Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.
Quote of the Day- "From the House's Mouth"
"One would have to logically assume that (flippers) are no longer in the market." - Jay Brinkmann, vice president of research and economics with the Mortgage Bankers Association, on foreclosures and forecasts of a nationwide 1% home price decline this year. (Beacon News, Apr. 28th)
Real Estate Sales and House Prices
- Buyer Resistance Drives Prices Down (Housing Bubble Blog, Apr. 30th): "New York: “In Westchester, the median price for houses was $635,000, down 2.3% from a year earlier and the second quarter in a row of y/o/y declines. Real estate agents said buyer resistance to high prices in the county had helped drive them down; last quarter’s median was well below Westchester’s record of $716,126 set in Q3'06… Westchester and Putnam are seeing growing inventories… but as a smaller market, Putnam may be feeling the effect to a greater degree. The number of single family houses for sale at the end of last quarter, 942, was up 48% over three years earlier.”
- F-M Housing Market Steady Amid Turmoil (IN-Forum, Apr. 30th) Minnesota: "Fargo-Moorhead Area Association of Realtors: Locally, sales are on the upswing... From Jan. 1 to Wednesday, sales of existing single-family homes, condos and twinhomes in Cass and Clay counties were up 2.5% compared with the same period last year, from 430 to 441… Sales jumped 7.1% during that same period, from $60 million to $64 million… The average sale price of a single-family home in Cass and Clay counties during that period was $151,200… New home construction also continued at a strong clip in 2006, with 1,159 permits issued… in Fargo, Moorhead, West Fargo and Dilworth."
- Beige Book: Lackluster Housing Market (Realty Times, Apr. 30th): " Beige Book Regional Analysis: Northern New Jersey: High-end homes (over $1.5 million) were languishing on the market, but more moderately-priced homes revealed some strength. Manhattan… apartment prices unchanged from a year ago. Philadelphia, PA: Demand for residential mortgages was nearly flat… consumers were shifting from variable-rate home-equity lines to fixed-rate home-equity loans… Cleveland, OH: Prices held, thanks to steady sales and new homes that were priced relatively higher than existing properties. Richmond,VA: House prices declined by 2-4%... condo prices were off 7-9%, compared to a year ago… Asheville, and Greenville, NC… Low- to middle-price houses were moving briskly... Atlanta, Georgia: Residential home sales and construction continued to decline in most areas, especially Florida with both new and existing home sales below year-ago levels in March…Chicago, IL: Residential construction continued to decline in most areas… The rise in mortgage applications was attributed to the growth in refinancing… St. Louis, MO: Home sales were unchanged in St. Louis, declined 6% in Memphis… Louisville home sales rose 4% and Little Rock's were up 2%, y/o/y in February. Little Rock housing permits down 25%... Minneapolis, MN: Housing permits were down a whopping 54% in March, compared to March 2006… Kansas City, AK: Weak residential construction business… low- to mid-level priced homes sold relatively well, while more expensive, high-end listings languished. Prices unchanged [y/o/y]… Dallas, Texas: Dallas, Fort Worth and Austin are facing a glut of new homes… depressing prices and forcing builders to lay it on thick with incentives. San Francisco, California: Developers were not unloading undeveloped land, suggesting they expect market snores to be limited… Strong stabilization in the pace of home sales and price appreciation."
- A City Undeterred by Cooling Market (LA Times, Apr. 28th): " DataQuick Information Systems: In Ontario, as in the rest of Southern California, the real estate market has been taking a beating. In March, sales of existing homes in the city were down 59% from the same month last year. The median sale price fell to $408,000 from $425,000… The value of undeveloped land, much of it still home to cows, has fallen by as much as $100,000 an acre in this part of San Bernardino County in the last six months, land brokers estimate, settling way below the peak of $550,000 in 2005."
- House Prices Slide as Property Glut Grows (Yahoo! Finance, Apr. 28th): "The Wall Street Journal's latest quarterly survey of residential real estate in major metropolitan areas [covering] 28 major markets… Florida home listings: Orlando and Tampa were both up 62%, Miami (58%) and Jacksonville (49%). Thomas Lawler, housing economist: In Florida's St. Lucie County, inventory is [enough for] 34 months at March's sales rate… 29 months in Palm Beach County and 25 months in both Miami-Dade and Broward counties… Other cities with big increases in listings… include Phoenix (36%), Chicago (44%), Los Angeles (54%) and Las Vegas (30%). Little changed but still plentiful: San Diego and Washington, D.C. areas."
