Real Estate News Blog

Times Co. Nears Deal On Building

2009-01-29T17:27:00.013-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

The deal under discussion is a sale-leaseback transaction in which Times Co. would sell the 19 floors it occupies at its 52-story headquarters to W.P. Carey & Co., an investment-management company, a person familiar with the talks said. Times Co. would continue to occupy and manage the space and have the right to buy it back in 10 years when its lease expires. Times Co. owns an additional six floors that it leases to other tenants; those floors aren't part of the deal.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

A spokeswoman for Times Co. said the company is pursuing a sale-leaseback of the building for as much as $225 million, and added: "Because the discussions are ongoing, we decline to comment on the status of the sale-leaseback."

The talks were previously reported Thursday night on the New York Times Web site.

Times Co. has $1.1 billion in debt and $46 million in cash and a substantial amount of debt maturing over the next couple of years. With print advertising declines accelerating across all newspapers, Times Co. has been forced to consider a number of options to free up cash.

The company in November cut its dividend by 75% and is trying to sell its stake in the company that owns the Boston Red Sox and the team's Fenway Park. Earlier this week Mexican billionaire Carlos Slim agreed to invest $250 million in the company in return for senior unsecured notes with detachable warrants convertible into common stock.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.011-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.009-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.007-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.005-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.003-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:27:00.001-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:26:00.005-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:26:00.003-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

Times Co. Nears Deal On Building

2009-01-29T17:26:00.001-08:00

By RUSSELL ADAMS and PETER GRANT

New York Times Co. is nearing a deal to sell a portion of its Midtown Manhattan headquarters in the latest of a string of recent efforts to reduce its debt load.

Getty Images

The building, designed by the architect Renzo Piano, was completed in 2007. Times Co. owns 58% of the tower, and the developer Forest City Ratner owns the rest.

The talks were previously reported Thursday night on the New York Times Web site.

W.P. Carey is a 36-year-old firm that specializes in sale-leaseback transactions and has $10 billion of assets under management.

Write to Russell Adams at russell.adams@wsj.com and Peter Grant at peter.grant@wsj.com

Printed in The Wall Street Journal, page B2

10 Percent Per Annum Growth in Unorganised Retail Sector

Japanese Retail Sales Fall for A Fourth Month

2009-01-29T14:35:00.001-08:00

Japanese Retail Sales Fall for A Fourth Month

Japanese Retail Sales Actual -2.7%, Expected -1.6%, Previous -0.9%

Release Explanation: Retail sales are the measure of the total sales of goods and services by retail stores in Japan. This is also an important part of figuring the country’s GDP. Retail sales are an important measure of consumer spending and inflationary pressures. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the Japanese economy.

Trade Desk Thoughts: Retail sales in Japan have slumped for a fourth straight month in December. This is further proof that the economy has fallen into a recession. Retail sales have decline 2.7 percent and was the worst one month fall seen in the past three years, as well as being well below expectations of a 1.6 percent drop. Large retailers took the biggest hit, seeing a year over year decline of 6.3 percent.

Forex Technical Reaction: The yen has weakened slightly after this report was released. The pair is currently oscillating near the 20 day moving average at 90.35.

TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.

The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.

NEC Plans to Enter Indian Retail Sector

Home Data in Spain Spell Gloomy News

Reliance, Vornado Join on Shopping Centers

Vacancies Rise at Retail Centers

Construction Industry Counts on Obama

2009-01-22T15:21:00.003-08:00

By JONATHAN KARP

As the economy slowed last year, the commercial-building unit of Kokosing Construction Co. had $130 million in projects -- a year's worth of revenue for the division -- halted in a three-week stretch. But now, with the prospect of a massive public-spending package by the Obama administration, the Ohio-based contractor is out recruiting workers.

"I told my managers that based on the expectation of a stimulus plan, we should continue interviewing people at colleges, hoping to have work for them by the time they graduate in the spring," says Brian Burgett, president and chief executive of Kokosing, a family-owned firm in Fredericktown, Ohio, that has built highways and industrial facilities for half a century.

After a rough year on the ground and in the stock market, engineering and construction companies are eager for the financial tap to be reopened. As the incoming administration assembles its stimulus plan, many contractors are lobbying hard for projects that will spend money fast rather than focusing on longer-term environmental and smart-growth policy goals.

That is largely because the industry has had steep job losses and foresees more bloodletting this year unless the government applies shock treatment to the economy. In December, construction accounted for 101,000 lost jobs, or nearly one-fifth of all U.S. jobs, capping a year in which the sector shed 632,000 jobs, according to the Bureau of Labor Statistics. Employment in nonresidential and heavy-engineering construction shrank by 7% and 9%, respectively.

The Associated General Contractors of America, the country's largest trade association of nonresidential builders, recently polled its members and found that, barring a change in the business climate, expected layoffs could cut construction employment by 30% this year.

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

The contractors association has submitted a white paper to the presidential transition team and to Congress that outlines the economic benefits for all types of infrastructure and emphasizes road and bridge work.

Mr. Burgett of Kokosing, who hopes to add fresh college graduates to his payroll, notes that Ohio has identified $1 billion in highway projects that could be started by June. Repairs to a bridge in Cleveland and upgrading an Interstate highway junction, not to mention the state's crumbling sewer lines, mean that "there is just an immense amount of work," he says.

Highlighting the industry's holding pattern, though, Mr. Burgett has put all equipment orders on hold until the stimulus package clarifies the environment. Typically, he orders $35 million of equipment a year.

