Real Estate

U.S. justices leave door ajar to risky home loans

25 Jun 2015

The Supreme Court confirmed that even neutral housing policies can be illegal if they have a prejudicial effect. That keeps banks and other mortgage providers vulnerable to claims of unintentional bias. More bad lending practices, not less discrimination, could be the result.

Uncle Sam wastes home-loan crisis

23 Jun 2015

Tackling expensive rent is a better policy goal than pushing mortgages – and would arguably create more jobs. Instead, Washington has stoked growth in home loans with low down payments and less creditworthy borrowers provided by shadow banks. That’s counterproductive.

U.S. homebuilders pour $5 bln slab of common sense

16 Jun 2015

Standard Pacific and Ryland have unveiled a purported merger of equals that actually approximates one. Investors even pushed both stocks up over 5 pct on Monday. The new group needs help from housing markets – but if it’s approved, the deal looks like a solid foundation.

REIT gambit gives Sears $2.6 bln more to burn

12 Jun 2015

The flailing U.S. retailer wants shareholders to exercise rights to capitalize a real estate unit which will buy 235 stores. The REIT may be a decent bet, and the proceeds will buy Sears boss Eddie Lampert time. The danger is that the hollowed-out merchant will waste the cash.

One of America’s best-run banks curiously kowtows

11 Jun 2015

U.S. Bancorp, the nation’s fifth-largest lender, is cranking up in big mortgages. CEO Richard Davis admits it’s merely to please shareholders hungry for loan growth, even if it’ll fall short of the bank’s 15 pct return of equity. Though small, such pandering can presage a crisis.

Sacyr sale shows Spanish property market split

10 Jun 2015

The 1.8 bln euros paid for the builder’s commercial property unit is at a hefty premium to net asset value. Investors are piling into funds focussed on offices or hotels. The residential market is a different story. The worst is over but it’s likely to bump along the bottom. 

China’s latest developer rescue plumbs new depths

10 Jun 2015

Renhe’s model of turning bomb shelters into malls has run aground. Now it is buying farmers’ markets for $839 mln, to bring in enough cash to keep the lights on. The catch: it’s buying at a premium from the chairman’s wife. Shareholders might hate it, if they had an alternative.

Amazingly, Irish homebuilder float looks a hit

9 Jun 2015

Ireland may be the real estate basket case of Europe, but a Dublin-based housebuilder is planning a London float. With most of its competitors bankrupt, strong demographics driving demand and prices in the Irish capital up 22 pct last year, Cairn Homes could be on to a winner.  

Supreme Court gives risky home loans a welcome mat

2 Jun 2015

The U.S. justices say second mortgages survive borrower bankruptcies – even when a first lien exceeds a property’s value. That shelters the kind of lending that helped inflate the housing bubble. Banks need incentives to offer credit carefully, not raise the roof like it’s 2006.

Edward Hadas: UK housing and the fear of greatness

29 Apr 2015

London urgently needs to be rebuilt and expanded, but none of the leading candidates in the upcoming election promises to do much about the problem. This, like costly U.S. healthcare and high European unemployment, is a rich democracy inertia trap. Affluence retards boldness.

British housing fetish has a bad global whiff

17 Apr 2015

Ruling Conservatives want to help more Britons buy their own dwellings. In global terms, UK home ownership isn’t especially high, but decreasing rentals is a foolish political objective. Making it one – especially with measures that just stoke demand – is irresponsible.    

Blackstone brandishes its long-term bona fides

16 Apr 2015

Nearly eight years after going public, the buyout shop is taking a victory lap. Its shares finally trade noticeably above the IPO price, and Q1 results suggest Blackstone’s model is working. Even so, owners of the firm’s equity may prove more fickle than investors in its funds.

Wells Fargo Q1 shows appeal of GE Capital’s wares

14 Apr 2015

Lower taxes and securities gains helped the West Coast lender beat estimates. But Wells has slowing loan growth, less interest income and more unused deposits – issues regional banks will probably face, too. That makes the assets GE’s finance unit is selling look very attractive.

GE finally exorcises Jack Welch’s financial demons

10 Apr 2015

It took a near-death experience and flat-lined shares, but Jeff Immelt is ditching banking and returning GE to its industrial roots. The timing works on many levels: asset values are high and lending businesses can be funded. Immelt also keeps a step ahead of prowling activists.

Immelt’s SIFI escape route is tough to follow

10 Apr 2015

The $280 bln GE is offloading most of its finance unit and should be able to ditch the systemic tag imposed by watchdogs. That will free CEO Jeff Immelt’s remaining empire from onerous rules. Big U.S. banks might fancy similar liberty, but they are more tightly hemmed in.

GE shows way by ending wait for tax Godot

10 Apr 2015

The U.S. conglomerate is bringing home $36 bln and will pay $6 bln in taxes on it. The move helps GE deliver a capital return plan with sufficient heft to make a mark. It also should be big enough to be noticed by other companies paying a price for leaving some $2 trln overseas.

U.S. mega-mall deal features bazaar tactics

17 Mar 2015

Macerich rejected an unsolicited $22 bln takeover bid from larger rival Simon Property. The suitor’s touted 30 pct premium may really be worth less. Even so, the target’s decision to shield itself by undoing good corporate governance is the more disingenuous haggling move.

Mall king’s $22 bln bid tests its hostile nature

9 Mar 2015

A frustrated Simon Property unveiled a bear-hug offer to buy smaller rival Macerich. The top U.S. shopping center owner has used similar tactics many times before, with mixed results. The structure of the real estate industry tends to require aggression but it also can backfire.

Carlos Slim buys Spanish real estate on the cheap

5 Mar 2015

The Mexican tycoon bought a 25 pct stake in property firm Realia at a discount and is eyeing a takeover. He is also the biggest shareholder of builder FCC, which in turn owns major stakes in Realia and Cementos Portland. Slim effectively controls all three. Minorities beware. 

Investor ardor for real assets may grow too fervid

4 Mar 2015

The illiquidity premium offered on assets such as real estate or infrastructure is attractive in a low-yield world. Low correlation with financial markets is a bonus. But too much money could end up chasing too few projects. It’s a recipe for mispricing risks.