Investors eye rich pickings in shophouses

Median prices of shophouses have surged by 50% in the last two years

Source: Straits Times / Money

SHOPHOUSES are fast emerging as an attractive prospect for investors confronted by dwindling investment opportunities in a downbeat property market.

While the residential market is now a pale shadow of itself from two years ago, deals in the shophouse space have picked up.

Just this month, two units at 10 and 12 Gemmill Lane changed hands for $10 million, according to sources. A 99-year leasehold unit at nearby 22 Gemmill Lane was also sold for $14 million at about the same time.

Based on the built-up area, the price works out to about $2,000 to $2,300 per sq ft (psf) each.

At least four units in Pagoda Street were snapped up for between $14 and $18 million each this week. Caveats from the Urban Redevelopment Authority revealed that one unit at 16 Gemmill Lane changed hands for $10.5 million last month and another one at 43 Keong Saik Road went for $7.8 million in August.

Shophouses, which are limited in supply, have traditionally been held by owners who inherited them and feel no pressure to sell. The units are therefore harder to buy, experts said.

But the landscape is fast changing, with investors jumping into the commercial market after eight rounds of cooling measures and stringent mortgage lending rules squeezed many out of the residential segment.

Mr Richard Tan, a realtor specialising in shophouses at PropNex, said: "Many do not realise the huge gains they're sitting on until investors offer them a deal they cannot refuse."

Shophouses are popular with foreign buyers as they do not face restrictions such as the additional buyer's stamp duty, unlike in the residential segment.

Also, conserved shophouses are concentrated in the prime Central Business District (CBD) and offer a cultural charm, said Mr Tan.

Mr Zain Fancy, founder of Clifton Real Estate Group, a firm investing mainly in shophouses, said the main draw is in "restoring units to their former glory".

"It's like owning a landed property with your own building with a piece of Singapore history."

URA data, based on land area, shows median prices of shophouses have surged by 50 per cent to $3,412 psf in the last two years.

"Generally, people who buy shophouses believe in capital appreciation. Shophouse rents have not moved as fast as capital values," said Mr Ian Loh, director and head of investment and capital markets at Knight Frank.

One drawback cited by industry players is that information on the units' built-up areas and rents is not freely available, resulting in a market that is still fragmented.

So landlords have not raised rents in line with the market, said Mr Tan. But this represents potentially better rental yields.

He cited a tenant who recently renewed a lease at $29,000 for a 4,000 sq ft three-storey shophouse in Tanjong Pagar - up from $18,000 three years ago.

Ms Chia Siew Chuin, director of research and advisory at Colliers, said shophouses have become popular with food and beverage outlets, budget hotels and even firms that do not require Grade A office space. CBD office rents can fall between $7 psf for older buildings and $12.50 psf in the Marina Bay financial district.

However, Mr Loh noted that shophouses are costlier to invest in, compared with other commercial assets such as strata office or retail space. A conserved shophouse in the CBD, for instance, can cost at least $7 million.

-By Cheryl Ong

http://www.straitstimes.com/archive/saturday/premium/money/story/investors-eye-rich-pickings-shophouses-20141018#sthash.b5kapvHZ.dpuf

Location 'elevates Mount Sophia's cachet'

Area's character continues to evolve, with art schools adding zest

Source: Straits Times / Money

THE Mount Sophia area has been changing for years now, and the newest kid on the block is the 493-unit Sophia Hills.

The condo is expected to be ready for preview next month, said developer Hoi Hup Sunway, although pricing is not yet available.

The units will range from 463 sq ft one-bedders to 1,539 sq ft four-bedders. Dual-key apartments will also be on offer. Completion is expected to be in 2018.

The condo will be one more addition to an area used to seeing the new displacing the old.

After all, the slopes above the Selegie area once housed Eu Tong Sen's Eu Villa, the Methodist and Nan Hua girls' schools and Trinity Theological College.

The schools have moved on to new pastures while Eu Villa was torn down in the 1980s to make way for Sophia Court.

There has been transformation at the foot of Mount Sophia as well, the site of The Cathay, Plaza Singapura and Dhoby Ghaut MRT station.

The Selegie area is home to a lively blend of art schools, niche retail shops as well as food and beverage outlets.

The School of the Arts, LaSalle College of the Arts and Nanyang Fine Arts Academy have all helped inject a healthy dose of youthful vigour.

Older shopping centres, including Parklane Shopping Mall and Peace Centre, stand beside newer developments like Wilkie Edge and the refurbished PoMo.

