This real estate developer is happy that new home construction is falling

This real estate developer is happy that new home construction is falling

by Real Estate News

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


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Recent headlines point to a slumping US housing market — as mortgage rates average near 7{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, an increasing number of potential homebuyers are finding it difficult to finance homes.

Mortgage applications fell in late February to a 28-year low, according to the Mortgage Bankers Association. But some of the country’s largest homebuilders are undeterred.

David O’Reilly, CEO of the real estate developer Howard Hughes Corp., told CNN that he’s “cautiously optimistic” that the residential housing market is rebounding after a downturn in the second half of 2022.

Before the Bell spoke with O’Reilly about Howard Hughes Corp

(HHC). and his outlook for the market.

This interview has been edited for clarity.

Recent data point to doom and gloom for the housing market. What are you seeing?

O’Reilly: I hear the headlines and they generate a lot of clicks, but I don’t see the death and destruction or anything close to what we saw during the global financial crisis. This, in my estimation, will be a very modest downturn. First, as a country, we’re short between four and five million homes. We just haven’t built enough to keep up with household formation since the global financial crisis. In most markets, we’re close to record lows in terms of inventory for homebuilders.

Sure, home prices are down but we’re just giving back some of the gains we saw in 2020. We’re still making an outsized profit relative to historical norms. When you hear about homebuilders buying down mortgage rates [contributing part of the purchase price upfront], they’re doing the things that they should do to help move inventory and they’re doing it very profitably.

David O' Reilly, CEO of the real estate developer Howard Hughes Corp. This real estate developer is happy that new home construction is falling.

Are you having issues attracting new buyers because of higher mortgage rates?

The mortgage rate is less impactful to homebuyers than the volatility of interest rates.

When interest rates are moving, rising or falling quickly, they create a pause amongst buyers because they want to know where it settles out. No one wants to lock in if they think the mortgage could be cheaper in a month. I think homebuilders have, to a large extent over the past several months, tried to take some of the volatility out of the market. Some of the volatility has come out naturally as the rate increases have been consistent with expectations and mortgage rates have behaved normally, but some of the risk and uncertainty has been taken out because home builders are saying we’re gonna lock in your rate at, you know, 4.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} or 5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, for a year or two.

Even though that 5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate is much higher than the 3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate a couple of years ago, it gives the consumer confidence to act without the uncertainty of rate volatility.

Are we in a housing recession?

In the second half of 2022 we saw a meaningful downturn in home sales nationally. We saw meaningful reductions across the board. But I’m cautiously optimistic that we’re starting to see a turn. I find it encouraging that home sales for the past several months have increased.

But what about new housing starts? Construction is falling.

New housing starts continue to fall — to me, that’s great news. During the second half of 2022 we saw the cancellation rate on new home sales surge. Those cancellations left a lot of standing inventory — home builders with homes that they were building for someone that canceled sitting on them.

The fact that they’re selling more but building less tells me that they’re eating through that inventory. And that is a great sign for the rest of this year.

▸ It’s all about the labor market this week as a slew of jobs data for February is set to be released.

Last month’s massive surprise — 517,000 jobs were added to the US economy when economists were expecting 185,000 — sent the stock market reeling. Investors are hoping that numbers fall back down to earth to help cool the economy and inflation along with it. If they don’t, expect market swings as the Fed will face more pressure to hike interest rates to keep prices in check.

ADP’s private payroll report for February and the JOLTS job openings, hires and quits report for January are expected Wednesday. On Thursday, Challenger, Gray & Christmas is set to release its job cuts numbers for February, and Friday brings the main show — the US jobs report for February.

Analysts expect that the economy added 200,000 jobs in February and the unemployment rate is expected to remain at a historically low 3.4{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

▸ Speaking of the Fed, Chairman Jerome Powell will be on the hot seat this week as he testifies before the Senate on Tuesday and the House of Representatives on Wednesday. In his semi-annual report to lawmakers, Powell will likely stress that the Fed will need to take more action to get inflation back down to its 2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} target. Investors will watch lawmakers question Powell, and he’ll likely be asked to defend his fight to cool the economy, which could hurt wage growth.

