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Putnam Investments has placed a large, concentrated bet that struggling U.S. shopping malls can transform themselves even as key tenants shut stores or file for bankruptcy, Reuters reported. So far, it is winning - to the chagrin of hedge funds like Alder Hill Management LP that are on the other side of the bet. Putnam, a Boston-based mutual fund firm, holds more than $1 billion worth of derivatives tied to mortgages on shopping malls, office buildings and hotels, according to interviews and filings analyzed by Reuters.

The Puerto Rican government is taking a hard line on rebuilding properties decimated by last year’s Hurricane Maria, offering homeowners federal financial assistance only if they move out of flood-prone areas, the Wall Street Journal reported. Government officials say that they don’t want to rebuild communities on land that is vulnerable to soil erosion, chronic flooding and destruction from future storms. “We need to move families to a safe place,” said Luis Burdiel Agudo, president of the Economic Development Bank for Puerto Rico, a government-owned bank that is helping oversee the recovery. Whether to rebuild homes in areas that are likely to flood again is a major issue for communities in places like Texas and Florida, especially as the costs of insuring these homes soar and rising sea levels mean more frequent flooding. The federal government has tried to step up purchases of frequently flooded houses from their owners instead of repeatedly paying out money from the financially troubled federal flood-insurance program.

The Treasury Department moved yesterday to block states from circumventing new federal limits on state and local tax deductions, the New York Times reported. A proposed Treasury Department rule, certain to face legal challenges from several states, would limit the type of charitable contributions that Americans are allowed to deduct on their federal taxes. The rule would effectively exclude donations that are rewarded with state tax credits. The regulation would affect only taxpayers who currently deduct more than $10,000 in state and local taxes. And its effect would most likely be concentrated among high earners in high-tax states, some of which created credits to help residents reduce the federal take. But it could also adversely affect taxpayers in other states, where such credits were already being given for contributions made to certain private or charter schools and universities, land donated for conservation purposes and donations to housing assistance programs. The proposed rule involves a provision of the new Republican tax law that set a $10,000-a-year cap on deductions for state and local taxes. The cap helped Republicans keep the estimated cost of the tax law, which centers on a sharp reduction in the corporate tax rate, under $1.5 trillion, to comply with a budget procedure that allowed the bill to pass without the support of any Democrats. Angered by the move, New York and New Jersey passed laws that set up charitable funds for state services, such as schools, and awarded state tax credits based on donations to those funds. Taxpayers making the donations would reduce their state taxes by the amount of the credit, but the state’s revenue would not fall.

A National Association of Realtors report showed yesterday that sales of previously owned U.S. homes unexpectedly dropped for a fourth month to the weakest in more than two years, signaling higher prices and tight supplies continue to squeeze demand, Bloomberg News reported. Prospective home buyers are increasingly discouraged by rising borrowing costs and property-price increases that are outpacing wage growth. The share of Americans who say that it’s a good time to buy a home fell in August to 63 percent, the smallest since 2008, the University of Michigan consumer sentiment survey showed on Friday.