Real Estate
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News and Views
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Macro/Technicals
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Sector News, M&A, Capital Raises
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Cantor Flows
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News and Views
REIT gains again outpaced the broader markets to close up 0.93% on the session. Standard and Poors yesterday said that U.S. home prices rebounded slightly from crisis lows during the second quarter and the Case-Shiller National Home Price Index posted a 4.4% gain in the second quarter, marking the final period which includes the home buyer tax credit. Macau gambling revenues surged 40% in August according to the city government. Capitalization rates averaged 7.22% in the second quarter, near the highest level relative to treasury bonds on record according to Bloomberg. On the desk we were better to buy yesterday by 3:1.
Macro/Technicals
RMZ: 688.16; +6.34; +0.930%XHB : 14.153; -0.0375; -0.264%
BJK: 25.31; -0.08; -0.315%
Leaders: CDR +4.74% LACO +4.74% GBE +3.81% FUR +3.63% SLG +3.48%
Laggards: ISLE -21.02% PNK -4.30% MPEL -3.23% BYI -3.14% MDH -2.83%
Sector News, M&A, Capital Raises
o MBA Mortgage purchase applications index +1.8% in 27-Aug; total market index +2.7%
o compares to +0.6% and +4.9%, respectively in the prior week
o refi index +2.8% vs. +5.7% in the prior week
o 30-yr fixed rate (12) bp vs. the prior week at 4.43%.
o U.S. commercial real estate yields are near highest relative to Treasury bonds on record, at ~429 bps, a signal to some investors it’s time to buy property – BBG
o Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, based on an index calculated by the National Council of Real Estate Investment Fiduciaries. That was 429 basis points, or 4.29 percentage points, higher than the yield on 10-year government bonds as of June 30, according to data compiled by Bloomberg. It’s about 475 basis points higher than Treasury yields as of yesterday.
o That spread is near the record 539 basis points in the first quarter of 2009, when the U.S. was mired in the worst of the financial crisis and property prices sank
o N.Y. State Mortgage Cuts Borrowing Costs 31% on $127 Million - BBG
o State of New York Mortgage Agency, which provides subsidized home loans to low- and moderate-income families, cut its borrowing costs 31 percent since April on about $133 million in tax-exempt housing bonds as demand from individual investors helped drive down yields.
o Top-rated tax-exempt municipal yields on debt due in 10 years fell 1 basis point, or 0.01 percentage point, yesterday to2.58 percent, equaling the lowest ever, according to data from Concord, Massachusetts-based Municipal Market Advisors dating to January 2001. Bond yields move inversely to prices
o Mortgage Bonds Lose Ground With Home Refi Boom: Credit Markets - BBG
o Government-backed U.S. mortgage bonds underperformed Treasuries in August by the most since November 2008 amid concern federal intervention will spark a refinancing wave that reduces the value of the securities.
o Fannie Mae, Freddie Mac and Ginnie Mae bonds tied to home loans returned 34 basis points, or 0.34 percentage point, less than U.S. debt last month, Barclays Capital indexes show. Fannie Mae’s 6.5 percent bonds maturing in about 24 years fell 0.75 cent last month to 108.9 cents on the dollar as 4.5 percent Treasury bonds maturing in 2036 gained 8.9 cents to 118.34 cents, according to data compiled by Bloomberg
o Home Prices Rise; Outlook DimsA2 – WSJ link
o U.S. home prices rose 3.6% in the second quarter, according to S&P Case-Shiller, but gains decelerated. Separately, consumer confidence moved higher in August.
o Government interference in the housing market might be backfiring
o The U.S. government is working to implement more programs aimed at curbing foreclosures. The need for such programs appears evident, but the numerous programs launched since the beginning of the housing crisis have done little to truly help the market, according to Fortune magazine. For example, the Home Affordable Modification Program and the Home Affordable Refinance Program have cooled the foreclosure rate but have struggled to offer permanent relief to homeowners. CNNMoney.com/Fortune (31 Aug.)
o HCP, SRZ HCP announces revamped Sunrise Senior Living relationship
o SRZ +15.3% (HCP agreement) : HCP Inc. (HCP) agreed to pay Sunrise Senior Living Inc. (SRZ) $50 million to terminate management contracts on 27 of the 75 senior housing communities owned by the health-care real estate investment trust, as the companies also dismissed all litigation proceedings between them. Sunrise's shares shot up 15% to $2.55 while HCP's added 10 cents to $35.32 after hours. DJ
o BRE BRE Properties reports two investments totaling $185M; sells Inland Empire property For $25M
o GRT Glimcher and an Blackstone affiliate to purchase Pearlridge Center in Honolulu, Hawaii for $245M
Cantor Flows
ARI, BEE, EQR, FRT, FVE, HME, HOT, HOV, ISLE, KBH, LALLF, MAC, NRF, NVR, O, PSA, ROIC, SPG, TCO, URI, VTR, WYNN