Japan's help for property firms seen falling short

TOKYO Jan 14 (Reuters) - Doubts are mounting about the efficiency of government efforts to support Japan's cash-strapped property firms as the list of corporate failures in the sector is seen as never-ending, analysts said.

Such concerns were underscored when two companies in the struggling sector filed for bankruptcy protection late last week, while developer Properst Co 3236.Q and Atrium Co 8993.T spooked investors with unexpectedly big revisions to their outlooks on Tuesday.

Analysts are sceptical about the government's emergency measures announced last month to help cash-strapped property firms from collapsing, saying the plan lacks size and details.

Many analysts also said banks remain tight on lending to small and medium-sized firms despite the government's orders for them to be more flexible when examining lending requests.

"From what we had heard from the Ministry of Land, Infrastructure and Transport, we see that the amount of support has not yet been decided," said Goldman Sachs analyst Atsuko Chiyoda.

"Property companies and funds are set to have an extremely tough time in the coming months," said Chiyoda, adding that many of them are due to repay loans at the end of March.

In 2008 alone, 16 listed property firms including Urban Corp and Morimoto Co went under after facing difficulties in raising operating funds, even though many of their businesses were profitable.

Dozens of other property firms are also in trouble as banks rein in lending amid the global credit crunch, while demand for apartments and office space weakens with the Japanese economy in recession for the first time in seven years.

To help small and midsize real estate developers who are finding banks increasingly reluctant to lend, the government announced an emergency package on Dec. 15 that includes a credit line totalling 250 billion yen ($2.80 billion).

But Goldman Sachs said in a report dated Tuesday that the government is still undecided about the total size of support to be channelled to developers and REITs through the Japan Finance Corp. and the Development Bank of Japan.

"It could be risky to have excessive expectations of government support," the report said.

Other analysts said the plan provided only limited support.

"We need to see something bigger and more drastic," said Daisuke Seki, chief executive of REITs at real estate consultancy IB Research & Consulting.

"Many property companies are in an extremely difficult situation now as they are having trouble getting refinancing agreements. If this kind of situation continues, then one in every five companies has a chance of collapsing," said Seki.

Suggesting tough business conditions, mid-sized property developer Properst, which in December announced layoffs of 40 to 50 percent of its work force, forecast an annual loss and scrapped its dividend plan due to unexpectedly poor sales and the credit crunch.

Atrium also cut its full-year net profit outlook by 98 percent and said it would skip a dividend payment.

Shares of Properst sank by the daily limit of 1,000 yen or 18 percent to a lifetime low of 4,490 yen and those of Atrium slid 12 percent to 221 yen.

Among other property companies, Arnest One Corp (8895.T) tumbled 12.2 percent to 159 yen and Tact Home Co (8915.T) sank 11 percent to 24,110 yen.

The real Estate subindex .IRLTY.T tumbled 2.4 percent, becoming the worst performer of the Tokyo bourse's 33 subsectors on Wednesday. ($1=89.46 Yen) (Editing by Michael Watson)