MADRID — Renewable energy investors who lost subsidies promised by Spain are heading to a London court to try to claw back $125 million from the government — a decadelong dispute with ramifications for clean energy financing across the European Union.
The outcome will be closely watched by investors after the U.S. passed a new law offering incentives for homegrown green technology. Experts say the Inflation Reduction Act is already drawing clean energy investment away from EU countries like Spain, leaving the 27-nation bloc much less competitive globally.
The European Commission, the EU’s executive arm, has proposed its own rules on allowing state aid and incentives for green investment. But those changes would not affect court cases already underway.
The lawsuit in London’s Commercial Court this week involves investors from the Netherlands and Luxembourg who poured millions into a solar plant in southern Spain in 2011. The Spanish government offered subsidies to encourage growth in renewable energy production, then controversially slashed the payments without notice as it cut costs after the 2008 financial crisis.
Spain has been sued internationally more than 50 times over the retroactive changes. It has not paid out despite losing more than 20 cases so far, according to U.N. data on international investment disputes. The EU backs Spain’s position.
“Those renewable investors — multibillion-dollar companies — are very concerned about the attitude of Spain and Europe looking forward,” said Nick Cherryman, one of the lawyers leading the case against Spain. “Why should they take risks investing in Europe given the track record?”
Spain now ranks alongside Venezuela and Russia as countries with the most unpaid debts over commercial treaty violations, according to a recent ranking compiled by Nikos Lavranos, a Netherlands-based expert in investment arbitration and EU law.
Most of the cases allege that Spain broke agreements it agreed to honor under the international Energy Charter Treaty, a legally binding agreement between 50 countries to protect companies from unfair government interference in the energy sector.
Environmental campaigners have criticised the treaty for protecting fossil fuel investment because financiers can also sue over policy changes aimed at scaling back polluting projects. However, for Spain, almost all cases relate to renewable energy.
“If you take the bigger picture, the EU is shooting itself in the foot by supporting Spain in this,” Lavranos said. “You cannot trust that they can follow through with their agreements, so I think you do shake investors’ confidence.”
He also questioned how leaving investors in the lurch over initiatives to ramp up renewable energy production aligned with recent EU initiatives like the Green New Deal, a goal for carbon neutrality by 2050 and relaxation of subsidy rules.
“It’s very contradictory,” Lavranos said.
In 2013, the investors in Spain brought a case before the World Bank-backed International Centre for Settlement of Investment Disputes, an arbitration body between governments and investors.
Spain in 2018 was ordered to compensate investors over its subsidy changes. Despite being told to pay out more than $1 billion by the international body, Spain has refused, citing EU rules.
Spain’s Ecological Transition Ministry said the payments “may be contrary to EU law and constitute illegal state aid.” When the government is told to make a payout, it says it notifies Brussels but that “Spain cannot pay before the commission’s decision, so it is faithfully complying with its legal obligations.”
The European Commission said the Energy Charter Treaty does not apply in disputes between member states like the Netherlands, Luxembourg and Spain, arguing EU law takes precedence. The commission says the decision to compensate investors over lost Spanish subsidies is still being studied and “the preliminary view is that the arbitration award would constitute state aid.”
Cherryman, the investors’ lawyer, said the EU thinks it “should be superior to international treaty law.” After waiting for payment for a decade and given the EU position, his team is trying to seize part of a $1 billion settlement awarded to Spain over a 2002 oil spill.
Starting Wednesday, the London court will hear Spain’s arguments that the investors should not be allowed to seize those assets in lieu of compensation they have yet to be paid.
José Ángel Rueda, a Spanish international arbitration lawyer who has represented several renewable energy investors against Spain, said the country’s reputation is at stake. Other EU members like Germany and Hungary have paid out after international disputes, opting to maintain a positive image, he said.
“Spain is not like Russia or Venezuela. It was expected to be a serious country. But the awards remain unpaid,” Rueda said. “Investors can see that Spain might not be a reliable state in terms of the rule of law.”