- Census Bureau Reports on Residential Vacancies and Homeownership (Census Bureau Press Release, Apr. 27th): "Department of Commerce’s Census Bureau: National vacancy rates in Q1'07 were 10.1 (+ 0.4)% for rental housing and 2.8 (+ 0.1)% for homeowner housing… Rental vacancy rate was higher than Q1'06 rate (9.5%), but not statistically different from the rate in Q4'06 (9.8%). For homeowner vacancies, the current rate was higher than a year ago (2.1%), but not statistically different from the Q4'06 rate (2.7%). The homeownership rate at 68.4 (+ 0.5%) for Q1'07 was not statistically different from Q1'06's rate (68.5%), but was lower than the Q4'06 rate (68.9%)… There were an estimated 127.3 million housing units in the United States in Q1'07. Approximately 109.7 million housing units were occupied: 75.0 million by owners and 34.7 million by renters."
Real Estate Investing and Sentiment
- Hottest 10 Buyers Real Estate Markets Announced (PR Web, Apr. 30th): "Housing Predictor, which forecasts housing market futures in more than 250 local housing markets in all 50 U.S. states… In Albuquerque, New Mexico, housing is projected to appreciate 9.1% by the year's end… Salt Lake City, Utah placed third… experiencing the beginning of a slow down in its housing markets after nearly a 20% increase in appreciation in 2006… Salt Lake [should appreciate through] the end of the year… New Orleans, Louisiana placed fourth, followed by Austin, Texas, Houston and Biloxi, Mississippi, which is experiencing unprecedented growth with a booming local economy in the wake of Hurricane Katrina."
- Flippers Flop as Hot Vegas Market Fizzles (Beacon News, Apr. 28th): "When the market slowed, many buyers forfeited their deposits, or let their properties get repossessed by the banks. As a result, the inventory of unoccupied condo units downtown since early 2005 has soared fivefold… New home builders are slowing down the pace of new projects in Las Vegas and are giving agents commissions of up to 12% and up to $100,000 in upgrades such as pools, granite countertops and appliances."
Mortgates and Real Estate Lending
- Resource America: Subprime Concerns Unfounded, Cheap Stock (Whitney Tilson in Seeking Alpha, Apr. 29th): "Resource America (NASDAQ:REXI) has been weak due to concerns that REXI’s fund management business will be negatively impacted by the implosion of the subprime mortgage market. While certain REXI- sponsored structured funds have exposure to subprime mortgages, the credit risk is borne by the investors in these funds, not by REXI. After meeting with management recently, we continue to believe that any impact will likely be minimal, REXI’s primary value drivers remain intact and the stock is cheap."
- Have Healthier U.S. Mortgage Lenders Hit Bottom? (Reuters, Apr. 27th): "Countrywide (CFC)…with 18% of the U.S. mortgage market, and IndyMac Bancorp (NDE) a Pasadena, California lender with 3.9%, said on Thursday quarterly profits fell a respective 37% and 34%. Countrywide also cut its 2007 profit forecast. Yet industry observers say investor demand on the secondary market to buy loans is rising, following a long decline that had accelerated in March. That suggests that at least for responsible lenders, the operating environment might be at or past a bottom."
- Selling Your Credit Score (Barry Ritholtz in Seeking Alpha, Apr. 26th): "Internet companies claim to raise FICO credit scores by 50 to 250 points by adding low-scoring borrowers as "authorized users" on the credit card accounts of people with FICO scores well in excess of 700. The positive payment information… then flows into the files of the persons with subpar credit. This takes advantage of a loophole in the Federal credit law, [allowing unlimited] "authorized users permitted on any single credit card account." The potential for fraud is there -- especially with the way loan originators offload mortgages… The loans can get easily sold and not represented to the originator."
- Heightened Global Risk Appetites Have Peaked and Subprime Woes Also Now Contained to Alt-A Mortgage Bonds (Minyanville, Apr. 26th): "The amount borrowers owe on their home-equity lines of credit [fell] in the past six months to $561 billion… the first such decline since 1999 according to WSJ writer Ruth Simon… Home-equity borrowing increase[d] 9% y/o/y through March. [But] the average annual growth rate of home-equity loans over the past five years is a whopping 21%... S&P said it may lower ratings on bonds from 11 different Alt-A mortgages… More than doubl[ing] the number of its warnings on bonds of Alt A mortgages… Issuers of the ALT-A bonds involved include Bear Stearns, Bank of America and Countrywide Financial."