▸ President Joe Biden is also expected to unveil his Federal budget proposal for the next year. He’s promised that it will include tax hikes for the wealthy — something that Wall Street typically doesn’t like to hear. While the president’s budget proposal is just that — a proposal — it will likely guide Democratic policy initiatives for the year to come. That means we’ll likely hear more about increasing capital gains taxes and taxes on controversial corporate stock buybacks, two policy proposals that also rattle investors.

Amazon made two recent announcements that don’t sound very good for the company — at least at face value.

The company is pausing construction on its second headquarters in northern Virginia, the company confirmed in a statement to CNN on Friday. Bloomberg first reported news of the pause.

John Schoettler, Amazon’s real estate chief, said the company is pushing back the new headquarters’ second-phase groundbreaking. The first phase is still under construction and expected to open in June.

The company’s decision to pause construction comes just two months after Amazon CEO Andy Jassy confirmed the company would be eliminating more than 18,000 jobs, the largest cut in its history. Amazon hired rapidly in the early years of the pandemic and it is cutting costs as consumers shift their behavior.

But Wall Street applauded the news on Friday. Amazon

(AMZN) stock surged 3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} higher.

That’s because investors want the company to reduce its expenses as revenue slows and the economic forecast remains dour. Jassy said during Amazon’s fourth quarter earnings report that he plans to do just that.

Amazon also announced on Friday that it will close eight cashier-less brick and mortar stores in Seattle, New York and San Francisco.

A developer plans luxury homes on a beloved Main Line property. But locals are pushing to ‘Save Rock Hill Farm.’

A developer plans luxury homes on a beloved Main Line property. But locals are pushing to ‘Save Rock Hill Farm.’

by Luxury Real Estate

The rolling hills, lush meadows, and verdant woodlands at Rock Hill Farm in Willistown offer you glimpses of the earlier.

They are also the concentration of a struggle about the potential — not only of Willistown and Chester County, but of after-rural, suburbanizing communities in other collar counties of Philadelphia, the place bucolic vistas prolonged treasured by locals are supplying way to McMansions and Wawas.

“These significant tracts of undeveloped land, these heritage landscapes? After they’re absent, they are gone,” mentioned Pennsylvania Point out Sen. Carolyn T. Comitta, a Chester County Democrat.

Prolonged owned by a conservation-minded nearby household, Rock Hill Farm was acquired for $25.4 million previous December by the substantial-profile developer and businessman J. Brian O’Neill, who is trying to get acceptance to make as lots of as 22 luxurious residences on parts of the 246-acre assets.

Willistown’s Setting up Fee is set to vote on his subdivision application Wednesday if authorised, the approach will be scheduled for a assessment and vote by the township’s Board of Supervisors. Because the software does not ask for exemptions from Willistown’s zoning regulations, the developer could be equipped to establish the residences by-ideal.

But supporters of a campaign named Help you save Rock Hill Farm — who selection 350 and counting, in accordance to organizers — mentioned they want to stave off a development they feel will inevitably destruction the natural environment, character, and quality of lifetime in Willistown and outside of.

“We’re just people of Willistown, Easttown and neighboring communities who are passionate about preserving the gains of open up area for the community at significant,” explained Les Haggett, a leader of the group whose household in Easttown is across South Valley Highway from the O’Neill residence. The group has dispersed additional than 500 “Save Rock Hill Farm” symptoms and additional than 100 matching T-shirts.

Haggett stated that though Rock Hill has very long been in personal fingers, its open up meadows, woods, and waterways are a neighborhood landmark “that allows the setting breathe.” He and other folks in the group would like the residence to develop into publicly available open up place and place out that its expanses of undeveloped greenery and scenery previously visually connects Willistown’s general public Ockehocking and Kirkwood preserves.

