Robert Shiller Is Downbeat About Housing | Chief Investment Officer

The reverberations of the 2008 housing bust are still with us. Nobel Prize winning economist Robert Shiller, who tracks US home prices, is not optimistic about the future of residential real estate—even though some data tend to argue that the market is fine.

“It’s looking weaker now,” he said in an appearance on CNBC. In 2004, before housing started to implode, home prices advanced at 12%, and with higher mortgage rates (6% for a 30-year fixed loan) than today, when you pay an average 4.3%, according to Bankrate.

His dour outlook comes at a time when unemployment is quite low, 3.8%, which with lower loan costs should spur more people to buy homes. But recent housing data are mixed. Home starts fell 8.7% in February from the month before, although existing home sales were up 11.8%. Existing dwelling sales are still about 1 million short of the 6 million units seen prior to the financial crisis.

By Shiller’s data, US home price increases have continued to slow. They had a 4.3% annual gain in January, down from 4.6% the month before, by the count of the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

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On the other hand, homebuilder stocks are rallying, with the SPDR Homebuilders exchange-traded fund up 17% this quarter.

“This doesn’t feel like a boom,” Shiller remarked. “It’s not exciting.” He did allow, though, that at least people “aren’t worried about losing their jobs, which makes them not want to buy homes.”

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Tags: Economy, Housing, Real Estate, Robert Shiller

A consortium that includes the $275.4 billion Canada Pension Plan Investment Board (CPPIB), and the $144.9 billion Ontario Teachers’ Pension Plan (OTPP) have agreed to acquire UK satellite telecommunications company Inmarsat for $3.4 billion, or $7.21 in cash per share.

The consortium, which formed a joint venture called Triton Bidco for the purpose of making the acquisition, also includes funds advised or managed by private equity advisory firm Apax, and private equity firm Warburg Pincus. Each of the companies have an equal share in the venture.

According to the contract’s equity commitment letter, the CPPIB’s equity commitment in the joint venture is 29.27%, and the Ontario Teacher’s Pension Plan Board’s is 24.39%. The CPPIB said its financial commitment to the deal will be approximately $900 million. The OTTP didn’t reveal its financial commitment.

Inmarsat is a provider of mobile satellite services, such as in-flight broadband for airlines, has an in-orbit fleet of 13 owned and operated satellites in geostationary orbit, and provides a portfolio of global mobile satellite communications services.

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“The satellite sector’s unique characteristics—long lead times and the need for deep technical expertise—make it attractive,” said Triton Bidco in a release. “But it is also a sector requiring strategic management and a long investment horizon.”

The $7.21 per share bid is comprised of a cash consideration of $7.09 for each Inmarsat share, plus a dividend of $0.12 per share to be paid on May 30 to Inmarsat shareholders on the register as at the close of business on April 23. The deal is subject to shareholder and regulatory approvals.

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Tags: Canada Pension Plan Investment Board, Inmarsat, Ontario Teachers' Pension Plan, Pension, Private Equity