Earlier this month, Kian Ho Bearings said it would acquire 10 shops at Peace Centre for $15.27 million in a bid to diversify from its business in core bearings, seals and power transmission belts. The shops have a remaining tenure of 55 years.

And Hiap Hoe is selling 33 of its shops at Parklane for about $55.6 million. The units have 59 years left on their leases.

Parklane tried unsuccessfully for a collective sale in 2007.

The area's mid- to long- term outlook "is positive as the completion of Rochor and Bencoolen Downtown Line MRT stations will... improve connectivity with the rest of the island", said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

She estimated that 1,150 apartments have been completed in the area since 2005 as part of 13 projects, including 8@Mount Sophia, Parc Emily, Parc Sophia and Mount Sophia Suites.

Projects under development include 1919, Liv on Sophia and Liv on Wilkie, which will together add a further 220 units over the next few years.

Home prices in the area have been flat this year - about $2,300 to $2,400 per sq ft (psf) for new sales and $1,600 to $1,800 psf for resales, noted Ms Chia.

"Prices of private residences here are not expected to see significant corrections despite the foreseeable weak market conditions," she said, citing the central location and broad range of amenities as plus points.

"Given its location up on a hill, there is a measure of exclusivity, distancing these homes from the crowd."

http://www.straitstimes.com/archive/saturday/premium/money/story/location-elevates-mount-sophias-cachet-20141018#sthash.Akli0SIs.dpuf

First Reit posts record Q3 DPU of 2.02 S'pore cents

Source: Business Times / Companies & Markets

First Real Estate Investment Trust (First Reit) has posted a record distribution per unit (DPU) of 2.02 Singapore cents for the third quarter ended September. This is a 3.1 per cent year-on-year increase, on the back of distribution to unitholders increasing 6.1 per cent to S$14.7 million.

-By Mindy Tan

http://www.businesstimes.com.sg/companies-markets/first-reit-posts-record-q3-dpu-of-202-spore-cents

Company Briefs

Source: Straits Times / Money

FIRST Real Estate Investment Trust (First Reit) has reported a 3.1 per cent rise in distribution per unit (DPU) to 2.02 cents for the third quarter ended Sept 30.

Net property income rose 7.9 per cent to $23.5 million while distribution to unitholders increased 6.1 per cent to $14.7 million.

Reit manager Bowsprit Capital Corporation said the trust delivered another record high dividend to investors for the quarter, and with full contribution from its latest acquisition, Siloam Hospital Purwakarta.

On a nine-month basis, First Reit's gross revenue rose 14.7 per cent to $69.4 million, while net property income climbed by 16.7 per cent to $68.3 million.

Distributable income rose 13.5 per cent to $43.3 million.

Prospects for the future remain bright, with Mr Joko Widodo's victory at the recent Indonesian presidential elections seen as a boost for the Indonesian economy and in particular, the health-care sector.

http://www.straitstimes.com/archive/saturday/premium/money/story/company-briefs-20141018

GuocoLand

Source: Straits Times / Money

DEVELOPER GuocoLand has reported a 68 per cent drop in first-quarter net profit to $27 million.

This was on the back of a 4 per cent fall in revenue to $223.6 million for the three months to Sept 30.

It was because higher revenue recognised from Goodwood Residence and Leedon Residence in Singapore was offset by lower revenue recognised for Seasons Park in Tianjin, China.

The sharp fall in net profit was mainly the result of a once-off gain from disposal of subsidiaries in the previous corresponding quarter that boosted profits for that period.

Earnings per share slumped to 2.21 cents from 7.33 cents previously while net asset value per share firmed to $2.44, compared to $2.36 as at June 30.

Looking ahead, GuocoLand noted the operating environment continues to be challenging.

http://www.straitstimes.com/archive/saturday/premium/money/story/company-briefs-20141018

Ascott Residence Trust plans to raise S$150m from perpetual securities

Ascott Reit said in a statement that the proceeds will be used to fund potential acquisitions and for general corporate funding purposes.

http://www.straitstimes.com/archive/saturday/premium/money/story/cmts-q3-income-rises-937m-20141018

Wong Heang Fine quits CapitaLand

His departure follows the exit of group deputy CEO Olivier Lim in June and CMA CEO Lim Beng Chee in September

http://www.straitstimes.com/archive/saturday/premium/money/story/another-ceo-quits-capitaland-group-20141018

Property sales: Plug 'obvious' loophole 

Source: Straits Times / Forum Letters

THE article ("Hiap Hoe snaps up unsold condo units"; Thursday) reported that some developers are setting up separate entities to buy their unsold units, to avoid paying fines for failing to sell all apartments in a project within two years of completion.

