July 30, 2014

In Zillow-Trulia Deal, Making Room for Brokers

Online real-estate service Zillow agrees to buy rival Trulia for $3.5 billion. Pictured, Zillow’s phone app.
Bloomberg News


Zillow Inc.



Z -0.97%



Zillow Inc. Cl A


U.S.: Nasdaq


$148.41


-1.46
-0.97%



July 30, 2014 4:00 pm


Volume (Delayed 15m)
:
1.48M



AFTER HOURS



$147.60


-0.81
-0.55%


July 30, 2014 5:02 pm


Volume (Delayed 15m)
:
104,246




P/E Ratio
N/A

Market Cap
$5.97 Billion


Dividend Yield
N/A

Rev. per Employee
$275,180









07/29/14 Deals of the Day: Mall Deal in…
07/28/14 In Zillow-Trulia Deal, Making …
07/28/14 HEARD ON THE STREET: Trulia Do…
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Z in







Your Value
Your Change









Short position




and


Trulia Inc.,



TRLA +0.64%



Trulia Inc.


U.S.: NYSE


$62.60


+0.40
+0.64%



July 30, 2014 4:02 pm


Volume (Delayed 15m)
:
2.32M



AFTER HOURS



$62.79


+0.19
+0.30%


July 30, 2014 5:10 pm


Volume (Delayed 15m)
:
307,513




P/E Ratio
N/A

Market Cap
$2.30 Billion


Dividend Yield
N/A

Rev. per Employee
$168,161









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07/29/14 Morning MoneyBeat: Bearish Sto…
07/29/14 What’s News: Business Financ…
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TRLA in







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the two online real-estate giants that announced plans to merge Monday, have a message for real-estate agents that have grown increasingly concerned about their market clout: We’re partners, not competitors.

Zillow, the most-trafficked real-estate website, agreed to buy Trulia, the No. 2 company, hoping to create a market behemoth that will dominate listings of homes for sale and other information that buyers and sellers covet.

At Zillow’s closing share price of $160.32, the company would issue about $3.5 billion in stock in the deal, which is expected to close in 2015, and value Trulia at just over $71 per share.

The concern of real-estate agents is understandable. The founders of Zillow came from Expedia about one decade ago where they eliminated the need for travel agents in booking many trips.

Spencer Rascoff, chief executive officer of Zillow Inc.
Bloomberg News

But Zillow executives took care Monday to ease concerns that they might plan a repeat performance in the real-estate business.

“We started Zillow as a media property, not a real-estate brokerage,” said

Spencer Rascoff,

chief executive of Seattle-based Zillow. “We sell ads, not houses.”

Zillow executives say the combined company—which will maintain both companies’ sites—will do even a better job of listing data on most houses in the country and connecting agents with buyers and sellers.

That also will benefit real-estate companies that advertise on the sites, executives say.

The acceptance of brokers will play a big part in determining whether the combined Zillow and Trulia succeeds. In the past 12 months through the first quarter they had combined annual revenues of about $400 million, but both lost money during the year.

Thousands of agents throughout the country rely on websites today for market data, listings and leads. But many have never been happy about ceding control of the market information that they once dominated.

The National Association of Realtors, a trade group, in 1996 started its own listings website, Realtor.com, which is now operated by Move Inc.

The association continues to tout it over competitors like Zillow and Trulia. “Realtor.com is still the most accurate, up-to-date resource of real-estate information,” said a spokesman for the association in an email Monday.

The growth of companies like Zillow and Trulia underscores the more subtle disruption that the Internet has caused in the real-estate brokerage industry than it has elsewhere. In other businesses, like stock trading and travel, online companies have eliminated brokers and other middlemen.

For example, the Bureau of Labor Statistics estimated that there were around 64,000 travel agents in 2013, compared with about 124,000 in 2000.

But Zillow’s founders say they understood early on that there always would be a need for real-estate agents, partly because buying and selling homes often are highly emotional decisions, and can be the biggest financial deals most people ever conduct.

“In real estate, there will always be a practitioner in the middle of a transaction, helping consumers with an infrequent, complex, and emotional transaction,” said Mr. Rascoff.

Real-estate brokers have stayed busy as the Internet has grown. The BLS estimated that there were almost 198,000 real-estate brokers and agents in 2013, well more than the estimate of 140,000 in 2000.

