PPCC: Pisitófilos Creditófagos. Invierno 2024

[Benzino Napaloni]

Esto no vale para el nuevo himbersor que se ha metido al buy-to-let con hipoteca variable a tipos negativos. Ese está jodido de verdad. ¿Hay suficientes como para que suponga una diferencia?

No lo creo. Esto da para Schadenfreude pero poco más. El placer de ver al que aspiró a "ascender" para vivir de la gorra sin gorra, sin inquilino, sin piso, y sin nada.

Al que ya se forró, cuando por la razón que sea no pueda cobrar tanto, le dará más bien igual y que le quiten lo bailado.

De todos modos la furia que hay en Cataluña por el inminente topado de rentas revela que por aquí hay bastantes metidos en la trampa del "buy to let".

[Derby]

https://www.ft.com/content/7f779977-186c-4868-9a0b-44aed802b605

Julius Baer’s profits tumble 52% as Signa hit triggers CEO exit

Philipp Rickenbacher will leave Swiss wealth manager after loans to troubled property group soured

Julius Baer was hit by a 52 per cent fall in annual profits as the Swiss wealth manager announced it was writing off its SFr606mn ($700mn) exposure to the crisis-hit Signa property group.

The Swiss lender also confirmed the departure of chief executive Philipp Rickenbacher, which was reported by the Financial Times and other media outlets on Wednesday. He will be replaced on an interim basis by his deputy and chief operating officer, Nic Dreckmann.

As a result of the biggest crisis to hit the bank in at least five years, Julius Baer reported SFr454mn of profit in 2023 — down from SFr950mn a year earlier — and earnings per share of SFr2.21, down 52 per cent.

“Speaking on behalf of the entire board of directors, I deeply regret that the full loss allowance for the largest exposure in our private debt business has significantly impacted our net profit for 2023,” said chair Romeo Lacher.

The wealth manager is one of the biggest lenders to Signa, a European luxury developer whose assets include a stake in KaDeWe, Germany’s most famous department store, and in the Chrysler Building in New York.

Julius Baer disclosed in November that the largest exposure in its private debt loan book was to one client — reported at the time to be Signa — and said it was taking a SFr70mn provision against potential losses.

It also said it was reviewing its private debt lending business. Since then its shares have dropped 15 per cent.

On Thursday it confirmed that it was exiting the specialist business, winding down its remaining private debt book of SFr800mn — which accounted for 2 per cent of its total loan book — and refocusing on its traditional areas of credit, such as Lombard lending and mortgages.

Despite the Signa loss, Julius Baer still increased its common equity tier one ratio — an indicator of its financial resilience — from 14 per cent to 14.6 per cent over the year and raised its liquidity coverage ratio from 233 per cent to 291 per cent.

Julius Baer said the five members of the executive board who were involved in credit decisions would be stripped of their 2023 bonuses and other members would have their variable pay “substantially reduced”.

Lacher and members of the board’s governance and risk committee will forgo their share-based fees, while Julius Baer also confirmed an FT report that David Nicol, chair of the committee, would not stand for re-election at the bank’s annual meeting in April.

“The board of directors will focus on reinforcing a strong risk culture, in line with our overarching objective to use our solid balance sheet with the utmost prudence for the benefit of our clients,” Lacher added.

[Derby]

https://www.businessinsider.com/banks-commercial-real-estate-loan-sales-debt-interest-rates-2024-1

Lenders are bailing out of commercial real estate as a wave of debt builds

*Some $2.1 trillion of commercial estate debt is estimated to come due by the end of 2025.
*Banks and other lenders could face big losses on those debts.
*Recent loan sales show that banks are trying to limit their exposure.

Amerant Bank, a large community bank based in Coral Gables, Florida, recently announced that it had reached a deal to sell a $401 million portfolio of loans tied to a collection of apartment buildings in Houston for $370 million – a roughly 7% discount on the debt's remaining balance.

Amerant's chief executive, Jerry Plush, described the planned sale on a January 25 earnings call as part of an effort to refocus its business on clients with whom the bank has an ongoing relationship. 