Although the public would expect the authorities to plug this loophole soon, I wonder why the identities of such "buyers" were not stringently qualified in the first place, thus allowing developers to get around the rule by selling to their affiliates or related parties.

If such methods were a bit more complex, it would be understandable that rules would eventually need to be tweaked to catch up with such "creativity". However, the possibility of a developer selling to itself is too obvious to even count as being creative.

-By Louis Peh

http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/my-point-20141018#sthash.MiH9RoOS.dpuf

Singapore, Penang step up investment links with new property project

Source: Today Online / Business

SINGAPORE — Penang chief minister Lim Guan Eng today (Oct 14) unveiled a new mixed-use development project led by a joint venture of Singapore’s Temasek Holdings and Penang’s state development agency, Penang Development Corporation.

This comes as both governments take further steps to strengthen their trade and investment links.

Situated near Penang’s Bayan Baru Free Industrial Zone, the S$500 million project, called BPO Prime, will offer some 1.6 million square feet of commercial and residential space, with the former targeting at business process outsourcing.

It will be planned and managed by Economic Development Innovations Singapore, with groundbreaking slated for next year. Construction will take two to three years.

This is one of the two projects that Temasek and PDC agreed to develop in Penang in a memorandum of understanding signed in May. The other project is the Penang International Technology Park, and both will total to S$4.4 billion in development value.

Mr Lim, who was in town today for a Penang investment seminar, said: “Penang’s outsourcing sector saw more than 20 per cent increase in revenue last year. BPO Prime is a priority project that is part of the state government’s plans to transform Penang into an international outsourcing hub.”

The MOU came as Singapore’s investment into Penang grew ten-fold to more than MYR600 million (S$234 million) between 2012 and 2013. Mr Lim said he’s hopeful for that figure to grow much further, as Penang’s skilled labour and manufacturing clusters can complement Singaporean companies’ regional expansion.

-By Wong Wei Han

http://www.todayonline.com/business/property/singapore-penang-step-investment-links-new-property-project

Homebuilders Buck Turmoil With Best Gain in Nine Months

Source: Bloomberg / Personal Finance

In a week when stock markets were roiled over concern that the global economy is faltering, U.S. homebuilders had the biggest gain in almost nine months.

The 11-member Standard & Poor’s Supercomposite Homebuilding Index rallied 6 percent since Oct. 10, the largest weekly increase since January, as global turmoil fueled a plunge in mortgage rates and housing starts jumped. The broader S&P 500 Index (SPX) fell for a fourth week.

“Even when the market was having some pretty bad days this week, the builders outperformed,” said Megan McGrath, a housing analyst with MKM Holdings LLC in Stamford, Connecticut. “A lot of little things have gotten together to get people maybe a little more optimistic.”

A drop in mortgage rates has the potential to boost home sales and gives builders reason to take on more projects. Average rates on 30-year home loans fell this week to 3.97 percent, the lowest since June 2013, according to Freddie Mac. The Commerce Department said yesterday that housing starts climbed 6.3 percent in September to an annual pace of 1.02 million, crossing what McGrath called the “psychologically important” 1 million barrier.

FHFA Plans

Homebuilders extended gains after reports yesterday that the Federal Housing Finance Agency, which regulates Freddie Mac and Fannie Mae, plans new steps to encourage lending to buyers with less-than-perfect credit scores. The FHFA also is planning an effort that will allow buyers to make down payments as small as 3 percent of the purchase price, two people with direct knowledge of the matter said.

“That’s good news,” said Jeff Meyers, president of Meyers Research, a homebuilding-consulting unit of Kennedy Wilson Holdings Inc., based in Beverly Hills, California. “The mortgage industry is the No. 1 issue holding up growth in housing.”

Not all the data were positive. Confidence (USHBMIDX) among U.S. homebuilders fell to a three-month low, the National Association of Home Builders/Wells Fargo index of builder sentiment showed this week, with the measure dropping to 54 from 59 in September. Readings greater than 50 mean more respondents report good market conditions.

“It’s still at a relatively high level,” Mark Vitner, a senior economist with Wells Fargo Securities LLC, said yesterday on Bloomberg Television’s “Bottom Line” with Mark Crumpton. “In the measures of future buyer traffic, they still remain exceptionally strong.”

KB Home

The S&P homebuilders gauge increased 4 percent yesterday. KB Home (KBH), based in Los Angeles, led the gain, adding 6.5 percent to $15.51. Fort Worth, Texas-based D.R. Horton Inc., the largest U.S. builder by revenue, rose 6.2 percent to $21.56.

