Real Estate

Foreign investors give Spanish property the thumbs down

5 Jun 2007

Real estate company Realia has priced its IPO at a whopping 26% below the price range due to weak international demand. Investors are right to be cautious about property in Spain. But the 36% discount to net asset value looks steep. Realia is priced to sell. Real estate company Realia has priced its IPO at nearly 20% below the price range due to weak international demand.

First big UK reit IPO may struggle

5 Jun 2007

Vector Hospitality s £2.6bn IPO is a landmark deal for London, but the hotel property fund is being greedy pushing for a big premium to NAV. Valuing a property group on yield is ok in theory, but Vector is let down by weak structure and poor timing. It needs to prove itself first.

Foxtons buyout not as risky as it looks

22 May 2007

BC Partners paid 12 times last year s ebitda for London estate agent Foxtons, which is a big premium to similar businesses. But Foxtons is currently growing very fast. So long as the market doesn t actually tank, BC should be able to hit its 20% return target.

Property woes have a silver lining for US Reits

4 May 2007

The market s problems have made Reit stocks more volatile and prompted real estate investors to look for safer ways to gain exposure. That s given Reits new access to the convertible bond market. They ve jumped at the chance and pumped out $14.5bn in the past six months.

Internet hotels are back

3 May 2007

A few years ago, they were all but worthless. Now Telecity Redbus of the UK is mulling an IPO valuing it at 20 times ebitda. Surplus capacity killed the first hotel wave. Now capacity is constrained. The snag is there s nothing to stop it going out of whack again.

HSBC calls time on London real estate

1 May 2007

The bank has sold its Docklands tower for £1.1bn, the highest price ever paid for a UK building and at a low rental yield of 4%. Space is scant in the world's financial capital, and liquidity abundant. As long as there's a wall of cash, prices can stay sky high.

Spanish property stocks in freefall

24 Apr 2007

All it took was jitters over minnow property stock Astroc, which has tanked over 60% in a week. Spanish property stocks were due a correction. But how big will it be?

Sacyr launches E9.5bn hostile bid for Eiffage

19 Apr 2007

The Spanish firm had been trying to get on the board of the French company for over a year, but was consistently rebuffed. Eiffage s move to strip voting rights from some Spanish investors was the last straw. So now it is going for the whole thing.

Unibail turns to Dutch for E21bn merger

10 Apr 2007

The French commercial real estate developer will combine with Rodamco. Unibail becomes less French, and Rodamco gets more new projects. Unibail s shares have been flying for the last nine months. It is taking advantage of the gains in this allshare deal.

Lenders push back on Apollo’s Realogy deal

30 Mar 2007

The normally tame lapdogs of leveraged finance reared up on their hind legs in response to a real estate broker s LBO. Forcing Realogy to pay more was not a tough call. But at least it shows lenders haven t completely lost sight of risk.

Russian real estate is fraught with risk

28 Mar 2007

Office rents may be only second to London, but with yields twice those in the rest of Europe, Russian property is still attractive, right? Not necessarily. It depends how fussy you are about property rights. Investors should be careful with the raft of Russian real estate IPOs.

Off-balance liabilities could ensnare US homebuilders

26 Mar 2007

They re not just facing falling sales and land values. They also have pricey commitments to local governments. Walking away would be costly. But so would the alternative continuing to build. Whichever option they choose, the homebuilders look overvalued.

China’s new Socialism – designed by Adam Smith

19 Mar 2007

The People s Congress has passed a law giving private property equal rights in a basic economic system of socialism . Call it what you will, private property is a good idea. It will help peasants and protect foreign investors from expropriation.

Hedge funds win either way in Countrywide deal

5 Mar 2007

The funds that locked buyout firm 3i out of the UK estate agent are supporting Apollo s bid because they're being offered an equity stake. Stub equity is rarely popular with investors. But Apollo securing a recommended bid puts 3i back in the frame. Either way, hedge funds win.

Metrovacesa shareholders settle their feud

19 Feb 2007

The Sanajuha and Soler/Rivero families have decided to split the company in two to settle a longrunning battle for control. This sounds sensible in principle. But the details are fuzzy and it s not clear what it means for minority shareholders.

Credit crunch threatens housing stocks

16 Feb 2007

Housing stocks are up since August, yet starts are dropping. They plunged 14% in January alone. Subprime mortgage losses are making lenders cautious. If the marginal buyer cannot get finance, the marginal house is dead inventory.

Indian real estate still offers opportunities

13 Feb 2007

Foreign money is pouring into India s booming real estate market, driving down yields in the major cities and raising fears of a bubble. But there are still plenty of cities where yields remain attractive. And the scale of India s development means demand is soaring.

Home Depot can salvage something from Supply

12 Feb 2007

The US home improvement retailer spent $8bn buying wholesale supply businesses, which diluted its overall profitability. But if Home Depot can attract a privateequity buyer to pay a premium, it might just fetch $10bn and net a decent profit.

No shop can beat go shop

8 Feb 2007

An increasing number of LBOs include go shop provisions which allow boards to seek out better offers but few succeed. By contrast, EOP extracted $3bn after agreeing to a no shop . More critical than the shopping label is the size of the break fee.

Has Steve Schwarzman gone an office too far?

7 Feb 2007

Vornado s white flag means Blackstone has won the $39bn battle for Equity Office in the biggest LBO in history. But the valuation looks toppy by almost any measure an impression that Vornado s withdrawal further reinforces.