Housing Bubble and Real Estate Market Tracker

by: Judy Weil

Judy Weil submits: 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"

"We are getting new people all the time. You can make money in any market if you know what you're doing. ... I hate to say this, but I'm sure there were people in the Great Depression in the '30s who made their fortunes buying properties for pennies on the dollar."- Alan Chantker, president of the Mid- Atlantic Real Estate Investors Association, on the investment opportunities the current credit crisis presents cool-headed investors. (Baltimore Sun, Sept. 9th)

Real Estate Sales and House Prices

  • August Home Sales Take a Major Plunge (Los Angeles Business Journal, Sept. 10th): "HomeData Corp.: Sales of new and existing homes in Los Angeles County slid to 4,107 units in August, just under half the 8,246 units that sold in August 2006 and [25%] below July’s 5,458 units… August is traditionally one of the more robust for home sales... Y/y [condo] sales plummeted 40% to 1,168 units. Sales were off 27% from July’s 1,601 units… August’s median price dropped slightly from its record July level to $579,000… still 5% higher than year-earlier levels. Condo prices hit a new peak of $460,000, up from July’s $450,000 and from $415,000 a year ago."

  • Will the Sub-Prime Crisis Reach Manhattan? (Gotham Gazette, Sept. 10th): "Wall Street salaries and bonuses are only part of the story behind the giddy housing market. Many brokers and bankers benefit from generous mortgage packages provided by their employers… Wall Street traditionally contributes about 20-25% of NYC’s economic output… After the 1987 stock market rout, the market for 1-2BR condos and co-ops in Manhattan was hard hit, with prices falling significantly... Apartments of that size were frequently bought by younger traders and investment bankers - the first casualties of securities firms feeling the pinch of losses and lower revenues. That market problem also caused many securities firms to trim back their staffs."

  • Mansions in the Sky (NY Times, Sept. 9th): "Manhattan’s wealthiest families are buying up as many apartments as they can and combining them into rambling mega-units. Brokers and developers say that buyers in this segment of the market are finding that they have few large apartments to choose from, and so they are creating the spaces they want from a half dozen 1-2BR apartments. While some buyers are swallowing up whole floors of new condominiums, others are buying neighboring apartments in older co-op buildings as they become available… These combination units are not bargains: 2BR apartments in the building typically cost $1.5m-$2 million, and 3-4BR apartments cost $2.5m-$3m."

  • Median Home Price Dropped In August (Colorado Springs Gazette, Sept. 7th): "The median price of homes sold in August dipped to $220,000, down 2.2% when compared with the same month last year, according to figures released today by the Pikes Peak Association of Realtors…It’s the second time in the last six months that year-over-year home prices have fallen. The supply of homes for sale totaled 7,052 in August, a 16.7% increase over the same period last year. Sales, meanwhile, fell 21.1% to 945."

Real Estate Investing and Sentiment

  • Bargain Hunters Buy Up Houses (Baltimore Sun, Sept. 9th): "The Mid- Atlantic Real Estate Investors Association has just over 300 members, up slightly from… 2005 and about 100 people more than in 2004. Investors United School of Real Estate in Baltimore… said it's getting a steady stream of 15-25 new students a month. ASPIRE America, an investing "academy" in the city, said its enrollment is about 300 -- up from 60 last year… Robert Bostick, CEO of ASPIRE America, is working on short sales… Last week alone, lenders holding mortgages on several other properties he wants came back with counteroffers: "They're bending over backwards at this point in time to get deals done."

  • A Pricing System with Wiggle Room (NY Times, Sept. 9th): "Variable pricing, also known as “value-range marketing” or “range pricing,” has gained popularity in the San Diego area over the last decade, becoming an established peculiarity of the region’s real estate market… CEO Ray Ewing of regional MLS Sandicor: There were only 12 value-range sales in 1996. Today range-priced listings make up 50% of all sales in San Diego County, with 15,335 properties sold with range pricing last year out of a total of 30,831 sales… Range pricing has been used in other areas of the country, like New York, Arizona, Michigan and Florida, but [it's not] as widespread as in San Diego."

Mortgates and Real Estate Lending

  • Local Banks Still Doing Mortgages (Rutland Vermont Herald, Sept. 7th): "Ken Wells, VP, Mascoma Savings Bank, Lebanon, N.H.: "Community banks are as eager to lend as ever… There is a liquidity crisis for many mortgage companies and mortgage brokers… business as usual for community banks. First, community banks are not tightening underwriting requirements because they didn't offer irresponsible loan products in the first place. Also, mortgage funding is almost unlimited because funds to lend come from depositors, the Federal Home Loan Bank system, and government-chartered agencies like Freddie Mac and Fannie Mae. Community banks don't rely on faceless investors across the globe who may disappear tomorrow."

