in a statement Sunday night, said more than 80% of its suppliers of materials and decorative services have “resumed cooperation,” and that it has signed thousands of new contracts with various suppliers. At the end of August, the developer disclosed that construction had been suspended at some projects after it fell behind on payments. And by October, hundreds of Evergrande’s unfinished developments were affected by work stoppages.
With just a few days to go before the end of 2021, Evergrande said it intends to deliver 39,000 homes in 115 projects to buyers across China in December. It compared that to its completion of fewer than 10,000 units in each of the preceding three months.
In a post on social media Monday, Evergrande said apartment projects have been handed over in batches in 18 provinces and it released photos of completed buildings adorned with bright red decorations and people signing papers to take ownership of their homes.
Despite this, Evergrande still has many more commitments to fulfill and its debt crisis remains unresolved. The 25-year-old developer used to be one of the country’s largest by contracted sales and is on the hook to deliver units to more than one million people. Many buyers made large down payments on unfinished flats, expecting to take ownership of them in a few years.
Hui Ka Yan,
Evergrande’s founder and chairman, said that “under the care and guidance of governments at all levels,” as well as support from partners, financial institutions and other constituents, the developer has made progress in its commitments to homeowners.
He added that Evergrande would do whatever it takes to resume work and deliver homes and predicted that the firm will eventually be able to “resume sales, resume operations, and pay off debts.”
The company’s statement followed comments over the weekend from two Chinese regulators which said they would safeguard the rights of homeowners and keep the property sector stable. Beijing has been trying to prevent Evergrande’s debt crisis from hurting the many small businesses and ordinary citizens that the developer owes money and apartments to.
head of China’s Ministry of Housing and Urban-Rural Development, said in an interview with the state-run Xinhua News Agency that the regulator will address the risks of some leading developers that fail to deliver projects on time, with the goal of “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.”
The People’s Bank of China separately said—as part of a wide-ranging statement on the economy—that it would protect the rights and interests of homeowners and promote the healthy development of the country’s real-estate market.
Evergrande, the world’s most indebted developer, has been struggling under the weight of roughly $300 billion in liabilities, including around $20 billion in international bonds. The developer has missed payment deadlines on some of its dollar bonds, setting the stage for a massive and complex restructuring. Major credit raters have declared it to be in default.
Earlier this month, the conglomerate sought help from the government of its home province, Guangdong. It has since set up a risk-management committee that includes representatives from several state-backed entities.
Evergrande recently said the committee is working to help contain its risks and will engage with its creditors. Some international bondholders, however, have said there has been little communication from the company so far, the Journal reported last week.
The company’s Hong Kong-listed shares have plunged in value this year to historic lows and its dollar bonds are trading at deeply distressed levels. Markets in Hong Kong were closed Monday for a public holiday.
HYDERABAD: Its proximity to the IT corridor, Hyderabad international airport and Outer Ring Road (ORR) coupled with fully developed infrastructure facilities, has turned Kokapet into a much sought-after location for investors. Even the Telangana government has chosen Kokapet for its land auctions as it is home to huge chunks of government land. Hyderabad Metropolitan Development Authority (HMDA) officials say Kokapet is ‘tested’ ground for auctions with the government raking in Rs 1,680 crore from the Golden Mile Project land auctions held in 2006. However,the HMDA could not get the entire amount then due to some legal tussle over 634 acres of land. The land parcel now stands in the clear.
While some firms bid Rs 14.5 crore per acre 15 years ago, the HMDA and Telangana State Industrial Infrastructure Corporation (TSIIC) is hopeful of getting double the minimum amount for the 64 acres land that has been put up for sale in Kokapet. “Being a green-field project, the Neopolis, Kokapet, where the auctions are being held, is going to be the most advanced and well-developed townships perhaps in the country with the best of infrastructure amenities. Planning has been done futuristically,” said Arvind Kumar, principal secretary, municipal administration and urban development department. Explaining the advantages, HMDA officials said Kokapet has been witnessing rapid growth for the past decade as it is just about five km from financial district and seven km from Gachibowli. It’s well connected to other parts of the city too through the ORR and the airport is only a 30 to 35-minute drive. It is also close to various educational and health care institutions. The government is also proposing metro connectivity, TSIIC officials said. Further, they point out how surrounding areas have also developed and have become real estate hubs with massive housing investments coming in the areas like Mokila, Kollur and Tellapur, which are now being touted as greenfield residential areas. “Kokapet auction is the last chance to get hold of prime land near the financial district before the market moves further west to the Kollur area. Apart from this, Kokapet is also a destination for high-end commercial and residential markets. Financial district infrastructure and unlimited FSI makes Kokapet attractive backed by employment potential,” said GV Rao, president of the Telangana Developers Association. Officials analyse the growth of Kokapet in two phases. One between 2005 and 2014 and another post 2014 after thecreation of Telangana. “Between 2005 and 2014, government had allotted land to prominent corporate firms, which resulted as an organic extension of Madhapur and turned it into an established real estate market. After ,2014 there has been saturation of land in both Hitec-City and Financial District and spillover demand is towards the south-west region. Now, regional and national level developers have taken up projects ( residential and commercial)in Kokapet,” a senior official of HMDA’s estate wing said.
