Related considering fund to buy-up condos

South Florida Business Journal - by Oscar Pedro Musibay

Jorge Perez, chief executive officer of condo developer the Related Group, is looking to create a fund to buy distressed units in South Florida's saturated condo market.

Matt Gorson, president Greenberg Traurig which represents Related, confirmed that Perez is considering it.

"The strong and smart developers would be wise to create funds and acquire distressed assets," Gorson said. "The Related Group would be in the mix."

Gorson said the analysis of the possible venture was in the very preliminary stage and he could not comment further or provide details about its potential mechanics.

A source outside the firm said Greenberg is already creating the paperwork and that the funding would come from Latin America.

Related did not return a call seeking comment.

Ron Shuffield, president of brokerage Esslinger Wooten Maxwell, said he hadn't heard about Perez's interest in buying distressed units, but it makes sense.

"If he can purchase parts of a building or whole buildings for less than it would cost to build them, it's a smart move," Shuffield said.

Investing in Wholesale Preconstruction Real Estate

Investing in Wholesale Preconstruction Real Estate
Buying in bulk can help increase profits
Published on: Tuesday, December 25, 2007Written by: Beth Anderson

Buying in bulk is a strategy many shoppers use to save money. That same strategy can also help real estate investors expand their profits.

Real estate developers typically have to pre-sell a certain percentage of condo or home developments to get a construction loan from banks. In addition to allowing for bank financing, getting the first few units sold tends to help start sales momentum and helps the developers get started on the project more quickly. As a result, developers are often willing to offer huge discounts in order to move large blocks of units. Most investors, though, will likely find it difficult to come up with the funds necessary to purchase a block of condos.

Investors interested in this type of investment should be glad to know that there are now several institutions that work to bring together investors to buy these bulk offerings. These institutions get deep discounts from the developers and pass them along to buyers, who can then buy individual properties at prices much lower than what they could have bought them for if they had purchased directly though the developer.

Most investors, after buying a property as part of a bulk rate discount preconstruction offering, sell it after construction is completed at retail price, often making thousands in profit. This investment strategy is called wholesale preconstruction, bulk preconstruction or preconstruction syndication.

Old Brick Township to include conservation, industry

December 22, 2007

Old Brick Township to include conservation, industry By AARON LONDON Staff Writer
A stretch of road in western Flagler County that was part of Florida's first great land-buying flurry of the 20th century could play that role again.

That is, if a developer's plans meet with approval.

Jacksonville Beach-based Fletcher Management Co. is preparing plans to develop 5,200 acres in northwest Flagler County called Old Brick Township, including 5,000 residential units and 1 million square feet of industrial space.

Because the project is so large, it must go through the state's multi-tiered development of regional impact process. The first step was taken Dec. 14 with a pre-application process in Flagler County conducted by the Northeast Florida Regional Council.

The property is west of U.S. 1 and along the border between Flagler and St. Johns counties. The western side of the project abuts Old Brick Road, part of an historic road that once stretched from Michigan to Miami, and developers say they want to help preserve and restore the road, which is listed on the National Register of Historic Places.

Foreign Buyers Snap Up 2nd Homes in US

By LESLIE WINES – 1 day ago
NEW YORK (AP) — Panden Rota, a Nepalese producer of fine rugs, is about to become a Manhattanite, the owner of a sumptuous apartment in the luxurious downtown neighborhood of Battery Park City.

His primary residence will remain Katmandu, but his new home will allow him to spend more time at U.S. showrooms that display his rugs and with a brother and sister in New York. "I looked at many places and I decided that a Manhattan apartment will always hold its value," he said.

Rota is part of a growing wave of foreigners who buy second homes in the U.S. for work and play and as an investment.

Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors.
The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.

Smaller builders gobble up lots in Lee County

By Dick HoganOriginally posted on December 23, 2007

Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.In the past two months, Hovnanian Enterprises sold 812 lots in Cape Coral to Deltona Corp. and is trying to sell its Lehigh Acres lots. Lennar Homes sold its 700-acre Stoneybrook North project in North Fort Myers to Metro Development Group and its 362-acre Cypress Shadows to Cameratta Properties.Both sellers are big, publicly traded national builders who have seen profits drop and stock price plummet.Hovnanian closed Friday at $7.05, off 81 percent from its 52-week high of $37.58 on the New York Stock Exchange. Lennar closed Friday at $17.20, off 70 percent from its 52-week high of $56.54 on the NYSE. Both companies lost their investment-grade debt ratings this year.

