On Monday February 28, 2011, 6:02 pm EST
Fewer people sign contracts
to buy homes in Jan.
WASHINGTON (AP) -- Fewer
Americans signed contracts to buy homes in January, the latest evidence that
the housing market is struggling to rise above depressed levels.
The National Association of
Realtors says its index of sales agreements for previously occupied homes fell
2.8 percent last month to a reading of 88.9, the second straight monthly
decline.
The reading was higher than
the 75.9 reading from June, the low point since the housing bust. But it's
below 100, which is considered a healthy level. The last time it reached that
point was in April, the final month people could qualify for a home-buying tax
credit.
Sales of previously owned
homes fell last year to the lowest level in 13 years. Economists say it will be
years before the housing market fully recovers. High unemployment, strict
lending standards and a record number of foreclosures are deterring potential
buyers, who fear home prices haven't reached the bottom.
Contract signings of
previously owned homes are usually a good indicator of where the housing market
is heading. That's because there's usually a one- to two-month lag between a
sales contract and a completed deal.
Tax cut has little impact
on economy in January
WASHINGTON (AP) -- A Social
Security tax cut that economists say should help the economy this year is off
to a slow start. Consumers increased their spending last month at the weakest
pace since June, even with the extra money in their paychecks.
Some people may be using
the additional money to pay down holiday credit card bills or higher gas
prices, analysts said. And harsh weather may have deterred some people from
shopping in January.
Personal finance experts
say the real test of the tax cuts impact will come this spring, when the Easter
holiday sales begin.
Still, consumers increased
spending by only 0.2 percent in January, the smallest gain since June, the
Commerce Department said Monday. At the same time, their incomes rose 1 percent
-- the biggest jump in nearly two years and a reflection of the tax cut.
The increased income is
part of an additional $110 billion that economists say workers will receive
this year from the cut in their Social Security taxes. Most families will see
about $1,000 to $2,000 in extra income. Households with two high-income earners
could receive up to $4,000 more.
In December, when President
Barack Obama signed the tax cut as part of a broader tax package, economists
predicted Americans would spend about two-thirds of the extra money and save
the remaining one-third. Higher-income taxpayers were expected to save a little
more; lower-income households would spend a bit more.
Economists said the extra
spending would help boost growth and could lead businesses to hire more. Still,
all that was before tensions in the Middle East sent oil prices spiking. And a
surge in global commodity prices is now expected to push U.S. food prices up
slightly this year, too.
Many analysts say such
inflation could siphon off most of the benefit of the tax cut. Several scaled
back expectations for growth Monday after seeing January's disappointing
report.
Ventas buying Nationwide
Health for $5.8 billion
NEW YORK (AP) -- Ventas
Inc. said Monday that it will buy Nationwide Health Properties Inc. in a $5.8
billion stock deal, creating the nation's largest health care real-estate
investment trust.
The Nationwide purchase
solidifies Ventas' position as a leading owner of senior housing communities,
along with real estate properties including skilled nursing facilities,
hospitals, and office buildings. The move also will make the company more
diverse, combining Ventas' health care facilities with Nationwide's focus on
senior housing and long-term care facilities.
The company will have more
than 1,300 assets in 47 states, the District of Columbia, and two Canadian
provinces. That includes operating 643 senior housing facilities and 379
skilled nursing facilities.
Ventas said private pay
sources will account for 70 percent of the company's net operating income.
Meanwhile, senior housing will account for about 55 percent of the combined
company's net operating income, with skilled nursing facilities and medical
office buildings accounting for about 22 percent and 11 percent, respectively.
Health care is one of the
fastest growing segments of the economy, and both companies foresee growth as
the population ages with the first wave of 79 million baby boomers turning 65
in 2011. Health care spending is projected to grow to 20 percent U.S. gross
domestic product by 2019, from about 18 percent today.
US approves first
deep-water well in Gulf
NEW YORK (AP) -- The U.S.
has approved the first deep-water drilling permit in the Gulf of Mexico since
last year's massive oil spill.
The Bureau of Ocean Energy
Management, Regulation and Enforcement announced Monday that it issued a permit
to Noble Energy Inc. to continue work on a well about 70 miles southeast of
Venice, La.