The villagers in “The Boy Who Cried Wolf,” bored of their shepherd boy’s constant false alarms, refuse to come to his aid when a wolf finally does appear. There may be a lesson in the fable for investors in Chinese property giant Evergrande and the country’s real-estate market more broadly.
Heavily leveraged Evergrande is in the midst of yet another financial squeeze. The company announced Sunday and Monday that it has recently sold almost $1 billion of holdings in two companies—internet services firm HengTen Networks and smaller real-estate developer China Calxon. Fitch Ratings cut Evergrande’s credit rating Tuesday from B+ to B, noting the company’s seemingly limited access to capital markets and growing dependence on less stable shadow-banking loans.
The current wobble has been unfolding for three weeks: It began when regulators started examining the relationship between Evergrande and Shengjing Bank, a regional lender in which the property developer has built a large stake.
Evergrande’s March 2022 bond currently yields a little over 20%, up from as low as 8.6% in late May. And the company’s share price is down almost 30% year-to-date, making it one of the few companies anywhere trading at the depressed levels of March 2020.
Close watchers of Evergrande can rightly say that it is not the company’s first financial tremor. Nor is it its second or third. Spikes in the company’s bond yields are relatively common. Optimists note that after a $1.5 billion bond maturing on June 28, it has no offshore bonds due for the rest of the year.
But there are many risks for Evergrande outside of what is technically recognized as debt. This month the company said it would repay a small amount of overdue commercial acceptance bills, a form of short-term IOUs on which the firm is heavily reliant. The company’s accounts payable, the balance sheet category that covers those liabilities, ran to about $95 billion at the end of 2020. That has more than tripled in five years.
The company’s 2020 results also make clear that the amount it owes to home buyers who’ve paid large deposits for unbuilt apartments rose rapidly in 2020. Fitch notes that while contracted sales have been rising, average selling prices have fallen, dropping 13% in 2020 and 7% in 2021 so far. That boosts cash inflows in the short term, but means even greater obligations and less money to pay for them in the long term.
And unlike the company’s September 2020 squeeze, when bond yields surged over concerns regarding its relationship with a handful of strategic investors, debts owed to thousands of small businesses and households can’t be so easily extended.
The bond market has told many tall tales of imminent defaults for Evergrande, and none have materialized. Perhaps these latest rumblings will come to nothing—but that doesn’t mean the wolf won’t eventually get his dinner.
talk as if the office will soon look more or less as it did before. Their real estate lending teams seem less sure.
Banks on both sides of the Atlantic are becoming more selective about which offices they will lend against. Pockets of the market have been resilient during the pandemic: The rate banks charge for mortgages on the best central London offices was 1.65% in the first quarter of 2021, more or less where it was before the crisis, data from real-estate company CBRE shows. But U.K. lending margins for older, less central offices are close to historic highs, based on the Cass Business School’s commercial real estate lending report.
In the U.S., the value of new office loans issued by banks in the first quarter of this year was just 35% of levels in the same period of 2019, according to Trepp data—a sharper pullback than for unloved retail assets such as malls. The spread between office mortgage rates and 10-year Treasurys also has widened from precrisis levels.
The rise in debt costs is notable because default rates on existing office loans are currently below 1%. Corporate tenants locked into leases are continuing to pay the rent, so landlords have met their mortgage payments. But that could change once existing contracts roll off and white-collar employees spend more time at home. Companies ranging from tech giant
plan to let some staff work remotely on a permanent basis.
The first word on what Wall Street is talking about.
Oversupply is already an issue in San Francisco, leading to big falls in rent and high vacancy rates. Lenders are also watching New York closely. In the mid-Atlantic region, which includes the troubled Manhattan market, almost one-third of banks’ outstanding office loans now fall into the riskier “criticized” category, up from 6% before the pandemic, survey data gathered by Trepp shows.
The pandemic also has accelerated the pre-Covid trend toward more energy-efficient offices with strong communal areas, good ventilation and natural light. Expensive improvements are needed both to entice workers back and to meet growing expectations for businesses to disclose and reduce their carbon footprints. Unfortunately for landlords, green credentials seem set to become a requirement to let rather than the basis for charging tenants a premium.
All of these factors make it tough to predict where office valuations are headed and therefore to underwrite loans. In central London, the best offices are still changing hands at high valuations that give rental yields of just 4%, buoyed by rock-bottom interest rates and strong demand from overseas buyers. Shareholders are more bearish. The discount to book value at which U.K. and U.S. office real-estate investment trusts now trade imply 15% and 10% falls in the value of the properties they own, respectively, according to real-estate research firm Green Street.
For now, mortgage writers too are erring on the side of caution. Seen through the lens of their lending activity, banks’ efforts to big up the office to staff appear halfhearted.
