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Owners of apartment buildings in the St. Louis area have been able to command increasing rents in the last few years, but that may change in 2008, despite higher demand.

That’s the prediction from RubinBrown, a Clayton-based accounting firm that tracks the local rental market and recently issued its annual report.

It found profits continuing to increase for apartment building owners through 2007, a change from most of the rest of the real estate industry, said Bryan Keller, partner-in-charge of RubinBrown’s Real Estate Services Group.

"Big picture-wise, there’s no secret that the apartment industry has fared better than other real estate sectors," Keller said.

And demand is continuing to grow, as people lose houses to foreclosure or put off purchasing them. But that doesn’t mean rents necessarily will grow cash loans with bad credit.

That’s because supply has increased — a result of for-sale condominium projects being converted into rentals — and the weak economy, which has people doubling up or moving in with family. So, while the average rent on a St. Louis-area market-rate apartment jumped 8 percent to $715 last year, don’t expect a repeat performance, Keller said.

"I don’t think you’re going to be getting rent increases this year," he said. "It’s going to be hard for somebody to have a property and expect a big rent. People will be looking for that moderate-income apartment."

tlogan@post-dispatch.com | 314-340-8291

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Japan’s two-largest banks, Mitsubishi UFJ Financial Group and Mizuho Financial Group, cut their earnings outlooks by more than half on Friday, hit by growing bad-loan costs and a plunging local stock market.

Once thought to be relatively insulated from the global credit crisis, Japanese lenders are now facing a sharp downturn in profits, hurt by a brittle domestic economy and overexposure to a stock market that has lost near half its value this year.

Resona Holdings, Japan’s fourth-largest bank, also cut its outlook on Friday, citing ballooning bad loan costs.

Underscoring the bleak outlook for the world’s No.2 economy, the Bank of Japan cut interest rates for the first time in seven years on Friday.

Analysts believe that Mizuho and some of its smaller rivals may need to follow industry leader Mitsubishi UFJ and raise new capital to safeguard against the global financial meltdown.

Mitsubishi UFJ said this week it would raise up to $10.6 billion to replenish a capital base depleted by the stock market’s fall and a $9 billion investment in Morgan Stanley

“Banks’ unrealized losses on their shareholdings will continue to increase as the stock market falls. That will hit into their tier-one capital, which would force them to raise funds,” said Reiko Toritani, senior director of financial institutions at credit agency Fitch Ratings.

Mitsubishi UFJ, which has spent about $14 billion this year on acquisitions at home and in the United States, cut its forecast by two-thirds freecreditreport. It now expects a group net profit of 220 billion yen ($2.23 billion) in the year to the end of March, compared to its previous forecast of 640 billion yen.

Bad loan costs rose to 245 billion yen in the nine months to the end of September, while stock-related losses reached 75 billion yen.

Traditionally Japanese lenders hold large stakes in their corporate clients as a means to cement their business relationship.

The value of those stocks — estimated at $250 billion at end-March — has been shredded by the Nikkei share average’s drop to a 26-year low this year.

BAD LOAN COSTS

Analysts have been particularly concerned about surging bankruptcies in Japan, which force lenders to increase their bad-loan costs, including provisions.

Mizuho, Japan’s second-largest bank, said it now expects its group net profit to total 250 billion yen ($2.5 billion) in the year ending in March, down 55 percent from its previous forecast of 560 billion yen.

Japan’s second-largest bank said it wrote down the value of its marketable securities by $1.4 billion in the six months to September 30. Japanese shares lost a further 24 percent in the month of October. 

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The pace of mergers and acquisitions in Europe will slow next year, but there are still plenty of deals to be done, particularly in the struggling finance sector and recently liberalised energy sector.

While M&A professionals expect most of the action in those sectors, they say mining, consumer products and healthcare industries will also be reshaped.

“There could be a lot of consolidation across many sectors as stronger firms capitalize on opportunities arising from the market dislocation,” said Craig Coben, the European head of equity capital markets at Merrill Lynch.

European companies have struck $1.328 trillion worth of M&A deals so far this year, a 37 percent decline on last year, according to latest Thomson Reuters data. Next year the volume could come off further.

“In 2009 we will continue to see a significant decrease in M&A volumes,” said Paulo Pereira, a London-based partner at boutique investment bank Perella Weinberg, adding that volumes could drop by more than a third.

“If you look at previous cycles, you can have a 50-70 percent decline from the top of the cycle to the bottom,” Pereira said. A cycle can take three to four years from peak to trough, he added.

