, Geostr and Marubeni-Itochu in a 44:51:5 proportion. -By Lee Meixian
Views, Reviews & Forum Let HDB landlords enjoy their rent Source: Straits Times When the owner of a Housing Board flat moves to private property, should he be allowed to keep - and profit off - his old flat? This question resurfaced in both the print and online Straits Times Forum pages last month, just as the Government was starting a series of conversations to gather Singaporeans' views on housing issues.
Global Economy & Global Real Estate Hilton to open 5 more hotels in Myanmar Operator signs management deals with Eden Group Co Source: Business Times / Property [SINGAPORE] Hilton Worldwide Holdings, the world's largest hotel operator by market value, said it plans to open five more hotels in Myanmar in the next three years, even as its maiden project in the country is facing delays. Hilton has signed management agreements with Eden Group Company Ltd, a business conglomerate in Myanmar, for the hotels. Two, which are existing properties, will be rebranded and open as Hilton hotels in October 2014. The other three are slated to open in 2016 and 2017, it said in a statement.
A surge in the number of tourists in recent years has sparked a boom in hotel development in Myanmar, where only six five-star hotels were in operation at the end of 2013. http://www.businesstimes.com.sg/specials/property/hilton-open-5-more-hotels-myanmar-20140612 US House Majority Leader upset by Tea Party rival in primary Cantor criticised for being soft on immigration issues Source: Business Times / World [WASHINGTON] In one of the most stunning primary election upsets in congressional history, the House Majority Leader, Representative Eric Cantor, was soundly defeated on Tuesday by a Tea Party-backed economics professor who had hammered him for being insufficiently conservative. The result delivered a major jolt to the Republican Party - Mr Cantor had widely been considered the top candidate to succeed House Speaker John Boehner - and it has the potential to change both the debate in Washington on immigration and, possibly, the midterm elections. With just more than US$200,000, David Brat - a professor at Randolph-Macon College in Ashland, Virginia - toppled Mr Cantor, repeatedly criticising him for being soft on immigration and contending that he supported what critics call amnesty for immigrants in the country illegally. Prof Brat will face Jack Trammell, a Democrat who is also a professor at Randolph-Macon, this fall in the heavily Republican district.
Republicans were so sure that Mr Cantor would win that most party leaders had been watching for how broad his victory would be. His defeat will reverberate in the capital and could have major implications for any chance of an immigration overhaul. -From Washington, US Towers rise in US cities as condos make a comeback First-time home- owners flocking to urban settings are helping fuel demand Source: Business Times / Property [LOS ANGELES] For the first time since the US housing crash, new condominium towers are sprouting in downtown Boston, Seattle and Los Angeles as developers bet on the return of the riskiest type of residential real estate. Buyers are signing deals to reserve units in two new high-end projects in Boston. A 41-storey tower rising in Seattle is the first phase of the largest condo development ever in the city. In Los Angeles, a 22-floor building is slated for construction later this year, the first ground-up high-rise condo project downtown since 2005. Construction cranes also spike the skylines of Washington, Houston, Miami, New York and San Francisco as financing gradually returns to a real estate class that lenders shunned for years.
Condos are regaining favour after a surge in rental demand pushed the US apartment-vacancy rate to the lowest level in a decade, sending urban rents soaring, while the inventory of for-sale housing remains historically low. -From Los Angeles, US Shelved Las Vegas projects are being revived Building recovery is sign of investor confidence in nascent recovery Source: Business Times / Property [CHICAGO] For almost five years, the desert plot at the western edge of the Las Vegas valley was home to hulking steel skeletons - ghostly ruins of a construction project halted by the recession. Now, the 43 ha site bustles with hundreds of workers building the first phase of Downtown Summerlin, an office, entertainment and retail complex that is scheduled to open in October. Howard Hughes Corp revived the development last year after the previous owner, General Growth Properties Inc, shut it down in 2008. The commercial real estate market in Las Vegas, littered with vacant buildings and abandoned construction sites by overreaching developers during the US property crash, is coming back to life as the local economy improves and tourists return to the nation's gambling capital. Blackstone Group LP's deal to buy the Cosmopolitan resort and Genting Bhd's proposed resurrection of an abandoned project on Las Vegas Boulevard are further signs of investor confidence in the nascent recovery.
