Real News‎ > ‎2014‎ > ‎May 2014‎ > ‎

22th May 2014

Singapore Real Estate

MAS cautions on foreign property investment

Singapore's central bank on Wednesday warned citizens of the risks attached to buying properties overseas, after data showed a surge in Singaporeans' investment in real estate abroad.

Source: Channel News Asia / Business

SINGAPORE: The Monetary Authority of Singapore (MAS) on Wednesday (May 21) warned citizens of the risks attached to buying properties overseas, after data showed a surge in Singaporeans' investment in real estate abroad.

MAS said local real estate agencies had handled overseas property deals worth S$2 billion last year - a 43 per cent rise since 2012.

"MAS would like to remind potential investors to be mindful of various risks associated with overseas property purchases," the central bank said, citing foreign exchange and interest rate risks as examples, along with less stringent rules governing foreign property developers.

"Risks are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets, such as the prospects for oversupply of properties, or of a deterioration in economic conditions," it added.

MAS said it was closely monitoring overseas purchases "with a view to ensuring financial stability as well as financial prudence among Singaporeans".

Advertisements for overseas properties - particularly in Britain, Australia and New Zealand - are a common sight in Singapore, one of the world's wealthiest countries, with an average per capita income of US$55,183 (S$69,000) in 2013.

But the city-state of 5.4 million people is also the most expensive place to buy a luxury home in Asia after Hong Kong, property firm Knight Frank said in a report in March.

Singapore last year imposed new measures to cool the red-hot local property market, including raising stamp duty - which made it costlier for foreigners to buy property - and sharply increasing minimum cash downpayments for buyers applying for loans for second homes.

These were in addition to earlier measures to tame the property market, including a move by the central bank in 2012 to impose a maximum tenure of 35 years for new housing loans.

- AFP/ek

HDB to receive 37 BCA awards

Source: Channel News Asia / Singapore

SINGAPORE: The Housing and Development Board (HDB) will receive a total of 37 awards at the Building and Construction Authority (BCA) Awards ceremony at Resorts World Sentosa on Thursday (May 22).

The awards ceremony recognizes developers and builders for contributions in shaping a safe, sustainable and high-quality built environment in Singapore.

23 of those awards will be Green Mark Awards, the highest number ever garnered by a single agency. Winners for that category include the HDB Hub, Connection One and the HDB Centre of Building and Research.

Four housing projects will bag the Universal Design Mark Award. Among them is the landmark integrated project, Kampung Admiralty unveiled last month. It will be awarded the Universal Design Mark GoldPlus Award.

Punggol Breeze and Casa Clementi will clinch double honours with the Platinum Award for Construction Productivity and the Construction Excellence Award.

HDB’s Director for Environmental Sustainability Research Alan Tan Hock Seng will be named the Green Architect of the Year for his consistent contribution and achievements in sustainability efforts in projects such as the Treelodge @ Punggol.

“The awards that we have garnered are a testament of HDB’s good work, especially in the area of creating a sustainable built environment,” said HDB’s Chief Executive Officer Dr Cheong Koon Hean. 

- CNA/ek

Developing Singapore's cultural infrastructure

More support for arts groups and new cultural infrastructure are in the pipeline. 

Source: Channel News Asia / Singapore

SINGAPORE: The Government on Wednesday (May 21) released details expanding on the "liveable city" aspect of President Tony Tan Keng Yam's address in Parliament last Friday.

In an addenda statement to the President's address, the Ministry of Culture, Community and Youth pledged to give artists and arts groups more support.

It will also make performing arts spaces more readily available, and help artists showcase their works on the international stage.

New cultural infrastructure will be built, including the Indian Heritage Centre and the National Gallery for modern and historical visual art.

The National Museum of Singapore and the Asian Civilisations Museum will be enhanced, while the Victoria Theatre and Concert Hall, and the Esplanade will be refurbished.