Homebuilder shares are down about 7 percent for the year, which also presents a potential buying opportunity, McGrath and Meyers said. Builders have been trading below their long-term average of 1.6 times book value, a measure of the total assets on their balance sheets, McGrath said.

New-home construction, including apartments, is still running about one-third below its long-term normal pace of 1.5 million units a year, leaving plenty of room for growth if unemployment continues to decline, Meyers said.

“Continued job growth will make housing demand stronger,” Meyers said. “A lot of people say we should get back to 1.5 million. It’s just a matter of when.”

-By John Gittelsohn

http://www.bloomberg.com/news/2014-10-17/homebuilders-head-for-biggest-weekly-gain-in-nine-months.html

Gain in Home Building Points to Sustained U.S. Growth

Source: Bloomberg / Personal Finance

Builders started work on more homes in September and American consumers this month were the most optimistic in seven years, signaling the U.S. economy will ride out a global slowdown.

Housing starts climbed 6.3 percent to a 1.02 million annualized rate from a 957,000 pace in August as multifamily and single-family projects advanced, the Commerce Department reported today in Washington. The Thomson Reuters/University of Michiganpreliminary sentiment index for October increased to 86.4, the strongest since July 2007, another report showed.

Gains in residential construction will help underpin the economic expansion as the recent drop in mortgage rates lifts home sales and gives builders reason to take on more projects. Other figures showing factory production rebounded last month and claims for jobless benefits dropped last week to the lowest level in 14 years added to evidence the turbulence in global markets has yet to depress the world’s largest economy.

“The fundamentals continue to look solid,” said Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh, who correctly projected an increase in homebuilding. “The turmoil in the market doesn’t reflect the underlying U.S. economic fundamentals.”

Stocks rallied, trimming this week’s decline, as earnings beatestimates (NHSPSTOT) and investors speculated that central banks will support economic growth with more stimulus. The Standard & Poor’s 500 Index rose 1.3 percent to 1,886.76 at the close in New York.

Survey Results

The increase in starts was in line with the median forecast of 76 economists surveyed by Bloomberg, which projected a gain to 1 million. Estimates ranged from 955,000 to 1.1 million after a previously reported 956,000 rate in August.

The firming in consumer confidence reflected a jump in Americans’ expectations about the economy six months from now as that gauge rose to 78.4 in October, a two-year high, the report from the University of Michigan showed. The index of current conditions, which measures Americans’ views of their personal finances, was unchanged at 98.9.

Job gains on pace for their strongest year since 1999 and cheaper gas prices are keeping households upbeat about the economic expansion amid the weakening in Europe and emerging nations. Faster wage increases and more broad-based improvement in the labor market would help further spur the consumer spending that makes up about 70 percent of the economy.

“An improving job market and lower energy costs are going to offset a lot of what’s happening,” said Joseph LaVorgna, chief U.S. economist of Deutsche Bank Securities Inc. in New York, who projected the index would rise to 86. “Consumers’ take-home pay is going up and they’re paying a lot less at the pump.”

Fuel Costs

The average price of a gallon of regular gasoline was $3.14 yesterday, the cheapest since February 2011, according to figures to AAA, the biggest U.S. auto group.

Falling energy costs help explain why Americans were more sanguine about price pressures. Consumers expected inflation to climb 2.8 percent over the next year, their lowest forecast in four years, today’s report showed.

Federal Reserve Bank of St. Louis President James Bullard said yesterday the central bank should consider delaying plans to end its bond-buying at the end of this month to halt a decline in expected inflation.

Today’s homebuilding report showed permits for future projects also increased, rising 1.5 percent to a 1.02 million annualized pace and pointing to a sustained pace of construction.

Construction Breakdown

Building of multifamily projects such as condominiums and townhomes jumped 16.7 percent to an annual rate of 371,000. Work on single-family properties rose 1.1 percent to a 646,000 rate in September from 639,000 the prior month.

All four regions of the U.S. showed increases, led by a 13.9 percent jump in the West.

Today’s figures followed a report yesterday from the National Association of Home Builders/Wells Fargo that showed builder confidence waned a bit in October after reaching its highest level in nine years the previous month.

Cheap borrowing costs will probably help underpin the market. The average 30-year, fixed-rate mortgage fell to 3.97 percent last week, the lowest since June 2013, according to Freddie Mac data. In November 2012, the rate fell to 3.31 percent, the lowest in figures back to 1971.

Mortgage Rates

“The trend in starts continues to be up,” said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio. “As the job market’s gotten better, as the mortgage rates have remained low and in the last week gone even lower, the underlying demand for single-family homes has improved.”

