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Blackstone Top Ticks Market Again, As Second IPO Pulled
The IPO window has closed. Just like in 2007, Blackstone once again times the exit opportunity perfectly (too bad you can't IPO twice), while firms like AEI and now Aviv REIT end up having to pull their initial public offerings. And this one happens to be the triple whammy of not just an IPO, and not just a REIT, but one lead managed by REIT reverse-interest expert (and short interest terminator) Bank of Countrywide Lynch. If Merrill was unable to find enough interest, then look out below.
The real-estate investment trust that operates nursing
homes in 21 U.S. states pulled its 16.6 million share IPO after
seeking $17 to $19 apiece, according to data compiled by
Bloomberg. The company planned to use proceeds to repay debt and
redeem stakes in an operating unit held by Chairman and Chief
Executive Officer Craig Bernfield and co-founder Zev Karkomi’s
estate, according a regulatory filing.“It wasn’t meeting investors’ expectations in pricing,”
said Joseph Betlej, vice president of St. Paul, Minnesota-based
Advantus Capital Management, which oversees $18 billion. Betlej
said he was approached about participating in the deal.
What a difference a month makes. It was one short month ago that Blackstone raised over $7 billion selling comparable crap to witless idiots:
While sellers such as Blackstone Group LP reaped $7.4
billion in September and October unloading shares into a stock-
market rally that’s lifted the Standard & Poor’s 500 Index by
more than 50 percent from its 12-year low in March, profits for
IPO buyers have deteriorated as the stock measure fell for the
first time in eight months.
We wish the Merrill REIT underwriting juggernaut better IPO luck in the future after this dismal failure. And if all else fails, there are still at least 20 utterly horrendous REITs that Merrill should have a direct line to Cohen and Steers to presell at least 80% of the offering. However, with short levels a shadow of their March selves, at this point in time a follow offering would likely promptly result in a 50% drop in any given stock price. Which we think the principals of C&S would likely not be too happy with at this very sensitive time.
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Speaking of selling crap to witless idiots, anyone notice AIG is up again by $5.50 today? 16%?
Of course we noticed. 5 points in 2 hours. WooHoo its the 2 p.m. Kingda Ka joy ride.
case in point - TPGI, another crappy real estate company announces an equity offering and falls 30%. Window just about closed.
Hey Tyler, care to list the 20 utterly horrendous REIT ticker symbols? I would love to buy long dated puts.
No thanks,
Got all the fluffy stock I need.
Don't slam the door on the oven. The stock souflette will fall.
OT, but this is ugly.
OTTI Charges Continue to Plague FHLBsBy Steven Sloan/American Banker
November 3, 2009
Despite changes by the Financial Accounting Standards Board (FASB) in March that were expected to stem fallout caused by other-than-temporary impairment (OTTI) charges at the Federal Home Loan banks, the system is continuing to suffer massive losses on its portfolio holdings.
Many Home Loan bank representatives praised the FASB after it amended its rules concerning OTTI to limit them solely to credit risk. But it has become clear that the credit risk embedded in the system's portfolios of private-label mortgage-backed securities is significant.
During the third quarter alone, the system's credit-related OTTI charges totaled $1.042 billion. That is more than half of the $1.995 billion in OTTI charges the system has taken all year.
The impact of the charges has been painful; the system said last week it lost $165 million during the quarter.
"This is an indication of the magnitude of their exposure to these kinds of securities," said Brian Harris, an analyst at Moody's Investors Service. "The credit pieces are becoming larger."
Home Loan bank representatives acknowledged that, even with the FASB's change, OTTI charges will remain a big challenge for the system. "The private-label mortgage-backed securities market continues to be a weight on the Federal Home Loan banks' earnings," said John von Seggern, the president of the Council of Federal Home Loan Banks.
The situation could be much worse. Noncredit-related OTTI charges totaled $8.4 billion for the first nine months of 2009 and before the FASB's decision, Home Loan banks would have been required to run that amount against earnings as well.
But the big question is how many more charges are in the offing. Harris estimated credit-related losses in the MBS portfolios could reach $2.8 billion.
In a press release last week, the Home Loan banks' Office of Finance did not offer an estimate of future charges but said the third-quarter hit resulted in large part from rising unemployment, lower housing prices and a tough refinancing market for borrowers who owe more than their home is worth. Those factors are unlikely to improve anytime soon, leading some observers to predict more charges. "Now you're down to the real fundamentals of credit being bad," said Bose George, a mortgage equity analyst at KBW. "Credit fundamentals are going to be weak for several quarters."
Given that background, there is little the Home Loan banks can do at the moment to minimize future OTTI charges. But George said the system should continue shifting back to its core advance business.
"The damage is done in terms of the old stuff but going forward, their business models need to have far-tighter parameters," he said.
Advances on Sept. 30 declined 27% from yearend, to $678 billion.
Some held out hope that the models Home Loan banks are using to determine credit-related OTTI charges are overly conservative and ultimate losses may prove to be lower. "There's an element that says they are front-end loaded accounting losses and there are potential recoveries," said Jim Vogel, the head of fixed-income research at First Horizon National Corp.'s First Financial Capital Markets Corp.
Others were less optimistic.
"They are real charges," Harris said. "It's an expected credit loss calculation."
New Robo posted today:
http://www.zerohedge.com/article/mass-chaos-confusion-and-bewilderment-a...
Bank of America Countrywide Lynch
aka
BACL
aka
deBACLe
We wish the Merrill REIT underwriting juggernaut better IPO luck in the future after this dismal failure
If only they had brought David Bianco on board to help sell this thing.....alas.