The next disaster - but not yet

The vultures circling around commercial real estate deals are becoming more and more numerous.
The sale of the John Hanccock Tower to Normandy serves as a striking example of what’s going on. This property was appraised for 1.3 bln USD in 2006 after being traded at 935 mln USD in 2003. In the foreclosure auction two days ago this marquee building in Boston changed hands for 660 mln USD.
Mall owners have to renew a lot of loans this year while malls get emptier by the day. It’s obvious that firms are going to default soon.
Build on mountains of debt, outlets like Macerich (ticker: MAC), Simon Property Group (ticker: SPG), Taubman Centers (ticker: TCO) and Developers Diversified Realty (ticker: DDR) to name a few, are all doomed if a white knight is not passing by soon.
A REIT which can suit one who wants to short is SRS.
The rot is everywhere.

Let’s name them: Bank of Ireland and Allied Irish Bank have submitted proposals to the Irish government to set up their version of good bank – bad bank. They put 35 bln € forward as the total figure. What’s going to the bad bank? Mainly real estate/development loans which have crippled the Irish banks. No more chicken wings and Guinness in the Harbor Master the coming months, lads.

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Rallytime everywhere

China is on the move.
The Shanghai Composite Index rallied since the start of this year 34.80% Bloomberg is reporting. Remarkable: commodity stocks are driving in the fast lane.
Zijin Mining Group en Jiangxi Copper, China Shenhua Energy Co, Tongling Nonferrous Metals Group and China Coal Energy are all rising fast.
In the mean time the Chinese are re-arranging their currency reserves. Their dollar assets went down from 83% a couple of months ago to 64%. But they have still 740 bln USD of US Treasuries.

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Missin' some fun

Protests in London.
And that’s the most important financial news everybody is concentrating on.
The First Human Resources Head, who is also CFO of the US, is in London too. Drives around in an Opel Corsa.
The only absent drop-out is me.
But not to worry. My local will broadcast the event all night, so time enough to look around for any old acquaintances.
Hold on, what do we read?
Belgium’s Solvay was in focus on Tuesday amid talk that a large European drugmaker was eyeing a possible bid for the chemicals and pharmaceuticals group. One suggestion was that a larger peer might try to prise away Solvay’s drug business. Any deal would hinge on Solvac, a holding company which owns 30% of Solvay’s shares and mostly acts on behalf of relatives of Ernest Solvay, the company’s founder. It is thought that Solvac would oppose any takeover.
Love those Belgians
They have to play the Serbs tonight.

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It's not over

The Case Shiller 20 City Home Price Index fell yesterday 18.97% y/y. Now, this decline was the biggest as far as this cycle is concerned. Biggest drop was in Phoenix, Vegas, San Fra, Miami and flashy LA.
Cheap housing in the US, someone is asking. Cheaper by the day, my dear.

Some figures: US March ISM from 35.8 to 36.3%, US March new orders index from 33.1 to 41.2%.

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Running for the exit

Commercial Real Estate is the next ship to sink. And it’s coming, fast and furious. Banks still try to ditch the hole, but the delinquent loans become so numerous that somehow this thing will implode.
You better close the windows when the trouble starts.
One glance at the ProShares Ultrashort Real Estate ETF (ticker: SRS) with components as Simon Property Group, ProLogis and Vornado Realty Trust will tell you the story

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