After adding to gross domestic product through much of 2013, residential construction has been uneven this year. Homebuilding contributed 0.27 percentage point to the 4.6 percent annualized gain in the economy in the second quarter. It subtracted from GDP in the previous six months.

Some lenders, including San Francisco-based Wells Fargo & Co., have tempered their outlook for an industry that hasn’t completely healed from the downturn that brought on the last recession.

“While the residential real estate market has definitely gotten better, which is good for the U.S. economy, it has not fully recovered,” Chief Executive Officer John Stumpf said on an Oct. 14 earnings call. “I believe there are several factors holding the housing market back from a complete recovery,” including slow household formation, elevated student debt levels and still-tight credit, he said.

Some of the ingredients for a pickup in the housing market remain in place. The economy has added an average 227,000 jobs per month through September. The unemployment rate has fallen to 5.9 percent from 6.7 percent at the end of last year.

-By Michelle Jamrisko and Danielle Trubow

http://www.bloomberg.com/news/2014-10-17/housing-starts-in-u-s-rose-in-september-to-1-02-million-rate.html

Honeywell Profit Tops Estimates on Energy, Housing Gains

Source: Bloomberg / News

Honeywell International Inc. (HON) posted third-quarter profit that exceeded analysts’ estimates and raised the low end of its full-year earnings targets as a housing rebound spurred sales of thermostats and air purifiers.

Net income rose to $1.2 billion, or $1.47 a share, compared with $990 million, or $1.24, a year earlier, the Morris Township, New Jersey-based company said in a statement. Analysts on average predicted earnings a share of $1.41, according to data compiled by Bloomberg.

Honeywell benefited from “U.S. relative strength” in economic growth while Europe is slow but stable and China shows continued expansion, the company said in a slide presentation. Honeywell’s earnings will increase faster than the market in general as it improves efficiency and introduces new products, Chief Executive Officer Dave Cote said in the statement. 

“Looking ahead to 2015, we’re once again planning for a slow growth macro environment, but expect to continue delivering strong earnings growth,” Cote said.

Honeywell rose 4.2 percent to $90.06 at the close in New York. The shares have dropped 1.4 percent this year, trailing a 2.1 percent increase for the Standard & Poor’s 500 Index.

U.S. housing starts hit a seven-year high in July, spurring demand for products such as water-heater controls. Energy services, including technology to separate water from gas and catalysts to raise refinery efficiency, are riding an energy boom while aerospace-defense sales grew after dropping in the first two quarters.

Sales Rise

Sales rose 4.8 percent to $10.1 billion. Analysts had estimated sales of $10 billion. Honeywell in July completed the sale of its auto brakes business for about $155 million, which reduced revenue.

Automation and Control Solutions led sales growth with a 8.8 percent gain, aided in part by last year’s acquisition of the hand-held computer company Intermec Inc. Sales rose 6.7 percent at the Performance Materials and Technologies unit on sales of catalysts and gas processing services. Aerospace sales were little changed after the unit incorporated Transportation Systems, which saw sales decline 10 percent because of the brakes-business sale.

Honeywell raised the lower end of its 2014 forecast of adjusted earnings per share by 5 cents to $5.50. It boosted the lower end of its annual sales target by $100 million to $40.3 billion to $40.4 billion. The company increased the lower end of its profit target by 5 cents in the previous two quarters.

A lower-than-normal tax rate of 24.6 percent in the third quarter added 4 cents to earnings per share, the company said. Segment profit margins increased to 17.4 percent from 16.7 percent a year earlier.

For the fourth quarter, Honeywell expects earnings per share of $1.37 to $1.42, which is below analysts’ average estimates of $1.47. Sales are expected to be little changed at as much as $10.4 billion, Honeywell said.

-By Thomas Black

http://www.bloomberg.com/news/2014-10-17/honeywell-profit-tops-estimates-on-energy-housing-gains.html

JPMorgan in Talks for New $6 Billion NYC Headquarters

Source: Bloomberg / News

JPMorgan Chase & Co. (JPM) is in early negotiations to build a new headquarters complex in the area of New York’s Hudson Yards, the burgeoning district under development on the far west side of Manhattan.

The largest U.S. bank wants to build two towers totaling 4 million square feet (372,000 square meters), which would cost about $6 billion, a person with knowledge of the discussions said. The company is in talks with developer Related Cos., New York City and the state for a deal, which could fall apart as the sides negotiate subsidies and costs.

