Slowing Inflation Primes G-7 Central Banks for June
Inflation-related releases across the Group of Seven will prime central bankers for crucial June interest-rate decisions, just as they meet in Italy to discuss the state of the world economy.
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Inflation-related releases across the Group of Seven will prime central bankers for crucial June interest-rate decisions, just as they meet in Italy to discuss the state of the world economy.
Big US bond investors have been aggressively shifting money into long-dated notes, betting that the unloved asset class will be one of the winners from eventual interest rate cuts.
A measure of underlying US inflation cooled in April for the first time in six months, a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year.
Emerging-market currencies dipped Friday on dwindling optimism over Federal Reserve rate cuts, paring their fourth-straight week of gains.
The owner of a historic office building in Manhattan’s Financial District has filed bankruptcy to sell the property, which has been subject to foreclosure and suffered from a lack of tenants due to the Covid-19 pandemic.
Nov 9, 2022
Bloomberg News
,Canadian real estate lender Romspen Investment Corp. has halted redemptions on its largest fund after a number of borrowers stopped making payments.
The Toronto-based firm will “temporarily defer payment” of redemptions until it’s clearer when borrowers will repay the loans and the fund can get cash from asset sales, according to a letter to investors dated Nov. 8. “Loan payoff activity remains suppressed.”
The move underscores the growing stress in the nation’s real estate market as a sharp rise in interest rates changes the economics of commercial projects and disrupts the housing market.
The firm, which is backed by New York-based TIG Advisors, is an established specialty manager of private mortgage funds, providing pre-development, construction and other loans for commercial and residential projects. It’s among the largest private players in that business in Canada.
The Romspen Mortgage Investment Fund had $2.8 billion (US$2.1 billion) invested in 134 mortgages at the end of June, about evenly divided between Canadian and US projects. Managers are now working to accelerate the sale of some assets to free up cash.
“Please be assured that we are working diligently to expedite a number of these portfolio transactions and remain confident in the underlying value of the fund’s assets,” Romspen said in the letter, which was signed by eight trustees.
“In many cases, however, such transactions involve coordinating the interests of a number of independent third parties, who are also affected by the present market uncertainties.”
Private lending funds gained popularity among investors hungry for yield during the era of rock-bottom interest rates. But mortgage finance vehicles have had a difficult year as rates increase. The rise in borrowing costs is also hurting developers as they seek capital to build new projects or refinance existing ones.
Romspen has cut back on its dealmaking in Canada as a result, Managing Partner Derek Jenkin told Bloomberg last month.
To preserve liquidity, the firm created a “runoff pool” for investors who want to get their money out as assets are sold. But that didn’t dampen redemption requests, according to the letter, which said the firm may take further measures if conditions worsen.
Romspen told investors it has still outperformed other asset classes this year, with an 8.2 per cent trailing one-year return as of June 30, according to its website. “We are confident that we will manage through this challenging phase and achieve reasonable long-term results for investors, much as we have in past periods of adversity over Romspen’s 50-plus year history,” the letter said.
When developers can’t catch up on their payments, Romspen forecloses and deploys teams to continue work on projects before selling them. Because it lends at 65 per cent loan-to-value, “the market would have to move by about 30 per cent for us to see any material loss in our book,” Jenkin said last month.