John Ryan wants to buy your lots

John Ryan's Metro Development Group recently bought 8,300 lots from Lennar, bringing its total to a whopping 30,000 lots in Florida - and counting.
By James Thorner, Times Staff WriterPublished December 23, 2007

John Ryan recalls the frenzied days of the last housing boom when a Pasco County chicken farmer had merely to snap his fingers and Ryan was aloft in his helicopter with a land-purchase contract in hand.
One site on the leading edge of suburban New Tampa absorbed an inordinate amount of his attention: 900 acres belonging to the Zephyr Egg Co. off Morris Bridge Road.
"I must have put 40 offers on that land," the 46-year-old Canadian-born developer says.

Distressed Oakland residential properties yield deals

Posted by Carol Marshall Oakland Business Review December 20, 2007 07:00AM
Categories: Commercial real estate, Top Stories

It's a story that's becoming too familiar to Russ Long, associate at O'Keefe & Associates.
"It has more and more become my job to help developers liquidate," Long said of his duties at the Bloomfield Hills-based turnaround and consulting firm. When builders - particularly national residential builders, Long said - pull out of markets that have become less profitable in Michigan's floundering economy, it's the land owners, the developers, who are left holding the bag.

General downturn doesn't slow Town Center project

December 18, 2007
General downturn doesn't slow Town Center project By BARRY FLYNN Business Writer
Town Center, the new "downtown" for Palm Coast, lost two land sales this year but is progressing with other major projects despite Florida's historic real estate bust.

Site work began this month for a $16 million Hilton Garden Inn and a two-story condominium office building, developers and city officials said. Plans for a 14-screen movie theater are moving ahead with the sale of land for it planned for this week.

Also, six banks have committed to opening branches on the periphery of the 1,500-acre project along two of the city's busiest thoroughfares, State Road 100 and Belle Terre Parkway, according to Dave Lusby, vice president of Palm Coast Holdings, the master developer.

CNN/Money.Com Likes St. Joe

St. Joe Company
Posted: 10:19 AM Dec 13, 2007Last Updated: 10:19 AM Dec 13, 2007

CNN/Money.com is picking the St. Joe company among it's best investment bets for 2008. The experts interviewed for the article admit they have no idea if the Florida real estate market has hit rock bottom. But they say it will eventually bounce back.
Right now St. Joe's company stock is selling for about 28-dollars a share. It's highest price was 82-dollars in July 2005.

With the U-S Census Bureau projecting a 33% population increase, or 6-million new residents in Florida by 2020, CNN/Money.com is betting the St. Joe Company will get it's share of that new home market.

The experts also point out Wall Street has undervalued St. Joe's 710-thousand acres of land. That value is 37-hundred an acre, while the fair market value would be around 72-hundred an acre.

Other analysts point out Panama City's home sales have been better than the state average this year and they predict the new airport will boost growth and development.
So how good is this information? Cnn/Money.com's top ten stock picks out-earned the Standard & Poors by 13% in 2006 and 8% this year.

A rescue plan that is worth the price

Published: December 7 2007 19:33 Last updated: December 7 2007 19:33

The US government’s attempt to stem the growing housing crisis by getting lenders to freeze loans to troubled subprime borrowers is a far from perfect scheme. It involves arbitrary judgments, rewards for reckless behaviour and variations of contracts. But it is justified by the extreme circumstances.

The package negotiated with lenders by Hank Paulson, the US Treasury secretary, is aimed at preventing a further wave of foreclosures over the next two to three years as floating-rate mortgages taken out by subprime borrowers reset to higher rates. Some 1.8m Americans who bought houses they could not afford fall into this category.

Fannie Mae Plan to Raise Housing Finance Costs Highlights Need for Congressional...

Fannie Mae Plan to Raise Housing Finance Costs Highlights Need forCongressional ActionWASHINGTON, Dec. 7 /PRNewswire-USNewswire/ -- In response to Fannie Mae'sannounced plan to impose an "Adverse Market Delivery Charge" for all mortgagespurchased after March 1, 2008, National Association of Home Builders (NAHB)Executive Vice President and CEO Jerry Howard today issued the followingstatement:"Fannie Mae's new fee is a broad tax on homeownership that ultimately will bepassed along to consumers. It's certain to be more difficult for the housingmarket to regain its footing when steps are being taken to drive up mortgagecosts. This is the exact opposite of what needs to be done and underscores theimportance of Congress quickly enacting legislation that would strengthenregulatory oversight of government-sponsored enterprises (GSEs) Fannie Mae andFreddie Mac while also preserving their vital housing mission.

