WL Ross & Co. and its partners ordered four Ultramax vessels with options for four more, Ross said by phone today. He declined to name the other investors in the venture, Nautical Bulk Holdings Ltd. The ships will be delivered in 2015 by China’s Jiangsu Hantong Ship Heavy Industry Co.

The 65,000 deadweight-ton ships will have fuel-efficient designs and be equipped with their own cranes, allowing them to unload cargoes in less-developed ports, Ross said. The company may buy more ships, he said. Ross’s company also has stakes in tankers hauling refined fuels and liquefied petroleum gas.

“Since we think a lot of the demand for dry commodities is going to develop in the emerging markets, we think they’re well-suited to that,” Ross said by phone. Shipping rates will recover by the time the new ships are built, he said.

The one-week auction rate, the benchmark introduced two months ago, was kept at 5.5 percent at a meeting today, the central bank in Moscow said in a website statement. That matched the forecasts of all 24 economists in a Bloomberg survey. For a second month, Bank Rossii refrained from offering guidance on whether it sees money-market rates as appropriate.

Faced with quickening inflation for the first time in five months, policy makers led by Elvira Nabiullina chose to extend a pause on interest rates held since an increase in September 2012. The reluctance to cut leaves Russia, ensnared in its worst slowdown in four years, apart from European central banks moving to keep borrowing costs low to support their economies.

“The central bank is essentially saying that nothing has changed in its assessment of risks to growth and from inflation,” Vladimir Kolychev, chief economist for Russia at VTB Capital in Moscow, said by telephone. Policy makers “are leaving themselves flexibility” on the monetary-policy outlook by not offering guidance on money-market rates, he said.

Ruble, FRAs

The ruble remained weaker against the dollar after the statement, depreciating 0.9 percent to 32.7160 as of 7:20 p.m. in Moscow. The Micex Index of 50 stocks slid 1.3 percent to 1,489.55

The three-month MosPrime rate, which large Moscow banks say they charge one another, may drop 13 basis points, or 0.13 percentage point, in the next three months, according to forward-rate agreements tracked by Bloomberg. The spread is up from a four-month low of 7 basis points on Nov. 5.

Consumer prices may rise 6.2 percent to 6.3 percent in November from a year earlier, theEconomy Ministry said today, faster than previously forecast. The Federal Statistics Service said inflation accelerated to 6.3 percent in October, exceeding all 22 forecasts in a Bloombergsurvey.

The faster inflation was caused by “non-monetary factors, including a rise in prices for fruits and vegetables, which was unusual for this season,” as well as higher costs for some animal-based goods, the central bank said in the statement. The factors should have a “short-term” effect.

Independence, Credibility

“The statement mentioned explicitly that the Russian central bank’s inflation forecasts will play a role in guiding monetary policy decisions going forward and this was the first mention of this,”Clemens Grafe and Andrew Matheny, analysts at Goldman Sachs in Moscow, said in e-mailed comments. “Making these forecasts independent is an important step toward solidifying the market’s perception of the central bank’s independence and credibility.”

While economic growth remains sluggish, the central bank doesn’t forecast a “substantial widening” in the output gap, a measure of the difference between actual and potential gross domestic product, according to the statement.

The economy is growing at “slightly below its potential level,” amid weak investment and a slow recovery in external demand, policy makers said.

GDP will probably expand 2 percent next year, 2.5 percent in 2015 and 3 percent the following year, the central bank said in updated three-year monetary-policy guidelines published on its website today. Net capital outflows are seen at $55 billion this year, according to the report.

Investment, Consumer

Fixed-capital investment may grow 3 percent to 3.8 percent in 2014-2016, with consumer demand remaining the primary driver of economic growth, according to the regulator. Spending by households on final consumption is estimated to grow 4 percent to 4.4 percent a year during the period, the central bank forecast.

Bank Rossii removed from its monthly commentary on rate policy a forecast that inflation would fall into this year’s 5 percent to 6 percent range. That was one of the few significant changes in the statement, according to ING Groep NV’s chief Russia economist, Dmitry Polevoy, who said policy makers are probably signaling “readiness” for the price goal to be missed.