One of the biggest names on Wall Street is getting into the timber business, and a big part of its plan to make money involves less logging.
J.P. Morgan Asset Management said Monday that it has acquired Campbell Global LLC, a Portland, Ore., firm that manages $5.3 billion worth of timberland on behalf of institutional investors, such as pensions and insurance companies.
The deal gives the $2.5 trillion asset manager a position in the booming market for forest-carbon offsets, tradable assets that are created by paying landowners to not cut down trees and leave them standing to sponge carbon from the atmosphere. Offsets are used by companies to scrub emissions from their internal carbon ledgers, which track progress toward pollution-reduction goals.
Campbell Global oversees about 1.7 million acres of forestland in the U.S., New Zealand, Australia and Chile. About two-thirds of its 150 employees are involved in managing the forests, while the others are investment professionals, said
the firm’s chief executive.
Campbell for more than three decades has managed timberland to produce logs for lumber and pulp mills. In recent years, it has moved into carbon markets, selling offsets in California’s regulated cap-and-trade market as well as in the unregulated voluntary markets that have boomed with the rise of green investing.
“We do believe this is the future for this asset,” Mr. Gilleland said.
Timberland investing became popular in the 1980s after the tax code was made more favorable to owners of income-producing real estate, Congress allowed pensions to diversify beyond stocks and bonds and Wall Street analysts convinced forest-products companies to sell off their timberlands.
Investors reasoned that trees would grow, and thus gain value, no matter what the stock market did. Timberland was viewed as a good hedge against inflation.
But it hasn’t always been a good investment: At the same time timberland investing was gaining momentum, the federal government was paying landowners in the South to plant pine trees on worn-out farmland to boost crop prices. Decades later, the resulting surfeit of pine has pushed log prices to their lowest levels in decades even as the resurgent housing market has lifted prices for lumber and other wood products to records.
Investors such as the California Public Employees’ Retirement System have suffered big losses on southern timberland in recent years. Though log prices in the West still move in unison with those of lumber, timberland there is threatened by fires and wood-boring beetles. In the North, mills have closed and rendered many wood lots uneconomical to log and worth more leased to companies as carbon sinks.
Would-be home buyers without big piles of cash are getting left on the sidelines.
In the turbocharged housing market, prices are surging and homes on the market are routinely selling for far more than the listing price. Those who can’t afford big down payments are often the ones losing out.
Half of existing-home buyers in April who used mortgages put at least 20% down, according to a National Association of Realtors survey. In 10 years of record-keeping, that percentage has hit or exceeded 50% three times, and all have been since last fall. A quarter of existing-home buyers in April paid cash, the highest level since 2017, NAR said.
Oscar Reyes Santana has been house hunting with his parents and siblings for more than a year in California’s San Fernando Valley. They are all first-time buyers and budgeted for a 5% down payment.
The family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time, said Mr. Reyes Santana, who is 23.
“It’s been really tough to try to beat everyone else,” he said.
They have all but given up the search for now, and are focused on saving up for a bigger down payment.
In such a housing market, sellers can often choose among multiple offers. Cash buyers have an advantage because they don’t need to secure mortgages, which can make the transaction go faster. Sellers sometimes worry that offers with smaller down payments are likelier to fall through during the loan-closing process, agents say.
Many borrowers who can afford only small upfront costs get loans insured by the Federal Housing Administration or the Department of Veterans Affairs. In an April NAR survey of real-estate agents, 27% said sellers were unlikely to accept an offer with an FHA or VA loan, and another 6% said sellers would refuse such an offer. These loans are less attractive to sellers because they have stricter closing conditions, real-estate agents say.
While mortgage originations of all types rose last year as home buying surged, FHA and VA loans lost market share to conventional loans. FHA loans, which often go to first-time buyers, accounted for 10% of home purchases in the first quarter of 2021, the second-lowest level since 2008, according to Attom Data Solutions.
“It’s very hard to get my FHA offers accepted,” said Olivia Chavez Serrano, a real-estate agent in Los Angeles.
Bigger down payments can cushion the housing market in a downturn. In the 2007-09 recession, home buyers who had made tiny down payments were quickly underwater as soon as home prices started to fall.
A lump sum of 20% or more can be hard to come up with as home prices skyrocket, especially without help from family members. “I’d say at least 50% of my first-time home buyers are getting gifts right now,” said Chris Borg, a mortgage broker at Vantage Mortgage Group Inc.
Low-down-payment loans and down-payment assistance programs are touted by affordable-housing advocates as crucial tools for increasing the homeownership rate, particularly for minority buyers. In 2019, a higher proportion of FHA and VA borrowers were Black or Hispanic compared with conventional-loan borrowers, according to the Urban Institute. Some congressional Democrats have proposed new down-payment assistance initiatives to help first-time buyers.
Surging home prices are also complicating appraisals, which means some buyers are being forced to shell out more cash than they had expected.