Noble started drilling the
well four days before the Deepwater Horizon exploded. Drilling activity was
suspended on June 12 under a moratorium the U.S. placed on exploration in
waters deeper than 500 feet.
No new deepwater permits
had been issued since the moratorium was lifted in October. Regulators have
been under pressure from the oil industry and some lawmakers to get drilling
projects started again in the Gulf while ensuring that new safeguards were in
place.
Director Michael Bromwich
said that regulators approved the permit after the company demonstrated it is
capable of containing a well blowout. Noble contracted with the Helix Well
Containment Group to use its emergency capping stack to stop the flow of oil in
case it loses control of a well.
Another emergency
containment solution, offered by a consortium led by Exxon Mobil Corp., was
announced earlier this month.
China's holdings of US debt
jump 30 percent
WASHINGTON (AP) -- China,
the biggest buyer of U.S. Treasury securities, owns a lot more than previously
estimated.
In an annual revision of
the figures, the Treasury Department said Monday that China's holdings totaled
$1.16 trillion at the end of December. That was an increase of 30 percent from
an estimate the government made two weeks ago.
The government made the
change to its monthly report based on more accurate information it obtains in
an annual survey. That survey more does a better job of determining the actual
owners of Treasury securities.
China was firmly in the top
spot as the largest foreign holder of U.S. Treasury debt even before the
revisions. But the big increase in Chinese holdings could ease fears that
Chinese investors might begin dumping their U.S. holdings. Such a development
could send U.S. interest rates rising. That would slow America's economic
recovery and increase Washington's costs for financing the $14.3 trillion
national debt.
China and Britain were the
countries with the biggest revisions in the new report.
The amount of U.S. Treasury
securities held by Britain fell to $272.1 billion in the new report. That's a
drop of $269.2 billion from the last monthly report which put the Britain's
holdings of U.S. debt at $541.3 billion. The holdings of the two countries
often show big revisions when the annual report is released.
The reason for the change
is that Chinese investors who purchase their Treasury securities in London are
often counted as British investors. The more detailed annual report does a
better job of tracking the countries in which investors reside as opposed to
the location where investors make their purchases.
Even with the revision,
Britain remained the third largest holder of U.S. Treasurys.
Japan had the second
highest foreign holdings, totaling $882.3 billion at the end of December. The
revision was only slightly below the original estimate.
The total foreign holdings
of Treasury debt stood at $4.44 trillion at the end of December, according to
the new report. That's up 1.5 percent from the estimate made two weeks ago. About
two-thirds of U.S. Treasurys owned overseas are held by foreign governments and
central banks.
St. Joe shakes up board
amid shareholder pressure
LOS ANGELES (AP) --
Fairholme Capital Management founder Bruce Berkowitz's bid to replace the board
of directors of Florida landowner St. Joe Co. ended Monday with the ouster of
the company's CEO and three other directors.
The Fairholme Fund -- a
mutual fund and St. Joe's largest shareholder -- also got to name four new
board members, including Berkowitz, and agreed not to pursue any more changes
to the board.
The remarkable turn of
events comes as St. Joe, based in Jacksonville, Fla., weighs its strategic
options, including a possible sale, after suffering massive losses during the
real estate downturn.
St. Joe President and CEO
Britt Greene, who has been with the company for 13 years, resigned his seat on
the board Monday. He will step down as president and CEO later this week, the
company said.
Also due to resign this
week are directors Michael Ainslie, John Lord and Walter Revell.
In addition to Berkowitz,
Fairholme named three other new directors: Fairholme Capital Management
President Charles Fernandez, former Florida Gov. Charlie Crist and Carnival
Corp. Chief Operating Officer Howard Frank.
Surviving the board shakeup
were Hugh Durden, Thomas Fanning and Delores Kesler.
Less than two weeks ago,
Berkowitz released a letter to St. Joe shareholders where he argued the entire
board needed to be replaced in order to turn the company around.
The fund manager even
reserved a website -- takebackjoe.com -- for the campaign.
