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Abu Dhabi Fund Involved In $1bn Tokyo Build Deal
on Aug 7, 2013 A group including an Abu Dhabi sovereign fund and former US insurance magnate Maurice “Hank” Greenberg have agreed to buy a prominent Tokyo office building for $1bn, the biggest property deal in Japan since February, people with direct knowledge of the transaction said. The decision by the foreign and Japanese investors to acquire the ageing but distinctive structure in central Tokyo highlights expectations that real estate values will revive as Prime Minister Shinzo Abe’s pro-growth economic policies boost investor sentiment and risk appetite. It will be Japan’s biggest property investment including foreign investors since the 2008-09 global financial crisis. The group, led by property investor by Asia Pacific Land, includes Abu Dhabi Investment Council, Japan’s Secured Capital Investment Management Co and C.V. Starr & Co Inc, which is run by Greenberg, the billionaire former chief executive of American International Group Inc, the sources told Reuters. For the purchase for more than 100 billion yen ($1.01 billion) of the 14-storey Shiba Park Building, the investors will inject about 10 billion yen in cash, said the sources, who asked not to be named because the deal is not public yet. Lenders including Mizuho Bank, Shinsei Bank and Commerz Japan Real Estate Finance Corp, a real estate lending unit of Commerzbank, will extend a combined 90 billion yen in loans, the sources said. The investors and banks declined to comment or could not immediately be reached. Japan’s real estate market, which fell sharply after the late 1980s asset price bubble, crashed again in the global financial crisis and rents in Tokyo have fallen steadily ever since. But there are growing signs of an upturn: vacancy rates in Tokyo’s quality buildings started falling last year, according to real estate services company CBRE. Monthly rents in central Tokyo, which had dropped since 2008, have been flat since last year. The Shiba Park Building deal is a sign of confidence that the 31-year-old building will keep attracting tenants and maintain steady rental income as Japan’s economy is expected to grow. Investors generally prefer newer buildings whose rental income is higher. Property values are expected to rise under “Abenomics”, a programme of heavy government spending and massive monetary easing meant to end 15 years of deflation. The Bank of Japan has been pumping money into the financial system to keep interest rates low, enabling investors to borrow money cheaply. Anticipating rising property values, US-based Westbrook Partners led the acquisition in April of a majority stake in a Tokyo office tower for about 30 billion yen. Tokyo’s Tiffany Building has been put up for sale as the owner Asia Pacific Land, leader of the Shiba Park Building group, bets on a recovery in property prices. The long, imposing Shiba Park Building – nicknamed the “Gunkan”, or “Warship”, building – has more than 83,510 square metres available for rent, much more than other buildings in its neighbourhood near Tokyo Tower. Its total floor space of 102,300 square metres puts it in the same class as the iconic Marunouchi Building, a prime commercial property in the capital’s hottest business district near Tokyo Station, at 159,720 square metres. One benefit of a big building is that it can host the headquarters of a large company. Daiei Inc, which once was Japan’s largest supermarket chain, is a former tenant of Shiba Park Building. The structure was bought by a fund managed by K.K. daVinci Holdings, once an aggressive property investor, in 2006 – near the height of the pre-crisis boom. It paid 143 billion yen in a deal with a fund managed by Morgan Stanley. The building went under lender control when the daVinci fund defaulted on the loans as the global crisis depressed property values worldwide. Continue reading
Investment In European Industrial Property Returns To Pre-Crisis Levels
http://www.ft.com/cms/s/0/b98e961e-feac-11e2-b9b0-00144feabdc0.html#ixzz2bHs44RGa August 6, 2013 Investment in European industrial property returns to pre-crisis levels By Ed Hammond, Property Correspondent Spending on European industrial property has returned to pre-financial crisis levels as a range of international investors vie for warehouses, logistics hubs and small factories, underscoring the improving sentiment over the continent’s economy. Investment in the sector, driven by pension funds, private equity investors and sovereign wealth funds, hit €6bn during the first six months of the year – 60 per cent up on last year and the highest level since 2007 – according to new data from Jones Lang LaSalle, the property consultancy. The sudden surge in demand for the esoteric asset class, among the worst hit in Europe’s property crash, suggests a revival in investor confidence over the prospects for the retailers and consumer goods businesses that dominate the leaseholder registers of industrial landlords. In the first years of the financial crisis, vacancy rates soared as companies cut back on their surplus stock, and small manufacturing businesses, which also account for a lot of warehouse space, were closed or mothballed. Tom Waite, director of European capital markets at JLL, said the demand for industrial property had been rising steadily for the past 18 months. He added, however, that a lack of new, well-located stock had stifled the ambitions of some investors. “There is now gradually