Posts Tagged ‘Blackstone Group LP’

CMBS Poised for a Comeback

Wednesday, February 19th, 2014

CMBS was a $230 billion industry prior to the recession. Today, we live in an era of lowered expectations where every victory needs celebrating as we get back into gear. Take Chicago, where lenders originated and sold off $2.48 billion in loans on Chicago-area properties last year, more than double the $1.20 billion in 2012, according to Trepp LLC, a New York-based research firm. Nationally, CMBS lending rose 85 percent last year, to $82.23 billion. So, we are 35% of the way back. A big part of this rebound is that lenders have eased rates and LTVs. Last year, the average U.S. CMBS loan equaled 63.6 percent of the property’s value, up from 59.8 percent in 2007, according to Trepp.

Another signal of the rebounding bond market is that troubled loans have been getting worked out and traded. First, CWCapital Asset Management LLC put properties with $2.57 billion of unpaid loan balances up for sale. Now, Blackstone Group LP (BX), Starwood Capital Group LLC and CIM Group are all following suit. About 700 bidders registered interest in the auction, which includes foreclosed loans, according to Morgan Stanley. What’s happening is that special servicers, seeing the surge in property values, are unwinding holdings from the real-estate collapse. According to Green Street Advisors Inc., commercial property prices have rallied 71 percent from their 2009 low, surpassing 2007 highs in some areas.

Looking ahead, many experts predict that U.S. CMBS lending will top $100 billion this year. The Chicago area could surpass $3 billion in 2014.

Chinese Conglomerate Buys AMC to Create World’s Largest Theater Chain

Tuesday, June 5th, 2012

Chinese conglomerate Dalian Wanda Group Company is buying the movie theater chain AMC Entertainment Holdings, for $2.6 billion in China’s biggest takeover of an American company.  The purchase reflects the global ambitions of a wave of cash-rich Chinese companies that are speeding their expansion by obtaining foreign skills and brand names.  According to Wanda, the transaction will create the world’s largest movie theater operator.  The Beijing-based company will invest $500 million to fund AMC’s development.  AMC operates 346 movie theaters, primarily in the United States and Canada, and has 23 of the 50 highest-grossing U.S. outlets.

We support AMC becoming bigger, not only in the United States but in the global market,” said Wanda chairman Wang Jianlin.  The deal reflects increasing Chinese investment in U.S. corporate assets.  The transaction is the third-largest Chinese corporate investment in the United States, according to financial research firm Dealogic.  It ranks behind investments by Beijing’s sovereign wealth fund, the China Investment Corporation, of $5 billion in Morgan Stanley and $3 billion in Blackstone Group LP, both for minority stakes in 2007.  Chinese companies had invested $34.8 billion in the United States by the end of 2011 in industries such as auto parts, agriculture and steelmaking, according to Derek Scissors, a China analyst at the Heritage Foundation.

Globally, mergers and acquisitions by Chinese companies total $16.8 billion so far in 2012, a six percent increase over the same period last year, according to Dealogic.  Wanda said AMC’s American management will remain in place and the headquarters will stay in metropolitan Kansas City.  It said the firm’s 18,500 employees would not be affected.

Established in 1988, the privately owned Wanda operates hotels, department stores, tourism and other businesses and had 2011 revenue of $16.7 billion.  The company employs 50,000 and its assets include 86 theaters in China.  AMC’s previous owners were Apollo Global Management, Bain Capital, the Carlyle Group, CCMP Capital Advisors and Spectrum Equity Investors.  AMC has reported losses for the past three years but its CEO, Gerry Lopez, said it has been profitable again this year due to strong ticket sales.

Wang said AMC’s financial problems were due to the high cost of servicing its substantial debt and that conditions should improve once Wanda’s cash allows it to pay off some of that.  “We are confident that after the merger, AMC will turn positive,” he said.  “We have absolute confidence in the future of the company.”

The acquisition comes as Hollywood is looking to China both for its fast-growing audience and for production partners.  Walt Disney Company’s next “Iron Man” movie will be co-produced with a Chinese partner and “Chinese elements” will be added to the story.  DreamWorks Animation SKG Inc., announced a venture in March with three Chinese companies to make animated and live-action films.  Wang said Wanda has applied to China’s government for a license to import movies.  He said the AMC acquisition concerned only film exhibition and not production or distribution.  “We have no plans to promote Chinese films in the United States,” Wang said.  “Mr. Lopez will decide what movies will be shown” in AMC theaters.

Wang and Lopez said the two companies will share experience in the film business.  Wang said Wanda is considering more overseas acquisitions for its entertainment, hotel and retail units.  “We want to be a big company, not just in China but in the world,” he said.

Wanda has been the largest theater owner in the second-largest film market in the world Now, the deal makes it also the owner of the second-largest theater chain in the largest film market,” said Chen Zheng, manager of Saga Cinema in Beijing.  Statistics from the State Administration of Radio, Film and Television indicate that Wanda Cinema Line generated 1.785 billion yuan ($282.4 million) in box office revenue in 2011, ranking first domestically.  Ticket sales totaled 13.12 billion yuan that year.

Writing for Slate, Richard Beales says that “Landing the largest purchase ever of an American target by a private acquirer from the People’s Republic will make waves.  And becoming the world’s biggest owner of cinemas will also boost Wanda’s global profile.  That is part of the motivation, and both the parent company — which claims $35 billion of assets — and its domestic cinema unit have explored the possibility of initial public offerings, according to news reports.  But the bigger rationale is surely to learn more about how to attract China’s increasingly affluent and urban citizens to giant movie complexes and sell them junk food to munch on.  Adding entertainment options to property developments is all the rage in the Middle Kingdom, and Wanda is a leading proponent.  The exchange of information on its high-grossing U.S. theaters, and potentially on technology like IMAX, will help Wanda.”