Stephen Sandherr, chief executive of the contractors association, says there are some $64 billion of approved "shovel ready" transportation projects. The imperative to spend big and spend fast creates a potential clash between some contractors and proponents of environmentally friendly policies that President-elect Barack Obama espouses. "If the objective is to get things out quickly ... it would be counterproductive to add smart-growth requirements to any of these projects," Mr. Sandherr says.

The public-relations battle is on for portraying major infrastructure projects -- whether or not they are part of the stimulus plan -- in the greenest possible light. Shaw Group Inc., a Baton Rouge, La., engineering firm, has attracted investors' interest after firming up a $4 billion nuclear power-plant contract.

"With the importance that is being placed on developing new sources of clean energy, we are anticipating a nuclear renaissance that will assist in reinvigorating the U.S. economy," says Gentry Brann, director of corporate communications at Shaw.

Company executives last week said they also are well positioned for levee, environmental remediation and other potential infrastructure work in a stimulus plan. The company is adding about 1,000 jobs to its 26,000-strong work force.

Contractors point out that their work is often subject to increasingly stringent environmental regulations. "A lot of the stimulus [spending] will go to projects that are green at some level," says J. Doug Pruitt, chairman and chief executive of Sundt Cos. in Tempe, Ariz.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

David Goldberg, communications director for Transportation for America, a nonprofit coalition of transit, housing and urban-planning groups, counters that "the real issue is whether we are creating more car dependence and oil dependence." He and other smart-growth advocates agree that road and bridge repair can be an effective use of quick stimulus money.

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

In addition to highway maintenance, Transportation for America supports funding mass-transit authorities to preserve jobs and investment in rail, bicycle and pedestrian facilities that expand transportation options.

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Housing Slump Hits Latino Workers

Construction Industry Counts on Obama

2009-01-22T15:21:00.001-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Construction Industry Counts on Obama

2009-01-22T15:20:00.009-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Construction Industry Counts on Obama

2009-01-22T15:20:00.007-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Construction Industry Counts on Obama

2009-01-22T15:20:00.005-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Construction Industry Counts on Obama

2009-01-22T15:20:00.003-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

Housing Slump Hits Latino Workers

Construction Industry Counts on Obama

2009-01-22T15:20:00.001-08:00

By JONATHAN KARP

If a stimulus package included funding for infrastructure projects, however, some 85% of the survey's respondents said they wouldn't lay off workers and in fact would hire more.

Don Weaver, vice president of Weaver Bailey Contractors Inc. in El Paso, Ark., says, "The highway industry doesn't get a lot of credit, but we're one of the biggest recyclers."

"We also want to make sure that for the longer term, we give ourselves a minute to think about the infrastructure we need for the post-oil-dependent economy," he says

Write to Jonathan Karp at jonathan.karp@wsj.com

Printed in The Wall Street Journal, page C10

India to attract $40 billion FDI this fiscal

As unemployment rises, Americans spending less, producing less

2008-12-25T13:56:00.001-08:00

A trio of U.S. economic indicators released Wednesday show an American economy continuing to veer off course as Christmas approaches.

Americans spent less in November, the first real proof that the yuletide selling season will be tough for retailers, while U.S. durable goods orders slumped in the same month, a further sign that American manufacturers still face bleak economic prospects.

Finally, in mid-December, the number of first-time jobless benefit claimants hit the highest level in 26 years.

"Today’s releases support our view that the U.S. economy is continuing to experience pronounced weakness in the fourth quarter. We expect the economy will remain weak in [the first half of] 2009," said Josh Heller, an economist with RBC Economics.

Americans cut their spending by 0.6 per cent in November, the fifth month in a row in which U.S. consumers — a famously profligate bunch — cut spending. In October, personal spending fell by one full percentage point.

Interestingly, the news was not all bad. Retailer discounts were a big factor in the month's reduced spending. Once prices were equalized between months, individual outlays actually rose by 0.6 per cent.

That rise will not help retailers but does indicate that buyers are still willing to purchase goods — if the price is right.

Durable order dip

New orders for U.S. durable goods fell by one per cent in November. That meant that the amount of cash going to manufacturers and other producers fell by $1.8 billion US in the month, dipping to $186 billion.

The reduction was actually a bit better than the 3.1-per-cent tumble economists had projected for the month and was much better than October's revised plunge of 8.4 per cent for the same indicator.

In addition, once transportation orders were subtracted, new orders rose by 1.2 per cent.

Still, the figures from the U.S. Commerce Department represented the fourth month in a row in which new orders dropped, a further sign that U.S. goods producers will not have much to cheer about in the coming months.

The number of American men and women who asked for employment benefits for the first time rose by 30,000 for the week ending December 20, boosting total first-time claimants to 586,000 — the highest number since November 1982.

This indicator is often viewed as a proxy for U.S. firings rather than voluntary leavings and a hint as to how these people see their chances at getting new work quickly.

Jobless Claims Soar for Week

Beazer Posts Narrower Loss

Gehry Lays Off Staff

2008-12-20T13:56:00.003-08:00

Frank Gehry laid off more than two dozen staffers in late November after client Forest City Ratner ordered the architect to put down his pencils on the $4 billion Atlantic Yards project, according to people familiar with the matter. A Gehry Partners LLP spokeswoman declined to comment.

A Forest City spokesman declined to comment and pointed to a previous statement that said work on the Brooklyn, N.Y., project was delayed because of legal challenges. Forest City has said it is committed to the 22-acre site, slated to be anchored by a basketball arena plus residential and office skyscrapers.