Although Zillow users can list their homes for sale without charge, it hasn’t become more popular to sell a home without an agent.

In 2001, about 13% of sales were a for-sale-by-owner property, according to the National Association of Realtors. In 2013, only 9% of sales fell into that category.

But that’s not to say that Zillow, Trulia and others haven’t changed the home-sales process. Today, many buyers and sellers start their search by going online.

Sites also are often checked by homeowners to see what their houses are worth and, as such, are important advertising tools for agents hoping to land listings from those possible sellers one day.

Giving one company so much market clout is concerning to the brokerage industry and some real-estate agents are approaching news of the merger with trepidation. Although Zillow and Trulia might not try to replace agents, they say, a combined company could be able to charge agents more for advertising.

California Association of Realtors president

Kevin Brown

wrote in an email that his association had concerns that “this merger will lead to fewer choices and higher advertising costs for our members and their clients.”

He wrote that “even in the Internet age, Realtors will continue to play an integral role in the home-buying and selling process.”

Lisa Chapman Bushnell, a real-estate agent in Marco Island, Fla., said she advertises on both Zillow and Trulia and spends more than $600 per month on each in order for her contact information to appear alongside listings when consumers search the sites.

She said that both sites get her leads on buyers and that she won’t be worried about the combined company unless it leads to higher advertising prices.

The sites “have improved my production greatly,” she said.

Write to Joe Light at joe.light@wsj.com

Article source: http://online.wsj.com/articles/zillow-to-buy-real-estate-rival-trulia-1406551333?mod=residential_real_estate

Gowanus Passes Sniff Test

The online-annotation company Genius is moving to Gowanus, where cheap rents and industrial architecture are luring some of the startups that had colonized many of Brooklyn’s other hip neighborhoods.

The company, now based in Williamsburg, is leasing a bit more than 43,000 square feet in an industrial building on Third Street, west of the Gowanus Canal. Genius employs about 25 people and expects to grow with the move to 40 to 50.

Article source: http://online.wsj.com/articles/gowanus-passes-sniff-test-for-some-startups-1406683589?mod=residential_real_estate

Three Sites Considered for New FBI Headquarters

WASHINGTON—The Federal Bureau of Investigation would move its headquarters from a storied, decades-old home in the nation’s capital to a new location in the suburbs under a federal government proposal released Tuesday.

The General Services Administration, which oversees federal office space, named two sites in suburban Maryland and one in northern Virginia as the three finalists for the new FBI headquarters.

The J. Edgar…

Article source: http://online.wsj.com/articles/three-sites-considered-for-new-fbi-headquarters-1406677156?mod=residential_real_estate

MBS MID-DAY: Bond Markets Pummeled by GDP; Bracing for Aftershock from FOMC

Bond markets began the day on relatively level ground vs yesterday.  It was, and has been up to GDP to cast the first major vote on whether or not bond markets move on to new highs for 2014 (or lows in terms of yield), or if they would be turned back toward the center of the range. 

Long story short, GDP came in every bit as hot as it was likely to, and bond markets have been selling-off ever since.  Both the data result and the market reaction are no surprise if you read the first post of the week.  If you didn’t, here it is

Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/381430.aspx

Homeownership at 19 Year Low

The rate of homeownership in the U.S.
continued to slide in the second quarter of 2014, reaching a 19 year
low
. The Commerce Department said that the seasonally adjusted
homeownership rate fell to 64.8 percent during the quarter, down 0.1
percentage point from the first quarter and 0.3 points compared to
the second quarter of 2013. The recent rate was the lowest for the
statistic since the second quarter of 1995.

Homeownership peaked at 69.4 percent in
the second quarter of 2004 and stayed within a range of 68.0 and 69.0
over the next 13 quarters before falling below 68.0 in the fourth
quarter of 2007. While there have been quarterly ups and downs the
homeownership rate has eroded at a fairly steady rate since then.

 

 

Homeownership was highest in the
Midwest
at 69.6 percent, 0.3 percentage points above the rate in the
first quarter, also the highest in the nation, and up 0.2 points from
one year earlier. The West had the lowest rate at 59.6 percent
compared to 59.4 percent in the first quarter and 59.4 percent in the
second quarter of 2013.

