%1

Bankruptcy Judge A. Jay Cristol approved a plan by a company in chapter 11 to pursue a residential project on Fisher Island, Fla., the South Florida Business Journal reported today. The order by the judge on Feb. 11 allows Fisher Island Investments to fully pursue development of the Palazzo del Sol and Palazzo del Luna projects despite the ongoing bankruptcy case and a foreclosure lawsuit in county court. Fisher Island Investments was thrown into bankruptcy court by an involuntary chapter 11 filing by several alleged creditors in 2011. The case has been delayed by ownership disputes but those issues have apparently been resolved and the court declared that the officers and directors of Fisher Island Investments are Roberto Sosa, Mark Hauf and Yves Baumann.

U.S. mortgage rates rose to the highest since September, increasing borrowing costs for homebuyers as prices climbed across the country, Bloomberg News reported yesterday. The average rate for a 30-year fixed mortgage was 4.53 percent this week, up from 4.48 percent, according to a statement today from Freddie Mac. The average 15-year rate climbed to 3.55 percent from 3.52 percent, the McLean, Va.-based mortgage-finance company said. While a jump in mortgage rates since May has slowed demand, buyers drove up prices for a limited supply of properties that included fewer discounted foreclosures. Home prices in 20 U.S. cities rose 13.6 percent in October from a year earlier, the biggest gain since February 2006, according to the S&P/Case-Shiller index.

Home prices have zipped back into record territory in a handful of American cities, a milestone that comes seven years after the housing bust ravaged the market and the broader economy, the Wall Street Journal reported today. Values are up more than 13 percent from their 2007 high in Oklahoma City and by more than 6 percent in the Denver metro area. Prices are back to all-time highs in 10 of the nation's 50 largest metropolitan areas, according to a Wall Street Journal analysis of price data from Zillow, an online real estate-information service. Prices nationally remain below the highs of the past decade, and many of the cities that have seen the biggest gains largely escaped a boom and bust.

The Commerce Department reported on Tuesday that new home sales in November hit an annualized rate of 464,000, which is 16.6 percent higher than one year ago, the Washington Post reported yesterday. Demand from homebuyers is also helping to push up the median sales price, which was $270,900 in November, up 4.5 percent compared to October. Sales varied dramatically by region. In the Northeast and the West, sales rose 15.2 percent and 31.1 percent, respectively, in November over the previous month. By contrast, sales fell 26.6 percent in the Midwest. In the South, which includes the Washington, D.C., region, sales fell 9 percent.

Purchases of new U.S. homes rebounded in October from the lowest level in more than a year, signaling buyers are starting to take higher mortgage rates in stride, Bloomberg News reported yesterday. Sales jumped 25.4 percent to a 444,000 annualized pace, following a 354,000 rate in the prior month that was the weakest since April 2012, figures from the Commerce Department showed today in Washington. Home sales are regaining strength as gains in employment and stock prices help consumers adjust to this year’s increase in borrowing costs and property values, which have hurt affordability. Builders such Hovnanian Enterprises Inc. are optimistic about the outlook for the market, which will need to expand to meet the needs of a growing population.

American Realty Capital Properties and Cole Real Estate Investments agreed yesterday to an $11.2 billion deal in which American Realty will buy Cole with a mix of cash and stock, the New York Times DealBook blog reported today. The combined company will become one of the largest commercial landlords in the country, leasing space to companies including Walgreens, Bed Bath & Beyond and FedEx. The origins of the deal date back to March, when American Realty made an unsolicited offer for Cole that would have derailed Cole’s move to go public. Cole rejected the offer and went on to list on the New York Stock Exchange. Since the listing in June, Cole shares have climbed more than 17 percent. Nonetheless, American Realty, the smaller of the two companies, still wanted to do the deal. It will pay a 14 percent premium over Cole’s closing stock price yesterday of $12.82, and assume significant new debt in taking over the larger company.

Steve Schwarzman’s Blackstone Group LP has spent $7.5 billion acquiring 40,000 houses in the past two years to create the largest single-family rental business in the U.S., Bloomberg News reported yesterday. The private-equity firm is now planning to sell bonds backed by lease payments, the latest step in turning a small business into a mature industry. Deutsche Bank AG may start marketing almost $500 million of the securities as soon as this week. The debt will include a portion with an investment grade from at least one ratings company. Blackstone has led hedge funds, private-equity firms and real estate investment trusts raising about $20 billion to purchase as many as 200,000 homes to rent after prices plunged 35 percent from the 2006 peak. The largest investors, seeking to profit from rebounding prices and rising demand for rentals among millions of Americans who went through foreclosure or can’t qualify for a mortgage, are looking to the bond market for capital to buy more properties and increase returns with borrowed money.

After a three-year foreclosure fight, the failed Chicago Spire project has landed in bankruptcy court, the Chicago Real Estate Daily reported yesterday. The owner of a defaulted loan on the aborted condominium tower and other creditors filed an involuntary bankruptcy petition against the developer of the downtown project, which at 2,000 feet high would have been the tallest building in the Western Hemisphere. The condo bust foiled that plan, leaving its creator, Irish developer Garrett Kelleher, with a big hole in the ground and a pile of unpaid debts. In June, developer Related Midwest LLC bought the delinquent $69.5 million loan on the development site at Lake Shore Drive and the Chicago River. Related ventures and two other creditors filed the bankruptcy petition yesterday in U.S. Bankruptcy Court in Delaware. In all, the Spire creditors say they are owed $82.5 million.

Bank of America Corp.’s Merrill Lynch unit must face a lawsuit filed by two trusts that hold and administer mortgages on behalf of investors who own more than $1 billion worth of securities collateralized by the loans, Bloomberg News reported on Friday. The trusts sued Merrill Lynch Mortgage Lending Inc. in New York State Supreme Court in December, seeking to force it to repurchase loans that allegedly didn’t conform to representations and warranties about their quality and characteristics. In 2006, Merrill bought more than 6,000 mortgages with an original principal balance of more than $1.1 billion from a third-party loan originator, ResMAE Mortgage Corp., then turned them into tradeable securities that were sold to investors, according to the complaint. After ResMAE filed for bankruptcy in February 2007, the trusts pursued claims against ResMAE in bankruptcy through LaSalle Bank, demanding that it buy back loans on which borrowers had missed their first or second payments or provide other compensation, according to the complaint. LaSalle settled those claims in July 2008 on behalf of five Merrill-sponsored trusts, including the two plaintiffs in the suit.

When Lehman Brothers filed for bankruptcy in the early morning of Sept. 15, 2008, the impact on one of the nation's largest land developers, SunCal Cos., registered barely a footnote in the countless articles chronicling the collapse of the nation's fourth-largest investment bank, Dow Jones Daily Bankruptcy Review reported today. But in California communities such as San Clemente and Oakland, work on more than a dozen multimillion-dollar real estate developments ground to a halt. In the aftermath of Lehman's collapse, it wasn't clear who actually owned the SunCal properties. Lehman wasn't even sure whether the properties had been part of the billions of dollars in extra collateral that clearing bank JPMorgan Chase & Co. had demanded in the weeks before the bankruptcy. (Subscription required.)
http://bankruptcynews.dowjones.com/Article?an=DJFDBR0020130916e99gbjt6o…

To hear key players discussing Lehman's chapter 11 filing and the lessons learned from the case, click here:
http://news.abi.org/educational-brief/lehmans-chapter-11-filing