Today - Thursday, December 18, 2014
- The four office properties at Maitland Center totaled 589K square feet and sold for $116.75M.
- The move is consistent with Liberty's (LPT +0.3%) strategy to stick with industrial properties in Orlando, and the company notes it's broken ground on two buildings there totaling 370K square feet.
- Source: Press Release
- The eight senior housing communities are leased to Senior Living Communities and will continued to be managed by a SLC affiliate. The 15-year master lease equates to an initial gross cash yield of 6.51%, with annual escalators of 4% in years 2-4, and 3% thereafter.
- The purchase was funded with proceeds from an equity raise and borrowings on the company revolver.
- Source: Press Release (Dec. 17, 2014)
- Previously: National Health Investors purchases portfolio for $476M (Dec. 2, 2014)
- NHI flat on the session
- The electric car maker backed by Berkshire Hathaway (BRK.A, BRK.B) began tumbling in Hong Kong at about 2 PM local time, and were lower by as much as 47% within an hour before closing down by 29%.
- Board secretary John Li dismissed various rumors on a conference call, including one that Chairman Wang Chuanfu had been arrested in London. He also said the company has no indication The Oracle has reduced his stake.
- Barclays is buying the dip in Ares Capital - upgrading to Overweight from Equal Weight - but the also-beaten-up shares of Prospect Capital (PSEC +2.8%) don't prove as enticing to the team, which downgrades to Equal Weight from Overweight.
- Prospect is making a nice move higher in line with the rest of the market, and Ares is up a full 4.7%.
- An earlier report had the NY Department of Financial Services and the CFPB investigating Ocwen for gaming short sale rules to boost its fees, so today's big rally in stocks is providing no relief to the battered shares of Altisource Portfolio Solutions (ASPS -5.4%), Altisource Asset Management (AAMC -4.8%) and Altisource Residential (RESI -1.7%).
- "We believe that American Express' (AXP +2%) recent broader inclusion initiatives are likely to take some time to develop and that top-line growth is likely to be constrained in the near term," says Jefferies, initiating coverage with a Hold and $95 price target.
- Initiatives like OptBlue and Serve look good over the longer-term, but come at a short-term cost which is likely to weigh on results in coming quarters. The $95 price target equates to about 15x the firm's 2016 EPS estimate - a warranted discount to peers thanks to AmEx's smaller scale and lower merchant acceptance, as well as credit risk exposure.
- Previously: AmEx initiated with Overweight rating at Morgan Stanley (Dec. 17, 2014)
- Alongside its valuation-related downgrade of Retail Properties of America, KeyBanc also cuts RLJ Lodging Trust (RLJ +0.4%) to a Hold from Buy after that stock's near-40% march higher this year.
- Previously: KeyBanc cashes in its chips on Retail Properties of America (Dec. 18, 2014)
- Macerich (MAC -0.1%) is the only mall REIT in the red in early action after being MLV & Co. rings the register, downgrading to Hold from Buy with the $80 price target unchanged. Earlier this week Citi also pulled its Buy rating on the stock.
- Macerich is ahead about 40% this year, with much of the gain coming since Labor Day.
- Ares Capital (ARCC +3.1%) is upgraded to Overweight from Equal Weight at Barclays after a near-20% decline since mid-summer.
- See also: Prospect downgraded as Ares is upgraded at Barclays
- The property consists of five industrial buildings totaling 384K square feet on 18.9 acres inside the Beltway - about 3 miles from D.C. They're currently 89% leased to 22 tenants. The estimated stabilized cap rate (assumes 95% occupancy) is 6.3%.
- Source: Press Release
- At issue is whether Ocwen Financial (NYSE:OCN) improperly stalled short sales on underwater homes. The rule says servicers must approve or deny a short sale application within 30 days of an application, and the NY Department of Financial Services and the CFPB are investigating whether Ocwen delayed sales in order to collect more fees, reports Bloomberg.
- Short sale specialists say Ocwen is known for demanding more paperwork right before the 30-day deadline, thus forcing the whole process to restart. “Ocwen has it all figured out,” says a Nevada consultant. “They are notorious for asking for one more piece of paper on the 29th day.”
