UK housing market could be unravelling 23 Nov 2007 The value of new mortgage approvals in October was 27% lower than the monthly average for the previous six months. It s not just a fallout from Northern Rock. Rather, it looks like the credit crunch is hitting home, literally. Rate cuts might not be enough to reverse this trend.
Land Securities three-way demerger makes sense 14 Nov 2007 The proposed breakup of the UK s largest property group goes further than expected. But specialisation is likely to be the way of the future for quoted real estate. Even so, it takes courage to make the first move in the face of a market downturn and with little prospect of any immediate boost to value.
The worst-timed financial product launch ever? 9 Nov 2007 Bonds backed by reverse mortgages are certainly in the running for that title. After all, they depend on home prices, and on confidence in rating agencies, appraisers and Wall Street. And they ve got mortgage in the name. That s five big nails in the coffin.
Could US mortgage debacle cost $1 trillion? 2 Nov 2007 That s more than pessimists are talking about, but it s not impossible. Start with the market s expected 50% loss on subprime mortgages. Add in 30% losses on other unconventional loans, and an extra $100bn caused by falling house prices. The sum is a round trillion.
Housing bailout squawking will probably work 30 Oct 2007 Countrywide chairman Angelo Mozilo s call for a housing bailout is selfserving, since lenders created the mess. However electionyear images of sympathetic defaulters facing foreclosure in a declining market makes public support inevitable. The later, the better.
The house price slip might soon be quick 29 Oct 2007 UK house prices fell by a tiny amount in October, and by a little more in London and other expensive markets. But vanishing buyers and dropping asking prices suggest the market s slip could easily turn into a slide.
Fed’s decision-making pain may be increasing 17 Oct 2007 Inflation ticked up in September and foreign investors have become unreliable, suggesting the Fed should raise rates. Housing is still weakening and could have some way to go, suggesting rates should fall further. The Fed is on the horns of an eversharpening dilemma.
UK buy-to-let loses fizz 28 Sep 2007 Buytolet investors have enjoyed fabulous returns in recent years. But as rates rise and house prices wobble the feast is over. Yet the sector s plight does not look desperate. Leverage is low and rising rents should allow most landlords to sit out harder times.
Lenders gain ground in debt-equity tug-of-war 26 Sep 2007 Not long ago, shareholder friendly tactics, which boiled down to leveraging up to enrich shareholders, pummelled lenders. But a new convertible bond deal by Standard Pacific shows this trend may anecdotally be reversing.
Crunch shatters commercial property’s shine 21 Sep 2007 The stellar returns of UK commercial property have taken a sudden downturn, with the sector making a zero return in August. It s probably only the beginning. Capital values are going to fall. But the decline shouldn t be as bad as in the early 1990s.
Radian faces uphill struggle 7 Sep 2007 The housing crisis ought to play to the mortgage insurer s strengths. Instead, Radian is being punished for its boomtime expansion. Its merger with MGIC is off, and any more ratings downgrades could scare off customers and hit earnings.
US homes point to more pain 28 Aug 2007 Home sales in the US fell only slightly in July. But the stock of unsold homes soared, suggesting further house price falls ahead. Falling US house prices could hit financial markets soon. Later, when US households feel poorer, it could threaten economic growth.
Fannie and Freddie can’t save the mortgage market 8 Aug 2007 And they shouldn t try. The US mortgage giants have only $79bn in capital and $170bn of subprime exposure. Now legislators want to raise their lending limits. That s bad in principle. It could shift even more risk onto US taxpayers.
London office boom not over yet 2 Jul 2007 It follows in the footsteps of HSBC which recently sold its own London offices. Prices are high, yet the market shows few signs of slowing. RBS has sold the Docklands Citigroup tower for £1bn in the UK s secondlargest single property deal at a rental yield of just 4.5%.
First big UK reit IPO may struggle 5 Jun 2007 Vector Hospitality s £2.6bn IPO is a landmark deal for London, but the hotel property fund is being greedy pushing for a big premium to NAV. Valuing a property group on yield is ok in theory, but Vector is let down by weak structure and poor timing. It needs to prove itself first.
Foreign investors give Spanish property the thumbs down 5 Jun 2007 Real estate company Realia has priced its IPO at a whopping 26% below the price range due to weak international demand. Investors are right to be cautious about property in Spain. But the 36% discount to net asset value looks steep. Realia is priced to sell. Real estate company Realia has priced its IPO at nearly 20% below the price range due to weak international demand.
Foxtons buyout not as risky as it looks 22 May 2007 BC Partners paid 12 times last year s ebitda for London estate agent Foxtons, which is a big premium to similar businesses. But Foxtons is currently growing very fast. So long as the market doesn t actually tank, BC should be able to hit its 20% return target.
Property woes have a silver lining for US Reits 4 May 2007 The market s problems have made Reit stocks more volatile and prompted real estate investors to look for safer ways to gain exposure. That s given Reits new access to the convertible bond market. They ve jumped at the chance and pumped out $14.5bn in the past six months.
Internet hotels are back 3 May 2007 A few years ago, they were all but worthless. Now Telecity Redbus of the UK is mulling an IPO valuing it at 20 times ebitda. Surplus capacity killed the first hotel wave. Now capacity is constrained. The snag is there s nothing to stop it going out of whack again.
HSBC calls time on London real estate 1 May 2007 The bank has sold its Docklands tower for £1.1bn, the highest price ever paid for a UK building and at a low rental yield of 4%. Space is scant in the world's financial capital, and liquidity abundant. As long as there's a wall of cash, prices can stay sky high.