Singapore Economy Strong leaders, clear vision 'key to shaping cities' Source: Straits Times Leaders who are transparent and have strong political will, good financing and a long-term vision are key to the success of shaping cities that are liveable and sustainable, said local and global thought leaders at three key environment forums yesterday.
http://www.channelnewsasia.com/news/singapore/spending-on/1132492.html Singapore ranked 3rd in study of global cities It was tops for two of the 10 indicators used to assess performance Source: Business Times / Top Stories [SINGAPORE] The Republic has come in third in the sixth edition of PwC's Cities of Opportunity study, finishing behind London and New York. Singapore also scored as the top Asian city. The study which analyses the development of 30 global cities gauges their performance over a variety of indicators. Singapore was tops for two of the 10 indicators used to assess performance - ease of doing business, and transportation and infrastructure.
Other indicators include technology readiness, demographics and livability, cost, and intellectual capital and innovation. -By Lester Wong Going green 'should not hurt taxpayers, growth' OECD projections suggest climate change can dampen world GDP by 2.5% Source: Business Times / Singapore GOING green need not necessarily have a negative impact on taxpayers and a country's growth, but failing to do so could result in a slowdown in the global economy, said Organisation for Economic Co-operation and Development (OECD) Secretary-General Angel Gurria. "New OECD projections suggest that climate change can dampen world GDP by as much as 2.5 per cent," he said. "The choice is not between going green or negating growth. . . We can pursue growth by going green." Mr Gurria was speaking to delegates yesterday at the In-Conversation panel, which was a part of three major global events - the Singapore International Water Week, World Cities Summit and the CleanEnviro Summit Singapore.
He said first movers could see technological and market advantages in the future, which would more than offset "the cost of being greener". -By Raphael Lim Digital cities for digital citizens Besides technology, a citizen-centric approach to city design and service delivery is a must to provide benefits Source: Business Times / Editorial & Opinion CITIES are growing at an unprecedented speed. Over half the world's population now lives within cities and this proportion is set to reach the staggering figure of five billion by 2030. This population trend is strongly reflected in Asia where major cities are forecast to accommodate two billion people in 20 years' time. It will thus be crucial for these cities to keep up with population growth and meet the needs of their citizens in a sustainable or "intelligent" manner. Some cities have already taken steps to adopt "intelligent city" initiatives, using technology to solve some of the challenges they face around energy efficiency, transportation, healthcare and public safety. However, some of these early adopters of technology are often merely speeding up existing administrative processes, instead of devising new ways of delivering better citizen services now into the future.
The most forward-looking city authorities are now realising that their cities need to re-invent themselves radically and find new ways of operating to deliver better services to citizens, businesses and visitors. -By Simon Giles Green growth: Securing the future of business and the environment Source: Business Times / Editorial & Opinion SUSTAINABLE economic development is now a key goal of many governments around the world, including for Singapore and the United Kingdom. The reasons for this are clear and compelling: If we can't find ways to grow our economies in a more sustainable way, we face a future of increasing resource scarcity and competition, continued environmental degradation and unabated climate change impacts which could potentially be catastrophic for our economies and societies. Cities will play an increasingly important role in the future battle for a greener future. The newly appointed United Nations special envoy for cities and climate change, Michael Bloomberg, recently highlighted the fact that cities today account for more than 70 per cent of global greenhouse gas emissions and two-thirds of the world's energy use. The population of the world's cities is projected to double by 2050, by which time they will contain 70 per cent of all people on earth. So the steps that are taken at the city level will have a major impact on the future of our planet. Cities have the potential to be an enormous force for good, but only if they pursue and exploit opportunities to create economically, socially and environmentally sustainable communities. And there are many such opportunities in areas such as energy, urban planning, transport systems, air quality, water, sanitation, waste management and disaster risk reduction.
