Today - Wednesday, April 1, 2015
- Based in Burlington, VT, Prime Reinsurance was created five years ago as part of the spinoff of Primerica, and Bloomberg is reporting the business as about to go on the block. No valuation estimate is available, but the operation had about $7B in assets as of Sept. 30.
- Among reinsurance names which may have interest could be Reinsurance Group of America (NYSE:RGA), suggests the story.
- A sale would be the latest in a line of dispositions from Citigroup (C -0.1%) boss Michael Corbat as he aims to simplify the bank's operations, and the recent pickup in reinsurance M&A might make this a good time to make a move.
- Previously: Endurance Specialty the winner in Montpelier Re bidding (March 31)
- Previously: RenaissanceRe buying Platinum Underwriters for $1.9B (Nov. 24, 2014)
- The new management agreement with Altisource Asset Management (AAMC +8%) should save Altisource Residential (RESI +6.5%) money immediately, says JPMorgan. Not quite yet sure how to figure the numbers, the teams sees total fees of $35M vs. $68M previously.
- The deal is a long one, however - 15 years with two 5-year extensions - and the analysts don't yet know what the termination fee might be. The agreement could potentially prove a costly one if RESI ultimately ends up owning a portfolio of single family rentals. The base management fee could move to 2% from 1.5%. Combine that with outsourced property management, and RESI would end up with a cost structure not as competitive or scalable as others single family rental REITs.
- Source: Brattle St. Capital
- Previously: Altisource Asset Management inks new management deal with Altisource Residential (March 31)
- Noting both Goldman Sachs (GS +0.9%) and Morgan Stanley (MS +0.6%) have underperformed the broader markets YTD, JMP's Devin Ryan expects gains going forward, but not enough to make him a buyer yet.
- For Q1, Ryan says Goldman looks set to report the better quarter relative to expectations, but both should have good enough results to support current valuations. However, at about 1.2x tangible book value, Ryan isn't seeing a lot of room for multiple expansion.
- "We continue to look for either more dislocated valuations or signs of earnings expansion above our current expectations, to potentially become more constructive on shares at the large cap investment banks."
- Source: Barron's
- Given Simon's (SPG +0.5%) $60B market cap, there aren't a lot of options to move the needle, writes Maureen Farrell, noting Simon lost a hostile bid for Taubman Centers more than a decade ago, and has made a number of failed attempts at buying General Growth Properties. Simon did land Mills Corp. in 2007 in a $7.9B deal.
- “I do think Simon recognized the importance of the Macerich transaction," says BMO's Paul Adornato. A shrewd capital allocator, Simon is likely to redevelop its own properties and renegotiate leases, says Adornato, rather than aggressively acquiring right now.
- As for Macerich (MAC -5%) - though another bid cannot be ruled out - its rejection of Simon is "unlikely to sit well with investors," says Stifel's Nathan Isbee,
- Previously: Macerich board rejects Simon offer (April 1)
10:45 AM| Comment!
- Started at Outperform are ACE Limited (ACE -0.6%), Arthur J. Gallagher (AJG -0.9%), Chubb (CB -0.6%), Marsh * McLennan (MMC -0.5%), and XL Group (XL -0.3%).
- Initiated at Neutral: Arch Capital (ACGL -0.3%), Progressive (PGR -0.9%), Travelers (TRV -1.1%), and Willis Group (WSH -0.8%).
- Started at Underperform: Aon Plc (AON -0.7%) and W.R. Berkley (WRB -0.7%).
9:47 AM| Comment!
- The company in March acquired four distribution warehouse buildings totaling nearly 1M square feet for $62M. For all Q1, STAG acquired five buildings totaling 1.5M square feet for $97M.
- As of today, the company has another 11 buildings under contract for $89M, and LOIs for six more buildings for $33M.
- The occupancy rate slipped to 94.2% from 94.9% at the end of Q4.