Banking and loan experts, however, see deeper motivations behind the decision by the bank and a growing number of other financial institutions that are beginning to unload commercial real estate loans.

"I don't ever like banks having to take a loss," said Stephen Scouten, a senior research analyst at Piper Sandler who covers Amerant. "Longer term, it's probably of some benefit."

Roughly $2.1 trillion of debt connected to commercial real estate assets, including office properties, apartment buildings, hotels, and retail spaces, will come due between now and the end of 2025 in the US, according to the real estate services firm JLL. With higher interest rates sapping commercial property values, JLL estimates that property owners will have to pour about $265 billion into paying down those loan balances in order to refinance. 

The wave of maturities and the enormous equity shortfalls have raised concerns that a growing number of commercial real estate debts will fall into distress, forcing banks and other lenders to suffer losses. 

The recent loan sales suggest that lenders are beginning to take a defensive posture, diminishing their exposure to the commercial property sector and raising cash.

"Staring at a problem is not going to make it go away," said Kevin Aussef, the president of US investment sales at CBRE, who noted that the firm had just been hired by the Canadian bank CIBC to sell a $316 million bundle of US office loans. "At some point in time, you are better off responding to it than waiting."

Aussef said that, for the time being, banks were seeking to sell off healthier loans at prices close to the face value of the debt and avoid heavily discounted sales that might force them to mark down loans more broadly across their portfolios.     

"We're not seeing an avalanche of these lenders coming to the market," Aussef said.

The pace, however, is picking up.

David Tobin, a cofounder of Mission Capital, a loan sale advisory that is a subsidiary of the property brokerage firm Marcus & Millichap, said that an increase in loan dispositions began in the second half of 2023, when major institutions like PacWest, HSBC, and Synovus sold notable portfolios.

His group tracked about $15 billion of commercial property debt sales during the year, roughly three times the volume from 2022. Hard data on such loan dispositions is scant and transactions are not always public, but Tobin said he expects a similar amount to trade in 2024.

"It should be a robust market," Tobin said. Buyers can include real estate investors willing to take control of the property assets tied to the loans or who see an opportunity to assume debts that pay attractive returns.
 
More discounts to come?

Not every potential investor, however, is ready to buy just yet. Some see bigger discounts in the near future as distress picks up. 

David Frosh, CEO at the specialty lending firm Fidelity Bancorp Funding Inc., for instance, said that banking executives in recent months have begun to inquire with him "every other week" to gauge his interest in purchasing commercial property loans they hold.

None have grabbed his interest however, he said, because they're not being offered at sizable enough markdowns.

"At the end of the day, the defaults are coming," Frosh said. "How big and when, I don't know."

Commercial real estate loans differ from residential mortgages taken by homeowners in that most are interest-only or pay down their principal balance minimally and span a decade or less. The system can subject property owners to the debt market during inopportune moments, such as the aftermath of the financial crisis when credit dried up, and today, where rates have risen to their highest level in decades.

Segments of the property market are in worse shape than others. Some office properties, for instance, have suffered a fundamental shift in value as a result of the widespread adoption of remote work and diminished leasing demand.   

Only 51% of securitized office loans were refinanced between October 2022 and December 2023, according to Fitch – well below the 73% refinance rate for the wider commercial real estate market. The ratings agency projects the situation will deteriorate in 2024, with less than 25% of maturing securitized office loans refinancing during the year. 

The agency predicts that office defaults will rise to 8.1% in 2024 and 9.9% in 2025 – higher than the 8.5% default peak during the financial crisis.

Even major investors have abandoned office deals, including Brookfield, which walked away from a portfolio of office towers in downtown Los Angeles, and Blackstone, which defaulted on 1740 Broadway, an office building near Columbus Circle in Manhattan. Bloomberg recently reported that the special servicer for the roughly $300 million securitized loan tied to 1740 Broadway was shopping the loan to potential buyers for half the value of the debt. The special servicer, Midland, declined to comment for this article.   

"We wrote this property off two years ago, and in the event a buyer is identified, we will work collaboratively to transfer the ownership," a spokesman for Blackstone told Business Insider in an email.

