RCA in the commercial property press:

Australian Investors Feel U.S.-Office Pinch

The Wall Street Journal reports: In late 2004, when Tishman Speyer Properties became one of the first U.S. real-estate companies to launch a publicly listed fund on the Australian Stock Exchange, the future looked bright.

Tishman Speyer Office Fund gave Tishman a fresh source of capital, while offering Australian investors a chance to profit from the rising tide in U.S. office values with the security of knowing one of New York's most prominent property owners and developers was at their side.

Five years later, the outlook is much grimmer for the fund that is managed by a subsidiary of the Tishman empire that also owns New York's Rockefeller Center and the Chrysler Building. The stock price, which touched highs near three Australian dollars in early 2007, are off their lows in the single-penny range earlier this year but are still trading in the 35-cent range. And in its latest move to resolve its troubles, the fund is raising cash and reducing its debt load by selling two California office buildings at substantial losses.

For fiscal year ending June 2009 the Tishman fund had an accounting loss after-tax of A$628.6 million ($568.2 million) compared with an after-tax loss of A$112 million in the year earlier. The 2009 loss was largely due to the decline in the value of its portfolio. As of June 30, the value of the fund's share of the portfolio was down about 34% to US$1.5 billion from a year earlier, the company reported. A spokesman for the fund and Tishman Speyer Properties declined to comment.

In a sign that Tishman may have paid too dearly for some of those prime properties, the fund is now taking losses as it sells the properties into the downturn. The sales come as a number of property owners are cutting loose some of their better holdings to raise cash.

"Investors are selling some of their healthiest assets in order to take care of other distressed issues," says Dan Fasulo, a managing director at Real Capital Analytics, a New York real estate research firm.

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Posted by: Nina Turner

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