Today - Sunday, April 19, 2015
- The 60M square foot operating portfolio of KTR Capital Partners comprises 322 properties with about a 95% overlap with Prologis' (NYSE:PLD) existing U.S. portfolio. The purchase also includes 3.6M square feet of development in-progress and a land bank with a build-out potential of 6.8M square feet.
- The acquisition is being made by Prologis' JV with Norges Investment Management, of which Prologis has a 55% stake.
- The deal is expected to be accretive to annual core FFO by about $0.14 per share on a stabilized basis - this would be 7% growth from the midpoint of Prologis' 2015 guidance. The purchase is anticipated to lower G&A expense as a percentage of AUM by about 12% and boost U.S. dollar equity exposure to 93%.
- A conference call is set for Monday at 8 ET.
- Source: Press Release
Friday, April 17, 2015
4:06 PM| Comment!
- In the sort of things dreams are made of for retailers, Costco's (COST -1.7%) new deal with Visa (V -1.6%) and Citigroup (C -1.6%) will have the company paying next to nothing for transactions vs. the roughly 0.6% it pays current partner American Express (AXP -4.2%).
- "The numbers didn't add up," said AmEx CEO Ken Chenault last month when telling his shareholders why the company let the Costco relationship go. "We couldn't accept their financial terms."
- For Citigroup, it's plan is to make money by customers carrying loan balances, and for Visa it hopes to earn when customers use those cards at other retailers where fees are higher. Banks generally make about 80% of their credit card revenue from interest balances and other fees, with interchange making up the rest, according to Bernstein's Lisa Ellis.
- To put some numbers on it, Costco had about $100B in sales last year, with its customers accounting for 20% of AmEx's loans and 8% of spending.
- "[Interest spreads] are unimaginably low for those of us who have followed this area for a long time,” says Nancy Bush of NAB Research.
- While low rates have provided occasional income boosts at lenders thanks to bursts of refinancing and the related fees, that well may have run dry. Now banks must rely on the gap between what they pay for deposits and what they charge for loans, and at Wells Fargo the spread dropped below 3% for the first time in decades, and at JPMorgan, it's just 2.07% after falling another seven basis points in Q1.
- On the expense side, the low-hanging fruit of big cuts following the financial collapse is gone, with at least some of it replaced by legal costs which won't quit and regulatory costs which look here to stay.
- Mergers? One look at the 3-years-and-running battle to close Hudson CIty and M&T Bank is enough to make any management shy about pursuing large acquisitions.
- Source: Ben McLannahan and Tom Braithwaite in the FT.
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- "We have significant concerns with the decisions taken by the Management Resources and Compensation Committee over the past year with respect to the succession planning and post-employment arrangements made with both Mr. McCaughey and Mr. Nesbitt,” says the Ontario Teachers' Pension Plan, upset over the orderliness of succession planning at CIBC (CM -0.9%) following the the replacement of the CEO and then the earlier-than-expected departure of the COO.
- The pension plan also voted against "overly generous" post-employment agreements with McCaughey and Nesbitt of C$16.7M and C$8.5M, respectively.
- Source: WSJ
- Supertel Hospitality (SPPR +64.9%) closes on the sale of two Savannah Suites hotels - 172 rooms in Augusta, GA for $3.4M and 120 rooms in Chamblee, GA for $4.4M. $4.1M of the proceeds was applied to the GE Capital mortgage maturing in December.
- The company also agrees to sell two Alexandria, VA hotels for $19M. Closing is expected in late spring or early summer.
- Source: Press release
- For the first time in nearly a year, writes Susan Persin, weekly U.S. RevPAR fell as of April 4, and results were mixed for the following week, with lower occupancy offsetting ADR growth.
- According to STR, which compiles the data, the RevPAR weakness is likely temporary thanks to Passover and Easter. The company notes fundamentals - an improving economy, low gasoline prices, and limited supply - remain in place.
- Could be, says Persin, but investors - eyeing the strong dollar and its effect on foreign travel to the U.S. - had turned somewhat negative on the previously hot sector before April's data. Host Hotels and Resorts (NYSE:HST) is the largest lodging REIT by far, contributing more than 25% of the sector's market cap. Its stock peaked in December and is lower by 14.3% YTD, despite a Q4 earnings beat and raised guidance.
- There's also supply concerns, with the 126K rooms under construction in March up 23% from a year ago. NYC has the largest number of rooms under construction/planned, followed by Houston, Miami, and Chicago.