Subprime Fallout and Foreclosure Impact
- In Acqua Vista, Some Owners Under Water (Voice of San Diego, Apr. 30th): "Hovnanian (NYSE:HOV) [bought] Acqua Vista in 2004… and changed the project to condos… Nearly 6,000 condos and apartments-turned-condos [added] between 2001-2006 upped downtown's residential quotient by almost half… RealtyTrac: Now 14 of Acqua Vista's 383 units are in foreclosure. Thirty-eight units are [listed], some at a loss… San Diego's downtown real estate market [is] a sort of microcosm of the housing boom, where builders flooded the market with supply, buyers [bought] at any price, and now… many investors are… stuck in their mortgages… [What happens] downtown in the coming months could serve as a bellwether for overstocked markets nationwide."
- PMI Group Sees US Mortgage Insurance Unit Losses (Reuters, Apr. 30th): "Mortgage Insurer The PMI Group (PMI) said on Monday it expects total incurred losses for its U.S. mortgage insurance operations to be between $300 million and $360 million in 2007. The company forecast the 2007 expense ratio for its U.S. mortgage insurance operations to be between 20-23%. "
- Mozilo Clause Drawing Blood (Los Angeles Business Journal, Apr. 30th): "SEC rule 10b5-1 enables company insiders to sell company stock… in the future, so long as the sales are in line with some schedule – perhaps price or time triggers.... If executives come across material non-public information as they sell stock, the plan [is] a defense against insider-trading charges. SEC: Countrywide Financial CEO Angelo Mozilo has sold more than $100 million worth of shares since August and $50m in the last three months... In the last week and a half alone, Mozilo sold nearly 200,000 shares for about $9m. All those sales were under… [Mozilo's] sale plans… Countrywide[is] a major lender in the subprime sector."
- Opinions Differ on Effectiveness of FICO Score (Minnesota Star Tribune, Apr. 29th): "Fair Isaac's (FIC) FICO score measures a consumer's ability to pay back a loan… In December, HSBC Finance [said] FICO scores were "less effective or ineffective" in predicting behavior during a period of aggressive lending and low interest rates… Any perception that FICO is faulty could have serious consequences for Fair Isaac. FICO is both the company's best-known product and the most popular credit-scoring system in the U.S… generating $177.1 million in sales last year, about 21% of Fair Isaac's total revenue... Last week Fair Isaac said Q2 revenue fell 3.4% to $201m… FICO also faces a challenge from VantageScore's new credit-scoring system."
- Don't Give Up on Housing Market (North County Times, Apr. 29th): "Earlier this month we reported that foreclosure filings on properties in San Diego County had climbed by 49% from February to March to 2,551… One in every 408 households… Of those 2,551 foreclosure filings, 1,998 were in default and 415 had been [just] notified... That leaves only 138 properties that were actually foreclosed on that month… less than 0.025% of San Diego County's 600,000 single-family homes, condos and duplexes… At $640,000, the median price of a single-family home in North County is up 2.4% from March 2006. That's only $10K off the all-time high set in June 2006."
- NYC Sets Up Hotline for Some At-Risk Homeowners (1010 WINS News, Apr. 27th): "With mortgage foreclosures on the rise, New York City's finance chief has set up a helpline for people at risk of losing their homes. Comptroller William Thompson says… research shows there could be more than 15,000 foreclosure filings in New York City this year… twice as many as two years ago."
- Mortgage Lenders Wins OK for Auction (Forbes, Apr. 27th): "Subprime lender Mortgage Lenders Network USA, which is shutting down its loan servicing operations, won bankruptcy court approval to auction off a "turn-key" loan-servicing platform that can service 187,500 mortgages… Mortgage Lenders, which serviced $14 billion in loans when it sought Chapter 11 protection in February, said a sale of the loan-servicing platform as a whole would bring in more cash than a "piecemeal" sale of the assets, including real estate leases, office equipment and proprietary software. The platform serviced 119,545 loans as of December 2006."