A decline by a third would still leave the value of transactions well above the previous trough of $542.61 billion in 2003, even taking into account the fact that market capitalization tends to grow.

But looking at the number of deals, just over 11,220 have been announced in Europe this year, only slightly above the 10,503 transactions recorded in 2002, the lowest number in the past 10 years one hour cash loan.

There are two conditions for M&A activity to pick up: cheaper and more readily available debt, and a reduction in volatility in equity markets, said Ian Hart, co-head of European M&A at Citigroup.

“When the equity market is going up or down by 10 percent or more a week, it’s very difficult to price any equity deal,” he said.

But dealmakers still predict plenty of work next year.

“The reasons for doing deals are still there … We expect there to be M&A activity in all sectors,” Hart said.

In a poll of European M&A professionals conducted in the first half of August, 36 percent of respondents said financial services would experience the highest levels of M&A in the next 12 months, while 34 percent said it would be in the energy sector.

Telecommunications, media and technology, mining, healthcare and consumer products together got a quarter of the vote, according to the survey by Intralinks, a provider of software for managing M&A documents.

“There is a lot of restructuring in the corporate landscape to be done in Europe that has already happened in the U.S. Whole sectors of the economy in Europe, for example, were only liberalised in late 1990s,” Pereira said, adding that energy and telecommunications were clear examples. 

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CALGARY–Suncor Energy Inc. has cut its capital spending target for 2009 by more than one-third to $6 billion.

Sixty per cent of the total – $3.6 billion – will be spent on the Voyageur oilsands development, the company said Thursday.

"Our aim is to ensure we are living within our means during a time of market uncertainty, while also making the strategic spending decisions that will allow us to continue on our growth path," stated CEO Rick George.

Suncor's 2009 plan maintains spending and construction schedules for the third and fourth stages of the Firebag in-situ operations, part of the $20.6 billion-Voyageur strategy.

Completion of Firebag stages 3 and 4 is set for 2009 and 2010. Planning for later Firebag expansions will be "flexible to respond to market conditions."

In the near term, Suncor will slow spending on the planned Voyageur upgrader, delaying targeted completion by a year internet payday loans.

"We remain committed to an integrated expansion strategy and targeted oilsands production of 550,000 barrels per day," said George.

"However, we've always had options available to us in terms of how the expansion is rolled out – and we believe in the current economic environment it's prudent to exercise that flexibility."

In addition to Voyageur investment, Suncor plans 2009 capital spending of $2.4 billion to support its base business, including $1.7 billion in the oilsands, $300 million in natural gas operations, and $400 million in refining and marketing segments.

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LONDON – The Icelandic government said today it reached tentative agreement with the International Monetary Fund for a US$2-billion loan over two years as part of an aid package to assist the crisis-hit Nordic country.

The government said the deal, which must be approved by the agency's board in Washington after negotiations in Reykjavik with IMF representatives, will also give Iceland immediate access to $830 million in funds.

Iceland had sought help from the IMF after its banking system collapsed this month under the weight of the global credit crunch – threatening the entire economy.

The country's currency, the krona, has lost half its value since January and banking transactions to and from the island country in the middle of the North Atlantic have seized, leaving its population of 320,000 financially stranded.

"This program will enable us to secure funding and gain access to the necessary technical expertise required to stabilize the Icelandic krona and to provide support for the development of a healthier financial system," Prime Minister Geir Haarde said in a statement.

"As a result, Iceland will commit to a sustainable long-term economic policy, and a plan for the recovery of the Icelandic economy," he added.

Haarde added that he expected the agreement with the IMF – the first loan by the body to a western country since 1976 – would encourage lending from other sources how to get a free credit report.

Iceland turned to the IMF after talks with Russia over a $3.2-billion loan failed.

It also has held talks for two days with a delegation from the Norwegian government over possible financial assistance and has suggested that Japan and other Nordic countries could offer more support.

Iceland already called on a swap facility drawing 200 million euros (US$256.6 million) each from the Norwegian and Danish central banks – it can take up to a total of 500 million euros ($636.2 million) from each. A similar deal with Sweden's central bank has not yet been used.

Iceland's central bank, Sedlabanki, is facing a considerable loss following the collapse of the banking system.

After the three main banks – Glitnir, Landsbanki and Kaupthing – became insolvent, Sedlabanki created new banks to handle domestic commercial banking activities.

It said it considered transferring liabilities for securities pledged to the central bank to those new institutions, but regulators determined that all debt instruments issued by the old banks must remain with those banks to guarantee transparency.

The banks' foreign debts amount to over $60 billion, dwarfing the country's gross domestic of $14 billion.

