North America property firms stymied by supply drought

Thu Apr 8, 2010 9:46pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - A wave of distressed properties expected to flood the North American market over the past year has never materialized, investors say, even as their ability to finance real estate deals improved considerably.

As a result, Canada's largest real estate firms have plenty of cash but few places to put it to work, executives gathered for an industry conference in Toronto said on Thursday.

At last year's CIBC World Markets real estate conference, the industry was eagerly awaiting what was expected to be a fire sale of properties as the deep recession in the United States and elsewhere took its toll.

Instead, not very many bargain-priced properties have been put on the block, executives say. At the same time, investors and property companies have managed to build up their capital positions as the global credit crisis eased.

Edward Sonshine, CEO of RioCan, Canada's largest and oldest REIT, said the company was sitting on more than C$100 million ($100 million) in cash waiting for the right acquisition to come along, ready to spend aggressively.

"I regret to say (so far) there is nothing to buy," he told the conference.

"There is more money than deal flow," said Richard Dansereau, managing director at Stonehenge Partners, a company that deals in residential buildings, mostly in Manhattan.

Canadian REITs such as Crombie and Allied Properties said their liquidity has never been stronger.   Continued...