The ministry also plans to build an island-wide network of community arts and culture nodes, community museums and galleries, as well as heritage trails.

Singaporeans can also look forward to more sporting facilities and programmes. "Sports facilities will be available within a 10-minute walk of most homes," the ministry said.

As part of efforts to make Singapore a smart nation, the Ministry of Communications and Information will develop a new Infocomm Media Masterplan.

Preliminary ideas that are being explored for the Masterplan include the development of new infrastructure to serve our future needs, such as a Heterogeneous Network that builds on the Next Generation Nationwide Broadband Network (NGNBN).  

The ministry will also develop a new masterplan for the National Library Board and National Archives, with a strong focus on facilitating Singapore content creation.

There will be a physical and digital collection of all Singapore content, through acquisitions and connections to other institutions.

The ministry said in the statement that it will continue to seek ideas from the community and support ground-up efforts to build a "liveable city and endearing home".

The ultimate aim is to "strengthen community harmony, and enhance our sense of identity and belonging to Singapore," it said.

- CNA/xy

Singapore to tap new technologies for 'smart' living

Source: Business Times / Top Stories

[SINGAPORE] Life in Singapore down the road, when it is fully fledged as a "smart nation", will entail the use of new technologies such as driverless vehicles and fibre networks.

The people will also tap the potential of infocomm and the media, and live in "smart towns" that cater to the needs of an ageing population.

These were the snapshots presented yesterday in an addenda to President Tony Tan Keng Yam's address in Parliament last week.

The Prime Minister's Office (PMO) called on Singaporeans to do their part to their part to make the country both a "liveable city and an endearing home".

-By Lee U-wen

Demand for environment impact studies grows

Source: Straits Times

The concept is simple: Before you build something, study how it will affect the environment and its surroundings in detail. While this may sound obvious, "environmental impact assessments" or EIAs have become more widespread in Singapore only in recent years.

Oxley appoints Accor to run two new hotels

The Stevens Road hotels will be run under Novotel and Ibis brand names

Source: Business Times / Property

OXLEY Holdings, a homegrown lifestyle property developer, has appointed hotel operator Accor to run two of its new hotels along Stevens Road.

The hotels, to be part of the company's hospitality-cum-commercial development in the area, will be run under the Novotel and Ibis brand names and are expected to open for business by end-2016.

Oxley said in a statement yesterday: "This will be a timely move that should cater to the anticipated increase in business and tourist arrivals to Singapore in the coming years."

It added that the project will also provide a recurring income stream.

-By Sheena Tan

JTC launches 'future-ready' industrial facility

Next gen building comes with bells and whistles for high-tech manufacturing

Source: Business Times / Property

THE launch of JTC Space @ Tampines North - the latest in JTC Corporation's suite of infrastructure solutions that integrates land-based facilities with high-rise, multi-user factories - is expected to fill a market gap particularly for small and medium-sized enterprises (SMEs) involved in heavier manufacturing activities.

Specifically, the next generation industrial facility is designed to be "future-ready", with designated vibration-sensitive space for new industries such as additive manufacturing and robotics. 

Additionally, the provision of high ceilings enables companies to retrofit the units to new usage such as cleanrooms and laboratories. Features like high floor loading and wide corridors also mean that some of the traditionally land-based industries can now go high-rise.

The nine-storey development features five land-based units which span 1,200 to 1,900 sq m and 105 high-rise units which range from 160 to 260 sq m.

Rolling out developments with such high technical specifications is targeted specifically at industrialists engaged in heavier manufacturing; this segment has been insufficiently supported by private developers as such high specification factories cost more to build.

-By Mindy Tan

JTC to build first high-rise facility for heavy manufacturing

Source: Today Online / Business

SINGAPORE — JTC said yesterday it will launch its first high-rise industrial facility that will meet the needs of heavy-duty manufacturers, which typically operate in land-based factories, as part of efforts by the Government to help small and medium enterprises (SMEs) overcome land constraints.

