Housing & Real Estate Sector:

Retail real estate investment trust General Growth Properties opted last week to pay its employees ahead of schedule, according to a well-placed banker, stirring up speculation that GGP may be acting in anticipation of a bankruptcy filing. The news combined with today’s announcement of GGP’s failed bondholder consent solicitation is sending a clear signal that a bankruptcy is possible, added a trader.

The German government plans to acquire an 8.7% stake in Hypo Real Estate Group. The troubled lender said in a statement that the German Financial Markets Stabilization Fund (SoFFin) is taking the step in an effort to stabilize the financial markets. Specially, as part of the recapitalization of Hypo Re, either SoFFin or the German government will gain full control over Hypo Real Estate Holding, and as a first step toward that end SoFFin has committed to acquiring 20 million shares of Hypo Real Estate.

Catalyst Capital has closed its first dedicated European real estate fund, the Catalyst European Property Fund, with EUR228.5 million in assets under management. Peter Kasch, managing partner in London, said the move is due to the current global economic conditions. "Our efforts are now concentrating on identifying acquisition opportunities where we can add value during a recovery period in the markets, particularly in established prime markets."

-- Sarika Gangar & Samantha Rowan

Times may be tough for most folks, but not for the top moneymakers on Alpha magazine’s eighth annual ranking of the world’s best-paid hedge fund managers.

Asian alternative investment manager Pacific Alliance Group and real estate investment manager Secured Capital Japan have signed a deal that will have Pacific Alliance invest up to JPY4.5 billion (USD46 million) in convertible bonds issued by Secured Capital Japan. Pacific Alliance made an initial payment of JPY3 billion for the bonds. The two also agreed to go in on real estate opportunities and distressed debt together over the next several years, in Japan and greater China.

Some might say the real estate industry is for dreamers. That's a great thing when you apply your dreams to developments that shape a skyline and a city. But it's another thing when the focus shifts only to the building's projected financials and loses sight of the assets themselves. What is happening in today's real estate market has been a rude, yet much needed awakening. In the end, it's always about the assets.

The Federal Reserve has given the green light for commercial real estate debt to be included in its Term Asset-Backed Securities Loan Facility, which is part of the Treasury’s Consumer and Business Lending Initiative.

The Real Estate News Roundup is a summary of publicly reported real estate news briefs. The information has been obtained from sources believed to be reliable, but REFI does not guarantee its completeness or accuracy.

--Leela Parker

The Maine Public Employees Retirement System is seeking a real estate consultant, IPE Real Estate reports. The pension fund, which will start the search within the next six months, decided in July last year to increase its target real estate allocation to 10% from 5%.

Merseyside Pension Fund has extended two contracts for real estate investment services, IPE reports. It has extended the property investment valuation contract with Colliers CRE to cover the March and September 2009 valuations, to provide the pension fund with “additional assurance” during the current market turmoil.

The move to get commercial real estate included in the Federal Reserve’s Term Asset Backed Securities Loan Facility is picking up steam. An amendment to TALF has been set forward that gives the option, but not the obligation, for commercial real estate debt to be accepted into the program. A vote on the amended bill in the House of Representatives is likely next week, at which time it will head to the Senate.

The commercial mortgage-backed securities market reportedly is concerned over plunging values of real estate owned by bankrupt retailer Boscov’s Department Store. The properties have seen a dramatic drop in value from $182.7 million at the time the loans for the property were originated to $40.5 million, and investors are concerned that if losses have begun hitting highly rated CMBS that contain Boscov’s-backed loans, they may be next to suffer. Delinquencies on commercial mortgages packaged and sold as bonds is said to be up nearly 200% in the past three months.

The Associationof Real Estate Funds has named Legal& General Property Managing Director Bill Hughes as its new chairman. Hughes succeeds former Chairman, Nick Cooper, global CEO of ING Real Estate Select.

Moody's Investors Service: Trends in EMEA Banking

The $473 million Kalamazoo (Mich.) Retirement System is considering shifting its entire real estate portfolio into private real estate investment trusts and is in the process of assessing global managers to present to the board at the next meeting Nov. 19. Kalamzoo’s real estate portfolio has an aggregate $23 million between the city and county plans. It is split 50/50 between public and private REITs. Private REITs have lower volatility and less correlation to the equity market than public REITs, said Board Chair Bob Salisbury.

Top exchange-traded-fund provider iShares is attributing sector growth to market turmoil as investors seek ways to hedge risk. In September, iShares trading volumes reached EUR25 billion for its European listed ETFs, compared with EUR15 billion for September 2007.

The backbiting between the New York Stock Exchange and the Nasdaq OMX Group has escalated, with the NYSE comparing Nasdaq’s share and listing statistics to "A Midsummer Night’s Dream." NYSE member firm and listings departments fired off nearly-identical missives to members and issuers saying that like the romantic comedy, Nasdaq’s marketing of its volume and listings successes "blends identities and blurs the lines between fantasy and reality." NYSE has called attention to what it perceives to be inaccuracies in Nasdaq’s reporting for the past few months, and it promises to continue to do so without "Shakespearean drama."

It seems that lately everyone wants in on currency exchange-traded fund action. Wisdom Tree and Barclays Global Investors recently launched currency ETFs and last week Rydex Investments announced it would launch four currency ETFs that focus on Hong Kong, Singapore, Russia and South Africa. So far no firms have been speculative enough to launch a currency ETF based on the Zimbabwean dollar. Count yourself lucky volatility-hating investors!

State Street Global Markets has asked for Securities and Exchange Commission approval to carry out creation unit trades of exchange-traded funds for affiliated institutions. Under SEC rules, broker/dealers may not perform creation unit trades--which typically involve blocks of around 100,000 shares--for affiliates. SSGM, a State Street subsidiary, is affiliated with the Standard & Poor's Depositary Receipts, or SPDR, family of exchange-traded funds. In a letter to the SEC, SSGM said allowing only third-party B/Ds to perform creation unit trades of ETFs is expensive, adding that an affiliate could not influence price by performing such trades.

Crises change markets. The Savings & Loans crisis pushed US banks into securitising mortgages; the European ERM crisis ultimately gave birth to the euro; the Asian debt crisis shifted the policy debate in the emerging markets and eventually strengthened them. These are some examples of past experience. What will change after the latest financial crisis? Or more specifically, what will happen to securitisation?

Neil Wilson, editorial director at HedgeFund Intelligence explains why the Big Apple still holds some aces.

Hedge funds have massively outperformed global equities over the past decade, as shown by HFI’s regional indices for the US, Europe and Asia. They have had a bright start in 2007 too.

Bahrain’s much anticipated retail and leisure development on Amwaj Island, has experienced overwhelming interest from potential lenders.

Investor enthusiasm towards China's stock market is likely to continue into next year, with banks and telecommunication companies favored amid tax and industry reform, Citigroup said.

The very unusual phenomenon of curve inversion has made a return to the US dollar swap market, and its re-appearance is causing quite a stir.