Singapore is an excellent example of a city that pays huge attention to urban planning, working to embrace more sustainable economic growth, and to providing a clean and green environment. It is fitting therefore that the Green Growth & Business Forum, which links sustainable development, economic growth and the business bottom line, is being held here. -By Greg Clark
http://www.straitstimes.com/premium/top-the-news/story/lessons-top-green-country-20140603 Singapore Real Estate Hougang Ave 7 HUDC estate all set to go private Source: Straits Times The four-decade-long HUDC scheme is coming to an end, as yet another estate is completing its privatisation journey. Hougang Avenue 7 HUDC estate is expected to be successfully privatised on June 13, The Straits Times has learnt, leaving just two others in the midst of doing so.
Post-launch, popular housing projects see slower sales Source: Straits Times Property developments that notched up brisk sales at their debuts seem to have slowed down as home seekers evaluate their options in a buyers' market. Market watchers said home hunters can take their time to secure the best buy given the way weaker market sentiment has turned the market in their favour.
Seven ground-floor units at Holland V mall for sale - See more at: Source: Straits Times A group of retail units on the ground floor of Holland Road Shopping Centre has been put up for sale. The seven freehold strata-titled shops face Holland Avenue, and are home for at least the next six years to supermarket chain Cold Storage.
Real Estate Companies' Brief Chip Eng Seng unit secures $165m HDB contract Source: Business Times / Companies CONSTRUCTION company Chip Eng Seng's wholly owned unit, Chip Eng Seng Contractors (1988), has secured a $165 million HDB contract for building works in Sembawang. The building works, to be carried out over 36 months, cover the construction of eight residential blocks, housing a total of 1,220 dwelling units with other community facilities. Completion is expected to be in the second quarter of 2017. As at March 31, the group's order book stood at $453 million. With this latest contract win, its order book has reached $618 million.
"Our strong track record in construction projects has allowed us to grow our pipeline of projects steadily over the years and we will continue to improve and strive to deliver quality projects to our clients in the times to come," said group executive chairman Lim Tiam Seng. -By Lynette Khoo Retailing woes go beyond Reits Source: Straits Times The Great Singapore Sale is on but shop owners here are unlikely to be in a festive mood. Squeezed by high costs, more competitors and shrinking sales, retailers have been asking for more help to survive amid challenging market conditions.
Views, Reviews & Forum Review rules on takeovers and privatisations Source: Business Times / Editorial & Opinion MICHAEL Dee has written two very good analyses on the recent takeover offer for CapitaMalls Asia (CMA) by Capitaland (CL): "CMA shareholders should stand their ground against 'fair offer'" in BT of April 22 and "Offer for CMA is still undervalued" in BT of May 29. All his points are very pertinent and can be equally applied to other recent takeover attempts, including that of LCD Global Investments (LCD) by RDL Investments (RDL). It is the minorities who are greatly impacted by all these takeover attempts, and they have to protect their own interests. They have to let their voices be heard and not leave it to others to speak up for their rights. They should be wary of the advice of the "independent directors" who invariably follow the advice of the "independent financial advisors" (IFA), the independence of which may need to be questioned. The Securities Investors Association (Singapore) (SIAS), being the watchdog for retail investors, should fight for a higher offer price for them. It should maintain a neutral stand and not advise retail investors to either accept or reject a takeover offer. Besides, SIAS does not hold a financial advisor licence, and is in no position to offer financial advice.
The same "conflict of interest" issue cited by Mr Dee in CL's takeover for CMA also resurfaces in RDL's takeover of LCD, as the two major shareholders of RDL are also majority shareholders of LCD. This is also manifested in other recent takeover attempts of other listed companies. Global Economy & Global Real Estate Valencia's old stadium excites Rowsley With Peter Lim's takeover of club, firm has a shot at redevelopment Source: Business Times / Companies SINGAPOREAN magnate Peter Lim's takeover victory of Spanish football club Valencia could potentially give Rowsley, a Singapore-listed firm he controls, a clear shot at redeveloping the old stadium which sits on prime land. Rowsley chief executive officer Lock Wai Han told BT in an interview - his first since he took over Rowsley's helm six months ago - that the firm is indeed eyeing several openings that have arisen now that one of Europe's top football clubs is in Mr Lim's bag. Top on Rowsley's wish list is to get a stab at redeveloping Valencia's old 55,000-seat Mestalla stadium, dubbed one of Europe's greatest stadiums and located in the dense neighbourhood close to the historic city centre or in real estate speak, "prime land".