Forest City Ratner's parent, Forest City Enterprises Inc., said last week that it has cut off its new development pipeline, except for Atlantic Yards. But the project faces challenges given the recession and the financial markets. A $153 million land loan from Gramercy Capital Corp. that has accrued to $177 million, is due at the beginning of February. Forest City is in talks with Gramercy to extend the loan.

Taking Office in Washington

Most of the deals getting done these days are ones where the buyer can take over an existing mortgage, obviating the need to find new financing.

Take, for example, a portfolio of eight suburban Washington office buildings that just traded hands. Asset Capital Corp. sold the block of buildings with 650,000 square feet to Creaney & Smith Group for $75 million. The blended cap rate is around 10.5%, according to people familiar with the deal. That is around two percentage points higher than it would have sold in the boom years.

The deal wasn't easy to get done. Asset Capital marketed the properties a year ago and found a buyer, but that deal fell through. Creaney & Smith came along and inked a contract in early summer. But then came negotiations with the eight lenders who had to sign off on the deal. The buyer had to post additional reserves to cover cash-flow decreases from potential vacancies. That lowered the loan-to-value ratio on the deal from around 78% to about 75%.

Collins Ege, of Jones Lang LaSalle, brokered the deal.

Miami River Condos

Riverfront, a cluster of condo towers along the Miami River that is envisioned as an affordable rival to more luxurious parts of the city, is off to an inauspicious start.

Wachovia Corp. has filed for foreclosure against the first building to open, the 489-unit Wind tower owned by Neo LLC. The construction loan came due in April, according to a lawsuit filed in Circuit Court in Miami-Dade County. But two forbearance agreements and a takeover by Wells Fargo & Co. later, Wachovia declared a default on $46.6 million in unpaid principal, plus interest and other fees.

Neo Chief Executive Lissette Calderon said her company is cooperating with Wachovia. More than 40% of the building's units had closed when the foreclosure was filed; 19 have closed since then, she said.

—Alex Frangos and Jonathan Karp

Parsvnath launches group housing project

New Pact for NYC Rail Yards

Canary Wharf Gets J.P. Morgan

Here’s Donald, to Assist Ed McMahon

U.S. Wants Building Tied to Iran

2008-12-20T13:56:00.001-08:00

By EVAN PEREZ

WASHINGTON -- The U.S. government is attempting to seize a piece of a storied Manhattan skyscraper, alleging it is owned by a front for the Iranian government.

In documents filed Wednesday in U.S. District Court in New York's Southern District, federal prosecutors said the building at 650 Fifth Ave., long known as the Piaget building, is 40% owned by a company that funnels money to Iranian state-owned Bank Melli. The bank is subject to Treasury Department sanctions for allegedly financing Iran's nuclear proliferation efforts.

The building, in a prime commercial section of midtown Manhattan just north of Rockefeller Center, was built in the late 1970s by a foundation set up by the former Shah Reza Pahlavi of Iran.

The Alavi Foundation, as it is now called, has been the subject of U.S.-Iranian tussles in the past, as some U.S. officials have tried to tie the foundation and its U.S. properties to the Islamic government that ousted the shah. The foundation continues to own 60% of the Fifth Avenue building.

Investigators from the Federal Bureau of Investigation and Internal Revenue Service allege that Bank Melli's interest in the building was disguised behind a company called Assa Corp. and associated entities incorporated in the offshore banking center of the Channel Islands.

Government documents filed in court cite emails and bank-account data to support the government's seizure of millions of dollars held in Assa accounts in U.S. banks. The government seized the money in a separate October proceeding.

Separately, the Bush administration added Assa and several affiliates to a Treasury Department sanctions list aimed at freezing assets of those implicated in proliferation of weapons of mass destruction.

"This scheme to use a front company set up by Bank Melli -- a known proliferator -- to funnel money from the United States to Iran is yet another example of Iran's duplicity," said Stuart Levey, undersecretary for terrorism and financial intelligence.

An attorney for the Alavi Foundation said the U.S. action doesn't affect the organization, which describes its mission as promoting Islamic culture and Persian language.

In response to accusations that Alavi is tied to the Iranian government, John Winter, the Alavi Foundation's attorney, said: "Every judge that has looked at this question, have concluded that those claims are without foundation or any merit."

Write to Evan Perez at evan.perez@wsj.com

LIC to Buy Land Worth Rs 2,000 cr

Mahindras to drive into low-cost housing projects

Taj to launch hotels in Bahrain

Help for Home Buyers

Sands Drops Jobs, Bonuses

2008-12-13T13:55:00.001-08:00

By TAMARA AUDI

Casino giant Las Vegas Sands Corp. will cut 216 full-time employees from its Las Vegas properties as part of an overall effort to reduce costs at the struggling company.

The company confirmed it would notify employees starting Friday. Sands is also eliminating $6.5 million in management bonuses for 2008.

The cuts come as all of Las Vegas endures a sharp consumer downturn that has seen revenues plummet every month since late last year. This week, Nevada gambling regulators said gambling revenue on the Las Vegas Strip fell 26% to $475 million in October, compared with the same month last year.

A Las Vegas Sands official said the latest staff cuts were being made across all departments at the properties. The cuts are largely positions that don't interact with hotel or casino guests, a company spokesman said. "It won't impact the customer experience at our properties," said the spokesman, Ron Reese.

Sands employs 10,000 workers at two properties in Las Vegas, the Venetian and the Palazzo. The cuts follow an earlier staff reduction of 50 employees last month.