- The portfolio size stands at 253 buildings and 48.5M square feet.
- Press release
- In other news, the company through its ATM program issued 417K shares in Q1 for proceeds of $10.1M.
9:35 AM| Comment!
- "It's inevitable that there will be some restructurings of loans that come, but on the other side of that the net will be positive," says Bank of Montreal (NYSE:BMO) CEO William Downe, expecting a pickup in M&A activity thanks to troubles in the oil patch.
- There's going to be a reconfiguration," he tells shareholders at the bank's annual meeting. "We expect to play a part in advising companies in the sector and we also expect to be involved in the financing of ventures that result from this."
- He also notes the price declines in heating oil and gasoline are effectively putting another $20 per week in the pockets of North Americans - "that's net stimulative to the economy."
- Downe says the bank is focused on organic growth, and has no acquisition plans at the moment.
- DDR Corp. (NYSE:DDR) closed on the purchase of one shopping center for $49M, and the sale of 31 assets for $353M in Q1. DDR's share of the sales was $153M.
- CFO Luke Petherbridge: "The current pricing environment has allowed us to continue to accelerate our portfolio transformation," and the company expects sales to exceed purchases in H1. Given the aggressive demand environment, DDR is considering the sale of additional assets sooner than previously expected.
- Source: Press Release
8:09 AM| Comment!
- JPMorgan downgrades BB&T (NYSE:BBT) to Neutral from Overweight.
- The stock's performance has been lackluster of late, off 2.1% Y/Y vs. the KBW Regional Banking ETF's 0.5% gain. Over the last six months, BBT has put in a gain of 4.8%, but this compares to the KBW Index's 7.8% advance.
- BBT -0.5% premarket
7:41 AM| Comment!
- IWCO Direct - a provider of marketing solutions to direct markets for acquisition and loyalty programs - is an existing portfolio company of Prospect Capital (NASDAQ:PSEC). Prospect is committing another $74.7M of first-lien floating-rate debt to support the business' recapitalization.
- "After witnessing budget-beating performance by IWCO Direct, Prospect and Court Square developed a win-win structure that rewards shareholders for the results to date and for continued growth," says Prospect's Jason Wilson.
- Source: Press Release
- In connection with the filing of its annual report, the company does not anticipate being subject to any REIT-required minimum distributions, and does not intend to declare any dividends this year short of certain asset sales, capital raises, a refinancing, or sizable improvement in operations.
- "We remain extremely focused on pursuing Campus Crest's (NYSE:CCG) strategic repositioning, and strengthening our financial and liquidity position," says Richard Kahlbaugh, non-executive chairman.
- Source: Press Release
- Sears Holdings (NASDAQ:SHLD) announces it entered into a real estate joint venture with General Growth Properties (NYSE:GGP).
- The company will contribute 12 properties to the JV at malls controlled by General Growth Properties in exchange for a 50% interest in the entity.
- The transaction values the exchanged Sears properties at $330M.
- SHLD +3.9% premarket.
- NY Judge John Michalski has dismissed a lawsuit filed by the state's attorney general which accused HSBC of ignoring a law designed to protect homeowners from foreclosure.
- The lawsuit, filed in 2013 by Eric Schneiderman, alleged HSBC violated a state law known as a request for judicial intervention, which entitles homeowners to settlement conferences within 60 days to negotiate loan modifications.
- Michalski dismissed the case by ruling that HSBC's delay or failure in filing the administrative paperwork was procedural, not substantive, and did not qualify as an "illegal act."
- If Greece ends up leaving the eurozone "it may not be a bad thing for the euro," Warren Buffett told CNBC, saying "it could be a good idea (in) several ways if everybody learns that the rules mean something."
- The euro plunged to its largest quarterly fall on record in Q1, after Greece's latest package of proposed reforms was dismissed by lenders as more of a list of ideas rather than concrete plans.
- The euro is +0.1% to $1.0746.
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
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