Real Estate

Frannie is dead – long live something similar!

11 Feb 2011

The U.S. Treasury finally unveiled ideas for reforming mortgage markets. Fannie Mae and Freddie Mac are to be euthanized eventually but everything else is still up for grabs. Disappointingly, the path of least resistance, and least real change, is looking most likely.

Vast U.S. housing lobby ready to stall GSE fixes

10 Feb 2011

Fannie Mae and Freddie Mac, seized by the government in 2008, don't wield the political clout they used to. But the mortgage giants still have a network with shared interests. That's a big reason they or possibly similarlooking offspring will be around for a while longer.

Leadership void plagues U.S. mortgage reform

9 Feb 2011

The White House has had more than two years to sketch out a future for the $11 trln market. Now leaked reports suggest a punt to Congress where once decided Republicans now want more debate. Sure, housing is practically and politically complex. But taxpayers deserve a plan.

Short Einhorn prods long Berkowitz into action

8 Feb 2011

A small Florida company, St. Joe, is provoking a big fight between the Greenlight and Fairholme bosses. Einhorn thinks its real estate is hugely overvalued, while Berkowitz owns 30 pct of its stock. Whoever is right, the revealing debate shows the benefit of hearing both sides.

U.S. housing reform at risk of stopping way short

4 Feb 2011

America's mortgage market almost sank the world economy, yet no one has done anything to fix it. The government's ideas, due out this month, will frame the debate. But the danger is they will be premised on dogma that should in fact be seriously questioned.

Federal Reserve inaction gets it right this time

2 Feb 2011

The central bank opted not to press ahead with controversial mortgagerelated rule changes and instead punted the matter to a newly created consumer agency. Given the beating the Fed took for neglecting the issue during the boom years, it's a small victory for financial reform.

China property tax lets buyers off too lightly

28 Jan 2011

A levy on real estate investors in Shanghai and Chongqing is on the right track. It could discourage speculation and redistribute wealth. But the proposed 1 percent won't strain buyers used to 20 percent price gains. Something harsher say a 5 percent tax may do the trick.

U.S. housing prices likely to keep on dropping

25 Jan 2011

Even though they're down 31 pct from their peak, home values may not yet be near the bottom. The CaseShiller 10city index's 1993 low was in real terms 27 pct below current levels. Lenders better hope that inflation outpaces rising interest rates, lessening future declines.

J.C. Penney capitulation could be only the start

24 Jan 2011

The department store chain wisely agreed to give board seats to agitators Bill Ackman and Vornado's Steven Roth. The move sidesteps a potentially distracting proxy battle for now. But if Penney can't show improvement quickly, the activists probably won't stay quiet for long.

Abu Dhabi’s Aldar bailout avoids Dubai haircuts

18 Jan 2011

With its $5.2 bln lifeline, the emirate is ensuring that creditors to the favourite vehicle for glitzy projects such as the Ferrari theme park don't suffer. The contrast with the restructuring of Nakheel, which is responsible for Dubai's palm frond islands, is stark.

European property needs more bank wannabes

6 Jan 2011

Axa has set up funds to invest 2.5 bln euros in real estate debt. The move suggests insurers could help ease the 450 bln euro refinancing burden left by Europe's shrinking banks. Many of these loans will be deemed too risky. But the French group may point the way for others.

BofA’s mortgage settlement gets too-giddy welcome

3 Jan 2011

The bank s shares jumped 5 pct on a $3 bln deal to buy back bad home loans from Fannie and Freddie and draw a line under the exposure. The cost is lower than outsiders worstcase scenarios and BofA s own expectations. But there s plenty of mortgage risk still on BofA s books.

U.S. consumers may be getting ahead of themselves

28 Dec 2010

Despite saying they feel less confident Americans opened their wallets wide this holiday season. Payroll tax relief in 2011 should keep retailers busy next year too. But temporary government support can only do so much. The housing market's travails may offer a sober warning.

Real estate’s commercial side looks bright in 2011

23 Dec 2010

Commercial property used to be a sucker bet. Yet the rebound in big city markets like New York, Los Angeles and Washington this year has primed the pumps for a broader recovery. There's still an overhang of debt, but that won't turn off investors looking for a deal.

U.S. economy needs fewer roommates

22 Dec 2010

Stalled construction and population growth are slowly reducing America's glut of vacant homes. Yet hard times mean more people shacking up together and fewer immigrants. When this trend reverses, it spells better times for everyone from cable operators to Home Depot.

Why mortgages might be Spain’s next headache

17 Dec 2010

Regulators think the country's 630 billion euro home loan market can withstand the slump, just as it did in the early 1990s. Spanish banks' biggest problem is bad loans made to real estate developers. But it may be optimistic to think that mortgages can survive unscathed.

Ghost of Lehman past lives on in Archstone

3 Dec 2010

Exposure to the real estate firm alone didn't kill the investment bank. But Lehman's involvement in the awfully timed 2007 LBO was emblematic of all that went wrong. Now Archstone has managed what Lehman couldn't: a restructuring to keep it in business.

Simon will have to dig deep to land UK’s CSC

25 Nov 2010

U.S. real estate giant Simon Property has made a vague approach to buy British rival CSC, just as its target is trying to buy 1.6 bln stg of prime UK retail space. CSC's standalone prospects are attractive. Simon will need to pay up to turn CSC from a buyer to a seller.

UK’s mid-tier bankers lose out on housing ladder

29 Oct 2010

Before 2007, a banker with a l00,000 pound salary and 500,000 pound bonus could get a 1.5 million pound mortgage. Postcrunch, bonus curbs and cautious lenders mean the same pay may only secure a 600,000 pound loan. Bankers may have to relearn a lost art saving for a deposit.

Why is the U.S. mortgage mess headlining again?

19 Oct 2010

Falling house prices, underwater borrowers and foreclosures are only part of the problem. The recurring paperwork snafus and the sheer size of the market make it worse. It s so knotty a fund manager is now pitted against its partial owner. Breakingviews unravels it all.