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DealBook: Deutsche Annington Shelves I.P.O. Plan

July 3, 2013 by Leave a Comment

Guy Hands runs the private equity firm Terra Firma.Brendan Mcdermid/ReutersGuy Hands runs Terra Firma.

LONDON – A German real estate company owned by Terra Firma, the private equity firm run by the British financier Guy Hands, has shelved a planned initial public offering, citing adverse market conditions.

Deutsche Annington Immobilien, one of Germany’s largest residential landlords, said in a statement late on Tuesday that it had called off the offering planned for Wednesday in Frankfurt, but added that the company would continue with its investment plan. Deutsche Annington said it would continue to evaluate the market environment and might sell shares sometime in the future.

Terra Firma, which was set up by Mr. Hands in 1994, had been expected to sell a part of its investment in Deutsche Annington in the initial share sale. Terra Firma bought Deutsche Annington in 2001 and has since helped it to grow through acquisitions of large real estate portfolios, betting on the relative stability of the German residential real estate market.

Deutsche Annington was expected to raise 1.1 billion euros ($1.4 billion) in the sale. It would have followed some successful initial offerings of similar businesses this year, including Germany’s LEG Immobilien. But concerns among investors that central banks could curb stimulus and start to unwind any support for the markets since the financial crisis five years ago had recently weighed on stock prices around the globe.

“Based on our strong financial position, we will focus on driving our operational performance, including continuing our investment and modernization program as planned,” Rolf Buch, Deutsche Annington’s chief executive, said in a statement.

Deutsche Annington owns more than 180,000 residential units worth a combined 10.4 billion euros. The company employs about 2,400 people.

Article source: http://dealbook.nytimes.com/2013/07/03/deutsche-annington-shelves-i-p-o-plans/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Cash Is Fueling Quick Home Sales

June 8, 2013 by Leave a Comment

The bursting of last decade’s housing bubble feels like ancient history here, where first-time home buyers are competing with investors to get into single-family homes with prices approaching $1 million.

“It’s everyone from a kid out of law school to an investor from China, walking around with thousands to spend,” said Kameron Eliassian, a Los Angeles real estate agent. “I don’t know where it’s coming from, and I don’t care. Just show me proof that it’s there, and we’re good.”

After saving money for years, waiting for the residential real estate market to hit bottom, buyers all over the country appear eager to get back in, lured by low interest rates and the prospect of a good deal.

But with the number of homes for sale at historically low levels and large investors purchasing thousands of properties, buyers are facing a radically changed market and prices are quickly rising.

The percentage of homes bought with cash has shot up in many markets across the nation. Nearly a third of all homes purchased in Los Angeles during the first quarter of this year went for all cash, compared with just 7 percent in 2007. In Miami, 65 percent of homes sold were for cash deals, compared with 16 percent six years ago.

The prices on all-cash deals are also rising significantly. In Los Angeles, the median price on an all-cash home this year is about $351,000, compared with $230,000 in 2009. Over the same period, the median price over all increased to $410,000, up $85,000. In fact, last month, home prices in Southern California hit their highest level in the last five years.

All-cash buyers, typically investors eager to renovate and quickly resell or rent out homes, are making it more difficult for first-time buyers, who typically rely on mortgage loans that can take weeks or months to materialize. More California homes have been flipped in the last year than in any year since 2005.

And while Los Angeles may be a center of the frenzy, it is not an anomaly. Buyers in Boston are offering $100,000 more than the asking price or placing offers on homes they have spent only minutes in. In San Francisco, Miami and Phoenix, sellers are looking at dozens of offers within days of putting their home on the market, often accompanied by letters from would-be buyers professing their love for the property. New York City has seen similar drops in inventory, and prices have been rising steadily since 2009.

Shortly after Andres Alvarez, 36, got married last fall, he began to look for a home with his wife, figuring that their steady jobs, savings and good credit would make them the perfect buyers in Los Angeles. They were ready to spend $700,000. Their optimism deflated quickly.

“We thought we were the cream of the crop, but anything that was in our price range and move-in ready, there was this insane competition,” Mr. Alvarez said. They put in nearly a dozen bids, often losing to cash buyers, before finding a two-bedroom home for $650,000. “It might be a great time to buy, but it’s a horrible time to be a buyer,” he said.

Dick and Susan Yost can vouch for that. They wanted to downsize while leaving their home in Cambridge, Mass., to their son and his family. “We bid on eight places before we finally got one,” Mr. Yost said. “The worst we bid was $85,000 over the asking price, and we didn’t get it.”

