These PE Firms Are About To Get Crushed By Their Subprime Auto Bets

In the aftermath of the ‘great recession,’ private equity firms placed massive bets on subprime auto finance companies with the typical “thesis” going something like this: “well, people have to get to work don’t they?”…genius, if we understand it correctly.
Of course, the “thesis” seemed to be confirmed when auto securitizations performed relatively well throughout the financial crisis, amid a sea of mortgage bonds getting wiped out, and private equity titans were off to the races with wall street titans from Perella Weinberg to Blackstone and KKR scooping stakes in small niche lenders.
Unfortunately, as Bloomberg points out today, the $3 billion bet on subprime auto lenders hasn’t played out precisely to plan as the “well, people have to get to work” thesis has proved to be somewhat less than full proof.
A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone Group LP has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times. And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits.
Since the turn of the decade, buyout firms, hedge funds and other private investors have staked at least $3 billion on non-bank auto lenders, according to Colonnade. Among PE firms, everyone from Blackstone and KKR & Co. to Lee Equity Partners, Altamont Capital and CIVC Partners waded in.

This post was published at Zero Hedge on Dec 21, 2017.

Sam Zell Is Stumped: “For Amazon’s Value To Be Justified, It Has To Be Worth 25% Of The US Economy In 5 Years”

When it comes to the last financial crisis, few timed the peak quite as well as Sam Zell, who sold his Equity Office Properties Trust, the largest office REIT, to Blackstone in 2007, literally days before the bottom fell out of the market. So, with Goldman dying to know when the next crash will take place, it is no surprise that it picked Zell as one of the people to ask. Unfortunately, Zell was unable to provide the much desired answer, and instead when Goldman’s Allison Nathan asked him “how much longer do you think the current economic expansion can last?” His answer was anticlimatic: “Frankly, I don’t have any idea. If I knew the answer to that, I would be rich. A year and a half ago, I said we were in the eighth or ninth inning of the expansion. But I think the election of Trump has changed that. There is more optimism in the business sector now, which has given us extra innings. So this expansion may last a little longer than everybody thinks.”
(Indicatively, when Zell says he “would be rich”, it is unclear just what number he envisions besides “more”: his current net worth is $5 billion according to Forbes.)
What, according to Zell is the cause for this “business sector optimism”? Surprisingly, his answer – as has been the case for a while – is Donald Trump:
Allison Nathan: Has your initial optimism post the election waned given the challenges Trump has faced in making progress on his legislative agenda?
Sam Zell: No, just the opposite. Despite all of the public tweeting and noise surrounding our president, the reality is that the steps he’s taken on deregulation, reversing executive orders, and so forth are confidence-building and very positive. The possibility of changing Dodd-Frank to increase lending to small businesses, for example, could have a very big impact. And I think that’s why the economy is responding in the same positive manner as is the stock market.
Allison Nathan: If tax legislation doesn’t pass, would that make you more pessimistic?

This post was published at Zero Hedge on Nov 10, 2017.

Why Have Investigations of Wall Street Disappeared from Corporate Media?

Hurricanes, wildfires, the multiple investigations of Russia’s involvement in the 2016 presidential election and the calamity-du-jour in the Trump White House are gobbling up an outsized share of digital and print news pages at corporate media. What’s gone missing is intrepid, in-depth investigations of Wall Street’s latest scam against the public – even at corporate media outlets purporting to focus on Wall Street.
Consider today’s front page of the Wall Street Journal: there’s an article on health care; central banks and stimulus; Iraqi forces and Kurdish fighters; how Blackstone Group is on the prowl for retail investors; and a curious report on long-haul truckers cooking up jambalaya and Thai peanut pork (you can’t make this stuff up). There is nothing about an investigation of a mega Wall Street bank; the dangers these behemoths continue to pose to taxpayers and the U. S. economy; nothing about Wall Street’s return to its jaded ways that led to the epic financial crash of 2008 – despite the fact that all of this is happening and timely and the public has a right to be reading about it in a paper whose beat is ostensibly Wall Street.
Rupert Murdoch’s News Corp. bought Dow Jones & Company in late 2007 after a century of ownership by the Bancroft family. The purchase just happened to come at a time when the Federal Reserve had secretly begun to funnel what would end up totaling $16 trillion in cumulative low-cost loans to bail out the Wall Street mega banks and their foreign counterparts.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Wall Street Icon Warns The Fed’s Balance Sheet Unwind “Is Very Dangerous For Markets”