The rate in the Northeast was 62.1
percent, down 0.3 point quarter over quarter and 1.1 point from the
same quarter the prior year. The South dropped from a 66.5 percent
rate a year ago to 65.9 percent in the second quarter of this year.
The rate in the first quarter was 66.5 percent.

As numerous studies have pointed out in
the last year, young people today are not the homeowners their age
group typically was even a few years ago. The homeownership rate for
persons under the age of 35 was 35.9 percent in the second quarter,
about half the rate of those 45 to 54 years of age and way below the
80.1 percent rate of Americans over the age of 65. As recently as
2008 and 2009 the homeownership rate for those under 35 was over 40
percent.

The Commerce Department estimates that
there were 133.21 million housing units in the U.S. in the second
quarter, an increase of 467,000 units from Q2 2013. Of the total
115.13 million units were occupied, 74.46 million by the owner and
40.67 million by a renter. In the previous quarter 114.67 million
units of the total housing stock were occupied, 74.53 million by
owners and 40.14 million by renters. Vacant units totaled 18.08
million units in the second quarter of 2014,

The national vacancy rate was 7.5 percent for rental housing and
1.9 percent for homeowner housing. Rental vacancies declined by 0.7
percentage points from the second quarter of 2013 and were 0.8 point
lower than in the first quarter. Homeowner vacancies were
essentially unchanged from a year earlier and 0.1 point below the
rate the previous quarter. Rental vacancies were the lowest since at
least the beginning of 2005 while homeowner vacancies had not dropped
as low since the third quarter of 2005.

The rental vacancy rate was highest in
the South (9.6 percent), followed by the Midwest (7.5 percent). The
rates in the Northeast and West were each 5.8 percent. The
homeowner vacancy rate was highest in the South (2.1 percent); the
other three regions each had owner vacancy rates of 1.7 percent.

Approximately 86.4 percent of all U.S.
housing units were occupied in the second quarter while 13.6 percent
were vacant. Owner-occupied housing units made up 55.9 percent of
total housing units, while renter-occupied units made up 30.5 percent
of the inventory. Vacant year-round units comprised 10.2 percent
of total housing units, while 3.4 percent were for seasonal use.
Vacant units that were held off market comprised 5.8 percent of the
total housing stock.

Where vacant units were available for
rent the median asking price was $756. Vacant for sale units had a
median listing price of $151,800.

Article source: http://www.mortgagenewsdaily.com/07292014_homeownership_vacancy_rates.asp

California Realtors get Heads-Up on Short Sale Complications

A short sale program for properties
serviced by Nationstar, which bills itself as one of the nation’s largest
independent loan servicers, is the subject of a new member advisory from the
California Association of Realtors (C.A.R.). 
 C.A.R. is acquiescing to the program
about which it has been in talks with the servicer for the last year but which it
has been told by the California Bureau of Real Estate (BRE) does not violate
any laws.

Nationstar requires most of its
mortgaged properties to be listed on auction.com before a short sale is finalized.  The company says it utilizes this business
model as a verification system to insure owners receive the best possible price. 

As a practical matter all potential
short-sale properties are put through the appropriate MLS by their listing
agents just as they do for properties managed by other servicers.  However, once a Nationstar listing receives
an offer acceptable to the seller, the servicer requires the property to be listed
on auction.com for a three week period. 
During that period the original offer will remain valid as long as the
buyer along with the buyer’s agent have registered with both Nationstar and
auction.com.

This appears to be a rather
straightforward practice albeit one that extends the already lengthy time it
takes most short sales to close compared to a market rate sale, but C.A.R.
maintains there are complications.  First,
during its lengthy discussions with the servicer C.A.R. says it learned that
auction.com tends to list the starting bid significantly lower than the actual amount
of the accepted offer in order to encourage bidders.

If a higher bid comes in through the
auction site of course the original buyer will lose the property unless he/she
places a second and higher offer with auction.com.  The ultimate buyer is charged a 5 percent
buyer fee although the original buyer is exempted if he has properly registered
as above. 

C.A.R. maintains that a buyer on
auction.com may be unable to use FHA or VA financing to purchase as those both
generally prohibit a buyer from paying a premium such as required by the site.  This would not apply to the original buyer if
he or she has properly registered so the fee is waived.