Following years of legal wrangling, the EU is now considering a coordinated withdrawal from the energy treaty, though that would not affect pending disputes.
“It is not possible to modernize the treaty to make it compatible with the objectives of the Paris agreement and the European Green Deal,” Spain’s Ecological Transition Ministry said.
The European Commission agreed, saying a withdrawal was “the most pragmatic way forward.”
That might simply nudge investors to look across the Atlantic, Cherryman said.
“America has been nimble, and it introduced very favorable legislation to encourage renewable investment,” he said. “They will respect my investment. Or I can take risk and go into Europe, go into Spain.”
The risk was the loss of more money for renewables, which are “a win for everybody,” Cherryman said. “We all want to see renewables being invested in and we all want a greener environment that is a safer future for our children.”
The transition from fossil fuels to renewable energy—a core theme in values-based portfolios for almost two decades—has been catapulted from a niche investment theme to the mainstream thanks to the passage of the most significant climate action legislation on record.
The Inflation Reduction Act (IRA), passed in August, is a profound inflection point in the evolution of climate policy that puts U.S. muscle behind the global push toward carbon-reduction goals. The bill, which dedicates $369 billion to climate provisions, is likely to elevate investor confidence in the clean-energy theme and open the door to new investment opportunities.
“The IRA will provide a huge boost to companies and projects, both proven and emerging, that enable decarbonization at scale,” says Justina Lai, chief impact officer at Wetherby Asset Management in San Francisco. “It provides much more policy certainty to companies and funds already investing in the energy transition and incentivizes laggards to catch up.”
The new legislation requires all emissions-producing sectors, such as transportation, agriculture, construction, and utilities, to reduce greenhouse gases, and provides a host of tax incentives to companies and individuals to make environmentally friendly choices, such as buying an electric vehicle and installing solar panels.
Lai expects more innovation in renewable energy, energy efficiency, electric vehicles, and batteries, along with nascent technologies in areas such as green hydrogen, direct air capture, carbon capture and storage, energy storage, and sustainable fuels.
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A goal to have net-zero carbon emissions by 2050—an agreed-upon target by many nations and the global scientific community—isn’t just a technology investment story. The carbon-reduction theme is intersecting with agriculture, construction, transportation, finance, and other industries.
In Kent, England, InspiraFarms creates modular cold rooms and packing-houses for agricultural use to reduce reliance on diesel generators and reduce food waste. Berlin-based Betteries upcycles electric-vehicle batteries and incorporates them in clean-power systems. In Lexington, Ky., Rubicon has developed software to help waste-management companies, businesses, and municipalities reduce carbon emissions.
“This is about investing across the entire value chain of this transition,” says Ian Schaeffer, global market strategist at J.P. Morgan Private Bank.
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While a major area of innovation is in slowing climate change, another is in addressing the needs of communities already struggling with the impact of rising global temperatures.
Source Global, a Scottsdale, Ariz., start-up, creates new solar-powered technology that extracts water vapor out of the air to make drinking water, eliminating the need for fossil-fuel-dependent methods for delivering drinking water to communities whose water supply is drying up due to climate changes.
“The beauty of the Inflation Reduction Act is that it opens the door to climate adaptation in underserved communities. That creates massive opportunity,” says Cody Friesen, Source’s founder and CEO.
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J.P. Morgan’s Schaeffer says investors should be looking toward the primary enablers of the transition to clean energy, and points to two important themes: green buildings and semiconductors.
“Buildings account for a staggering amount of carbon emissions,” he says. “We think there’s opportunity in sustainable construction materials, efficient air systems, incorporating smart systems, and digital infrastructure.”
Semiconductors are essential to modern technology and will play a big role in the transition of the automotive industry from internal combustion engines to electric vehicles, Schaeffer says. “This will require more powerful and efficient semiconductors. The demand for these will skyrocket in coming years.”
Opportunities are global in scope, and suited for long-term investors, he says. “This transition will be a long and bumpy but ultimately inevitable process likely to take us through the middle half of this century.”