Authored by Christoph Gisiger via Finanz und Wirtschaft,
Blackstone’s market maven Byron Wien warns that stocks are in danger of suffering a setback. But he also explains why investors should keep their calm and weather the impending storm.
To expect the unexpected is the key to success in investing. That’s exactly what Byron Wien has built himself a unique reputation on: For more than thirty years the living Wall Street legend publishes a yearly list with ten surprises that will have a meaningful impact on the global financial markets. People all over the world are aware of it and identify me with it, says the Vice Chairman in the private wealth group of Blackstone. What they seem to like about it is that I put myself at risk by going on record and hold myself accountable at the year end, he adds.
So how accurate are Wien’s predictions for 2017 so far? Which developments could surprise investors during the rest of the year? And first and foremost: Where does the experienced market maven see the biggest risks and opportunities right now?
Mr. Wien, everybody on Wall Street knows you for your yearly prediction of ten surprises. What is for you personally the most astonishing development so far this year?
I would say I’m having an average year where I get five or six surprises right. Everybody calls them forecasts or predictions but they really are surprises. To me, a surprise is an event that the average investor would only assign a one out of three chance of taking place but which I believe has a better than 50% likelihood of happening. I never get them all right but I don’t do it for score. I do it to get people thinking.

This post was published at Zero Hedge on Jul 26, 2017.

World Stocks Hit Record High For 10th Consecutive Day In “No-Vol Nirvana”

The relentless risk levitation continued overnight, as global shares extended their stretch of consecutive record highs on Thursday for a 10th day after a cautious BOJ lifted Asian stocks to a decade high with a dovish announcement that offered no surprises, while pushing back Kuroda’s 2% inflation target to 2020, the 6th consecutive delay. With all eyes on the ECB in just over an hour, US equity futures are in the green, following solid gains around the globe. European stocks extended their biggest gain in a week while Asian equities maintained their rally. Microsoft, Blackstone, Philip Morris and Ebay are among companies reporting earnings. Initial jobless claims data due.
Traders – so mostly algos – are riding a global risk “high” in stocks as Asia’s and then Europe’s early 0.4 percent gains ensured MSCI’s 47-country All World index was up for a 10th straight session. This is the longest winning streak in global stocks since February 2015 and shows little sign of fatigue even as bond yields edged modestly higher again. The Stoxx Europe 600 Index rose 0.3 percent as of 9:53 a.m. in London. The U. K.’s FTSE 100 Index rose 0.5 percent to near the highest in a month. The MSCI Emerging Market Index fell 0.1 percent, the first retreat in almost two weeks. The VIX index closed below 10 for a record fifth consecutive day. Appropriately, Bloomberg dubbed the move a “no-vol” nirvana, in which stocks and bonds keep rallying as volatility evaporates.

This post was published at Zero Hedge on Jul 20, 2017.