"We see consultancy and real estate opportunities that may open up for us, so we are submitting a proposal (to Mr Lim) for a feasibility study to get involved in the project," said Mr Lock. -By Anita Gabriel Record price sought for New York's Woolworth Building penthouse Developers seeking US$110m for the unit at the top of the 58-storey tower Source: Business Times / Property [NEW YORK] Lower Manhattan's landmark Woolworth Building, once the tallest skyscraper in the world, is setting another record. Developers are seeking US$110 million for the penthouse apartment in the pinnacle of the 58-storey tower, a proposed offering plan filed with New York State Attorney General Eric Schneiderman's office shows. That's the highest-ever asking price for a condominium in downtown Manhattan, according to Jonathan Miller, president of appraiser Miller Samuel. "The price is more reflective of the unique historical nature of the property" than its location or the heated luxury market, Mr Miller said. "We've seen rapid absorption downtown, but this project is unlike anything that's come online."
The upper floors of the building at 233 Broadway, with its neo-Gothic spire rising above City Hall, are being converted into 34 luxury apartments with prices rivalling those at Midtown skyscrapers fringing Central Park. The tower, designed by Cass Gilbert for five-and-dime-store pioneer Frank Woolworth, was completed in 1913. At 241 metres, it was the world's tallest skyscraper until 1930. -From New York, US Smaller rise in Dubai home prices after cooling measures Source: Business Times / Property [DUBAI] Dubai home price gains slowed in the first quarter after financial authorities took steps to cool the booming market, broker Knight Frank LLP said. Values in the emirate rose 3.4 per cent, less than Lithuania, Estonia and Malta, Knight Frank said in a statement yesterday. That compared with a 9.2 per cent jump a year earlier. Even so, Dubai home prices climbed 27.7 per cent during the 12 months through March, the most in the world.
Dubai financial authorities have been trying to tame a market that has lurched between boom and bust since it was opened to foreign buyers in 2002. The Central Bank of the United Arab Emirates has restricted mortgage lending and the government doubled transaction fees as rapid price increases sparked concern that a bubble was forming. -From Dubai, UAE Credit Suisse to sell German properties valued at 700m euros Source: Business Times / Property [BERLIN] Credit Suisse Group AG is selling commercial buildings in Germany valued at about 700 million euros (S$1.2 billion) as it liquidates property mutual funds in the country, two people with knowledge of the matter said. Brookfield Financial is managing the sale, said the people, who asked not to be identified because the matter is private. Some of the 20 properties being sold are held by Credit Suisse's CS Euroreal fund and include the German headquarters of Royal Philips NV in Hamburg, one of the people added. A spokeswoman at Zurich-based Credit Suisse and a spokesman at Brookfield Financial, a unit of Toronto-based Brookfield Asset Management Inc, declined to comment.
German property funds began winding down more than 25 billion euros of assets in 2010 after investors, shaken by the global financial crisis, sought more redemptions than funds could immediately meet. More than 13 of the 44 funds have suspended redemptions or are liquidating, noted Sonja Knorr, an analyst at Berlin-based Scope Ratings. Soaring land values worsen London's housing shortage Housing plots in city now cost 27% more than their pre-crash peak in 2007: report Source: Business Times / Property [LONDON] Land prices are soaring in central London, making it more difficult for developers to supply homes that residents can afford and reducing Mayor Boris Johnson's chances of alleviating the city's housing shortage. Values jumped 25.8 per cent in the year through March, compared with a 13.1 per cent gain in the city's most desirable neighbourhoods, broker Savills plc said in a report yesterday. Housing plots in the capital now cost 27 per cent more than their pre-crash peak in 2007, according to the report.