- Other sector names: Hospitality Properties (NYSE:HPT), Ashford Hospitality (NYSE:AHT), Strategic Hotels (NYSE:BEE), Sunstone Hotel (NYSE:SHO), LaSalle Hotel (NYSE:LHO), Pebblebrook Hotel (NYSE:PEB), Chesapeake Lodging (NYSE:CHSP), Summit Hotels (NYSE:INN), RLJ Lodging (NYSE:RLJ), Chatham Lodging (NYSE:CLDT), Hersha Hospitality (NYSE:HT).
- Head of a desk trading mortgage-related debt at Citigroup (C -1.2%), Ilker Ertas has reportedly resigned this week to take up a position with mREIT giant Annaly Capital (NLY).
- Ertas' exit would follow the departure of Stefan D'Annibale - head of Treasury and agency trading - who joined a hedge fund, and the resignation of long-bond trader Joseph Leary.
- Q1 earnings of $552M or $0.66 per share vs. $558M and $0.79 one year ago.
- Net interest income of $2.9B up 5% Y/Y. NIM of 15.79% down 304 basis points as deposits rolled in.
- Provision for loan losses down $77M to $687M thanks to improved asset quality trends.
- Loan-receivables growth of 7%, driven by purchase volume growth of 10% and average active account growth of 4%.
- Deposits of $35B up 28% Y/Y, and now make up 59% of funding, up from 55%.
- CET1 ratio of 16.4%.
- On the earnings call, management says it does not expect any buybacks or dividends until the separation from GE is complete, though capital will continue to grow in the meantime.
- Previously: Synchrony Financial beats by $0.02, beats on revenue (April 17)
- SYF -0.3%
- "If any doubt remained, it is very clear that dollar strength is a major problem right now for large multinationals," says Topeka, after going over American Express' (AXP -4.5%) Q1 results, and noting the corporate card business slowdown wasn't isolated to any particular industry.
- AmEx, notes the team, has 31% of its volume outside of the U.S. and is highly dependent on cross-border and business-related travel. 'This reads negatively for Mastercard (MA -1.4%), and, less so, Visa (V -1.4%)."
- AmEx earnings call transcript and presentation slides.
- Previously: AmEx beats on bottom line, but outlook still dour (April 16)
- Rather than sell or spin off all of its retail operations as it unveils a major restructuring later this year, Detusche Bank (DB -3.1%) has decided to sell its Postbank unit, according to a report in Der Spiegel.
- Postbank is Deutsche's retail operation in Germany.
- "An alternative model that foresaw the complete separation of retail banking business appears not to have found sufficient support in the management board," says the magazine.
- Previously: Deutsche set to unveil restructuring plans (April 13)
- Noting the strong run for the stock headed into Q1 results, analyst Brian Kleinhanzl says he didn't see anything in the report which would warrant boosting 2016 estimates materially higher.
- "We do not believe that a larger premium to forward book value is warranted at this time since the volatility of Goldman's (GS -1.2%) earnings is still high and visibility into forward earnings [is] low."
- The rating is cut to Market Perform from Outperform, though the price target is boosted to $210 from $195.
- The stock advanced 5.3% in the two weeks headed into yesterday's earnings release, and is up 11% over the last three months.
- Previously: Goldman call: Will strong trends continue? (April 16)
- Previously: Goldman up 1% early after earnings beat (April 16)
9:44 AM| Comment!
9:05 AM| 4 Comments
- Q1 net income of $134M or $0.73 per share vs. $139M and $0.73 one year ago.
- Net interest income of $413M vs. $410M a year ago, with NIM slipping to 2.64% from 2.77%.
- Adjusted noninterest income of $212M vs. $208M a year ago. Adjusted noninterest expense of $416M vs. $406M.
- Provision for credit losses of $14M vs. $9M a year ago. "our energy portfolio continues to perform well, with only modest negative credit migration. However, in light of the fact that oil and gas prices remain depressed, we expect that our criticized loans may increase from current very low levels as the year progresses.
- Energy-related loans included about $3.6B of outstanding loans in the bank's energy business line along with another $750M in loans in other lines of businesses to companies with a sizable portion of revenue related to energy. Total loans at the bank of $48.15B.
- CET1 ratio of 10.43%.
- Previously: Comerica EPS in-line, beats on revenue (April 17)
- CMA flat premarket
- Shisui Premium Outlets located outside of Tokyo opened two years ago with 121 stores. Phase two opens today, adding 62 stores and 136K square feet, bringing totals to 183 stores and 375K square feet.
- "We are very pleased with the enormous success of Shisui Premium Outlets in an incredibly short period of time," says Mark Silvestri, COO of Simon Premium Outlets (NYSE:SPG).
- Press release
8:15 AM| Comment!
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