This article appears in the March 2023 issue of Penta magazine.
ST. JOHNSBURY, Vermont — The immigration deal announced Friday by U.S. President Joe Biden and Canadian Prime Minister Justin Trudeau aims to shut down a process that has enabled tens of thousands of immigrants from across the world to move between the two countries along a back road between New York state and Quebec.
Since early 2017, so many migrants entered Canada via Roxham Road outside Champlain, New York that the Royal Canadian Mounted Police staffed a reception center to process them, less than five miles from the official border crossing where they’d be returned to the United States. Mounties warned they’d be arrested, but once on Canadian soil, they were allowed to stay and pursue asylum cases that can take years to resolve.
The new policy says that any asylum seekers who lack U.S. or Canadian citizenship and are caught within 14 days of crossing will be sent back across the border. It was set to take effect a minute after midnight Saturday, a quick implementation aimed at avoiding a surge of refugee claimants trying to cross, according to Canadian officials who spoke on condition of anonymity to discuss the deal in advance.
“We are expanding the Safe Third Country Agreement to apply not only at designated ports of entry, but across the entire land border, including internal waterways, ensuring fairness and more orderly migration between our two countries,” Canada’s announcement said.
Canada also agreed to allow 15,000 migrants to apply “on a humanitarian basis from the Western Hemisphere over the course of the year, with a path to economic opportunities to address forced displacement, as an alternative to irregular migration.”
Some of the last migrants to make it through were about eight people in two families — one from Haiti, the other from Afghanistan — who arrived at the U.S. end of Roxham Road just after dawn on Friday. Both said they took circuitous routes to get there.
Gerson Solay, 28, carried his daughter Bianca up to the border. He said he didn’t have the proper documents to remain in the United States.
“That is why Canada is my last destination,” he said before he was taken into custody for processing.
The deal comes as the U.S. Border Patrol also responds to a steep increase in illegal southbound crossings along the wide-open Canadian border. Nearly all happen in northern New York and Vermont along the stretch of border nearest Canada’s two largest cities, Toronto and Montreal.
It’s unclear how Roxham Road became a favorite route, but it’s just a taxi ride from where Interstate 87 approaches the Canadian border, and for southbound migrants, it’s a relatively short distance to New York City.
While the numbers are still tiny compared to the U.S.-Mexico border, it’s happening so frequently now that the Border Patrol increased its staffing in the region and has begun releasing some migrants into Vermont with a future date to appear before immigration authorities.
Canadian officials have struggled to cope with this since early 2017. Many northbound migrants said they were fleeing because they feared President Donald Trump’s immigration policies were hostile to their presence in the United States. The process continued since the Biden administration took office.
These migrants have taken advantage of a quirk in a 2002 agreement between the U.S. and Canada that says asylum seekers must apply in the first country they arrive in. Migrants who go to an official Canadian crossing are returned to the U.S. and told to apply there. But those who reach Canadian soil somewhere other than a port of entry are allowed to stay and request protection.
The agreement was immediately criticized by some who feel it could endanger the safety of asylum seekers by preventing them from getting needed support from both governments.
“Given the assault on access to legal protection for the most vulnerable migrants arriving at our borders, it’s questionable whether the United States still qualifies as a ‘safe third country,”’ said Danilo Zak, associate director for policy and advocacy for the humanitarian group CWS, also known as Church World Services. The organizaion has worked for decades on behalf of people across the world who have been forced from their homes.
“We urge President Biden to strongly reconsider this deal and to work with Congress to restore access to asylum and support policies that recognize the dignity of all those arriving at our borders,” Zak said in a statement.
Meanwhile, southbound migrants are straining U.S. border officials.
U.S. Border Patrol agents stopped migrants entering illegally from Canada 628 times in February, more than five times the same period a year earlier. Those numbers pale compared to migrants entering from Mexico – where they were stopped more than 220,000 times in December alone — but it is still a massive change in percentage terms.