Private Equity Sets Its Sites On A New Funding Victim: Mom-And-Pop 401(k)s

After laying ruin to the defined-benefit pension plans of public and private employees over the past several decades, Wall Street has its sites set on its next victim: mom-and-pop 401(k)s. Sure, because as our recent headlines confirm, wall street money managers have worked wonders for public/private pension funds:
Are Collapsing Pensions “About To Bring Hell To America”? How Chicago’s Largest Pension May Run Out Of Cash In As Little As 4 Years NY Teamsters Pension Becomes First To Run Out Of Money As Expert Warns “Pension Tsunami” Is Coming Dallas Police Pension On Verge Of Collapse As Record Number Of Cops Seek Full Withdrawals Alas, with companies increasingly opting for defined-contribution retirement plans (401k’s) in-lieu of defined benefit plans, combined with the trillions of dollars of losses that wall street has racked up for the nation’s largest pensions, it’s no wonder that ‘millionaire, billionaire, private jet owners’, like Stephen Schwarzman of Blackstone, are looking to get their ‘fair share’ of fees from America’s $4.8 trillion in 401(k) assets.

This post was published at Zero Hedge on Apr 20, 2017.

Global Stocks Rise, S&P Futs Flat As Dollar Rebounds Ahead Of Critical Week For Markets

European bourses advance and Asian share rose led by a surge in Hong Kong stocks which rose the most in three months as Japan hit 15 month highs. U. S. futures are little changed along while the dollar rebounded from session lows after Friday’s selloff. Crude oil has continued its retreat, down 0.2% and sliding for a 6th straight day after breifly dropping below $48 in overnight trading.
The Hang Seng China Enterprises Index jumped the most since November amid easing concern that U. S.-China political tensions will weigh on the yuan after BlackStone’s Steve Schwarzman, one of Trump’s top economic advisers, said Sunday on CNN that Trump will likely temper his criticisms of China, including his campaign claim that the country manipulates its currency. South Korean equities rose to the highest since May 2015 following last Friday’s impeachment of president Kim, while European shares headed for a fourth straight gain. The dollar fell against most major currencies, with the euro climbing for a third day. Oil kept sliding below $50 as U. S. drillers continued to boost activity, countering OPEC’s efforts to drain a global glut. Industrial metals advanced for a second day.

This post was published at Zero Hedge on Mar 13, 2017.

Financialization of Rents Gets Taxpayer Guarantees

Government buckles, guarantees rental-home mortgage-backed securities for first time ever. Wall Street wins again.
Invitation Homes, the 2012 buy-to-rent creature of private-equity firm Blackstone, and now owner of 48,431 single-family homes, thus the largest landlord of single-family homes in the US, accomplished another feat: it obtained government guarantees for $1 billion in rental-home mortgage backed securities.
The disclosure came in an amended S-11 filing with the SEC on Monday in preparation for Invitation Homes’ IPO. Invitation Homes bought these properties out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. The IPO filing lists $9.7 billion in single-family properties and $7.7 billion in debt.
Some of this debt will be refinanced with the proceeds from the sale of the $1 billion of government-guaranteed rental-home mortgage backed securities.
The government agency that has agreed to guarantee the ‘timely payment of principal and interest’ of these ‘Guaranteed Certificates,’ as they’re called, is Fannie Mae, one of the government-sponsored entities (GSE) that has been bailed out and taken over by the government during the Financial Crisis.

This post was published at Wolf Street on Jan 24, 2017.

Investors “Stunned” To Learn Hedge Funds Expense Bar Tabs, Private Jets, Trader Bonuses

With storm clouds already building above the hedge fund industry, which as reported last night posted deplorable results in 2016 as only 32% of fundamental and quantitative funds outperformed their benchmarks according to JPM data – the worst performance this decade – leading to the largest redemption requests since the financial crisis, as over $100 billion was withdrawn from the industry last year, the latest shock to hedge fund investors, already displeased with underperforming the S&P for years, is the realization that they also pay for many if not all hedge fund expenses, resulting in substantial payments over and above those envisioned by the conventional 2 and 20% model.
The reason for their confusion and/or anger is simple: as Reuters points out, some of the more prominent hedge funds such as Citadel LLC and Millennium Management LLC charge clients for such costs through so-called “pass-through” fees, which can include everything from a new hire’s deferred compensation to travel to high-end technology. And it all adds up with investors often paying more than double the industry’s standard fees of 2% of assets and 20 percent of investment gains, which in light of recent performance has already infuriated countless investors leading to a historic outflow from active to passive managed funds.
Clients of losing funds last year, including those managed by Blackstone Group LP’s Senfina Advisors LLC, Folger Hill Asset Management LP and Balyasny Asset Management LP, likely still paid fees far higher than 2 percent of assets.