Legal Web Sites Shake Up Condo Market

Lawyer-run sites attract clients as they educate real estate buyers

By Paola Iuspa-AbbottDaily Business ReviewDecember 10, 2007

South Florida lawyers are increasingly tapping into the cyber world to capture a share of the growing business of helping buyers recover deposits from pre-construction and condo conversion projects.

Web sites such as recovermydeposit.com and depositrecoveryservices.com are popping up across the Web. The lawyer-run sites inform buyers of their rights under Florida law and possible remedies and offer them help. But to be able to offer this service, lawyers said, they have had to relearn specific state and federal laws that were little used in the past.

Hallandale Beach condo buyers sue, say that were misled about marina

Group demands deposits now that slips unavailable
By Robin Benedick South Florida Sun-Sentinel

December 7, 2007

HALLANDALE BEACH - Despite its name, the Ocean Marine Yacht Club is no mariner's dream.In fact, boats may not be welcome at the new 28-story condo tower on the Intracoastal Waterway because a planned 48-slip private marina is not going to be built.Without a dock for their boats, some buyers who are supposed to close on their condos starting this month are demanding their deposits back. No marina, no sale, they say.

Fannie Cuts Dividend, Offers $7 Billion in Preferreds (Update3)

Dec. 4 (Bloomberg) -- Fannie Mae, the largest source of money for U.S. home loans, cut its dividend 30 percent and said it will sell $7 billion of preferred stock to bolster capital as the housing crisis deepens.

The quarterly payout will drop to 35 cents a share from 50 cents starting in the first quarter, Washington-based Fannie Mae said in a statement today. The government-chartered company plans to issue the preferred stock later this month.

The worst housing slump in at least two decades will hurt fourth-quarter earnings ``in a material way'' and continue to weigh on 2008 results, Fannie Mae said. The decision to shore up capital follows a similar move last week by McLean, Virginia-based Freddie Mac. Fannie Mae said last month it had a capital cushion of $2.3 billion after reporting a quarterly loss of $1.4 billion.

UPDATE 1-Countrywide plummets as mortgage jitters grow

Tue Nov 20, 2007 1:57pm ET

(Updates stock price, adds background, details)

NEW YORK, Nov 20 (Reuters) - Shares of Countrywide Financial Corp (CFC.N: Quote, Profile , Research) plummeted as much as 22 percent on Tuesday to their lowest level in more than seven years following an analyst downgrade and amid growing investor jitters over credit losses stemming from the U.S. housing slump.

The shares were down $1.43, or 13.5 percent, to $9.14 in afternoon trading after falling as low as $8.21 earlier in the session -- less than half the $18 conversion price for the $2 billion of Countrywide preferred stock that Bank of America Corp (BAC.N: Quote, Profile , Research) bought in August.

Credit default swaps on Countrywide Home Loans Inc rose about 160 basis points to 900 basis points, or $900,000 per year for five years to insure $10 million of debt, an analyst said.

UPDATE 1-Countrywide plummets as mortgage jitters grow

Tue Nov 20, 2007 1:57pm ET

(Updates stock price, adds background, details)

NEW YORK, Nov 20 (Reuters) - Shares of Countrywide Financial Corp (CFC.N: Quote, Profile , Research) plummeted as much as 22 percent on Tuesday to their lowest level in more than seven years following an analyst downgrade and amid growing investor jitters over credit losses stemming from the U.S. housing slump.

The shares were down $1.43, or 13.5 percent, to $9.14 in afternoon trading after falling as low as $8.21 earlier in the session -- less than half the $18 conversion price for the $2 billion of Countrywide preferred stock that Bank of America Corp (BAC.N: Quote, Profile , Research) bought in August.

Credit default swaps on Countrywide Home Loans Inc rose about 160 basis points to 900 basis points, or $900,000 per year for five years to insure $10 million of debt, an analyst said.

Freddie Posts Loss, May Cut Dividend; Shares Plunge (Update8)

Nov. 20 (Bloomberg) -- Freddie Mac fell 29 percent, the biggest decline since it went public in 1988, as the second- largest U.S. mortgage-finance company posted a record loss, warning of a possible dividend cut and the need to raise capital.