“Open house lets people in,” Haggett reported. “Development of this character keeps most people today out. ”

He and other individuals stated it’s tough to have an understanding of why a township that has supported land conservation given that the 1980s would think about a system to construct on one particular of it greatest remaining rural attributes. They also issue out that Rock Hill incorporates habitats for birds and other wildlife.

The farm contains a 10-bedroom principal property built in 1900, together with many smaller sized houses, barns, and other structures. The land is house as effectively to a Crum Creek branch that empties into a reservoir that delivers drinking drinking water to Delaware County inhabitants.

“We moved here from the reduce Most important Line simply because we consider in open up space,” reported Michele Cruise, who with her partner, Mark, has lived in Willistown given that 2000.

O’Neill and Edmund J. Campbell Jr., the King of Prussia lawyer symbolizing the developer just before the setting up commission, declined to remark. Associates of the Willistown Preparing Commission and Board of Supervisors also did not react to requests for remark.

In a July 7 letter, Campbell introduced to the fee 3 potential ways to building the assets at South Valley, White Horse, and Grubb Streets.

The first proposal is for by-suitable development of five properties on the White Horse segment, with 17 added houses to be built on a new cul-de-sac in the property’s 100-acre eastern portion. The developer would retain the appropriate to separately request acceptance for additional solitary-family members residential development around the present key dwelling on the farm’s 122-acre western portion.

An choice described in the letter consists of building of a single residence in the White Horse area and 20 a lot more in the jap part. A 2nd choice phone calls for construction of 13 homes in the jap part and order of a $12.5 million conservation easement by a 3rd get together to forever maintain about 75{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the complete home.

“Our preference is to see land in rural areas permanently preserved as open up space,” Brian N. O’Leary, govt director of the Chester County Planning Fee, mentioned in an e-mail. An advisory body, the county commission is examining O’Neill’s proposals.

“When [total preservation] is not feasible … we endorse that residences be clustered jointly with sizeable open up house preservation,” he said in the electronic mail, and explained proposals to do so as “generally consistent” with the county’s in depth program.

There are 147,000 preserved acres in Chester County, representing 30.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of its full land location. Willistown experienced 4,400 acres, or 38{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of its land spot, preserved, at the end of last year.

“If you’re heading to have advancement,” O’Leary mentioned afterwards through an job interview from his business, “then what they [O’Neill’s company] are proposing is quite very good.”

Climbing genuine estate values have ongoing to spur the sale and subdivision of previous estates and upscale farm attributes, notably in Key Line communities.

In June, for instance, Reduce Merion Township opted to enable the Linden Hill estate to be subdivided into five constructing heaps.

Whilst larger charges can complicate land preservation attempts, there have been noteworthy current successes: In April, Westtown Township moved to obtain 208 acres of Crebilly Farm for $20.8 million programs contact for the land to turn into a park.

In the meantime, the 209-acre Kirkwood Farm house on Providence Highway in Willistown was shown for sale final winter season in ads touting its “endless views” and other characteristics.

“To the very best of our knowing, the property is less than an agreement of sale with a non-public customer, and we are hopeful to have a superior conservation final result,” claimed Kate Etherington, executive director of the Willistown Conservation Trust.

Founded in 1996, the belief employs conservation easements and other equipment to guard environmentally delicate and or else considerable land in and all-around Willistown from improvement by respecting the legal rights of, and performing with, residence entrepreneurs.

The have faith in has served conserve 7,500 acres in the headwaters of the Crum, Ridley, and Darby Creeks.

“As for Rock Hill,” Etherington stated, “we continue on to have conversations with the present-day proprietor.”

Fascination in sustaining historic, environmentally sensitive, or or else significant local places and landscapes is nothing new in and around Willistown.

