Boston Properties

Frontrunning: February 12

  • The Man Who Killed Osama bin Laden... Is Screwed (Esquire)
  • G7 fires currency warning shot, Japan sanguine (Reuters)
  • North Korea Confirms It Conducted 3rd Nuclear Test (NYT)
  • Italian Police Arrest Finmeccanica CEO (WSJ)
  • Legacy, political calendar frame Obama's State of the Union address (Reuters)
  • China joins U.S., Japan, EU in condemning North Korea nuclear test (Reuters)
  • Wall Street Fading as Emerging-Market Banks Gain Share (BBG)
  • Berlin Conference 2.0: Drugmakers eye Africa's middle classes as next growth market (Reuters)
  • Barclays to Cut 3,700 Jobs After Full-Year Loss (BBG)
  • US Treasury comment triggers fall in yen (FT)
  • ECB Ready to Offset Banks’ Accelerated LTRO Payback (BBG)
  • Fed's Yellen Supports Stimulus to Spur Jobs (WSJ)
  • Libor Scrutiny Turns to Middlemen (WSJ)
  • Samsung Girds for Life After Apple in Disruption Devotion (BBG)

Frontrunning: January 25

  • Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
  • Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
  • China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
  • BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
  • Merkel Takes a Swipe at Japan Over Yen (WSJ)
  • Wages in way of Abe’s war on deflation (FT)
  • Italian PM under fire over bank crisis (FT)
  • Senior officials urge calm over islands dispute (China Daily)
  • Spain tries to peel back business rules (FT)
  • Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
  • Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)

Frontrunning: January 15

  • White House delays 2014 budget after "fiscal cliff" standoff (Reuters) - And Senate will pass this... never?
  • Amari Signals Limits to Abe’s Campaign to Weaken Yen (BBG)
  • Draghi’s Bond Rally Masks Debt Doom Loop Trapping Spain (BBG)
  • Obama backs gun limits, concedes tough fight ahead (AP)
  • Bernanke to Weigh QE Costs as Fed Assets Approach Record (BBG)
  • Japan to Sell Debt Worth 7.8 Trillion Yen to Pay for Stimulus (BBG)
  • France more than doubles forces in Mali (FT) and yet...
  • Malian Rebels Take Town and Vow to Avenge French Attack (NYT)
  • China’s Li Calls for Patience as Government Works to Reduce Smog (BBG)
  • EU berates China over steel subsidies (BBG)
  • Number of working poor families grows as wealth gap widens (Reuters)

Frontrunning: December 6

  • MSM discovers window dressing: Fund Managers Lift Results With Timely Trading Sprees (WSJ)
  • White House Unyielding on Debt Limit (WSJ)
  • Obama, Boehner talk; Geithner prepared to go off "cliff" (Reuters)
  • Republicans urged to resist tax rises (FT)
  • China looms large over Japanese poll (FT)
  • As predicted here two months ago, Greek Bond Buyback Leads S&P to Cut to Selective Default (BBG)
  • Japan opposition LDP set to win solid election majority – polls (BBG), but...
  • Japan Opposition LDP’s Main Ally Cautions Abe on BOJ Pressure (BBG)
  • U.S. and Europe Tackle Russia Trade (WSJ)
  • King Seen Maintaining QE as Osborne Extends Fiscal Squeeze (BBG)
  • Syria pound fall suggests currency crisis (FT)
  • Irish budget seeks extra €3.5bn (FT)
  • U.K. Extends Cuts Due to Poor Outlook (WSJ)
  • ECB Seen Refraining From Rate Cuts as Yields Sink on Bond Plan (BBG)

New York's Ultraluxury Office Vacancy Rate Jumps To Two Year High As Financial Firms Brace For Impact

Traditionally, when it comes to reading behind the manipulated media's tea leaf rhetoric and timing major inflection points in the economy, the most accurate predictor are financial firms, whose sense of true economic upside (or downside) while never infallible, is still better than most. Yet unlike employment, which is usually a lagging, or at best concurrent indicator, one aspect that has always been a tried and true leading indicator, has been real estate demand, in this case rental contracts. Due to the long-term lock up nature of commercial real estate contracts, firms are far less eager to engage in rental transactions (and bidding wars) when they expect a worsening macroeconomic environment. Which is why news that office vacancy in Manhattan's Plaza district, the area between Sixth Avenue and the East River from 47th to 65th streets, anchored by the landmark Plaza Hotel at Fifth Avenue and Central Park South which is home to some of the nation’s most expensive and prestigious office towers, and where America's largest hedge funds and PE firms have their headquarters, has just risen to 12.3%, or a two year high, is probably the most troubling news for the economy and a real indicator of what to expect of the immediate future.

