Real Estate

WeWork gets complex, but its problem is simple

15 May 2019

The shared-office firm has set up a unit to buy buildings as it readies for an IPO. It’s a way to hedge against rising lease costs and cash in on WeWork’s supposed halo effect. If tenants prove fickle or demand subsidies, though, the benefit of owning property only goes so far.

Growth IPOs exploit total addressable credulity

13 May 2019

Uber says its “total addressable market” is $12.3 trln. Lyft is less exuberant, claiming a mere $1.2 trln TAM, while one estimate of WeWork’s global real-estate opportunity hits over $200 trln. Such heady figures show ambition, but investors need to address the built-in hype.

Viewsroom: Will millennials kill Silicon Valley?

25 April 2019

Young, tech-savvy adults say everything from high prices to climate change may prompt them to leave the San Francisco area. Other U.S. cities can benefit. Also: Why CEO Jack Dorsey should favor Square over Twitter. And what to expect from Indonesian President Widodo’s second term.

Blackstone’s conversion is less than it seems

18 April 2019

Turning into a corporation should broaden the buyout shop’s investor base and win inclusion in indexes. Yet a similar move hasn’t done much for rival KKR, and power stays in hands of boss Steve Schwarzman and insiders. They, not passive investors, will decide Blackstone’s value.

Silicon Valley has a millennials problem

17 April 2019

The high cost of living, homelessness, and climate change are prompting young adults to consider leaving the Bay Area, recent surveys show. Such intractable issues aren’t new. But they’re now threatening the region’s ability to attract and keep talent. That’ll hit its economy.

Asian logistics IPO delivers at a discount

11 April 2019

Warburg Pincus plans a Hong Kong listing for $4 bln warehouse operator ESR. Fancy godowns are in short supply and e-commerce is booming. Yet public markets have not favoured regional rivals like GLP, taken private in 2017. Plain packaging will help the sale stack up.

Dublin’s office boom lacks residential support

5 April 2019

Commercial construction in Ireland is back at pre-crisis levels. Tech giants and banks seeking a post-Brexit perch are fuelling demand for office space. But with Ireland building fewer than 20,000 homes a year – half what is needed – workers will struggle for affordable housing.

IPO wave amplifies Silicon Valley inequality

28 March 2019

One estimate sees 6,000 new millionaires minted from the likes of Lyft and Uber going public. It will give the overall Bay Area economy a boost but may exacerbate social problems. There’s already an affordable housing crunch, and the gap between the rich and poor is growing.

WeWork shows benefit, and cost, of SoftBank vision

26 March 2019

The shared-office giant’s loss in 2018 more than doubled to $1.9 bln, outpacing the growth – and amount – of revenue. Backer SoftBank believes in investing heavily in expansion. Potential IPO investors must square that breakneck spending with a $47 bln private valuation.

Chrysler Building can ape its Midtown rival

20 March 2019

New York City’s art deco tower is being sold for $150 mln, a fraction of what it fetched a decade ago. An onerous ground lease, renovation needs and drift away from Midtown explain much of the discount. But the Empire State Building shows how to restore luster to fading icons.

Americans want new homes, just not these ones

21 February 2019

U.S. existing-home sales fell in January to a three-year low, the National Association of Realtors said on Thursday. More unsold homes and a dip in mortgage rates ought to help the market. But the dearth of starter homes means what’s available is increasingly out of reach.

University endowments are study in U.S. inequality

20 February 2019

With public funding for higher education waning, institutions depend on investments more than ever. Yet most have small endowments and lack access to areas like private equity. The likes of Harvard and Yale face new taxes and ebbing returns, but their riches can cushion the pain.

German $6 bln non-LBO is sign of lean buyout times

15 February 2019

Hellman & Friedman and Blackstone are buying classifieds group Scout24. They can’t pile much debt on it, and the return looks way off the level investors usually expect. With buckets of cash, private equity needs to do deals. Buying fast-growing targets offer a little security.

Viewsroom: Down Under’s upheaval

14 February 2019

Falling house prices and slowing Chinese growth are putting Australia’s record of almost 28 years of economic expansion at risk. The banking industry got dinged after a gripping year-long investigation. And a change of government looks likely. Breakingviews dives into the issues.

Mall king Unibail has some wiggle room on dividend

13 February 2019

Boss Christophe Cuvillier unveiled the fruits of a $15 bln takeover of shopping-centre giant Westfield. Though retailers are struggling, Unibail covered its juicy dividend - but not so comfortably as to vanquish worries an economic downturn could still endanger future payouts.

Thoma Bravo finds mortgage cloud’s silver lining

12 February 2019

The buyout firm is paying $3.7 bln for Ellie Mae, a cloud-based U.S. mortgage processing software outfit. Rising interest rates and slipping prices have overshadowed the housing market, but that makes automation more attractive to lenders. A debt-free balance sheet adds allure.

London’s after-Brexit party will be dreary affair

11 February 2019

Property prices in the capital have stuttered since the 2016 referendum. If Prime Minister Theresa May can avoid a chaotic exit, investment may pick up. Yet a rising pound will discourage some foreign punters. And political and economic uncertainty will linger.

China’s property giants have a decent foundation

8 February 2019

Evergrande and other developers are tapping pricey offshore markets to refinance $98 bln of debt maturing this year. Sales are slow, but prices are still rising fast enough for comfort. Things will look even better if officials ease curbs as part of an economic stimulus package.

WeWork offers glimpse of conflicts to come

23 January 2019

The shared-office upstart and potential IPO candidate rents buildings part-owned by its co-founder and CEO. Private-company trends arguably encourage such blurred lines, but public investors tend to distrust them. It’s another reason to doubt WeWork’s high-rise valuation.

Temasek gives CapitaLand a new economy makeover

14 January 2019

The state investor will sell a real estate unit to the Singapore property giant for $4.4 bln. Temasek gets a majority stake in the heavyweight, which it already part-owns. With more exposure to e-commerce and developed markets, CapitaLand gets scale and downside protection.