Real Estate

Capital Calls: Monte dei Paschi

21 Nov 2023

Concise views on global finance: The Italian Treasury raised 920 mln euros by selling a 25% stake in the bank on the open market. So far, it looks like a better outcome for taxpayers than submitting to the onerous sale conditions offered by UniCredit in 2021.

China’s property boost has to sway wary banks

15 Nov 2023

Beijing wants to inject 1 trln yuan into housing projects. It’s a bigger version of a 2022 scheme lenders shunned because developers are saddled with huge debts. Without a broader plan to convince banks the government can stop the real estate rot, the new effort will also fail.

Ping An highlights China property and policy risks

9 Nov 2023

Beijing wants to broker a bailout of troubled developer Country Garden by the $100 bln insurer, Reuters reported. Ping An denies it has been asked. Yet it’s a warning that, as local governments try to defuse debt bombs, even large private companies may face pressure to help.

Vanke’s safety net models new face of China Inc

7 Nov 2023

The $18 bln property developer’s shares jumped after its owner Shenzhen Metro pledged unreserved support and a $1.4 bln tool kit should it need a rescue. As the state takes a bigger role in business, Vanke illustrates how that could reduce both returns and risks for investors.

Canary Wharf may yet avoid once-a-decade upheaval

6 Nov 2023

The main landlord of London’s key office district has tended to have a new owner every 10 years. The 300 mln pounds of equity injected by incumbents Brookfield and Qatar suggests they may buck the trend. That gives Canary Wharf scope to address its issues in a stable manner.

Broker disruption can grow beyond housing

1 Nov 2023

A $1.8 bln verdict against real estate agents could cut into commissions and deflate sky-high home prices. Industries with similar middlemen were already disrupted. Residential brokers are due for a reckoning. Others, like investment banking, could use dismantling, too.

Capital Calls: Ford, Amazon

26 Oct 2023

Concise views on global finance: The loss per car at the $45 bln automaker’s electric-vehicle unit has jumped 51% in a year. So-so earnings at the $1.2 trln e-commerce giant’s cloud division beat the even lower bar set by rival Alphabet.

Country Garden default will serve a bigger purpose

17 Oct 2023

China’s top property developer may miss a debt payment. Creditors have an incentive to quickly agree on a restructuring for its $11 bln of offshore bonds after rival Evergrande’s process flopped. Beijing needs to show the highly leveraged sector can get onto a healthier path.

Capital Calls: Starboard vs. Murdoch

16 Oct 2023

Concise views on global finance: The investment fund wants the publisher of the Wall Street Journal to spin off its real estate assets a year after another activist agitated for a similar move.

Hong Kong buyout leaves property woes clear as mud

10 Oct 2023

Haitong Securities offered a 114% premium for shares it doesn’t already own in its ailing subsidiary. At some 60% of book value, that could have set a benchmark for other brokerages laid low by their China real estate holdings. The lack of transparency on assets prevents that.

China has reason not to let Evergrande rejig rot

3 Oct 2023

Its chairman is suspected of crimes. Offshore creditors may hope a proposal to restructure their $19 bln holdings is still on the table. A forced liquidation will see them recover as little as 2%. Their fate will offer a clue to whether Beijing still values overseas debt markets.

Evergrande is weak link in China’s property fix

25 Sep 2023

The developer’s debt rejig has fallen before the first hurdle. It can’t issue new notes because of an investigation. For all Sunac and Country Garden’s good news, Evergrande accounts for half of the trio’s $670 bln liabilities. Its struggles will hold back the entire market.

China’s property price caps have two sharp edges

18 Sep 2023

Price caps were introduced in 2016 to contain runaway home prices. Ditching them now will allow indebted developers to sell down their bloated inventory and help the market find a bottom. Officials are flirting with the idea, but Beijing will need to brave the social fallout.

China’s cautious property giants may be rewarded

8 Sep 2023

Vanke Chair Yu Liang presciently called the top of the market. Now he says it has oversold and will return to a healthier level. Some optimism is warranted. Policies aimed at shoring up home sales are stirring a rebound in stocks. Yu can afford to be more positive than most, too.

Builders have shelter against UK house-price storm

1 Sep 2023

Property values are falling as demand dwindles, but the likes of Persimmon trade on decent multiples. A squeezed rental market and peaking rates mean the pain may not last long. For now, homebuilders have strong balance sheets and can generate cash by depleting their land banks.

With housing, Buffett chooses a great location

30 Aug 2023

The billionaire’s Berkshire Hathaway recently backed US homebuilders such as Lennar even as mortgage rates rose. Although Americans will pay more in interest, higher wages can make up the difference. Plus, existing home sales have ground to a halt. Builders are in prime position.

Leaving the office for dead may haunt investors

23 Aug 2023

Landlords’ valuations are half pre-pandemic levels due to the boom in hybrid work. Yet looser labour markets are giving bosses more power and companies like Google want staff to spend more time in their buildings. Fund managers betting on a trend reversal may be on to a winner.

Evergrande’s EV deal drives wishful thinking

16 Aug 2023

The embattled property group is giving up control of its stalled electric-car unit to help pay down debt. Its new partner, Dubai-based NWTN, hopes the purchase will charge up its own China strategy. But that seems overly optimistic in an increasingly cutthroat market.

Central bank peanuts highlight China’s policy gaps

15 Aug 2023

A surprise rate cut failed to soothe markets rattled by a weak economy and property defaults. The People’s Bank of China is limited by thin bank margins and the risk of outflows. Loose monetary policy won’t help demand, if President Xi Jinping keeps ducking bolder fiscal action.

WeWork multitasked when it had just one job

9 Aug 2023

The office subletter conceded it might collapse, just months after a debt-for-equity recapitalization and four years since a funding round valued it at $47 bln. Mismanagement, hype and debt-fueled growth are to blame. Rival IWG suggests the business model works if kept in check.