The nine-storey JTC Space @ Tampines North will have technical specifications such as high ceilings, floors that can withstand heavy loads and wide corridors, which are necessary for heavy, land-based industries. Construction is scheduled to begin at the end of the year and is expected to be completed by 2016.

“The development is also designed to be future-ready, with designated vibration-sensitive space to accommodate new and emerging industries like additive manufacturing and robotics,” said JTC chairman Loo Choon Yong at the launch yesterday. “We are targeting to achieve a plot ratio of 3.0, the highest for an industrial development to date.”

Also speaking at the launch, Minister for Trade and Industry Lim Hng Kiang highlighted JTC’s efforts in supporting the Government’s push to help SMEs in the manufacturing sector thrive amid the manpower crunch and limited space in Singapore.

“A common feature among JTC’s latest projects is that they co-locate companies operating along different parts of the same value chain within a single development. Other projects help land-based companies transition to high-rise space. JTC Space @ Tampines North is one such project,” Mr Lim said. “Moving from ‘land’ to ‘space’ not only enhances our overall land use but also presents a good opportunity for SMEs to redesign their processes and reconfigure their production layouts to achieve higher labour productivity.”

Stretching across a site area of 1.13ha, JTC Space @ Tampines North will feature 105 high-rise units ranging between 160sqm and 260 sqm and five land-based units of 1,200 sqm to 1,900 sqm. The units can be expanded horizontally or vertically to form larger manufacturing spaces.

Tenants will benefit from natural ventilation and lighting and have access to a basement car park and a loading bay for container trucks.

But as industrial infrastructure improves, companies must do their part to stay competitive, Mr Lim urged.

“Singapore is entering a new phase of development. We are transforming our manufacturing landscape to position ourselves as the advanced manufacturing hub in the region. This will open up many new and exciting opportunities,” he said. “However, SMEs have to upgrade their capabilities, up-skill their workers and innovate, so they can keep up with the intensifying global competition and seize these growth opportunities.”

-By Wong Wei Han

Portfolio of family-owned Balestier properties up for sale

Source: Straits Times

A portfolio of family-owned property in Balestier is on the market. The sale lot comprises two adjoining shophouses and a redevelopment site in Tessensohn Road, and six adjoining shophouses in Balestier Road.

Unlicensed estate agent charged by CEA

Source: Business Times / Singpaore

THE chief executive officer of Azea Personal Coaching (APC), which organises property investment seminars for the public, has been charged by the Council for Estate Agencies (CEA) for allegedly acting as an estate agent without being licensed.

Five charges were brought against Tan Yang Po, trading as APC, for allegedly facilitating sales transactions for her client, foreign property developer Sterling Camden LLC.

This is the first prosecution case related to unlicensed estate agency work for the sale of foreign properties, CEA said in a statement yesterday. It said APC had introduced Sterling Camden, which was selling apartments in Houston, Texas, to members of a property club belonging to Azea.

CEA alleged that Ms Tan informed members about the developer's apartments, costing around US$49,000-60,000 each, with a guaranteed investment return of 8 per cent, plus net rental yield for two years.

-By Raphael Lim

Woman charged with conducting unlicensed real estate work

Source: Channel News Asia / Singapore

SINGAPORE: The Council for Estate Agencies (CEA) has charged 50-year-old Tan Yang Po with allegedly acting as an estate agent without being licensed with the CEA.

Tan, who was trading under AZEA Personal Coaching (APC), is the first to be prosecuted in relation to unlicensed estate agency work for the sale of foreign properties.

Under the Estate Agents Act, an estate agent must be licensed with the Council (CEA) before it can market local or foreign properties here.

Tan became a member of the AZEA property club after attending APC's free property seminar and two-day investment course opened to members of the public.

She allegedly informed other members of the club that APC's client -- foreign property developer Sterling Camden LLC -- was selling apartments in Houston, Texas.