"The strong recovery in the London housing market is leading to competition for a limited pool of suitable opportunities in the land market from a wide range of domestic and foreign players," Susan Emmett, residential research director at Savills, said in the report. -From London, UK UK mortgage approvals at 9-month low April's net mortgage lending rises by £1.7b from March Source: Business Times / Property [LONDON] UK mortgage approvals fell more than economists forecast in April, dropping to the lowest in nine months as banks tightened lending rules. Approvals declined to 62,918 from 66,563, the Bank of England (BOE) said yesterday. That's the third monthly decline after they reached a six-year high in January. Today's report also showed continued weakness in business lending, which fell £2.4 billion (S$5 billion) in April. Banks have toughened criteria in recent months and new rules came into force in April requiring borrowers to prove that they can afford repayments even when interest rates rise. Yesterday's report adds to signs of a possible easing in the housing market as BOE financial stability officials prepare to meet this month to decide if they need to take action to cool property growth.
The decline in approvals in April was more than forecast by economists, who had projected a reading of 64,500. -From London, UK http://www.businesstimes.com.sg/specials/property/uk-mortgage-approvals-9-month-low-20140603 UAE banks raising exposure to property market Source: Business Times / Property [DUBAI] Banks in the United Arab Emirates are increasing exposure to the country's booming real estate industry betting that, five years after property values slumped and non-performing loans soared, this time it will be different. Lending to the construction segment climbed 40 per cent to 181 billion dirhams (S$61.91 billion) in 2013, according to the latest central bank data, the most since 2008 when loans jumped 81 per cent. Emaar Malls Group, a unit of Emaar Properties, raised a US$1.5 billion Islamic facility last month, according to a company statement on Sunday. Non-performing loans at UAE banks grew to between 10 and 12 per cent after the credit crisis as property prices crashed by more than half. Real estate values in Dubai, home to the world's tallest skyscraper and one of the biggest shopping malls, increased at the fastest pace in the world in 2013, while bank lending growth accelerated to the quickest in five years.
"You can see in terms of business practices that things aren't as hairy as they were in 2008," Raj Madha, an independent regional banking analyst, said on Sunday. Back then "people were selling buildings, then looking for ways to build those buildings". "We haven't seen that come back yet," he said. -From Dubai, UAE Hong Kong Rents Hurt by China Tourist Curbs: Real Estate Source: Bloomberg / Luxury Jiao Jun, visiting Hong Kong from Shanghai with his wife Creasey Xia for the first time, is not feeling welcome. “The people here have such a bad attitude toward us,” the 25-year-old logistics worker, in Hong Kong on a two-day trip last week, said while shopping for gold jewelry in the Causeway Bay district, home to the world’s most-expensive retail street. “I don’t know why. We’re spending and driving their economy.” Rising tensions between local residents and the tens of millions of tourists who flock across the border pulling rolling suitcases and fill the city’s subway each year have prompted Chief Executive Leung Chun-ying to consider limiting their arrivals. The move could cost Hong Kong as much as HK$25 billion ($3.2 billion) in retail sales, according to Goldman Sachs Group Inc. It also could spark a drop of as much as 10 percent in rents for shops, according to CBRE Group Inc. The city’s landlords, such as Wharf Holdings Ltd. and Hysan Development Co., may suffer as well. “Retailers have already become more cautious on their expansion plans in Hong Kong” with the recent slowdown, said Joe Lin, executive director of Hong Kong retail services at property brokerage CBRE Group Inc. “What the chief executive has said will cause even more worry.” Curbing visitors to the former British colony from mainland China, who account for as much as half of retail spending in some malls, would be a double blow to the city’s landlords. Retail sales in March fell for the first time since 2009 and declined 9.5 percent in April as