TOKYO, July 22 (Reuters) - Shares in Japanese real estate developers tumbled on Tuesday after property developer Zephyr Co (8882.T: Quote, Profile, Research, Stock Buzz) folded under $893 million in debt, spooking investors already nervous because of the global credit crunch.
Mid-sized real estate developer Urban suffered the most, with its shares down 22 percent at 131 yen, the lowest intraday level since February 2004. Shares of C's Create (8921.T: Quote, Profile, Research, Stock Buzz) fell 14.6 percent and those of Joint Corp (8874.T: Quote, Profile, Research, Stock Buzz) fell 14.2 percent to 410 yen.
Zephyr was untraded with a glut of selling orders at 14,700 yen, down 12 percent or 2,000 yen from Friday's close of 16,700 yen.
In the largest failure of a listed firm in Japan in nearly five years, Zephyr said on Friday it had filed for court-led rehabilitation. It had difficulty raising funds after the bankruptcy of wholly-owned subsidiary Kondo Sangyo in late May made lenders wary. [ID:nT292958]
A handful of mid-sized Japanese real estate companies have folded in the past few months as banks, reeling from the subprime loan crisis, reined in lending to a sector seen at risk as the world's second-largest economy slows.
Weak consumer spending and a rise in construction material prices further burdened real estate developers.
To cope in this tough business climate, many real estate developers are trying to sell land and buildings to improve their balance sheets. But analysts question if such measures are enough to save the companies.
"Even if they sell excess property, buyers would not pay much and seek a big bargain," said Yutaka Kakizaki, an analyst from Chibagin Asset Management, adding that this meant developers ended up selling property at a loss.
"It will just be a matter of time until we see the next (corporate failure)" Kakizaki said. (Reporting by Mariko Katsumura; editing by Sophie Hardach)
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