C.A.R. reports that Nationstar says
that foreclosures may start or continue on a seller in default while the property
is in its “market validation program.” However, the foreclosure date will be
suspended until the property is sold in an approved sale or otherwise removed
from the program.

The Realtor association is advising
its members who take seller listings where Nationstar is the servicer to
immediately contact the servicer to determine if the property will be listed on
auction.com and whether buyers’ agents should be notified accordingly.  Also the agent should determine if there is appropriate
language that should be inserted in offers or counteroffers.

Agents working with on the buyer are
advised to inform their clients of the possible additional steps that may be
needed to complete transactions on these properties.  Buyers who are using government-back mortgage
programs should also be told to check with their lenders about the required buyer
premiums before bidding on an auction.com property.

C.A.R. also told its members that
this validation program requires both the listing agent and seller to sign
documents which could impact their legal rights.  Agents should advise
their clients to seek legal counsel to interpret any clauses in such agreement
that may raise concerns as to possible costs or risks to sellers for
participating in the process.

C.A.R. said that the servicer has
not
, to date, changed anything stated in the MLS with regards to agent
commissions, unless it does not meet the requirements of the loan investor.
However, this could change based on servicer guidelines.

Nationstar claims to be the fastest
growing of the top 50 servicers in the U.S. 
As of December 31, 2013 it had $391 billion loans in its portfolio.  It is a “high touch” servicer which means
that it handles many distressed loans.

Article source: http://www.mortgagenewsdaily.com/07302014_short_sales_c_a_r.asp

517 Wilson Plaza Trades Hands in Glendale (UPDATE)


Western Imperial 2000 LLC sold the 517 Wilson Plaza office building at 517 E. Wilson Ave. in Glendale, CA for $5.6 million, or about $252 per square foot. The new owner will occupy 55 percent of the property.

The two-story, 22,260-square-foot office building was constructed in 1983 in the Glendale Office submarket of Los Angeles County.

Krich Adary of Hall Chambers represented the seller. David Wash of Stone Miller represented the buyer in the sale.

Please see CoStar COMPS #3061949 for more information on this transaction.

Editor’s Note: The news story was updated to include the buyer rep, unintentionally left off the initial report.

Article source: http://www.costar.com/News/Article/517-Wilson-Plaza-Trades-Hands-in-Glendale-UPDATE/162362?ref=/News/Article/517-Wilson-Plaza-Trades-Hands-in-Glendale-UPDATE/162362&src=rss

Amgen To Close 4 Plants, Lay Off 2,900, Consolidate Campus

Amgen announced a restructuring plan to invest in continuing innovation and the launch of its new pipeline molecules, while improving its cost structure.

Initial efforts include streamlining the organization, reducing layers of management, increasing managerial spans of responsibility and beginning implementation of a revised geographic site plan.

As a first step, the company will reduce staff by 2,400 to 2,900, beginning later this year and continuing through 2015, predominantly in the U.S. This represents approximately 12% to 15% of Amgen’s global workforce.

The company will also close its facilities in the states of Washington and Colorado.

21720 23rd Drive SE, Suite 200, Bothell, WA 98021;
1201 Amgen Court West, Seattle, WA 98119;
4000 Nelson Road, Longmont, CO 80503; and
5550 Airport Blvd., Boulder, CO 80301.

“At each site, we are actively engaging in discussions with third-parties about potential future use of the facilities,” said Robert Bradway, Amgen’s chairman and CEO.

While cutting at those locations, Amgen will expand its presence in the biotechnology hubs of South San Francisco, California, and Cambridge, Massachusetts, and retain its headquarters in Thousand Oaks, California, with a reduced number of staff consolidated into fewer of the existing buildings.

Company-wide, these actions will result in an approximate 23% reduction in the company’s facilities footprint.

As a next step, the company is evaluating additional efficiency initiatives, particularly in the area of shared services and other external expense categories to support its growth objectives.

The company plans to review these initiatives, together with an estimate of resulting cost savings, pipeline progress and commercial plans, and performance against its strategic priorities during a business review meeting in the fourth quarter.

Article source: http://www.costar.com/News/Article/Amgen-To-Close-4-Plants-Lay-Off-2900-Consolidate-Campus/162689?ref=/News/Article/Amgen-To-Close-4-Plants-Lay-Off-2900-Consolidate-Campus/162689&src=rss

Home Builders Venture Into Urban Areas

Lennar’s Avenue Collection in Weehawken, N.J., a five-building luxury condo community.
Ron Wyatt

A top executive of


Lennar Corp.