Las Vegas "kind of went through this frozen period", said John Matt Stater, research manager for brokerage Colliers International in the city. "Over the last year we really got the blood pumping now, and things are moving fast." -From Chicago, US Home of millionaire accused of murder sets Aussie sale record Source: Business Times / Property [SYDNEY] The Sydney harbourfront mansion of millionaire Australian property developer Ron Medich, who is accused of murder, was sold for close to the A$40 million (S$47 million) asking price, setting a 2014 Australian record. The five-bedroom home in the eastern suburb of Point Piper went to a local buyer on Tuesday night, said Bill Malouf, principal at broker LJ Hooker Corp Double Bay, who handled the sale. He declined to confirm the identity of the buyer or the exact price. The sale of the house, with harbour views, a private jetty and a full-floor master retreat, follows another transaction a week ago for more than A$30 million in the same suburb.
Two other properties, also in the eastern suburbs, are vying to become Australia's most expensive sales, as record-low interest rates, rising share prices and demand from overseas buyers boost demand for luxury properties. -From Sydney, Australia Famous Irish hotel, two others go on sale for 30m euros Source: Business Times / Property [LONDON] The Malton, where Jacqueline Kennedy and her children vacationed in the 1960s, and two other Irish hotels were put on sale for 30 million euros (S$51 million). That's 10 million euros less than The Malton alone sold for in 2006. The hotel, opened in 1854, is in Killarney about 290 kilometres southwest of Dublin and it's where parts of Ryan's Daughter starring Robert Mitchum was filmed. The 172-bedroom Malton is being sold together with the Metropolis Hotel in Cork and the Kilkenny Remand Hotel in the city of the same name, broker Savills plc said on Tuesday. "This is the first portfolio of Irish hotels to be offered for sale in almost a decade," said Tom Barrett, head of Savill's hotel and leisure unit in Ireland. The hotels are profitable and "considerable interest" is expected, he added.
Irish commercial property values fell by as much as two-thirds after a real estate bubble burst in 2008. An improving economy is boosting demand for business properties, which gained the most since 2006 in the first quarter. Revenue per available room, a hotel-industry measure of occupancy and rates, rose 11 per cent to 71 euros at Irish hotels last year, according to data compiled by researcher STR Global. -From London, UK Emaar Malls 'raising US$750m through sukuk' Over US$5b orders said to be placed for the 10-year notes Source: Business Times / Property [DUBAI] Emaar Malls Group is raising US$750 million through a debut Islamic bond issue, according to two people familiar with the matter. The 10-year sukuk may price at about 185 basis points above mid-swaps, the people said, asking not to be identified because the information isn't public. The owner of Dubai Mall, one of the world's biggest, met fixed income investors in Asia, Europe and the Middle East this month.
More than US$5 billion in orders were placed for the notes, the people said. Early price guidance for the issue was in the area of 200 basis points above mid-swaps early on Monday. -From Dubai, UAE http://www.businesstimes.com.sg/specials/property/emaar-malls-raising-us750m-through-sukuk-20140612 Vietnamese developer to tap nascent suburban-style homes It aims for a 10-fold rise in its market capitalisation to US$1b by 2020 Source: Business Times / Property [HO CHI MINH CITY] Nam Long Investment Corp, Vietnam's biggest affordable housing developer, plans to move to building satellite towns, which are taking hold as rising incomes in South-east Asia feed surging demand for suburban-style living. Nam Long, which started trading a year ago on the Ho Chi Minh City Stock Exchange, is targeting a 10-fold increase in its market capitalisation to US$1 billion by 2020, by developing suburban-style communities on its blocks of land, including in the province of Long An, a gateway to the country's rice-growing Mekong Delta. Strong demand for affordable housing in Vietnam as the country urbanises has helped overcome a "challenging" national property market in recent years, the International Finance Corp said in February.