Tan said these apartments cost about US$49,000 to US$60,000 each, with a guaranteed investment return of eight per cent plus net rental yield for two years.

Thereafter, Tan allegedly facilitated the sale transactions for the foreign properties.

For each successful sale, she collected a commission from the foreign property developer.

At all material times, APC acted as an estate agent while she was not licensed as one with the CEA.

Tan faces five charges, each punishable with a fine not exceeding S$75,000 or imprisonment for a term not exceeding three years, or both.

CEA advises consumers to check its public register of estate agents and salespersons on its website to verify if an estate agent or salesperson is licensed and registered.

Consumers should also exercise due diligence when buying foreign properties. 

- CNA/ec

Real Estate Companies' Brief

CapitaLand stake in CMA crosses 80% mark

Source: Straits Times 

Capitaland has taken a big step towards its aim of delisting CapitaMalls Asia (CMA), after crossing the 80 per cent level in the shopping mall firm since it raised its bid last week. It has amassed an 81.3 per cent stake in CMA, or about 3.17 billion shares, as of Tuesday, the developer said yesterday.

CapitaLand’s stake in CapitaMalls Asia crosses 80% mark

Source: Today Online / Business

SINGAPORE — CapitaLand’s stake in CapitaMalls Asia (CMA) has crossed the 80 per cent mark, bringing it closer to attaining full control of its shopping mall arm.

CapitaLand, South-east Asia’s largest developer, now controls about 81 per cent of CMA, after taking into account open-market purchases and acceptances of the offer as at 5pm on Tuesday, it said in a statement yesterday. On May 16, it increased its offer for CMA to S$2.35 per share and said the offer was unconditional. CMA shareholders who accepted the offer before May 16 will get the higher offer price. CapitaLand had previously offered S$2.22 per share before adjusting it downwards to S$2.2025 to take into account a dividend payment.

“CapitaLand is committed to delisting CMA and we are confident we will achieve this objective. The proposed delisting and full integration of CMA is in line with our ‘One CapitaLand’ strategy to enhance our long- term competitiveness,” said group chief executive officer, Mr Lim Ming Yan, in a statement.

“The group will be well-positioned to deepen and strengthen our ability to undertake and optimise integrated developments with the simplified structure,” he added.

CMA is one of Asia’s largest shopping mall developers and operators, with interests in more than 100 shopping malls across Singapore, China, Malaysia, Japan and India.

-From Channel News Asia

Views, Reviews & Forum

Before taking plunge into UK property market...

Source: Straits Times

Recent media report stated that Singaporeans are "piling into" property investments in Britain. I strongly urge anyone thinking of making such an investment to carefully consider the claims by the sellers of these properties.

Global Economy & Global Real Estate

Moody's cuts China property outlook

Source: Business Times / Companies

AGAINST a backdrop of Chinese developers turning to Singapore to raise funds through bonds, Moody's has revised its outlook for China's property industry to "negative" from "stable".

The revised outlook reflects the credit rating agency's expectations for the fundamental business conditions in the industry over the next 12 months. Moody's sees a significant slowdown in residential property sales growth, high inventory levels and weakening liquidity over the coming 12 months.

"We expect modest 0-5 per cent year-over-year growth (on a 12-month trailing basis) over the next 12 months. This growth rate is materially lower than the 26.6 per cent year-on-year rise in nationwide cumulative contracted sales in full year 2013," said Franco Leung, a Moody's assistant vice-president and analyst.

Moody's said the weaker sales growth for the sector is driven mainly by tighter onshore liquidity, increased mortgage rates, buyers' expectation of further easing of property prices and slower GDP growth in China. But it sees rated developers with larger operations, prudent financial management and good liquidity to be in a better position to withstand the challenging conditions.