more investible stock coming on to the market as continued occupier demand is leading to new development. As a result, we now expect full year 2013 investment to break the €10bn barrier – which would be the third-strongest result ever recorded,” he added. The investment this year has been centred on the continent’s largest property markets – France, Germany and the UK – which accounted for 60 per cent of all transaction value. The largest deal of the period involved a €1.2bn portfolio acquisition by the joint venture of property group ProLogis and Norway’s oil wealth fund. The sector has also proved particularly popular with private equity funds, which have started to look beyond the Europe’s now highly competitive office and shopping mall markets. Blackstone, the US private equity firm, has been among the most active investors in the industrial sub-sector, creating a specialist logistics and warehouse property business. One of the main attractions of industrial property, which represented 10 per cent of Europe’s total real estate investment market during the six months, is that yields on warehouses are typically much higher than those available on prime offices or retail property. Continue reading
Risks to Global Food Supply and Impacts to Investors – Steve Yuzpe
By Sprott Group August 06 2013 “Control oil and you control nations; control food and you control the people.” Henry Kissinger Steve Yuzpe is the Chief Financial Officer for Sprott Resource Corp ., a publicly traded company that invests in the private equity side of the natural resource sector. Steve spoke about investing in agriculture at the Agora Symposium in Vancouver. He believes the world will one day be faced with localized food shortages and globally rising food prices that could create, in the worst-case scenario, civic upheaval in the most affected areas. According to Steve, there are several factors threatening the global supply of food. Climate change, he says, causes weather conditions to become more volatile, potentially having an enormous impact on our food supply and the productivity of existing farmland. Steve also believes that water issues are probably the least discussed factor when people talk about food scarcity. Agriculture and other uses are depleting non-refreshing, ancient fossil aquifers all over the world. When they run out, they are finished. The most intensely used ‘fossil water reserves’ will eventually disappear. In particular, the Ogallala Aquifer, which supplies about 30 percent of all groundwater used for irrigation in the U.S. is running out, he says. Lake Mead and the Colorado River are also examples of areas under water stress in the U.S. “Food insecurity and food inflation are a permanent part of our world going forward,” Steve told the crowd. “Ultimately, I believe that wars will be fought and governments toppled over the need for food and water.” “The term ‘peak water’ will become more commonly used over the coming years. By some estimates, at least 56% of the world population lives in ‘water vulnerable’ areas.” I followed up with Steve after the speech: What investment ideas in agriculture could pan out? “The areas where there may be opportunities in agriculture over the next five years include taking advantage of the growing consumer demand for healthy foods, and greater attention being paid to nutrition. Companies that provide food traceability and safety services, like the tags on the ears of animals being raised for meat production, are likely to benefit. As we tragically saw during the mad cow disease outbreak that culminated in a European ban on British beef in 1996, the ability to trace the source of food is essential to assuring a safe food supply.” Do soil degradation and erosion spell a definite decline in food production? Is this an inevitable side-effect of agriculture? Unsustainable agricultural practices are the single greatest contributor to the global increase in soil erosion rates. “Soil erosion is potentially a huge problem in the future and yet, it does not need to be problem.” Modern no-till techniques have evolved, in which an air drill sends the grains and fertilizers into the ground without disrupting the topsoil, Steve explains. “But this has only been applied to 10% of agricultural production so far — a shame for the farmland we continue to lose every year. Once the organic matter and moisture have left the soil, it takes a lot of time to build back up.” Could water rights be a good way to play the need for greater food production, and a possible shortage of water? “Investing in water is also interesting but, of course, water is a basic necessity for survival, which means that governments are unlikely to allow prices to rise too much. Right now, water is almost free, so it’s mispriced. If you want to invest in water rights, the best places to invest are in geographic areas where the local constituency can afford to pay market rates and there is rule of law. Otherwise, your investment is likely subject to a lot of political risk, as government control of prices and confiscation become more than just possibilities.” Steve Yuzpe has 15 years of experience with financial administration management in public and private corporations. Sprott Resource Corp .is a Canadian-based company, the primary purpose of which is to invest and operate natural resource projects. Through acquisitions, joint ventures and other investments, Sprott Resource Corp . seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. Continue reading
