Text size
Redbox’s 36,000 DVD-rental kiosks are now owned by Chicken Soup for the Soul Entertainment.
Dreamstime
One of this year’s most surprising tech deals was the acquisition of the movie-rental kiosk chain Redbox by
Chicken Soup for the Soul Entertainment
.
Don’t let the name fool you: Chicken Soup for the Soul is a video-streaming company that just happens to have grown out of the popular book series.
Today, Chicken Soup owns Crackle and other ad-supported video-streaming services. The Redbox deal gives the business some real scale, and it has turned the company into a bargain-bin small-cap bet on the future of video—one that the market is largely ignoring.
Chicken Soup’s roots go back to the well-known series of inspirational self-help books created by the writers Jack Canfield and Mark Victor Hansen. Since the original book was published in 1993, there have been more than 250 follow-ups (Chicken Soup for the Golfer’s Soul, Chicken Soup for the Preteen Soul, etc.), which together have reportedly sold more than 500 million copies. By 2007, Canfield and Hansen had begun to search for a buyer for their company, which included not only the Chicken Soup books but also a line of pet foods sold under the Chicken Soup brand.
They eventually found William Rouhana, who some investors might remember as the CEO of broadband provider Winstar Communications, which went bankrupt in 2001 as the internet bubble was popping.
Rouhana separated the books and pet-food business from the video segment and took the video-focused Chicken Soup for the Soul Entertainment (ticker: CSSE) public in 2017.
Prior to the Redbox deal, Chicken Soup owned a handful of other streaming assets, including Crackle (which it bought from
Sony
in 2019), a service under the Chicken Soup name, and a small ad-supported movie site called PopcornFlix.
Chicken Soup ultimately paid about $70 million in stock for Redbox and assumed $350 million in debt. The deal included an agreement to push out the due date on the Redbox debt, giving Rouhana time to clean up the company’s finances.
As the deal was pending, some Redbox holders bet that another bidder would emerge, at one point driving the price of Redbox shares to many times the value of the deal price. But Redbox never got any other options. The company was out of cash and likely headed for bankruptcy, a victim of a dramatic slowdown in film production during the pandemic. Rouhana says Redbox customers were still going to the kiosks but weren’t finding many new movies to rent.
With the transaction, Chicken Soup adds a network of 36,000 kiosks and expands its head count to about 1,500 from 200. The deal also revamps the company’s financial profile. In an interview at the modest Chicken Soup headquarters, above a CVS in Cos Cob, Conn., 35 miles north of Midtown Manhattan, Rouhana says the combined company should have earnings before interest, taxes, depreciation, and amortization, or Ebitda, of between $100 million and $150 million in 2023. Revenue should be at least $500 million, he says, about twice the Wall Street consensus forecast for 2022.
If Rouhana’s forecast is accurate, Chicken Soup’s stock—down about 50% since the deal closed—looks ultracheap. The company has a market value of just $164 million, and an enterprise value of a little over $500 million. “The market is just not accepting that there is a turnaround inherent in the situation,” Rouhana says.
Rouhana says Redbox revenue is historically tied to the number of new DVD releases available in its kiosks. In the fourth quarter, the number of new release rentals should jump to 35, from 13 in the current quarter, he says. In the long run, Rouhana expects the kiosk business to be a cash cow that generates capital for the company to invest in its core streaming business.
As my colleague Jack Hough noted in Barron’s cover story last week, the decision by
Netflix
(NFLX) and
Walt Disney
(DIS) to launch ad-supported streaming tiers has cast a new spotlight on the potential for advertising in the streaming world, a category known as advertising-supported video on demand. Rouhana says the development “provides validation for the AVOD model” and should convince more advertisers that they “need to be there.” At least a dozen smaller ad-supported services like Philo and Crunchyroll have hired Chicken Soup to sell advertising on their behalf, Rouhana says.