This post was published at Zero Hedge on Jan 19, 2017.

Evictions by Wall-Street Mega-Landlords Soar, Financialization of Rents Cause ‘Housing Instability’: Atlanta Fed

It blames the Fed & Bernanke; the dark side of ‘healing’ the housing market.
The housing collapse during the Financial Crisis keeps on giving. On Friday, Invitation Homes, a creature of private-equity firm Blackstone, and largest landlord of single-family rental homes in the US, filed with the SEC to raise up to $1.5 billion in an IPO. Deutsche Bank, JP Morgan, BofA Merrill Lynch, Goldman Sachs, Wells Fargo, Credit Suisse, Morgan Stanley, and RBC Capital Markets are the joint bookrunners and get to cash in on the fees.
Invitation Homes, founded in 2012, now owns 48,431 single-family homes, according to the filing. It bought them out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. Revenues for the nine months through September 30 rose 11.4% to $655 million, producing a net loss of $52 million. It lists $9.7 billion in single-family properties and $7.7 billion in debt.
Blackstone was a pioneer in the post-Financial Crisis buy-to-rent scheme, including issuing the first rent-backed structured securities in November 2013. The collateral for the $479-million deal was rental income from 3,207 homes. Blackstone paid rating agencies Moody’s, Kroll, and Morningstar to rate the bonds; so nearly 60% of the debt was rated AAA. Other tranches carried lower ratings. The overall cost of capital to Blackstone from the securitization of these rents was about 2.01%. Cheap money! Thank you hallelujah QE and ZIRP.

This post was published at Wolf Street by Wolf Richter ‘ Jan 7, 2017.

Foreclosure Crisis Comes Full Circle? Biggest Buy-to-Rent Landlord Plans IPO (Despite Red Ink Everywhere)

The financialization of rents.
In the Fed-engineered asset price inflation since the Financial Crisis, the value of the US housing stock has ballooned to $35 trillion, as large private equity firms have muscled into the single-family housing market, long the domain of mom-and-pop investors. They have acquired about 160,000 single-family houses out of foreclosure for least $32 billion. In the process, the homeownership rate has dropped to the lowest since 1965. And now comes the time to sell it to the public.
The largest player in the field, Blackstone’s Invitation Homes, which spent about $10 billion since the Financial Crisis, or about $150 million a week during the heyday, on about 50,000 homes in 14 metropolitan areas, has confidentially filed for an IPO, according to The Wall Street Journal. But it will face some, let’s say, challenges.
Other players in the buy-to-rent scheme include American Homes 4 Rent, which got started in 2012 and now owns about 48,000 rental houses in 22 states. It went public in August 2013 at $16 a share. It produced a net loss every year since, sports negative EPS of -25 cents and and a whopping negative PE ratio of -84. But its stock closed today at $21.09 a share.
Starwood Waypoint Residential Trust, spun off from Starwood Property Trust Inc., a commercial-property investment and finance REIT, started trading in February 2014. It has merged this year with the portfolio of houses owned by real estate mogul Thomas Barrack, changed its name to Colony Starwood Homes, and is now the third-largest landlord in the US. It too has lost money every year, has negative EPS of -47 cents and a negative PE ratio of -64. And its stock too is up and today closed at $30.02 a share.

This post was published at Wolf Street on Dec 6, 2016.

Is Wall Street Trying to Rig Trump’s Business Advisory Panel?

