Real Estate

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?

French retail safer port than UK in property storm

14 Feb 2008

UK shopping centres are like supertankers according to property investor Liberty they're ploughing through the downturn with only modest damage to NAV. But cheaper debt and robust growth mean its French cousins aren't tanking at all. Investors might prefer this port of call.

An Englishman’s home is his millstone

11 Feb 2008

UK homeowners have often seen house price inflation as a boon. But Britons pay too much, borrow too much and work too hard to afford their small, overpriced homes. And high prices also exclude many from homeownership.

Happy birthday, credit crunch

7 Feb 2008

It s the first anniversary of HSBC and New Century revealing mounting problems with subprime loans. Once thought containable, the US s mortgage woes were instead the catalyst for bursting the broader leveraged credit bubble. So far, only more confusion seems to lie ahead.

British Land set to weather UK real estate storm

7 Feb 2008

The UK Reit has slashed asset values by 16%, but its closedend structure means investors, not the company, feel most of the pain. Unless UK property prices collapse totally, British Land will survive the downturn. It could even profit from the distress of forced sellers.

Troubled Spanish real estate firm tempts Dubai

4 Feb 2008

Colonial boomed along with the Spanish market. But now the overgeared company and its overgeared shareholders face a repayment squeeze. Enter Dubai. The sovereign wealth fund has enough money and patience to make a go of Colonial. But it might find easier pickings elsewhere.

Spanish real estate woes could trap cajas

4 Feb 2008

The savings banks have been allowed to expand lending aggressively in Spain, but not raise much equity. As real estate falls back, they look more exposed than the big and internationally diversified commercial banks. Big losses are possible in this politically favoured sector.

Deutsche may pay for succumbing to real estate froth

31 Jan 2008

The bank lent $5.8bn to real estate mogul Harry Macklowe. Now he can't repay the loans so Deutsche is stuck with seven office buildings. Sure, the deal was cut at the top of a frothy market, but the bank should have understood the risks. Deutsche could be facing a big loss.

City job cuts set to hit UK property returns

30 Jan 2008

The fouryear boom in London commercial property looks to be fully over. One survey shows a sharp drop in demand from potential renters. Another suggests 20,000 job cuts in the City. Investors have already been shying away from the sector. They are likely to start running.

US stimulus package may worsen mortgage lender headaches

29 Jan 2008

The fiscal stimulus package before Congress is partly an attempt to prop up the ailing housing sector. But tinkering with the economy often has unintended consequences. The measure could actually hurt mortgage lenders and end up being counterproductive.

M&B pays price for misguided property punt

29 Jan 2008

The UK pub operator has taken a £274m hit equivalent to all last year s earnings on unwinding hedges associated with a failed property joint venture. Chief executive Tim Clarke may have been badly advised, but he is lucky to be hanging on to his job.

Wolseley suffers as construction troubles spread

21 Jan 2008

The UK group only gets about a quarter of its revenue from new US construction. That business has been suffering badly, dragging the share price down. Other markets are now slowing. That s bad news for current profits. And a test for this acquisitive company s business model.

Scottish Equitable adds to UK commercial property woes

18 Jan 2008

The UK investment group is to halt redemptions from its £2bn real estate fund for up to a year after it almost ran out of ready cash. Scottish Equitable hopes this will buy time to sell assets. But with fear clearly spreading among investors, others may have the same idea.

Blackstone’s property team could rock rivals’ foundations

16 Jan 2008

The group run by Jonathan Gray has left real estate magnate Harry Macklowe in trouble. He is selling the GM building because he can t refinance a loan used to buy buildings from Blackstone. Commercial real estate problems could spread. Blackstone might be positioned to profit.

CDO debacle claims another German scalp

15 Jan 2008

Hypo Real Estate s problems are not lifethreatening, as were the losses suffered by IKB last summer. But it doesn t reflect well on the German lender's management. Either they knew the risks of the toxic debt products and ignored them, or didn t understand them.

Synergies give BofA huge buffer in $4bn Countrywide deal

11 Jan 2008

The expected cost savings alone are worth some $5.6bn to shareholders today. Given the fraction of book value Bank of America boss Ken Lewis is paying for the mortgage lender, it would take massive writedowns, approaching some $14bn, before the investment would hit the red.

John Thain’s Merrill set to stay in downtown Manhattan

9 Jan 2008

The former Goldman and NYSE man might feel more at home with the suits of Wall Street than the hockey jerseys of Madison Square Garden. But a better reason for Merrill Lynch to stay put is that it can t afford the cost or public lampooning involved in a flashy building project.

Colonial massacre classic tale of double leverage

3 Jan 2008

Spain's second largest property group is in a tailspin not just because it borrowed excessively to invest in overvalued assets; its chairman financed his own 40% stake by borrowing. When prices rise, double leverage multiplies the gains. When they turn, it magnifies the agony.