America's commercial real estate market continues to look sick. The latest indication comes Sunday, following the abrupt bankruptcy filing of Capmark Financial Group, the massive commercial real estate financier that formed in 2006 when GMAC agreed to sell the majority of its commercial real estate business to Kohlberg Kravis Roberts and others. The firm has been one of the country's biggest investors in strip malls, office buildings, and hotels. According to the New York Times, "Capmark is only the latest to fall victim to continued trouble in the commercial real estate market, which many analysts have said will continue to deteriorate. Many small banks have collapsed this year under the weight of commercial loans." The Wall Street Journal concurs, writing that "problems in that market are far from over." The unraveling of Capmark is a big blow to private-equity owners KKR, Goldman Sachs (GS) Capital Partners, and Five Mile Capital Partners, the newspaper adds, which teamed up to pay $1.5 billion in cash for the business from GMAC in 2006.
All eyes in the automotive industry are once again on Ford (F), but this time for promising reasons. The WSJ cites industry analysts who reckon the carmaker just may report break-even results for its biggest market, North America, on Nov. 2, breaking a string of several years of heavy losses. Ford is gaining ground mainly at the expense of rivals General Motors (MTLQQ) and Chrysler. "Ford gained more than five percentage points of U.S. retail market share in the third quarter compared with the same period of 2008, while Detroit rivals General Motors Co. and Chrysler Group LLC lost ground," the newspaper reports, citing CNW Marketing Research. That's the good news. The reality is the rally isn't expected to last long. By 2010, GM and Chrysler, fresh out of bankruptcy, are expected to bounce back on the strength of new models.
Meanwhile, a GM plant in Delaware is expected to rev to life again—this time as the site of a new manufacturing hub for Fisker Automotives new hybrid vehicles, the Los Angeles Times reports. The announcement is expected to be made by Delaware's own Joe Biden. Fisker earlier this year got a $528 million loan from the Department of Energy.
The media reincarnation of Michael Eisner continues apace. On Monday, the former head of Disney (DIS) is expected to announce that his fledgling Web video studio, named Vuguru, will become its own company, thanks to a multimillion-dollar investment by Canadian media company Rogers Communications, the NYT reports. The main thrust of this investment is to help Eisner increase the volume of Vuguru's output. "Under a dozen series have been released by Vuguru to date, but he would like the company years from now to be producing 30 series a year," writes the NYT. Eisner seems to think that by bolstering Vuguru now, he will able to see off other underfinanced competition in a market that could attract greater levels of advertising when the economy rebounds.
There are some major rumblings in the financial world this morning. The NYT reports that the Obama administration and Congress are poised to introduce legislation that would give the government sweeping powers over companies and institutions deemed too big to fail. "The measure would make it easier for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution," it writes. Meanwhile, long-time activist investor Nelson Peltz is set to grab a seat on the board of mutual fund giant Legg Mason after acquiring a 4.3 percent stake in the firm, the WSJ writes. Why would Legg be so magnanimous with its directorships? "In exchange for the board seat, Mr. Peltz's Trian Fund Management, a New York-based hedge fund, has agreed to a 'standstill' pact in which it will accumulate no more than 9.9% of Legg Mason stock for the next two years and vote its shares in favor of the company's slate of director nominees in that period," writes the WSJ. And in late-breaking finance news, ING Group, the Dutch financial-services company, plans to raise up to 7.5 billion euro’s, or $11.3 billion, in a new rights issue as part of a deal with the Dutch government to repay bailout money ahead of schedule. As part of the plan, ING will split its insurance and banking businesses.
And, finally, there's a hopeful prediction on fuel prices for those of you who watched in horror over the past week as the price of a gallon of gas shot upward. Crude may have broken the $80 barrier, the highest price in more than a year, last week, but it probably won't go much higher, Business Week says, citing industry analysts.