Appraisals are based partly on recent sale prices for comparable homes in the area. When housing prices rise quickly, appraisal values don’t always keep up. Mortgage lenders will typically lend only enough to cover the appraised value of a home, so when an appraisal comes in low, the buyer has to make up the difference or let the deal fall through.
For example, a buyer who plans to put 20% down on a $500,000 purchase expects to pay $100,000. But if the home is appraised at $450,000, the cash payment goes up to $140,000—the sum of the $50,000 shortfall plus a $90,000 down payment.
Many buyers are still getting offers accepted without putting 20% down. First-time home buyers who used mortgages paid 9.1% down on average year-to-date through mid-May, though that is up from 8.4% for all of 2020, according to CoreLogic. Repeat buyers paid 16.6% down on average.
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Briana Stansbury, who works at a community college in Portland, Ore., recently made an offer on a two-bedroom house. She used a 5%-down loan program that Freddie Mac offers for first-time buyers, and she agreed to go through with the purchase even if the appraisal came in as much as $10,000 below her purchase price of $371,500.
That put Ms. Stansbury at risk of having to come up with extra cash in a hurry, but she had lost out on bids for other houses and thought it would give her a leg up.
Ms. Stansbury lost sleep while she waited for the appraisal. But it came back above the sale price, and she closed on the house in May.
Danyell Allen of Cedar Park, Texas, felt ready to buy a house this year. She had saved up for a 5% down payment. Her children wanted to paint their walls and adopt a pet, which they can’t do in their rental house.
But after losing out on more than 10 offers, she called off the search. “The lowest I heard I was beat out on any home was $30,000 over asking price,” she said. “That’s not something I can do.”
is a little-known real-estate investor that helps private-equity firms cash in on their hospital investments. Recent financial documents provide fresh details on the close relationship and deal-making between the firm and its biggest tenant.
The documents show Medical Properties Trust’s exposure to Dallas-based Steward Health Care, a hospital chain until last year controlled by Cerberus Capital Management LP. When Steward ran into financial trouble, Medical Properties Trust provided it more than $700 million through a series of complex deals, the documents show. It provided $200 million to buy Steward assets valued at $27 million. Then it refinanced debts Steward owed Cerberus.
The documents give a window into the finances of a company at the heart of private equity’s push into healthcare in recent years. They show how the financial turbulence at these firms can have ripple effects elsewhere in the financial system.
Steward accounted for 30% of Medical Properties Trust’s revenue last year. Steward lost more than $400 million in 2020 and reported nearly $1 billion of unpaid supplier expenses and other bills, the documents show. The company also faces audits by the Internal Revenue Service and state authorities.
Medical Properties Trust says it is one of the world’s largest nongovernmental hospital owners, with more than 400 properties world-wide and assets of nearly $19 billion. Steward is a large for-profit operator, with 34 hospitals nationally and more than $5 billion of revenue last year.
Steward said in response to questions that it was “on solid financial footing.” It attributed a rise in accounts payable to a surge of Covid-19 cases late last year and information-technology investments the company had made. It declined to comment on the audits, as did the IRS.
Medical Properties Trust has publicly described some of the recent deal-making as an effort to align itself with Steward’s strategy and take advantage of its potential growth. Cerberus declined to comment for this article.
The hospital landlord has previously received written inquiries from the Securities and Exchange Commission, including about its relationship with Steward. As a private company, Steward doesn’t have to publish its financial results. Medical Properties Trust filed Steward’s financials with the SEC last week because it said the information might be relevant to investors.
The SEC declined to comment.
The close relationship between Steward and Medical Properties Trust is partly a result of deal making by Cerberus. Under the private-equity firm’s control, Steward sold significant hospital real estate to Medical Properties Trust, which in turn leased the real estate back to Steward. Medical Properties Trust also has a roughly 10% stake in Steward, documents show.
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Steward, like many hospital operators, struggled in the pandemic and says it received more than $400 million in government relief last year. The company says it lost more than $400 million last year, compared with an $82 million net profit in 2019.
While company financial statements show it had around $400 million of cash and equivalents at the end of last year, its short-term liabilities significantly exceeded its current assets.
Medical Properties Trust operates in a niche of real-estate investing. It buys hospital real estate—the physical buildings and land—and then leases it back to the companies that run the hospitals. Many of its deals have been with private-equity firms, which can use the cash from the sales to lock in profits or pay down debt incurred in the takeover of hospital operators. The playbook turns hospitals into renters of property they previously owned.
Rhode Island officials recently restricted the owners of two hospitals from doing sale-leaseback transactions to raise funds. The ruling stemmed from a state probe of hospital chain Prospect Medical Holdings Inc., which until recently was backed by Leonard Green & Partners LP.
Prospect had earlier used proceeds from real-estate sales to Medical Properties Trust to pay down debt, including money borrowed to fund hundreds of millions of dollars in dividends.
“We’d all rather own our home than rent it or lease it. Why? Because there’s value in it. There’s value in it I can use on a rainy day to raise capital,” said
The Easton Hospital was ultimately saved after a nonprofit operator agreed to buy it from Steward. Cerberus has said it is happy the Easton community’s needs were met.
