Porter & Co.

Energy delivery firm MDU Resources (MDU) plans to spin off its construction services business (from the Securities and Exchange Commission on July 10)…

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Upon completing MDU Resources Group, Inc.’s (NYSE: MDU) previously announced strategic review of its wholly owned construction services business, MDU Construction Services Group Inc., the MDU Resources board of directors has determined that it will pursue a potential tax-advantaged separation of the construction services business from MDU Resources. The board said a tax-advantaged separation of
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An activist short-seller alleges fraud at “green” battery tech firm Enovix (ENVX) – which also happens to be a current long investment position of famed short-seller Marc Cohodes (from ESG Hound on July 5)…

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Hello again, friends. I haven’t written a stock-specific thesis on this publication in over a year, but it’s time to mix things up again. Today, I’ll present evidence that Enovix, a California-based battery company with meager revenues, big promises, and an eye-watering $3 billion market capitalization is riding high on hype and little else. Putting
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The lack of existing home supply is creating a boom in the new-home market (from The Wall Street Journal on July 19)…

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After mortgage rates shot up last year, Ivory Homes, one of Utah’s largest builders, suddenly had few buyers for the hundreds of homes it had under construction. So Clark Ivory, the chief executive, laid off 9% of his staff, and by January he had slashed construction by nearly 80% from its 2022 peak. Then, much
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The value of distressed U.S. office properties rose 36% to $24.8 billion in the second quarter (from Bloomberg via Yahoo Finance on July 19)…

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About $24.8 billion of US office buildings were in distress at the end of the second quarter, surpassing previous leading commercial real estate laggards — hotels and retail properties. The total value of offices that were financially troubled or already repossessed by lenders shot up about 36% from the first quarter, MSCI Real Assets reported
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An insider’s look at the carnage in New York’s office real estate market (from New York Magazine on July 18)…

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Every time the real-estate market crashes, people say, “This time is different.” When there’s distress all around, it’s hard to grasp how there could ever be an upside. But with the benefit of hindsight, you can see that if you’d had enough money when things got bad, you could have made a killing by taking
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U.S. homebuilder sentiment continues to improve as supplies remain tight (from Bloomberg on July 18)…

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US homebuilder sentiment rose in July to the highest level in 13 months as buyers continued to opt for new construction amid a tight housing supply. The National Association of Home Builders/Wells Fargo gauge increased for a seventh-straight month, to 56 from 55 in June. The figure matched the median estimate in a Bloomberg survey
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This simple statistic explains why U.S. housing supply remains stubbornly low (from MarketWatch via Realtor.com on July 17)…

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Mortgage rates are inches away from 7% – but less than a tenth of U.S. homeowners have a home loan at that rate. In fact, only 9% of all existing mortgages in the U.S. were taken out with a rate of above 6%, according to data from the Federal Housing Finance Agency, and analyzed by
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Unlike CRE prices, U.S. home prices are closing in on a new all-time high (from Redfin on July 17)…

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A record low number of homes for sale combined with an uptick in homebuyer demand propped up housing prices in June, even as elevated mortgage rates kept many buyers on the sidelines. The median U.S. home sale price was $426,056 in June, just 1.5% ($6,341) below the all-time high of $432,397 set in May 2022.
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Morgan Stanley warns the broad CRE market could fall 30% from its peak (from MarketWatch on July 17)…

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The U.S. economy isn’t the only thing unwilling to capitulate despite sharply higher interest rates. Commercial real-estate prices have been heading lower in the wake of the pandemic and the Federal Reserve’s inflation fight, but the bulk of the pain still looks poised to come, according to Morgan Stanley analysts. Prices for apartment buildings, offices
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Global consulting giant McKinsey projects “hybrid work” is here to stay, which indicates demand for office and retail space in major cities is unlikely to recover to pre-pandemic levels anytime soon (from McKinsey Global Institute on July 13)…

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Real estate in the world’s superstar cities has not kept up with shifts in behavior caused by the pandemic. The cities’ vibrancy is at risk, and they will have to adapt. Continue reading here.