The CEO notes that Chicken Soup is the only pure play among the five largest ad-supported streaming services, a group that includes FreeVee, owned by
Amazon.com
(AMZN); Tubi, acquired by
Fox
(FOX) for $440 million in 2020; Pluto, acquired by Viacom, now
Paramount Global
(PARA), for $340 million in 2019; and the Roku Channel, owned and operated by streaming-platform company
Roku
(ROKU). Rouhana thinks there is consolidation coming, and says that Chicken Soup expects to be a buyer. Rouhana isn’t talking about being on the other side of the deals, but it’s also conceivable that Chicken Soup itself could one day become a target.
In the long run, Rouhana says the ad-supported streaming model should eclipse the subscription business that has come to dominate the market. What Chicken Soup and others need to do, he says, is provide quality content, make it easy to find, and offer advertising that is both relevant and interesting to consumers. “That’s all doable,” he says. “Every piece of that is under way inside our company right now.”
If Rouhana’s vision plays out, his book could be called Chicken Soup for the Bullish Soul.
Write to Eric J. Savitz at eric.savitz@barrons.com
By Joe Hoppe
Boku Inc. shares rose Tuesday after it said it has entered a new multi-year commercial agreement with an Amazon.com Inc. subsidiary to supply its digital wallet and other local payment methods to Amazon.
Shares at 0727 GMT were up 8.4 pence, or 11% at 85.4 pence.
The London-listed mobile-payment and identity-verification company said that the agreement–which has a three-year term from launch, with a one-year renewal period–covers the processing of payments for Amazon Prime Video subscriptions for customers located in certain South East Asian and African counties.
Revenue for Boku from Amazon will be based on the percentage of Prime Video transaction value that it processes.
At the same time, Boku has issued Amazon warrant to subscribe for up to 11.2 million shares in the company, representing up to 3.75% of Boku’s existing share capital. Some 747,676 shares were vested on the warrant issue, and the balance vests are based on Amazon achieving certain revenue targets over the next seven years.
The warrants are exercisable at 81.2 pence, the 30-trading day volume weighted average price of Boku’s shares immediately prior to issuing the warrants, and are exercisable for 10 years from issue.
Write to Joe Hoppe at joseph.hoppe@wsj.com
By Anthony O. Goriainoff
FirstGroup PLC said Tuesday that it will sell all but two items of its legacy Greyhound property portfolio to Twenty Lake Holdings LLC for around $140 million, and that it expects to complete the sale in December.
The FTSE 250 train-and-bus operator said that following the sale, its exit from residual Greyhound assets will be substantially complete at an aggregate net value of more than $160 million. The company added that this was ahead of expectations.
FirstGroup said it also completed the sale of a site in Denver for net $9 million in August and that some of the proceeds were applied in further derisking residual Greyhound pensions liabilities.
The company said that the book value of the Greyhound properties sold since the year end was around $60 million as of March 26, and that as a result it expects a profit on sale of around $90 million to be booked in fiscal 2023.
“The sale of these residual Greyhound properties is another milestone in refocusing FirstGroup on our strong positions in bus and rail in the U.K.,” Chief Executive Graham Sutherland said.
Shares at 0714 GMT were down 1.60 pence, or 1.3%, at 123.40 pence.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
Text size
FedEx will be closing FedEx Office locations to save money.
Mario Tama/Getty Images
Wall Street is piling on as
FedEx
stock plunges. Contrarian investors might want to snap up shares on the cheap but it looks a little early for that.
Downgrades abound after
FedEx
(ticker: FDX) shocked investors, reporting weaker than expected earnings for its fiscal first quarter, ended in August, while it also withdrew financial guidance for the year.
The new downgrades come too late to save investors any pain today. Shares could have further to fall from here, but the stock is off more than 20% in premarket trading Friday.
It all started Thursday evening. FedEx announced it earned about $3.44 per share from $23.2 billion in sales. Wall Street was looking for more than $5 in per-share earnings from $23.5 billion in sales. Management said volumes were slowing down as “macroeconomic trends significantly worsened.” Costs were a problem too.