As losses mounted, Medical Properties Trust proved to be a key source of cash for Steward, financial filings show. In 2017, Steward acquired two hospitals in Utah as part of a broader transaction involving Medical Properties Trust. Under the deal, Medical Properties Trust issued Steward roughly $700 million of mortgages for the properties.
Then, in July 2020, Medical Properties Trust agreed to acquire the Utah properties from Steward. Under the deal, Medical Properties Trust erased Steward’s mortgages and paid Steward an extra $200 million for what Medical Properties Trust said was the real estate’s “relative fair value.” Steward leased the properties back from Medical Properties Trust in exchange.
“All of our sale-leaseback transactions are subject to independent valuation and analysis,” Steward said.
Cerberus sold its 90% stake in Steward last year to a management group led by Chief Executive Officer
Ralph de la Torre
in exchange for a note from Cerberus, Steward said at the time.
In January, Medical Properties Trust stepped in to provide Steward a new $335 million loan that it said would extinguish the debt Steward owed Cerberus. Medical Properties Trust’s chief financial officer told analysts that the loan would be “nominally profitable.”
“The goal of the investment is not necessarily to earn a high-profit interest rate,” he said, but the deal would help better align Medical Properties Trust with Steward’s growth.
Steward declined to disclose loan terms but said the deal allowed it to sever ties to Cerberus.
The most complex deal involved Steward’s international business, which had been running hospitals on the island nation of Malta. Under the deal, Medical Properties Trust formed a new joint venture with Dr. de la Torre and other executives that is separate from Steward.
Medical Properties Trust then agreed to provide financing. It lent the joint venture $205 million so it could acquire the international assets from Steward. The hospital company’s financial statements said the assets sold were worth $27 million.
Asked about the price tag on an analyst call, Medical Properties Trust CEO
Edward K. Aldag Jr.
said it reflected work done by Dr. de la Torre’s team to secure opportunities for a venture in Colombia. “They put an awful lot of time and effort and infrastructure in place,” he said.
Steward said the price for the assets was fair and determined by arm’s length negotiations.
Despite the losses and government financial support, Steward said it returned cash to owners of the business this year. Steward said the payment wasn’t a dividend but a return of shareholder capital. The total payout likely totaled more than $100 million.
The failure of the Keystone XL project demonstrated the challenges of building new pipelines in the U.S. and Canada amid galvanized environmental groups and delivered a blow to oil-and-gas companies that now must rely on aging infrastructure.
abandoned Wednesday, and other pipelines for more than a decade, hoping to choke off fossil-fuel usage by making it harder to transport. The success with Keystone XL already has emboldened environmentalists, who in recent weeks have turned their attention to other pipelines in the U.S. and Canada.
But the U.S. and Canada still rely on pipelines to transport fossil fuels that underpin commerce, transportation and heating and cooling. As pipelines become increasingly difficult to build, the countries will become more dependent on older infrastructure that is vulnerable to disruptions. The shutdown of the Colonial Pipeline last month after it was attacked by hackers highlights the potential impact caused by unexpected disruptions to the current network.
“Clearly, we’re relying on the infrastructure we currently have. The question becomes, as we think about filling future demand, and we need to repair or replace old infrastructure, how are we going to handle it?” said
Amy Myers Jaffe,
a research professor at Tufts University’s Fletcher School.
Global oil demand is projected to peak in coming years, which could mean projects like Keystone could eventually outlive their utility, Ms. Jaffe said. “We’re not building for the 1950s, we’re building for the 2030s.”
In the past two years, at least four multibillion-dollar pipeline projects that drew protests have been canceled or delayed after encountering regulatory and political roadblocks, and environmental groups are looking to capitalize on the momentum. Some producers also have resorted to transporting oil by rail, a more expensive and potentially more dangerous alternative.
evacuated 44 workers in Minnesota, working on replacing a crude-oil pipeline there, after a group of protesters descended on a pump station in the middle of the state. Native American tribes and environmental groups continue to challenge the Dakota Access Pipeline in a long-running effort that has entangled the company in court for years.
The death of Keystone XL is the latest setback for the oil-and-gas industry. In May, a Dutch court found that
board, a historic defeat for the oil giant that may force it to alter its fossil-fuel-focused strategy.
The trio of defeats demonstrates how dramatically the landscape is shifting for oil-and-gas companies as campaigns directed by environmentalists have spread to investors, lenders, politicians and regulators who are increasingly calling for a transition to cleaner forms of energy.
Cos. dropped its Constitution natural gas pipeline after failing to gain a water permit from New York state.
who made canceling Keystone XL a central plank of his election campaign, has remained mostly mum about other pipeline projects under construction.
Environmental and indigenous groups have sued to stop construction on Enbridge’s project to replace its Line 3 crude-oil pipeline with a larger conduit that will carry oil from Alberta’s oil sands to Superior, Wis., arguing that the U.S. Army Corps of Engineers failed to consider the environmental impacts of the pipeline when it granted a water-quality permit.