Chinese consumers, facing slowing economic growth at home, shift their spending to daily necessities such as medicine and food from luxury bags and jewelry. Sales of jewelry, watches and luxury gifts plunged 40 percent in April from a year earlier, the most since October 2004, according to Hong Kong government data released today. Damping RentsShop rents on first-tier streets may be limited at 5 percent growth this year and those in fringe locations could fall as much as 10 percent, CBRE said in a first-quarter review. If fewer mainland visitors are allowed into Hong Kong, prime-street rents may stagnate, or even drop slightly, and secondary street rents may widen their decline to 15 percent, according to CBRE’s Lin. Retail street rents in prime Hong Kong shopping precincts fell 2.2 percent in 2013, according to Savills Plc. Average rents in Hong Kong’s main shopping districts may decline 5 percent in the next 12 months, property broker Colliers International said earlier this month. Causeway Bay was ranked the world’s most expensive shopping location for rents in 2013, ahead of New York’s Fifth Avenue, according to data from Cushman & Wakefield Inc. It costs retailers $3,017 a square foot in the district, an increase of 15 percent from 2012, data show. Falling SpendingPrada agreed to lease a shop on Russell Street, in Causeway Bay, for HK$9 million a month, while Chow Tai Fook will reportedly rent a shop on Canton Road in Tsim Sha Tsui for almost HK$2,900 per square foot, more than 2.5 times the rent paid by the previous tenant, according to Cushman & Wakefield’s third-quarter 2013 review report. Swedish retailer Hennes & Mauritz AB leased 46,000 square feet in Hang Lung Center in Causeway Bay for about HK$10 million a month, according to CBRE. The last time prime-street shop rents fell on an annual basis was in 2003, when they declined 3 percent, according to Savills. Average rents have almost quadrupled over the decade through the end of last year, according to the broker, after Hong Kong’s government in 2003 allowed individual mainland visitors into the city to boost an ailing economy. Fewer TouristsThe number of tourist arrivals from the mainland has been increasing “rather rapidly” in the past few years and “has exerted pressure on certain facilities” as well as some neighborhoods, the chief executive told reporters on May 27. “Therefore, the Hong Kong government has been listening to views of various sectors and has been communicating with the central authorities.” Leung sought advice on the consequences if Hong Kong cuts visas to mainland visitors by 20 percent, Hong Kong Economic Times, a Chinese-language newspaper, reported the same day, citing his speech at a closed-door meeting a day earlier. A reduction of that magnitude in mainland arrivals would probably mean almost a 5 percent cut in total retail sales, according to Savills. Harbour City“We’d be looking at a greater impact on prime shopping malls and core retail districts where the spending currently focuses,” said Simon Smith, senior director of research and consultancy at the London-based brokerage. Mall owners such as Wharf, Hysan and Sunlight Real Estate Investment Trust may be hurt by a drop in mainland tourist spending, Macquarie Group Ltd. said in a May 27 report. Wharf, which owns two of the most popular malls among mainland shoppers, was cut to neutral from buy by Bank of America Corp.’s Merrill Lynch & Co. unit last week. Wharf’s shares were down 8.1 percent this year to May 30, the second-worst performer in the Hang Seng Property Index, which tracks the stocks of nine developers and was up 3.2 percent in the same period. Mainland tourist spending accounts for 50 percent of the sales at Wharf’s Harbour City mall in the Tsim Sha Tsui district and as much as 40 percent of revenue at its Times Square shopping center in Causeway Bay, Merrill Lynch analysts, led by Karl Choi, wrote in a May 27 note. Retail sales at these malls could drop 8 percent to 10 percent in the worst-case scenario, they said. Catherine Fu, a spokeswoman for Wharf, controlled by the family of billionaire Peter Woo, declined to comment. Wharf shares fell 0.8 percent to HK$54.45 at the close of trading in Hong Kong. Balanced MixHysan, operator of its namesake mall, is among companies with the most earnings at risk, Macquarie analysts wrote in a May 27 report. “We have a portfolio of balanced