Like other major casino companies, Sands is grappling with billions in debt that it took on to fund expansion plans. But its stock has taken a dive and its controlling shareholder and chief executive, Sheldon Adelson, has had to contribute nearly $1 billion of his family's cash to keep the company from breaking debt covenants.

Write to Tamara Audi at tammy.audi@wsj.com

Nicolas Cage Lists Vegas House

Airports to Emerge as Business Hubs

Businesses Bring the Green to Portland

2008-12-11T00:23:00.009-08:00

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

Denmark-based Vestas Wind Systems AS said this month that it is planning to build a new North American headquarters in the city. Negotiations still are under way and the site isn't set, but the project is likely to be more than 500,000 square feet and be valued at about $250 million.

View Full Image

SolarWorld

SolarWorld recently opened a large solar-cell manufacturing facility outside Portland, Ore.

Vestas Americas, which has been in the city since 2002, has roughly 300 employees in about six leased office locations totaling about 100,000 square feet in the Portland area, says Roby Roberts, a spokesman for Vestas, one of the world's largest wind-turbine suppliers.

Vestas, despite the credit-starved times, hopes to start construction next year.

"Certainly the existing economic situation is one that's going to make you be careful, but we're reasonably confident that things are going to work out," Mr. Roberts said. The state has sweetened the deal with an offer of about $15 million in cash on top of incentives from the city that could be valued at $12.5 million, city and state officials say.

Other sustainable-development and renewable-energy businesses also have made a home in Oregon. The state has courted the industry with such initiatives as the Business Energy Tax Credits, says Jillian Schoene, spokeswoman for Oregon Gov. Ted Kulongoski.

First created in 1979 and expanded in 2007, the tax credits have helped draw solar-energy manufacturers to the state, Ms. Schoene says. Germany-based SolarWorld AG this fall opened a 480,000-square-foot solar-cell manufacturing facility in Hillsboro, outside Portland. Moreover, the North American headquarters of Spain-based Iberdrola Renovables, already located in about 57,000 square feet of leased space in Portland's Pearl District, is looking for additional room to grow, a spokeswoman says.

By the NumbersThird quarterPortland, Ore., Metro20082007Office vacancy14.5%14.7%Avg. annual rent/s.f.$20.10$19.36Retail econ. vacancy9.1%6.5%Avg. annual rent/s.f.$18.43$18.37Hotel occupancy 77%78%Avg. daily room rate$104.78$98.80Median single-family home price$278,600$299,700

Source: Property & Portfolio Research Inc., Smith Travel Research, National Association of Realtors

But the demand from green businesses comes amid signs in the Portland region of the broader economic malaise wracking the country.

Home to about 2.2 million people, the area counts Nike Inc. and Intel Corp., based in Santa Clara, Calif., among its larger employers. Median home prices that had held up longer than in many western U.S. markets have weakened over the past year, and the metro area's unemployment rate rose to 6.4% in October, just above the national rate of 6.1% and well above the 4.6% level in the year-earlier month, according to the U.S. Labor Department.

That slowdown has begun to damp demand for commercial real estate. The region's retail, office, warehouse and apartment vacancies, though still below national averages, are edging up and rents are either declining or are forecast to begin falling, according to Boston-based Property & Portfolio Research.

The region's office-leasing market, among the region's strongest commercial sectors, also is slowing. The amount of sublease space available in Portland's commercial business district jumped to 146,000 square feet in the third quarter from about 45,000 square feet in the year-earlier period, as some companies trimmed space needs, according to Crispin Argento, a research analyst for Colliers International in Portland.

The amount available for sublease was still less than 1% of the inventory, he says. And a surge of new office buildings, some speculative, also are on tap to deliver space in the next two years. Vestas also could add to that available space if it builds anew rather than leasing space in one of the projects underway.

Against this backdrop some cautiously optimistic developers are pushing ahead. Todd Sklar, senior vice president and head of development for San Francisco-based Shorenstein Properties, says construction is now up to the 10th floor on an environmentally friendly office building in Portland called First & Main.

Set to open in 2010, it is to include retail space and about 346,000 square feet of office space that isn't yet leased, as well as a place for cycling commuters to park bikes and shower, and paneling in the lobby made from old stadium seats.

Mr. Sklar notes that in some cities numerous companies are cutting space as they face takeovers or restructurings. Compared with that, having a company like Vestas put space on the market so it can expand doesn't seem so bad, he says. "In the context of other cities, we're in good shape," Mr. Sklar said.

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

IT, Non-IT Rental Gap Widens in India

Businesses Taking Less Office Space

Two NBA All-Stars Cut House Prices

Brisk Commercial Development Takes Breather

Businesses Bring the Green to Portland

2008-12-11T00:23:00.007-08:00

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

View Full Image

SolarWorld

SolarWorld recently opened a large solar-cell manufacturing facility outside Portland, Ore.

Vestas, despite the credit-starved times, hopes to start construction next year.

Source: Property & Portfolio Research Inc., Smith Travel Research, National Association of Realtors

But the demand from green businesses comes amid signs in the Portland region of the broader economic malaise wracking the country.

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

Airports to Emerge as Business Hubs

IT, Non-IT Rental Gap Widens in India

Businesses Taking Less Office Space

Two NBA All-Stars Cut House Prices

Tycoon's Fall Is a Warning

2008-12-11T00:23:00.005-08:00

By WILLIAM BOSTON

During every economic crisis, personal empires rise and fall, but the decline in the fortunes of Spain's Sanahuja family and its real-estate group, Metrovacesa SA, is a preview of what is in store for Europe's real-estate tycoons.