- FBR Group Posts 1Q Loss on Subprime (Forbes, Apr. 26th): "Friedman, Billings, Ramsey Group (NYSE:FBR), an investment bank that is active in mortgage debt [and] technically a REIT, reported a Q1 loss of $185.9 million, or $1.08/share, compared with a profit of $26.6 million, or $0.16/share, in Q1'06. FBR Group… lost $124.2m in its subprime mortgage lending unit... FBR Group had to adjust the value of its loan portfolio because a "series of distressed sales and bankruptcies" has led to credit deterioration and devalued mortgage debt. FBR Group said it will take steps during Q2 to shield itself from the risk of subprime mortgages."
- BankAtlantic's 1Q profits Drop Amid Rise in Troubled Real Estate Loans (Sun Sentinel, Apr. 26th): "BankAtlantic Bancorp… reported a sharp rise in troubled real estate loans… Q1 earnings fell to $0.9/share or $5.7 million compared to $0.10/share or $6.5m in Q1. The company recorded a loss from continuing operations of $2.2m compared to income from continuing operations of $8m for Q1'06. BankAtlantic Bancorp's CEO Alan B. Levan: [Alongside] 79,000 new customer accounts in Q1… the bank also recorded a $19.6m increase in troubled loans for residential real estate development. The banking company's allowance for loan losses increased to $50.4m, compared to $41.9m the year before… BAB xpects further deterioration in its loan portfolio this year."
- Home Foreclosure Filings in N.C. Increase 25% (Journal Now, Apr. 26th): "RealtyTrac: Home-foreclosure filings in North Carolina increased 25% during Q1 compared with a year ago… There were 9,563 filings in North Carolina. The Winston-Salem metropolitan statistical area had 540 filings, or 6% of those in North Carolina. There were 499 in Forsyth County, 33 in Stokes County, eight in Yadkin County, and none in Davie County. The Greensboro-High Point MSA had 746 filings, or 8% of those in the state. The Charlotte-Gastonia-Concord MSA had 3,686, or 39 percent, while the Raleigh-Cary MSA had 1,392, or 15%."
- Foreclosures Hurt Community as Well as Owners (Courier Post Online, Apr. 26th): "Foreclosures don't just hurt the credit and spirit of the defaulted borrowers. They can impact an entire community. Ken Wade, CEO of NeighborWorks America testified before the House Financial Services Committee: "The value of surrounding homes goes down, and other homeowners will have difficulty selling or refinancing their homes, leading to further disinvestment in communities…" A study by the Woodstock Institute in Chicago on foreclosed properties in that city found that each foreclosure of a conventional mortgage within a city block of a single-family home resulted in a decline in property value between 0.9-1.1%."
Global Impact and Alternatives To The Housing Slump
- From the Sublime to the Sub-Prime (Financial News- US, Apr. 30th): "After the US sub-prime mortgage crisis and an associated housebuilding slump we appear to have a Spanish property sector panic… Financial innovation… in Europe, [like the] vast growth in offshore property funds, allowed institutional investors to avoid local property taxes and obtain international diversification…. Secondary markets in property funds are often inadequate. In bad conditions valuations become irrelevant and markets freeze... Last week share prices in the Spanish RE sector collapsed… defaults on debt will surely follow. Spanish house price inflation slowed to 8%... Over the past 10 years output has exploded from 200,000 to 750,000 dwellings a year."
Macro Impact, And Will The Housing Slump Cause A Recession?
- Bernanke Is Wrong on Inflation, Goldman, Merrill Say (Bloomberg, Apr. 30th): "Chief economists at Goldman Sachs, Merrill Lynch and UBS say the worst housing slump in a decade may drive the U.S. economy into a recession and stifle consumer prices. [They] say the Fed will cut its target for overnight loans between banks at least three times this year... Central bank governors found no evidence that the housing market had affected the broader economy [at] their March policy meeting... Goldman, Merrill and UBS are among seven of the 21 so- called primary dealers, who trade directly with the Fed, forecasting that the central bank will cut its target rate from 5.25% to 4%."
- Shaw Creates Commercial Hospitality Brand (Interior Design, Apr. 30th): "Carpet manufacturer Shaw announced last week the creation of Shaw Hospitality Group, a union of Shaw Hospitality and Design Origins. Serving as a comprehensive commercial hospitality brand, the new group will allow the company to market its hospitality brands collectively. Shaw Hospitality produces textured carpet for guest rooms and Design Origins manufacturers patterned carpet for public spaces… Shaw Industries Group is a subsidiary of Berkshire Hathaway."