The central bank is still discussing the appropriate level for the long-term inflation target after seeking to reduce consumer-price growth to 4 percent in 2014-2016, Igor Dmitriev, head of Bank Rossii’s monetary-policy department, said at a conference in Moscow yesterday.

Longer Term

Rate policy will be tied to “how we see the longer-term development” of inflation rather than current trends, he said.

While Russia’s keeping rates steady, other central banks in the region have been easing borrowing costs to shore up their economies. Hungary reduced borrowing costs for a 15th month in October, while Poland pledged this week to keep its main rate at a record low until at least July 2014.

The European Central Bank cut its benchmark interest rate to a record low yesterday after a drop in inflation to the slowest pace in four years. The Czech monetary authority yesterday approved the first koruna sales in more than a decade to ease policy.

The Russian central bank is trying to ensure inflation stays on a lower trajectory in the long term even as the government warns that the country’s share in the global economy will be eroded during the next two decades by slower-than-average growth.

GDP will probably grow at an average pace of 2.5 percent until 2030, Economy Minister Alexei Ulyukayev, a former central banker, told reporters in Moscow yesterday. The economy grew 1.2 percent from a year earlier in the second quarter, the worst result since the last three months of 2009.

“The government should be the one stimulating the economy, not the central bank,” Oleg Popov, who manages $1 billion in Russian equities for Allianz Investments, said by phone in Moscow. “The central bank’s key role right now is limiting the scope of inflation growth, and so far they’ve been moderating it quite well.”

There is “not an agreement at this point in time,” Kerry told reporters after making an unscheduled stop in Geneva to participate in the nuclear talks. “We hope to try to narrow those differences but I don’t think anybody should mistake that there are some important gaps that have to be closed.”

U.S. Secretary of State John Kerry speaks to the press upon his arrival in Geneva on Nov. 8, 2013

Kerry joined counterparts from France, Germany and the U.K., who also arrived today in the Swiss city to seek an accord over Iran’s disputed nuclear work. He’ll meet Iranian Foreign Minister Mohammad Javad Zarif later today after consulting European Union foreign policy chief Catherine Ashton.

During two days of talks in Geneva, world powers have edged closer to an accord over Iran’s disputed nuclear work. While all the details have yet to be worked out, a framework has been agreed upon, Zarif said yesterday in an interview. Iran has been offered “limited, targeted and reversible relief” from sanctions in return for concrete and verifiable concessions on its nuclear work, White House spokesman Jay Carney said in Washington.

Talks are at a “sensitive and critical stage” and Kerry’s presence is needed to resolve issues where differences remain, Iran’s deputy foreign minister, Abbas Araghchi, told journalists.

‘Utterly Rejects’

Kerry arrived after making another unscheduled visit to Israel early today to talk with Prime Minister Benjamin Netanyahu, who said he “utterly rejects” and “is not obliged” by any potential agreement that may emerge from the Geneva meetings.

“I understand that the Iranians are walking around very satisfied in Geneva, as well they should be, because they got everything and paid nothing,” Netanyahu said.

Tensions over Iran have frayed relations that Netanyahu and the White House have worked to repair in recent months. The Israeli leader has urged the U.S. and five other powers taking part in talks with Iran — France, Germany, the U.K., Russia and China — to reject any proposal unless it ensures a halt to all uranium enrichment and the construction of a reactor that could produce plutonium.

Iran is willing to limit the “size, scope and dimensions” of its enrichment program without bringing it to a complete halt,Araghchi said. Iran had previously signaled it’s willing to make compromises, shelving a demand for immediate recognition on the right to enrich uranium, and saying it may be ready to limit its stockpile of uranium enriched to 20 percent purity.

International Atomic Energy Agency inspectors who monitor Iran’s 17 declared nuclear facilities are due to fly to Tehran next week. They’re seeking access to people and sites that they’re barred from visiting, to investigate a possible military dimension to Iran’s nuclear program. The Persian Gulf nation of 80-million people insists its nuclear work is peaceful.

