It's all over the news this week – even on the international scene. This company is coming out of bankruptcy; that company has started to make a profit. What's 'on the go' in business news?
Out of Bankruptcy
General Growth Properties Inc., the second-largest U.S. mall owner, just came out of the biggest real estate bankruptcy in the country’s history. This company was recovering from their bankruptcy filed in April 2009 – and a huge debt of $27 billion. They had been unable to refinance because of the collapse of the commercial mortgage-backed securities market and overall economic downturn.
General Growth Properties Inc. had an extensive restructuring plan. The company provided full recovery for creditors as well as recovery for shareholders. Usually, shareholders are not included in a bankruptcy reorganization.
In the initial restructuring stage, they concentrated on restructuring a mortgage debt of $15 billion tied to 140 properties. Of course, restructuring comes with a cost. The company lost $29.3 million in core funds from operations during the 2010 third quarter compared to a profit of $88.9 million last year. The culprit was restructuring costs. General Growth owns and operates over 183 retail centers in 43 states.
Reporting a Profit
Starwood Property Trust Inc., a significant real estate player, has reported a third-quarter profit. The company raised its dividend as it bought loans in the recent commercial property downturn. Keep in mind that Starwood reported a 2009 loss of $1.9 million. Starwood has made $203 million in new investments during the third quarter including commercial mortgage-backed securities tied to hotels, apartments, shopping centers, offices, and warehouses.
Global Scene
Canada
According to commercial real estate brokerage Avison Young, commercial real estate is rebounding in Canada. The value of commercial property deals is expected to reach $16 billion in 2010. By September, the year's transactions had exceeded 2009 numbers with more than $12 million of commercial real estate in the mix.
Actually, the 2010 figures are a 57% increase over a nine-month period in 2009. Of course, the numbers are not as favorable as in 2007 and 2008. Yet the figures are encouraging for the coming months in commercial real estate. Toronto was the most active market YTD (year to date).
"This is a significant improvement over the $11 billion worth of investment sale transactions completed in 2009, but is still shy of the $21 billion recorded in 2008 and the $30 billion in properties that changed hands at the peak of the market in 2007," says Bill Argeropoulos, Avison Young's Director of Research.
Philippines
The Villar-led property developer, Vista Land & Lifescapes Inc., grew its nine-month net profit by 36% to P2.17 billion. The growth was attributed in great part to revenues from its affordable housing business. Vista Land is expected to achieve its P20-billion sales target for this year.
Sales levels increased by 29% in the first three quarters in 2010. Vista Land senior vice president, Ricardo Tan Jr., says that consumers have confidence in the market. Vista is the holding company of five business units catering to different market segments.
"We expect to see continued strong sales performance in the fourth quarter as we have launched more projects over the last few months. We should comfortably exceed our sales target for the year by just repeating our third-quarter performance," says Vista Land senior vice president Ricardo Tan Jr.
Are Things Looking Up For You?
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