Real Estate

UK property vultures could be circling a while

16 Jun 2009

As borrowers default, the balance sheets of RBS and Lloyds are filling up with unwanted property assets. Equityrich buyout firms like Blackstone would normally be looking to buy. But postbailout, these banks don t have to sell. That will force vultures to swoop elsewhere.

Paulson’s contrarian real estate bet looks smart

10 Jun 2009

The man who made his name betting on the subprime mortgage bust has turned his eye to commercial real estate with a $100m investment in broker CBRE. That seems gutsy prices are tanking. But Paulson may not need a rebound. Indeed, he has already made $24m on the deal.

No need to rush back onto London housing ladder

5 Jun 2009

After falling 24%, the central London housing market has picked up. Supply has increased. Affluent buyers with fat deposits are exploiting supercheap mortgages. There is anecdotal evidence of sealed bids and gazumping. But a sustained period of growth looks unlikely.

UK housing recovery is wishful thinking

1 Jun 2009

Several indices suggest house prices are stabilising. But the signs aren t strong enough to call the bottom of the slump with certainty. That would require a turn in the labour market and improved mortgage financing for firsttime buyers. Both look some way off.

US homeowners may be poorer than they feel

28 May 2009

The 19% drop in US house prices in the past year looks less dire than the S&P 500 s 40% plunge. But adjusted for leverage, homeowners may have lost more than they think. Throw in price opacity and lack of liquidity in housing, and stocks may provide better shelter.

Rising yields could hurt housing and delay upturn

27 May 2009

The rate at which US home prices are dropping has slowed. But rising interest rates could damp buyers enthusiasm, delaying or even deepening the market bottom. With economic recovery depending on the stabilization of the housing market, that could prolong the recession.

Ex-mortgage salesman tries rebirth as savvy buyer

26 May 2009

Stanford Kurland made a mint as the number two at lender Countrywide. Now he s looking for $750m to bankroll picking over the wreckage of the mortgage market. Sure, he should be equipped to find bargains for investors. But he and his colleagues will make the more certain return.

UK commercial property slump yet to hit bottom

21 May 2009

The battered realestate market has already fallen over 40% since its peak. But rents are still sliding, and problems refinancing £40bn of debt due this year could spark forced sales. Peaktotrough values could be more than 50%.

Property woes test Goldman conflict management

15 May 2009

The investment bank is famous for neatly managing potential conflicts when it takes multiple roles in a situation. Asking investors to pump cash into its Whitehall real estate fund while collecting fees on the bailout will be a big test of its skill at keeping the peace.

US housing still has a way to fall

28 Apr 2009

The rate of decline in US house prices moderated in February. Great news for housinghobbled banks, right? Maybe not. Better isn t the same as good . And the cities with the worst price declines are still leading the charge downward.

Spain’s banks wrestle with post-bubble housing

15 Apr 2009

Banks have been buying property from ailing developers, in the hope of later gains. The strategy worked in the last bust, but the wait this time could be painfully long. Discount lending might clear some housing stock. But there s only so much a bank can do in a falling market.

Canary Wharf debt buyback could buy Songbird time

6 Apr 2009

The UK property group is buying back some of its debt at a discount. The accounting treatment could help Songbird, its highly indebted majority owner, avoid a covenant breach. It sounds like a neat plan for everyone. But Canary Wharf s minority shareholders might think otherwise.

UK house-price slump has further to go

2 Apr 2009

By one measure, UK house prices could be near fair value. A survey showed them rising in March for the first time in 17 months. But housing slumps usually overshoot, and need consumer optimism to turn. There s not much of that around. There could be room for another 20% fall.

Faint US housing market dawn is a big global plus

25 Mar 2009

Upticks in home sales suggest the US housing market may be approaching bottom. Prices are close to their longterm average in terms of multiple of buyers earnings, and may decline only modestly further. That s good news for US banks asset portfolios and the global economy.

Rights issues: a new fee pool for commercial banks

19 Feb 2009

Conventional sources of underwriting investment banks and hedge funds are drying up. But in the UK, commercial banks are picking up the slack. It s a way of squeezing more out of existing lending relationships. The trend has further to run.

US mortgage plan is well-designed

18 Feb 2009

Obama s proposed plan to reduce foreclosures pulls off a neat trick. Subsidising servicers and lenders to reduce mortgage payments minimises moral hazard and is an efficient form of intervention. This may be the best spent of all the bailout monies.

Lenders should draw up naughty borrower lists now

17 Feb 2009

Trump's casino company just filed for bankruptcy for the third time. During the boom, banks overlooked big borrowers track records. They should make a list of who to shun and stick to it next time. It could also include Zell, Macklowe and a lot of US consumers.

US housing starts plunge has a silver lining

22 Jan 2009

New home construction dropped to a 50year low. That's not as bad as it sounds if it means housing inventory will be worked off, allowing prices to find a floor. Both processes may be nearing completion by yearend, which will stabilise mortgage values and end the banking crisis.

Mortgage market right to prefer cash to promises

8 Jan 2009

US mortgage bonds have rallied since the Fed said it would buy $500bn of them. That seems odd they re already allbutguaranteed by the government. But with the administration issuing mixed messages about its backing, investors are right to prefer cash on the barrelhead.

US shouldn’t bail out commercial property barons

22 Dec 2008

The Fed plans to finance the purchase of securities backed by credit card, auto, student and small business loans. That should help unfreeze retail credit. Now commercial property owners want in. But that won t unleash consumer spending which is the real key to a recovery.