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Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slashed its annual operating profit forecast by 57 percent to far below market expectations, citing a firmer yen and tough price competition in the flat TV and digital camera markets.

The electronics and entertainment conglomerate generates more than three-quarters of its revenue overseas, and the recent surge in the yen against both the euro and the dollar has been slicing into its profits.

But the currency is not the only problem. Sony also warned that the global economic slowdown and fierce price competition would hit profitability on its Bravia LCD TVs, Cyber-shot digital cameras and handheld video cameras.

Analysts and investors were already talking about the chances of another revision later this year given that Sony’s revised euro/yen rate of 140 yen for the October-March second half is still far from the current level of around 125 yen cash advance now.

Sony acknowledged that its operating profit would fall another 80-90 billion yen if current rates were applied.

“I’m a bit concerned about their new assumptions. There’s a chance they may have to cut their outlook again,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Sony cut its operating profit forecast for the year to next March to 200 billion yen ($2 billion) from 470 billion yen. The new target is well short of the market consensus of 381.8 billion yen in a poll of 20 analysts by Reuters Estimates.

On a net basis, Sony lowered its full-year forecast by 38 percent to 150 billion yen, and trimmed its sales outlook by 2 percent to 9 trillion yen. 

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Billionaire investor Kirk Kerkorian lowered his stake in Ford Motor Co to 6.1 percent and said he could sell the remainder of his shares in the No. 2 U.S. automaker.

News of a possible exit by the single largest shareholder in Ford sent its shares down nearly 4 percent.

The move comes after a more than 60 percent decline in Ford shares since Kerkorian raised his stake to 6.5 percent in June and said he was willing to support the automaker’s turnaround with an infusion of additional capital.

Kerkorian’s offer of capital had been widely seen as a boost to Ford’s restructuring plans at a time when Detroit’s three automakers face increasing scrutiny over their ability to ride out a sharp downturn in U.S. auto sales.

General Motors Corp and Chrysler LLC are in talks about combining the two American automakers in an attempt to shore up cash and survive the industry slump, sources familiar with the plans have said payday advance lenders.

Kerkorian’s investment vehicle Tracinda Corp said on Tuesday it was reallocating its resources to focus on gaming, hospitality, oil and gas industries where it sees value in light of current economic and market conditions.

Kerkorian, who has invested $1 billion for 140.8 million Ford shares, saw his investment sour over the past months as U.S. auto sales dropped to 15-year lows amid tightening credit and slumping housing prices.

Ford’s U.S. sales are down 17 percent in the first nine months of the year, a steeper decline than the industry’s 13 percent drop. 

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The Toronto stock market surged almost 300 points yesterday, led by big gains in energy stocks after oil prices turned around following steep losses in three sessions.

However, gains on New York markets evaporated as the latest American home construction and consumer data reminded investors of the depth of the economic slowdown and prompted a wave of selling in the final hour.

Banks and insurance companies were also a big reason that Toronto’s S&P/TSX composite index came back from a morning deficit of about 200 points to close up 292.52 points at 9,562.49.

The Toronto market ended the week up a healthy 497.33 points or 5.5 per cent, with financials up 10 per cent in the wake of an announcement that Ottawa will buy up to $25 billion in mortgages from the banks and shift them to Canada Mortgage and Housing Corp. But the main TSX index is down 19 per cent since the first of the month.

The TSX Venture Exchange gained 8.33 points to 946.12, while the Canadian dollar edged 0.38 cent (U.S.) lower to 84.25 cents.

New York’s Dow Jones industrial average, up over 300 points at one point, closed down 127.04 points to 8,852.22. The Nasdaq composite index was 6.42 points lower to 1,711.29 and the S&P 500 index moved down 5 cash advance loan.88 points to 940.55.

The market’s rise came against a background of deepening economic gloom. The U.S. Commerce Department reported construction of new homes plunged by a bigger-than-expected 6.3 per cent in September. And the University of Michigan’s index of consumer confidence took its steepest-ever slide, to 57.5 from September’s 70.3.

Andrew Pyle, a wealth adviser at ScotiaMcLeod, said there’s a tug of war between the government bailouts and retail investors "who really don’t want any part of this market until things settle down. And that’s giving us these massive swings as we see daily now."

On the TSX, the energy sector was up 6.9 cent after three days of oil-price declines that took crude below $70 a barrel for the first time since August 2007. The November crude contract on the New York Mercantile Exchange gained $2 to $71.85 a barrel ahead of OPEC’s meeting on prices next week.