A week ago, family patriarch Roman Sanahuja Pons was the owner of some 80% of Metrovacesa, the fifth-largest property company in Europe in terms of assets. By the end of last week, Mr. Sanahuja had swapped shares amounting to 55% of Metrovacesa to pay off €2.1 billion ($2.72 billion) in debt to six Spanish banks.

The banks -- Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, Banco Espanol de Credito SA, Banco Popular SA, Banco Sabadell SA and Caja Madrid -- agreed to take control of Metrovacesa and to purchase an additional 1.8% of its shares each, bringing their combined stake to 65.8%.

Mr. Sanahuja still is fighting to retain his remaining 25% of Metrovacesa, which could dwindle to 4% if he fails to refinance another €1.4 billion in debt owed to HSBC Holdings PLC and La Caixa SA. The rest is owned by minority investors and in free-floating shares.

Metrovacesa wasn't available to comment.

The saga being played out in Spain is just the opening act of a bigger, painful drama that will grip Europe's property markets in coming months, said industry insiders and analysts. Creditors will take over property as owners can't generate the cash to service debt.

"Before it is over the banks will be the biggest landlords in Spain," said Carlos Ferrer, head of the Spanish residential-property business for property consultants Jones Lang LaSalle. Mr. Ferrer also heads a new line of business advising banks faced with bad property loans.

Spanish banks were stunned when Martinsa-Fadesa SA, one of the country's biggest developers, collapsed in July. Since then, Spanish banks have been accepting property in exchange for debt.

Some of the banks are hiring real-estate specialists to help develop property-management strategies. "The banks are looking at all options, but most realize it's better to hold on to the property now if they can," said Mark Creamer, head of CB Richard Ellis's loan and corporate-recovery service.

As global property markets soared, Spanish developers invested in residential property. According to the Bank of Spain, loans to property developers had soared to €313 billion by the end of June, almost 10 times the level of a decade ago when Spain's real-estate boom began.

But Spain's property bubble burst last year, as rising interest rates, a weak economy and rising unemployment led to a collapse in demand for residential housing, leaving more than a million completed new homes unsold.

When the market was hot, Mr. Sanahuja took big risks to expand his family empire. Over the past five years, Mr. Sanahuja raised his stake from less than 5% in 2003 to nearly 40% in 2006 in a battle for control of the company with Joaquin Rivero, who was Metrovacesa chairman at the time. Supported by minority shareholders, Mr. Rivero kept control until February 2007. Having reached a stalemate, Mr. Rivero conceded to Mr. Sanahuja and agreed to split the company. Mr. Sanahuja kept control of the Metrovacesa brand and the company's Spanish assets, while Mr. Rivero got the French assets.

In his bid to seize control of the company, Mr. Sanahuja's investment company, Cresa Patrimonial, borrowed as much as €4.3 billion in 2006, putting up about 38.1 million Metrovacesa shares as collateral.

As chairman of Metrovacesa, Mr. Sanahuja installed Jesus Garcia de Ponga, an executive from Mr. Sanahuja's Barcelona development company, Sacresa, as CEO. Under their leadership, Metrovacesa went shopping, culminating in the record purchase of the HSBC office tower on 8 Canary Wharf in London.

In a case of double leverage, both Mr. Sanahuja and Metrovacesa got squeezed by creditors. Mr. Sanahuja couldn't pay the service on his debt. And Metrovacesa, limping under €7 billion in debt, is selling assets under pressure and was forced to give the Canary Wharf tower back to HSBC last week. The deal allowed Metrovacesa to cancel a €950 million loan and reduce its debt by more than €1 billion to €5.9 billion.

—Christopher Bjork in Madrid contributed to this article.

China and India Emerge as Top Property Investment Zones

Realty Market Recovery Hinges on Lower Rates

Home Data in Spain Spell Gloomy News

Airports to Emerge as Business Hubs

Businesses Bring the Green to Portland

2008-12-11T00:23:00.003-08:00

By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

View Full Image

SolarWorld

SolarWorld recently opened a large solar-cell manufacturing facility outside Portland, Ore.

Vestas, despite the credit-starved times, hopes to start construction next year.

Source: Property & Portfolio Research Inc., Smith Travel Research, National Association of Realtors

But the demand from green businesses comes amid signs in the Portland region of the broader economic malaise wracking the country.

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

Businesses Taking Less Office Space

Two NBA All-Stars Cut House Prices

Tycoon's Fall Is a Warning

2008-12-11T00:23:00.001-08:00

By WILLIAM BOSTON

Metrovacesa wasn't available to comment.

Spanish banks were stunned when Martinsa-Fadesa SA, one of the country's biggest developers, collapsed in July. Since then, Spanish banks have been accepting property in exchange for debt.

—Christopher Bjork in Madrid contributed to this article.

China and India Emerge as Top Property Investment Zones

Realty Market Recovery Hinges on Lower Rates

Home Data in Spain Spell Gloomy News

Wachovia Unloads Troubled Loans

Shun Tak Plans New Macau Hotel

2008-12-04T16:26:00.007-08:00

By JONATHAN CHENG

HONG KONG -- A member of Macau's Ho casino family unveiled preliminary plans to develop a five-star hotel on Macau's Cotai Strip, even as hotel and casino operators there grapple with a slowdown and travel restrictions from mainland China.

View Full Image

Associated Press

Shun Tak plans to develop a five-star hotel on Macau's Cotai Strip, as other companies curb growth plans. Above, the MGM Grand Macau opening last year.

