Commercial Real Estate Purchases Getting Bigger : The Real Estate Bloggers

Commercial Real Estate Purchases Getting Bigger

June 7th, 2006 • Related • Filed Under

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SkyscraperThe deals for commercial real estate are getting bigger mainly because the commercial marketplace is nearing its peak. There is a window in which public companies have to report the slowing earnings, thus lowering their market value, while private investors can extract value still. The torrid property value increases have been very good to REITs, but the stock market punishes lower earnings even when they are exceeding the market at large.

The best alternative for the  REITs at this stage is to offload some of their moderately and poorly performing properties to lock in the capital profits and maintain their stock prices. Then when the markets dip, try to buy in on the cheap.

From 2000 to 2003, acquisitions of real estate companies totaled about $12 billion annually, Ingrassia said. About a third involved public-to-private deals. By 2005, the total reached $50 billion and 62 percent involved private money buying public companies. So far this year, the total has reached $35.6 billion, with about 55 percent of the deals involving public-to-private transactions.
“We’re on target again to have a record year,” Ingrassia said.
Private marketplace values real estate more highly than the public markets, said Stephen Furnary, chairman and chief executive of ING Clarion Partners LLC, part of Dutch ING Group (ING.AS: Quote, Profile, Research).
Private players can place greater debt on the properties than public players can because they don’t face public shareholders via Reuters.com.

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There Are 2 Responses So Far. »

  1. Comment by AGM on 9 June 2006:

    Critical questions during the ING Annual General Meeting (AGM) 25th April 2006During the AGM, critical shareholders will question ING about investments in companies that are involved in human rights violations. Recent research demonstrates the financial links between ING and companies that have been criticised due to practices such as support for dictatorial regimes, forced relocations of population, and forced labour. This is published in the report ‘Where do you draw the line? Research into the financial links between five bank groups and companies that violate human rights’, was conducted by Netwerk Vlaanderen, a Belgian organisation promoting sustainability in the financial world.

  2. Comment by AGM on 9 June 2006:

    Dutch Giant ING Group subsidiary ING Real Estate will announce the launch of the ING Real Estate China Opportunity Fund next week. A US$300 million fund to invest in property developments in China with partners including Forte, Gemdale, Vanke, Raycom, Cosco, Greenland and Beijing Capital Land.

    What will not be announced are the various troubles the Group has faced in recent months in China:

    1. An embarrassing investigation by the State Administration of Foreign Exchange (SAFE) and the National Reform and Development Commission in 2005 into alleged financial irregularities related to previous investments.
    2. Tax irregularities in reporting to both Chinese and Dutch authorities related to short falls in declaration of unearned income from China owned assets with an alleged Group policy of ‘no surprises’ from the Chief Financial Officer.
    3. A Rosa Parks moment when the Chinese media picked up on a story of racism at ING Real Estates core asset, Shanghai Racquets Club and Apartments, where local Chinese passengers were required to sit at the back of the bus. http://www.chinadaily.com.cn/china/2006-05/28/content_601893.htm#
    4. A derisory investment track record of 6% rental returns on core rental asset in Beijing and Shanghai.
    5. ING Groups dismal investment track record elsewhere in China:

    ING fund loses half its assets
    23 January 2006

    The joint venture fund run by Dutch banking group ING lost more than half its assets in the fourth quarter of 2005, as the country’s fund management industry as a whole dropped 1.2%, its first decline in five years, the Financial Times reported. The ING-China Merchants Securities fund, the country’s third largest investing in short-dated bonds, saw a 56% drop in value from US$3 billion to US$1.4 billion.

    Ends…

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