The company already has replaced sections in other states but has encountered obstacles in Minnesota, where it hopes to complete construction by the end of the year. After Enbridge evacuated workers Monday, the Hubbard County Sheriff’s department arrested 179 people for damaging equipment and dumping garbage on the site.
“The project is already providing significant economic benefits for counties, small businesses, Native American communities, and union members—including creating 5,200 family-sustaining construction jobs, and millions of dollars in local spending and tax revenues,” said the company in a statement on Thursday.
The Minnesota Court of Appeals is expected to make a ruling on a case that challenged the state’s Public Utilities Commission’s approval of the project.
Michigan state officials in November revoked a permit that allowed another Enbridge pipeline to run along the bottom of the Straits of Mackinac, citing the risk of damage to the region’s ecosystem. Gov.
gave Enbridge a May 12 deadline to shut down the pipeline, but the company hasn’t complied, claiming the governor lacks the authority to do so.
The 645-mile conduit carries more than half a million barrels of oil and natural-gas liquids each day from Superior to refineries in Michigan, Ohio, Pennsylvania, Ontario and Quebec.
“Does the Keystone XL cancellation embolden fights against other pipelines? That’s a resounding yes,” said
Great Lakes region executive director for the National Wildlife Federation, which opposes the operation of Enbridge’s pipeline through Michigan.
“We’re very pleased,” said
executive director of the Sierra Club, which opposes both Enbridge pipelines in Minnesota and Michigan. He said the successful Keystone XL effort has taught them important lessons on how to oppose other projects. “It has taught us to never give up,” he said.
Enbridge pointed to the dramatic impact of the Colonial Pipeline’s six-day closure last month as an example of the consequences of scuttling energy infrastructure. The shutdown of the nation’s largest fuel pipeline, caused by a May 7 ransomware attack, spurred a run on gasoline across the Southeast, leaving thousands of gas stations without fuel for days.
During a Senate committee testimony Tuesday, Colonial Chief Executive
emphasized the scale of the pipeline, noting 50 million Americans rely on it to carry fuel to gas stations, as it provides almost half of the fuel consumed on the East Coast.
“Not only do everyday Americans rely on our pipeline operations to get fuel at the pump, but so do cities and local governments, to whom we supply fuel for critical operations, such as airports, ambulances and first responders,” Mr. Blount said in written testimony.
-MGM Holdings Inc. deal has another trade up its sleeve: going big on uranium.
New York hedge fund Anchorage Capital Group LLC has amassed a holding of a few million pounds of uranium, people familiar with the matter say, in a bet that prices of the nuclear fuel will recover after a decade in the doldrums. It is buying and selling uranium alongside mining companies, specialist traders and utility firms with nuclear-power plants, turning the fund into a significant player in the market.
Venturing into the uranium market, which is much smaller than oil or gold markets, is unusual for a firm that typically invests in corporate debt. It is another example of money managers straying into esoteric markets in search of returns after a yearslong run-up in stocks and slide in a bond yields.
Anchorage’s physical uranium holdings are also a rarity because Wall Street firms don’t typically own physical uranium. Most investors bet on uranium prices by buying shares of mining firms, or through companies like
In the 2000s, investors piled into uranium trades, helping to power a run-up in prices that peaked in 2007. Most funds exited either during the 2008-09 financial crisis or after Japan’s 2011 Fukushima nuclear disaster sapped demand.
as the financial institution with the biggest presence.
The uranium that is usually traded takes the form of U3O8, a lightly processed ore. Prices for U3O8 have sagged since Fukushima knocked demand, leading to a glut that traders say has yet to be whittled down.
The material this week traded at $32.05 a pound, according to UxC LLC, a nuclear-fuel data and research company. Prices reached an all-time high of $136 a pound in 2007, according to records going back to 1987.
Anchorage is wagering on a reversal. Spearheaded by trader Jason Siegel, the fund began acquiring uranium a few years ago, because its analysis showed most miners were booking losses at prevailing prices, a person familiar with the fund’s thinking said. The fund bet that uranium prices would rise to encourage miners to produce enough material.
Mr. Siegel didn’t respond to requests seeking comment.
The entry of a financial firm has caused a stir in the uranium market. Anchorage buys and sells infrequently, but in large quantities that put it in the same league as big uranium merchants such as Traxys Group, participants say.
Anchorage hasn’t publicly disclosed its interest in the uranium market, the size of its holdings or the terms of any specific transactions. The exact size of Anchorage’s position—a topic of speculation in the market—couldn’t be learned. The person familiar with the fund’s thinking said it owned fewer than five million pounds of uranium. The overall spot market for the nuclear fuel turns over 60 million to 80 million pounds each year, according to UxC.
Due to strict rules about where uranium can be held, trading typically doesn’t involve moving the fuel around the world. Firms instead take ownership of U3O8 stored in drums at three processing facilities in France, Canada and the U.S. When they sell, buyers take ownership on the spot. The transactions aren’t reported publicly.