tenant mix, with different price points catering to all types of customers,” Hysan said in an e-mailed response to questions. “We also do not have a reliance on any group, be they local shoppers or visitors.” Hysan’s shares are up 14 percent this year. While average street rents are projected to fall, leasing space in shopping centers may continue to get more expensive as retailers prefer the malls’ management and mix of tenants, according to Savills. Average rents in major shopping centers rose 1.7 percent in the first quarter after gaining 9.1 percent last year, according to the broker. Hysan declined 5.4 percent to HK$35.90 today, the biggest decline since May 2012. Gold JewelrySwire Properties Ltd., operator of three malls including Pacific Place in the Admiralty district, derives as much as 40 percent of its sales from mainland visitors, according to a Merrill Lynch report on May 8. “Imposing tourist restrictions will have an impact that goes beyond retail and service sectors,” Swire Properties said in a statement in response to questions about the proposed change. Swire Properties shares have risen 26 percent this year. The stock rose 2.3 percent to HK$24.75 today. Chinese buyers have been propping up the city’s retail sales and rents since July 2003, when Hong Kong started allowing visitors from selected mainland cities on an individual basis as a way to stimulate the economy after Hong Kong was hit by the severe acute respiratory syndrome, known as SARS. From 2009, residents of Shenzhen, the southern city bordering Hong Kong, were able to apply for multiple-entry permits, boosting the number of same-day visitors. Visitors from the mainland accounted for 75 percent of Hong Kong’s 54.3 million arrivals in 2013, according to the Tourism Commission. Total arrivals jumped 12 percent last year, the fourth consecutive year of double-digit gains. Slowing ArrivalsHong Kong’s tourist arrivals would slow even without any policy measures, CBRE’s Lin said, pointing to a drop in mainland visitors during the Labor Day holiday in May, traditionally a time of travel and shopping for the Chinese. That contrasts with year-over-year growth just seven months ago during the October break, known as Golden Week. “If this proposal was raised a year or two ago, the government may have been able to achieve what it wanted, but now it’s too late,” Lin said. “The consequences of such a move might exacerbate a situation that’s already deteriorating.” Jiao and Xia, the couple from Shanghai, said they planned to spend as much as 30,000 yuan($4,800) during their trip. It’s still cheaper to shop in Hong Kong because of the weaker Hong Kong dollar against the yuan, Xia said, holding a small burgundy shopping bag from Chow Tai Fook, the world’s largest jewelry chain. “We’ll just go about our own business,” Jiao said, when asked if he and his wife will come back to Hong Kong. “Our friend came from Shenzhen to spend the day with us yesterday. She hates coming here.” -By Michelle Yun Ventas to Buy ARC Healthcare, Housing for $3.5 Billion Source: Bloomberg / News Ventas Inc. (VTR), the biggest U.S. health-care real estate investment trust by market value, agreed to a pair of deals totaling $3.5 billion as it expands its ownership of medical offices and housing for the elderly. Ventas, based in Chicago, agreed to buy American Realty Capital Healthcare Trust Inc. for $2.6 billion in cash and shares, according to a statement today. Ventas also said it will buy 29 independent senior-housing communities in Canada from Lake Oswego, Oregon-based Holiday Retirement for C$980 million ($900 million) in cash. “These acquisitions are consistent with our stated strategy to be the leading owner of health-care and senior-living properties globally,” Ventas Chairman and Chief Executive Officer Debra Cafaro said in the statement. “We are continuing our focus on private-pay assets, expanding our industry-leading medical-office building footprint and international presence.” Health-care REITs are capitalizing on rising demand for medical services from an aging population in the U.S. Ventas is adding properties in the growing senior-housing and medical-office segments of the real estate market to boost income and payouts to shareholders. ‘Aggressive’ Growth“The health-care REITs have been characterized by their aggressive external growth platforms over the past several years,” Michael