The bank has requested at least $1 billion in property-tax abatements in the form of payments in lieu of taxes, or PILOT, and other subsidies, which city officials have rejected, said Wiley Norvell, a spokesman for Mayor Bill de Blasio. The city already has invested more than $1 billion in the far west side area, where Related is planning a $20 billion development, to make the neighborhood commercially viable, he said.

“We can’t even have a discussion for changing the PILOT until you know whether they will even have a building because negotiations are still being conducted between the bank and Related, which the city has been trying to facilitate,” Norvell said in an interview.

A move by JPMorgan to Hudson Yards potentially would bring about 16,000 jobs to the area, while reducing or ending JPMorgan’s longtime presence on Park Avenue just north of Grand Central Terminal, said the person with knowledge of the talks, who asked not to be named because of the preliminary nature of the discussions.

Tower Sales

If the deal goes forward as proposed, the bank probably would sell its 1.3 million-square-foot headquarters building at 270 Park Ave. as well as 383 Madison Ave., a tower completed in 2001 as the headquarters of Bear Stearns Cos., which JPMorgan took over when it bought that firm in 2008, the person said.

Joseph Evangelisti, a JPMorgan spokesman, and Joanna Rose, a spokeswoman for Related, said they couldn’t comment on the talks, which were reported today by the New York Times. Jason Conwall, a spokesman for New York State’s Empire State Development Corp., didn’t immediately respond to a request for comment.

For the past two weeks, Alicia Glen, the city’s deputy mayor for economic development, has been working to get Related and the bank to come to an agreement and hasn’t been negotiating with JPMorgan on subsidies, according to Norvell.

‘No Way’

Glen said in an e-mail that “there’s no way that the city would entertain a demand for a billion dollars in additional incentives at Hudson Yards. We have always been willing to engage with them in a dialogue about how we could be helpful in making a move more feasible.”

The bank earlier this year began to review its 11.4 million square feet of New York property holdings, looking at both Hudson Yards and the World Trade Center in lower Manhattan as possible places to consolidate operations, a person briefed on the discussions said in August.

JPMorgan is now focusing most of its attention on two adjacent sites just north of Related’s Hudson Yards development, according to two people with knowledge of the talks. Related controls the land the bank is considering for its towers.

Related is building two skyscrapers at the 26-acre (10.5-hectare) Hudson Yards complex, one slated to be the headquarters of Time Warner Inc. and the other for the luxury-handbag maker Coach Inc. The developer also plans a retail complex to be anchored by Manhattan’s first Neiman Marcus department store. A platform over the rail yard is under construction.

Banks Consolidating

JPMorgan has about 20,000 employees in New York City, plus another 7,000 workers at Chase bank branches around the city, which aren’t part of these talks, one of the people said. The bank also has another 10,000 workers in upstate New York.

Large investment banks have been under pressure to boost profits while contending with tighter regulations in the aftermath of the 2008 credit crisis, which left Lehman Brothers Holdings Inc. bankrupt and prompted the U.S. government to support the industry. Banks have been consolidating operations and seeking lower-cost offices for employees who don’t interact with clients.

In June, JPMorgan received from the state of New Jersey $22.5 million of annual tax credits for 10 years to create 1,000 jobs and retain about 2,600 others. The bank has offices in Jersey City and has said it intends to expand there.

-By Henry Goldman, Hugh Son and David M. Levitt

http://www.bloomberg.com/news/2014-10-17/jpmorgan-in-talks-for-new-6-billion-nyc-headquarters.html

Monaco Murders Reveal Six Hidden Real Estate Billionaires

Source: Bloomberg / Luxury

On the evening of May 6, a man carrying a shotgun approached a black Lancia Voyager pulling out of a hospital parking lot in Nice, France. Raising the weapon, he fired through the front passenger window and hit Helene Pastor, the richest woman in Monaco, in the chest, neck and jaw. Another shot hit her driver, Mohamed Darwich, in the heart and abdomen.

As the gunman fled with an accomplice to Marseille, the victims were rushed to the intensive care unit at Nice’s St. Roch hospital. Darwich died four days later. Pastor told police before she died on May 21 that she had no idea who would want to attack her, French weekly L’Express said.

“There was real astonishment. She was an extremely discreet individual and the Pastor family aspired to be completely normal business people,” said Frederic Laurent, a Monaco historian. “They’re the richest family in the principality but their business affairs were perfectly normal.”

Over the next seven weeks, police pieced together phone records, closed-circuit television footage and DNA found on a soap bottle in the gunman’s hotel room. The trail led them to Wojciech Janowski, the longtime partner of Pastor’s daughter, Sylvia. His personal trainer Pascal Dauriac told police that Janowski gave him 140,000 euros ($180,000) in cash to arrange the attack, Brice Robin, the Marseille prosecutor, said at a June 27 news conference.