Anchorage’s wager relies on buying uranium and selling it to utility companies and others at a higher price for delivery several years in the future, in what is known as a carry trade. Doing so could generate annualized returns of roughly 5% for Anchorage, according to people familiar with the matter.
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The hedge fund embeds options into sale agreements with utilities and other firms, people familiar with the matter say. This can involve selling fuel to a utility company at a discount in return for the right to deliver more uranium at a set price at a later date.
Anchorage isn’t alone in betting that prices are primed to rebound.
Investment firms including Segra Capital Management LLC, Sachem Cove Partners LLC and Azarias Capital Management LP expect that efforts to wean the world off fossil fuels will require new nuclear-power stations, according to executives at the funds. They are seeking to profit by buying shares of uranium miners or firms like Yellow Cake, which is up 31% in London trading over the past year.
Some investors hesitate to own uranium outright because of the perception that it can cause dangerous accidents, according to Joe Kelly, chief executive of brokerage Uranium Markets LLC.
“There’s a deterrent that does not exist in other commodities,” said Mr. Kelly.
We love a good DIY project around here, but even the most seasoned DIY-ers still need to call a professional from time to time. When that happens, you’ll want to hire someone who’ll get the work done without too much hassle.
Contractor stories seem to fall into one of two categories: It’s either “Look at what a great job they did!” or “Let me tell you about the time this guy put a backhoe through my garage—and I paid him for it.” Avoiding the second category is always the goal, and usually all it takes is some legwork on your part. Here are our best tips for hiring the best contractor for the job, every time.
Get a home inspection
You don’t want to be forced to pick a contractor hastily because an emergency repair is breathing down your neck, so your best defense is to check for problems before they crop up. Make a list of all the systems in your house and how old they are: When was your roof installed? How old is your furnace? What about the wiring? When was your HVAC last serviced? Then, have a qualified home inspector come check things out so you know which repairs to prioritize.
How to find a reliable contractor
Once you’ve identified your home’s biggest problem areas, the real work begins: Research. This will take some time and effort, but will be well worth it in the end.
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Get word-of-mouth recommendations
Word of mouth is king, so personal recommendations should always be your first step. Ask family members if they know a good contractor in the area. Ask your neighbors, too—they likely have similarly constructed homes of a similar age and are probably dealing with the same problems you’re facing. Stop by local businesses and ask for recommendations. (If you need an electrician, for example, head to the local electrical supply shop and ask around.) Don’t ask who to avoid—although some people may volunteer that information willingly—ask who they’d love to work with again.
Check for complaints
A list of recommendations is just a starting point. Your next move is to see if any of the businesses you’re circling have complaints lodged against them. The best way to do this is to by searching complaint databases via your state’s Department of Consumer Affairs or Consumer Protection. If you’re not sure where to start, this website has a list of consumer rights offices in all 50 U.S. states. Some city and county Chambers of Commerce will have complain registries, but you may have to email or call someone at the office for assistance. Whatever you do, don’t look up a contractor’s Better Business Bureau rating and call it a day—while BBB complaints can provide useful information, ratings alone rarely tell the whole story.
Look up licensing and permit requirements in your area
Before you start calling contractors, you should be familiar with what credentials a contractor needs to perform work in your area. This one is kind of a doozy: Some U.S. states require all contractors and construction workers to be licensed by the state’s construction board, while others only require state-level accreditation for certain types of work. Some counties and even cities have their own licensing requirements, too.
HomeAdvisor.com has a quick-and-dirty guide to contractor licensing practices in every state, and it’s a good place to start—but you may still be confused. In that case, find the contact section of your state, county, or city construction licensing board’s website and ask them questions. Keep it simple and direct; the person minding the construction board’s email inbox probably gets the same four questions over and over.
Make some calls and get some quotes
If you’ve done your research, you should now have a shortlist of contractors who have passed the recommendation and checkup stages. Now’s the time to start calling. Don’t be afraid to ask lots and lots of questions—most of the issues that could blow up in your face later in the game can be prevented altogether by asking lots of questions early on.
Get proof of insurance
You can’t afford to let an uninsured contractor work on your home. If they get injured—or put a backhoe through your garage—and they aren’t insured, the bill comes to you.
Don’t feel bad being firm with your request for proof of insurance. Ask how many employees they have and who will be doing the work. (Depending on the field and the kind of work being done, it’s possible the supervisor is credentialed but the workers aren’t.) You should be able to verify a contractor’s insurance policy with your state licensing board—and if you get stuck, someone at the board should be able to help.
Meet contractors in person
Have multiple contractors come out to see where the work will be done and what you expect. Communicate what you need as clearly as possible to decrease any chance of miscommunication and wasted time and money.
This is also the time to do a thorough vibe check. If you get a bad feeling about any part of the meeting, don’t move forward. I once told a contractor I needed a quote for my insurance company, and his immediate reply was, “So are you actually going to get the work done or what?” If he’d had let me finish, I would have said that I wanted the quote today so the work could get started. That comment cost him the job.