Subprime Fallout

  • Reinsurance Rates Yet To Feel Subprime Heat (Economic Times of India, Sept. 10th): "The subprime crisis is unlikely to hit reinsurance rates in India as of now, but if the contagion were to spread further it is possible that insurance companies will have to pay more for passing on their risks to reinsurers… If investors start losing money and migrate to safer instruments, it may lead to shrinking of reinsurance capacities. Insurance companies, who could not afford AAA-rated reinsurers, negotiated lower rates with lesser-rated reinsurers that may have exposure to the subprime meltdown in the US. It is understood that some of the South-East Asian reinsurers have exposure to such risks."

  • Next In Line For Subprime Hit: Bonds? (CNN Money, Sept. 9th): "Bond funds typically diversify their investments to protect investors against losses in any one type of bond. The most risk-averse funds invest solely in U.S. Treasury bonds, while others buy corporate debt and mortgage-backed bonds that may have triple-A ratings but carry more risk than that of the federal government… Morningstar: Mutual funds that have invested in short-term bonds - including subprime debt: Fidelity Advisor Ultra Short Bond A and Fidelity Ultrashort Bond, managed by Fidelity Investments, are both down nearly 5% for the year… State Street Corp.'s Advisors' SSgA Yield Plus has lost 9.5% of its value so far this year."

  • Subprime Unlikely To Cause Big Insurance Claims (Reuters.com, Sept. 9th): "The insurance industry is unlikely to face a flood of major claims as a result of the subprime mortgage crisis, a leading insurer said on Sunday. Henry Keeling, COO of XL Capital Ltd (NYSE:XL), one of the largest Bermuda-based insurers, said: "On subprime, there's clearly exposure to both the insurance and reinsurance markets," but he expected the industry's exposure to be manageable. Insurers and their reinsurers, who assume risks too large or volatile for insurers to retain themselves, are likely to pay claims resulting from lawsuits involving banks, auditing firms and rating agencies, Marsh Inc. (NYSE:MMC), the world's largest insurance broker, warned earlier this month."

  • IndyMac to Post 3rd Quarter Loss, But Sees Profitable Future (Roy Mehta in Seeking Alpha, Sept. 7th): "IndyMac Bancorp's CEO Michael Perry announced Friday [he will seek a] 50% dividend decrease, to a 5% yield... and fire 1,000 employees in the coming months… Perry drastically lowered the company's Q3 forecast, IndyMac's first loss in eight years. Analysts surveyed by Bloomberg had the company earning $0.30/share. However, IndyMac expects to earn in the "range of breakeven to a loss of $0.50/share," caused by "spread widening and a continued high level of credit costs." Perry did provide some hope for shareholders by saying he expected IndyMac to be "solidly profitable in both Q4-07 and in 2008."

  • Countrywide May Cut Up To 12,000 Jobs – WSJ (Roy Mehta in Seeking Alpha, Sept. 7th): "Countrywide Financial Corp is expected to cut its workforce by 10,000 to 12,000 jobs in the next three months, according to the Wall Street Journal. The cut will represent about 20% of the company's total workforce. If the markets improve, the cuts will be less drastic. CFC also expects its loan originations in 2008 will be 25% lower than 2007, as they plan to be more conservative."

  • Negative Amortization and Interest Only: The Next Mortgage Bomb? (Markham Lee in Seeking Alpha, Sept. 7th): "People who never paid down a lick of principle over the time they owned the home and/or are now dealing negative amortization to the tune of 10-20%... It’s quite possible that there are home owners out there who on top of 20% worth of negative amortization from their mortgage loan, are dealing with depreciation in the area of 10, 20, even 30%... Owing 30-50% more on your home than it’s worth is a horrific situation… If you consider the impact of negative amortization + housing price depreciation, it’s quite likely that resetting negative amortization loans will have higher foreclosure rates than ARMs."