So far, five analysts downgraded shares in response. The stock was cut to Neutral from Buy at BofA Securities, while J.P. Morgan analyst Brian Ossenbeck cut his rating to Hold From Buy and his price target to $214 from $258 a share. Loop Capital Markets analyst Rick Paterson cut his rating to Hold from Buy and his price target to $202 from $339 a share.
KeyBanc analyst Todd Fowler cut his rating to Hold from Buy. He suspended his price target. Fowler’s target coming into the downgrade was $325 a share. Finally, Stifel analyst J. Bruce Chan downgraded shares, like the others, to Hold from Buy. His price target went to $195 from $288 a share.
There were other price target cuts from the Street. The average analyst price target is now about $250 a share, down from almost $290 a share just a couple of days ago.
There have been six downgrades of FedEx stock this month. Only Citi’s Christian Wetherbee downgraded shares to Hold from Buy before the guidance disaster. Still, 55% of analysts covering the stock still rate the shares Buy. And the average price target is about 50% above where shares are slated to open. Maybe it’s a good time to snap up shares on the cheap? After all, shares are trading at about 9 times updated fiscal year 2023 earnings estimates.
Discretion might be the better part of valor in this case. For starters, earnings estimates probably have further to fall, making it tough to call the stock cheap yet. That 9 times multiple probably isn’t really 9 times.
And another time FedEx ran into a string of tough results was back in late 2018. Back then, FedEx cut its full-year guidance to roughly $16 a share from about $17.50 when reporting fiscal 2019 earnings in December 2018.
Shares dropped more than 12% in response. It took a few more quarters for the company to work out the kinks. Shares were down another 10% over the next 12 months while the
S&P 500
gained about 28%.
But over the next year, from late 2019 to 2020, FedEx shares rose almost 90% while the S&P rallied 15%.
It’s tough, and usually a bad idea, to try to time the market. FedEx stock did become a strong performer at some point in 2019 into 2020. And shares are closer to a bottom now than before. Still, past experience shows investors should have some time to evaluate what’s going on for a few months.
Sometimes, patience is a virtue.
Write to Al Root at allen.root@dowjones.com
Text size
A new home under construction in Monterey Park, California
Frederic J. Brown/AFP via Getty Images
About the author: Susan Wachter is the Sussman professor of Real Estate and professor of Finance at The Wharton School of the University of Pennsylvania and co-director of the Penn Institute for Urban Research. She is currently an advisory committee member of the Bureau of Economic Analysis of the Department of Commerce.
The U.S. housing market has entered an unusual and confusing phase. House prices and rents year over year continue to grow at historically high rates. But construction and sales activity are at the kind of lows that normally characterize a recession. Rents and housing-cost equivalents are more than 40% of the consumer price index and their rises are big contributors to inflation. Despite high prices, developers are walking away from deals, and firms are halting production mid-process. Sales activity is also falling. What is causing these seemingly contradictory outcomes?
Construction-industry profits are at a low, due to high input costs. Supply shortages are driving profits down by causing construction costs to rise faster than prices. New-construction inventory is growing. But the major source of for-sale home inventory is the pool of existing homes, and this inventory is still low.
The reason inventory is low is monetary policy. In an unintended result of the Federal Reserve’s ongoing round of rate increases, monetary policy is causing a locked-in effect that motivates existing homeowners to stay put. When interest rates rise, homeowners frequently decide to retain their attractive mortgage rate and not move to another home. Instead, they may do a home improvement, or simply stay in their current living situation.
Expected inflation contributes to demand, particularly from investors, who often use housing as an inflation hedge. But it also motivates homebuyers who wish to take advantage of still relatively low mortgage rates. While the average mortgage rate of nearly 5.9% may seem high, for those who are motivated to buy, mortgages are a one-way bet that they cannot lose. If rates continue to rise, borrowers can lock in at today’s rates and if they fall, they can refinance. Moreover, although rates have doubled since March, and are now the highest since November 2008, they are still low historically and, adjusted for inflation, lower. Rates and prices are making it harder for the average person to afford a home, but demand is high for those who can qualify. The share of the U.S. population ages 32-36, the largest segment, is at the prime age for home buying.
