Protection
Zephyr seeks bankruptcy protection on Tokyo homes
Zephyr Co., a Tokyo-based builder of condominiums, sought protection from creditors after sales of homes in the Japanese capital declined.
Zephyr, with debt of 94.9 billion yen ($892 million), filed for bankruptcy protection after its Kondo Sangyo unit collapsed on May 30, according to a statement today. Kyoei Sangyo Co., a construction company based in western Japan, also sought protection from creditors today.
Condominium developers are struggling after units for sale in the Tokyo area dropped for a 10th month in June as price increases and slower wage growth deterred some potential buyers. There may be more bankruptcies as banks demand loan repayments, said Masahiro Mochizuki, an analyst at Credit Suisse Group.
“We may see more bankruptcies in the coming months as banks try to collect,” Mochizuki said by telephone today. “Banks' attitudes toward lending depends on earnings performance and condo sales of each company.”
Zephyr has dropped 75 percent in six months in Tokyo trading. The company has a market value of about 5 billion yen.
Debts Surge
Bankruptcies in the real estate industry rose by 24 percent in June from a year earlier, according to Tokyo Shoko Research Ltd. The companies had combined debt of 142.63 billion yen, seven times more than a year earlier. Zephyr has about 20 billion yen of corporate bonds outstanding, according to Bloomberg data.
Kyoei Sangyo, a developer based in Hiroshima, said it would file for bankruptcy protection after accumulating debt of 8.73 billion yen.
The number of condominiums placed on the market in Tokyo and its surrounding prefectures of Saitama, Chiba and Kanagawa fell 30 percent from a year earlier to 4,004 units, the Tokyo- based Real Estate Economic Research Institute said July 15.
Urban Corp., Japan's eight biggest developer, has dropped 88 percent this year. The share decline prompted lenders to ask President Hiroyuki Bozono to sell most of his stake.
Pacific Holdings Co., Japan's third-largest real-estate asset manager, fell to the lowest in more than four years today after the company forecast a net loss and cut its dividend.
Pacific fell 10 percent to 25,950 yen in Tokyo, the lowest since Jan. 16, 2004. It was the fifth day of daily-limit drops since the company revised its forecast on July 11 after markets closed.
(Published by Bloomberg - july 18, 2008)