The hamlets of Historic Sugartown and the White Horse Historic District entice readers. The community can obtain walking trails on 10 websites that have been guarded from development. And a e-book about Willistown heritage titled Acres of Quakers, posted in 2006 by the township historic commission, ran to 685 internet pages — and finished in the calendar year 1900.

Help you save Rock Hill Farm has an lively existence on Fb and somewhere else on social media, and members such as Haggett and Cruise explained by themselves as newcomers drawn into activism because of the stakes involved.

“Change is fantastic in a ton of ways”, mentioned Rachel Breskman, a member who grew up in Willistown. “But with Rock Hill Farm the [proposed] alter is damaging. Not successful.”

Comitta, who serves as minority chair of the Pennsylvania Senate’s environmental methods and vitality committee, saluted the grassroots effort.

Land conservation “is a really complex puzzle” that can take time to get suitable, she reported.

“It’s not linear and it is not quick. But it can be finished,” Comitta explained.

“In the situation of Rock Hill Farm, I think it should really be carried out.”

This tale has been updated. An before edition misidentified an opponent of the proposed progress. His name is Mark Cruise.

Developer seeks .8M in damages, says bank violated agreement for Pa. property

Developer seeks $3.8M in damages, says bank violated agreement for Pa. property

by Investment Property

WILLIAMSPORT-A Lycoming County firm that specializes in the development of serious estate for the restaurant marketplace is in search of far more than $3.8 million in damages professing a lender violated a ideal-of-first-provide settlement with a State College region house.

Pennsylvania Expenditure Qualities II (PIP II) in a criticism submitted Friday in U.S. Middle District Court accuses Truist bank of selling the property in the 2500 block of East University Avenue without having giving it the required chance to buy it.

PIP II, dependent in Williamsport, statements it paid out BB&T (predecessor to Truist) an supplemental $50,000 for the arrangement when it ordered the adjacent house for $500,000 in 2016.

The agreement, according to the suit, needed PIP II to be notified in crafting of the bank’s intention to sell the parcel so it had the option to negotiate its order.

In accordance to the courtroom grievance, PIP II uncovered very last September the home had been offered to Horizon Federal Credit rating Union at least a 12 months earlier for $1 million.

PIP II, whose principals are Albert and Paul Clapps, states it was well prepared to pay the $1 million for the about 1½-acre residence at a targeted traffic light-weight together a busy freeway (Route 26).

PIP II experienced made a Burger King on the land it bought in 2016 and says it experienced programs for a complementary restaurant on the 2nd web-site.

Its spot would assistance a causal eating facility these as Applebee’s, Olive Yard, Buffalo Wild Wings, Hooters and Joe’s Crab Shack, the suit contends.

The criticism factors out the Clapps have decades of practical experience developing cafe locations.

Albert Clapps is a former regional vice president/district supervisor for Carrols Corp. and was portion of the administration staff assigned to make your mind up which of the 222 Carrols cafe spots would be transformed to Burger Kings.

He and a enterprise companion fashioned A.M.L. Growth Corp. in 1979 that owned and operated Burger King franchises for 30 a long time.

Paul Clapps joined A.M.L. starting in 1996. The two formed Pennsylvania Investment decision Qualities the exact yr and PIP II in 2008. Each corporations have made restaurant houses in the course of Pennsylvania.

He also is included with partners who have true estate and small business developments in the Williamsport location.

The chance to acquire and establish the Centre County assets would have produced a monetary obtain to PIP II in excessive of $3.8 million, the breach of contract accommodate states.

Centered on their expertise, the Clapps estimate it would price $1.35 million to construct a everyday cafe on the residence with yearly hire remaining in the hundreds of hundreds of pounds.

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Indiana Real Estate Developer and Property Manager Admits Ponzi Scheme to Defraud Investors of Millions of Dollars | USAO-NJ

Indiana Real Estate Developer and Property Manager Admits Ponzi Scheme to Defraud Investors of Millions of Dollars | USAO-NJ

by Investment Property

NEWARK, N.J. – A assets developer and supervisor from Indiana today admitted his part in a scheme to defraud authentic estate traders, U.S. Legal professional Philip R. Sellinger declared.