Knott and Tom McDonough, analysts at Newport Beach, California-based research firm Green Street Advisors Inc., wrote in a May 30 report. Ventas shares fell 2.8 percent, the most since March 19, to close at $64.93. The stock is down 9.1 percent in the past 12 months. American Realty Capital Healthcare (HCT) rose 9.7 percent to $10.91. While Ventas shares fell today because “people might be worried about the price they paid” for the two acquisitions, the deals will add to earnings, said Michael Carroll, an analyst at RBC Capital Markets in Solon, Ohio. Competition is strongest for medical offices and senior housing among real estate buyers, he said. The deal with ARC Healthcare amounts to $11.33 per ARC share, Ventas said. That’s about 14 percent more than ARC Healthcare’s closing share price on May 30. The acquisition probably will be completed in the fourth quarter, Ventas said. ‘Compelling Premium’For Nicholas Schorsch’s ARC Healthcare, the transaction “delivers our shareholders a compelling premium,” Schorsch said in the statement. The deal gives ARC investors “the opportunity to participate in the future growth of what will become the largest, and in my view, best-managed health-care REIT and sixth-largest overall REIT in the country.” Under the agreement, Ventas will acquire 143 properties, plus the opportunity for another $250 million of potential investments, which could be completed by the end of the year, the company said. The ARC senior-housing properties are 94 percent occupied and generate $4,300 per occupied room, according to the statement. Their expected net operating income growth rate is 4 percent to 5 percent. The 29 Holiday Retirement properties are in seven Canadian provinces, with the majority in Toronto and Alberta, Ventas said. They generate C$3,200 per occupied room. Worst PerformanceHealth-care REITs, which soared to records early last year, have been the worst-performing part of the property-trust market in the past 12 months. The U.S. had 526,144 senior-housing units in the 31 largest markets in the first quarter, up 1.4 percent from a year earlier, and an additional 16,181 units are under construction, according to the National Investment Center for the Seniors Housing & Care Industry, a trade group based in Annapolis, Maryland. Ventas owns almost 1,500 assets in 47 states, according to today’s statement. Among the other large senior-housing companies are Toledo, Ohio-based Health Care REIT Inc. (HCN) and Long Beach, California-based HCP Inc. (HCP) Schorsch’s American Realty Capital Hospitality Trust Inc. also agreed today to pay $1.93 billion for a group of hotels that’s indirectly owned by funds managed by Goldman Sachs Group Inc., creating one of the biggest hospitality-focused real estate investment trusts in the U.S. -By David M. Levitt and Brian Louis Ex-Blackstone Executive’s Family Office Said to Buy Alco Source: Bloomberg / News Dunes Point Capital, the investment firm started last year by former Blackstone Group LP (BX)executive Timothy White, purchased the manufacturing businesses of Alco Industries Inc. for an undisclosed amount, according to two people familiar with the situation. Alco, an employee-owned manufacturer that produces goods such as agricultural chemicals, electrical insulation materials and tools, had $134 million of revenue in fiscal year 2013, according to a document sent to prospective buyers. Houlihan Lokey’s Illiquid Financial Assets practice managed the sale, and Blackstone’s GSO Capital Partners LP and PNC Bank provided financing, said one of the people, asking not to be named because the information is private. Jordan Benyas, an associate at Rye, New York-based Dunes Point, didn’t respond to a phone call for comment. Andrew Lesko, chief executive officer of Alco Industries, didn’t respond to a phone call and e-mailed request for comment. Dunes Point, a family office and subsidiary of White Group Holdings, has also gathered money from other family offices to take controlling stakes in industrial and energy companies. Family offices, money managers that handle the fortunes of the world’s richest individuals including computer maker Michael Dell and Microsoft Corp. co-founder Bill Gates, are increasingly teaming up on direct deals to avoid the onerous fees levied by traditional fund managers. Single-family offices hold about $1.2 trillion in assets and multi-family ones manage