EnCana Corp. gained $3.38 to $49.88 and Suncor Inc. rose $2.02 to $26.22.

Canadian Press

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PARIS – European governments overcame their differences to put $2.3 trillion (U.S.) on the line Monday in guarantees and other emergency measures to save the banking system in their most unified response yet to the global financial crisis.

The pledges by six countries that use the euro and Britain helped soothe stock markets, along with a promise by top central banks to provide unlimited short-term dollar credits.

The amount – pledged by Germany, Britain, France, the Netherlands, Spain, Portugal and Austria – dwarfs the $700-billion rescue package put together by U.S. President George W. Bush's administration, although not all the European money will necessarily be spent.

It represented Europe's most unified response yet to the financial crisis, after weeks where European governments often acted at cross purposes and sniped at each other – a piecemeal approach that failed to stop steep and frightening slides on financial markets.

"The time of each one for itself is fortunately over," French President Nicolas Sarkozy said, following a cabinet meeting that approved France's spending in the framework of the scheme.

"United Europe has pledged more than the United States," added the French leader, who has taken a lead in corralling European governments to act together.

The money pledged by European governments will not go into a collective pot. Instead, governments were deciding individually how much to commit to supporting their own banks under broad guidelines agreed at a summit on Sunday. The sums are considered a maximum, and might not all be spent if the financial crisis eases.

About $341 billion of the European pledges was earmarked to be spent on recapitalizing banks by buying stakes.

The money pledges put a price tag on the package agreed to Sunday by the 15 countries that use the euro currency. They agreed to individually guarantee bank refinancing until the end of next year, rescue important failing banks through emergency cash injections and take other swift measures to encourage banks to lend to each other again.

Stocks markets rebounded Monday after the European decision and other weekend efforts to find solutions to the financial crisis, which has crushed major banks in both the U.S. and Europe and battered stock exchanges worldwide cheap payday advance.

Germany's DAX rose 518.14 points, or 11.4 per cent, to close at 5,062.45, while France's CAC-40 was up 355.01 points, or 11.2 per cent, at 3,531.50. Britain's FTSE 100 was 324.84 points, or 8.3 per cent, higher at 4,256.90, despite some hefty falls in the banks that have accepted government help.

Also helping markets was a joint move by the U.S. Federal Reserve, the European Central Bank and the Swiss National Bank to provide unlimited short-term credit in U.S. dollars to financial institutions. The Bank of Japan said it was considering similar measures.

Europe's biggest economy, Germany, put together a rescue package worth as much as $671 billion to shore up the country's financial system. "We are taking drastic action, no question about it … so that what we have experienced is not repeated," Chancellor Angela Merkel told reporters.

Sarkozy said the French government would provide up to $491 billion to help banks, most of that in guarantees for bank refinancing. The Netherlands put up $273 billion to guarantee interbank loans.

Austria's government offered up to $116 billion. Spain said it would guarantee up to $135 billion in a bank bond issuance this year. Portugal guaranteed $27 billion – nearly 12 per cent of annual GDP – to encourage Portuguese banks to lend to each other.

Italy did not earmark a specific amount but Finance Minister Giulio Tremonti told reporters the government would offer "as much as necessary."

The European moves are modelled on Britain's $88- billion plan to partly nationalize major banks. Prime Minister Gordon Brown has also promised to guarantee a further $438 billion worth of interbank loans to restore confidence in the financial sector.

The head of the International Monetary Fund welcomed the European decision despite the high price it is expected to impose on state budgets.

"We must recapitalize the banks … otherwise everyone will suffer," Dominique Strauss-Kahn said on France's Europe-1 radio Monday. "And that costs money."

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Group of Seven finance chiefs, meeting after stocks plunged and as a global recession looms, vowed to prevent the collapse of major banks while failing to unveil new initiatives for thawing credit markets.

“The current situation calls for urgent and exceptional action,'' the finance ministers and central bankers said in a statement after talks in Washington yesterday. They pledged to “take all necessary steps to unfreeze credit and money markets'' without detailing how that would be accomplished.

Signaling they would intervene to avoid a repeat of last month's collapse of Lehman Brothers Holdings Inc., the officials promised to ensure major banks have access to cash and are able to tap public funds for capital. By refraining from specific fresh measures such as embracing a U.K. plan to guarantee loans between banks, they still run a risk of disappointing investors.

“They've seen what Lehman did and the repercussions,'' said Jeff Pantages, chief investment officer at Alaska Permanent Capital Management in Anchorage, which oversees $2 billion. “If you're a bondholder, you've got to feel better. If you're a shareholder, you're not so sure.''