For home buyers who can afford monthly mortgage payments based on their income, coming up with a down payment is typically the hardest barrier to overcome. But that’s less so at the moment. Since the onset of the pandemic, households have accumulated several trillion dollars in incremental savings. This savings increase has enabled many households to weather the initial increase in inflation, and it has given them a buffer against the effect of rising prices. In addition, the investor share of home purchases, which is not affected by either constraint, is at an all-time high.
Nonetheless, existing home sales fell 20.2% from July 2021 to July 2022. Mortgage applications for purchase are down 23% as of early September. Many would-be buyers are finding it difficult to qualify for the standard mortgage, with affordability, in the National Association of Realtors index, at a 33-year low. For June 2022, the most recent Case Shiller data shows year over year house price rises of 18%, but Black Knight data show the national market is turning, with prices falling nearly 0.8% for the month of July. The median sales price, which reflects the composition of sales, is also decreasing. The median price reached $440,000 in the second quarter of 2022. In July, the median existing-home sales price was $403,800. Although this represents a 10.8% increase from a year earlier it reflects a $10,000 decline from June 2022’s record high of $413,800.
Amid this dynamic, Fed Chair Jay Powell indicated last month at Jackson Hole, Wyo., that monetary restraint would continue until it works. The Fed’s position matters because a decline in inflationary expectations and an overall slowing of the economy provide the path to easing housing markets’ supply shortages. When that happens, buyers will face potential price declines, with a whiplash effect in previous high-growth markets. A recession will cause mortgage rates to fall and will ease the lock-in effect, driving some homeowners to sell, since they will no longer fear losing their advantageously priced mortgages. Inventories will then grow in a self-reinforcing rise, as there no longer will be a reason to wait to list due to the lack of inventory. Inventory shortages are likely to reverse quickly and with that, price rises will reverse as well.
Already we see inventory of newly constructed homes rising to new highs, which is why the construction industry is in recession and new home prices are falling. The only good news is the resulting lower owners’ equivalent housing costs and rents will equate to a lower rise in the CPI. The resulting inflation relief will get us back to economic growth.
Guest commentaries like this one are written by authors outside the Barron’s and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to ideas@barrons.com.
By James Glynn
SYDNEY–Sales of new homes in Australia continued to slide in August as rapidly rising interest rates crunched the market.
New home sales fell 1.6% over the month, after a 13.1% drop in July, the Housing Industry Association, a construction industry group, said Wednesday.
July and August represented the weakest pair of months for new home sales since Covid lockdowns hit in 2021, the HIA added.
“Sales of new homes over the past two months are reflective of a slowing in the market as the impact of the rise in the cash rate hits households. This rise in borrowing costs compounds the impact of the rise in the cost of construction,” HIA economist Tom Devitt said.
The Reserve Bank of Australia has raised interest rates since May at the fastest pace seen since 1994, with financial markets pricing in a lot more over the coming months.
Still, while new home sales are falling, there is a backlog of yet-to-be-completed construction that will act as a buffer for the industry, keeping demand for skilled trades people remains exceptionally strong through the rest of 2022 and into 2023.
“The concern remains that the adverse impact of rising rates on the wider economy will be obscured by this volume of ongoing work and that the RBA goes too far, too soon,” Mr. Devitt said.
Write to James Glynn at james.glynn@wsj.com
Billions of dollars worth of office buildings, retail centers and apartment buildings in coastal U.S. cities sit in the path of major flooding as sea levels rise, according to a new DBRS Morningstar report.
The credit rating agency looked at a snapshot of roughly 47,000 buildings that it monitors out of the roughly $670 billion commercial mortgage bond market and found nearly 5,000 were at risk of severe or extreme flooding, given the dramatic pace of climate change in recent decades.
All told, it pegged about $539 billion worth of mortgage bond deals rated by the agency as having some exposure to severe or extreme flooding, leaving only a fraction of the market free of the threat.