]]> http://ibfon.org/kerry-says-no-iran-nuclear-deal-yet-as-critical-gaps-remain/feed/ 0 http://ibfon.org/twitter-rose-3-8-percent-after-surging-73-percent-yesterday/ http://ibfon.org/twitter-rose-3-8-percent-after-surging-73-percent-yesterday/#comments Fri, 08 Nov 2013 16:40:51 +0000 http://ibfon.org/?p=240 Continue reading →]]>

Twitter Price Target $50 at End of 2014: Peck

The contours were familiar: A hot social-media company going public with investors baying to buy its stock. Yet the outcome of Twitter Inc.’s initial public offering was far different from Facebook Inc.’s, underscoring the delicate balancing act of pricing IPOs.

Twitter rose 3.8 percent after surging 73 percent yesterday, the biggest day-one jump for an IPO of more than $1 billion since 2007, according to data compiled by Bloomberg. The company received orders for about 30 times as many shares as it offered at the $26 IPO price, according to a person with knowledge of the matter. Facebook was little changed in its debut and slumped 11 percent the next trading day.

The dichotomy highlights the difficulty of reconciling the two main goals of an IPO: raising as much money as possible for the company while also ensuring a significant pop for investors in the first day of trading. With Facebook’s first-day flop and subsequent yearlong slump still fresh in their minds, Twitter and its bankers opted for an IPO price that would be quickly surpassed, avoiding the investor backlash that Facebook is only now recovering from.

An empty office floor in New York. Photographer: Victor J. Blue/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.

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 andPortland, 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.

Real estate investors are “more willing to explore opportunities in a wider swath of potential markets,” according to the report, based on responses from more than 1,000 property buyers and lenders.

Commercial-property sales by dollar volume surged 222 percent in Reno in the eight months through August from a year earlier, and 173 percent in Louisville, according to New York-based Real Capital. Those gains beat the increases in Manhattan, where sales have risen 86 percent, and Los Angeles, Chicago and Dallas. In Greensboro, North Carolina, sales jumped 157 percent.

Reno Market

Reno’s industrial market has attracted Blackstone Group LP (BX), the largest real estate private-equity firm, because of its proximity to Northern California and other Western states within a close shipping radius. In August, affiliates of Blackstone Real Estate Partners VII bought a portfolio of industrial properties in Reno from a partnership controlled by Lehman Brothers Holdings Inc., Lehman said in an Aug. 7 statement. Blackstone paid $427 million for the portfolio, according to law firm Willkie Farr & Gallagher LLP, which represented Lehman in the transaction.

Low property prices and interest rates have helped lure buyers to the market this year, said Tim Ruffin, a senior vice president at brokerage Colliers International in Reno.

“It really caught us all by surprise,” Ruffin said. “We’re recovering. Businesses are doing better.”

Reno Buildings

Reno-area office buildings of more than 40,000 square feet (3,700 square-meters) sold for about $200 a square foot from 2005 to 2007, during the boom, and fell to $100 a square foot from 2009 to early 2012, following the economic collapse, Ruffin said. They’re now selling for $110 to $140 a square foot, less than the $180 to $200 it would cost to build them, Ruffin said.

In Greensboro, the five-year average annual return for commercial real estate was 7.2 percent through the second quarter, and in Louisville it was 5.9 percent, according to the National Council of Real Estate Investment Fiduciaries, a Chicago-based trade group. That compares with a 0.8 percent yearly return in the New York area, and 4.6 percent in San Francisco. In September, the price per square foot for Manhattan office space was $678, according to Real Capital.

Smaller markets in parts of the U.S. Southeast are the investment focus for Highwoods Properties Inc. (HIW), a Raleigh, North Carolina-based real estate investment trust with a market value of about $3.3 billion. Highwoods tries to invest in the best business districts of mid-tier markets, said Chief Executive Officer Ed Fritsch.

Highwood Development

Highwoods is developing a $110 million two-building complex for MetLife Inc., the largest U.S. life insurer, in Cary, North Carolina, a suburb of Raleigh. In September, it bought the Pinnacle at Symphony Place, a 29-story, 520,000-square-foot Class A office building in downtown Nashville, for $153 million.

“Pricing is competitive,” Fritsch said of properties in the cities it’s focused on. “The gap between pricing in gateway markets and our mid-tier markets has certainly contracted.”

One advantage of investing in smaller markets is that rents are more stable than in large cities. While rents in New York have bigger jumps when the economy is thriving, they also drop more when times are tough, Fritsch said.