Foreclosure Impact

  • The Real Foreclosure Crisis (Gotham Gazette, Sept. 10th): "Foreclosures in Manhattan changed by only a small amount from July 2006-July 2007… Increasing from 225 to 253, a difference of 28. It's true that the foreclosures rose by 12% but the number of foreclosures was small to begin with… Staten Island actually recorded a decline in foreclosures of 5.7% for the year - dropping from 244 to 230 cases... Queens foreclosures have increased to 882 from 390... The borough has seen a robust increase in housing sales, but foreclosures have increased by a far greater percentage. This could be explained by a greater number of sub-prime borrowers in Queens than in Manhattan."

  • Home Foreclosures Hit Yet Another Record (Eli Hoffmann in Seeking Alpha, Sept. 7th): "Mortgage Bankers Association [MBA]: A seasonally 0.65% of homes entered foreclosure in Q2'07, shattering Q1'07's record of 0.58%... the third straight quarter of record foreclosures. Q2 foreclosure starts were up 44% from Q2'06. In 18 states, at least 19% of all subprime loans were delinquent, and 5.12% of all loans were past due. In total, almost 17% of all subprime adjustable-rate mortgages [ARMs] were delinquent, vs. 15.75% last quarter and 12.24% a year ago. Delinquent prime loans rose to 2.73% from 2.58% and 2.29% a quarter and a year ago. One bright spot: 2.85% of subprime fixed-rate loans were in foreclosure, down from 3.29% and 3.05% a quarter and a year ago."

  • New Mortgage Foreclosures Set Record (Associated Press, Sept. 7th): "Doug Duncan, the MBA's chief economist, said the worsening performance was [partly] the result of… heavy job losses in the Midwest states of Ohio, Michigan and Indiana, a region hard hit by heavy losses in the auto industry and other manufacturing industries... Duncan: "The percent of mortgages in Ohio that are 90 days or more past due or in foreclosure is still more than twice the national average and 1% of all the mortgages in Michigan had foreclosure actions started on them during Q2." He said there were also significant problems in the neighboring states of Indiana, Illinois, Kentucky, Tennessee and Pennsylvania."

  • More Than 6% Of Texas Mortgage Holders Are Late With Monthly Payment, Survey Finds (Dallas News, Sept. 6th): "Mortgage Bankers Association: Almost 6.5% of the state's mortgage holders are late with their monthly payment, the latest survey finds. That's higher than the national loan delinquency rate of 5.12%. Texas ranks ninth among states with the highest late payment rates… In Q2, 18.7% of adjustable subprime home loans in Texas were past due at the end of June. If there is any good news, it's that Texas' late loan payment rate is virtually unchanged from a year ago."

Global Impact and Alternatives To The Housing Slump

  • Indiareit Gearing Up To Launch $500 Mn Offshore Fund (Economic Times of India, Sept. 9th): "Indiareit Fund Advisors Managing Director and CEO Ramesh Jogani: Real estate venture capital fund Indiareit is gearing up to launch its second offshore fund by the end of the year: "We plan to come out with a $500-million fund this time… Jogani said both individuals and financial institutions, including insurance and private equity players from the US, Europe, the Middle East, Japan and South-East Asian countries would make investments in the fund. The minimum investment size for individuals in the fund would be as low as $0.5m, while institutions would have to dole out $5m to get a pie of the fund."

  • Socgen CEO Says Bank Faces No New Subprime Risks But Some Ops Hit In August (Forbes, Sept. 9th): "Societe Generale CEO Daniel Bouton said the bank has no new elements to reveal concerning its exposure to the US subprime loans crisis since August 2nd's [H1 report]. But while in terms of the industry as a whole the credit market situation is now 'under control', certain of SocGen's investment banking operations were 'affected' in August by the crisis… Bouton stressed that only a small part of the investment banking business was affected… As for the lasting effects of the credit crisis, Bouton believes that 'certain types of deals, such as massive LBOs will have to go back to less aggressive levels of credit."

  • Ethiopia: Foreign Investment in Real Estate Up By Five-Fold (All Africa, Sept. 9th): "Ethiopian Investment Agency's [EIA]: Foreign investment in real estate… registered close to a 500% [increase] in the F2006/2007 Ethiopian [from] the preceding year. During the F2006/2007, over 4.74b birr worth projects in foreign real estate investment were registered… Foreign investors are closely tailing their local counterparts in real estate investment during the reported period. Some 5.4b birr was registered in real estate development by local investors in 2006/2007, versus that of 4.8b birr registered capital in the sector by foreign investors… Five years ago, registered foreign investment in real estate in the country was less than 19 million birr."

Macro Impact, And Will The Housing Slump Cause A Recession?

