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SurinPhumi – Eco-Green Community

Date:​ Thu-12-December-2014

MetLife Inc. (MET) bought Washington’s Fairmont Hotel from Ivanhoe Cambridge as the largest U.S. life insurer expands its commercial real estate portfolio.

MetLife agreed to pay $180 million for the luxury property, which has 415 rooms and conference space, the New York-based insurer said today in a statement.

Insurers have been investing in real estate to bolster profits and guard against inflation as returns from bonds are pressured by low interest rates. MetLife has an equity real estate portfolio of almost $16 billion, and the insurer also extends commercial mortgages.

“This was a great opportunity to acquire a luxury asset in a top tier market,” Robert Merck, MetLife’s global head of real estate, said in the statement. The property will “generate the kind of steady cash flows we need to meet our long-term policyholder obligations.”

MetLife has also been investing in office buildings in a joint venture with Norway’s sovereign wealth fund. That’s part of a business the insurer is building to manage assets for clients.

After large investments by international groups, including Blackstone Group LP and Singapore’s sovereign wealth fund GIC Pte, the volume of property transactions could rise at least another 20 percent next year to 6 trillion yen ($50 billion), from an estimated 4.5 trillion yen to 5 trillion yen this year, real estate broker Jones Lang LaSalle Inc. (JLL) said.

Prices of prime office buildings in Tokyo have gained more than 20 percent this year and are set to increase at least 10 percent in 2015, helped by rising rents and low borrowing costs, said Takeshi Akagi, Jones Lang LaSalle’s head of research in Tokyo. Landlords have been able to raise rents in the city as vacancy rates have fallen -- the current rate of 5.55 percent is the lowest since January 2009.

Building Boom

By calling elections for the lower house of parliament this weekend, Abe is seeking to extend his mandate and fend off a potential leadership challenge from within his ruling Liberal Democratic Party. Recent polls have suggested the LDP will win a landslide victory, which would allow Abe to stay in office for as long as four more years.

Mitsui Fudosan Co. (8801), Japan’s biggest real estate developer by sales, cited the improved business environment created by Abe’s economic policies in July, when it sold new shares for the first time in 32 years. The company raised 328.98 billion yen, which it plans to use for office redevelopment in central Tokyo.

In another sign of growing confidence, Mori Building Co., Japan’s biggest closely held developer, said in June it plans to develop about 10 projects in central Tokyo worth an estimated 1 trillion yen with partners over the next decade.

More Deals

Singapore’s GIC acquired the Pacific Century Place Marunouchi building in October for $1.7 billion, and the following month New York-based Blackstone bought a residential portfolio for more than 190 billion yen from GE Japan Corp.

More deals are likely if Abe wins this weekend’s election, said Akagi of Jones Lang LaSalle. A win by Abe’s LDP “will serve as an extension of time for Abe to carry out his policy,” said Akagi.

Some of the money pouring into Japanese commercial real estate has come from the investment trust sector, which has received a special boost from the Bank of Japan’s easy money policy, one of the so-called “three arrows” of Abenomics together with higher fiscal spending and structural reform.

The BOJ has bought 175.6 billion yen of real estate investment trusts since December 2010, when it began the purchases. It plans to triple the annual amount to 90 billion yen in 2015 as it steps up its quantitative easing policy to bolster growth.

The central bank buying has increased confidence and lowered borrowing costs for Japanese REITs, which accounted for about 27 percent of this year’s commercial transactions, according to Jones Lang LaSalle. The Tokyo Stock Exchange REIT Index (TSEREIT) gained 24 percent this year after rising 82 percent in the previous two years. It was little changed as of 10:30 a.m. in Tokyo.

‘Early Stages’

Abe is expected to implement various structural reforms after the elections, including the creation of so-called strategic zones around Tokyo and elsewhere in Japan, which will offer lower corporate taxes and looser building restrictions.

The real estate industry has also received a boost from Tokyo winning the right to host the 2020 Olympic Games, and sentiment has been helped by Japan’s plan to legalize casinos. Adding to that, the country’s $1.1 trillion pension fund has said it will invest in alternative assets such as real estate for the first time.

The commercial real estate recovery has encouraged Angelo Gordon & Co., the New York-based alternative asset manager with about $27 billion in assets, to broaden its property investments beyond the commercial market to hospitality and residential.

“We are still in the earlier stages here,” said Jon Tanaka, the fund’s Tokyo-based managing director.

Source From: BONNA REALTY GROUP ( 12-12-2014 )











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