- Hidden Trends and the Sectors They Drive - Barron's Interviews Charles Hess (Barron's in Seeking Alpha, Apr. 29th): "Barron's interviews Charles Hess of Inferential Focus, who looks to detect subtle shifts in trend across investment themes: "The housing market has yet to see forced sales, which could happen if cost-cutting leads to increased corporate layoffs. Were this to occur, forcing the Fed to lower rates, the economy would then have to deal with foreigners pulling funds out of the U.S."
- Economy at its Slowest in Four Years (NY Times, Apr. 28th): "Economic growth slowed to its weakest pace in four years during Q1'07, underscoring how the persistent slump in the housing market continued to serve as a drag on the American economy… As throughout much of last year, the housing slump was the biggest anchor on the economy. Home construction recorded its sixth consecutive quarterly decline, falling 17% at an annual rate and subtracting almost a full percentage point from G.D.P… Despite the worrisome state of housing, Americans continued to borrow and buy. In the first quarter consumer spending grew 3.8%, a fairly vigorous pace."
- Housing Slowdown Impacts Many Sectors (Barry Ritholtz in Seeking Alpha, Apr. 27th): "Forbes notes that it's not just the lower end sub-prime credit/entry homes that are being affected: there is something of a fire sale in the luxury sector as well. "Even wealthier households use ARM products to finance the purchase of luxury homes in expensive areas. The rate resets combined with declining house values are creating a problem even in this sector of the housing market."… When demand drops due to credit or financing issues, a mere price drop will have little effect. This is why the decrease in Housing activity -- Resales, HELOCs, Refis -- is potentially so important."
- Ingersoll-Rand's Numbers on Weak Housing Market, Hit Estimates (Seeking Alpha, Apr. 27th): "Ingersoll-Rand said Q1 earnings dropped 14% to $217 million ($0.70/share) on weak U.S. markets and higher commodity costs. Revenue was up 6% to $2.67 billion. Earnings and revenue were both in line with Thomson Financial estimates. The company gave Q2 guidance of $0.93-$0.98/share and full-year guidance of 'record earnings' of $3.45-3.55. The company said weak U.S. home construction depressed demand for its Bobcat machines; revenue from its compact vehicle segment were down slightly, and profits slid 18%. The company said strong international growth (18%) helped offset weak domestic revenue, which was down slightly."
- Collapse of U.S. Housing Bubble Will Balance Income & Consumption (Daily Reckoning- Australia, Apr.27th): "For three decades after WWII, the average American worker’s income grew by 2-3% a year after inflation, and stateside consumer spending grew apace. But after the mid-1970s, these income gains slowed… while spending growth continued at the same pace… Baby Boomers… settled for 2%-3% average annual spending growth financed by artificial means… The average American is now spending at a level not sustainable by income, but only by asset values, specifically in real estate. And when those asset values collapse, and they’re doing so as we speak, so will U.S. consumer spending and overall economic growth."
- Ford Cut Loss in 1st Quarter; U.S. Sales Fell (NY Times, Apr. 27th): "The company said about 2,000 hourly workers had changed their minds about accepting incentives to retire early or give up their jobs… Jerry Sullivan, president of Local 600 of the United Automobile Workers union… said workers changed their minds for a variety of reasons… [Some] who hoped to leave Michigan found that they could not sell their houses because of the drop in real estate demand, could not afford homes in new cities."
Homebuilders And Housing Stocks
- S&P/Case-Shiller: Home Price Declines Show No Signs of Abating (Index Universe in Seeking Alpha, Apr. 27th): "If you've bought a house in one of those bubbly urban markets and you're suddenly fearful of losing a big chunk of your nest egg… it is possible to hedge your bets by trading housing market futures and options on the Chicago Mercantile Exchange (NASDAQ:CME). The CME has offered trading in U.S home prices since April 2006, and the contracts are based on the aforementioned S&P/Case-Shiller Home Price Index. Investors in the CME futures have been pessimistic recently. The January 2008 housing futures contract projects prices in 10 major U.S. cities to be down 5.1% from early 2007."