  • Are National Home Prices Down 3.2 Percent or Up 3.2 Percent? (Realty Times, Sept. 10th): "The Case-Shiller survey was created to provide market-by-market benchmarks for… futures contracts tied to housing price movements... The OFHEO House Price Index was created… to allow… regulatory oversight of Fannie Mae {FNM) and Freddie Mac's (FRE)… collateral backing [values on their] mortgage loan and securities portfolios… The OFHEO database is limited to houses with conforming, conventional loans no greater than $417,000... [and] omits FHA/VA loans, jumbo mortgages, most subprime and Alt-A nonconforming loans, and condominiums. It includes refinancings… The Case-Shiller index… covers houses with mortgages of every type and size, recorded at hundreds of courthouses around the country... It includes no refinancings… has no data whatsoever from 13 states… and has incomplete data from 29 states for a variety of technical and legal reasons."

  • Schools Borrow Now; We'll Pay Later (IndyStar.com, Sept. 9th): "The state's property tax mess has caused school districts to borrow millions of dollars, which will come back to haunt already angry taxpayers in next year's property tax bills. The loans were needed to cover gaps left by lower-than-expected property tax payments… Indianapolis Public Schools, for example, was anticipating receiving about $211 million in property taxes in 2007… Lawrence Township Schools got a letter in July from state officials approving its spending plan for 2007, only to learn the next week that property tax bills were being frozen at the 2006 amount, said Michael Copper, the district's superintendent."

  • Four Fed Presidents: No Rate Cut Needed Now (Judith Levy in Seeking Alpha, Sept. 7th): "Four regional Fed bank presidents, speaking separately on Thursday, said they do not believe a rate cut is required at this time -- though their assessments of the effects of the credit crunch on the broader economy appear to differ. Kansas City Fed President Thomas Hoenig and Atlanta Fed President Dennis Lockhart said they do not see signs of a spillover, while St. Louis Fed President William Poole said "the probability of recession is higher than it used to be" and Dallas Fed President Richard Fisher said it is not yet clear whether or not the financial turmoil is affecting the economy at large."

  • Copper, Zinc Lead Metals Decline After Unexpected U.S. Job Drop (Bloomberg, Sept. 7th): "Copper, zinc and nickel led declines Friday on the London Metal Exchange after the U.S. economy unexpectedly lost jobs in August for the first time in four years, stoking speculation demand growth for metals may slow… [The employment figures] triggered declines in stock markets and industrial metals… The jobs data "provide one sign that problems are starting to spread from the subprime-mortgage market to the rest of the economy,'' Sempra Metals Ltd. analyst, John Kemp, said in a report. Sempra is one of 11 companies trading on the LME floor."

  • Furniture-Makers See 6 Percent Drop In Orders (Winston-Salem Journal, Sept. 7th): "Financial services company Smith Leonard's monthly survey: A yearlong orders slump for U.S. furniture manufacturers and marketers deepened during June… The value of new orders was $2.2 billion in June, down 6% from June 2006. The survey also found that 83% of participants reported a decrease in orders. That’s the highest percentage reporting declines in the past 13 months. Orders fell in 12 of those months when compared with… the previous year. Ken Smith, the director of furniture services for Smith Leonard: Orders have been affected primarily by the sluggish housing market, consumers’ debt concerns and the decreasing number of independent furniture stores."

  • As Housing Market Cools, Far Fewer Become Agents (NY Times, Sept. 7th): "California Department of Real Estate: The number of people taking the real estate sales exam in California soared from a little more than 2,000 a month in the late 1990s to a peak of nearly 20,000 in April 2005. But by July 2007, the number had dropped to 8,000… Membership in the National Association of Realtors, the national trade group and lobbying organization for the sales side of the housing industry, increased by 163,000 in 2005, to almost 1.3 million members, but grew by only 6,000 in H1'07."

  • Chrysler Chief Sees Link of Housing to Car Sales (NY Times, Sept. 7th): "Chrysler CEO Robert L. Nardelli is concerned that problems in the housing market and the broader economy are hurting car and truck sales… In recent weeks, auto companies and Wall Street analysts have reduced their forecasts for auto sales because of a combination of factors, including high gas prices, consumer uncertainty and the crisis facing mortgage lenders. As the former head of Home Depot, the home improvement retailer, Mr. Nardelli said, he can see a connection between housing woes and the automobile market. “There is a direct coupling there, and some negative spill from housing into the auto industry.”