-By Lynette Khoo

Talk of the town - London's housing boom

Escalating values, foreigners with piles of cash are what's abuzz in the city

Source: Business Times / Property

[LONDON] Rohit Sabhlok said he's upset he lost a bidding war on a London house. Katy Barnes bought her home to avoid rising rents, while Holly Martin purchased hers as an investment - and both are hooked on a website that shows their property values soaring. Kay Durrant used her home's growing equity value to pay bills.

Welcome to London's frenzied housing market, where low mortgage rates and a dearth of properties for sale have sent prices rising in a year by an amount almost twice the average annual London wage.

From centuries-old pubs to Mayfair clubs to the halls of Parliament, London is abuzz with talk of escalating values, foreign buyers with piles of cash and half-built garages selling for vast sums.

London's housing boom "has become a mainstay of conversation", said Paul Stenson, an asset manager at Dunbar Assets plc as he sipped a pint of Aspall cider at Ye Olde Cock Tavern on Fleet Street, a pub dating back to 1549. "Never mind the hackneyed view of it being the conversation of dinner parties, it's gone beyond that. It's like the elevator music that's constantly on play."

-From London, UK

German retail acquisitions soar

Source: Business Times / Property

[BERLIN] German retail property acquisitions more than doubled in the first quarter as demand for stable returns pushed the total above the UK for the first time since 2012, Cushman & Wakefield Inc said yesterday in a report.

Investors bought 3.43 billion euros (S$5.87 billion) of German shops and malls in the first quarter, 116 per cent more than a year earlier, David Hutchings, Cushman & Wakefield's head of Europe, Middle East and Africa investment strategy, said. UK purchases climbed 27 per cent to 3.37 billion euros.

"The underlying attraction is the stability of Germany; it's a low-volatility, safe market," Mr Hutchings said. "There's a view that growth from good-quality retail will start to accelerate in the coming years." Insurers, pension funds and money managers are buying German commercial properties as a way to boost returns amid record-low interest rates in fixed-income markets. 

Retail asset prices are under pressure to rise as supply fails to keep up, New York-based Cushman & Wakefield said in the report.

Germany, which usually competes closely with the UK for Europe's top retail investment destination, edged ahead in the first quarter because of two large deals, Mr Hutchings said.

-From Berlin, Germany

Lloyds limits mortgage lending to cool London housing prices

Source: Business Times / Property

[LONDON] Lloyds Banking Group Plc, the UK's biggest mortgage lender, said it will impose limits on lending to homebuyers to counteract rising house prices in London.

The bank will cap lending at four times salary on loans of more than £500,000 (S$1.1 million), Lloyds said in a statement on Tuesday. The lender, which is 25 per cent owned by the government, said the policy will affect about 8 per cent of its lending in the UK capital.

"This is a targeted response to an issue largely in the upper tiers of the London housing market," Stephen Noakes, group director of mortgages at Lloyds, said in the statement. "This prudent update to our lending policies is intended to manage risks to our business and for our customers."

Lloyds is the first of Britain's biggest mortgage lenders to announce measures to cool house-price gains and protect itself from potential future losses. Bank of England Governor Mark Carney has warned housing poses the biggest risk to Britain's economy. London prices have reached record highs, with a typical home now going for £458,000.

-From London, UK

Another sukuk issue by Saudi firm draws investors

Source: Business Times / Property

[DUBAI] Dar Al Arkan's third Islamic bond sale in a year is attracting buyers as investors bet the Saudi Arabian company's real estate assets outweigh a junk credit rating at Standard & Poor's (S&P).

Dar Al Arkan Real Estate Development Co is poised to sell a benchmark US dollar-denominated sukuk due 2019, according to two people with knowledge of the offering, who asked not to be identified.

The yield on the company's May 2018 sukuk slid 107 basis points this year to 6.17 per cent at 12.29pm in Riyadh, according to data compiled by Bloomberg.

Rates on Middle East Islamic bonds fell 50 basis points in the period to 4.14 per cent, JPMorgan Chase & Co indexes show.