“The band of volatility is more narrow in the mid-tier markets,” he said.

Cap Rates

Capitalization rates, a measure of yield for the real estate industry, for commercial properties in markets such as New York, Chicago and Los Angeles average 6.5 percent, Nadji said. In secondary markets including Portland they average 7.6 percent, and in areas such as Louisville they’re 8.6 percent. Cap rates are calculated by dividing net operating income by the purchase price for a property.

Blackstone is in talks to buy an office building in Lisle, Illinois, a suburb of Chicago, for about $115 million, said a person with knowledge of the situation. The purchase would be done at a cap rate of more than 8 percent, said the person, who asked not to be identified because the deal is private.

Rising investor demand for office buildings in markets such as Manhattan and San Franciscohave sent cap rates down in the recovery as property values rose.

Post-Crash Low

The three-month rolling average cap rate in Manhattan fell to a post-crash low of 4.7 percent in August 2012 from 6.4 percent in April 2010, according to Real Capital. In San Francisco, it dropped to 5.2 percent in August, the latest month for which figures are available, from almost 8 percent in July 2010, and in Houston it’s at 7.2 percent after climbing as high as 9.3 percent in June 2010.

Credit is becoming more readily available in smaller markets as the economy improves as well, helping boost real estate demand, Nadji said.

“It’s beginning to be pretty broad-based,” Nadji said. “Lenders are more willing to lend in tertiary locations for the first time, probably, since the recovery began.”

Banks have arranged $63.5 billion of CMBS this year, data compiled by Bloomberg show. Issuance is poised to reach $80 billion in 2013, according to Credit Suisse Group AG.

In the suburbs of major cities, office occupancies are being boosted by economic growth. Of the 56 million square feet that has been absorbed in the U.S. office market over the past year, 90 percent was in the suburbs, according to Walter Page, director of office research at CoStar Group Inc. (CSGP) in Boston.

CoStar Index

With a lack of new development and a slowly recovering economy, some suburban markets may reach a point next year where they will have rent growth rather than rent declines, Page said in a telephone interview.

Price gains in a CoStar index that tracks large, high-quality properties have moderated in recent months as increases in another index that is dominated by smaller transactions has accelerated. That’s an indication “investors’ risk tolerance is growing,” CoStar said in a report. The study was based on data for commercial-property sales through July.

A Green Street gauge of U.S. properties was unchanged in October as higher interest rates “put the brakes on what had been a long-running recovery in property values,” according to a report this week. The firm’s index is based on its estimate of the value of portfolios owned by real estate investment trusts, which tend to have high-quality properties.

Manhattan Office

Green Street’s midtown Manhattan office price index was unchanged in October and is 10 percent to 15 percent below its 2007 peak, according to the report.

Not all real estate investors are looking beyond major cities. Since the financial crisis and ensuing recession, many REITs have been selling properties in smaller markets and focusing on the best-quality buildings in the most-desirable U.S. markets.

“The public REITs are not going to be buying in the tertiary markets,” said Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio. “Investors don’t want them in it.”

Large institutional investors such as private-equity funds also don’t tend to have a lot of money invested in tertiary markets. In smaller areas, buyers are generally local or regional groups and closely held investors, said Bob Bach, director of research at commercial real estate brokerage Newmark Grubb Knight Frank in Chicago.

“Everybody’s searching for yield,” he said. “By and large, it’s a different investor profile that is attracted to tertiary markets.”

Commonwealth Success

CommonWealth REIT, whose biggest shareholder is seeking to oust the board, has been selling suburban properties and buying in downtown markets. CommonWealth plans to seek buyers for 110 buildings in addition to 94 it has sold or has agreements to sell, the company said last month.

CommonWealth’s “success in reaching agreements to sell the 94 non-core properties listed for sale earlier this year, together with the substantially improved market to sell suburban and industrial properties, has encouraged our board to accelerate the sale of the remainder of CWH’s non-core properties,” Adam Portnoy, the Newton, Massachusetts-based company’s president, said in the Oct. 1 statement.