Homebuilders And Housing Stocks

  • Projects, Developments And Other Activity In Cities Across OC (Orange County Business Journal, Sept. 10th): "KB Home (NYSE:KBH) may be building homes in the city after all. It paid $24.7 million for 13 acres west of the San Diego Freeway, in 2005… As the housing market cooled, KB reportedly shopped the site but found no takers. Fountain Valley’s planning department: Grading could start as early as January… The site is approved for 54 homes of about 3,000-3,800-sf, and a 1-acre park. Far West Industries recently started grading on a similar project [near] KB’s land. Far West’s models are set to open this month, with homes starting at just less than $1 million. Brookfield Homes Corp. plans to build townhomes and stores in the city’s downtown."

  • Builder Sees Light At End Of Slump (Press of Atlantic City, Sept. 9th): "Michael Skea, VP, sales and marketing for NJ-southern NY region [at] K. Hovnanian, which has a dozen developments in southern New Jersey: "Y/y for July and August sales are up, and our sales numbers were significantly healthier this August than the preceding year." Hovnanian is confident enough of the change in the market that it is holding its first-ever "nationwide" sales event this weekend… Hovnanian is offering discounts at all of its residential developments. A sampling of price reductions in the area includes: as much as $81,887 at Hidden Pines and Oak Manor in Egg Harbor Township [and] $106,609 at Tides at Seapoint in North Wildwood."

  • County, Toll Brothers Agree To Joint Road Work (Boca Raton News, Sept. 9th): "Widening and improving Lyons Road was part of the approval requirements in the original Toll Brothers (NYSE:TOL) Mizner County Club development in west Delray Beach. [But] the county is now… widening West Atlantic Avenue… Commissioners said that assisting Toll with its work would make both projects more efficient and less troublesome for the public. Toll expects to spend $3 million to satisfy its road improvement development requirements… the county will pick up $600,000 of that cost… The Mizner Country Club 384-acre development… is one of several Toll developments in South Florida."

  • Tupperware Large Upside (Globe and Mail, Sept. 8th) CHART: "From the low in late 1998, Tupperware Brands ($31.26 U.S. yesterday) built a large multiyear base between $12.50 and $22.50. Remembering that "the larger the base - the higher the space," this suggests that Tupperware has a large upside potential. The rally to $29.83 signalled the breakout from the base and the start of a new major up-leg (NYSE:A). Current levels should provide a good buying opportunity (NYSE:B). Only a decline below $24 would reverse the positive status.Point & Figure measurements provide targets of $35 and $39 (12% and 25% appreciation potentials from current levels). Higher targets are also visible."

  • WCI Abandons Sale, Names Icahn Chairman (Judith Levy in Seeking Alpha, Sept. 7th): "Luxury homebuilder WCI Communities said Thursday it is abandoning its attempts to sell the company after receiving no bids. It also unanimously elected activist investor Carl Icahn to the position of chairman... In February, Icahn, who is WCI's largest shareholder, tried to oust the board of directors… [later] making a $22/share offer for the company. Both moves were resisted by management. Don Ackerman, the board chairman being replaced by Icahn, rejected the bid because he believed the company could fetch a better price. Ackerman: "Obviously selling the company at $22 would've been a better decision than holding an $8 stock."

  • Beazer Hit with Default Notice, Stock Tumbles (Roy Mehta in Seeking Alpha, Sept. 7th): "Beazer Homes USA Inc. said that it had received default notices from US Bank, a trustee of Beazer's senior notes, on Friday. Beazer whose been hit hard by the challenging housing conditions and two separate probes in its mortgage-origination business, said the default notices are "invalid and without merit." The company said that US Bank sent the default notices because Beazer has not reported its Q2 earnings report. Egan-Jones Ratings Co.: "Beazer needs to provide answers on its credit strength soon." The company said on August 15th that the delay was a result of the internal probes."

  • Hooker Furniture Hooks a Profit (Motley Fool, Sept. 7th): "Hooker Furniture's (NASDAQ:HOFT) quarterly results: Sales fell 10.1%, to $1.15 million per day…. Gross margins improved 3% as the company incurred lower delivery costs. Selling and administrative expenses also fell, in part since warehousing and storage costs declined… Earnings jumped to $0.39/share, from $0.10 a year ago. That's not too bad, with the housing market's decline and higher borrowing costs affecting furniture makers these days. Furniture Brands' (FBN) recent sales and earnings results were down, and Stanley (NASDAQ:STLY) has also seen its earnings suffer… [Higher end] Ethan Allen (NYSE:ETH) has seen modestly improving sales, but… was cautious in its outlook… Hooker is… expecting costs to continually decline and is working to efficiently control supply-chain management."