about $500 billion, according to Bob Casey, senior managing director for research at consulting firm Family Wealth Alliance. White BackgroundBefore starting Dunes Point, White was head of private-equity investing at Blackstone’s credit arm GSO Capital, where he was also co-head of mezzanine and co-portfolio manager of the unit’s first mezzanine fund. Prior to GSO, White was at Audax Group and DLJ Merchant Banking Partners. Dunes Point completed its first deal in August with the purchase of Professional Plumbing Group Inc. from affiliates of Bradford Equities and management. Alco Industries, which is based in Norristown, Pennsylvania, was formed through a management buyout by former manufacturing executives of Alco Standard Corp. As part of the deal, the seven companies will retain their management teams, said the people. -By Sabrina Willmer Credit Suisse Said to Plan $950 Million German Property Sale Source: Bloomberg / News Credit Suisse Group AG (CSGN) is selling commercial buildings in Germany valued at about 700 million euros ($950 million) as it liquidates property mutual funds in the country, two people with knowledge of the matter said. Brookfield Financial (BAM) is managing the sale, said the people, who asked not to be identified because the matter is private. Some of the 20 properties being sold are held by Credit Suisse’s CS Euroreal fund and include the German headquarters of Royal Philips NV (PHIA) in Hamburg, one of the people said. A spokeswoman at Zurich-based Credit Suisse and a spokesman at Brookfield Financial, a unit of Toronto-based Brookfield Asset Management Inc., declined to comment. German property funds began winding down more than 25 billion euros of assets in 2010 after investors, shaken by the global financial crisis, sought more redemptions than funds could immediately meet. More than 13 of the 44 funds have suspended redemptions or are liquidating, said Sonja Knorr, an analyst at Berlin-based Scope Ratings. The CS Euroreal fund has properties valued at about 4.3 billion euros, according to Credit Suisse’s website. The fund had 6 billion euros of assets when it began liquidating in 2012. Credit Suisse has until April 30, 2017, to liquidate CS Euroreal, according to German regulators. In December, Credit Suisse agreed to sell six properties, including the Corn Exchange office building in London, for 315.3 million euros. That was 6.5 percent less than the previously assessed value. Insurers, pension funds and sovereign wealth funds are buying German commercial property as a way to boost returns at a time when other fixed-income assets are paying low interest rates. Investors will probably buy offices, shops and warehouses valued at as much as 40 billion euros in 2014, according to a forecast by Jones Lang LaSalle Inc. (JLL) That would be 30 percent more than in 2013. -By Dalia Fahmy ARC Hospitality to Buy $1.9 Billion of Hotels From Goldman Funds Source: Bloomberg / Luxury American Realty Capital Hospitality Trust Inc. agreed to pay $1.93 billion for a group of hotels that’s indirectly owned by funds managed by Goldman Sachs Group Inc., creating one of the biggest hospitality-focused real estate investment trusts in the U.S. The company is buying 126 hotels in 35 states operated by brands including Holiday Inn, Hilton Garden Inn and Hyatt Place, the New York-based company said in a statement today. The properties, known as the Equity Inn portfolio, are the largest ever acquisition by ARC Hospitality. Three of the five largest U.S.-based global hotel operators have raised revenue forecasts for the year as the strengthening global economy has boosted demand for hotels. ARC Hospitality’s purchase gives it access to hotels that offer limited food and beverage services to customers. “The select-service hotel segment offers tremendous value given the economic recovery in the U.S., higher profit margins and reduced operational risks,” ARC Hospitality Chairman Nicholas Schorsch said in the statement. “Now is an opportune time to acquire well-located, high-quality hotels in the upscale and upper midscale tiers.” The deal is expected to close in the fourth quarter, according to the statement. Realty Capital Securities LLC advised ARC Hospitality while Goldman Sachs and Deutsche Bank AG advised the sellers. The two banks will provide financing to ARC Hospitality in connection with the purchase. -By Neil Callanan |