Hines Global REIT Inc., a nontraded REIT sponsored by international investment company Hines, this year bought a retail center in Jacksonville, Florida, for $135 million, and one in Murfreesboro, Tennessee, for $163 million, according to a regulatory filing. The 317,415-square-foot Markets at Town Center in Jacksonville is 93 percent leased, and the 747,497-square-foot Avenue Murfreesboro is 89 percent leased.

Higher Pricing

While Hines focuses on larger U.S. metropolitan areas, the company decided that the Jacksonville and Murfreesboro properties dominate their markets “and would command much higher pricing in larger markets based on the productivity of the retailers and the market share of the assets,” Kenton McKeehan, a Hines managing director, said in an e-mail.

Acquiring property in smaller markets has its perils. If the owner wants to sell in the future, the pool of prospective buyers may be more limited than in major markets, said Ryan Severino, a senior economist at real estate data provider Reis Inc. in New York.

“There’s definitely a liquidity risk there,” he said.

Rising interest rates may scuttle some planned property sales because of the additional borrowing costs. While rising rates are a risk for all real estate buyers, those shopping in small markets are likely to face fewer investors pursuing the same buildings, unlike in major markets such as New York and San Francisco.

“There isn’t as much competition,” Severino said. “Pricing is probably more reasonable in those markets.”

Ankara (AA) – Isik Gokkaya, deputy chief of Real Estate Investment Company (GYODER), said the real estate sales increased 89 percent in the first quarter of 2013 compared to the same period of 2012 following the claims about a decrease in the sale of real property due to Gezi Park incidents.

British overseas real estate agency Spot Blue said there were no problems with the sales in Turkey despite Taksim protests

Evaluating the Turkish real estate market to AA, Walkersaid they had been working on real estate sector in Turkey for the last 10 years, adding there was a growing interest of investors in Turkey. 

“Taksim protests do not change the good picture of Turkey in the long term,” said Walker, adding, “The problem is some media organizations like BBC exaggerating the incidents.”

Stating that the decreasing trend in the stock market of the country was temporary, Walker said the economic indicators of Turkey were going better.

“We had a good week and a good month, having no problems with the sales despite the Taksim protests,” added Walker.

The Majlis Speaker then pointed to the issue of talks with the US offered by some candidates and said “It is a kind of rashness to make such a big thing out of the US issue. Analysts over in the US also believe that such prioritizing of issues in foreign policy has undergone a sort of collapse.”

Larijani also provided comments on his friendly relations with Javier Solana and said “My type of negotiating is so that I do not allow fragility to develop in relationships. After all they are also human beings and need to have close relations with the one before them so that they can be able to further matters. I had the feeling that there was no difference between us and the Taliban in their eyes. All in all towards the end of my term in the Secretariat of the National Security Supreme Committee I could reach a sort of mutual modality with Messrs. Solana and ElBaradei.”

The Majlis Speaker then said “The Iranian nuclear case had different phases and situations. The talks must always have framework and support. I think that when Mr. Solana held office things could be pursued more easily. Although he would pursue the matter with his own source of backing he enjoyed a certain amount of flexibility which prevented shaky talks.”

Larijani asserted that there is no time for populist words and said “The problem is clear and the remedy is also easy to discern. The remedy is what the Leader said, that is to promote production. Whoever campaigns based on anything else must be kidding.

“Today’s determination is another example of the international community’s strong and steady commitment to convince Iran to meet its international obligations.”

Kerry said the nine nations; China, India, Malaysia, South Korea, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan, are on the exemption list because those countries have significantly reduced oil imports from Iran.

The top US diplomat also called the Tehran government to take “concrete actions” to address the concerns of the international community over the Islamic state’s controversial nuclear program, warning that otherwise it would face “increasing isolation and pressure.”

Sabuncu said in a written statement that automotive industry continued to grow in Turkey while European manufacturers were struggling with ups and downs due to the economic crisis. 

Export of cars increased 12 percent and reached $1.8 billion, Sabuncu said, reminding the overall automotive exports increased 8.6 percent to reach $12.7 billion since the beginning of the year.

Sabuncu said the growth owed largely to a 14-percent increase in exports to EU, largest market for Turkish automotive products.

The biggest European buyer in May was Germany with $244 million despite a 5 percent decrease. Germany was followed by France with $210 million, Italy with $162 million, and Britain with $157 million.