LEN -0.45%



Lennar Corp. Cl A


U.S.: NYSE


$37.47


-0.17
-0.45%



July 29, 2014 4:03 pm


Volume (Delayed 15m)
:
3.04M



AFTER HOURS



$37.47


0.00
%


July 29, 2014 5:50 pm


Volume (Delayed 15m)
:
37,657




P/E Ratio
14.93

Market Cap
$7.51 Billion


Dividend Yield
0.43%

Rev. per Employee
$1,168,680









07/29/14 Home Builders Venture Into Urb…
07/29/14 Home-Builder CEO Pay Rises
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LEN in







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recently joined with officials from Weehawken, N.J., to celebrate the completion of the home builder’s newest condominium complex, a luxury building across the Hudson River from New York City.

The 74-unit building—which will feature hotel-like amenities, including concierge services, a lobby lounge with a fireplace, gyms and yoga rooms, gathering areas and catering kitchen—is the first of a five-building, 660-unit master-planned community in Weehawken called the Avenue Collection. Condos at the first building range in price from $1.1 million to $2 million. Construction of a second tower with 103 luxury condo units is under way.

The nation’s second-largest home builder by revenue may be better known for $300,000 single-family homes. But in 2011, the company branched out into the rental market and has since increased its investments.

The Miami-based company’s multifamily division has spent about $1 billion to develop 18 apartment communities nationwide, 13 of which are still under construction. What’s more, according to a July report by Zacks Investment Research, Lennar is planning to spend $3 billion to build 12,000 apartments over the next four years.

Ten years ago, it was rare for a national home builder to venture into the condo and apartment market or to build in or near big cities, preferring to construct single-family homes for middle-class families in suburbia. But as demand increases for luxury condos in or near urban areas, national home builders are chasing those affluent buyers and their dollars.

Craig Klingensmith,

Lennar’s Northeast division president, credits global buyers and Manhattan’s resurgent real-estate prices for interest in Lennar’s new luxury buildings in New Jersey. Lennar bought the Avenue Collection properties in 2008, but it first tested the waters, building 35 new luxury units in 2011 at its other master-planned condo community in Weehawken, Henley on the Hudson. “We sold that building relatively quickly, and it gave us confidence to start on the Avenue [Collection] project,” he said.

Lennar and other builders have said that their core business remains focused on the single-family suburban home, but they are ramping up their presence in the multifamily sector.


Toll Brothers Inc.,



TOL -0.65%



Toll Brothers Inc.


U.S.: NYSE


$33.46


-0.22
-0.65%



July 29, 2014 4:00 pm


Volume (Delayed 15m)
:
1.61M



AFTER HOURS



$33.60


+0.14
+0.42%


July 29, 2014 4:43 pm


Volume (Delayed 15m)
:
14,807




P/E Ratio
22.76

Market Cap
$5.99 Billion


Dividend Yield
N/A

Rev. per Employee
$1,072,460









07/29/14 Home Builders Venture Into Urb…
07/24/14 Home Builder’s Sales Promotion…
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the 13th-largest home builder and one of the first national builders that turned to condos and apartment buildings, reported that revenue from its multifamily and high-rise tower businesses was more than 20% of the company’s total sales last year, up from less than 3% in 2000. And with more than 4,000 units in the pipeline—from new rentals in suburbia, urban high-rises and high-density student housing—the company is diversifying across the market.

“We are currently looking to expand our urban for-sale business into Boston, San Francisco and Miami,” said

Fred Cooper,

a senior vice president. “We’ve also been expanding our high-end rental business in both suburban and urban markets in the Boston to D.C. corridor and are exploring the metro San Francisco area as well.”

At Lennar, multifamily revenue accounted for only $14.7 million of $5.93 billion of total revenue last year. That revenue is expected to increase as its projects are completed in the next year, according to Zacks Investment Research, which notes that Lennar’s multifamily revenue in the second quarter climbed 51% over the year-ago period.