Even unappealing homes, he said, had “people all over them.”

Still, there are plenty of skeptics wondering how long the sharp price increases can last.

“People are realizing we’ve probably hit bottom, but the kinds of spikes we’re seeing in places like California seems like history is repeating itself,” said Daren Blomquist of RealtyTrac, which monitors residential sales. “That’s not sustainable for the long term, at least not for the regular home buyer, so I think there are some warning flags there.”

For agents who spent the last several years scrounging for business, the change is welcome. When Mr. Eliassian listed a three-bedroom home in the Hollywood Hills for $699,000 this year, he worried that the current renters would make it difficult to schedule prospective buyers. But with just two open houses — one meant only for other agents — nearly 300 people came through.

“I had to turn the phone off to avoid people asking to see the place,” Mr. Eliassian said.

Within the week, he had six offers, and the home sold for $745,000. He said he had represented and sold homes to more cash buyers in the last year than at any other time in his career.

Article source: http://www.nytimes.com/2013/06/09/us/cash-is-fueling-quick-home-sales.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

After Quake, Japanese Choose Peace of Mind Over Great View

July 19, 2011 by Leave a Comment

They couldn’t wait to leave.

Their high-rise building, as it was designed to do, withstood Japan’s devastating earthquake on March 11, swaying and shuddering to absorb the worst shocks. But Ms. Tsubuku said she was petrified as the tower waved like a reed in the wind. And the elevators were knocked out of service until the next day, effectively stranding the couple and their two cats.

“I never knew how scary it is to live so far above ground,” said Ms. Tsubuku, who blogs about Japanese housing with her American husband, Philip Brasor. “I no longer think that high-rises are designed for people to live in.”

Neither, apparently, do a growing number of other people in and around Tokyo, which is more than a hundred miles from the areas worst hit in the disaster. Sales of high-rise apartment units have plummeted in Tokyo. And some renters like Ms. Tsubuku have moved out.

The new wariness threatens to halt a redevelopment rush that has been a rare bright spot in Japan’s residential real estate market and has transformed the city’s waterfront from an area of warehouses to a gleaming new skyscraper district.

With new or planned development worth billions of dollars at risk here and elsewhere in Japan, troubled real estate could prove to be yet another blow that the March 11 disaster has rendered to the already frail Japanese economy.

The earthquake also exposed the instability of land reclaimed from the sea, which in the last decade has become home to hundreds of thousands of people along Tokyo Bay. In Urayasu, a coastal city just 10 miles east of central Tokyo, the quake tore up pavement and tipped over houses as the ground quickly turned to mud in a phenomenon known as liquefaction.

The jitters and actual damage are unwelcome reminders of the tenuous ways that land-scarce Japan has continually sought to expand its habitable areas.

Over the last century, the nation has undertaken big land-reclamation projects in cities across the country to meet its industrial and residential needs. And since the early 2000s, reclamation has focused on Tokyo’s waterfront, where cheap land had opened up after shipbuilders and other heavy industry gave way to rivals elsewhere in Asia. One popular new neighborhood, with multiple apartment towers, used to be a shipyard operated by the industrial conglomerate IHI.

Now, second thoughts about high-rises and waterfront properties in Tokyo and other Japanese cities are casting a shadow on the country’s $29 trillion real estate market.

In May, unit sales at apartment buildings with 20 or more floors in greater Tokyo fell 39.5 percent from a year earlier, after plunging 82.8 percent in April, according to the Real Estate Economic Institute, a private research center in Tokyo.

The numbers have put a damper on overall apartment sales in metropolitan Tokyo, which grew just 3.6 percent in May — well below analysts’ expectations — after falling 27.3 percent in April.

Stringent building codes meant that the quake caused little actual damage to high-rises — even in the disaster zone up north, where most of the destruction was caused by the tsunami. But since the earthquake, homebuyers are preferring low-rise apartments, developers say, and are looking inland where the ground tends to be firmer.

“Nobody cares so much anymore about a good view,” said Toru Matsumura, head of the real estate investment team at the Tokyo-based NLI Research Institute . “Instead, they’re asking what will happen when the next big quake hits.”

At first sight, Masaru Isogawa’s 12-story apartment building in Urayasu, just east of Tokyo, appears to have escaped the quake unscathed. But the quake jolted the reclaimed land that makes up much of his neighborhood, contorting underground gas, water and sewage pipes.

Article source: http://feeds.nytimes.com/click.phdo?i=c9a37ae96cc327ee591dc10ea0a1547d

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