On December 2 President-elect Donald Trump’s transition team sent out a press release advising that he had formed a business advisory panel ‘which is composed of some of America’s most highly respected and successful business leaders, will be called upon to meet with the President frequently to share their specific experience and knowledge as the President implements his plan to bring back jobs and Make America Great Again.’
In fact, according to the Chair of the panel, Stephen A. Schwarzman, Chairman and CEO of Blackstone, a private equity/hedge fund/investment bank headquartered in New York City, it was Schwarzman who actually selected the members of the panel and Trump went with the full group he had selected. (See Schwarzman’s Bloomberg TV interview here.)
Aside from being a disparate cacophony of voices from wildly different businesses ranging from Boeing, a commercial jet manufacturer, to the Cleveland Clinic with no representation at all from labor or consumers, the panel has an outsized representation from the financial sector with one particularly curious member.

This post was published at Wall Street On Parade on December 6, 2016.

Schwarzman, Dimon, Fink Will Advise Trump How To Create Jobs

Shortly after Donald Trump picked former Goldman partner Steven Mnuchin as Treasury Secretary, he was rumored to be considering another Goldmanite, current President and COO Gary Cohn – who as reported earlier this week is already contemplating “life after Goldman” – for energy secretary. The follows a previous report that Trump may appoint Cohn as head of the Office of Management and Budget. So, as Trump wonders which other Goldman banker to poach to fully outsource financial management of the US directly to Goldman, a taxpayer-backed hedge fund which has already taken over the world’s central banks, he decided to spread the Wall Street love and earlier today announced that he has created an economic panel chaired by Blackstone’s Stephen Schwarzmann, whose members will also include such illustrious “non-swampies” as Jamie Dimon and Larry Fink, as well as various other “prominent U. S. business leaders” to get Wall Street’s advice on such matters as … job creation.
The President’s Strategic and Policy Forum will begin meeting with Trump in February after his inauguration. From the announcement:
President-elect Donald J. Trump today announced that he is establishing the President’s Strategic and Policy Forum. The Forum, which is composed of some of America’s most highly respected and successful business leaders, will be called upon to meet with the President frequently to share their specific experience and knowledge as the President implements his plan to bring back jobs and Make America Great Again. The Forum will be chaired by Stephen A. Schwarzman, Chairman, CEO, and Co-Founder of Blackstone.

This post was published at Zero Hedge on Dec 2, 2016.

Billionaire, Wall Street Democrat Added To Treasury List As More Clues Emerge On Trump Cabinet

Trump held meetings with several potential candidates for senior administration jobs over the weekend at his Trump National Golf Club in Bedminster, New Jersey. While no new official announcements were made over the weekend, we did get a couple of new clues on potential appointments to key positions.
Of the open positions, the running for Treasury Secretary has emerged as one of the most highly contested with a handful of very successful candidates. As Bloomberg reports, Trump’s weekend meetings in New Jersey included sessions with Jon Gray, a billionaire democrat from Blackstone who vehemently supported Hillary’s campaign. Other candidates for the Treasury job include Trump campaign finance manager Steven Mnuchin; David McCormick, the president of hedge fund Bridgewater Associates; and billionaire Wilbur Ross. Jamie Dimon’s name has also been tossed around for the Treasury post though it’s unclear whether he would be interested.
President-elect Donald Trump discussed the possibility of naming Blackstone Group LP’s Jon Gray as Treasury secretary during a half-hour meeting the two held Sunday, according to people familiar with the events. Gray, 46, a billionaire who oversees real estate at the world’s biggest manager of alternative assets, is a Democrat who financially supported Hillary Clinton during the campaign. He’s one of a number of business executive to be considered for the role by Trump’s transition team, joining a list that includes Trump campaign finance manager Steven Mnuchin; David McCormick, the president of hedge fund Bridgewater Associates; and billionaire Wilbur Ross.
Ross, a distressed-debt investor, met with Trump on Sunday and is also being considered to lead the Commerce Department, people with knowledge of the deliberations have said. Ross entered his meeting at the Trump National Golf Club in Bedminster, New Jersey, about 10 minutes after Gray exited his, which lasted about 32 minutes. McCormick later arrived at the golf resort.
The ‘in-depth’ conversation with Gray ‘included the economy, global capital markets and the world financial situation,’ Trump’s transition team said in a statement late Sunday. ‘Future legislation regarding the tax code and long-term debt were also discussed.’
David McCormick, president of the hedge fund Bridgewater Associates, also met with Trump. McCormick, a West Point graduate who served in the first Gulf War, later worked at Treasury and in the White House during the George W. Bush administration.