Beyond Lennar and Toll, other national home builders expanding into the multifamily market include


KB Home,



KBH -0.82%



KB Home


U.S.: NYSE


$16.91


-0.14
-0.82%



July 29, 2014 4:00 pm


Volume (Delayed 15m)
:
3.19M



AFTER HOURS



$16.95


+0.04
+0.24%


July 29, 2014 4:41 pm


Volume (Delayed 15m)
:
11,660




P/E Ratio
15.66

Market Cap
$1.57 Billion


Dividend Yield
0.59%

Rev. per Employee
$1,526,710









07/29/14 Home Builders Venture Into Urb…
07/17/14 Housing Starts Sink 9.3%, Driv…
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PulteGroup Inc.



PHM -0.86%



PulteGroup Inc.


U.S.: NYSE


$18.39


-0.16
-0.86%



July 29, 2014 4:03 pm


Volume (Delayed 15m)
:
4.69M



AFTER HOURS



$18.34


-0.05
-0.27%


July 29, 2014 7:23 pm


Volume (Delayed 15m)
:
212,486




P/E Ratio
2.70

Market Cap
$6.97 Billion


Dividend Yield
1.09%

Rev. per Employee
$1,455,010









07/29/14 Home Builders Venture Into Urb…
07/24/14 Higher Selling Prices Boost Pu…
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PHM in







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and


Hovnanian Enterprises Inc.



HOV -0.93%



Hovnanian Enterprises Inc. Cl A


U.S.: NYSE


$4.25


-0.04
-0.93%



July 29, 2014 4:04 pm


Volume (Delayed 15m)
:
5.60M



AFTER HOURS



$4.20


-0.05
-1.18%


July 29, 2014 4:49 pm


Volume (Delayed 15m)
:
28,771




P/E Ratio
70.83

Market Cap
$623.07 Million


Dividend Yield
N/A

Rev. per Employee
$1,077,340









07/29/14 Home Builders Venture Into Urb…
07/29/14 Home-Builder CEO Pay Rises
06/04/14 Hovnanian Enterprises Swings t…
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Of the $331 billion spent last year to build new housing, multifamily construction accounted for $32 billion, or 9.6%, compared with $15 billion, or 6.1%, in 2011, according to the National Association of Home Builders.

And that percentage is increasing. Housing consultant IBISWorld Inc. estimates that by the end of this year, construction of new condo and apartment buildings will have increased at an annual average rate of 28% since 2009.

During that same period, construction of single-family homes is estimated to have risen 14%.

“Many traditional home-building firms, enticed by these high growth rates, have diversified their operations into multiunit construction in order to expand their revenue,” said Omar Khedr, research analyst at IBISWorld.

In the West, particularly California, IBISWorld estimates that the number of new apartments and condos under construction rose faster than anywhere else, increasing 47% in 2012 and 20% in 2013.

And much of the construction is happening in or near cities. “The suburban markets aren’t seeing the same interest in spec-house development that we saw” a decade ago during the housing boom, says

Jonathan Miller,

president of real-estate consultant Miller Samuel Inc.

Last September, Los Angeles-based KB Home entered San Francisco with plans to build its first condo there, a 74-unit luxury midrise building. Then in April, the company bought more property there to build 81 luxury units. Those two properties are among KB’s nine new multifamily condo communities, almost all of which it began building last year and mostly in California.

“These land-constrained areas are close to employment centers where demand for new housing far outweighs supply,” said KB Home CEO

Jeffrey Mezger.

Mr. Mezger said those dynamics are translating into prices for new homes that “are well above local market averages.”

Write to Max Taves at max.taves@wsj.com

Article source: http://online.wsj.com/articles/home-builders-venture-into-urban-areasdeal-of-the-week-1406663662?mod=residential_real_estate

Simon, With Klépierre Deal, Expands Reach in Europe

Shoppers inside the Gare St. Lazare shopping mall, operated by Klepierre, in Paris.
Bloomberg News

PARIS—Mall king

David Simon’s

plan to build a retail real-estate empire in Europe similar to the one his family built in the U.S. took a big step with the planned €7.2 billion ($9.68 billion) merger between France’s Klépierre SA and Dutch rival


Corio



CORA.AE -0.11%



CORIO N.V.


