by Calculated Risk on 12/18/2007 07:19:00 PM

From the Financial Times: Second wave of SIV liquidity problems looms

January will bring the start of a second wave of liquidity problems for SIVs as the vast majority of medium-term funding starts to come due for repayment, according to a report from Dresdner Kleinwort analysts to be published on Wednesday.
...
SIVs rely on cheap, short-term debt ... [that] has come from both ...(CP) ... and from the slightly longer maturity medium-term note (MTN) markets. ... “So far SIVs have primarily felt the impact of collapsed CP issuance,” said Domenico Picone at DrK. “Outstanding MTN for the 30 SIVs currently stands at $181bn, which will be the next liquidity challenge they face.”

Luckily the SuperSIV will be ready to step in, from Bloomberg: `SuperSIV' Fund to Start Buying in Weeks, Banks Say.

by Calculated Risk on 12/18/2007 04:13:00 PM

From Bloomberg (no link yet): Macklowe Failed to Repay $500 Million Loan, Newsletter Says (hat tip Brian)

New York investor Harry Macklowe failed to pay a $495 million loan from Deutsche Bank AG to develop an office, hotel and condominium tower on the Park Avenue site of a former luxury hotel, Commercial Mortgage Alert said.
...
He also missed a payoff deadline for a $120 million loan on
510 Madison Ave. ...

In September, the WSJ reported: Macklowes On a Wire

Mr. Macklowe and his son Billy paid $6.8 billion to buy seven New York buildings from Equity Office Properties Trust. ... the sale was one the most expensive real-estate deals in U.S. history, symbolizing the skyrocketing prices paid for buildings at a time of cheap debt and demand for office buildings.

The transaction was emblematic of the lax underwriting standards of the real-estate boom. Macklowe Properties put in only $50 million of equity and borrowed $7.6 billion, according to the documents. (Mr. Macklowe borrowed more than the purchase price to cover closing costs and other fees.) The deal also had "negative debt service," meaning that the rents from the buildings weren't expected to cover the debt payments for five years ...

Talk about a high LTV: borrowing $7.6 Billion for a $6.8 Billion purchase on properties that have probably declined in value. Approximately $5.0 Billion of the debt must be paid off in February.

by Calculated Risk on 12/18/2007 03:42:00 PM

The Union Tribune has a graph of house prices in San Diego based on the DataQuick numbers released earlier today: Home prices tumble

Click on graph for larger image.

This graph from the Union Tribune article shows the median home price in San Diego has declined 15% from the peak in November 2005, and has now returned to early 2004 pricing.

From an earlier post, this graph shows the round trip for 15% and 30% nominal national price declines for the S&P/Case-Shiller U.S. National Home Price Index and the OFHEO, Purchase Only, SA index.

A 15% nominal price decline would take prices back to late 2004 for both indices. A 30% price decline for Case-Shiller would take prices back to mid-2003; 30% for OFHEO would take prices back to late 2002.

For San Diego, the Case-Shiller index through Sept 2007, shows prices have declined to below the July 2004 level (very similar to the DataQuick numbers). Not all areas will see the same price declines, but these round trip graphs will probably become common.

by Calculated Risk on 12/18/2007 01:40:00 PM

From DataQuick: Southland prices fall again; sales perk up

... Sales were the slowest for a November in at least 20 years and the median sale price posted a record 10.3 percent year-over-year decline ...

A total of 13,173 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November. That was up 2 percent from 12,913 sales in October, and down 42.7 percent from 23,005 in November last year, according to DataQuick Information Systems.

Last month's sales were the lowest for any November in DataQuick's statistics, which go back to 1988. The previous low was in November 1992, when 15,446 homes sold. November has averaged 22,749 sales over the last 20 years.
...
The median price paid for a Southland home was $435,000 last month, down 2.2 percent from $445,000 in October, and down 10.3 percent from $485,000 in November last year. That year-over-year decline is the largest for any month in DataQuick's records. Last month's $435,000 median was the lowest since March 2005, when it was also $435,000.

Foreclosure activity is at record levels ...

Record low sales, record falling year-over-year decline in prices, record foreclosure activity - sounds like a broken record.

by Calculated Risk on 12/18/2007 12:27:00 PM

From MarketWatch: Goldman's 'horrible' Nov. points to more credit losses: CNBC

... Goldman Sachs ... suffered through a "horrible" November, in a signal that the credit crunch may continue, CNBC reported Tuesday ... the business channel reported that Goldman recently endured the worst two weeks in the company's history.

This follows this mornings news: Goldman Sachs again outpaces expectations

Goldman Sachs on Tuesday posted fourth quarter earnings that were well ahead of analyst estimate ... highlighting the firm's ability to manage risk and outride rivals in one of the toughest markets in memory.

Goldman's Q4 ended in November, so that included the "horrible" November.