Zuckerman To CNBC: "The Recession Never Ended"

Everyone's favorite perma-bullish stand-in for Cramer, Fast Money's Scott Wapner, seemed lost for words when Boston Properties CEO Mort Zuckerman laid down some basic truthiness on the state of the US economy "We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended. I think we may be heading for an even weaker economy this year than people expect." The righteous REIT ruler went on to note that it is not just the US but Europe (ridiculously high unemployment rates) where he analogizes (rather picturesquely) that it reminds him of "the man who jumps off a 25-story building and as he's hurtling by the sixth floor he says 'don't worry, nothing has happened yet'." Wapner is silenced and changes the topic as we suspect he is stunned at the honest sentiment given the nominal three-year-highs in REIT indices. Truth is indeed stranger than fiat-fiction.

Boston Properties' Mort Zuckerman Obliterates Barack Obama

Media and real estate tycoon Mort Zuckerman, who recently admitted he helped write Obama's speeches in the past, has come out blazing with easily the most damning missive of the president and his legacy to date. Mort joins such other distinguished and notable CEOs as Steve Wynn to openly blast the administration and its policies. In the meantime, the president has surely not made many new friends in the executive offices of the E&P space. Before all is said and done, look for letters such as the one attached to become a daily occurrence.

Weekly/YTD Credit Summary: January 15

This week has been noticeably weak for credit markets as they underperformed equity markets, fitting with our aggregate capital-structure model perspective. IG-HY has decompressed rather well buy the intrinsics have decompressed considerably more as market breadth is dominated by wideners and steepeners.

We see a slightly different picture evolve as spreads remain slightly tighter from 12/31 close with FINLs still leading the way as non-financials are mostly wider on average. Breadth is negative around 4to3 as the indices have handily outperformed intrinsics in IG and ExHVOL but not so in HY. Credit has underperformed equity since the start of 2010 (once again fitting wit hour model perspective) and their is more room to go yet on this.

Daily Credit Summary: January 13 Congressional Subpoena On Credit-Equity Divergence

Spreads were broadly wider in the US as all the indices deteriorated. IG trades 14.3bps tight (rich) to its 50d moving average, which is a Z-Score of -1.5s.d.. At 79.25bps, IG has closed tighter on only 5 days so far this year (268 trading days). The last five days have seen IG flat to its 50d moving average.

Indices generally outperformed intrinsics with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed but narrowed the skew, HY outperformed but narrowed the skew.

Daily Credit Summary: September 25 - UnPanic

Spreads pushed wider today with HY actually starting to shiver a little after holding its gains in the face of equity and IG weakness so far this week, as high beta names finally underperformed low beta. IG12 modestly underperformed IG13 once again as the tail names underperformed and HY underperformed IG. Breadth was more negative today in CDS land with wideners outpacing tighteners by around 7-to-1 and a noticeable flattening in the IG12 curve.

New York's Trophy Buildings Down 25-60% In Two Years

Whether or not the government has something up its sleeve to rescue commercial real estate is still unknown, despite various floating rumors. What is not debatable is that the ultra luxury CRE segment in New York, those crowning skyscrapers whose ownership as recently as 2 years ago resulted in a cache of real estate glory and jealous stares from competitors, has experienced an unprecedented decline in value in a short 24 months.

BXP's Mort Zuckerman: "The Economy Is Worse Than It Looks"

One would think that if anyone had an interest in painting an overly optimistic picture for the economy in general, and commercial real estate in particular, the Chairman of office uber-REIT Boston Properties would be it. Nope.

Daily Credit Market Summary: May 20 - Anything But Unch.

Spreads were mixed in the US with IG worse, HVOL improving, ExHVOL weaker, XO wider, and HY selling off (but while moves were marginal close-to-close, the sentiment was wider all day off a gap tight opening).

Mack-Cali Late To The Follow On Party

But better late than never, especially when you have the REIT dilution powerhouse behind you. CLI just announced it will issue a total of 7,475,000 shares with Merrill as lead underwriter. Use of proceeds: "To repay borrowings under its unsecured revolving credit facility" which has as syndication agent...pause... Bank Of America. Unfortunately the $180 million of max proceeds will not really help BofA with their total bank exposure...