This post was published at Zero Hedge on Nov 21, 2016.

China’s HNA Group Acquires 25% Stake In Hilton For $6.5 Billion

Last night when we discussed the latest acquisition by the Chinese financial conglomerate China Oceanwide of Genworth we said that “Should the deal close, it will likely unleash a surge of more Chinese acquisitions of questionable US companies, leading to even more short squeezes on concerns that the “Chinese are coming.” We didn’t have long to wait: moments ago another Chinese conglomerate, HNA Group, announced it had acquired a 25% equity stake in Hilton Worldwide Holdings from Blackstone for $6.5 billion, or $26.25 in cash.
The deal represents a ~15% premium to HLT’s last close $22.91 and reduces Blackstone’s interest in Hilton to ~21%. Blackstone will keep 2 seats on HLT board, including Jon Gray who will remain chairman. According to Bloomberg, HNA will enter into a stockholders pact with HLT, and into similar agreements with Park Hotels & Resorts and Hilton Grand Vacations, effective upon closing. The deal allows HNA to appoint 2 directors (1 HNA member, 1 independent member) to HLT’s board, bringing total to 10 members.
Furthemore, HNA agrees to some restrictions on selling stake for 2 yrs, and will vote shares in excess of 15% proportionally with holders.

This post was published at Zero Hedge on Oct 24, 2016.

A Stagflationary Firestorm Approaches

For the Western gold community, the main theme for 2016 continues to be, ‘let the good times roll!’ To understand why that is true, please click here now. Double-click to enlarge. GDX just raced to yet another new high for the year, and my next target prices are $33 and $37. Technically, the situation is superb; there’s a momentum-style buy signal in play on my 14,7,7 Stochastics series, and the price chart is a textbook ‘staircase’ pattern of higher highs and higher lows. Please click here now. Double-click to enlarge this wonderful daily gold chart. This Friday’s jobs report could be the catalyst that pushes gold towards $1392, and on to my $1432 target. Here’s why: The US government could face a sovereign bond crisis if Janet Yellen hikes rates in a material way, but wage pressures and entitlements spending are growing while corporate earnings growth is stagnant. That’s a deadly recipe for a ‘stagflationary firestorm.’ Each strong jobs report that is met with no interest rate hike from Janet convinces more institutional money managers that inflation is on the horizon, and so they buy undervalued gold stocks relentlessly. I’ve argued emphatically that the Western world is moving from system risk to stagflation risk, and I’m in very good company with that view. Please click here now. Byron Wien is a highly influential analyst at Blackstone Advisory Partners. It’s mainly amateur investors who are focused on the supposedly grand ‘upside breakout’ in the US stock market. In contrast, pros that move enormous amounts of liquidity like Wien don’t see any material upside to the market, and they are getting worried about the effect of wage pressures on inflation.

This post was published at GoldSeek on 2 August 2016.

Large investors make the full exit: Big rental investors like Blackstone are now selling properties to current renters.