Health Care REIT in $2.4B
Genesis property deal
NEW YORK (AP) -- Health
Care REIT Inc. is buying the assets of rehabilitation facility and nursing home
operator Genesis HealthCare for $2.4 billion in the second major health care
real estate deal announced Monday.
The Toledo, Ohio, company
said it will buy all of Genesis' real estate assets, which include 147
post-acute care, rehabilitation, assisted living and long-term care services in
11 states across the Northeast and Mid-Atlantic regions. It will have an option
to buy a 9.9-percent stake in Genesis for $47 million. Genesis of Kennett
Square, Pa., will continue to run the facilities.
Health Care REIT is buying
the assets from JER Partners and Formation Capital LLC. The boards of Health
Care REIT and Genesis have both approved the deal. The company said it expects
the sale to close during the second quarter assuming regulators approve.
The company said it plans
to sell 25 million shares of stock and $625 million in convertible preferred
stock to finance the deal. The underwriters of that offering will have an
option to buy as much as 3.8 million common shares and $93.8 million in
preferred stock to cover any over allotments. Health Care REIT also obtained a
commitment for a bridge loan worth as much as $2.4 billion.
Health Care REIT said it
expects $198 million in rent in the first year after closing. The deal is
expected to increase its annual funds from operations by 39 cents per share.
Funds from operations, which adds in such items as amortization and
depreciation, is considered key to measuring the financial performance of real
estate investment trusts.
Live Nation's loss for 2010
more than triples
LOS ANGELES (AP) -- Live
Nation Entertainment Inc., the concert promoter that merged with Ticketmaster
last year, said Monday that its net loss for 2010 more than tripled as concert
attendance fell and ticket sales for other events also declined.
The annual net loss through
Dec. 31 hit $228 million, or $1.39 per share, from $60 million, or 73 cents per
share, a year ago.
The company did not break
out the quarterly loss. But its cumulative net loss over nine months through
September was $95 million. With 164 million shares outstanding, that amounts to
58 cents per share.
Revenue in the quarter fell
2 percent to $1.24 billion and was down 9 percent for the year at $5.06
billion.
Analysts surveyed by
FactSet expected Live Nation to post a quarterly adjusted loss of 17 cents on
revenue of $1.12 billion.
For the full year, analysts
expected revenue of $4.95 billion.
Libya oil chief: Production
down 50 percent
CAIRO (AP) -- Libya's oil
chief said Monday that production had been cut by around 50 percent, and argued
it was safe for foreign oil workers to return after a mass exodus sparked by
Moammar Gadhafi's increasingly violent campaign to retain control of the
country.
The assurances by Shukri
Ghanem, the head of the state-run National Oil Co. and Libya's de facto oil
minister, came as uncertainty swirled about the state of the OPEC member's
production and who was actually in control of the brunt of the nation's oil.
Libya sits atop Africa's largest proven reserves.
The country is the only
member of the Organization of the Petroleum Exporting Countries so far seriously
affected by the protests roiling the Arab world, and unrest there has sent
shudders through global oil markets.
Ghanem claimed that the
government in Tripoli remained firmly in control of the country's oil
installations -- from fields to refineries and pipelines. He rejected an
assessment put forward by EU Energy Commissioner Guenther Oettinger on Monday
that Gadhafi had lost control of the country's main oil and gas fields.
By The Associated Press
The Dow Jones industrial
average gained 95.89 points, or 0.8 percent, to close at 12,226.34. The
Standard and Poor's 500 rose 7.34, or 0.6 percent, to 1,327.22. The Nasdaq
composite rose 1.22 points, or less than 0.1 percent, to 2,782.27.
Benchmark West Texas
Intermediate crude for April delivery lost 91 cents to settle at $96.97 per
barrel on the New York Mercantile Exchange. In London, Brent crude fell 34
cents to settle at $111.80 per barrel on the ICE Futures exchange.
In other Nymex trading,
heating oil for March delivery fell less than a penny to settle at $2.9389 per
gallon and gasoline futures for March delivery fell 1.59 cents to settle at
$2.8927 per gallon. Natural gas for April delivery added 3.2 cents to settle at
$4.037 per 1,000 cubic feet.
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