In the Border Patrol’s Swanton Sector, which stretches across New Hampshire, Vermont and a portion of upstate New York, agents stopped migrants 418 times in February, up more than 10 times from a year earlier. About half entering from Canada have been Mexicans, who can fly visa-free to Canada from Mexico.
About an hour south of the border, the police chief in St. Johnsbury, Vermont, population 6,000, alerted state officials that the Border Patrol had dropped off a vanload of immigrants with just a few minutes notice at the community’s welcome center. The same thing happened several times before within the last few weeks.
In a statement, U.S. Customs and Border Protection said the migrants dropped off in St. Johnsbury had been apprehended along the border after entering the U.S. without authorization, and were given a notice to appear for later immigration proceedings.
They were dropped off in St. Johnsbury because it has a station where migrants can take a bus to a larger city.
“In such circumstances, USBP works in tandem with local communities to ensure the safety of all parties—both community members and migrants—and to ensure stability in the community’s resources,” the statement said.
But local officials said they weren’t given time to prepare. State officials are now working to set up a system to provide migrants services they might require.
On Thursday, a Haitian couple and their children, boys aged 17 and 9 and a 15-year-old girl, were dropped off at the welcome center. The family, who did not want to give their names, wanted to take a bus to Miami.
They said they’d been in Canada for two months, but wouldn’t talk about what prompted them to keep moving.
They missed the Thursday bus that would allow them to connect to a bus to Boston, where they could catch another bus to Miami. A team of local volunteers spent the day getting them something to eat, finding them a place to stay the night and arranging for them to take the bus on Friday.
Police chief Tim Page said St. Johnsbury wants to help these migrants, but not on the fly.
“We need to get something down so we know what we are going to do when these families arrive,” he said. “We don’t have a system set yet, so when we do I am sure this will all go a little smoother.”
Associated Press contributors include Rob Gillies in Ottawa, Ontario.
Published: March 23, 2023 at 4:26 a.m. ET
By Michael Susin
Seplat Energy PLC said Thursday that it has taken legal action against its former chair after terminating a consultancy agreement with its wholly-owned subsidiary and its co-founder with immediate effect.
The Nigeria-focused energy company said the termination follows repeated warnings about breaches of a material nature such…
By Michael Susin
Seplat Energy PLC said Thursday that it has taken legal action against its former chair after terminating a consultancy agreement with its wholly-owned subsidiary and its co-founder with immediate effect.
The Nigeria-focused energy company said the termination follows repeated warnings about breaches of a material nature such as “unilaterally making significant commitments on Seplat’s letterhead without prior board authority or knowledge”.
The company said that under the consultancy agreement, Mr. A.B.C Orjiako, acting through Amaze Ltd., was obliged to provide defined assistance with certain external stakeholder engagements following his retirement from the board.
The company has commenced legal action against Mr. Orjiako and Amaze Ltd. at the Federal High Court in Abuja, Nigeria.
Mr. Orjiako served in the company as chair and stepped down in May 2022.
Write to Michael Susin at michael.susin@wsj.com
When Nashville, Tenn., native Stephen Parker recently listed a mobile home that he owns on the rental market, he received about 30 applications in one week. “I priced it competitively,” he said.
Parker, who is also a real-estate agent, said that he sees rent growth staying strong as many people find it too expensive to purchase homes, a situation made worse by low inventory and high interest rates.
He bought his first investment property in 2020, and his portfolio of rentals has since grown. He owns various properties, including a small mobile home park, a duplex and several single-family homes.
“We’ve become a renting nation,” Henry Stimler, an executive in the multifamily capital-markets division at the real-estate firm Newmark, told MarketWatch.
Renters have more flexibility and fewer of the responsibilities that come with home ownership, Stimler said, and they can more easily move to other cities and states. “I don’t think it’s a bad thing,” he said.
Nashville, for its part, was ranked one of the hottest real-estate markets of 2023 by Zillow
Z
.
But with the surge in interest rates and demand, new residents may find buying property in that city expensive.