The hotel is slated for completion in 2013, and will be managed by Dubai-based Jumeirah Group, said Pansy Ho, managing director of Hong Kong-listed conglomerate Shun Tak Holdings Ltd. Shun Tak plans to fully finance the project, saying there were no plans to accommodate a casino at the hotel, to be named the Jumeirah Macau Hotel.

Ms. Ho's announcement was short on specifics, noting that plans were still at a "very preliminary" stage. She offered no details on the hotel's design or how much the development would cost. The project will also require government approval.

Even so, the move is a vote of confidence in Macau's future as industry experts question some of the growth figures that have been touted in recent years. It also comes as some of its rivals re-examine their ability to expand in Macau.

Last month, Sheldon Adelson's Las Vegas Sands Corp. put the brakes on growth plans in the Cotai Strip, while Galaxy Entertainment Group Ltd. has also announced plans to postpone construction on its project there.

Pansy Ho

Some experts said the announcement by Ms. Ho, the 45-year-old daughter of local gambling magnate Stanley Ho, is a chance for her to reaffirm her commitment to Macau as concerns rise about how other frozen projects will hurt employment in the Chinese special administrative region, whose economy is reliant on the casino industry. Ms. Ho already owns a 50% stake in a Macau casino with U.S. operator MGM Mirage.

"Shun Tak's view of the Macau economy is long term," Ms. Ho said in a statement Tuesday. "We remain positive that its fundamentals are strong and sound, and will continue to invest in its future, trusting that it will be one of the first destinations to recover from the recent market adjustments."

David Green, director of the gaming practice at PricewaterhouseCoopers, said the current environment is a good time for long-term players to exact better terms. "The message right now is that if you have access to capital, it's a good time to invest," he said. "It is an especially good time to be negotiating construction contracts and land premiums."

Visitor numbers to Macau have been hurt by the global economic downturn, as well as the Chinese government's restrictions on mainland Chinese citizens traveling to the special administrative region. In October, about 2.6 million visitors came to Macau, an 8% increase from a year ago. But mainland Chinese traveling to Macau under the individual visit system, hit by the new restrictions, fell by 26% from the previous October.

Analysts at Credit Suisse Group forecast Macau gaming revenue to remain flat in the last three months of 2008 compared with the same period in 2007, a pullback from the 45% year-on-year growth in the first nine months of this year.

Gabriel Chan, a gaming-sector analyst with Credit Suisse in Hong Kong, said Ms. Ho's announcement was designed to outlive the current market pessimism, calling the hotel an early bet that sentiment will eventually return. "The question is really when China's government will relax travel restrictions," Mr. Chan said.

Shun Tak Group owns half of the Mandarin Oriental Macau, and 34.9% of the Westin Resort Macau. Jumeirah Group is a member of Dubai's state-owned Dubai Holding, which operates that city's Burj Al Arab hotel. The Macau property will be Jumeirah's third hotel in China.

—Jackie Cheung contributed to this article.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

CITCO Plans to Set up a Five-Star Property in Chandigarh

Choice Hotels, Amrapali Group to set up hotel in Noida

CITCO Plans to Set up a Five-Star Property in Chandigarh

Shun Tak Plans New Macau Hotel

2008-12-04T16:26:00.005-08:00

By JONATHAN CHENG

View Full Image

Associated Press

Shun Tak plans to develop a five-star hotel on Macau's Cotai Strip, as other companies curb growth plans. Above, the MGM Grand Macau opening last year.

Pansy Ho

—Jackie Cheung contributed to this article.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

Choice Hotels, Amrapali Group to set up hotel in Noida

CITCO Plans to Set up a Five-Star Property in Chandigarh

Shun Tak Plans New Macau Hotel

2008-12-04T16:26:00.003-08:00

By JONATHAN CHENG

View Full Image

Associated Press

Shun Tak plans to develop a five-star hotel on Macau's Cotai Strip, as other companies curb growth plans. Above, the MGM Grand Macau opening last year.

Pansy Ho

—Jackie Cheung contributed to this article.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

Choice Hotels, Amrapali Group to set up hotel in Noida

Trump to Sell Atlantic City Casino

Shun Tak Plans New Macau Hotel

2008-12-04T16:26:00.001-08:00

By JONATHAN CHENG

View Full Image

Associated Press

Shun Tak plans to develop a five-star hotel on Macau's Cotai Strip, as other companies curb growth plans. Above, the MGM Grand Macau opening last year.

Pansy Ho

—Jackie Cheung contributed to this article.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

CITCO Plans to Set up a Five-Star Property in Chandigarh

Choice Hotels, Amrapali Group to set up hotel in Noida

Trump to Sell Atlantic City Casino

U.S. Rethinks Roles of Fannie, Freddie

2008-12-02T16:56:00.001-08:00

America's $11 trillion home-mortgage market is heading for a makeover.

Mortgage lending in the U.S. relies heavily on institutions set up in the 1930s by politicians and government officials seeking remedies for the Great Depression. Now, bankers say, the current economic crisis will force Congress and the Obama administration to decide how to repair or rebuild those institutions, including Fannie Mae, the Federal Home Loan Banks and the Federal Housing Administration.

The main focus is on the government-backed buyers of home loans: Fannie Mae, created in 1938, and its younger cousin, Freddie Mac, formed in 1970. Heavy losses stemming from mortgage defaults prompted regulators to seize control of the two companies Sept. 6. Though hobbled by those losses, Fannie and Freddie still buy or guarantee more than half of all home loans in the U.S.

