Real Estate

UK has little wiggle room on mortgage aid

21 Jun 2023

Prime Minister Rishi Sunak is under pressure to cushion the 1.7 trln pound home loans market from high interest rates. Taxpayer support would spook markets and add to the Bank of England’s inflation headache. Targeted relief from banks would do less damage – but have less impact.

Flailing property firms make for risky buyout prey

13 Jun 2023

Shares in Swedish landlord SBB crashed, while listed European peers also trade at heavily discounted valuations. It looks like a golden opportunity for private funds, with $700 bln of cash. The tough part will be securing debt financing and avoiding catching a falling knife.

Office landlords are in store for retail redux

19 May 2023

The vacancy rate for US buildings reached a 30-year high as fewer people return to work and companies cut costs. Retail owners had a similar sob story when e-commerce and a recession hit. A slowdown in building helped to boost rents. Office landlords could have a similar restart.

Center Parcs buyout would offer low thrills stay

17 May 2023

Brookfield plans to sell the British holiday park operator for up to 5 bln pounds. The company’s unique assets and brand loyalty have made it an appealing asset for private equity. But its own limits on expansion and Britain’s cost-of-living crisis may now dent returns.

Guy Hands’ misery offers bondholders a free lunch

16 May 2023

The Terra Firma owner lost a legal fight with the UK, which wants to end a controversial housing privatisation. That could force Hands to sell properties and repay 4 bln pounds of debt at a premium to its market price. It’s the kind of bet the former bond trader might have loved.

TPG returns to credit party fashionably late

15 May 2023

The buyout firm’s $3 bln purchase of direct-lending firm Angelo Gordon takes it back into a business it split off in 2020, and will make it look more like bigger peers like KKR. Missing the last private-credit wave is no bad thing, since TPG could catch the crest of the next one.

Blackstone is cautious enough with its mall IPO

4 May 2023

It has trimmed the size of a $400 mln REIT deal to list Indian shopping malls and pricing looks conservative. A successful float of a portfolio where occupancy rates are near maxed out will give the US fund something small to cheer about in a tough global real estate market.

DR Horton plays ‘heads I win, tails I also win’

20 Apr 2023

Rising cost of funding should be bad for homebuilders, but America’s largest posted stronger than expected earnings. Listings are down 25% from last year as homeowners want to hold on to their cheap mortgages. With scarce inventory, builders benefit from both low and high rates.

Commercial property pain is only just beginning

13 Apr 2023

Valuations of offices and shopping malls are under threat as rising interest rates ratchet up the cost of buying real estate. In this Viewsroom podcast, Breakingviews columnists discuss how inflation and remote working could make the crisis far worse than 2008.

Swedish real estate is canary in the coal mine

13 Apr 2023

The Nordic nation is at the sharp end of Europe’s real estate slowdown. Residential prices fell 15% last year, with offices and shops set to follow as debt costs surge. Its property firms with borrowings equivalent to 40% of GDP have little cushion if foreign bondholders panic.

Real estate warning: beware the backward cap

5 Apr 2023

Property loans are causing anxiety, for good reason. Yields from owning real estate are lower than borrowing costs, something that hasn’t happened since the financial crisis. The devil is in the detail, but for some owners looking to refinance, there could be hell to pay.

Bank rescue real estate turns from dowry to downer

30 Mar 2023

In 2008, failed lenders like Bear Stearns owned prime property that helped underpin value for buyers. But Credit Suisse sold off much of its real estate before UBS swooped. Its long-term leases may prove a headache as remote working shrinks demand for office space.

Zombified Evergrande will haunt for years to come

23 Mar 2023

The Chinese developer’s plan to restructure $20 bln of offshore debt proposes long repayment terms and sweeteners of dubious value. If approved, Evergrande still needs twice the amount in financing to finish building presold homes. The next problem is for onshore borrowers.

Blackstone’s Finnish fiasco adds to property slump

10 Mar 2023

Steve Schwarzman's firm defaulted on a $313 mln securitised loan backed by Nordic offices, after failing to win support from bondholders. More messy workouts are likely as troubled deals come due. It’s an opportunity for savvy players, and another worry for European real estate.

Capital Calls: Eli Lilly

1 Mar 2023

Concise views on global finance: The drugmaker is reducing the list price on its insulins by 70%. Problem is, few actually pay anything close to the sticker price. Insurers will probably prefer to use insulins from rivals, assuming they can keep negotiating big discounts.

Hong Kong’s office landlords face a tough rebound

1 Mar 2023

Global firms like Invesco are signing long leases but vacancy rates are at 12%, more than double Tokyo and Singapore. The Asian hub’s delayed reopening coincides with fresh supply hitting the market too. Hong Kong needs corporate tenants from mainland China to return fast.

China’s property U-turn is fuel for debt rejigs

10 Feb 2023

With Beijing allowing credit to flow to the sector again, developers can see a better future. Those in default, including Evergrande and CIFI, have a new incentive to restructure their U.S. dollar bonds. It will also make creditors at the negotiating table more demanding.

Public Storage has advantage in clutter battle

6 Feb 2023

The stuff-storing giant has kicked off an $11 bln takeover battle with an offer to buy smaller rival Life Storage. Based on today’s prices, the proposal leaves room for counterbids. But with storage companies looking historically expensive, Public’s stock gives it an advantage.

Leery buyers put screws to U.S. homebuilders

31 Jan 2023

Pulte, which constructs more upscale houses, lifted quarterly sale prices 17%, but D.R. Horton and Lennar sacrificed operating margin to offload homes. High interest rates are keeping 80% of Americans downcast about the market. Optimistic valuations tell an oddly different story.

Surging big-city rents reveal real estate puzzle

27 Jan 2023

The cost of renting apartments in New York, London and Sydney soared last year even as higher interest rates pressured property values. Professionals want more home-working space while students are returning to cities. Yet rents and house prices cannot diverge forever.