Family Fortune

Dauriac’s lawyer Jean-Robert Nguyen Phung, said in a phone interview that his client had implicated Janowski and confessed to a role in the crime.

“He owns up to what he did, he accepts his responsibility, his involvement and his part,” Nguyen Phung said.

Details of the attack were based on photographs of the crime scene, Robin’s press conference and two people familiar with the police investigation who asked not to be identified because the case is ongoing.

Janowski may have ordered the ambush in order to access the 77-year-old matriarch’s estate, Robin said, which is part of a family fortune valued at more than $13 billion, according to the Bloomberg Billionaires Index.

Janowski, who is being held at Marseille’s Baumettes jail, has been placed under formal investigation along with Dauriac and five other suspects, including the alleged gunman. He said he was innocent in a Sept. 22 appearance before the case’s examining magistrate, his lawyer Erick Campana said in a phone interview.

Monaco Skyline

“What Dauriac claims, namely that Janowski ordered the crime, is false,” Campana said, noting that his client wouldn’t have inherited anything because he wasn’t married to Helene Pastor’s daughter. “The motive advanced by the state prosecutor is completely illusory.”

The fortune Janowski stands accused of targeting belongs to a single branch of the Pastor family, the Monegasque clan that built much of Monaco’s skyline and owns thousands of apartments in the city-state. Helene Pastor’s two children, Sylvia and Gildo, stand to inherit at least $1.2 billion each, joining four other members of the family’s fourth generation who also have become billionaires, according to data compiled by Bloomberg. None have appeared individually on an international wealth ranking.

Calls, e-mails and hand-delivered messages to the Monaco offices of the family companies Groupe Pastor and Helene Pastor Pallanca SAM requesting comment weren’t returned. Michel Pastor Group, another family company, declined to comment, according to Isabelle de Segonzac, a spokeswoman at Paris-based Image 7 PR.

Casino Square

“It’s almost impossible to try and do anything in Monaco without coming into some kind of contact with the family,” said Max Ryerson, an entrepreneur who lived in Monaco for 12 years and ran Club 5 Thousand, an online private members club for high net worth individuals. “If you’re looking for a very nice apartment, you will need to rent from the Pastors. They’re part of life.”

The family’s influence on Monaco is visible on the five-minute drive along Larvotto Beach to Casino Square in the center of the principality, a journey dominated by high-rise apartment blocks all built and owned by the Pastors.

At one end stands the 29-story Roccabella, one of Monaco’s most exclusive residences, whose marble foyer, high ceilings and uninterrupted views of the Mediterranean has attracted tenants such as billionaire Philip Green and singer Shirley Bassey. Arrayed along the rest of the artificial beach, also built by the family, looms a continuous line of Pastor buildings erected in the 1970s and 1980s -- the Bahia, Estoril, Formentor, the Columbia and Houston Palaces, and Emilie Palace.

Reserved Right

Helene Pastor was the last surviving member of the family’s third generation and controlled closely held Helene Pastor Pallanca SAM, whose holdings include the Bahia and Emilie in the Larvotto district, the Trocadero, Continental and Schuylkill apartments, and the Gildo Pastor Center, a 430,000-square-foot (40,000-square-meter) office complex in the Fontvieille neighborhood, according to the company’s website. They’re valued at $3.7 billion, according to data compiled by Bloomberg.

Gildo, 47, and Sylvia, born in 1961, are entitled to at least two-thirds of her fortune under Monaco’s Civil Code. They’re credited only with this reserved right in Bloomberg’s net worth calculation, giving each a fortune of at least $1.2 billion when the estate is distributed. No inheritance tax is levied between parents and their children in the city-state. E-mails and phone messages sent to closely held family company Helene Pastor Pallanca requesting comment weren’t returned.

Groupe Pastor

“Monaco has forced heirship rules,” Alexis Madier, an attorney at Monaco-based Gordon S. Blair Law Offices, said in phone interview. “You cannot deprive any child of their reserved shares except if you execute a will and the children accept to renounce their respective share in the estate, which can take place only after the death.”

The heirs of Helene’s two late brothers also own multibillion dollar chunks of Monaco’s skyline. The four children of Victor Pastor, who established Groupe Pastor, would have inherited at least 75 percent of his fortune when he died in 2002, according to Monaco’s Civil Code.

The properties owned by this branch of the family are valued at $5.4 billion, according to data compiled by Bloomberg, giving each of the four Pastor siblings, Philippe, Marie-Helene, Jean-Victor, 46, and Patrice, 41, a $1 billion fortune based on their reserved share. No response was received to e-mailed and hand-delivered messages to Groupe Pastor’s office on Avenue Princesse Grace requesting comment.