Get quotes in writing—and keep track of them
Always get quotes in writing, with as much detail as possible. Never accept anything like, “It should run you about [insert price here].” Should things go terribly wrong, verbal contracts are worthless in court. In some fields it’s impossible to perfectly estimate cost, especially if the contractor won’t be able to get a better look at the problem until work has started. But it’s not unreasonable to get an over-run percentage in writing, which basically states that if the job does run over, it won’t be more than 15% of the estimate you’ve been given.
Spreadsheets are enormously helpful during the quote-gathering stage of the game. The larger the job, the more costs you’ll have to track, and different styles of quoting can be confusing. A simple spreadsheet that lists things like parts, labor, and time estimates can help you easily compare apples to apples when you’re reviewing quotes, and help you ask important questions—like “Why are you using 50% less materials than the other three contractors I’ve gotten quotes from?” On your end, be consistent when describing the job to each contractor so they’re all working with the same information.
Ask for references
If a contractor can’t give you at least three people who can vouch for the quality of their work, you’re in trouble. Photos of past work can also be helpful for things like landscaping and large-scale remodels, so ask to see some. Be sure to actually contact the references; if the size and cost of the job merits it, you can even ask if they’ll let you see the work in person.
Avoid the biggest red flags
At this point, you’ve done all the research, checked up on the licenses and permits, gotten—and checked—references, which means the chances of you getting scammed are nearly zero. Still, it pays to be aware of the big danger signs when it comes to home-repair scams:
If the price sounds too good to be true, it probably is: Either you’re about to get ripped off, or they’re using such sub-par materials that you’ll wish they’d just taken the money instead.
Beware high-pressure sales techniques, like insisting that a price on new siding is only good for the next 24 hours.
No contract, no deal: Never hire anyone who won’t sign a contract.
Never take out a permit for a contractor: Generally speaking, the person who takes out the permit is the one responsible for compliance. If your name is on the permit and the work crew totally screws up, you’re the one who will be slapped with all the fines.
What to do while the work is in progress
Once you’ve found a contractor that checks out and you feel good about, it’s time to get the work started. There are several key things you can do during the actual getting-things-done phase to make life easier and protect yourself if things go wrong.
Check in early and often
You know when the wrong time to tell the construction crew that the stone is the wrong color is? Right after they’ve tapped in the keystone and handed you the final bill. Stay on top of the project: If something doesn’t look right, bring it up as soon as you notice it. There isn’t a construction process around that is easier to fix later rather than sooner. Frequent check-ins will ensure the work is done just the way you want it.
Track the progress
Every day, make note of the work that’s been done—and not done—and take some photos. Not only is it fun to have pictures of a big project as it unfolds, but should things sour between you and the contractor, a clear photographic record is invaluable.
Get proposed changes in writing
If any major changes are made to your project, ask to get them in writing. Little things like moving some outlets or changing the type of sealant used usually don’t merit a new contract—but if you decide to add a new level to a deck halfway through, definitely get the new plan in writing.
Pay as you go
Reputable contractors do not demand all the money up front. If a contractor insists that you pay a large deposit or even the total bill before the work starts, then she or he is not a good contractor. A 10–15% deposit to start the job is reasonable, but you should never be asked to pay for raw materials. A reputable contractor will have good credit and an account with his suppliers.
Don’t be afraid to shut it down
People have a strong aversion to firing contractors, but they really shouldn’t. If your contractor is violating the terms of the deal, you can and should fire them—in writing, of course.
This isn’t necessarily an easy process because it involves contract law, which varies by state. According to Bankrate.com, you’ll want to make sure there’s a “material breach of contract” before terminating a contractor mid-job. Basically, you need to be able to prove that the contractor violated the terms you agreed upon when you hired them. (This is where those photos and written changes come in handy.) It’s much better to cut your losses when things are still salvageable so you can get someone else to finish the job.
Be a dream client
The golden rule definitely applies to the contractor-client relationship. This means you should be courteous, ask plenty of questions—while respecting their wisdom and expertise—and generally treat the people working on your house like people.
When I had a new roof put on my house in searing 90-degree Fahrenheit heat a few years ago, I made sure there was a cooler with water and sports drinks out on the driveway every day, packed to the top. The guys on the roofing crew said I was the first homeowner who had ever even asked if they were thirsty, let alone made sure they had anything to drink. Sure, you could argue that staying hydrated is their responsibility, but the cooler and the sports drinks cost me next to nothing and showed I cared about providing them a safer work environment.
Once you’ve made it this far, you’re as ready as you’ll ever be to sit back while someone else takes care of your home improvement troubles. Remember to keep logging and photographing the work, stay in communication with your contractor, and be nice—your efforts will no doubt be rewarded.
This article was originally published on July 2, 2010. It was updated on June 8, 2021 to reflect Lifehacker’s current style guidelines, and to add updated information, new links, and a new photo.