A sign of the strains: The G-7 ministers today met with President George W. Bush, an echo of former President Bill Clinton's visit with the group in 1998 amid the Russian debt default and collapse of the hedge fund Long-Term Capital Management LP.

`Global Crisis'

“This is a serious global crisis and therefore requires a serious global response,'' Bush said at the White House. The Group of 20, which includes emerging markets such as Russia and China, convenes later.

European leaders will go beyond the G-7's agreements in shaping their own rescue package when they meet tomorrow in Paris for a second summit in as many weekends, French Finance Minister Christine Lagarde said. Europe's governments just a few weeks ago questioned the need for a strategy, arguing their banks were sound.

German Chancellor Angela Merkel today joined French President Nicolas Sarkozy in calling on euro-area authorities to establish a “toolbox'' of policies. While agreeing a coordinated response was necessary, they said it won't involve a fund for banks.

Lehman's downfall precipitated the latest chapter of the 14- month crisis, causing banks to stop lending to each other out of concern they may not get their funds back. The G-7's willingness to now back “systematically important financial institutions'' may provide some relief for Morgan Stanley, whose stocks and bonds dropped this week on concerns for its health.

Stocks Slump

U.S. Treasury Secretary Henry Paulson said no bank was singled out in the discussions yesterday.

The policy makers from the U.S., Japan, Germany, U.K., France, Canada and Italy met after stock indexes this month plunged more than 20 percent from Japan to Europe to North America.

That left them under pressure to roll out new policies and adopt a united front to quell the panic in markets after their previous steps failed to do so and appeared disjointed. Instead, they outlined principles for all nations to follow.

Steps taken should protect taxpayers and avoid “potentially damaging effects on other countries,'' the group said. In the past month, some European governments have taken unilateral actions to increase bank-deposit guarantees, spurring concern that savers would drain cash from nations with less protection.

Policy Paths

Paulson said it would be “naive'' to think that different economies in different circumstances could come up with the same policy paths.

In the past two weeks, global central banks executed emergency interest-rate cuts and pumped more cash into markets, the Federal Reserve said it would buy commercial paper, European governments bailed out banks and the U.K. and U.S. said they would start taking equity stakes in financial companies.

Money markets remain gridlocked even so, with the three- month London interbank offered rate climbing to 4.82 percent yesterday, a record premium over the Fed's benchmark rate. The seizure spurred British policy makers to propose a program to backstop loans between banks.

G-7 officials shied away from copying the U.K. idea, which would either turn central banks into clearing houses for banks' loans or have governments back the obligations.

Access to Credit

The jump in borrowing costs and restricted access to credit prompted Merrill Lynch & Co. to predict the G-7 economies next year will be the weakest since 1982.

U.S. stocks fell for an eighth straight day yesterday, with the Dow Jones Industrial Average capping its worst week since 1914. The MSCI World Index of equities in 23 developed countries slid 20 percent this week, the most since records began in 1970.

Policy makers expressed confidence that investors will ultimately recognize the scale of initiatives under way, including a new U.S. plan to buy stocks in a “broad array'' of financial companies.

“We have taken a lot of actions,'' European Central Bank President Jean-Claude Trichet said. “It is normal that there is a maturing process.''

Paulson signaled his top priority is to start buying financial stocks as soon as he can. “This is a plan that I'm quite confident will work,'' he said. The Treasury chief also said “we have more to do in the liquidity area.''

Brown's Program

The American plan follows U.K. Prime Minister Gordon Brown's 50 billion pound ($87 billion) program that will partly nationalize at least eight lenders and provide 250 billion pounds of loan guarantees.

Canada's government yesterday moved to shore up its banks by saying it will buy as much as C$25 billion ($21.6 billion) in mortgages from them. German Finance Minister Peer Steinbrueck and Bundesbank President Axel Weber said they're working on a package of measures to rescue banks that will be revealed before markets open next week.

“The situation in financial markets is demanding unusual and far-reaching decisions from all policy makers,'' Weber said. “There is no alternative to these measures because banks have come under strong pressure.''

While the G-7's joint statement made no mention of currencies, Trichet said the group viewed excess volatility in exchange rates as detrimental and urged China to allow faster gains in the yuan.

Rifts within the G-7 were exposed on two fronts yesterday. Lagarde blamed the U.S.'s decision to let Lehman go bankrupt for precipitating the crisis, while Italian Finance Minister Giulio Tremonti rejected a draft statement for being “too weak.'' The 266-word text that won his blessing was shorter than the original.

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