KeNo's Housing and Economic Portal: Friday September 3 Housing and Economic stories

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TOP STORIES:

Hypo’s U.S. Property Woes Crystallized at Snowmass Ski Resort - (www.bloomberg.com) Snowmass Village, the Colorado ski town neighboring Aspen, got a lift in 2007 when Hypo Real Estate Holding AG agreed to arrange $520 million of loans to complete a $1 billion year-round resort. Three years later, construction has halted on parts of the 19-acre Base Village in Snowmass, where some buildings are wrapped in plastic, and Hypo has been seized by the German government. When the lender, whose 2009 implosion was Germany’s biggest bank failure since World War II, tried to foreclose on the developers in July, it was met by a countersuit that accused it of a “shameful repudiation” of its obligations. The resort’s fate is a microcosm of all that has gone wrong for the bank as it handed out more than $8 billion to finance U.S. real estate projects during the property bubble. They include the Landmark, a luxury condominium and retail development near Denver, and a stalled hotel-condominium project in Phoenix. Hypo has taken control of both properties in the past 18 months, according to Real Capital Analytics. “Hypo Real Estate jumped on the biggest and most spectacular real estate projects in the U.S. because that was the easiest way to grow quickly,” said Wolfgang Gerke, president of the Bavarian Center of Finance in Munich, where Hypo is based. “Their megalomania was what brought them down in the end.” Soured Loans: U.S. loans are a fraction of the up to 210 billion euros ($265 billion) of “non-strategic assets” that Hypo will try to wind down, Gerke said. Yet they loom large for the bank and for German taxpayers because the debt is weighed down by defaults, foreclosures and litigation. Some 67 percent of Hypo’s U.S. real estate loans were on a watchlist or non-performing at the end of June, according to the company. That’s up from 58 percent six months earlier. Hypo doesn’t disclose which loans are on the list. Under Evan Denner, who headed the bank’s U.S. real estate financing arm, Hypo Real Estate Capital Corp., the firm boosted U.S. commercial-property lending, which rose to about 6.5 billion euros at the end of June from 4.2 billion euros in 2004. The projects included the W South Beach Hotel & Residences in Florida and the Trump International Hotel & Tower in Hawaii’s Waikiki Beach. Denner, who holds a masters degree from Columbia University in New York, left in 2009. He now works at Cantor Fitzgerald LP and said he couldn’t comment.

NFL teams get $acked - (www.nypost.com) The average value for NFL teams has fallen for the first time since Forbes began keeping track in 1998. The magazine released its annual rankings yesterday, which show the average team decreased 2 percent in value from last year to $1.022 billion. The Dallas Cowboys remain No. 1 and widened the gap between themselves and the rest of the NFL. They're now worth $1.805 billion. The New York Giants were ranked No. 4, with a value of $1.18 billion, and the New York Jets, ranked No. 6, are worth $1.14 billion.

Morgan Stanley Analyst Says Governments to Default - (www.bloomberg.com) Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director. “Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote. Rather than miss principal and interest payments, governments may choose a “soft” default in which they pay back debts with devalued currencies resulting from faster inflation or force creditors to take lower returns, Mares said in an interview. Borrowing costs for so-called peripheral euro-region nations from Greece to Ireland surged today, resuming their ascent on concern that governments won’t be able to cut their budget deficits. Standard & Poor’s lowered Ireland’s credit rating yesterday on the rising cost of supporting nationalized banks.

Obama and Aides Discuss Ways to Spur Economy - (www.nytimes.com) Amid the latest signs of a faltering recovery, President Obama held a lengthy conference call with economic advisers on Wednesday to discuss a course of action in a partisan election season that leaves them little room to maneuver. The call, which the president held from his vacation retreat, was with his Treasury secretary, Timothy F. Geithner; Christina D. Romer, the soon-departing chairwoman of the Council of Economic Advisers; and Lawrence H. Summers, director of the White House National Economic Council. The discussion came as the second report in two days pointed to a weaker-than-expected housing sector — a weakness that acts as a drag on the broader economy. “The discussion focused on recent data reports, global markets and economic growth,” said a White House statement afterward. “The economic team provided an update on the next steps to keep the economy growing, including assistance to small businesses and the extension of tax cuts to the middle class.”

'Free rent' signs of trouble - (www.toledoblade.com) Commercial real estate agent Joe Belinske never thought retail life could be like it is today on Monroe Street near Westfield Franklin Park mall. "Monroe Street used to rent itself. People never put out 'For Lease' sign. You didn't have to market it," said Mr. Belinske of CB Richard Ellis/Reichle Klein, a Toledo commercial real estate firm. But these days all along the Monroe Street-Talmadge Avenue corridor - the Toledo area's crown jewel of commercial real estate - times are tough. "For Lease" signs have proliferated on Monroe from Sylvania Avenue past Talmadge to the Target shopping plaza. Some of the signs feature a shocking indicator of hard times: "Free rent." Area rents have fallen significantly, and what was the price for hidden space in strip malls that looked away from the road, is the going price for better sites that look straight out onto Monroe.

OTHER STORIES:

Cerberus’ NewPage Turns ‘Increasingly Toxic,’ CreditSights Says - (www.bloomberg.com)

Falcone's wireless plan relies on hedge fund assets - (www.reuters.com)

FSA seeks to avoid financial ‘froth’ - (www.ft.com)

Southern California Edison Bonds Pay Record-Low Yield for 30-Year Notes - (www.bloomberg.com)

U.S. Credit-Default Swaps Benchmark Climbs to the Highest in Seven-Weeks- (www.bloomberg.com)

Bank of Korea Governor Kim Says `Vigilance' Is Required on Inflation Risks - (www.bloomberg.com)

U.S. plans to strengthen anti-dumping trade regime - (www.reuters.com)

China's Official Inflation Data Mask Surge in Food Prices, Medical Costs - (www.bloomberg.com)

Europe Loan Growth Accelerates as Economy Recovers - (www.bloomberg.com)

Jobless Claims in U.S. Decline More Than Economists Estimated to 473,000 - (www.bloomberg.com)

Bernanke Expected to Sketch New Fed Action on Economy - (www.nytimes.com)