When all you read is gloom, turn here for a much different perspective.

Monday, June 29, 2009

A $4.3B Investment in Real Estate

On Monday, Blackstone Group (BX) said it had finished raising 3.1 billion euros, or $4.3 billion, for its Blackstone Real Estate Partners Europe III fund. (“BREP Europe III”)

The placement will aim to exploit the real estate recovery.

Blackstone had initially only sought to raise 2.5 billion euros for the fund, but found significantly more appetite for real estate risk in the current environment.

"BREP Europe III is well positioned to take advantage of the inevitable recapitalization of the property sector," said Chad Pike, Senior Managing Director of Blackstone.

Sunday, June 28, 2009

Weekly Good News Wrap - June 15-28

  • Commercial Real Estate: Recovery Signs?

    Posted: Sat, 27 Jun 2009 21:42:00 +0000

    Some commercial real estate business is stirring again.

    The deals seem to be starting small, but never-the-less they are happening.

    "Until a couple of transactions settled, you didn’t have a floor in the market," says Jeff Pacy, a broker with Preston Partners in Lutherville, MD.

    According to Pacy and other commercial real estate insiders outside of Baltimore, they are seeing a "sudden burst of business." For commercial property under $10M, the pricing now seems to be right. Institutional buyers are also treading softly back into commercial property from the sidelines.

    Sensing the recovering markets, those investors see demand growing and bargain basement prices says Jonathan M. Carpenter, vice president with Colliers Pinkard’s Investment Services Group. Some businesses are also looking to save some money by trading their monthly rent for a mortgage payment that they can finance.

    And their bankers seem to be willing to lend again. Scott Nicholson, executive vice president and chief banking officer at Columbia Bank says that his bank is more likely to lend to owner-occupied commercial tenants as those loans tend to perform better over the long run.

    You may recall additional federal programs that help small business. The U.S. Small Business Administration’s 504 loan program is designed to aid small businesses in getting the money they need to buy properties for their operations. Back in March, President Obama announced that the U.S. Treasury would invest $15 billion with the Small Business Administration (SBA) in order to further boost the secondary markets for suchsmall business loans.

    So we've, recently we've seen:

    1. Homeowners with more manageable monthly payments
    2. Housing starts bounce up
    3. The number of residential foreclosures begin to fall
    4. Jumbo mortgage activity increasing
    5. Pending home sales jump up
    6. Existing home sales rising

    And now commercial real estate is showing recovery signs.
  • Kansas City Fed: Regional Factory Production Now Net Positive

    Posted: Sat, 27 Jun 2009 01:01:00 +0000

    For the first time in 10 months the Tenth Federal Reserve District is reporting factory production that is now net positive. The Tenth Federal Reserve District encompasses Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

    The Kansas City Fed released its manufacturing report on Thursday and claimed that "manufacturing activity showed signs of a rebound in June." The report also shows that firms in the region have net positive expectations for future factory activity.

    The net percentage of firms reporting month-over-month increases in production in June was 9, up from -3 in May and -6 in April. The positive production netted increases in both durable and non-durable-goods production plants.

    (Source: Kansas City Fed - click to enlarge chart)

    Additionally, over half of companies in the region are now reporting satisfaction with their inventory levels.

    Large increases also registered in future factory activity indexes from May to June. The future production index rebounded from 1 in May to 13 in June. Sub-indexes for future shipments, new orders, and order backlog all jumped up.

    This positive report from the 10th district follows a string of positive manufacturing reports from across the country. Last week the Philly Fed reported its highest activity reading since September 2008. On Tuesday the central Atlantic regional Fed report showed manufacturing advancing considerably faster in June over May. And a week from Monday there was good news lurking under the June headlines for NY's empire index.
  • Federal Reserve Eases On Interventions

    Posted: Fri, 26 Jun 2009 01:58:00 +0000

    On Thursday the Fed announced that it will end or significantly curb the use of three emergency programs that it had been using to provide cash to brokers and money-market funds.

    The developments are additional signs that the Fed sees improving financial markets and that it will begin honoring its promise to back out of its unprecedented interventions as market conditions warrant.

    Michael Feroli, from JPMorgan Chase was quoted as saying, "The crisis is abating and the worst is behind them." Feroli is an ex-Fed official.

    A Fed statement released Thursday also states, "Conditions in financial markets have improved in recent months." The officials state they will continue to "monitor closely" the need for their interventions and appropriate timing for backing out of other intervention measures.

    The Fed noted that it will also reduce its program to provide needed cash to commercial lenders. You'll remember that we noted those commercial markets thawing out considerably and reported that in late Feb.

    Some economists have worried that since the Fed policies were so accommodating during the recession, it will be difficult avoid inflation as the Fed attempts to unwind its program during the recovery. Thus far inflationary pressure has not materialized.

    Ciaran O'Hagan of Societe Generale stated that the Fed's actions on Thursday would begin to slowly reduce the market's "fears that the Fed’s generosity is excessive."

    Meanwhile as the stock markets continue to reflect on their huge run in recent months, it is to be expected that skeptics remain... and accordingly the trend continues to show stocks moving sideways.
  • Existing Home Sales Yields Good News Triplet

    Posted: Wed, 24 Jun 2009 04:08:00 +0000

    Tuesday we reviewed a dozen areas where home prices are rising. Wednesday yielded the release of home sales data with three more significant pieces of great news.

    1. Sales of previously owned homes rose for the second month in a row in May. The improvement was 2.4% better than the sales rate in April.

    2. Inventories of existing homes continue to decline rapidly. Inventory levels are now below the 10 month mark for all existing homes for sale. That level is down over 15% from a year earlier. There is now only a 9 month supply of existing single family homes on the market.

    3. What may be the best news in Tuesday's home sale data is the fact that the number of distressed sales has drop precipitously. Earlier in the year close to 50% of sales were distressed. May's data shows that level down to 33%

    It is no wonder then that home prices in many cities are beginning to recover.
  • Home Prices Up in a Dozen Cities

    Posted: Tue, 23 Jun 2009 05:34:00 +0000

    Repeatedly we said that the strength of this recovery will be measured in part by how well the housing industry fares.

    Recently we've seen:

    1. Homeowners with more manageable monthly payments
    2. Housing starts bounce up
    3. The number of foreclosures begin to fall
    4. Jumbo mortgage activity increasing
    5. Pending home sales jump up
    6. Existing home sales rising

    It is no wonder then that home prices in many cities are beginning to recover.

    See the chart below for a dozen cities all across the country reporting significant price bounces already this year.
    (Source: Zillow)(click to enlarge)

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