-From Dubai, UAE

Thai developer warns of daunted investors

Source: Business Times / Property

[BANGKOK] Thailand's largest industrial land developer, Amata Corp, said that it was worried that foreign investors could halt investments in Thailand after the implementation of martial law.

Several clients had already delayed signing contracts to buy land after the country's political crisis escalated, chief marketing officer Viboon Kromadit told Reuters on Tuesday. "We are monitoring how things develop after the announcement of martial law. If there are negative signs, foreign investors may stop investments. This will make it more difficult to recover," Mr Viboon said.

Thailand's army declared martial law on Tuesday to restore order after six months of anti-government protests that have left the country without a proper functioning government, but denied that it was staging a military coup.

Amata, which houses production bases for car maker BMW and tyre maker Bridgestone Corp, is a bellwether for foreign investor sentiment towards Thailand. Japanese car makers are 

among its biggest clients. - Reuters

-From Bangkok, Thailand

BNY Mellon Reaches Deal for $585 Million Office Sale\

Source: Bloomberg / Luxury

Bank of New York Mellon Corp., the world’s largest custody bank, agreed to sell its headquarters tower at 1 Wall St. in lower Manhattan to a joint venture led by Harry Macklowe’s Macklowe Properties for $585 million.

The deal for the 1.1 million-square-foot (102,000-square-meter) skyscraper is expected to be completed in the third quarter, the New York-based bank said yesterday in a statement. The company has been seeking to scale back its office needs and is looking for other locations to lease space.

The sale “will advance our plan to consolidate office space in New York City, lead to a more functional and efficient work environment for our employees, and deliver a solid financial gain to the company,” BNY Mellon Chairman and Chief Executive Officer Gerald L. Hassell said in the statement.

BNY Mellon is looking for about 400,000 square feet of offices to move employees once the building is sold. The bank is in the midst of choosing between Brookfield Office Properties Inc. (BPO)’s 225 Liberty St. in lower Manhattan or 70 Hudson St. in Jersey City, New Jersey, a person with knowledge of the discussions said earlier this month.

The company expects to announce its leasing decision in the next two months, Hassell said in the statement.

Condo Conversions

The price values 1 Wall St. at about $530 a square foot, among the highest ever on a per-square-foot basis for a lower Manhattan office tower, according to data from Real Capital Analytics Inc. The post-recession peak of $577 a square foot was reached in December when Verizon Communications Inc. sold part of its headquarters building at 140 West St. to Magnum Real Estate Group, which is converting the space to luxury condos.

The sale to Macklowe, co-developer of the high-rise condominium tower 432 Park Ave., raises the possibility that 1 Wall St. will be converted for residential use. The property was marketed as a condo conversion opportunity, with parts near the bottom of the building to be used for retail or offices.

Steven Solomon, a Macklowe spokesman, declined to comment on the deal.

For Macklowe, 76, the deal would be another step in a return to prominence after he lost seven Midtown skyscrapers when credit markets froze in 2008. He had financed their $7 billion purchase the year before with almost all short-term debt. The setback also forced him to sell Midtown’s General Motors Building, one of the city’s most valuable skyscrapers.

Macklowe is a partner with Los Angeles-based CIM Group on 432 Park, which the developers say will be the tallest residential tower in the Western Hemisphere. It’s one of several condominium projects under way on or near 57th Street that will offer commanding views of Central Park and capitalize on international demand for luxury housing as a haven for cash.

Macklowe and CIM also paid $253 million in 2011 for 737 Park Ave., an Upper East Side rental building, which is being converted to condominiums, according to data compiled by Real Capital, a New York-based research firm that tracks commercial real estate sales.

-By David M. Levitt

Lowe’s Profit Tops Estimates as Chain Endures Winter

Source: Bloomberg / Personal Finance

Lowe’s Cos. (LOW), the second-largest U.S. home-improvement retailer, posted first-quarter profit that topped analysts’ estimates as better merchandising choices helped it withstand weaker demand caused by harsh weather.

