A New Wave of Investment

Beijing to hand $200bn to CIC
By Henny Sender,Jamil Anderlini in Hong Kong, in Beijing FT.

China Investment Corp, the sovereign wealth fund, will soon receive $100bn to $200bn in new funds from the government, according to three people familiar with the matter.

CIC, which has fully allocated the $110bn it had available for offshore investments, is to get the new money as Beijing seeks to reduce its exposure to US government debt. A number of senior officials, including the central bank governor, have said China’s foreign exchange reserves are beyond “reasonable requirements”.

The reserves, already the largest in the world, grew by nearly $200bn in the first quarter to top $3,000bn for the first time. In the past week, two senior government economists have said China only needs reserves of around $1,000bn.

CIC was established in 2007 with the mandate to invest some foreign reserves in riskier offshore assets. At that time, China had less than $1,500bn in its foreign exchange coffers. The fund suffered early missteps, investing in US private equity firm Blackstone and in Morgan Stanley before their shares plummeted in the financial crisis. But people who deal with CIC say it has grown in professionalism and confidence.

“They had a lot of growing pains in the beginning but now they know more,” says one private equity executive.

In addition to handing more money to CIC, Beijing is considering using the reserves to set up new special-purpose funds that would invest in sectors such as energy and precious metals, as well as a foreign-exchange stabilisation fund, according to a Chinese media report on Monday, citing unnamed sources.

Debate has raged among policymakers in Beijing over how much more money CIC should receive, while the central bank and the ministry of finance have fought a bureaucratic turf war over whether the central bank should have more control over the fund. “There has been bureaucratic bickering for a year,” said one person familiar with the matter. “It has been difficult to resolve.”

The central bank had proposed that the State Administration of Foreign Exchange, an agency under the central bank that manages the forex reserves, either invest directly as a shareholder in CIC or hand CIC a mandate to manage a certain amount of reserves on its behalf.

Those suggestions were rejected, according to people familiar with the matter, and CIC will now probably receive the money from the finance ministry, its shareholder, as occurred when it was initially capitalised in 2007.

After initial investments in western financial institutions CIC has focused on offshore investments that take advantage of China’s economic boom.

Rockfeller’s Foresight

洛克-外滩源

RockBund.

Master Developer for Redevelopment of Historic Bund in Shanghai

RockBund is a 94,000 square meter urban mixed-use redevelopment project at the historic confluence of the Huangpu River and Suzhou Creek in downtown Shanghai. The project combines the restoration of 11 historical buildings with new, world-class architecture and a new public space infrastructure. RockBund will form a major part of the Waitanyuan redevelopment district, a city-led “key” development project that will transform the area. Waitanyuan combines new infrastructure, parks, waterfront, historic restoration and new buildings- hotels, boutiques, department stores, theaters and cultural venues and residential space – to revitalize the northern tip of the Bund and create the most fashionable neighborhood in Shanghai.
 

http://www.rockbund.com/index.htm

Guillaume Nery base jumping at Dean’s Blue Hole

Cliché! english version

A Miniature of 1911 America

This is a great documentary from PBS – American Experience, which described the infamous Triangle Shirtwaist Factory Fire in New York City on March 25, 1911.

It came to me as a miniature of 1911 America experience.

100 years ago, European immigrants moved to the city for their America dreams. Successful industrialists built city’s skyline through

their private wealth. I found great resemblance for today’s China.

…the sweatshop workers(the girl in the video working 14 hr/day, earning $2 per week), the hard-working spirit, the desire for learning and entrepreneurship, the psychological confusion.

…the power and the wealth are perfectly legitimate as reward for the exercise of individual freedom and hard-work…

I will make a big bet on China’s rising power.

http://video.pbs.org/video/1817898383

Happy New Year!

Incognito – Listen to the music

RE 312 (12) Escrow & Closing

-Escrows:

• For closing aspects of transaction: instead of buyer & Seller meeting face to face, a 3rd party (escrow agent) acts as an intermediary.

• Assure completion of task: post-closing performance (repairement of walls)

• Lender Protection: Tax and Insurance Escrow accounts

-Escrow Agreement: each party’s instruction detail the condition that must be met before release of instrument. Need not to be reduced in writing.

>> It is a contract, not revocable w/o all parties’ consent.

-Condition: depositor’s intension doesn’t take effect until the happening of a specified condition.

-What if property burns down between contract made and closing date?

>> Seller written notice within 2 days, buyer can proceed transaction with insurance money or rescind contract by written notice within 10 days the notice from seller.

-Utility bill: protected by tax lien. Seller should pay off the accrued amount up to closing.

-Settlement Clerk: execution of documents at the closing.