  • Could Subprime Save Fleetwood? (Motley Fool, Sept. 7th): "Manufactured home and recreational vehicle maker Fleetwood Enterprises (FLE) suggested that subprime challenges could actually end up helping its manufactured homes segment… as certain homebuyers find it harder to gain approval for loans -- especially those buyers considered high-risk. Of course, tougher credit markets could serve to hurt all housing… Manufactured-home sales have fallen to less than 30% of the company's total sales [and] Fleetwood continues to lose money in the RV/travel-trailer business. The best option may be to sell out to manufactured homebuilding rival Champion Enterprises (CHB), as SLS management recently recommended. Further industry consolidation among Coachmen (NASDAQ:COA), Winnebago (NYSE:WGO), Thor (NYSE:THO), and Palm Harbor Homes (PHHM) could also help."

  • Technician Sees KB Home (KBH) Building Value (Blogging Stocks, Sept. 7th): "Technical expert Yola Edwards: KB Homes (KBH) is well off its 52-week high of $56.08, reached in early February [and] appears to have completed a "wave 2 correction as it has retraced about 70% of its wave 1 advance from July 2000. Several bottoming hammer candlestick patterns have emerged at the $29 level, which appears to be defining the conclusion of the declining wave." Technical indicators [like] MACD [are] "diverging positively and has issued a preliminary buy signal from extremely oversold territory." KBH pays an annual $1 dividend yielding a 3.20% return, which appears to be safe. "If you believe in buying good-quality companies when they're down, KBH offers a great opportunity."

  • Homebuilder Breaks Ground On New Model Home Centers (Orlando Sentinel, Sept. 7th): "Engineered Homes, a Florida homebuilder… has broken ground for two new model home centers at two new Central Florida communities it is counting on to help boost home sales. Engineered has projects under way in Orange, Seminole and Osceola counties and several others planned for Polk and Lake counties… Johns Lake Pointe and The Preserve at Lake Charm are among seven residential communities Engineered Homes has under way in Central Florida. The company… posted $102.7 million in home sales last year."

  • Hurricane Katrina Follies In Louisiana - KB Homes Not Laughing (Blogging Stocks, Sept. 6th): "KB Homes (KBH) has been trying to develop various projects in and around New Orleans... [But] KBH learned after it arrived that state law requires plumbers to complete more than four years of training before obtaining a license, and that Louisiana follows different plumbing codes than most other states. That means KBH effectively can't bring plumbers from Houston, where it has an extensive contractor network. After KBH sponsored a bill in the state legislature to loosen these arcane requirements, the state's Plumbing-Heating-Cooling Contractors Association promptly squashed it dead. Never mind that thousands of locals needed housing, and the workers pouring in to help rebuild the city needed housing... KBH has withdrawn from many projects."

Commercial Real Estate and REITs

  • Carlyle Looks Beyond Credit Turmoil To Raise Real-Estate, Buyout Funds (Wall St. Journal, Sept. 8th): "Carlyle Group, which has the most prominent fund-raising machine of any of the large private-equity groups, has just completed two funds -- a $3 billion real-estate fund in the U.S. and a $7b fund for buyouts in Europe… Robert Stuckey, who runs the real-estate group at Carlyle [says] the dislocations should create opportunities. "Because liquidity is less abundant, we believe that the capital markets may underprice certain properties." Carlyle [has] a 38% internal rate of return for its earlier [real estate] funds over the past nine years. Still, the fund-raising comes shortly after Carlyle's listed mortgage-backed securities fund had to borrow $200 million from the founding partners at Carlyle to avoid a fire sale of securities."

  • Analyst Downgrades SL Green Stock (Chron.com, Sept. 6th): "Lehman Brothers Inc. analyst David Harris on Thursday cut his rating on SL Green Realty Corp. (NYSE:SLG) from "Overweight" to "Equal Weight", citing concerns that the credit squeeze could stymie rent growth and lower property values in the office REIT's portfolio. Harris reduced his price target to $126 from $144: "Reduced [NYC] space demand by financial services giants could quickly take froth out of the market at a time when supply is rising." The credit market woes have also shrunk the availability of credit for commercial real estate transactions. Fewer deals and a smaller pool of qualified buyers could weigh on property prices... The REIT's portfolio is less diversified than its peers, Boston Properties Inc.(NYSE:BXP) and Vornado Realty Trust (NYSE:VNO)."

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