Monte Carlo

The holdings identified as being controlled by Michel Pastor Group, three quarters of which would be shared by Michel Pastor’s five children after he died in March, are valued at $3.8 billion. The company declined to comment.

The family’s holdings aren’t publicly disclosed. They were derived from discussions with local real estate brokers, reports on new construction in Monaco, listings by the Pastor’s estate agencies and visits to the buildings themselves.

The family first arrived in the principality in 1880, when Jean-Baptiste Pastor, an Italian mason from Liguria began working in Monaco, according to Groupe Pastor’s website.

He founded JB Pastor & Fils in 1920, which has been responsible for many of Monaco’s largest public works projects, including building the first sports stadium in 1936. After World War II, his son Gildo bought waterfront land in Monaco’s Larvotto neighborhood, where his company was building the underground railway, one of several public projects undertaken by Prince Rainier III in a bid to revitalize the principality.

“Our grandfather was a visionary,” Delphine Pastor told L’Express in a November 2013 profile. “At the time, to the east of the Monte Carlo casino, there was nothing.”

Port Hercule

The Larvotto neighborhood became the foundation of the family’s empire after they received permission to develop the land in 1966. By adhering to a family mantra to avoid selling property, the Pastors accumulated real estate holdings that comprise more than 1,800 units, according to data compiled by Bloomberg. They could be even wealthier: L’Express estimated their holdings at 4,000 apartments.

After Gildo’s death in 1990, the empire was parceled out between his three children, Victor, Helene and Michel. Victor inherited developer JB Pastor & Fils and his younger brother received Centre Immobilier Pastor. Both the Victor and Michel branches remain active builders in the city.

Some of the family’s more recent projects stand along the cliffs overlooking Port Hercule, including Michel Pastor Group’s 45-unit Monte Carlo View and Groupe Pastor’s Simona tower, whose white, webbed facade is one of the skyline’s most visible.

Record Prices

The family’s holdings have benefited from the growth of Monaco as a destination for the super-rich. It’s the world’s most-densely populated country, with 36,950 inhabitants living in the 0.8-square-mile (two-square-kilometer) enclave in 2013, up 48 percent since 1975, according to official statistics.

“The greatest difficulty in Monaco is to optimize ground space,” Patrice Pastor is quoted as saying on JB Pastor & Fils’s website.

Even with space at a premium, the allure of Monaco remains strong for the wealthy. Most residents don’t pay personal income tax, and the principality’s location and climate continue to attract people. The total value of property sales hit a record 1.2 billion euros in 2013, according to the Monegasque Statistics and Economic Studies Institute.

Electric Carmaker

The principality’s residential values are the highest in the world, with the price of ultra-prime property in Monaco at 90,900 euros per square meter, according to a 2014 research report by broker Savills Plc.

“Monaco will become more and more popular,” said Angela Kleiber, owner of Monaco-based realtor Lorenza von Stein, citing the tax regime and location. “Monaco is so attractive, I don’t know what level prices could go up to.”

Helene Pastor’s murder has refocused attention on a family whose reach is increasingly international.

The heirs of Michel Pastor also own estate agent John Taylor and a fifth of Artcurial, a French auction house. Helene’s son Gildo, who suffered a stroke in 2014 and was being visited by his mother on the evening she was shot, according to L’Express, owns electric-car maker Venturi, which runs a Formula-E team with actor Leonardo DiCaprio as a backer.

“The younger generation have really tried to be entrepreneurial and do other things than just the property business,” said Ryerson. “It’s clear that the property funds everything they do, but hats off to people like Gildo who are trying to push for sustainability.”

Senseless Crime

Such commitments have seen the Pastors’ influence wane somewhat from their 1970s and 1980s heyday.

“Their influence is a bit less insofar as the family has been divided and that in the end they are less active as builders,” historian Laurent said. “If we take the precise case of Helene Pastor, she was a rentier and no longer did any construction activity.”

Even without the property development income enjoyed by other branches of the family, her rental income was such that she could still give each of her two children an allowance of 500,000 euros a month. According to prosecutors, that wasn’t enough for Janowski, who had run up debts of 9 million euros, French daily Le Parisien reported.

“It was hard to find a sense to this crime,” said Laurent. “That it appears to be a family matter perhaps reassures the principality.”

-By Tom Metcalf

http://www.bloomberg.com/news/2014-10-16/monaco-murders-reveal-six-hidden-real-estate-billionaires.html