Brookfield boss Bruce Flatt may not be betting on US offices again soon
US defaults and Korean delays lead today’s collection of real estate headlines from around the region, as Brookfield fails to make payment on debt linked to a Washington DC area office portfolio and sources in Seoul says a KKR joint venture with IGIS Asset Management has been put on hold. Also in the news, ARA US Hospitality Trust completes a US acquisition and Shanghai has a good day for land sales as developers regain confidence.
Brookfield Funds Default on Loan for DC Office Portfolio
Brookfield Corp funds have defaulted on a $161.4 million mortgage for a dozen office buildings, mostly around Washington, DC, as rising vacancies hit property values. The loan transferred to a special servicer who is working with “the borrower to execute a pre-negotiation agreement and to determine the path forward,” according to a filing on the commercial mortgage-backed security.
Brookfield, a major office owner, previously defaulted on debt tied to two Los Angeles buildings, the Gas Company Tower and the 777 Tower. Landlords including Columbia Property Trust, owned by funds managed by Pacific Investment Management Co., and a venture started by WeWork Inc. and Rhone Group have also defaulted on office debt. Read more>>
KKR, IGIS Delay Korea Joint Venture
IGIS Asset Management Co., the largest real estate investment firm in South Korea, and US private equity giant KKR & Co. have indefinitely postponed their plan to establish a Seoul-based joint venture, according to investment banking sources on Sunday.
“Given current market conditions, we have decided that it is not the best time to establish a JV,” an IGIS official said. Market watchers speculate that IGIS has been pressured under the Financial Supervisory Service’s recent investigation of the Korean firm’s investments, focusing on real estate project financing. Read more>>
ARA US Hotel Trust Closes on Colorado Acquisition
The manager of ARA US Hospitality Trust announced that on Tuesday it closed on the its $29 million acquisition of the Home2 Suites by Hilton Colorado Springs South hotel, completing a deal which was first announced in January.
The trust’s manager says that it acquired the property in Colorado Springs at a 9.0 percent yield, with an independent valuer appraising the hotel at a market value of $30.2 million. Read more>>
Shanghai Plots Sell at a Premium in City’s First Land Sale of 2023
Shanghai’s first land sale of the year got off to a solid start as developers’ confidence and risk appetite were bolstered by China’s strong first-quarter economic growth and access to easier credit. A total of 19 plots measuring 944,200 square metres (10.16 million sq ft) will be auctioned during the four-day sale that ends on Friday.
The first five plots sold on Tuesday witnessed furious bidding at the Shanghai land authority’s office in Pudong New District, with some fetching as much as 10 per cent above their reserve prices. Read more>>
Hong Kong Home Sales Reach 20-Month High in March
Hong Kong home sales reached 6,690 units in March, a 20-month high, as improved sentiment and a property tax cut boosted transactions, according to property consultancy CBRE.
Homes priced between HK$4 million ($510,000) and HK$5 million in particular accounted for 16.5 per cent of the total number of transactions in the first quarter, higher than their share of transactions of between 10.5 per cent and 13.9 per cent in the same quarter since 2020, according to the latest report by the consultancy. Read more>>
Singapore Central Bank Chief Said Leaving This Year
Ravi Menon, the Monetary Authority of Singapore’s longest-serving chief, is poised to leave the central bank this year, according to people familiar with the matter.
Menon has been at the helm of the MAS since 2011 and his current term ends May 31. Chia Der Jiun, one of his former deputies, is tipped to be his successor, the people said, declining to be identified discussing a private matter. Read more>>
Ping An Pushes for HSBC to Split Off Asian Operations
HSBC’s biggest shareholder called on the bank to create a separately listed Asian business headquartered in Hong Kong to fix what it sees as a lack of competitiveness. In a strongly worded statement Tuesday, the CEO of Ping An (PIAIF) Asset Management said that despite improvements, the insurer remained “deeply concerned” about HSBC’s financial performance relative to rivals.
“It is necessary for HSBC to push for structural reform to fundamentally address HSBC’s underlying market competitiveness issues, improve performance, enhance value and accelerate growth opportunities in Asia,” Michael Huang wrote. Read more>>
Private Equity Investment in Indian Real Estate Fell 95% in Q1
Private equity investment into Indian real estate fell sharply by 95% in January-March to $45 million amid global uncertainties, according to property consultant Savills India. PE investment stood at $1 billion in the year-ago period. “The investment activity has been subdued due to growing global recession concerns, rising capital costs, and a mismatch in valuation expectations between sellers and investors, which have become significant hindrances to capital deployment in India,” Savills said in a report.
Furthermore, recent events in the global financial world, including the collapse of Silicon Valley Bank and the contagion spreading to other mid-market U.S. banks, have contributed to the overall uncertainty in India’s office leasing demand, it said. Read more>>
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