Herbert Whalen, aka “Bert Whalen,” 47, of Indianapolis, Indiana, pleaded guilty by videoconference in advance of U.S. District Choose Madeline Cox Arleo to the first depend in an indictment, charging him with conspiracy to dedicate wire fraud

“The defendant preyed on harmless victims’ need to enhance their individual financial position as a result of what they thought were seem investments,” U.S. Attorney Sellinger stated.  “Working with our partners at the FBI, we had been equipped to find his illegal activity and guarantee that he will now confront justice for his crimes.  Combatting expense fraud remains 1 of our highest priorities, and this conviction sends a very clear information that these kinds of carry out will be punished.”

“Investment fraud schemes take lots of varieties and as prolonged as there are trusting persons, on the lookout for what seems like a superior way to shield and grow their revenue, these fraudsters will carry on to strike,” Special Agent in Cost George M. Crouch Jr. claimed. “The FBI is frequently on check out for burglars who paint their strategies as golden prospects to make on your wealth when, in fact, they are only creating theirs employing your hard-acquired funds. The ideal defense is still avoidance: do your research and check out multiple web-sites like FBI, SEC, and FINRA, to validate legitimacy really don’t imagine the buzz – if it appears far too excellent to be legitimate, it most likely is and check out any seemingly wonderful opportunity through the lens of skepticism. Last of all, if you suspect fraud, report it to ideas.fbi.gov.”

In accordance to paperwork submitted in this situation and statements built in court docket:

From August 2016 to July 2018, Whalen, who operated Oceanpointe Residence Administration in Indianapolis, engaged in a scheme to get dollars from serious estate investors by misrepresenting and concealing the bad affliction of properties managed by Oceanpointe and by producing faux leases for unoccupied Oceanpointe homes. Buyers were being promised that, following repairs and rehabilitations had been completed, and tenants rented the properties, investors would acquire copies of the leases and begin to acquire rent payments as their return on expenditure. In actuality, several Oceanpointe attributes were not repaired and rehabilitated, and were being not all set for occupancy. To conceal this point from victim buyers, Whalen and a conspirator directed Oceanpointe staff members to draft phony leases, making it seem to investors that Oceanpointe qualities were rented, when, in reality, the attributes remained vacant. Whalen instructed Oceanpointe workers to area faux tenant names on leases to ship to Oceanpointe buyers.

When investors attempted to check out the houses that they had purchased, Whalen directed Oceanpointe employees to include the windows to conceal the weak affliction of the attributes and the point that the qualities remained vacant. Whalen and other people commingled tenant rent payments and picked which buyers would be paid from the pool of funds in order to silence investors who voiced concerns and evade detection of the fraud. In purchase to reduce buyers from leaving Oceanpointe and exposing the fraudulent perform, Whalen directed an Oceanpointe personnel to generate a fake id and falsely claim, on an on-line genuine estate concept forum, that the Oceanpointe employee was an trader with Oceanpointe and yet another firm, and that Oceanpointe had addressed all of the problems pertaining to the financial investment property. These misrepresentations and other people led to thousands and thousands of pounds in losses to investors, which Whalen utilised to, among other issues, fund his lifestyle.

The cost of conspiracy to commit wire fraud carries a most likely punishment of 20 years in prison and a good of up to $250,000, or 2 times the gross loss or achieve induced by the offense. Sentencing is scheduled for July 14, 2022.

U.S. Attorney Sellinger credited distinctive agents of the FBI, underneath the route of Exclusive Agent in Demand George M. Crouch Jr. in Newark, with the investigation main to today’s responsible plea.

The govt is represented by Assistant U.S. Attorneys Carolyn Silane of the Financial Crimes Unit and Ari B. Fontecchio of the Distinctive Prosecutions Division in Newark.