Net income in the quarter ended May 2 increased 16 percent to $624 million, or 61 cents a share, from $540 million, or 49 cents, a year earlier, the Mooresville, North Carolina-based retailer said today in a statement. Excluding some items, profit was 62 cents a share. Analysts projected 60 cents, the average of 25 estimates in a Bloomberg survey.

Chief Executive Officer Robert Niblock has added workers to stores and introduced merchandise with wider profit margins as rising home prices spur people to spend more on their homes. While the long winter held sales at Lowe’s established stores to a 0.9 percent gain, trailing the 5 percent increase analysts estimated, Lowe’s maintained its forecast that revenue by that measure would advance 4 percent this year.

“Consumers continue to have an increased willingness to invest in their homes” because home prices keep rising, Niblock said in a telephone interview. Real estate values have room for more appreciation as the economy improves, he said.

Lowe’s shares fell 0.2 percent to $45.41 at the close in New York. The stock has declined 8.4 percent this year, compared with a 5.2 percent drop for Home Depot Inc. (HD) and a 2.1 percent gain for the Standard & Poor’s 500 Index.

Profit this year will be $2.63 a share, the company said. That’s up from a previous projection of $2.60. Analysts estimate $2.62.

Home Depot

Home Depot, the largest U.S. home-improvement retailer, reported somewhat similar results yesterday. While first-quarter sales and profit trailed analysts’ estimates, ending six straight years of exceeding or meeting projections, the chain reiterated its forecast that revenue would gain 4.8 percent this year and boosted its projection for profit.

Total sales at Lowe’s last quarter rose 2.4 percent to $13.4 billion, trailing analysts’ $13.9 billion average estimate. Same-store sales fell 5 percent in the U.S. Northeast due to the extended winter weather, the company said. The chain, which has about 430 fewer stores than Home Depot, also maintained its forecast for an annual revenue gain of 5 percent.

‘Biggest Impact’

“The single biggest impact on the first quarter was weather and the delayed spring,” Niblock said. He pointed out that the company missed sales expectations last year, still reiterated its annual forecast and ended up topping it.

Like Home Depot, Lowe’s growth strategy has shifted to boosting sales at current stores rather than opening new locations. The one recent exception came last year, when Lowe’s bought the majority of Orchard Supply Hardware Stores Corp.’s assets, including 72 stores, out of bankruptcy for about $205 million.

When it comes to the housing market, both chains care most about home values because they give people the confidence and incentive to do renovations and make repairs.

“Their definition of the housing market is very, very different,” said Robin Diedrich, an analyst with Edward Jones & Co. in Des Peres, Missouri. The gains in prices, along with low interest ratesand better weather are “good reasons to be fairly optimistic that the housing market can continue to chug along.”

Slowing Demand

Sales of previously owned homes fell to the slowest pace in 20 months in March and purchases of new houses sank 14.5 percent from February, according to reports last month. Mortgage applications to buy homes plunged 19 percent from a year earlier, indicating slowing demand during what is typically the busiest season for deals.

Economists have been questioning whether the pullback is a result of the unusual weather or the waning of outside influences that fueled the rally. The average 30-year, fixed-rate mortgage rate was 4.2 percent in the week ended May 15, up from 3.51 percent in the comparable week a year earlier, according to Freddie Mac.

Also, the investors who helped drive up prices in the past two years by buying homes and converting them into rentals are finding fewer distressed properties on the market.

-By Matt Townsend

American Realty to Sell Shopping Centers to Blackstone

Source: Bloomberg / News

American Realty Capital Properties Inc. (ARCP), the largest U.S. owner of single-tenant real estate, plans to sell most of its multitenant shopping-center buildings to affiliates of Blackstone Group LP (BX) for $1.98 billion in cash.