The Treasury Department has agreed to provide them capital as needed, and the Federal Reserve said last week that it would spend as much as $600 billion buying debt and mortgage-backed securities issued by Fannie and Freddie over several quarters.

The consensus among both Republicans and Democrats is that the current structure of Fannie and Freddie doesn't work. Though they are owned mainly by private shareholders, they have a public mission to support the housing market. That has led to conflicts between shareholders' desire for maximum profits and congressional demands for more support to the housing industry.

A series of policy options compiled from various sources by Andrew Davidson, a mortgage-industry consultant, calls for turning Fannie and Freddie into cooperatives owned by the lenders that sell mortgages to them. These cooperatives would package mortgages into securities for sale to investors. Unlike Fannie and Freddie, the cooperatives wouldn't own large amounts of loans and related securities on their books. To make the securities more attractive to investors, Treasury would receive fees for agreeing to cover any losses on the securities above a certain level.

This explicit backing from Treasury would replace the current system under which investors merely assumed that the government would stand behind Fannie and Freddie. Many investors, especially those overseas, have lost confidence in that "implied" guarantee and want something definite.

This approach would take away from Fannie and Freddie their traditional duties of ensuring liquidity in the market by buying mortgage securities when other investors back away and of making special efforts to finance housing for poor people. If Congress sees a need for such functions, Mr. Davidson says, it should set up government programs to achieve them and allocate funds for those purposes.

A complication is that home builders and Realtors, both powerful lobbying groups, argue for a continuing federal role for Fannie and Freddie to ensure a steady flow of money into home mortgages, even when private investors recoil from the risk. Bank-controlled cooperatives, on their own, wouldn't provide the degree of support for housing that these lobbying groups want.

Rep. Barney Frank, a Massachusetts Democrat who is chairman of the House Financial Services Committee, will have a key role in this debate. He doesn't favor the status quo; the "hybrid system" of private shareholders and a public mission "didn't work well," he said in a recent interview. Rep. Frank said there may be a case for separating their current functions into different entities, one to finance housing that is affordable for low- and moderate-income people and another to ensure adequate funding for the mortgage market in general.

Congress also may tinker with the 12 regional Federal Home Loan Banks, which lend money to more than 8,000 commercial banks, thrifts, credit unions and insurers. These loans are a big source of funding for mortgages. But the home-loan banks also borrow based on an implied guarantee that no longer looks so attractive to many investors. Mr. Davidson says the home-loan banks may have to pay fees for an explicit government guarantee of their debt.

Write to James R. Hagerty at bob.hagerty@wsj.com

SBI Set to Deduct Home Loan Rates

Mortgage Rates Near a Year High

Fannie, Freddie Called Weak in Capital Base

Fed Aid Sets Off a Rush to Refinance

2008-11-26T13:55:00.001-08:00

The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.

Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine the volume of refinancing.

At Bank of America Corp., call volume was roughly twice what was expected at call centers and via the Internet, said Matt Vernon, national sales executive. "It's the folks who have been sitting on the sideline. They're jumping in with this news."

View Full Image

Reuters

Maria Arellano, center, joins a Tuesday rally in Sacramento, Calif., asking state lawmakers to stop home foreclosures and help modify home mortgage loans to make them more affordable.

Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, say mortgage brokers and lenders.

While the initial flurry of calls came from people seeking to refinance, economists predicted lower rates also will spur some home buying among bargain-seekers. The surge in refinancing will help the overall economy by putting more cash in consumers' pockets and reducing the pressure on some borrowers struggling to make payments.

"This is a win-win," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. "It will directly increase demand for housing and help with the downward spiral in home prices."

The positive response to the Fed action came amid grim news in the housing market. Home prices continued to fall as the economic downturn deepened in September, according data released Tuesday by S&P/Case-Shiller. For the third quarter, the S&P/Case-Shiller home price index posted a 16.6% decline from a year earlier, worse than the 15.1% drop recorded in the second quarter.

The government's latest plans won't fix all the problems bedeviling the housing and credit markets. And it's not clear whether the most recent initiative will keep mortgage interest rates down over the long run.

Mortgage rates had dipped briefly in past weeks following previous government actions, including the takeover of Fannie Mae and Freddie Mac. But then rates creeped upward.

Tuesday's lower rates will for now only benefit borrowers who have the cash and credit rating to qualify for mortgages under current lending standards. The Fed's actions won't make mortgages any easier to get for homeowners or buyers who haven't been able to qualify in recent weeks.

Lower rates also won't help the roughly 11.8 million borrowers who are unable to refinance because they owe more than their home is worth, said Mark Zandi, chief economist of Moody's Economy.com

"I don't think it changes any of the underlying fundamentals to the mortgage-origination process," said Mr. Vernon, of Bank of America. "What it does do is help those who have the ability to refinance, because they will get a lower rate and will have some increased cash flow, if they can get through the process."

Still, the government's latest action was expected to be welcomed by homeowners and potential homebuyers. "The biggest group of people that will benefit from this is that John Q. Citizen who was the responsible consumer in the first place -- the person who is the prime borrower who is starting to crack under the pressure of this bad economy," said Jeff Lazerson, a mortgage broker in Laguna Hills, Calif.

Some borrowers moved quickly to take advantage of the lower rates. Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn., said his mortgage bank arranged for about 15 refinances of mortgages Tuesday as people rushed to lock in lower rates.

