Evening star., 1935-01-05
RISING SECURITIES
BRIGHTEN MARKET
New Yorker Says Higher
Bond Prices Stabilize
Realty Mart.

York fnancier, who added that as an
indicator of genuine recovery no single
factor can be of greater Importance
than stabilization of real estate values
LAS a group" Mr.. Amott, president
OF Amott, Baker & Co., continued, mo
other bond investments have expert
enced as high a percentage Of recov-
cry. Yet, despite the fact that capital
investment in real estate mortgage
securities is more than $4,000, 900 900,
with fully 70 per cent of this amount
in default, relatively little attention
has been paid to them by the great
majority of investment organizations.
Among the factors that have been
responsible for the marked improve
ment in the real estate security mar
ket during 1884 was steadily increasing
rentals, which started as early as last
February in many Eastern cities.
Rents had reached the lowest levels
since 1918, according to the National
Industrial Conference Board. Atten-
ton also has been called to the sharp
reduction in vacancies and improved
rental collections by Supt. Van
Schaick, Rehabilitation of New York's
IA guaranteed mortgage houses. Even
more significant is his recent an
nouncement that 80 per cent of in
terest due from mortgagors, and in ar
rears when he assumed charge, has
now been paid.
Gain Is "a Per Cent.
"a review of prices on 200 Eastern
real estate issues showed an average
price increase of 244 per cent for the
first II months of the year. Then, on
December 3, price increases OF 10 to 70
per cent were not unusual, and at the
year end real estate bond prices are at
the highest level in more than three
years.
Many reasons may be cited for the
wider market interest in real estate is
sues. Perhaps one of the most i'm
portant has been the relative scarcity
of new issues of securities generally, to-
gether with wide price fluctuations,
which attracted the attention of many
security dealers who were seeking other
material suitable for retail selling.
Volume purchases of real estate
bonds had particularly important in
fluence on the 1884 market. These
were of two kinds. For the most part,
syndicate buyers wish to acquire own
ership or control of particular prop
erty, or to secure a voice in reor-
ganization. There were also what may
be called inside buyers who were
usually we'll informed regarding a
certain property and who purchased
-, SnaHnlo tive n.
vestment.
Bids Are Few.
"a particularly significant factor
throughout the entire year was the
marked reticence of holders to liqui-
date. This resulted in a one-sided
market in numerous issues, with bids
practically always obtainable, but rel
atively few offerings. 1t was not un-
usual for bid prices to advance three
or five points without an actual trans
action taking place. This was true
also during the week of December 3,
when many real estate bond prices in
creased three to ten points without
any changing hands.
Bond issues secured by theater
ana housekeeping apartments enjoyed
the highest percentage OF price in
crease during the year, while theater
and Office building issues are at the
highest dollar value and hotels the
lowest. A recent study Of New York
hotels, however, shows an improved
situation for these least-favored issues.
Room sales in 1884 showed an in
crease every month over that OF 1888.
with a total increase for the year OF
nearly 18 per cent.
Continued improvement may be
expected In apartment issues as is in
dicated by the findings Of the Na-
tional Association of Real Estate
Boards, whose recent survey OF 268
cities disclosed that 20 per cent report
an actual shortage Of apartment space.
Apartment Earnings Gain.
"While there has been a general in
crease in all real estate earnings, this
has been particularly true OF apart
ment houses of the medium class type.
In New York City, apartment vacarl-
cies are reported to be at the lowest
level since 1890. In many instances
where the situation looked quite bad
a year ago, greater earnings have
cleared up tax arrears and have
frightened the outlook for reorgan1za-
tionS. Barring government competi-
ton in connection with its housing
program it is even possible that we
might experience something akin to
the pace-buying-panic' that marked
the housing shortage Of 1920.
Improved markets have followed
reorganiZationS in practically every
instance. In a recent analysis, we
found that the average price increase
Of 153 issues where no plan had been
proposed was 80 per cent compared
with II per cent price increase for
IS issues where complete reorganiza-
ton by bondholders' committees.
Among New York City properties re-
organized in 1884, for instance, 2 Park
avenue and Forty-second street and
Lexington avenue may be cited. Cur
rent bid prices of 471a and As, respec-
lively, for these issues compare with "a
and "a at the end of 1888.
with all of the favorable elements,
there were certain adverse factors that
became apparent during the year.
These may be expected to influence
the real estate security market in
the new year. Important among these
was the general rise in tax rates as
well as assessed valuations. There con-
tinues to be gloomy outlook for
many Office building properties, par
ticularly, those in financial districts.
Also, there have been indications that
some of the provisions of section 77-B
Of the Federal bankruptcy act may
provide the means Of bringing about
reorganization plans of a type dif-
ferent from those we have seen here
tofore."
To preserve Rrushes.