Beyond the office sector, higher interest rates have fundamentally reset values across property types as investors seek returns that remain above the yields they can reap from risk-free investments like Treasurys. An investor considering a $100 million property, for instance, that produces $5 million – a 5% return – might today demand a higher yield of 8%. That shift would revise the property's value to around $63 million if the rental income remains steady, wiping out some, or all, of its existing equity.

Considering that lenders, in recent years, frequently extended debts up to about 60% of a property's value, the decreases in property prices have also made existing mortgages outsized in relation to the new values. Frosh believes that such loans require double-digit discounts to become compelling to buyers. 

"Take the keys"

Some lenders and borrowers have arranged deals to extend debts in the hope that interest rates will drop this year, values and revenue will rebound, and a property's financial situation can be salvaged.

The nearly $700 million in mostly securitized debt at Aon Center, an 83-story tower in Chicago, entered special servicing at the beginning of 2023, a situation where a property is flagged by its lender as nearing default.   

"We were in a position that nobody wanted to be in, which was high interest rates on the heels of a one- to two-year period where office leasing was slowed," said David Blumberg, a managing director at 601W Companies, the investment firm that owns the tower.

The landlord, however, recently struck an agreement to add three years to the loan at a reduced interest rate.

"Everybody's consensus was that if we did a three-year extension, we'd get to the other side of the mess with certainty," Blumberg said, referring to the property's lenders and executives at 601W.

Such deals don't come cheaply, loan experts say, requiring owners to invest millions of dollars of cash to pay down portions of the debt, create reserves for building improvements and other costs related to leasing space, and forgo fees and revenue until a property's financial situation is stabilized.

Blumberg said that 601W had to invest $40 million to receive the extension on Aon Center's loan package.

Not every owner will decide to invest that kind of cash into the uncertain proposition that property values will bounce back in the next few years.

"It's really a question of what the sponsor thinks his property's worth today and in the future," said Rob Verrone, the founder of Iron Hound Management, a company that arranges and restructures commercial real estate debts. If "the lender says to you, we will give you an extension, but you got to put $10 million in, you may say: take the keys."

More banks are exploring loan sales

Banks and other lenders generally aren't eager to seize the real estate assets that collateralize their debt. Foreclosures can take months or longer and owning property is costly, requiring lenders to cover maintenance, insurance, and other operating charges.

"You've got taxes that are mounting up, insurance costs that are as high as they've ever been on commercial properties," said Bliss Morris, the founder and CEO of First Financial Network, a loan sale broker and advisor who has offices in Oklahoma City and New York. "These are all things that the banks have to think about."

Morris said she has seen a growing flurry of banks who are exploring loan sales to avoid the risk of having to take back properties.

"I can tell you, most of the bankers that we talk to today would just as soon exit the loan on as high a value note as they can versus getting into a long-term, drawn out foreclosure."

[Derby]

https://www.hellenicshippingnews.com/dry-bulk-watches-evergrande-liquidation-after-16-5-drop-in-real-estate-investment/

Dry bulk watches Evergrande liquidation after 16.5% drop in real estate investment

“China’s property market is estimated to account for approximately 35% of the country’s steel demand. It is an important driver for economic growth and raw materials like iron ore, coking coal, wood, and cement. Overall, the Chinese economy is a significant driver of dry bulk and more than 35% of dry bulk volumes are destined for China,” says Filipe Gouveia, Shipping Analyst at BIMCO.

On 29 January, a Hong Kong court mandated the liquidation of China Evergrande Group, a major property developer burdened with debt of more than USD 300 bn. This development could further erode investor confidence and worsen the outlook for China’s real estate sector. In 2023, investment in real estate declined by 16.5%, even as the economy grew.

The court’s mandate was issued in response to Evergrande’s failure to present a viable restructuring plan. Yet, Evergrande may still appeal, and it is still uncertain whether the ruling will be accepted by the Chinese courts.

The Chinese real estate crisis began in 2020. The government stepped in to curb soaring debt levels and since then, Evergrande has been at the forefront of the crisis. It has significantly impacted construction activity, with floor area of new real estate dropping to less than half of what they were before the crisis.