“Investors and underwriters no longer have the luxury of simply checking if a property is outside of FEMA’s 100-year flood zones and verifying there is some evidence of flood insurance,” Kevin Augustyn and his credit rating team, wrote in a new report.
Instead, the team looked at the National Oceanic and Atmospheric Administration’s latest projections for sea levels, which point to an additional rise along the U.S. coastline of 10 to 12 inches by 2050, or as much as the total rise measured in the past 100 years.
Flood risks helped inform this map, which shows Miami topping the country with an estimated $1.1 billion worth of office, retail and multifamily buildings at risk of structural damages as sea levels rise, according to the report, which relied on data from Arup and the First Street Foundation.
Miami and New York City top the list of cities with commercial buildings most at risk as sea levels rise
Sources: Arup and First Street Foundation
New York had an estimated $582 billion in similar properties at risk, followed by about $450 billion in Pittsburgh, $330 billion in Boston and roughly $280 billion each in Houston and San Francisco.
“Although not all coastal, Pittsburgh is particularly susceptible to flooding because the city is at the junction of three rivers,” the report said.
Heavily exposed
Climate change has been rapidly evolving, evidenced by the stunning increase in billion-dollar weather and climate disaster events since the 1980s, which makes historical data “less accurate,” according to the DBRS Morningstar team.
What’s more, commercial property owners can tap national flood insurance coverage from the Federal Emergency Management Agency of only $500,000 for a building and $500,000 for the building’s contents, according to the report, even though many key properties in big cities have been financed with hundreds of millions of dollars in mortgage debt. The report said additional coverage would need to be purchased in the private insurance markets.
To help investors get a better grip on their potential exposure to rising sea levels, the DBRS Morningstar team found 4,704 buildings at risk of extreme and severe flooding (see chart) in bond deals it rates. The following breaks down exposure by deal type.
Most commercial mortgage bonds rated by DBRS carry some risks of climate-related flooding.
DBRS Morningstar
While the commercial mortgage bond market finances only a cross-section of the nation’s buildings, the DBRS Morningstar report still provides a grim snapshot of the near unavoidable flooding risks most investors face.
That also isn’t the only risk, particularly with the embrace of flexible work arrangements. Before the pandemic, lenders often pitched “single-borrower” commercial mortgage bond deals to investors as safe-haven investments, in part because they frequently helped fund top real estate owners looking to build, buy or refinance New York City’s priciest office towers.
The pandemic upended that view, with office buildings still only 43.% occupied more than two years after the onset of the COVID crisis, according to Kastle Systems’ latest 10-city weekly average.
With that backdrop in cities like San Francisco, lenders and investors have grown increasingly wary about financing office buildings.
Real estate owners also will face sharply higher borrowing costs when their debts come due, with the benchmark 10-year Treasury rate
TMUBMUSD10Y,
near 3.4% on Tuesday, and with the Federal Reserve expected to pull the trigger on another jumbo rate increase next week in a bid to cool rampant inflation, while risking sparking a potential recession.
Read: Any doubt Fed will raise rates by 75 basis points next week is gone after hot U.S. inflation data
U.S. stocks swooned on Tuesday after August inflation data came in hotter than expected, with the Dow Jones Industrial Index
DJIA,
down more than 900 points at last check, the S&P 500
SPX,
off 3.2% and the Nasdaq Composite Index
COMP,
tumbling 4%.
Text size
Blackstone headquarters in New York.
Angus Mordant/Bloomberg
A slowdown in the credit markets could lead to upside for two commercial-mortgage real-estate investment trusts in the form of lending opportunities, according to BTIG.
Higher interest rates, recession fears, and the war in Ukraine have made U.S. banks more hesitant to lend, BTIG analyst Eric Hagen wrote in a research report. In the second quarter, banks issued $20.6 billion of securities backed by real-estate loans, down from $29 billion in the first quarter, The Wall Street Journal reported, citing Trepp data.