With homeownership continuing to be out of reach for many, landlords like Parker are poised to benefit. “You may be better off renting, especially if you don’t know if Nashville is where you’re going to be forever,” Parker told MarketWatch.
Mortgage rates began climbing after the U.S. Federal Reserve began raising interest rates in early 2022. On Wednesday, the Mortgage Bankers Association said the 30-year rate was averaging 6.48%, up from 3.22% in early 2022.
Higher rates have added hundreds of dollars in interest costs to home buyers’ monthly payments. Buyers have subsequently seen the amount they can afford to pay for a house shrink, even as there are fewer homes for sale.
The U.S. economic outlook remains unclear — a situation compounded by the crisis in the banking sector. Many Americans are worried about job security and financial stability and are reluctant to purchase a home, according to Fannie Mae
FNMA
.
Some good news: Rents appear to have stabilized. The government’s analysis of the housing sector shows that rents grew 0.8% in February, pushing the increase over the past year to a 42-year high of 8.8%. However, research from private sources — such as Apartment List — indicates that rent growth has slowed. After five straight months in which rents fell, national rents rose by 0.3% in February, the company said.
‘I just want roots’
Jennifer Mark, a 49-year-old autotransfusionist in Goshen, Ind., lives in a $625-a-month one-bedroom apartment with her adult daughter and her husband. She’s been selling cupcake toppers on Etsy to bring in extra money.
But thanks to medical bills that are weighing on her credit score, Mark is not yet able to qualify for a Federal Housing Administration-backed loan and can’t purchase a home, although she has a budget of about $150,000.
Finding a two-bedroom to rent would make homeownership an even more distant prospect. The higher monthly rent would make it difficult for her to save for a home and to pay off the debts that are keeping her credit score low.
The average rent for a two-bedroom apartment in Goshen is $925 per month, up 12% from a year ago, according to Rent.com. For a decent apartment, the cost is closer to $1,200. “My God, rent is so high,” she said.
Renting also comes with restrictions. “If I’m going to be paying this much for rent, then I may as well own and be able to do what I want with my house and not have someone tell me, ‘Oh, you can’t have a cat. You can’t have a dog,’” she said.
She needs to pay off medical bills so she can achieve a credit score of at least 580 — a level she’s already surpassed on newer credit-scoring models not often used by mortgage lenders, like FICO 8 — and qualify for a loan.
Renting does have some perks, she said. She doesn’t have to worry about paying for plumbing or furnace issues, for instance. But owning a home is still her dream, and it remains out of reach. “I just want roots,” Mark said.
A generation of renters?
The data shows a mixed picture for renters: While the U.S. is building a ton of apartments, home prices aren’t expected to fall enough to make owning one affordable for many lower-income Americans.
There are currently over 940,000 apartments under construction in the U.S., up 24.9% from a year ago, which is helping to address demand. The number of multifamily units under construction is at its highest level since 1974.
But the supply is not helping all Americans equally. The U.S. is short approximately 7.3 million affordable, available rental homes for extremely low-income tenants, according to the National Low Income Housing Coalition.
Newer units, meanwhile, have been targeted at higher-income renters, wrote Whitney Airgood-Obrycki, a senior research associate at the Harvard Joint Center for Housing Studies, in a blog post this month.
And while rent growth has moderated for more expensive apartments in more sought-after neighborhoods, Airgood-Obrycki wrote, prices were rising faster at the end of last year for the lowest-quality units.
Landlords are slowing rent increases, Redfin
RDFN
deputy chief economist Taylor Marr said in a recent report, “because they’re grappling with a rise in vacancies as an influx of new apartments hits the market.”
Renters — particularly in the multifamily sector — are more likely to stay put due to high interest rates, Stimler said.
“Those who bought apartment buildings last year and locked in historically low rates before rates started rising, they’re going to be okay, because less and less of their tenants are going to leave and become homeowners,” Stimler said.
Some Americans feel like they are becoming a generation of permanent renters, losing out on the “American dream” of owning a home and building wealth through real estate. But Stimler said he did not think that was necessarily a bad thing.