But he said about half-dozen other interested customers couldn't refinance because they had relatively low credit scores and too little equity in their homes. To get a rate of 5.5% Tuesday, he said, a customer would need a credit score of at least 720, about average, and home equity of 20%.

Chris Freemott, president of All American Mortgage in Naperville, Ill., said his firm locked in $4.5 million in deals on Tuesday. "It's easily been one year since we've seen that volume," he said.

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Among those benefiting from lower rates was James Ramsey of Aurora, IL., whose mortgage rate, currently 5.625%, was slated to increase by as much as a percentage point in January. On Tuesday, Mr. Ramsey locked in a 5.5% rate on his $180,000 mortgage. The refinance "is going to let me pay off a couple of credit cards really quick," he said.

The government's action was also greeted with relief by Scott Davis, a telecommunications project manager for the city of Phoenix, and his wife, Denise, a school teacher. On Tuesday, the couple locked in a refinance that will lower their mortgage rate to 5.375% from $6.75%, said Steve Walsh, their mortgage broker.

The Davises, who bought their home in July, needed help. They haven't been able to sell their old house yet and so are renting it out, but for less than their mortgage payments. All told, housing costs are eating up nearly half of their after-tax income, Mr. Davis says. The couple has stopped eating out and putting money into retirement accounts; they have also taken on second jobs to keep afloat.

Mortgage rates declined faster than yields on 10-year Treasury notes, which were quoted late Tuesday at 3.094%, down one-quarter of a percentage point from 3.342% on Monday. Mortgage rates tend to move in line with rates on 10-year Treasurys, but the gap between the two has widened recently.

That gap narrowed on Tuesday, which helped drive mortgage rates lower. The spread between rates on 30-year fixed-rate mortgages and 10-year Treasurys narrowed to 1.70 percentage points, compared with as much as 2.35 percentage points last week, said Credit Suisse Group mortgage strategist Mahesh Swaminathan.

Before credit markets seized up, the gap between the two averaged 1.23 percentage points, he said.

"Clearly, this is a major announcement," said Mr. Swaminathan, who expects mortgage rates to fall to as low as 5% over time. "It brings supply and demand into balance."

About $6 trillion of home mortgages were originated in 2005, 2006 and 2007, and interest rates on most of the fixed-rate loans in that period were 6% or more.

The $500 billion of Fannie, Freddie and Ginnie mortgage securities the Fed plans to buy accounts for a bit more than 10% of such securities outstanding, said Arthur Frank, head of mortgage-securities research at Deutsche Bank in New York.

Write to Ruth Simon at ruth.simon@wsj.com and James R. Hagerty at bob.hagerty@wsj.com

Residential Sector Remain Sluggish Despite RBI’S Rate Cut

Mortgage Rates Held Steady This Week

Mortgage Rates Near a Year High

Dodd Tied to Countrywide Loans

Construction Poised for Rebound

2008-11-25T13:55:00.001-08:00

The construction industry, beset by one of the biggest drops in employment in the current economic downturn, could be poised for a rebound under President-elect Barack Obama's expected stimulus package.

Mr. Obama hasn't offered details, but anticipating a surge in public-works spending, investors bid up construction and engineering stocks. URS Corp., a San Francisco-based engineering and construction company, rose 34%, global giant Fluor Corp. rose nearly 17% and Granite Construction Inc., a domestic engineering company, rose 22%.

Steven Fisher, an equity analyst for UBS in New York, said that 11 engineering firms he tracks had lost, on average, two-thirds of their market value this year through Friday as big construction projects were delayed due to state and local budget concerns. But Monday, share prices for that group rose by an average of 16%, far outperforming the broader market.

Stephen Sandherr, chief executive of the Associated General Contractors of America, a lobby for largely non-residential builders, said that a stimulus plan could "absolutely change the scenario for companies that have been talking about laying people off." His group's chief economist, Kenneth Simonson, noted that some 52,000 jobs in the heavy and civil engineering sector -- primarily highway projects -- have been lost in the past 16 months. Overall, construction had the highest unemployment rate, 10.8%, in October, he said.

As the housing market imploded, some companies that had focused on residential construction have been bidding on road projects, and bigger engineering firms have bid on smaller projects just to keep their work forces busy, industry officials said.

From highways to schools, state and local governments have been postponing approved construction projects in recent months. Assured funding would jump-start these projects. The American Association of State Highway and Transportation Officials, a group of state and local government officials, has a list of 3,109 "ready-to-go" highway projects that could break ground in 30 days to 90 days worth $18.4 billion.

Two former Clinton administration transit officials, Mortimer Downey and Jane Garvey, are among those spearheading transportation issues for the Obama transition. They have reached out to state and local officials to be ready for a spending package.

"What we've been told is to be ready, it's coming," says Christopher Ward, executive director of the bistate Port Authority of New York and New Jersey. His agency has several infrastructure projects in planning, including a new rail tunnel connecting New Jersey and Manhattan that is seeking federal funds. That project would create 6,000 jobs, according to Mr. Ward. "Clearly we have the construction capacity to get shovels in the ground."

Robert Murray, economist at McGraw-Hill Construction, says "the general criticism is, by the time these stimulus packages are passed and implemented, the economy is already coming out of recession. But given the prolonged slowdown expected in 2009, if this package passed early next year, it has potential to be helpful."

Write to Jonathan Karp at jonathan.karp@wsj.com and Alex Frangos at alex.frangos@wsj.com

Real-Estate Major Enters into Construction Business

Real estate developers tying up with Construction firms

Skanska Prospers in U.S., but Stock Slides