This translates to opportunity for commercial mortgage REITS such as
KKR Real Estate Finance Trust
(ticker: KREF) and
Blackstone Mortgage Trust
(BXMT). Both provide senior commercial-mortgage loans to properties backed by institutional sponsors. “Both companies are nonbank mortgage originators/lenders. They’re more flexible and nimble than a bank, which is trying to navigate through a whole host of complex variables,” Hagen told Barron’s.
Hagen has Buy ratings on both KKR Real Estate and Blackstone Mortgage. He said he “might lean a little bit toward KREF as the better value right now.” He trimmed his price target for Blackstone Mortgage to $32 from $35, and his price target for KREF is $21.
Both could see a pickup in lending activity due to a mortgage dislocation, Hagen said. The situation makes the REITs appealing. The two have traded similarly this year. The yield for each, including dividends, is about 9%, Hagen noted.
Each REIT has its own risks. KKR Real Estate’s portfolio comprises 47% multifamily loans, 26% office and 11% industrial, according to the firm’s website. It had $7.9 billion in assets under management as of June 30. KKR Real Estate’s average loan-to-value, or LTV, is 67%. Lenders use LTVs to assess risk; loans with a higher ratio typically mean higher interest rates. “It’s standard for most of the commercial mortgage lenders to operate below 70%,” Hagen said. KKR Real Estate originated $1 billion in loans in the second quarter, according to its second quarter earnings release.
The much-bigger portfolio in Blackstone Mortgage had $26.5 billion in AUM as of June 30. Office loans comprise 41% of Blackstone Mortgage’s portfolio, while multi is 25% and hospitality is 19%, according to a Q2 earnings supplement. Blackstone Mortgage’s LTV ratio is 64%. It originated $3 billion in loans in the second quarter.
Hagen sees potential earnings and book-value upside for Blackstone Mortgage connected to higher short-term interest rates, including an estimated 26 cents a share from SOFR, the floating interest rate benchmark, which is expected to rise 150 basis points, or bps, according to a Sept. 8 note.
By comparison, KKR Real Estate could see a pickup of about 30 cents a share from SOFR rising 150 basis points, Hagen wrote in an Aug. 25 note. He expects its third-quarter earnings capture the 75 basis-points hike in July, plus the hike next month. KKR Real Estate stock is down 6% this year. At Friday’s close of $19.62, shares are trading at about one time book value, Hagen noted.
Both REITS face some possible bumps in the current environment. For BXMT’s portfolio, one risk is the economic and political uncertainty in Europe, including the intense focus on higher energy costs, Hagen said in a Sept. 8 note. Roughly 25% of BXMT’s $26.5 billion loan portfolio is in Europe, Hagen said. BXMT, down about 5% year-to-date, changed hands Friday at $29.15. The stock is trading slightly above book value, Hagen said.
KKR Real Estate, meanwhile, doesn’t have any European exposure. But it does face some risk due to
Amazon.com
(AMZN), which is canceling, closing or delaying the opening of 49 delivery-processing facilities across the U.S. due to the slowdown in online shopping, according to the OC Register.
The largest loan in KR Real Estate’s portfolio is a $381 million refinancing for a multifamily property in Arlington, Va., located across the street from Amazon’s HQ2 office park, Hagen said in the note. KR Real Estate’s second-largest loan supports the construction financing for one of Amazon’s new LEED certified office towers in Bellevue, Wash., Hagen said.
Amazon declined to comment, but pointed to a story from the Washington Business Journal, which said that Amazon planned to pause construction on office towers in the Bellevue, Wash., area, but no changes are expected for the development of its HQ2 campus in Arlington.
Write to Luisa Beltran at luisa.beltran@dowjones.com
I’ve been thinking a lot about the cost of living, and how house prices, rent and food prices contribute to how we socialize with friends. I am a longtime reader of your column, and I took note of one a few years ago about how the $1 tip is dead. As a result, I always give $2 or more to a coat attendant or a bar man. Today, I have a similarly-themed question.
With sky-high inflation, is it still acceptable to arrive at a friend’s house for dinner with just one bottle of wine? I ask because on a recent visit to these neighbors a friend of theirs arrived with two bottles of champagne, three different cheeses and flowers. I was holding a two-year-old bottle of red wine from my small “cellar” (kitchen cupboard).