The worst housing slump in 16 years caused ``significant deterioration'' in the third quarter that will continue through year-end, McLean, Virginia-based Freddie Mac said in a statement. The net loss was $2.02 billion, or $3.29 a share, three times what some analysts estimated.

``It's as bad as it possibly could be,'' said Howard Shapiro, an analyst at Fox-Pitt Kelton in New York. Shapiro recommended investors sell Freddie Mac shares, reversing his opinion to hold more of the stock than is contained in benchmark indexes.

UBS Faces `Substantial' CDO Losses, CreditSights Says (Update2)

By Cecile Gutscher

Nov. 19 (Bloomberg) -- UBS AG, Europe's largest bank by assets, may have lost as much as $9 billion on collateralized debt obligations, according to CreditSights Inc.

The losses would be almost half the Zurich-based bank's $20 billion of top-rated CDOs, securities based on underlying assets. CreditSights, the independent research firm in New York, based its analysis on the bank marking down its holdings to prices indicated by benchmark indexes rather than methods used by UBS.

``While we do not expect it to make the additional $9 billion of writedowns estimated by our model, we do not see how it can avoid further substantial losses,'' CreditSights analysts led by Simon Adamson in London said in the report. ``UBS is by far the most vulnerable bank in absolute terms'' out of the nine European banks surveyed by CreditSights, the report said.

Treasuries Rise to the Highest in Two Years on Credit Concern

By Sandra Hernandez and Deborah Finestone

Nov. 17 (Bloomberg) -- Treasuries rose to the highest since 2005 as credit-market losses related to delinquent subprime mortgages drove investors to the safety of government debt.
Two-year notes gained for a fifth straight week, extending their rally to the longest in eight months on speculation the Federal Reserve will cut borrowing costs a third time this year. The Fed will release minutes of its October meeting next week, and the Commerce Department is expected to report that housing starts fell to the lowest since 1993.

``The market's pricing in an easing by the Fed,'' said Anne Briglia, senior fixed-income strategist in New York at UBS Wealth Management Research. ``Price action is being driven by institutional investors who are acutely aware of the broader financial stresses here.''

The two-year note's yield fell 8 basis points, or 0.08 percentage point, to 3.34 percent this week, according to bond broker Cantor Fitzgerald LP. It reached 3.28 percent yesterday, the lowest since February 2005. The price of the 3 5/8 percent security due in October 2009 rose 1/8, or $1.25 per $1,000 face amount, to 100 17/32. Yields move inversely to bond prices.

Goldman Sees Subprime Cutting $2 Trillion in Lending (Update5)

By Kabir Chibber
Nov. 16 (Bloomberg) -- The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a ``substantial recession'' in the U.S., according to Goldman Sachs Group Inc.

Losses related to record home foreclosures using a ``back- of-the-envelope'' calculation may be as high as $400 billion for financial companies, Jan Hatzius, chief U.S. economist at Goldman in New York wrote in a report dated yesterday. The effects may be amplified tenfold as companies that borrowed to finance their investments scale back lending, the report said.

``The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized,'' Hatzius wrote. ``It is easy to see how such a shock could produce a substantial recession'' or ``a long period of very sluggish growth,'' he wrote.

Freddie Mac Joins Fannie Mae in Raising Mortgage Fees

By Jody Shenn

Nov. 15 (Bloomberg) -- Freddie Mac, the second-largest source of money for U.S. home loans, joined Fannie Mae in introducing or raising fees on mortgages the company buys from lenders because of the increased risks in slumping housing and mortgage markets.

Freddie Mac is primarily setting new fees for mortgages made to borrowers with credit scores below 680, whose loans exceed 70 percent of their property's value. The new charges range from 0.75 percent to 2 percent depending on credit scores, according to a bulletin by the company. The changes take effect March 1.

The higher fees by Freddie Mac and Fannie Mae follow an 81 percent drop over the past year in the market for new mortgage securities without guarantees from the government-sponsored enterprises. The tightening of lending standards that's resulted has worsened defaults by borrowers unable to refinance rising adjustable-rate loans and has limited home sales and prices.

U.S. Stocks Decline; Wells Fargo, Fannie Mae, J.C. Penney Drop

By Michael Patterson

Nov. 15 (Bloomberg) -- U.S. stocks fell for a second day after Wells Fargo & Co. said the housing market is the worst since the Great Depression and investors speculated Fannie Mae masked credit-market losses in its latest earnings report.

