Japanese Had Little Yen to Own O.C. Real Estate in 1992, a Survey Shows : Investment: Acquisitions here were next to nothing and they had spent only $32 million for local property in 1991.

Japanese investors had virtually no interest last year in what was behind the Orange Curtain.

A Kenneth Leventhal & Co. survey shows that their investment in Orange County real estate was next to nothing--not much of a surprise, though, considering that they had spent only $32 million for property here in 1991.

Orange County office buildings, industrial parks and hotels have caught the attention of Japanese investors, but not to the extent of major downtown areas such as Los Angeles and Honolulu. A decline in the Japanese stock market as well as in the yen’s buying power has made investors more careful about where their money goes.

“They’ve really pulled in their horns,” said Walter Hahn, director of real estate consulting at Kenneth Leventhal’s Newport Beach office. “There may have been smatterings (of investment), but it was nothing significant.”

Nationwide, Japanese investors spent just $807 million on U.S. real estate in 1992, a decline of 85% from the previous 12 months and the smallest total since the national accounting firm, based in Los Angeles, started tracking Japanese investment in 1985.

Investors spent $291 million on California real estate in 1992, down 70% from $976 million the year before.

The climate has been chilled by higher interest rates and by greater bank capital reserve requirements in international bank standards. Even more, the bulk of Japanese investment went into projects started or properties bought years earlier, or to offset those buildings’ operating losses.

“In many cases, they are just feeding those projects more and more to keep them going,” Hahn said.

An oversupply of hotels and office buildings has sent property values falling since 1988, the peak of Japanese investment in the United States. The amount spent that year for U.S. properties totaled $16.5 billion. Yet even then, interest in Orange County was overshadowed by Japanese purchases of premium skyscrapers in downtown Los Angeles or resorts in Palm Springs. Five years ago, Japanese investors bought $506 million worth of Orange County real estate, just 3% of the nationwide total that year.

“There wasn’t that much, even in the boom years,” Hahn said. The Japanese, he said, “view Orange County as a suburban area. We don’t have the million-square-foot buildings, the premium space.”

Hahn says he doubts that investment in Orange County will pick up any time soon. “They have to put their own house in order,” he said, noting that many Japanese companies and investors are “still in the denial stage. They haven’t faced up to problems.”

Problem real estate loans have been mounting at Japanese banks, and many financial institutions have been struggling to get the troubled properties off their books, he said.