- "We view shares to be fairly valued on a risk-adjusted basis given our forecast for slower relative earnings growth in 2015 (-1% AFFO growth vs. 8% for the sector) vs. the company’s peers," says analyst Todd Thomas, downgrading RPAI from Buy to Hold and pulling the $17 price target after the stock's bug run higher this year.
- He notes current occupancy of 93.3% offers less upside than the 88% it stood at when the company went public in 2012.
- "Finally, we suspect that management will issue conservative 2015 initial FFO guidance, which could also pressure shares in the near term; this may present a more attractive entry point for tactical investors."
- MetLife's (NYSE:MET) balance sheet expanded this year to more than $900B in assets, passing Goldman Sachs to become the 5th-largest S&P 500 company on that metric. MetLife is also bigger than Prudential Financial and AIG - both of which have already been designated as SIFIs.
- "There’s probably not a chance that they escape," says Macquarie's Sean Dargan. "I'm working under the assumption that Met is going to be a SIFI.”
- Size alone doesn't necessarily make a company systemically important, says a former Treasury official, noting assets can be transferred to other firms if they can perform the same functions. Nevertheless, MetLife seems resigned to its fate, and is now getting ready to work with the Fed on designing capital rules aimed at insurance rather than banking.
- After a couple of small, but wildly profitable shale deals several years ago, KKR went for a big one with the 2011 $7.2B buyout of Samson Investment - the largest-ever buyout of an oil and gas company.
- The investment at the moment is far underwater, reports the WSJ, as natural gas prices plunged almost immediately after the purchase, and the recent crash in crude oil has socked Samson even further. The company has lost more than $3B since the buyout, and KKR and partners' $4.1B investment has shrunk by 75%.
- The losses haven't diminished KKR's appetite for energy deals. "I'm glad we’re in the position that we are, as prices have come down significantly,” said Henry Kravis recently. "We see this as a real opportunity."
- As for Samson, analysts expect KKR will need to inject cash by early 2016, barring a big rise in oil and gas prices, or get better-than-expected proceeds from asset sales.
- In other news, Morgan Stanley's Michael Cyprys initiates KKR with a Buy.
- Genworth Financial (NYSE:GNW) is lower by 6.6% in premarket action following last night's disclosure that the results of its long-term care review will be delayed until the new year.
- BTIG's Mark Palmer reiterates his Buy rating and $16 price target, saying the delay does not change his team's view of the outcome, i.e. that the market value that's been erased from Genworth since the LTC issues emerged more than reflects the impact on the company's valuation.
- Previously: Genworth LTC review taking longer than hoped (Dec. 17, 2014)
- XL Group (NYSE:XL) fell 3.9% yesterday after announcing talks to buy Catlin Group (OTCPK:CLNGF) for $4.2B, and today Bernstein downgrades to Underperform from Market Perform, calling the price too high. The price target is cut to $30 from $44.
- KBW also downgrades, moving to Market Perform from Outperform.
- Previously: XL Group confirms purchase discussions with Catlin Group (Dec. 17, 2014)
- The acquisition of about 700K square feet of office space valued at $130M more than doubles Hughes' (NYSE:HHC) commercial holdings in downtown Columbia, and gives the company more than a 50% market share there.
- The six buildings are 90% leased and currently unencumbered.
- The deal partially satisfies a tax matter with General Growth Properties, and on Dec. 15, Hughes paid the IRS about $204M to satisfy a court loss to the that agency. Hughes has filed an appeal and expects it to be heard next year.
- Source: Press Release
- The 28 properties were acquired from GE subsidiary Diamond Senior Living, and are currently net-leased to a new Aviv operator, Laurel Health Care at an initial cash yield of 8.5% for another 15 years.
- AVIV entered into the agreement to buy these properties shortly after agreeing to sell itself to Omega Healthcare Investors (NYSE:OHI).
- Source: Press Release
- Previously: Aviv REIT buys 28-property portfolio for $305M (Nov. 5, 2014)