Tokyo Stocks Rattled by Rumors of Shuwa Woes : Securities: Talk that the developer, which has big holdings in the Southland, has financial problems raises fears that others are in trouble.

Rumors that major Japanese property developer Shuwa Corp. is in financial difficulties shook the Tokyo stock market on Wednesday, reinforcing fears of a spate property-related business failures.

“The go-go days for property developers are over for the time being,” said Mark Brown, analyst at Barclays de Zoete Wedd Securities (Japan). “It’s going to get worse before it gets better.”

Rumors of ill-defined problems at Shuwa--a private company that owns 53 buildings in Tokyo and 35 buildings overseas--were a major factor in the Tokyo stock market’s 569-point fall on Wednesday, a fall of 2.4%, brokers said.

Shuwa has been one of the most aggressive Japanese buyers in the U.S. real estate market. It owns the massive Arco Plaza complex and the Southern California Gas Co. Building in downtown Los Angeles. The firm also owns properties in Century City, Orange County and other parts of the state.

In Mid-town New York, Shuwa owns the former ABC Television skyscraper and Mellon Financial Center.

The brokers said Shuwa had been an aggressive market player and had used up a great deal of money buying stakes in six Japanese retail firms.

Officials at Shuwa were not available for comment.

The Shuwa rumors have surfaced several times this year, but industry analysts said it was only one of many property firms being squeezed by higher interest rates and falling real estate prices.

On Monday, Kyowa, a builder heavily involved in real estate and golf course development, filed an application with Tokyo District Court to work out a plan to settle about $1.17 billion in debt.

“In terms of companies having financial difficulties, it’s just beginning,” said Daniel Nielsen, industry analyst at SBCI Securities (Asia).

Kyowa is one of many firms that jumped into property when Japanese land prices started soaring in the mid-1980s.

But a combination of declines in land prices and higher mortgage rates are starting to choke real estate firms. New Ministry of Finance guidelines on real estate lending have been key in the change from boom to bust.

Property firms have gone searching for funds--first to banks, then to non-bank lending institutions, to the overseas branches of Japanese banks and to foreign banks, analysts said. “Right now they’re basically running out of oxygen,” Nielsen said.

The number of real estate firms that went bankrupt up to October this year was 225, compared to 262 in all of 1989, according to Teikoku Data Bank, a private credit firm.

Accurate land price figures are notoriously hard to come by, but analysts say contract rates for condominiums are a good indicator of the state of the market.

In Tokyo in October, only 60.1% of the units put on the market were sold, according to the private Real Estate Economy Institute Co.

It said the figure had fallen steadily since June and was now near the five-year low of 58.3% in January, 1986, compared to a record high 98% in June, 1987.

Small- and medium-sized property companies appear to be facing the worst crunch, but there is concern that some of the major companies may be drawn in.

Analysts said focus was shifting to the many property firms that have listed on Tokyo’s over-the-counter market in the past year.

Companies with a major bank backing may be able to survive, analysts said.

“There are expectations of a steady stream, but no panic wave, of bankruptcies,” Nielsen said. “The property market is in for a long haul.”