Tag Archives: San Francisco

Mortgages: Reno Better Than Manhattan for Buyers Demanding Yield

According to Bloomberg,

Commercial real estate investors are moving to smaller markets and buying suburban properties as they search for higher returns after snapping up the most desirable buildings in the biggest U.S. cities.

Reno Better Than Manhattan for Buyers Demanding Yield: Mortgages (Bloomberg)

Reno Better Than Manhattan for Buyers Demanding Yield: Mortgages (Bloomberg)

Demand for office buildings, retail centers and warehouses in cities such as Reno, Nevada; Greensboro, North Carolina; and Louisville, Kentucky, is surging as yields shrink for real estate on the coasts and in larger cities. Properties on the outskirts of major metropolitan areas also are attracting interest, with prices for suburban offices rising faster than downtown real estate, according to an index compiled by Moody’s Investors Service and Real Capital Analytics Inc.

“There’s plenty of capital for real estate,” said Jim Sullivan, a managing director at Green Street Advisors Inc., a Newport Beach, California-based property-research company. “If investors are in search of bargains, they do need to move a bit further out on the quality spectrum.”

Buyers competing for top-tier buildings fueled a real estate rebound in cities including New York and San Francisco, then moved on to secondary markets such as Houston and Portland, Oregon, and now are shifting their attention to smaller areas. The “low-hanging fruit” in the biggest cities already has traded hands in recent years, said Hessam Nadji, chief strategy officer at Marcus & Millichap Real Estate Investment Services.

“Yields in those markets have compressed pretty quickly,” he said in a telephone interview. “Investors seeking higher yields are going to secondary and tertiary locations.”

Wider Swath

A survey released yesterday by PricewaterhouseCoopers LLP and the Urban Land Institute on trends for 2014 showed a rising level of confidence in markets outside of major areas as banks, insurers and private-equity firms prepare to increase financing to the sector. Wall Street may issue more than $100 billion in commercial mortgage-backed securities next year, which would be more than any period except the boom years of 2005 through 2007.

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Twitter’s IPO May Value It at $11.1 Billion

Source: Bloomberg News

Source: Bloomberg News

According to The Wall Street Journal, Twitter Inc. on Thursday said it would price its shares at $17 to $20 in an initial public offering, valuing the messaging service at up to $11.1 billion, a number seen as conservative even for a company facing widening losses.

The proposed market value would makeTwitter worth nearly twice as much asGroupon Inc., GRPN +3.11% the daily deals company, but less than one-tenth of social-networking rival Facebook Inc.

As proposed, Twitter’s IPO could raise as much as $1.6 billion for the company, whose service has grown to more than 230 million monthly active users since the first “tweet” was sent in 2006.

Analysts said the company might yet raise the target price. If the offering is well received, it could signal that investors are willing to wager on a big future for social-media companies even in the absence of profits, which Twitter doesn’t have. The deal comes amid the best year for U.S.-listed IPOs since 2007 based on number of deals.

With a price range established, Twitter can now begin to pitch investors who would have access to the starting IPO price. The company is expected to settle on a final price on Nov. 6, according to a marketing document reviewed by The Wall Street Journal. Twitter shares would then begin trading the next day on the New York Stock Exchange NYX -0.12% under the symbol TWTR.

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Hedge Fund’s Cancun Dream Explained in Junkiest Junk Deal

Hedge Fund’s Cancun Dream Explained in Junkiest Junk Deal

At a time when bond buyers are shunning junk, Hyatt Hotels Corp. (H) and Farallon Capital Management LLC are trying to drum up financing for 13 all-inclusive beach resorts from Cabo San Lucas to Cancun with Latin America’s riskiest debt in three years.

Playa Resorts Holding BV, a joint venture between Hyatt and the $19.2 billion San Francisco-based hedge fund, is planning to raise $300 million of seven-year bonds that Moody’s Investors Service rates Caa1, or seven levels below investment grade. If completed, the sale would be the first of such a low-rated corporate dollar bond in the region since now-defunct Brazilian meatpacker Independencia SA issued debt in 2010.

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Can Brazil Start-Ups Succeed Despite Tough Short-Term Outlook?

The consensus among investors and entrepreneurs in Brazil is that the short term will be difficult, but that long-term prospects remain highly favorable.

The consensus among investors and entrepreneurs in Brazil is that the short term will be difficult, but that long-term prospects remain highly favorable.

Brazil’s Internet start-ups were once the darlings of emerging markets, attracting venture capitalists from around the world. But after two-plus years of growth, the sector is facing tougher times, reports Vinod Sreeharsha from NY Times.

Numerous young companies, even those with prominent investors, are struggling to show sustainable profitability despite early rapid growth in revenue. A case in point: Shoes4You, an e-commerce site selling designer footwear, decided to close down last month, despite being backed by the prominent United States investment firms Redpoint Ventures, Accel Partners and Flybridge Capital Partners.

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