Replies to post #1147 on Ander's Market Theories (AMKTH)

[AnderL]

Foreign Skyscraper Purchases
in Real Estate
http://bigpicture.typepad.com/

Seems as if there is going to be some major currency shifts coming in the near future if history is repeating itself. Japan never lost anything when they bought and sold Rockefeller Center. They exchanges Yen for Dollars to make that purchase in the 1980s and then trades Dollar back into Yen when they sold it. Yes the price in Dollars on Rockefeller Center dropped over that length of time but when you factor in currency exchange and the value of the Yen in the 1980s and then in the late 90s you will see that they made money hand over fist. It's not as simple as trading currency and that is the end of it. The Japanses did gain on the leasing of the offices at Rockefeller Center over those years.

Seems the Emirates is going to do the same. In fact the US might be the target of a major international land grab as US investors sell off all their properties because the real estate market is crashing relative to their green tinted view.

Does this sound at all familiar to anyone else?

A foreign investor, flush with cash thanks to recent economic shifts, begins buying up landmark "trophy" properties in Manhattan.

If you are old enough, that may remind you of the Japanese in the 1980s, who amongst other items, purchased Rockefeller Center.

Well, its time to update your calendar. This morning, the NYT reported that "the royal family of Dubai, the oil-rich Arab emirate on the Persian Gulf . . . plunked down more than $1.1 billion for [2] buildings: 230 Park Avenue, the gold-crowned, 34-story tower that sits astride the avenue between 45th and 46th Streets, and the Essex House, one of the grand Art Deco hotels on Central Park South."

These most recent acquisitions comes on top a 3 year billion dollar spree in U.S. real estate, including "nursing homes, office buildings, hotels and thousands of apartments in Dallas, Phoenix, Nashville and Atlanta."

The Times wonders aloud if "the emirate can . . . escape the fate that befell Japan15 years ago when it made too heavy a bet on real estate at the top of the market and lost. . . . "

You can see the 2 properties below:

Essex House




Helmseley Building




Sources:
Art Deco Era Architecture in NYC
http://www.greatgridlock.net/NYC/nyc2.html

Alphabetical List of New York Buildings
http://www.wirednewyork.com/alphabetical.htm#E

Helmsley Building
http://www.thecityreview.com/helmsley.html

Arab Royals Buy 2 Pieces of the Skyline
CHARLES V. BAGLI
NYT, November 10, 2005
http://www.nytimes.com/2005/11/10/nyregion/10build.html

[AnderL]

REITs UK

Excellent News!

UK Real Estate Investment Trusts (UK-REITs)

The London Stock Exchange has responded to HM Treasury and Inland Revenue discussion paper on the introduction of a UK-REIT, in which the Government seeks the views of the industry representatives on the tax treatment of a UK-REIT vehicle. In our response, we specifically address the question of requiring a UK-REIT to be listed. The London Stock Exchange is supportive of the proposal to introduce a UK-REIT and believes there are benefits to both issuers and investors in such vehicles being either listed or admitted to trading on AIM.

Real Estate Investment Trusts, or REITs for short, are probably the most talked about and long awaited investment vehicles on the UK investment scene.

Initially developed for the US market REITs are something of a holy grail for both private and institutional investors as they offer a high-profit, low-tax investment vehicle via a broad property portfolio which is traded on the stock market.

The commercial property market in the UK has enjoyed historic success over the last decade, capturing the attention of investors all over the country. People are still feeling the sting from the series of corporate scandals and share price devaluations which have plagued traditional investments over the first half of this decade and many now seek lower risk investments which can still produce high gains.

In the past there have only been two options in entering the property investment game: you could buy a property in its entirety or buy the property in a limited partnership. The major drawback with limited partnerships is that they are subject to high taxation while the first option requires a large financial outlay. These two factors have deterred many potential investors from entering the market.

What is a REIT?

A REIT is basically an organisation with the sole purpose of owning and managing investment properties. REITs provide a string of advantages such as tax breaks, income return and inflationary protection.

This type of organisation is classed as ‘pass-through’ meaning that most of the income cash flows can be issued to the investors free of corporation tax – generating strong shareholder dividends. Such dividends are generated by rental revenue from the managed properties.

REITs are an affordable, broad and balanced way of investing in property. The real clincher is that, unlike property which is notoriously difficult and expensive to buy and sell, shares in REITs are freely tradable on the stock market and thus provide a unique level flexibility.

What most people find so attractive about REITs is their tax transparency: they are free from the capital gains tax or corporation tax characteristic of traditional property investment.

The good news is that the government whole heartedly approves of launching UK REITs and if all goes well legislation for should be passed in the 2006 Finance Bill.