Big Wall Street investors stopped buying real estate in large quantities back in late 2014. In many casesbig investors had front row seats at banks and were able to buy in bulk and for incredibly low prices not offered to the public. This crowding out of course has caused two major things to unfold: inventory to dwindle and a push up in prices for regular families looking to buy. For the first time in history many things happened in the housing market including nationally falling prices but also a large interest from Wall Street in single family homes. Now with prices near previous peak levels many of these large investors are making the full exit by offering to sell the homes to current tenants, for of course a modest increase. Those bailouts that were geared to helping the public actually created a system that has slammed the homeownership rate lower and has now jacked home prices up once again. Large investors are now making their final play by cashing out.
Large investors cashing out
An interesting story from Bloomberg examines this new trend:
‘(Bloomberg) Melissa Suniga and her mother had been renting a three-bedroom Phoenix house for less than a year when their landlord, Blackstone Group LP’s Invitation Homes, gave them the chance to buy it.

This post was published at Doctor Housing Bubble on July 15, 2016.

Ultimate Market Timer Sam Zell: ‘Know What the Problem Is?’

Zell gets even gloomier, hammers ZIRP, starts selling. ‘No one has ever accused me of not being a realist,’ Sam Zell told CNBC. The chairman of Equity Group Investments and of apartment mega-landlord Equity Residential was talking about the markets for office and apartment buildings in some major cities that have already peaked.
‘Overall we’ve come off this extraordinary period of liquidity and this extraordinary period of low interest rates,’ he said. ‘I think we’re unlikely to see a repeat of that going forward, and I think we’re going to see more supply in what had been pretty tight markets.’
And he has been selling. Back in 2007, he once again proved his sense of market timing. As the commercial property bubble was already teetering, he sold Equity Office Properties Trust to Blackstone for $23 billion, not including $16 billion in debt. Then prices crashed, and commercial property defaults hit the banks. As the dust was settling at the end of the Great Recession, he went on a shopping spree.

This post was published at Wolf Street on May 27, 2016.

Blackstone Deal Hammers San Francisco Commercial Real Estate

Signs of a bust pile up. Private-Equity firm Blackstone Group is planning to acquire Market Center in San Francisco, a 720,000 square-foot complex that consists of a 21-story tower and a 40-story tower.
The seller, Manulife Financial in Canada, had bought the property in September 2010, near the bottom of the last bust. In its press release at the time, it said that it ‘identified San Francisco as one of several potential growth areas for our real estate business and we are optimistic about the possibilities.’ It raved that the buildings, dating from 1965 and 1975, had been ‘extensively renovated and modernized with state-of-the-art systems in the last few years….’ It paid $265 million, or $344 per square foot.
After a six-year boom in commercial real-estate in San Francisco, and with near-impeccable timing, Manulife put the property on the market in February with an asking price of $750 per square foot – a hoped-for gain of 118%!
Now the excellent Bay Area real estate publication, The Registry, reported that Blackstone Real Estate Partners had agreed to buy it for $489.6 million, or $680 per square foot, ‘according to sources familiar with the transaction.’ The property has been placed under contract, but the deal hasn’t closed yet.

This post was published at Wolf Street on May 15, 2016.

Creditors Stumble into New Black Hole at Energy Giant Abengoa

Accounting tricks come home to roost. Over a month ago, it seemed that Abengoa, the global renewables giant headquartered in Spain, that once thought it had mastered the dark arts of financialization only to crumble under the weight of its own debt, appeared to be on the path to recovery. Or at least rebirth.
A Spanish judge had agreed to give the firm seven more months’ breathing space through a debt standstill. More importantly, 75% of the company’s lenders, including banks and bondholders, had provisionally agreed to the company’s restructuring plan, which includes a debt-for-equity swap and 70% write-downs on its over 9 billion debt.
The plan also includes opening up between 1.5-1.8 billion of credit lines for Abengoa, as well as 800 million in guarantees. Much of this would be provided by current bondholders and lenders, though some of the slack is expected to be picked up by private equity firms like KKR, Blackstone, Cerberus, Apollo, Centerbridge, Children’s Investment fund (TCI) and Oaktree.

This post was published at Wolf Street by Don Quijones ‘ May 10, 2016.