Real Estate

Property merger of three favors top brass of two

9 Jun 2016

A trio of U.S. real-estate investment companies is attempting a rare union of equals. Being bigger could justify the effort for Colony Capital. Senior executives at the NorthStar duo involved may find more motivation in some $200 mln of deal-triggered payouts.

Ménage à REIT exposes financial-engineering lusts

4 Jun 2016

Two years after NorthStar Realty separated a business to “unlock value,” they’re reuniting and getting into bed with Colony for a three-way merger of equals. Savings and scale could heat up the relationship. Investors might, however, expect such fickle lovers to fall out again.

U.S. mortgage agency misses Wall Street lesson

26 May 2016

The Federal Home Loan Banks, which fund private-sector banks’ housing lending, now rely on short-term borrowing for over half their debt. That may boost the profitability of their nearly $1 trln of assets. But as the 2008 crisis taught regular banks, it also increases risk.

U.S. lenders’ $3.4 bln deal pits hope vs. reality

23 May 2016

Ares Capital’s takeover of under-fire rival American Capital may well bring more fees, lower funding costs and better returns. But the market for lending to mid-market companies has become tougher even as banks have retreated. The complexity of the tie-up doesn’t help, either.

Chancellor: UK housing crisis isn’t supply problem

17 May 2016

British home prices are higher than ever relative to incomes. But nosebleed values aren’t a sign of inadequate supply. It’s all about ultra-low interest rates and foreign capital flows. When Chinese capital flows reverse, the London property bubble will burst.

Quicken Loans may yet reroute U.S. lending justice

13 May 2016

Prosecutors say it knowingly broke rules on government-backed mortgages. The lender wants its day in court, calling the feds’ actions a “misuse of power.” The likes of Wells Fargo have settled rather than fight. Forcing the government to make a case at trial could change that.

Dubai’s skyscrapers may teeter rather than tower

15 Apr 2016

The sheikhdom plans to break its own record for the world’s tallest skyscraper. The new tower will cost $1 bln to build and sit at the heart of a giant real estate project. As falling oil prices force Gulf petrostates to diversify, Dubai may need a new strategy to lure investors.

Wanda trades places in $4 bln property buyout

31 Mar 2016

Chinese tycoon Wang Jianlin may delist his flagship property firm from Hong Kong less than 16 months after its IPO. It’s a bad time for a company exposed to China’s smaller cities to be in the public eye. Wang may nurse big plans, but minority investors have only a bit part. 

Dublin is flunking its investment hotspot test

17 Mar 2016

Multinationals like PayPal love Ireland’s 12.5 percent corporate tax rate. But a flawed Irish property market is causing a drastic shortage of homes for their workers to live. Without cutting building costs, Dublin will struggle to capitalise should the UK quit the EU.

Watchdogs’ mortgage spat stems from bigger DC fail

14 Mar 2016

Fannie and Freddie’s regulator and the U.S. Treasury disagree about whether the home-loan agencies’ minuscule capital buffers are a problem. Money is available for another bailout. But that a debate exists at all is a reminder lawmakers have flunked fixing mortgage finance.

Carlos Slim builds Spanish empire at skinny price

10 Mar 2016

The Mexican tycoon has been building stakes in builder FCC and property firm Realia. He has made bids for both, at low premiums, after exceeding a 30 pct threshold. Slim has no incentive to offer target shareholders a sweeter offer unless the regulator forces his hand.

Restoration Hardware gives new excuse for failure

25 Feb 2016

The U.S. furniture retailer said sales slowed because of January’s stock market jitters. Given the high prices of Restoration products, it’s not far-fetched to believe its affluent customers have some sensitivity to the wealth effect. But this sounds like the new bad weather.

German real estate M&A fiasco leaves no winners

10 Feb 2016

The failure of Vonovia’s hostile bid for Deutsche Wohnen spares investors a long legal battle. The bidder comes away empty handed with at least 42 mln euros of costs. Wohnen’s defence involved a pricey acquisition. It’s time for German real estate to become boring again. 

Lowe’s makes an offer even Canada can’t refuse

3 Feb 2016

The U.S. home-retailing chain has won over Rona with a 104 pct premium valuing its northern counterpart at C$3.2 bln. Protectionism helped thwart a bid from Lowe’s in 2012. A strong dollar made a knockout bid easier now. And it turns out the color of money suits any flag.

Germany’s listed landlords better off detached

21 Jan 2016

Deutsche Wohnen investors have until Jan. 26 to decide on rival Vonovia’s 14 bln euro hostile bid. Yet synergies are disputed, and a 14 pct fall in the bidder’s shares makes a stingy offer even less compelling. Wohnen can grow on its own, and its shareholders should say No.

Retail real-estate spin looks like short-term fix

11 Jan 2016

A warm U.S. winter has wrought more distress on Macy’s and Kohl’s. Shares in the companies are down by double digits, lending activists a stronger hand for separating out property assets. Reversing consumers’ growing aversion to big department stores will prove more difficult.

London’s bankers should retrain as builders

28 Dec 2015

The City’s banks are sacking thousands of staff. Meanwhile, the construction sector needs 120,000 new pairs of hands to boost UK housing supply to a level that eases house-price inflation. For bankers smarting from accusations of social uselessness, it might make a decent change.

Even Facebook can’t make distance disappear

18 Dec 2015

The social network is virtual, but in the real world it’s paying staff $10,000 to live near its campus. Silicon Valley draws strength from bringing smart people together to cross-pollinate ideas. A downside is having to keep pace with rising real estate costs and commuting times.

Trump’s Muslim tirade fails basic capitalist test

9 Dec 2015

The GOP candidate’s call to ban Muslim visitors ignores the openness on which the system that made him rich relies. U.S. deficits, banks and property have all benefitted from Arab money. Closing doors to people could do the same to capital, which a president can ill afford.

Deutsche Wohnen takes hostile bid defence too far

30 Nov 2015

The German landlord has complicated a 14 bln euros approach by rival Vonovia by buying apartments worth 1.2 bln euros and taking on debt. True, it shows that Wohnen can gear its balance sheet up under its own steam, but there are less risky ways to make the case for independence.