Real Estate

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.

Overlapping shareholders may sway EOP battle

2 Feb 2007

The company has a $22.4bn cash offer from Blackstone and a $23.2bn cash/stock offer from Vornado. Shareholders may be tempted to take cash. But not so fast. Vornado s stock might appeal to EOP s top investors, who own 44% of the shares and are also the biggest backers of Vornado.

Belgravia outstrips Upper East Side

22 Jan 2007

House prices in prime areas of London and NYC are booming compared to the UK or the US in general, driven by bankers bonuses. But London is pulling away from NYC. That s partly a reflection of its momentum as a financial centre. But the extra cost is also a worry.

Could 666 be the mark of the top?

7 Dec 2006

That s the number of the Fifth Avenue building which has sold for a recordbreaking $1.8bn. It s a reminder that US commercial property is soaring ahead, fuelled by the remarkable growth in securitized lending.

Indian property fever keeps burning

5 Dec 2006

The central bank has warned of overheating. But $4bn of real estate IPOs in the pipeline suggests few are listening. True, demographics are favourable. But not enough to justify 300% price increases in three years. It looks like another financial bubble.