Major central banks are now on the way to cut policy rates

Nouriel Roubini Dec 05, 2007

What a difference a day makes. Yesterday this author called for all major central banks to cut policy rates to address the severe liquidity and credit crunch that is infecting the G7 and Eurozone financial markets and prevent a global hard landing. 24 hours later we have now:

- the Fed clearly on the way to cut rates next week for the third time in a row, the only issue being now whether it is going to be a 25bps or 50bps cut.

- The Bank of Canada cutting its policy rate by 25bps yesterday given the financial markets turmoil and the excessive strength of the loonie.

- The Bank of England deciding by tomorrow whether to cut its policy rate with the authoritative Financial Times editorial column today recommending a rate cut in the UK and being sympathetic to rate cuts by other central banks as long as growth is under threat. Hopefully Mervyn King and his fellow policy makers at the BoE will follow the advice of the FT and others who are now calling for a rate cut.

In a Credit Crisis, Large Mortgages Grow Costly

By FLOYD NORRIS and ERIC DASH
Published: August 12, 2007

When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.

“I have been in the business 20 years and I have never seen” such a big swing in interest rates, said the broker, Bob Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.
“There is a lot of fear in the markets,” he added. “When there is fear, people have a tendency to overreact.”

The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.

HSBC seen facing another hit from U.S. mortgages

LONDON (Reuters) - Europe's biggest bank HSBC Holdings (HSBA.L: Quote, Profile , Research) is this week expected to unveil a further big hit from its exposure to the U.S. mortgage crisis.
HSBC Finance, the unit formerly called Household, will unveil third-quarter results on Wednesday.

The Sunday Telegraph newspaper said HSBC will reveal a new $1 billion hit in the results. But the figure could be higher than that as losses from the run-off of the U.S. mortgage book was about $2 billion in the second quarter and the market has deteriorated since then, analysts have said.

HSBC declined to comment on Sunday.

Paulson: Pact near for freeze on mortgages

Treasury chief says government is working with lenders to avoid defaults
updated 2 hours ago

WASHINGTON - Treasury Secretary Henry Paulson said Monday he is confident there will soon be an agreement to help thousands of homeowners avoid mortgage defaults by temporarily freezing their interest rates.

Paulson told a national housing conference that this effort involved a “pragmatic response” to current realities as the economy goes through the worst housing slump in more than two decades. The number of homeowners struggling to meet higher payments because their initial introductory rates are resetting is currently soaring.

Paulson and other top Treasury officials have been holding talks with major players in the mortgage industry over the past several weeks to hammer out an agreement that would freeze the lower introductory rates to keep them from resetting to higher levels for a period of years.

WEEKEND EDITION: How To Spot Signs The Housing Crisis Is Nearing Bottom

December 02, 2007: 08:42 PM EST

BOSTON (Dow Jones) -- This week's stock market rally lifted long-suffering financial shares and home-builder stocks and was seen as a heartening sign for the battered housing market, although economists say it's only the first, uneasy step toward restoring confidence and an eventual turnaround.

A recovery may still be years away, and several other key factors need to come together before housing prices can stabilize and begin to mend. Interviews with housing and financial analysts revealed several signs that savvy investors might want to look for that would set the stage for a housing recovery.

First, financials stocks such as banks and lenders, as well as other housing sectors such as home builders, need to flatten and rebound.

"The sentiment is so negative," said Mark Vitner, senior economist at Wachovia Corp. (WB) . "The housing industry isn't going to get better until financial services improve, and there's just too many homes out there in inventory."

The economist said if construction pulls back the next two years as expected, housing supply and demand should get back in balance by the tail end of 2009, considering the glut of unsold homes currently on the market.

Another requirement is that spreads on bond yields need to come down, giving investors a better sense of safety, while the commercial real estate market has to avoid major setbacks. A plan to freeze rates on subprime adjustable-rate mortgages, if it moves ahead, would help quell fears of a surge in home foreclosures, experts said.

The projections for the credit and mortgage markets must brighten, and consumer confidence has to revive. Homebuyers need to come out this spring, but all bets are off if the economy slides into a recession. Finally, more rate cuts by the Federal Reserve in coming months would also improve the outlook, as would consolidation in the home-builder sector or foreign investors putting more money into banking and housing stocks.