“‘I am happy to be on anybody’s guest list, if I’m being honest. I value their friendship, and I look forward to meeting new people at their home. Retirement can get pretty lonely.’”
I am blessed to have neighbors who water my plants when I am away — and vice versa — and sometimes invite us over for drinks if they have out-of-town visitors. I am a retiree, 67, and I am happy to be on anybody’s guest list, if I’m being honest. I value their friendship, and I look forward to meeting new people at their home. Retirement can get pretty lonely.
I also try to return the favor, but I don’t know as many people in our town as these friendly neighbors, and they are all couples who appear to have very little time between their second homes, golf clubs, tennis clubs and their own groups of friends. I lead a simple life. I have a cat, and a family who live out of state, and some college friends scattered across the country.
Maybe I’m being insecure or worrying unnecessarily, but I hate to be cheap. Am I a cheapskate?
A Wine Loving, $2 Tipper
Dear Wine Lover,
Given that you don’t attend a lot of dinner parties in your neighborhood, it’s understandable that you may feel sensitive about whether you are bringing enough of your “A Game” to the party, or simply, bringing enough wine.
When we put such a high value on something — a job interview, a first date, new friends, good neighbors — it can bring out our insecurities, and put unnecessary pressure on us to perform when all we have to do is ask questions, listen to what others say, and be engaged. We all have feelings of self doubt, and they ebb and flow over time. Even the most confident and ebullient dinner-party guest may harbor doubts about their scintillating conversation or the quality of their wine.
Whether or not you decide to bring an extra bottle depends on the lavishness of the culinary production, and your relationship with the friend.
As lifestyle magazine Real Simple pointed out earlier this year in helping readers entertain on budgets of all sizes, $100 will get you “olives for guests to munch on when they arrive, and an arugula salad with goat cheese, walnuts and pomegranate seeds for a first course; stuffed Cornish hens with parsley potatoes and green beans is the main course; with lemon pound cake for dessert. (And there’s a bottle of pinot noir, too!)”
In that case, you could bring a decent bottle of wine — not the cheapest on the shelf — and a chunk of Stilton, or some flowers.
For $25, hosts could cook a mushroom risotto and give each of their guests a lone glass of wine, supplemented by guests bringing bottles of their own. But what well-mannered host wants to risk running out of beverages? Or telling their guests that — sorry, folks — one glass of wine is your limit? That’s tantamount to flashing the light on and off, like they do in an Irish pub, and telling the startled guests, “Have you no home to go because I’ve got a bed to go to!”
In this scenario, one bottle is fine, and the knowledge that the host may have more dinners if they keep within their budget. I would rather go to a modest dinner with an interesting and lively host than an extravagant dinner party with a bunch of bores who insist on telling you their opinions on everything from politics to petty gossip.
“‘Even the most confident and ebullient dinner-party guest may harbor doubts about their scintillating conversation or the quality of their wine.’”
If you’re cooking for four people, and providing alcohol and starters and a dessert, and you’re not Gordon Ramsey or Julia Child, you may — like me — cut some corners on the preparation. So you may end up spending even more. The biggest treat when a guest walks through your door is when they are smiling, showing their obvious pleasure at being there.
If it’s your first time in their home, it’s always a great start to the evening to arrive with wine and flowers. I sometimes also pick up a book that I love on the way. It’s nice to share literature that inspires or moves you. Nor does it have to be a new book. You can choose one from your library. Homes are full of books that have been read just once that are crying out to be read again, and again — and by a new pair of eyes each time.
If you are a regular visitor — the kind of pal with which you watch TV together and have each other around a few times a month — one bottle of wine is fine, or even the offer of a salad or dessert as an alternative, especially if it’s midweek and neither of you wish to wake up with a heavy head.
If you want to show your appreciation for landing on your neighbor’s guest list, and you don’t get that many invitations, making a little extra effort will keep you on the top of their list, especially given the rise in the cost of food. (Grocery prices just had their largest price hike since 1979.)
