Lippo Seeks U.S. Property Assets on Signs of Economic Recovery
Lippo Group, an Asian investor of property and banks founded by Indonesian tycoon Mochtar Riady, is seeking real estate acquisitions in the U.S., encouraged by signs of recovery in the world’s biggest economy.
“We can consider anything as long as it’s in property,” Riady, 84, said in an interview with Bloomberg Television at the World Economic Forum in Dalian, China. “We see the U.S. economy improving, so that’s where our focus will be.”
Lippo joins the likes of Wang Jianlin, China’s richest man, in hunting for U.S. property assets. Announced property deals in the U.S. have totaled $49 billion this year, compared with $27 billion in the same period last year, according to data compiled by Bloomberg.
The U.S. Federal Reserve is meeting this week and is expected to taper its monthly bond purchases to $75 billion from the current $85 billion pace, according to the median estimate of 34 economists surveyed on Sept. 6 by Bloomberg News. The Institute for Supply Management’s factory index earlier this month showed U.S. manufacturing expanded in August at the fastest pace since June 2011.
Riady said that the rupiah’s decline this year will not affect its acquisition plans because the overseas deals will be handled by its Singapore company. OUE Ltd. (OUE), previously known as Overseas Union Enterprise, is helmed by his son, Stephen.
The expansion in the U.S. comes as the Indonesian rupiah fell about 16 percent this year, the most among Asia’s currencies.
The central bank last week unexpectedly raised interest rates for a second time in two weeks as pressure to shore up the rupiah outweighed the threat to economic expansion. Bank Indonesia also lowered its forecast to a range of 5.5 percent to 5.9 percent, from 5.8 percent to 6.2 percent.
The country’s economy is under pressure as foreign investors withdraw “hot money” and exports slow, Riady said. “This year’s economy may still dip lower slightly, but next year it will recover.”
OUE said in August last year it’s seeking deals to almost double its assets to S$10 billion ($7.9 billion) in as early as three years. The Singapore company bought the U.S. Bank Tower in Los Angeles earlier this year for $367.5 million. Riady said the purchase of California’s tallest building is the start of the company’s plan to expand in the U.S.
Future investments will be about the same size, and he is looking in California, New York and Miami for possible deals, declining to elaborate on specific targets.
“The real estate industry will be our guiding factor for investment,” he said.
Besides OUE, the Riady family’s businesses include Lippo Ltd. (226), a Hong Kong-listed property and investment firms, and Indonesian companies such as PT Lippo Karawaci Tbk and PT Siloam International Hospitals.
Wang, who owns China’s biggest commercial land developer Dalian Wanda Group, said last week he has hired two investment banks to buy hotel management companies, mostly in the U.S. His company, which develops property and shopping malls and runs department stores, luxury hotels and movie theaters, is accelerating acquisitions overseas as the real estate market in China is overheating.
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