Real Estate

China’s Evergrande closes in on magical rebirth

7 Nov 2017

The property developer controlled by Xu Jiayin just raised another $9 bln by selling down a stake in a subsidiary. Based on the market reaction, the bold campaign to reduce debt is working. Pressure is now on, though, to complete the amazing turnaround with a Shenzhen listing.

Hong Kong skyscraper deal induces acrophobia

2 Nov 2017

Tycoon Li Ka-shing is selling out of an iconic tower for a lofty $5.2 bln. The buyers are led by an unlikely owner, a Beijing-backed energy trader, according to a media report. They get just a 2 pct yield as the city’s richest man exits. It all screams top of the market.

Homebuilder $18 bln merger hits just enough nails

30 Oct 2017

Lennar has agreed to buy smaller rival CalAtlantic at a 27 pct premium, creating the largest housebuilder in the U.S. The logic seems solid, and the expected $250 mln in cost savings mean that Lennar can afford the markup, though with little left over to feather its own nest.

Hadas: Greed is best indicator of financial crisis

26 Oct 2017

New research casts small-time property investors as the secret villains in the 2007 U.S. house price collapse. As usual, the love of leverage was the root of financial distress. Balance sheets are stronger today, but investors still haven’t learned the virtue of moderation.

FirstRand makes punt on post-Brexit housing market

16 Oct 2017

The South African bank has offered 1.1 billion pounds for Britain’s Aldermore. Shares in the mortgage lender had slipped amid concerns about the slowing property market. At 8 times expected 2018 earnings, FirstRand could be getting a bargain – provided bad loans don’t shoot up.

Hong Kong’s new leader clears first hurdle

11 Oct 2017

In her maiden policy address, Carrie Lam unveiled lower taxes for small firms and more affordable housing for the middle class. Her proposals mark a decent start for tackling the city’s economic divide. If she follows through, Lam could earn support tackling more divisive issues.

Sunac’s spending spree leaves no room for error

26 Sep 2017

Investors have rewarded the Chinese property developer’s debt-fuelled expansion. Chairman Sun Hongbin's aggressive land-grab may well pay off, especially if the sector consolidates. But as property prices cool and political risk rises, a small misstep could be life-threatening.

Misbehaving CEOs can get off far too easily

21 Sep 2017

That's a lesson to draw from the case of KB Home boss Jeffrey Mezger, whose crass rant with neighbor Kathy Griffin went viral. Cutting his bonus might hurt if he received one in recent years. A more fitting penalty would be to axe his haul of stock awards worth some $2.4 mln.

Time isn’t always on Warren Buffett’s side

12 Sep 2017

Berkshire Hathaway’s bid to buy a fifth more of Home Capital was rejected by the Canadian lender’s shareholders. The setback comes weeks after Texas utility Oncor was snatched out from under Buffett's conglomerate. His opportunism is sometimes exposed on closer inspection.

China’s house rental push is past due

6 Sep 2017

Beijing wants more people to rent. Migrating from mortgages to leases could vent speculative pressure and put the critical property sector on a sustainable economic footing. Social customs and institutional interests will neutralise the initiative's effectiveness.

China’s big banks dig deeper into housing market

31 Aug 2017

ICBC, Bank of China, CCB and AgBank are extending new credit, though not as quickly as the wider financial system. Their restraint is welcome, as are signs of improving bad loans. But continuing to lend heavily into the country’s property boom could be storing up fresh trouble.

U.S. housing hangover shows few signs of lifting

29 Aug 2017

Home prices keep climbing as inventories sit at historic lows yet the pace of construction lags. What might stimulate builders is worsening affordability for millennials, and may be persuading boomers to stay put. A decade after the crisis, the market is still dysfunctional.

Japan Inc now chases unicorns, not Sunflowers

24 Aug 2017

SoftBank is putting an astonishing $4.4 bln into WeWork, a purveyor of hip shared office spaces. Growth means Masayoshi Son’s outfit may fare better than Japanese firms that once splurged on Impressionist paintings and Rockefeller Center. But those assets weren’t easy to copy.

UK bank upstarts are already priced for downturn

17 Aug 2017

Shares in buy-to-let lenders, such as Aldermore, have fallen in the past three months due to fears about the housing market. Even if more loans sour, these newcomers can grow earnings by wresting market share from older high-street peers. The drop in their valuation is overdone.

Mortgage interest deduction’s death long overdue

16 Aug 2017

White House officials are considering limiting a tax break that encourages home purchases. The incentive mostly helps the rich and induces risky behavior. The gimmick has also had little impact, with the home-ownership rate falling to a 51-year low in 2016. Its demise is welcome.

U.S. landlords build nice $20 bln addition

10 Aug 2017

Blackstone-backed Invitation Homes is merging with Starwood Waypoint to roll up 82,000 single-family rental houses. The all-stock deal should generate useful savings and shrink overall indebtedness. Low home-ownership rates nationwide also provide the deal a security deposit.

Hong Kong tycoons find easy way to unearth value

10 Aug 2017

Peter Woo’s Wharf plans to spin off $29 bln of local malls and skyscrapers. Like Li Ka-shing’s 2015 reshuffle, this is meant to ensure a sprawling empire is fully valued by the market. This may inspire other property barons to follow suit – but investors will need to be patient.

Chinese are buying London’s skyline past its peak

7 Aug 2017

Hong Kong-based bidders have snapped up the Walkie Talkie and Cheesegrater skyscrapers for 1.3 bln and 1.2 bln pounds respectively. The sky-high prices mean lower yields at a time when Brexit is putting pressure on rents. Still, it’s better than buying real estate at home.

Hudson’s Bay may be more real estate than retail

1 Aug 2017

The C$2 bln Canadian company is under siege from a pushy investor. Jonathan Litt has ideas about repurposing the Saks Fifth Avenue flagship location and exiting Europe. Even if too bold, the bleak outlook for department stores suggests it's time for Hudson's Bay to refocus.

Wanda and Sunac go back to M&A 101

20 Jul 2017

The Chinese developers have been forced to rejig their $9 bln property deal. The result is a less fiddly structure with a third party. That might get the sale through, but Wanda's long list of problems make it unclear if it is any closer to its bigger goal of listing onshore.