Monday, Jan 21, 2008
Then came the builders... then the construction equipment leasing firms
Financial News: Default lines rumbling through construction business
It didn’t take long for the credit crunch to send tremors through the construction industry.
Perini, the general contractor on the $3 billion Cosmopolitan Resort and Casino project now under construction in Las Vegas, said it received notice that the project’s developer had received a loan default notice from its lead lender on the project, Deutsche Bank.
Ian Bruce Eichner, CEO of the development firm on the project, 3700 Associates, confirmed to the Associated Press that his company defaulted on a $760 million loan from Deutsche Bank after it failed to get refinancing on a construction loan by a Tuesday deadline.
Posted by lvmreader @ 09:51 PM (294 views) Add Comment
1 Comment
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1. drewster said...
So far it's all going exactly as predicted. A lot of companies are partly or almost entirely dependent on rising house prices and high transaction volumes. Housing feeds construction, which feeds construction equipment. Housing also feeds estate agents, surveyors, valuers, removals companies (might be a good time to short U-Haul? ticker symbol UHAL in the states); we've already seen big lay-offs in estate agencies.
Inside the house the boom feeds new kitchens, bathrooms, sofas, carpets, and more. That's Magnet, BathStore, DFS, Allied Carpets, etc. - all in trouble. In the old days buyers could fit a £10,000 kitchen and it would add £30,000 of value to the house. Not any more. Previously buyers could finance the purchase of the kitchen by MEWing. Not any more.
Can anyone think what other sectors will be directly hit by the housing downturn?