- Freddie Mac Loses $5B in Third Quarter; May Ask for Second Fed Handout
- Fannie Mae Loses $19.8B in Third Quarter; Asks Government for Another $15B Bailout
- Refinance Loans Hit FHA Hard; Agency May Also Ask for Treasury Help
- Blackstone and Glimcher Form JV to Buy 2 Malls for $320M
- Duke Realty Takes $50M Hit on Empty 425,000-SF Office Building in Atlanta
- Tishman Speyer Partners Head for Default on $3B Loan
- Inland Eases Balance Sheet With $100M Sale of 2 Prime Properties
- Dollar General Seeks $750M as IPO Market Blooms
(WASHINGTON, D.C.) -- Freddie Mac is holding its hand out again as it reports a third-quarter net loss of $6.3 billion. That compares with net income in the second quarter of $768 million.
The agency's gross loss was $5 billion but came to $6.3 billion after factoring in the $1.3 billion dividend on its senior preferred stock to the Treasury. The net loss to common stockholders was $1.94 per diluted share.
"During this critical time for homeowners and the market, we continued to support the recovery of the housing market by providing a stable source of mortgage funding and helping people to keep their homes," Freddie Mac CEO Charles E. Haldeman Jr. says in a prepared statement.
Haldeman says he expects to ask the Treasury for financial help "as the prolonged deterioration of market conditions continue to negatively impact" the company's financial results. Freddie Mac has received a total $51 billion in federal aid to date, according to the Treasury.
(WASHINGTON, D.C.) -- Fannie Mae, under the government's control since September 2008, recorded a net loss of $19.8 billion or a loss of $3.47 per diluted share in the third quarter.
That performance compares to a loss of $15.2 billion or a loss of $2.67 per diluted share in the second quarter of 2009. Fannie Mae CEO Michael J. Williams already has asked the Treasury for a $15 billion handout.
Since September 2008, the company has lost a total $111 billion of taxpayer money. It has received $45 billion in aid to date.
The continuing bailouts of Freddie Mac and Freddie Mae have been one of the costliest government interventions in history, according to DSNews.com.
Please see related articles:
"Failing Fannie Mae's New Deed-for-Lease Plan Could Make it Nation's Largest Residential Landlord," Nov. 6, 2009
"Congress Oks Three Big Economic Boosters but Critics Still Abound," Nov. 5, 2009
(WASHINGTON, D.C.) -- The Federal Housing Administration, headed by Commissioner David H. Stevens, is expected to ask the Treasury before year end for taxpayer funds to cover anticipated near-future losses, according to The Wall Street Journal.
"Although the FHA has tightened credit standards, many of the 2007 and early 2008 mortgages are going bad," the WSJ states.
The agency expects to post defaults on 24 percent of all loans insured in 2007 and 20 percent of those backed in 2008.
"What we have to do is eliminate players who prey on the industry in a way that is not legitimate," Stevens told the WSJ.
Brian Montgomery, FHA commissioners for four years until his term was up in July, says, "The orders from Congress and us were clear: We want to save as many families as we can, recognizing that a lot of loans people were looking to refinance out of should never have been made in the first place."
This month the FHA is expected to release the findings of its annual audit. The WSJ states the audit will show "the projected value of the agency's reserves has fallen below a federally mandated level."
That situation would make the FHA ask the Treasury for taxpayer money for the first time in its 75-year history.
The FHA doesn't make loans but insures lenders against losses when a borrower defaults.
(COLUMBUS, OH) -- The Blackstone Group of New York and Columbus, OH-based Glimcher Realty Trust are looking at a December closing on two prime regional shopping centers.
The newly formed joint venture is buying Lloyd Center in Portland, OR and Westshore Plaza in Tampa, FL from Glimcher Realty Trust for $320 million. The joint venture will also assumed $218 million in mortgage loans the properties are carrying.
A Blackstone affiliate will own 60 percent of the joint venture; Glimcher, 40 percent.
"We look forward to jointly evaluating additional mall acquisitions in the future," says Glimcher CEO Michael P. Glimcher. "This relationship will help Glimcher in the near-term while also positioning us to benefit from the economic recovery when it occurs."
Adds Jonathan D. Gray, senior managing director of Blackstone: "We believe there should be regional malls available at attractive pricing during this cycle."
(ATLANTA, GA) -- Duke Realty Corp. has devalued a $187 million construction loan by $50 million or about 27 percent on a vacant, 425,000-square-foot, 34-story office building it is co-developing with Pope & Land Enterprises Inc. in the affluent Buckhead area of Atlanta.
The building is called 3630 Peachtree and also includes 17 floors of luxury condos developed by Novare Group Holdings LLC and Post Properties Inc., both of Atlanta.
The loan from Charlotte, NC-based Bank of America Corp., matures in July 2011, according to the Atlanta Business Chronicle.
Duke's writedown also reflects about a 30 percent drop from the original development costs, the newspaper states. The original costs were between $300 and $350 per square foot.
A writedown leaves the asset on the company's balance sheet with a lower value. A writeoff would have completely removed the loan amount from the profit-and-loss statement.
In Buckhead, Grubb & Ellis Co. speculates office vacancy could reach 30 percent by the end of the first quarter in 2010.
"This slide is nearing the bottom, but we are nowhere close to being on the way up," Kris Miller, president of Atlanta-based Ackerman & Co., tells Atlanta Business Chronicle.
"While the impairment charges have been recorded, we are working diligently with prospective tenants to lease the space," according to a prepared statement by Duke Realty. "We still believe this is an excellent project and will be successful."
