REIT Watch: Nomura REIT’s Shares Drop in Tokyo Debut

on Jun 12, 2013
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**Japan**

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**Nomura REIT’s Share Price Declines**
Nomura REIT (TYO:3285), Japan’s largest initial public offering so far this year, fell during its first day of trading today as it tracked a drop in the market. The REIT, run by Japan’s biggest brokerage Nomura, closed 6.20 percent lower at ¥93,800 today, June 12, after selling 1.75 million shares at ¥100,000 apiece and raising 175.1 billion (₤1.2 billion).

“The market overall is weak,” Deutsche Bank analyst Yoji Otani said as quoted by Bloomberg. “The investors at the moment don’t want to take risk.”
Nomura REIT, run by Japan’s biggest brokerage Nomura, will have a portfolio of ¥227.6 billion (₤1.5 billion) worth of commercial properties and warehouses located mainly in Tokyo. “The quality of the assets in the REIT is not very good,” Hideyuki Shinka from Norinchukin Trust & Banking told Bloomberg. “On top of that, the market is down today so the REIT has also been affected.”

**United States**
**Carey Watermark Investors Pays $113 Million for Holiday Inn Hotel**
Carey Watermark Investors, a real estate investment trust investing in lodging and lodging-related sectors, announced yesterday that it had acquired the Holiday Inn Manhattan 6th Avenue for $113 million (₤72.2 million).
“As the strongest performer of the top 25 hotel markets, New York City ranks first as the most active hotel investment market in the US,” chief executive Michael Medzigan said in a statement. “The opportunity to enter the market through the acquisition of a relatively new, well-located property with an established operating history, strong initial cash returns and the potential for future appreciation made it an ideal investment for Carey Watermark.”

The REIT will have to pay an additional $8.4 million (₤5.4 million) for capital improvements and acquisition-related costs. The purchase of the 226-room, 24 storey hotel located at 125 West 26th Street was partially financed with $80 million (₤51.1 million) in debt.
**Jefferies Reaffirms “Buy” Rating on Tanger Factory Outlet Centers**
Jefferies reaffirmed its “buy” rating on Tanger Factory Outlet Centers (NYSE:SKT) in a note issued to investors yesterday but lowered its price target for the shares from $43.00 to $40.00.

!m[Tanger Factory’s share price was $33.52 as of 12.06.2013, 15.05 BST.](/uploads/story/3015/thumbs/pic1_inline.jpg)
“Despite the sell-off, there are still a few bargain hunting opportunities given that valuations still remain somewhat rich (17.5x P/FFO) for the group,” commented Jefferies analyst Omotayo Okusanya. Tanger Factory’s share price has fallen by 10 percent over the last month but is still up by 8.75 percent year-on-year.
**Nomura REIT’s share price was ¥93,800 as of 12.06.2013, 15.05 BST.**
**Tanger Factory’s share price was $33.52 as of 12.06.2013, 15.05 BST.**

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