China’s Shimao Group, another big Chinese real estate developer, might need to sell off property

China’s Shimao Group, another big Chinese real estate developer, might need to sell off property

by Real Estate News

This week, two main credit history ranking businesses downgraded Shanghai-based developer Shimao Group even more into junk territory. The enterprise has been grappling with mounting personal debt and is contemplating providing some qualities to lessen its credit card debt load.

“Shimao’s liquidity has significantly deteriorated — the decline is worse than we formerly expected,” claimed S&P World Rankings, which lower the firm’s credit score ranking to B-. Just two months back, S&P was continue to score Shimao as expenditure quality. “We now evaluate the company’s liquidity to be weak.”

Moody’s on Monday slash Shimao’s ranking to B2 citing “elevated” liquidity threats, a substantial amount of financial debt owing in the around expression, and weakening accessibility to funding.

About the weekend, the Chinese media outlet Caixin documented that Shimao has set on sale all of its domestic real estate initiatives as the hard cash-strapped firm scrambles to dispose of belongings. Shanghai Shimao International Plaza, one of the tallest skyscrapers located in the coronary heart of Shanghai, could be sold to the city’s govt-owned companies for extra than 10 billion yuan ($1.6 billion), the report explained.
On Tuesday, Shimao denied in a Hong Kong stock exchange submitting it experienced entered into any preliminary settlement about the disposal of Shanghai Shimao Worldwide Plaza.

But it acknowledged that it is in conversations with probable consumers about some asset revenue.

The enterprise “may perhaps look at disposing of selected attributes if the terms and disorders are correct,” it included.

The strain on Shimao marks however a different snag for Chinese real estate, which has been in disaster for a while. The crunch commenced in 2020, when Beijing started out cracking down on extreme borrowing by developers in a bid to rein in their high leverage and suppress runaway housing selling prices. But the dilemma escalated considerably previous fall as Evergrande — China’s most indebted developer with some $300 billion in liabilities — began warning much more urgently of liquidity issues.
Evergrande has due to the fact been labeled a defaulter by Fitch Scores after showing to skip spending some monetary obligations very last month. Govt officials are also now associated with the company’s recently established danger administration committee, a transfer broadly perceived as guiding the business by a restructuring of its personal debt and sprawling enterprise operations.

Shimao was once considered a more healthy developer than its seriously indebted rivals. But in the past thirty day period it has endured a bond and stock rout as financial debt woes unfold in the residence sector.

Shares of Shimao Team have tumbled more than 20{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in the earlier month.

Shimao Team has a substantial selection of financial debt maturities owing in 2022, including $1.7 billion worth of offshore bonds, 8.9 billion yuan ($1.4 billion) really worth of onshore bonds, and “sizable” offshore lender loans, in accordance to Moody’s.

But the firm is producing “sluggish development” on fundraising and refinancing, growing uncertainties over its capacity to pay off financial debt, in accordance to Moody’s. The scores company also forecast Shimao’s residence revenue to decline “notably” over the upcoming six-to-12 months, impacted by weakening homebuyer assurance.

S&P analysts also expect Shimao’s liquidity to further deteriorate.

“The firm is struggling with heightened refinancing challenges due to nevertheless-restricted regulatory ailments, aside from the materially weakened money markets accessibility,” they stated.

Evergrande can't pay its debts. China is scrambling to contain the fallout

Other builders — together with Kaisa and Fantasia — are also having difficulties with the fallout from the actual estate sector turmoil, as the deepening slowdown in the assets market place, coupled with hazard aversion among banks and buyers, would make it more difficult for them to refinance.

On Tuesday, analysts from Morningstar mentioned liquidity pressure in China’s house sector could develop into a “downward spiral” due to the fact of all the credit history ranking downgrades, which will reduce off developers from accessing cash marketplaces even more.

“To restore self esteem in the sector, the authorities really should be supportive of financing attempts by better names like Shimao, which has complied with” money regulatory suggestions, wrote Cheng-wee Tan, a senior fairness analyst at Morningstar, in a investigation note.

