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/C O R R E C T I O N -- KENNETH LEVENTHAL & CO./

 /C O R R E C T I O N -- KENNETH LEVENTHAL & CO./
 In LA017, "Japanese 1991 Investment in U.S. Real Estate Pluumets to


$5 Billion, Leventhal Study Shows" moved yesterday, we are advised by a representative of the company that the 1990 total for Japanese investment in the San Francisco/Oakland metropolitan area was "$488 million" instead of "$361 million" as originally transmitted. A corrected version of the release follows. JAPANESE 1991 INVESTMENT IN U.S. REAL ESTATE PLUMMETS TO $5 BILLION,
 LEVENTHAL STUDY SHOWS


Represents a 61 Percent Decline from 1990 Investment of $13 Billion;
 San Francisco/Oakland Ranked Fifth in 1991 Investment
 SAN FRANCISCO, Feb. 20 /PRNewswire/ -- Held back by their government's lending restrictions, declining stock values and a faltering U.S. real estate market, the Japanese invested only $5 billion in U.S. real estate last year, the lowest level since 1985, according to a study released today by the national accounting firm of Kenneth Leventhal & Co. The San Franicsco/Oakland metropolitan area ranked fifth in 1991 investment, with $127 million, or 3 percent, of Japanese investment.
 "The performance of real estate investments in today's market is not influenced by the color of a flag," said Bruce Miller, co-managing partner of the firm's San Francisco office. "Japanese investors are experiencing the same problems as U.S. financial institutions and developers. Until oversupply is absorbed and real estate markets rebound across the U.S., Japanese money will be cautiously invested and earmarked to finish existing projects," he added.
 Miller stressed that Japanese investors have poured $76 billion into U.S. real estate since the mid-1980s and they are not pulling out.
 "In fact, the recent easing of lending restrictions by the Ministry of Finance and the growing improvement in the U.S. economy will attract a continuing supply of Japanese capital to help liquify our financial system and securitize real estate debt here," he predicted.
 Miller added, however, that annual Japanese investment in U.S. real estate will never again reach the level of $16 billion invested in 1988. "The Japanese financial system is now focusing on profit over growth, with a greater priority on domestic lending," Miller said, noting that higher interest rates and the need to set aside capital reserves to meet international bank standards contributed to the drop in Japanese investment last year.
 Resorts Overtake Office Properties
 The Japanese preference for hotel/resort properties is apparent as this category has led investment over the last three years, drawing a cumulative total of $20 billion. Office properties, however, still lead cumulative investment with a total of $28 billion or 38 percent. "The Japanese remain disenchanted with office properties since most major markets are overbuilt, and the declining growth in service industry jobs to fill those offices is stalling the market's recovery for the next few years," said Miller. In 1991, hotels and resorts were the leading property type in the San Francisco/Oakland metropolitan area with 40 percent.
 The number of transactions was down from 307 in 1990 to 103 in 1991, yet the transaction size increased from $43 million to $49 million. Miller attributed the jump in value to Matsushita's acquisition of MCA for a reported $6.3 billion of which real estate accounted for $622 million.
 From Alaska to Orlanda, Japanese Diversify
 Japanese investment also contracted geographically in 1991 with investment in only 18 states compared to 27 in 1990. Hawaii and California captured half of the total investment last year followed by New York. Guam dropped to fourth place, but development of resort properties in the U.S. territory continues because of its close proximity to Japan.
 Hawaii attracted the most Japanese investment for the first time in four years, garnering 33 percent of the total $1.7 billion. Resort development accounted for almost half of that amount with residential and land transactions both receiving approximately 20 percent of the 1991 Hawaiian investment. "Although the Japanese continue their fascination with Hawaii, a number of residential and hotel/resort projects have been placed on hold," said Miller. On a cumulative basis, Hawaiian properties are second only to California in attracting Japanese investors.
 In the San Francisco/Oakland area, Japanese investment totaled $127 million, down by more than half from 1990's total of $488 million. However, San Francisco/Oakland is still among the three California cities that made the 1991 top 10 metropolitan list, ranking fifth trailing Los Angeles and San Diego. The decrease in the number of California cities appearing in the top 10 list is a direct result of the recession having a bigger impact on the West Coast, Miller explained.
 For the first time, Anchorage, Alaska, attracted Japanese investors, ranking 10th with $54 million invested. At the other end of the map, Orlando, Fla., ranked sixth with $122 million invested mainly in land and golf courses.
 "An increased familiarity with U.S. markets has heightened Japanese awareness of and interest in secondary markets, and investors are seeking to decrease their portfolio risk by expanding geographically," Miller explained.
 Change in Investor Types
 Investment by public and private companies accounted for 37 percent of all Japanese capital invested in 1991, moving them to the No. 1 spot. A disproportionate share of that total resulted from the MCA/Matsushita acquisition, according to the Kenneth Leventhal & Co. study. Construction and development companies, the leading investor type for the preceding three years, dropped to second place. They substantially pared down their land acquisitions.
 "Individual investors and investment companies continue their penchant for golf," said Miller, pointing out that they bought 47 percent of all courses purchased by the Japanese last year.
 Outlook for Future Favors Home Building
 Smaller home builders are in the best position to benefit from continued Japanese investment in U.S. real estate, according to Miller. "As U.S. financial institutions continue to restrict construction lending, the home building industry needs capital, especially since lowered interest rates and favorable tax proposals are fueling a rebound in the marketplace," he explained. "Larger builders can access institutional funds and the public companies can turn to Wall Street. For smaller builders with good track records, Japanese investors can provide the equity needed to finance land acquisitions and new construction," he added.
 The forecast for the future Japanese investment in U.S. real estate ranges from $3 to $5 billion in 1992, according to Kenneth Leventhal & Co. Capital will flow into new single-family and apartment developments with a considerable portion going to Southern California, a market with a high comfort level for Pacific Rim investors.
 Miller added that many Japanese banks can be expected to restructure their U.S. commercial real estate projects throughout 1992 to reflect prevailing economic conditions.
 The Kenneth Leventhal & Co. Japanese Data Base tracks convertible debt and equity investment in real estate acquired or developed for investment purposes only. It does not include data on manufacturing facilities or the individual purchase of single-family homes. Kenneth Leventhal & Co., the nation's 10th largest accounting firm, is recognized for its expertise in real estate and financial services.
 -0- 2/20/92
 /CONTACT: Bruce Miller of Kenneth Leventhal & Co., 415-777-3640; or Danielle Rose of Casey & Sayre, 310-457-3676, for Kenneth Leventhal & Co./ CO: Kenneth Leventhal & Co. ST: California IN: SU:


CH -- LA020 -- 1602 02/21/92 19:29 EST
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