Netherlands: Amsterdam


39.48


-0.05
-0.11%



July 30, 2014 11:19 am


Volume (Delayed 15m)
:
310,990




P/E Ratio
N/A

Market Cap
€3.61 Billion


Dividend Yield
6.92%

Rev. per Employee
€998,571









07/29/14 Simon, With Klépierre Deal, Ex…
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CORA.AE in







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NV.

Mr. Simon’s Indianapolis-based


Simon Property Group Inc.,



SPG -0.22%



Simon Property Group Inc.


U.S.: NYSE


$170.10


-0.37
-0.22%



July 29, 2014 4:01 pm


Volume (Delayed 15m)
:
965,206



AFTER HOURS



$170.10


0.00
%


July 29, 2014 4:31 pm


Volume (Delayed 15m)
:
14,720




P/E Ratio
37.19

Market Cap
$53.59 Billion


Dividend Yield
3.06%

Rev. per Employee
$912,239









07/29/14 Simon, With Klépierre Deal, Ex…
07/29/14 Simon’s European Shopping Does…
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bought a hefty stake in Klépierre in March 2012 when it looked as though the sky over Europe was falling. He spent two years pruning the company’s portfolio and implementing American-style leasing practices.

Now, the company he bought into as a fixer-upper is poised to become one of the biggest retail landlords in Europe. Mr. Simon, chairman of Klépierre’s supervisory board, said in an interview Tuesday that his prediction of Europe’s recovery has been vindicated.

“In 2012, the world was talking about the euro breaking up and whether the [European Central Bank] was going to create the same kind of environment that the Fed created here” in the U.S., Mr. Simon said. “I just had a feeling it would, and that the recovery would play out very similarly as it did here.”

Simon Property Group owns 29.4% of Klépierre. A 21.7% stake is still owned by French bank


BNP Paribas SA,



BNP.FR +0.54%



BNP Paribas S.A.


France: Paris


50.31


+0.27
+0.54%



July 30, 2014 11:19 am


Volume (Delayed 15m)
:
610,894




P/E Ratio
12.74

Market Cap
€61.87 Billion


Dividend Yield
2.98%

Rev. per Employee
€209,597









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which sold the larger controlling stake to Mr. Simon.

Under the deal announced Tuesday, Klépierre is offering Corio’s shareholders 1.14 Klépierre shares for each Corio share they own. The offer values Corio at €7.2 billion based on Klépierre’s share price on July 28, the companies said in a joint statement.

Not all of Klépierre’s shareholders shared Mr. Simon’s enthusiasm for the deal. The company’s shares fell 2.8% Tuesday in Paris after the proposed merger was announced. Corio’s stock rose 10% in Amsterdam.

If the deal is approved by shareholders, it would represent the largest transaction in Europe’s retail real-estate sector since France’s Unibail Holding took over Dutch rival Rodamco Europe NV for €11.2 billion in 2007.

The Klépierre deal would allow the French company to expand its footprint across Europe, most notably in Germany and Italy. The combined entity, with assets valued at more than €21 billion, would operate 182 shopping centers in 16 European countries.

Mr. Simon’s push into Europe was fueled in part by his recognition that the European shopping center business was less mature and more fragmented than in the U.S. Retail assets owned by European real-estate investment trusts were valued at less than €20 billion in 2000. Since then, the figure has doubled, according to Green Street Advisors, a real-estate advisory firm.

“Not so long ago, companies like Klépierre were not so exclusively focused on retail, not so big, and they’ve been on this expedition to become more focused and larger,” said

John Lutzius,

a Green Street managing director. “I think David Simon is a master chess player in the game of shopping center consolidation.”

Discussions between Klépierre and Corio’s largest single shareholder, Dutch pension fund APG, began about six months ago, according to a person familiar with the matter. Klépierre approached Corio after it received the green light from APG.

According to the joint announcement, APG has agreed to irrevocably tender its 30.6% stake to Klépierre. BNP Paribas also has said it would back the merger.

“With the support of BNP, we were able to create the Klépierre of the future, and what’s even more rare is that an American was able to bring all these people together,” Mr. Simon said. “I don’t even speak French.”

—Shayndi Raice contributed to this article.

Write to Noémie Bisserbe at noemie.bisserbe@wsj.com and Shayndi Raice at shayndi.raice@wsj.com

Article source: http://online.wsj.com/articles/klepierre-to-buy-corio-for-9-68-billion-1406624947?mod=residential_real_estate