The Chinese government has taken methods to consist of the property slowdown, which includes the move by regional authorities to work with Evergrande on possibility administration.

The People’s Lender of China lower the sum of cash that banking institutions need to hold in reserve very last thirty day period, unleashing 1.2 trillion yuan ($188 billion) for business enterprise and family financial loans. Times later on, the central bank slash its most important desire rate for the initial time in 20 months, stepping up endeavours to increase slower advancement.

Tan stated the authorities could also provide specific assist to “improved names” in the marketplace, these as directing point out corporations to order property from people developers.

Trading of Chinese property developer Kaisa shares halted in Hong Kong

Trading of Chinese property developer Kaisa shares halted in Hong Kong

by Real Estate News

Trading in shares of Chinese real estate developer Kaisa was halted Wednesday for the second time in two months, as troubles in China’s property sector resurfaced this week.

The developer had been snowed under by debt issues, as it struggled to make repayments recently.  It looked unlikely that it met its $400 million offshore debt deadline on Tuesday, according to Reuters.

Kaisa halted trading in early November for nearly three weeks, following news that it had missed a payment on a wealth management product.

There was no immediate reason given for the latest trading halt. Kaisa had said in late November that it would restructure offshore debt payments due in December by offering investors new bonds worth $380 million that are now due in 2023. The original U.S. dollar-denominated bonds were worth $400 million.

But last week, the developer failed to close an exchange offer with bondholders. Among other options, bondholders could choose to buy new bonds issued by Kaisa that could be exchanged with equity in some of the developer’s listed units. That failure to reach a deal increased Kaisa’s chances of default, analysts have said.

Among Chinese developers, Kaisa is the second-largest issuer of U.S. dollar-denominated offshore high-yield bonds, according to French investment bank Natixis. Evergrande, the world’s most indebted real estate developer, ranks first.

Kaisa shares have slumped about 20{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} over the past month.

Evergrande, which saw its debt crisis surface in recent months, came back under the spotlight this week as it looked likely to officially default for the first time. There was still no word from the developer on whether it has paid $82.5 million worth of interest — the 30-day grace period ended Monday.

It would be the first time that the firm formally defaults if so, as it has managed to make the last few interest payments at the eleventh hour — within the grace period deadline.

However, Evergrande, the world’s most indebted developer, is set to forge ahead into a debt restructuring that would include all of its offshore public bonds and private debt.

Sentiment has also been buoyed by China’s move toward an emphasis on easing. On Monday, the country’s central bank said it would cut the reserve requirement ratio, or the amount of cash that banks must hold as reserves, for the second time this year. That frees up 1.2 trillion yuan ($282 billion) to boost slowing growth amid the pandemic.

I think overall, the government understands that you will have a few failures, but the sector as a whole continues to be a very important part of the economy.

Teresa Kong

head of fixed income and portfolio manager, Matthews Asia

China’s real estate sector has been hit by the government’s moves to tame debt. Evergrande’s problems came to a head after the authorities rolled out the “three red lines” policy last year. That policy places a limit on debt in relation to a firm’s cash flows, assets and capital levels. That started to rein in developers after years of growth fueled by excessive debt.

Other Chinese real estate developers — apart from Kaisa — also started showing signs of strain – some missed interest payments, while others defaulted on their debt altogether.

“The story for China property still remains intact,” said Teresa Kong, head of fixed income and portfolio manager at Matthews Asia, suggesting that China’s pace of urbanization is still in the early stages.

“So there’s still many households that will be forming, especially the urban areas as workers continue to migrate out of the rural areas into the urban areas,” she told CNBC’s “Squawk Box Asia” on Wednesday. “I think overall, the government understands that you will have a few failures, but the sector as a whole continues to be a very important part of the economy.”

Kong also highlighted that local provincial governments — which have been very dependent on land sales to developers — need to think about alternative sources of revenue.

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