Deutsche may pay for succumbing to real estate froth 31 Jan 2008 The bank lent $5.8bn to real estate mogul Harry Macklowe. Now he can't repay the loans so Deutsche is stuck with seven office buildings. Sure, the deal was cut at the top of a frothy market, but the bank should have understood the risks. Deutsche could be facing a big loss.
City job cuts set to hit UK property returns 30 Jan 2008 The fouryear boom in London commercial property looks to be fully over. One survey shows a sharp drop in demand from potential renters. Another suggests 20,000 job cuts in the City. Investors have already been shying away from the sector. They are likely to start running.
M&B pays price for misguided property punt 29 Jan 2008 The UK pub operator has taken a £274m hit equivalent to all last year s earnings on unwinding hedges associated with a failed property joint venture. Chief executive Tim Clarke may have been badly advised, but he is lucky to be hanging on to his job.
US stimulus package may worsen mortgage lender headaches 29 Jan 2008 The fiscal stimulus package before Congress is partly an attempt to prop up the ailing housing sector. But tinkering with the economy often has unintended consequences. The measure could actually hurt mortgage lenders and end up being counterproductive.
Wolseley suffers as construction troubles spread 21 Jan 2008 The UK group only gets about a quarter of its revenue from new US construction. That business has been suffering badly, dragging the share price down. Other markets are now slowing. That s bad news for current profits. And a test for this acquisitive company s business model.
Scottish Equitable adds to UK commercial property woes 18 Jan 2008 The UK investment group is to halt redemptions from its £2bn real estate fund for up to a year after it almost ran out of ready cash. Scottish Equitable hopes this will buy time to sell assets. But with fear clearly spreading among investors, others may have the same idea.
Blackstone’s property team could rock rivals’ foundations 16 Jan 2008 The group run by Jonathan Gray has left real estate magnate Harry Macklowe in trouble. He is selling the GM building because he can t refinance a loan used to buy buildings from Blackstone. Commercial real estate problems could spread. Blackstone might be positioned to profit.
CDO debacle claims another German scalp 15 Jan 2008 Hypo Real Estate s problems are not lifethreatening, as were the losses suffered by IKB last summer. But it doesn t reflect well on the German lender's management. Either they knew the risks of the toxic debt products and ignored them, or didn t understand them.
Synergies give BofA huge buffer in $4bn Countrywide deal 11 Jan 2008 The expected cost savings alone are worth some $5.6bn to shareholders today. Given the fraction of book value Bank of America boss Ken Lewis is paying for the mortgage lender, it would take massive writedowns, approaching some $14bn, before the investment would hit the red.
John Thain’s Merrill set to stay in downtown Manhattan 9 Jan 2008 The former Goldman and NYSE man might feel more at home with the suits of Wall Street than the hockey jerseys of Madison Square Garden. But a better reason for Merrill Lynch to stay put is that it can t afford the cost or public lampooning involved in a flashy building project.
Colonial massacre classic tale of double leverage 3 Jan 2008 Spain's second largest property group is in a tailspin not just because it borrowed excessively to invest in overvalued assets; its chairman financed his own 40% stake by borrowing. When prices rise, double leverage multiplies the gains. When they turn, it magnifies the agony.
US retailers bloated from big box binge 3 Jan 2008 Retail floor space has grown over 20% in the past decade, and now far exceeds other developed nations per capita. The housing bust, tapped consumers and internet competition are causing indigestion. With December sales down, the consequences of the glut are becoming apparent.
UK commercial property proves hard to price 19 Dec 2007 Only £5bn of transactions are expected this fourth quarter, down 75% from last year. Big deals have almost dried up completely. Markets are shifting so quickly that buyers and sellers can t easily find common ground. When they do, it could be at significantly lower prices.
UK housebuilders tarred by US brush 17 Dec 2007 The big UK housebuilders shares are down twothirds from their 2007 peak. Sure, the UK housing market is slowing rapidly. The markdown is as deep for their US peers, which have much more on their plate. That seems excessive.
Fannie Mae and Freddie Mac should be privatised 12 Dec 2007 The US mortgage giants have outlived their public usefulness. They ve also proved themselves no more prudent than competitivelydisadvantaged freemarket rivals. Their subsidies should go, and they should be left to live or die on level terms with other financial institutions.
A really useful mortgage bailout toll-free number 6 Dec 2007 The Bush administration thinks some 1.2m adjustablerate mortgage holders could be helped by its new plan to freeze teaser rates for five years. But all those borrowers may swamp its tollfree phone counselling service. Here s a proposal to automate it and speed things along.
Would Goldman want Paulson back? 5 Dec 2007 Maybe not. The Wall Street powerhouse isn t known for putting up with failure. And the Treasury secretary hasn t been much of a success so far. Granted, a bank is easier to run than an economy. But his misguided efforts on SIVs and mortgage resets risk tarnishing his reputation.
US housing: worse than in 1991, and still falling 30 Nov 2007 US house prices have already declined more than during the last housing crisis. But too many used homes are still up for sale. The average price is down 8% from the peak. A sharper fall will be needed to get the market back into balance. The means more mortgage pain.
Paulson’s subprime bailout faces long odds 30 Nov 2007 His new scheme to head off defaults on resetting adjustable rate subprime mortgages makes more sense than his SuperSIV project. That only addressed a symptom of the mess; the new effort tackles a cause. But it s far more complex than the SIV bailout and faces longer odds.
UK listed property stock sell-off has gone far enough 28 Nov 2007 Sure, the UK commercial property market is in bad shape. As the hot money exits the sector, the spectre of firesales is depressing prices and activity. But current share prices are discounting up to 25% falls in asset values and 6%plus yields. That looks too gloomy.