Over 85% of China’s steel is manufactured in blast furnaces which use iron ore and coking coal as raw materials. Given China’s depleted iron ore resources, the country relies heavily on imports, importing 73% of global seaborne iron ore volumes.

“Despite the property crisis, Chinese steel production increased in 2023 due to higher steel exports and strong demand from car manufacturing. Consequently, both iron ore and coking coal shipments strengthened, leading to stronger freight rates for capesize ships,” Gouveia says.

In the short term, the outlook for Chinese dry bulk imports seems stable. Both exports and car manufacturing could continue to support steel production in China, while iron ore inventories are down 7% y/y. Furthermore, Evergrande’s Chief Executive has asserted that current housing projects will be delivered.

“In the medium term, the outlook for the dry bulk market, especially for the capesize segment, will depend on how China manages the liquidation of Evergrande. Some believe that Evergrande will be allowed to fall with negative impact on home buyers, financial institutions, economic growth, and iron ore demand. We believe that at least some of the negative effects will be mitigated by the government,” says Gouveia.

[Derby]

https://www.ft.com/content/9199361a-06bd-4de2-8b57-f8cef7143dd3

Bank losses revive fears over US commercial property market

Lenders in US, Asia and Europe hit by exposure to sector struggling with lower occupancy and higher interest rates

Mounting losses from banks in the US, Asia and Europe have rekindled concerns about weakness in the US commercial property market, a sector that has been under pressure from lower occupancy levels and higher interest rates. 

Regional US lender New York Community Bancorp revealed on Wednesday that it had taken large losses on loans tied to commercial property, while Japan’s Aozora Bank and Deutsche Bank warned on Thursday about the risks from their exposure to US real estate. 

The losses mark the latest fallout from the US commercial property market’s dual problems of fewer people working in offices since the pandemic and more expensive borrowing costs. 

“We expect evidence of distress to ramp up this year as loan extensions end,” said Kiran Raichura, deputy chief property economist at Capital Economics. “Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market.”

NYCB, whose share price soared last year after it scooped up the collapsed Signature Bank at the height of the crisis among US regional lenders, said on Wednesday it had taken $185mn in losses on just two property loans and set aside more than $500mn to cover potential loan losses.  

The revelations shocked investors, sending NYCB’s stock down almost 40 per cent to wipe out its gains since its takeover of Signature. The pressure continued on Thursday, with the stock down a further 14 per cent in early New York trading. 

The fallout from NYCB weighed on other regional bank stocks, a sector that has still not fully recovered from the collapse of Silicon Valley Bank and other mid-sized lenders last year.

Banking analysts said NYCB’s poor results had resulted from factors particular to the lender — especially its move to a higher classification in regulatory oversight because of its larger scale following the Signature acquisition — but cautioned that it still served as a reminder of the worries around real estate.

Bank of America analysts wrote in a note that higher losses tied to commercial real estate office exposure “are a reminder of ongoing credit normalisation that we are likely to witness across the industry”.

The ripple effects were felt in Tokyo, where shares in Aozora crashed by their maximum limit on Thursday after it forecast a full-year loss on overseas real estate loans and warned that it would take as much as two years for the US office market to stabilise. 

Aozora, a mid-sized lender, revised down its previous forecast for a profit of ¥24bn ($164mn) for the financial year ending in March to a net loss of ¥28bn. The profit warning triggered a drop of more than 21 per cent in the bank’s shares, which had been trading close to a five-year high ahead of the announcement.

Deutsche Bank, meanwhile, also lifted provisions for losses on loans linked to US commercial real estate to €123mn, from just €26mn a year before.

The worries around real estate are not limited to the US. Switzerland’s Julius Baer reported a more than 50 per cent drop in its profits on Thursday after it wrote off SFr606mn ($700mn) from its exposure to the crisis-hit Signa property group. The losses were steep enough to result in the departure of chief executive Philipp Rickenbacher.

[Cadavre Exquis]

Okta To Lay Off 7% of Staff Because 'Reality is That Costs Are Still Too High'
Posted by msmash on Thursday February 01, 2024 @09:46AM from the tough-luck dept.