- Homebuilder Loses $94M in Quarter (Denver Business Journal, Apr. 27th): "M.D.C. Holdings (NYSE:MDC) lost $94.4 million in Q1'07, hurt by weakened demand for new homes and tightened subprime lending standards… The company's loss, which amounted to $2.07/share, is in contrast to profit of $95.4m, or $2.08/share, in Q1' 06… The Q1 loss included pre-tax charges of $141.4m for asset impairments and $4m for write-offs of deposits and pre-acquisition costs associated with land option contracts [writeoffs]... MDC's loss was greater than Wall Street had expected. Analysts on average had forecast a Q1 loss of $0.31/share, according to Yahoo Finance. MDC shares fell Friday."
- David Fry's Market Outlook for Friday (Seeking Alpha, Apr.27th): "Beazer Homes (NYSE:BZH) reported a loss and withdrew guidance... Lawsuits against the company's mortgage origination business continue apace… JPM analyst stated that BZH's order drop "was much better than his estimate"... The stock rose [gulp] nearly 5%. Pulte Homes (NYSE:PHM) also reported poor earnings and cancelled providing any guidance... PHM was up 3.3%. Ryland Group (NYSE:RYL) said it would miss estimates… RYL was up over 4%. Meritage Homes (NYSE:MTH) CEO Steven Hilton stated: "Margins will continue to be under pressure… in 2007, [we] expect some modest improvement in demand during 2008..." The stock was up [double gulp] 13.5%! The Homebuilder ETF (NYSEARCA:XHB) powered ahead on this great news day by nearly by 3.31%."
- Beazer Slumps in Second Quarter, Retains Legal Counsel (Nashville Business Journal, Apr. 27th): "Atlanta-based Beazer Homes USA (BZH), posted a net loss of $43.1 million on $826.3m in revenue, compared with net income of $104.4m on $1.3 billion in revenue in Q2'07. Loss per share was $1.12, compared with earnings of $2.35/share in the Q2'06… Beazer's filing for Q2'07 include $86.9 million in charges related to inventory impairments, impairments from joint ventures and abandonment of land option contracts."
Commercial Real Estate and REITs
- Billionaire Speaks to Students About Prime Investments (Columbia Tribune, Apr. 28th): "Real Estate billionaire Sam Zell: Real estate values have swelled from the greatest period of "monetization" ever that began when REITs [were created]… "We’ve achieved the goal of creating liquid real estate… Investment cash from publicly traded REIT’s, pension plans and other sources… have opened the flood gates of capital for real estate. But he cautioned that "there really are limits" to rising real estate values and said that he keeps an eye on unrealistic prices by using replacement cost as a benchmark. Zell… shunned Europe for investments and instead has focused on emerging countries such as Mexico, Brazil, Egypt and China."
- CSFB Damns LoopNet With Faint Praise (Jason Jones in Seeking Alpha, Apr. 27th): "CSFB says LoopNet (NASDAQ:LOOP) is well positioned to benefit from the shift of market activity in the commercial real estate space online. This shift should continue to drive LOOP shares higher, inline with the broader internet sector. With shares trading at 17.4x '07 EV/EBITDA, we are reiterating our neutral rating.' JJ: An MLS for commercial real estate seems like an interesting concept but valuation is somewhat high and the real estate market is not that attractive right now."
- Triple Net Healthcare Subsidiary Buys Naples Facility (CoStar, Apr. 27th): "Triple Net Properties' healthcare real estate arm, NNN Healthcare/Office REIT, acquired a 57,552-sf medical office building in the Commons Professional Park. The building, known as Commons V, is in Naples… The property is 97% leased to five tenants, including Anchor Health Center and Collier Surgery Center… Danny Prosky: VP Acquisitions: "NNN Healthcare/Office REIT believes Southwest Florida, with its growing population of affluent seniors, is an excellent target location for investment…" Commons V is NNN Healthcare/Office REIT's fourth purchase since its inception early this year."
- Developers Diversified Forms JV With Dividend Capital (CoStar Group, Apr. 27th): "Developers Diversified (NYSE:DDR) is under contract to flip three shopping centers to a new joint venture it's forming with Dividend Capital Total Realty Trust, for $161.5 million. Developers, [a] retail REIT, will generate about $50m in pre-tax gains from the deal... It will own a 10% stake in the joint venture and handle management and leasing of the properties. "We are able to retain day-to-day management of high quality, stabilized community center assets while expanding our fee management business, which will both preserve capital and enhance our returns on equity," said Scott Wolstein, CEO of Developers."
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