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Emerging Markets

Japanese property finance: safe haven beckons global investors

  • 30 Jun 2008
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The global financial markets have seldom suffered a more perilous period than during the past year. The insidious US subprime mortgage crisis continues to corrode the balance sheets and credibility of many of the world’s leading financial institutions. The full extent of the global credit market turmoil remains unknown. Are there safe havens in these storms? Absolutely, argue the numerous proponents of Japan’s property finance market.

The high point of Japan’s commercial real estate market was about two decades ago.

The low point of Japan’s financial system came a decade later, as the unwinding of the country’s bubble economy ravaged financial institutions. After that nadir, Japan staged a broad-based and convincing recovery, during which the commercial property market has shone as one of the country’s brightest stars, and nowhere more so than in central Tokyo, home to a large proportion of the nation’s real estate wealth.

There is little doubt that the brilliance of the Japanese commercial property market has dimmed since the peak, near-perfect conditions in the physical property market and financial markets from 2005 to late 2007.

But many argue that the current risk-reward ratio has seldom, if ever, been more appealing for non-recourse property lenders and investors in Japanese commercial mortgage backed securities, even as the dark clouds over the global financial markets cast their shadows into almost every nook and cranny worldwide.

Optimists maintain that although the latest Japanese commercial property market data has weakened, as shown by the performance of Grade A central Tokyo office buildings, the downturn is negligible and the picture is almost as positive as at any time in the past two decades.

In the physical property market, the troubles in the US and Europe, as well as the more restrictive and more costly financing conditions in Japan, have combined to force the virtual withdrawal of many opportunistic, arbitrage-driven, leveraged buyers, many of them sponsored by the world’s leading banks and investment banks.

But in their place are plenty of long term, largely international buyers, most of which need modest or no leverage, and many of which will hold these assets for many years to come.

Although at the margins, such as in economically sensitive assets and certain provincial locations, some are suffering from reduced liquidity, domestic and international property market experts and core investors believe that the outlook for Japan’s commercial property market is very encouraging, especially in Tokyo.

For non-recourse lenders and CMBS investors prepared to invest the time and resources to fully understand the assets and the markets, the message from Japan’s property finance market professionals is, quite simply, seize the day.
  • 30 Jun 2008

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 HSBC 66,677.92 399 10.15%
2 Citi 65,903.33 324 10.03%
3 Deutsche Bank 62,123.51 299 9.45%
4 JPMorgan 57,926.10 280 8.81%
5 Bank of America Merrill Lynch 37,734.03 215 5.74%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 HSBC 6,221.38 14 11.59%
2 JPMorgan 5,140.67 18 9.58%
3 Bank of America Merrill Lynch 4,497.27 18 8.38%
4 Deutsche Bank 4,264.56 14 7.95%
5 Credit Suisse 4,132.73 8 7.70%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
1 Citi 7,103.94 21 0.00%
2 JPMorgan 6,391.69 17 0.00%
3 Barclays 5,235.31 11 0.00%
4 Deutsche Bank 4,325.08 11 0.00%
5 HSBC 3,388.08 11 0.00%

EMEA M&A Revenue

Rank Lead Manager Amount $m No of issues Share %
1 Goldman Sachs 184.87 44 12.87%
2 Bank of America Merrill Lynch 96.40 30 6.71%
3 JPMorgan 94.14 45 6.55%
4 Deutsche Bank 89.92 33 6.26%
5 Lazard 84.17 46 5.86%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $m No of issues Share %
1 ING 382.49 5 8.60%
2 Commerzbank Group 292.65 4 6.58%
3 UniCredit 275.33 3 6.19%
4 SG Corporate & Investment Banking 271.81 3 6.11%
5 Raiffeisen Bank International AG 207.65 3 4.67%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
1 Standard Chartered Bank 1,142.00 13 0.00%
2 AXIS Bank 1,096.97 30 0.00%
3 Deutsche Bank 1,016.41 16 0.00%
4 Barclays 699.87 9 0.00%
5 Trust Investment Advisors 698.72 32 0.00%