Thursday 26 April 2018

Taiwan insurers to focus on Global Cities

Taiwanese investors are focusing on the likes of Paris, London and Tokyo
Taiwanese investors are focusing on the likes of Paris, London and Tokyo

Adela Lin

Taiwanese life insurers seeking higher returns may purchase more properties in London, Paris and Tokyo to increase their total real estate assets by $9bn in four years, according to CBRE.

Commercial properties in London yield 4pc to 5pc annually compared with about 2.5pc in Taipei, CBRE global chief economist Richard Barkham said in an interview in Taipei.

"Taipei City's spread of prime office yields over government bonds are among the lowest among major cities worldwide," Barkham said. "Taiwanese life insurance companies looking for higher yields in properties and diversification in portfolios are going abroad."

London and Tokyo are the top two investment destinations for international cross-border investors, CBRE Asia-Pacific research head Henry Chin said. A weak yen and yields of 3.5pc to 4pc make Tokyo attractive, he said.

Taiwan's insurance companies have been on a hunt for foreign real estate after regulators eased investment restrictions. Last month, Cathay Life Insurance bought the Walbrook Building in the City of London financial district for £575m and Fubon Life Insurance purchased the site of the Madame Tussauds waxworks museum.

CBRE estimates that Taiwanese life insurers' combined domestic and overseas real estate assets will rise to $33bn in 2018 from $24bn last year.

Demand for global properties will be bolstered by low interest rates and excess savings over the next five to seven years, Barkham said.

The island's central bank may not raise interest rates until mid-2016, Barkham said. Taiwan's economy may expand 4pc to 4.5pc next year as Chinese growth bottoms out, the euro region recovers and U.S. consumption picks up, he said. Taiwan last month cut its 2015 growth forecast to 3.28pc.

Meanwhile in the US, Starwood Hotels & Resorts Worldwide plans to list its timeshare unit, Vistana Signature Experiences, on the New York Stock Exchange by the end of this year.

The new public company will be listed under the ticker VSE, Starwood said in a statement. The new company includes 19 vacation ownership resorts and three other properties, with Starwood adding more hotel inventory as part of the transaction, Starwood said.

"Today's filing is a pivotal step toward the planned spinoff of our vacation ownership business," Adam Aron, Starwood's interim chief executive officer, said in the statement. "The spinoff will also further advance our asset light strategy."

Starwood, which owns the Sheraton and W brands, in February announced the plan to spin off the timeshare unit. Starwood has been moving to cut real estate holdings to focus on property management and franchising. It's slimmed down after several dispositions, including its Sheraton on the Park in Sydney sale to China's Sunshine Insurance Group in November.

Vistana will offer luxury vacation ownership and travel products in resorts in the US, Hawaii, Mexico, and the Caribbean.

Blackstone, the biggest real estate private equity firm, hired Jonathan Pollack from Deutsche Bank to be chief investment officer of its property-debt unit, which oversees almost $10bn of investor capital.

Pollack had been global head of Deutsche Bank's commercial real estate group, where Blackstone was one of his biggest clients. He left Germany's largest lender last week after 16 years with the company.

At Blackstone, Pollack will report to Michael Nash, who is in charge of Blackstone Real Estate Debt Strategies. The debt unit includes the publicly traded Blackstone Mortgage Trust.

Pollack "is in our opinion one of the bright, bright lights in our industry," Nash said in a telephone interview. "He has a lot of overlap with many of the businesses we've done on the private lending side," along with running Deutsche Bank's commercial mortgage-backed securities operation, the biggest of its kind.

Blackstone has been expanding its executive ranks in real estate as its property business grows. The company earlier this year named Kenneth Caplan to be chief investment officer of the real estate unit, making him number two to global chief Jonathan Gray.

Aside from the mortgage trust, Blackstone's debt-strategies business includes mezzanine-debt funds and CMBS investing. The business acquired mortgages from General Electric Co. as part of the industrial company's recent sale of $23bn of property assets to Blackstone and Wells Fargo & Co.

Blackstone started its debt-strategies business in 2007, the year the company went public, with the hiring of Nash from Merrill Lynch. Pollack is joining as the group expands to other countries, including Mexico, Canada and Australia, with the GE deal.

"We're still a growing, emerging player in global debt and we have the intention to keep growing and doing different things," Nash said. "Jonathan's going to be a thought leader in our business."

Pollack joined Deutsche Bank in 1999 from Nomura Bank. He has a bachelor's degree in economics from Northwestern University in Evanston, Illinois.

Pollack took the helm of Deutsche Bank's commercial mortgage bond business in 2011 and helped make it Wall Street's top underwriter of securities linked to real estate from strip malls to skyscrapers.

Since then, Deutsche Bank has financed a number of Blackstone deals including its acquisitions of the Extended Stay and Motel 6 lodging chains. (Bloomberg)

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