“Our parents got married at 21 or 22, settled down, bought a home, got on the property ladder, and that was their first property purchase,” Stimler said. “That was a huge milestone then. Today, we don’t have that need anymore.”
“Millennials are much more transient,” he said. “They want to be able to pick up and leave, and go anywhere [and have] the ability to work from anywhere. All of these factors have led to a decline in the demand for single-family homes.”
Wherever you stand on that particular debate, one thing is clear: Landlords are benefiting from an increasingly unaffordable housing market, while millions of renters in the U.S. find themselves trapped.
“One man’s meat is another man’s poison,” Stimler said.
Banking sector jitters and higher interest rates likely spell trouble for the roughly $5.5 trillion U.S. commercial real estate debt market.
The banking sector has been in the crosshairs of jittery investors since Silicon Valley Bank’s collapse in mid-March after it sold a portfolio of rate-sensitive “safe” securities at a loss, sparking a run on the bank by fearful depositors.
Since then, a subsidiary of New York Community Bancorp
NYCB
snapped up assets and liabilities from the failed Signature Bank
SBNY
at a 17% discount. However, the deal didn’t include its commercial real-estate portfolio, according to Barclays researchers, who viewed the development as “a negative” for commercial real estate, as the portfolio likely would have sold at a discount.
Another regional lender, First Republic Bank,
FRC
has been in the spotlight too, after it received a historic $30 billion injection in deposits from big American banks to shore up confidence in smaller banks. Its shares were up more than 50% on Tuesday, but still were down 84% on the year to date, according to FactSet.
“I don’t think it’s going to be a repeat of the 90s,” said Michael Thom, a partner at law firm Obermayer, referring to the boom and bust cycle in U.S. commercial real estate that led to a wave of bank failures.
But Thom does see landlords already having a tougher time getting new loans, especially on half-empty office buildings due to flexible work arrangements.
Here’s a look at 3 charts that highlight key areas of worry for commercial real estate and where debt tied to these properties reside in the U.S. banking system and beyond.
Who holds the risk?
Multifamily properties has been a “favored” property asset class in the wake of the global financial crisis, after a foreclosure wave hit underwater homeowners and boosted demand for rentals.
Since that time, the federal government has come to own nearly half of the $2 trillion multifamily loan pie (see chart), according to Deutsche Bank research. Banks own almost half of the exposure to the rest of the $3.5 trillion in commercial property debt market.
Related: Be cautious of floating-rate commercial real estate debt, says Barclays
Deutsche Bank researchers led by Ed Reardon noted that commercial property prices dropped by 21% during the global financial crisis.
While it’s unclear how this cycle will play out, the Deutsche Bank team pointed to recent Fed stress tests of big banks that projected $75 billion in commercial real estate losses, at a 9.8% stressed loss rate.
The Green Street Commercial Property Index pegged U.S. property values as down 15% in March from a year before.
Watch small U.S. banks
Small banks have become key players in commercial real estate over the past two decades. Their share of the loan pie among all banks rose to almost 68% in January, up from 52% 18 years ago, according to recent tally from Apollo Global Management.
What’s more, small banks grew lending in the sector by nearly 20% in March from a year before (see chart) as the Fed was rapidly increasing interest rates. Large banks increased their exposure by only about 5%.
Office albatross?
While small banks often keep commercial real-estate loans on their books, Wall Street often looks to package larger loans on skyscrapers, office towers and other property types into bond deals.
In good times, loan payments are passed onto investors in the bond deals. But when credit issues, late payments or defaults arise, it’s a bondholder problem. That’s the roughly $670 billion commercial mortgage-backed securities (CMBS) market in a nutshell.
Financing through the CMBS market has been a key way for many trophy office buildings in New York, San Francisco and other big U.S. cities to receive funding in recent decades.
Office properties, once considered a relatively safe investment, aren’t viewed the same way any longer, particularly with Kastle Systems’ gauging office vacancy in its 10-city barometer at only 47.3% as of March 20.
