Real Estate

Debt-for-equity swap could soothe Colonial’s woes

2 Apr 2008

Banks backing Colonial s indebted shareholders are considering swapping their loans for some 50% of the stricken Spanish property group. The banks would lose money initially, but stronger shareholders would give the company a chance to recover. It could be the least bad option.

Sacyr spared forced E8bn cash bid for Eiffage

2 Apr 2008

The Spanish group has avoided the worst. A court has ruled it won t have to pay cash for the rest of its French rival s shares. But Sacyr is still in a bind. The lawsuits may not be over, a full share bid would be difficult, and it won t find many buyers for its 33% stake.

Homeowners shouldn’t wish for a Bear-like bailout

27 Mar 2008

Struggling borrowers objecting to JPMorgan s takeover of the Wall Street firm would probably be worse off under a similar deal than under existing relief efforts. What s more, the rapid drop in Libor has, for now, removed the risk of sharp rises in their interest payments.

Dubai-Colonial drama may not be quite over

20 Mar 2008

Talks have broken down between Dubai s sovereign wealth fund ICD and the creditor banks of Colonial, the Spanish construction group that is teetering on the brink of bankruptcy. This may not be the end of the party but Dubai will have to make more concessions.

First biggish Spanish construction firm goes bust

19 Mar 2008

Seop filed for creditor protection after its clients, mostly property developers, fell behind on payments. The bigger construction companies are more diversified and so on safer ground. But with financing increasingly hard to come by, Seop may not be the last to bite the dust.

Markets too eager to celebrate over mortgage giants’ plan

18 Mar 2008

That s the only way to read the positive reaction to regulator Ofheo s relaxing Fannie and Freddie s capital constraints. Ofheo seems to be hoping that promises from the agencies not to gear up will encourage investors to pony up more capital. That seems a tad optimistic.

Bank turmoil dangerous sign for UK property

18 Mar 2008

To strike deals and halt the slide in UK property prices, investors need banks to lend to them. But debt is increasingly elusive, due to a double squeeze from worldwide liquidity worries and highly leveraged borrowers. This unholy mix could keep real estate prices heading south.

Wolseley’s strategy goes wrong

17 Mar 2008

The building materials group has two problems a big exposure to US housing and high leverage. It s trying to tough it out by cutting capex, while increasing the dividend. But it might do better to swallow some pride, raise equity and buy while assets are cheap.

Toll shows CEO pay is tough to reform

14 Mar 2008

With share prices plunging, investors are paying careful attention to gaps between executive pay and performance. Efforts to give shareholders a sayonpay have been gaining momentum. But talk is cheap. As Toll Bros shows, changing pay practices can be much more difficult.

Freddie and Fannie should raise more capital

13 Mar 2008

If they have called the housing market right, they may not need more. But that s a big if. And with capital tight, they can't easily help the US mortgage market their public mission. Raising new equity would dilute shareholders. But if it's spent wisely, they could benefit.

Crowded banks could put floor under City rents

13 Mar 2008

In the last City office crash, in 2003, banks had just moved to bigger premises, flush with dotcom exuberance. When they didn t fill the extra space they dumped it, and rents plunged. This time, banks are using all their space. Only a jobs bloodbath could hit rents as badly.

Dubai tries to pick off Colonial’s crown jewels

12 Mar 2008

The Dubai fund aims to buy only the troubled Spanish property company s good rental business, leaving shareholders with cash and a rump of risky assets. The majority shareholders have agreed to sell, but Colonial s beleaguered banks still have to sign off, which could be tricky.

US mortgage bailout options

11 Mar 2008

Pressure is growing in Washington to aid underwater homeowners. Robert Cyran handicaps the various government bailout plans.

Battle for Colonial looks far from over

4 Mar 2008

It s not clear whether Dubai Investment Corp has really walked away from its E3bn bid for the troubled Spanish property company. Shareholders should hope not. The share price is plummeting and there is a mountain of debt. The indebted biggest holders lack bargaining power.

UK should learn from resilient buy-to-let market

3 Mar 2008

Buytolet investors are riding out the UK property storm. There s a chronic shortage of rental housing which developers would like to address. Right now the government tries to require affordable housing for buyers. Supporting rental development might be a better way.

Is Fannie Mae starting a liar loan business?

29 Feb 2008

Move over, Ninja. The US mortgage giant is offering overburdened borrowers unsecured loans to pay off their arrears, based partly on verbal confirmation of ability to pay. It s billed as helping stretched homeowners, but Fannie's bottom line might gain most for now.

Dubai tightens screws on Colonial

27 Feb 2008

The emirate s sovereign wealth fund has offered shareholders in the troubled Spanish property firm a miserly cash premium or a bond that pays no cash for four years. It s not so great for Colonial shareholders. But they don t have much bargaining power.

UK property bulls should put money where mouth is

26 Feb 2008

Most real estate bosses say the 12% fall in UK values since summer won t get any worse. If they mean it, they should buy property derivatives, which are forecasting the same fall again in 2008 they could earn a tidy profit if Armageddon is avoided. If not, then talk is cheap.

Should property companies diversify or specialise?

25 Feb 2008

Big UK real estate investment trusts mostly run diversified portfolios. That's worked well Hammerson's asset value only fell slightly in the second half of 2007. But Land Securities is splitting up in the middle of a downturn. That may sound crazy, but investors could benefit.

Why would one property fund buy shares in another?

19 Feb 2008

Because that s the cheapest way to buy UK property these days. So a New Star fund is investing some of the proceeds from asset sales in closedend funds which are going at a big discount. That may make sense, but then why should investors pay New Star a 1.5% management fee?