“‘Loneliness can creep up on you. It can happen when you are surrounded by people, but don’t feel like you are welcomed by and/or truly connected to them.’”
Loneliness can creep up on you. It can happen when you are surrounded by people, but don’t feel like you are welcomed by and/or truly connected to them. It is an epidemic in rural areas, and it is also prevalent in big cities where people are living on top of each other.
Sometimes, lonely people turn to Facebook
META,
and other social media — and while that provides a connection to the world, it can also be the emotional equivalent of empty calories. You have retired in a place far from familiar faces, your routine is gone and you are naturally rebuilding your social life.
Not everyone can afford to bring two bottles of wine and a selection of cheese to dinner, but we can all bring the best version of ourselves: showing our appreciation for our host’s table and food, asking questions, sharing ideas, avoiding complaining about everything that’s wrong with the world (save that for Twitter
TWTR,
or, even better, therapy), and making sure that anyone who may seem ill-at-ease is taken care of.
A kind word, a thank-you note and thoughtful gift, however small, can go further than a second bottle of a pricey Pinot Noir, even in an era of rising prices.
Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Also read:
‘Things are rocky between us’: My girlfriend and I sold our Florida home. Our $200,000 profit was wired to her account. She refuses to give me my fair share.
I shared expenses 50/50 with a friend on vacation. She wants me to split the cost of her credit card’s foreign-transaction fees. Is that sharp practice?
Home values in August saw their largest monthly decline since 2011. Some cities see house prices drop by 3%.
Home values are edging down as buyers remain spooked by high mortgage rates, according to a new report.
The typical value of a home in the U.S. fell 0.3% in August from the previous month, according to real-estate company Zillow’s August market report. That’s the largest month-to-month drop since 2011, the company said.
Zillow cited “the historic rise in home prices over the pandemic, compounded by this year’s spiking mortgage rates.”
Though home-price appreciation has slowed since it peaked in April, home values are still up 14.1% from a year ago. They’re up nearly 44% from August 2019, before the onset of the coronavirus pandemic.
The typical 30-year mortgage rates has now surpassed 6%, meaning that monthly payments are significantly higher than just months ago. And, with home prices retreating only modestly, many would-be buyers consider a purchase still out of reach and remain on the sidelines.
“The prime suspect to explain the pullback in home-buyer demand is the huge decline in affordability over the past year. The diverging fortunes of more and less affordable markets backs up the hypothesis,” Zillow said.
“More affordable markets in the Midwest are generally retaining their heat while competition is cooling most rapidly in Western markets, especially those with the highest home prices and the ones that saw the most home-price appreciation over the pandemic.”
Home values fell the most in San Francisco, where they were down 3.4%, a percentage decline matched by Los Angeles. In Sacramento, values were down 3.2% and in Salt Lake City 2.6%.
Home values rose in a few markets, such as Birmingham, Ala.; Indianapolis; Cincinnati; and Louisville, Ky. Homes in these areas are typically priced at under $300,000.
With people hesitant to buy homes, the typical time a listing lasts on the market is increasing slightly: In August, the average listing was pending 16 days after first going active on Zillow. That typical market time was three days longer than in July.
Inventory is crawling up, rising by 1% from July.
“Typical mortgage payments show an even starker picture of the astronomical growth of expenses for new homeowners over the past three years,” Zillow said.
The typical monthly mortgage payment for a new home has jumped from $897 in August 2019 to $1,643 this year — an 83% increase. That’s an “astronomical growth of expenses for new homeowners over the past three years,” Zillow said.
Affordability has significantly declined. In April 2021, when the benchmark mortgage rate was around 3%, the annual income needed to buy a home at the median price of $340,700 was $79,600, researchers at the Harvard Joint Center for Housing Studies said on Friday. With rates at 5.41% in July, the annual income needed to buy a median-priced $403,800 home was $115,000, they said.
Emma Ockerman contributed to this report.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com.
Source link