Shares of office REITs, or real-estate investment trusts, have plunged 51% over the past 12 months, according to Morgan Stanley researchers. That compares with a 23% drop for the Dow Jones Equity REIT Index
DJDBK
for the same stretch.
The concern with hybrid work is that tenants won’t need as much office space as in the past, which could drag down property prices and hurt landlords with billions of debt coming due in the next few years, likely at higher rates.
While some borrowers will get loan extensions or modifications, a “more expensive funding regime” could force others to “hand back the keys,” said BofA Global’s Alan Todd, who leads the bank’s CMBS research effort, in a recent client note.
To help gauge borrower costs, the average coupon for office loans in multi-borrower, or “conduit,” commercial mortgage bond deals has almost doubled to 6.3% since 2021.
Against this backdrop, Todd at BofA expects new CMBS issuance to finance buildings of only about $50 billion this year, or roughly half the volume of 2022.
FRISCO, Colo. — A community in Illinois is in mourning a day after two local teens were killed while sledding at a Colorado ski resort.
Paula Crane, superintendent of the Prairie Central school district in Fairbury, confirmed Monday that two students from Prairie Central High School died in a “tragic accident.”
She declined to identity them out of respect for their families. A local church will be offering counseling for any students or staff.
The two students, ages 18 and 17, had been on spring break.
The young men were riding in tandem down the halfpipe at Copper Mountain Ski Resort in Summit County when they launched off a large snowbank at the bottom, according to the Summit County Sheriff’s Office.
Authorities say both teens then landed on hard ice and suffered blunt force trauma. They were pronounced dead at the scene.
“Our thoughts and condolences go out to the families and friends of the individuals involved in this tragic incident,” Sheriff Jaime FitzSimons said.
The teens’ bodies have been turned over to the county coroner’s office, which will determine the exact cause and manner of death.
Authorities did not release further details.
Copper Mountain Ski Resort, which lies roughly 75 miles (121 kilometers) west of Denver, is a popular draw for skiers and riders with over 2,500 acres (1,012 hectares) of high alpine terrain.
Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Taylor Swift got her start in the music industry at the tender age of 16, with the release of her eponymous country album in 2006. In the years since, the 12-time Grammy winner has transformed herself into a pop superstar and built her brand into a global powerhouse, selling more than two million tickets for her upcoming “Eras Tour” in a single day and announcing plans to direct an upcoming feature film. Along the way, she has become a savvy businesswoman who has often used her clout to shake up the music industry. Most recently, her decision to rerecord her older albums, ensuring that revenue from those streams go to her, caused a flurry of new standards from her label Universal Music Group NV to make sure other artists didn’t follow suit.
So it’s perhaps not surprising that, in the process of becoming a music-industry juggernaut, Ms. Swift has also amassed an empire in the real-estate world. Despite her relative youth, the 33-year-old has assembled a portfolio of homes worth at least $150 million. With a penchant for historic houses, Ms. Swift—using a variety of trusts and limited liability companies—has acquired significant properties in locations ranging from Nashville, Tenn., to Beverly Hills and Rhode Island. Since most of these properties were purchased years before the Covid-induced real-estate frenzy, their value has risen dramatically in the time they’ve been owned by the country-singer-turned-pop star. While Ms. Swift tends to hold her properties for the long term, she has also sold a few homes along the way, often for a substantial profit.
COLUMBIA, S.C. — The parents of a ninth grade South Carolina student who said she was accosted by a teacher for walking to class instead of stopping and reciting the Pledge of Allegiance are suing the teacher, principal, school district and state education officials.
Marissa Barnwell said she was walking quietly to class and decided not to stop for the pledge or a moment of silence that followed. A teacher yelled at her, confronted her and pushed her against a wall.
Barnwell was then sent to the principal’s office, which she said was humiliating because she feared she was in trouble. The principal sent her back to class, but Barnwell said he never let her know that the teacher was wrong and she was right.