(NEW YORK, NY) -- Tishman Speyer Properties Inc., Blackrock Realty and their partners in the 11,200-unit Stuyvestant Town-Peter Cooper Village in Manhattan are nearing default on a $3 billion loan, the developers acknowledge.
They have asked that the loan be transferred to CW Capital, a special servicer, which may try to modify the loan terms, according to Bloomberg. Servicers are used when a loan is in or near default and needs to be reviewed.
"Fitch expected the transfer of the loan to special servicing as cash flow generated by the property remains insufficient to service the debt," states Fitch Ratings. "Debt service reserves are expected to be depleted by the end of December."
The Tishman Speyer partners bought the 80-acre property in 2006 from MetLife Inc. for $5.4 billion. Stuyvesant Town-Peter Cooper Village is Manhattan's largest apartment complex.
According to data from Deutsche Bank, Bloomberg states a $3 billionm 10-year loan to finance the acquisition was bundled with commercial mortgages and sold to investors as bonds.
The property now has a market value of about $1.89 billion, down 65 percent from the appraised value at the time the loan securitized in November 2006.
(OAK BROOK, IL) -- Inland Western Retail Real Estate Trust Inc. has sold two non-core assets for a total $100 million as it continues to improve its balance sheet, the company reports.
Steven Grimes
"As a company, we are committed to reducing the leverage on the balance sheet and retaining cash to support the refinancing of our maturing debt," says Inland CEO Steven Grimes.
Year-to-date, the company has refinanced $401.9 million and retired $204.2 million of its maturing debt associated with asset sales. Inland has an additional $619.1 million under application and $393.3 million in extension negotiations, Grimes says.
(NEW YORK, NY) -- When it was completed in 1913, the 935,000-square-foot, 792-foot tall Woolworth Building at 233 Broadway was hailed as the tallest skyscraper in the world and the envy of every office building developer.
The 57-story, 99 percent-leased tower is still generating attention from developers and investors.
Rome, Italy-based Sorgente Group is talking with New York-based Witkoff Group and investor Rubin Schron about buying a 51 percent stake in the property, according to Bloomberg.
Sorgente already owns a piece of the classic-styled Flatiron Building in Manhattan. Steven Witkoff, chairman and CEO of Witkoff Group, paid $137.5 million to Venator Group in its 1998 purchase of the building.
Bloomberg research finds the Woolworth Building had a value of $320 million as of March 2005. The current mortgage loan balance on the property is $250 million.
(MOSCOW, RUSSIA) -- Renaissance Capital, an international investment and merchant banking organization based in Moscow, is reporting a busy calendar in the launches and results of initial public offerings in the U.S. and abroad.
- Dollar General, a KKR-backed small-box discount retailer with 8,700 stores in 35 states, plans to raise $750 million by offering 34.1 million shares at a price range of $21.00 to $23.00. Citi, Goldman Sachs, and KKR are the lead underwriters on the deal.
- rue21, a value-focused teen fashion retailer with over 500 stores in 43 states, plans to raise $115 million by offering 6.8 million shares at a price range of $16.00 to $18.00. BofA Merrill Lynch , Goldman Sachs, and J.P. Morgan are the lead underwriters on the deal.
Both companies hope to emulate the success of Vitamin Shoppe ([VSI]), which in late October became the first traditional retailer to go public in almost two years. Its stock is up 14%.
- Verisk Analytics, which provides data, statistical models and tailored analytics for P&C insurance firms, will see its quiet period end on Nov. 15, 2009. On Oct. 6, 2009, the company raised $1,875.5 million by offering 85,250,000 shares at $22.00, above the range of $19.00 to $21.00. BofA Merrill Lynch , Morgan Stanley acted as lead managers on the deal.
- Banco Santander Brasil, the fourth-largest bank in Brazil and a spin-off of Spanish bank Santander, will see its quiet period end on 11/15/09. On 10/6/09, the company raised $7,035.0 million by offering 525,000,000 shares at $13.40, within the range of $12.45 to $14.15. Santander Investment, Credit Suisse, and BofA Merrill Lynch acted as lead managers on the deal.
Banco Santander Brasil
- 7 Days Group Holdings, which converts and operates limited service economy hotels across major metropolitan areas in China, announced terms for its IPO on Monday, only a week after submitting its initial filing.
The company plans to raise $101 million by offering 10.1 million American Depository Shares at a price range of $9.00 to $11.00. At the mid-point of the proposed range, 7 Days Group Holdings will command a market value of $600 million.
The national company, which was founded in 2004 and booked $106 million in sales in 2008, plans to list on the NYSE under the symbol SVN.
J.P. Morgan, Citi, and Oppenheimer & Co. (previously J.P. Morgan and Deutsche Bank) are the lead underwriters on the deal, which is expected to price next Thursday, Nov. 19.
- Archipelago Learning, which provides subscription-based online education services for students K-12, announced terms for its IPO on Monday.
The Dallas, TX-based company plans to raise $100 million by offering 6.3 million shares at a price range of $15.00 to $17.00. At the mid-point of the proposed range, Archipelago Learning will command a market value of $400 million.
Archipelago Learning, which was founded in 2000 and booked $42 million in sales over the last 12 months, plans to list on the NASDAQ under the symbol ARCL.
BofA Merrill Lynch, William Blair, and Robert Baird are the lead underwriters on the deal, which is expected to price next Thursday, Nov. 19.
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