Nam Long wants to reduce the percentage of overall revenue generated by its affordable housing business to one-third by 2019 from about 90 per cent now, according to chief executive Nguyen Vinh Tran, based in Ho Chi Minh City. -From Ho Chi Minh City, Vietnam
http://www.straitstimes.com/premium/world/story/viet-developer-eyes-satellite-towns-20140612 China building artificial isles in Spratlys, says Philippines Source: Straits Times Carney Addresses London Bankers as Housing Call Looms Source: Bloomberg / Luxury Mark Carney is about to show if he can make good on George Osborne’s Mansion House promises. Four years after the chancellor of the exchequer pledged in his first speech to London bankers to arm the Bank of England with powers to prevent financial crises, surging house prices are putting pressure on officials to use them. The governor can scarcely avoid mentioning the topic himself in his own debut at the annual Mansion House event tonight, less than a week before he leads a BOE panel that will debate the need for action. Osborne, 43, will also speak at the showpiece occasion held in the Egyptian hall of the 18th century Palladian residence of the Lord Mayor of London, opposite the central bank. With the housing market becoming a battleground in an election less than year away, the dilemma for Britain’s economic policy makers is how to prevent a bubble from forming without angering voters by creating barriers to homeownership. “So far everything the bank’s been doing has been easing, and that’s been popular,” said Simon Wells, a former BOE economist who now works at HSBC Holdings Plc. “The big test for Carney is if he has the mettle to do something unpopular, whether that’s macroprudential policy or rate rises.” The BOE kept its key interest rate at a record-low 0.5 percent this month. That, along with rising demand and a shortage of supply, drove homes values to a six-year high in May, according mortgage lender Halifax. The Royal Institution of Chartered Surveyors said today its house-price index rose to 57 in May from 55 in April, close to the highest since 2002. ‘Potential Risk’The three-century-old BOE is facing pressure to act, with the Organization for Economic Cooperation and Development calling on it to consider further measures on property. U.K. Business Secretary Vince Cable said today the central bank must “stop this boom getting out of control,” and that a “stable” level of mortgage lending is about 3 to 3 1/2 times income. “The Bank of England should not hesitate to use these powers, and any others we make available, should they see serious risks emerging in the housing market,” Osborne told lawmakers today. Carney, 49, who replaced Mervyn King just under a year ago, has said the BOE is monitoring housing and will take action if needed. Policy maker Ben Broadbent told lawmakers yesterday that property is a “potential risk” to the economy, though rampant credit growth is a greater concern than price gains. “We are not primarily in the business of identifying and ending bubbles,” he said. “What I worry about is if the recovery in the housing market encourages an increase in mortgages, and in particular high loan-to-value, loan-to-income, risky mortgages. That is what matters.” Supply ShortageThe BOE’s Financial Policy Committee holds its next meeting on June 17. While its focus may be lending, the government has cited the lack of housebuilding as the source of potential market stress. Osborne said June 6 that building homes is the “only long-term answer.” One upside from the pickup in house prices has been its impact on confidence and the recovery. The U.K. economy grew 0.8 percent in the first quarter and is on track to be the fastest-growing among the Group of Seven this year. The gains haven’t translated into a boost for the ruling Conservative Party. The Tories are trailing the opposition Labour Party 31 percent to 37 percent, according to a YouGov Plc poll. The Liberal Democrats, the junior member of the coalition led by Prime Minister David Cameron, are on 7 percent. The next general election is slated for May 2015. In European Parliament elections last month, the Conservatives came third in a national poll for the first time ever. Housing IncentivesOsborne has helped to fuel demand for property with his Help-to-Buy program, aimed at homebuyers with small down payments. While he’s asked the FPC to monitor the policy, the panel also has other weapons at its disposal. These include recommending tougher capital ratios on mortgage lending or capping the the size of loans relative to a borrower’s income. Part of the dilemma is how to properly gauge if Britain’s property market is overheating considering the disparity across regions. Annual price growth in London was 17 percent in March compared with 8 percent for the whole country. “The big challenge going forward is how to tighten policy without derailing the recovery,” said Rob Wood, an economist at Berenberg Bank in London and a former central bank official. “These new macroprudential policy tools are new and untested.” Tougher RulesThe BOE has already taken some steps, curtailing support for mortgage lending through its Funding for Lending program, while regulators have toughened rules as part of a so-called Mortgage Market Review. Home-loan approvals dropped to a nine-month low in April. Some banks aren’t waiting for the FPC. Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc have both imposed restrictions on lending, capping mortgages at four times salary, indicating they may be bracing for action from officials along those lines. The share of loans that amount to more than four times a single income or three times joint income rose to 45 percent of all regulated loans, the most since 2007, according to a Matthew Pointon, an economist at Capital Economics Ltd. in London. A BOE survey in April showed banks more willing to lend at loan-to-value ratios above 90 percent. “While the introduction of the MMR regulations appears to have caused a dip in the level of mortgage lending since January, it has as yet done nothing to bring down LTI ratios,” he said. “These figures do not give the FPC much of a reason to delay taking action to cool the housing market.” -By Jennifer Ryan http://www.bloomberg.com/news/2014-06-11/carney-addresses-london-bankers-as-housing-call-looms.html IMF Starts Global Housing Index to Analyze Boom-Bust Cycles Source: Bloomberg / Luxury The International Monetary Fund has started publishing analysis of housing markets around the world to help ensure boom-to-bust cycles are identified and avoided before they start another financial crisis. “While a recovery in the housing market is surely a welcome development, we need to guard against another unsustainable boom,” IMF Deputy Managing Director Zhu Min wrote in a blog post today. The fund’s Global Housing Watch will be updated quarterly. Global housing prices have risen for seven straight quarters, according to the Washington-based fund’s new global index. Countries where housing remains “still too pricey” include Belgium, Canada, Australia, New Zealand, France and the U.K., according to the fund. Ratios of house prices to rents and incomes “remain well above the historical averages for a majority of countries,” Zhu wrote. -By Brendan Murray Blackstone Investors Set to See First Cash From Hilton IPO Source: Bloomberg / Luxury Blackstone Group LP (BX) is planning its first sale of Hilton Worldwide Holdings Inc. (HLT) shares, a step toward returning some cash to the buyout firm’s investors after the biggest initial public offering of a U.S. hotel company. Hilton registered to sell 90 million shares on Blackstone’s behalf, according to a filing today from the McLean, Virginia-based hotel operator. The world’s largest lodging company by market value has climbed 17 percent since raising $2.35 billion in its Dec. 11 IPO. The underwriters will be allowed to buy another 13.5 million shares if they sell the initial amount. Blackstone is taking advantage of stocks at record highs to start to return money from its largest-ever investment by the amount of equity staked. The New York-based firm’s $26 billion purchase of Hilton in 2007 came at the tail end of the buyout boom. Since then, the rebound in capital markets and the travel industry has catapulted the deal to be among the most profitable private-equity acquisitions of all time. Blackstone didn’t sell any Hilton stock in the IPO. It held 752.5 million shares, or a 76 percent stake, at March 31, according to data compiled by Bloomberg. Chairman and Chief Executive Officer Stephen Schwarzman said on an earnings conference call in October that Blackstone is moving into a cycle of “very high” potential for large realizations and consequent gains. The company probably will be a large Hilton shareholder “for many years to come,” he said. More IPOsThe firm has planned other stock sales following a wave of property IPOs completed toward the end of 2013. Brixmor Property Group Inc. (BRX), a New York-based shopping-center landlord that went public in October, filed May 27 for a secondary offering by Blackstone of 25 million shares. That would reduce the firm’s stake to about 69 percent from about 77 percent, according to the regulatory filing. Extended Stay America Inc., a joint investment by Blackstone, Centerbridge Partners LP and Paulson & Co., yesterday registered to sell 21 million paired shares of its stock on behalf of the holders. The Charlotte, North Carolina-based lodging chain raised $565 million in its Nov. 12 IPO. Blackstone acquired Hilton, then known as Hilton Hotels Corp., in October 2007. Under Chief Executive Officer Christopher Nassetta, Hilton relocated its headquarters from Beverly Hills, California, and expanded its room count by more than a third, almost all of it outside the U.S. The underwriters on the sale are Deutsche Bank Securities Inc., Bank of America’s Merrill Lynch unit and Morgan Stanley, according to the filing. -By Hui-yong Yu |