“I was completely and utterly disrespected,” Barnwell, 15, said at a news conference Thursday, according to The State newspaper. “No one has apologized, no one has acknowledged my hurt. … The fact that the school is defending that kind of behavior is unimaginable.”
Barnwell’s parents are suing the River Bluff High School teacher, the principal, Lexington School District 1, and the South Carolina Education Department in federal court, saying they violated the girl’s civil rights and her First Amendment rights to both free speech or not to speak at all.
A state law passed more than 30 years ago requires public schools to play the Pledge of Allegiance at a specific time every day.
But that law also prohibits punishing anyone who refuses to recite the pledge as long as they are not disruptive or do not infringe on others.
“The thing that’s beautiful about America is we have freedoms,” said Tyler Bailey, the family’s lawyer. “Students in our schools should feel safe, they should not be feel threatened for exercising their constitutional rights.”
Barnwell said she called her parents in tears and they said the teacher, principal or district never responded.
Lexington School District 1 said its attorney is working on a response to the lawsuit and didn’t have any additional comment. River Bluff High School’s website indicates the teacher and principal are still working at the school.
“I was just in disbelief,” Barnwell said, adding that she told the teacher, “Get your hands off of me.”
Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
11 commercial REIT stocks loved by analysts, who see upside of up to 47%
As if concerns over banks’ liquidity weren’t enough to rattle investors, analysts have been raising concerns about the U.S. commercial real-estate market, especially for office buildings. Below is a screen of real-estate investment trusts that concentrate on commercial real estate, highlighting the 11 analysts expect to fare best through 2024.
A REIT is a company that owns property, makes loans or invests in mortgage-backed securities and distributes at least 90% of its earnings to shareholders as dividends, in return for tax advantages. Most dividends received by REIT investors are taxed as ordinary income.
On Monday, a group of analysts at BofA Securities led by Camille Bonnel wrote that REITs that own office buildings had declined 70% in value “as public markets have been pricing in secular headwinds and tight lending conditions” since the beginning of the Covid-19 pandemic in 2020.
On Monday, Adam Posen, president of the Peterson Institute for International Economics, said the commercial real estate space was heading into a “real mess,” in part because office occupancy was down 30% to 40% since the pandemic began.
Back on March 7, analysts at Keefe, Bruyette and Woods predicted “no soft landing for CRE,” especially in particular markets, including San Francisco, New York, Washington D.C., Seattle, Austin, Texas, and Phoenix. In a report highlighting risks for REITs and banks, the KBW analysts added: “With $400bn of annual loan maturities, we expect increasing credit issues as borrowers evaluate capital and lenders become defensive; our framework implies 1-3% loan losses.” They expect office building values to decline 30% or more, with those values “30 to 50% into correction.”
The BofA analysts provided some comfort for REIT investors: “Most REITs tend to own top-quartile properties and follow an active, hands-on ownership model. Historically, public REITs outperform within their markets particularly in tougher market conditions like today.”
CRE REIT screen
To highlight which REITs focused on commercial real estate (CRE) might fare best, we began with the 180 REITs in the Russell 3000 Index and then narrowed the list.
First, there is a distinction between equity REITs, which own properties and rent them out, and mortgage REITs, which are lenders and investors in mortgage-backed securities.
And now for the cuts:
AFFO is adjusted funds from operations — a non-GAAP calculation. In the REIT industry, FFO adds depreciation and amortization back to earnings, while subtracting gains on the sale of property. Adjusted FFO goes further, netting out expected capital expenditures to maintain the quality of property investments. For commercial mortgage REITs, FFO isn’t typically calculated, so we looked at EPS instead.
Among the remaining 53 companies, 11 are rated “buy” or the equivalent by at least three-quarters of the analysts covering them. Here they are, sorted by the upside potential implied by consensus price targets among analysts polled by FactSet:
ARE
REFI
STWD
CTO
AMT
CHCT
REXR
VICI
PLD
GLPI
IRM
Click on the tickers for more about each REIT. If you are interested in any individual stock, it is best to do your own research and form your own opinion about how successful a company is likely to be over the next decade at least.
Read Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
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