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By Jason Stipp | 10-20-2009 03:09 AM

A Different Story in Hong Kong Real Estate

Analyst Pick Third Avenue Real Estate Value manager Mike Winer says well-financed Hong Kong real estate companies are positioned for growth in a strengthening local market.

Securities mentioned in this video
TAREX Third Avenue Real Estate Value Instl

Jason Stipp: One of the benefits, I would say, of your fund is that you are able to look beyond the U.S. and try to find opportunities elsewhere. And I do notice, among your top holdings are some Hong Kong-based companies. So tell me what you're seeing there, and sort of contrast the situation in Hong Kong to what you're seeing in the U.S. and why you see opportunity in some of those Hong Kong companies.

Michael Winer: Sure. What's interesting is our Hong Kong companies are incredibly well-financed. So, unlike the U.S. companies that have historically used leverage that appeared to be reasonable when property values came down, now their leverage all of a sudden seems to be choking the U.S. companies.

But the Hong Kong companies are extremely well financed. Some of them are actually net-cash companies. And the management teams in Hong Kong have, over the last year or two, dealt with an economic downturn which has now reversed itself completely, and now they're in a full-fledged boom and asset appreciation. But they've been dealing with economic issues but haven't been dealing with balance-sheet issues.

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