American Realty expects to complete the deal within 30 days and use the proceeds to fund its purchase of Red Lobster’s real estate portfolio, the company said today in a statement. The New York-based real estate investment trust raised its full-year target for acquisitions to $4.5 billion.

American Realty, led by Chief Executive Officer Nicholas Schorsch, has amassed single-tenant buildings leased to businesses such as drugstores and fast-food restaurants through acquisitions, including the $9.85 billion takeover of Cole Real Estate Investments Inc. in February. Last week, the REIT said it would buy more than 500 Red Lobster seafood restaurants in a $1.5 billion sale-and-leaseback deal.

“This sale will allow us to acquire what in our view are the 500 best Red Lobster stores profitably by selling our multitenant portfolio” at a yield that is more than 1 percent lower than the restaurants’ 7.9 percent initial cash return, David Kay, American Realty’s president, said in the statement.

Share Offering

American Realty shares were down 4.7 percent to $12.29 as of 1:47 p.m. in New York, after earlier falling as much as 5.4 percent. The decline is largely because the company simultaneously said it started an offering of 100 million common shares, said Cedrik Lachance, an analyst with real estate research firm Green Street Advisors Inc. Lachance estimated the new shares may raise as much as $1.4 billion.

“The equity was necessary to finance the flurry of deals since the beginning of the year,” Lachance, whose company is based in Newport Beach, California, said in a telephone interview. “I don’t see it as positive or negative. I just see it as necessary.”

American Realty had previously planned to spin off the properties being sold to New York-based Blackstone into a unit called American Realty Capital Centers. Separating into separate single-tenant and multitenant retail companies would provide stockholders with “more clarity, more efficiency and more opportunity,” Schorsch said in March.

‘Best Value’

“We now believe the sale of the multitenant portfolio will deliver the best value-creation option to our shareholders and serve to enhance the clarity of our single-tenant, net lease investment strategy,” Schorsch said in today’s statement.

American Realty was wise to switch strategies because Blackstone probably is paying more for the properties than the company would have gotten in the public markets, Lachance said. Investors would have discounted American Realty Capital Centers because plans called for it to be externally managed, a structure that is “unattractive because management is not appropriately aligned with shareholders,” he said.

The $1.98 billion Blackstone agreed to pay is marginally less than the properties’ open-market value, reflecting a “large check-writer’s discount,” he said. That price is still significantly higher than what the spinoff would have raised, according to the analyst.

“All this serves to recapitalize the company, and puts the company in a position to continue to aggressively buy assets,” Lachance said.

Blackstone, the world’s biggest manager of private-equity real estate funds, has retail holdings including a majority stake in Brixmor Property Group Inc. (BRX) The New York-based REIT, which owns grocery-anchored shopping centers, raised $825 million in an October initial public offering.

In December, Blackstone bought a $718 million minority stake in Columbia, South Carolina-based Edens, an owner of more than 100 community-based shopping centers on the East Coast.

-By Ross Larsen and David M. Levitt

BNY Mellon Said Reach Deal for $585 Million Office Sale

Source: Bloomberg / Luxury

Bank of New York Mellon Corp. agreed to sell its headquarters tower at 1 Wall St. in lower Manhattan to Harry Macklowe’s Macklowe Properties for $585 million, a person with knowledge of the transaction said.

The deal for the 1 million-square-foot skyscraper is expected to be completed in the third quarter, said the person, who asked not to be named because the agreement isn’t public. At about $585 a square foot, the price is one of the highest ever per-square-foot basis for a lower Manhattan office tower.

The sale to Macklowe, co-developer of the high-rise condominium tower 432 Park Ave., raises the possibility that the building will be converted for residential use. The property was marketed as a condo conversion opportunity, with parts near the bottom of the building to be used for retail or offices.

Ron Gruendl, a BNY Mellon spokesman, and Steven Solomon, a Macklowe spokesman, didn’t immediately return phone calls seeking comment. The Wall Street Journal earlier reported that Macklowe was the buyer.

-By David M. Levitt