Identity management company Okta said on Thursday in a message to employees that it would lay off 400 employees, about 7% of the company's headcount. From a report:

CEO Todd McKinnon said in his message that the "reality is that costs are still too high." Okta is only the latest tech company to trim headcount in the opening weeks of 2024. Nearly 24,000 tech workers lost their jobs in January alone, even as many tech companies saw their stock prices continue to grow.

Saludos.

[Derby]

https://www.reuters.com/markets/boc-governor-says-if-inflation-goes-higher-rates-will-be-hiked-2024-02-01/

BoC Governor says if inflation goes higher, rates will be hiked

OTTAWA, Feb 1 (Reuters) - Bank of Canada's Governor Tiff Macklem reiterated on Thursday that new developments could push inflation higher and that would mean the central bank might still need to raise interest rates.

"If new developments push inflation higher, we may still need to raise rates," said Macklem in his address to the finance committee in the House of Commons.

The central bank would want to see inflationary pressures easing with a clear downward momentum in underlying inflation as it is concerned about the persistence of underlying inflation.

[Derby]

https://www.bde.es/f/webbe/SES/Secciones/Publicaciones/Informesituacionfinancierafamiliasyempresas/2023/S2/Fich/SituacionFinanciera_022023.pdf

INFORME DE LA SITUACIÓN FINANCIERA DE LOS HOGARES Y LAS EMPRESAS
2.º semestre 2023

[Derby]

https://www.marketwatch.com/story/not-just-nycb-japanese-bank-issues-warning-on-u-s-offices-cutting-some-chicago-loans-by-63-d2159fd8

Not just NYCB: Japanese bank issues warning on U.S. offices, as Deutsche Bank increases provisions

Aozora Bank shares skidded 21% in Tokyo trade

On the heels of a profit warning from New York Community Bancorp that was at least partly due to the deteriorating office-loan market, a Japanese bank cut the value of some of its own U.S. office loans by more than 50%.

Aozora Bank’s stock JP:8304 slumped 21%, making it the worst performer in the Nikkei 225 JP:NIK on Thursday, after cutting its annual profit forecast by 52% and its revenue forecast by 35%.
(...)

[Derby]

https://www.statista.com/chart/20165/un-global-food-price-index/

[Derby]

https://www.bloomberg.com/news/articles/2024-02-01/byju-s-alpha-files-for-chapter-11-bankruptcy-in-delaware

Byju’s Alpha Unit Files for Chapter 11 Bankruptcy in Delaware

A unit of Byju’s, once one of India’s hottest tech startups, filed for Chapter 11 bankruptcy in Delaware.

Byju’s Alpha, a special-purpose company formed for financing, sought court protection in Delaware on Thursday, court papers show.

The company listed assets of at least $500 million and liabilities of at least $1 billion in its bankruptcy petition.

Lenders to Byju’s won a court fight in Delaware late last year that allowed them to appoint a new director of the financing unit.

[Derby]

https://www.marketwatch.com/story/zoom-to-cut-2-of-staff-reports-ee8b3dab

Zoom to cut 2% of staff: reports

Zoom Video Communications Inc. ZM said Thursday it will reduce its workforce about 2%, according to reports in the Wall Street Journal and Bloomberg. The job cuts will be division by division, a person familiar with the matter said Thursday. A company spokesperson said the company routinely evaluates its teams “to ensure alignment with our strategy. As part of this effort, we are rescoping roles to add capabilities and continue to hire in critical areas for the future” such as artificial intelligence. Last year, Zoom announced it would cut about 1,300 employees, or roughly 15% of its staff.(...)

[Saturio]

Bueno pues las Earnings de Meta, Amazon y Apple no han ido mal.
Sobre todo las dos primeras.
Todo en verde.

Cualquiera diría que se ha contagiado el optimismo y hasta acciones castigadas estos últimos días han subido, yendose a las nubes en el aftermarket (por ejemplo Tesla).

[asustadísimos]

[No olviden que las autoridades también están asustadísimas.]

[Currobena]

[No olviden que las autoridades también están asustadísimas.]

Como siga así, nos vemos en máximos históricos de bolsa a final de año y esto no peta hasta después de las elecciones estadounidenses.