Real Estate

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.

Wall Street goes a bridge too far in LBOs

24 Nov 2006

First Boston s bridge loan demise 15 years ago appears to have been erased from the securities industry s collective memory. How else to explain the willingness of Blackstone s bankers to commit $3.5bn in a record equity bridge financing for its EOP buyout?

Warburg Pincus taps strong demand for property

30 Oct 2006

The US private equity group's $1.2bn global real estate fund is its first dedicated property fund,reflecting demand for alternative assets. Investors want exposure to fastgrowing Asia, which could make up 50% of the fund. But emerging markets carry higher risks.

Metrovacesa bid battle turns into Mexican standoff

22 Sep 2006

Neither side gained the decisive victory it wanted. The result is an impasse and, oddly, a rocketing share price. The gains seem built on hopes one bidder will eventually launch a full takeover offer. Perhaps. But the stock is already very expensive.

Metrovacesa bid battle is a game of musical chairs

18 Sep 2006

When there aren t enough chairs to go round, the winning strategy is to aim for the one that other players are least likely to run for. The same is true for the E7.9bn Spanish property company because two competing partial bids aren t enough to take out all the free float.

American economists draw false parallel with the UK

15 Sep 2006

Many believe that the US will experiences a similar experiences as the UK economy after the British real estate market cooled in 2004. However, the differences between these markets are more pronounced than the similarities.

UK house price split reflects unbalanced economy

18 Jul 2006

Once again, house price growth in London is far outstripping the rest of the nation. Blame big bonuses in the finance industry. But the capital's strength is potentially destabilising. The UK suffers from a new type of the Dutch disease overreliance on one sector.

Buffett won’t let go of his baby

27 Jun 2006

The renowned investor has structured the world s largest charitable gift so as not to change the status quo at Berkshire Hathaway. But that may not be in the best interest of the Gates foundation nor of Berkshire s shareholders.

New housing futures contract faces dim prospect

19 May 2006

With US property prices vulnerable to a downturn it might seem a good time to launch a housing futures contract. Yet previous efforts to offer housing futures have floundered due to lack of liquidity.

Buffett ignites M&A guessing game

10 May 2006

The billionaire told Berkshire shareholders he s close to making a $15bn acquisition. Now everyone's drawing up shortlists. Suitable targets fit, like Heinz, Campbell s, Hershey, Masco, Aon and Harley. But it s the stretch ideas Ford and GM that titillate

Expect no more home runs from Buffett

8 May 2006

The billionaire downplayed expectations at his AGM. But he still believes the Berkshire Hathaway culture creates a longterm advantage. But it's difficult to see how the "faith" uniting the conglomerate and its shareholders can survive the inevitable departure of its boss.

Tesco considers putting the Reit in UK retail

24 Mar 2006

As one of the UK s biggest property owners, Tesco is an obvious candidate for putting its £12bn freeholds into a listed vehicle. The retail group s stability would make a Tesco Reit attractive to investors too. The risk is that less suitable candidates follow suit.

German property-fund reform may come too late

23 Jan 2006

The liquidity crunch facing openended real estate funds including KanAm and DB Real Estate has generated sensible suggestions for reform. But that might not repair the reputational hit to the funds industry, which sold these products when equities were out of favour.

Nothing wrong with UK reit proposals

8 Jan 2006

The UK property industry is up in arms over government plans to impose ownership limits and a gearing cap on real estate investment trusts. But the potential valuation uplift from conversion to reit status means the market can easily navigate its way past these obstacles.