-HUD Uniform Settlement Statement (most transactions)

-prohibits “phantom” fee and ”kickbacks
-Sausage Maker (Settlement Statement) : Buyer’s funds & proceeds of Loan>> all of bills are paid>> net amount to seller

Buyer has to pay                 Seller is to receive

Buyer already paid             Seller has to pay

RE 312 (11) Physical Condition & Environmental Matters

-Comprehensive Environmental Response, Compensation & Liability Act (CERCLA) or Superfund Law

>> Imposes liability for clean-up of hazardous substances w/ a Federal response out of Superfund Trust.

>> Government can collect funds from Potentially Responsible Parties (PRP) and create lien on property

>> PRP: past/present owners/operators of facility, past/present generator of waste, past/present transporter of waste to facility. PRP doesn’t have to participate or even know.

>> Liability is STRICT, joint and severally liable (doesn’t have to have evidence of negligence/fault, only to prove the waste leaking from facility). Sue any or more of the PRPs, w/o including all of them. Divisibility of waste.

>> PRP can be very broad, the lender on foreclosure and take title, parent company involved in decision making. Avoid ownership and participation in decision!

>> Innocent Landowner Defense: harzrd was placed before you are an owner and you didn’t know/have reason to know or PRP s government agency obtained through involuntary take or person acquired through inheritance.

>> You have “all appropriate inquiry”, visually inspected, check government records for dirty uses and further inquiry for distinctly low price.

-Enforcement:

Environmental Liens: super priority

Deed Restriction

Sue for Extraordinary Damages

-Environmental Site Assessment (ESA)

• Phase I: cursory look w/o testing, public record review, interviews and site visit.

• Phase II: if suspicious uses, sampling and test.

- Brownfield Initative: government assisstant (tax break and grant) to promote environmental clearance and revitalize the contaminated lands.

-New “All Appropriate Inquiry”:

-Written report from environmental professional who renders an opinion.

>> Interview, review with historical uses, titel search for environmental liens, review of federal/state record of contaminants and landfills, visual inspection.

-Private Land Use Control

>> Deed Restriction: a condition in the instrument or covenant. When condition occurs, onwer’s interest terminates or subject to termination.

>> When covenant breaks, owner remains owner, but subject to law suits.

-Affirmative Covenant: maintainance of party wall and build fences.

-Equity:

Termination of Covenant: Unless there is substantial change in character of the neighborhood, the restrictive covenant no longer effective, termination can be granted.

-Public Land Use Control:

>> Zoning: regulation by the goernment of structures and uses of land within designated zones. Proper exercise of government’s >>police power (inherent right of the state to regulate to protect the public health, safety and welfare; no taking nor compensation)

>>Comprehensive Plan

>> Zoning Enabling Acts: states grant municipalities spefici authority to regulate land use.

>> Bulk Zoning: density, frontage, setback

>> Use Zoning (Euclidean): industrial, residential, commerical

-Exceptions in Zoning: Eg., a school in residential district.

“carve outs” within particular zone for specific uses that are compatible with but not in heart of the zoning uses.

-Non-conforming Use: Eg., Your house was there before zoning change. Legal. You can’t enlarge, Use is “run with land”.

-Special-Use Permit: needs grant. Conditional uses.

-Variance (Typically in bulk zoning)

• Deviate in a minor way from authorities. House setback 25 ft you requires 30 ft.

• To get variance, 5 requirements:

1. Denial of variance resultsin unnessary hardship

2. no hurt of neighborhood value

3. not contrary to the spirit of ordinance

4. benefit public interest

5. substantial justice

RE 312 (10) Financing Contingency

-Open-ended mortgage: permits mortgagor to borrow additional amount up to original amount.

>> Priority over liens made between mortgage and future advance, if it is obligatory 2nd mortgage and bank didn’t have knowledge of judgment lien.

>> If no advance, actual notice is needed.

-Morgage Process:

• RE Settlement Procedure Act (RESPA): applicable to some residential, transaction involving “federally related mortgage loans”, 1st mortgage on 1-4 family residence made by FDIC insured lender.

• Application:

Usury (interest limitation)

RESPA: Good Faith Estimate of Closing Cost and Settlement Cost Booklet

Truth in Lending: APR Calculation

• Underwriting (personal creditworthiness and appraisal of property)

• Loan Committment: written; Mortgage Insurance (residential only, more liquid than uninsured mortgage, not only lender, but the insurance company confirms the property value > debt, if default, insurer pays and takes the property)

• Loan Terms:

Promissory Note (evidence of debt, liability recourse/non-recouse, co-obligators and guarantors)

>>If default, sue on note to get personal judgment; have re sold and proceeds against debt

Security Agreement (mortgage/deed of trust & assignment of rents, secured by real estate)

-Subordination: you have 2 mortgages and you want to refince the 1st larger one. W/o subordination, your 2nd mortgage becomes in 1st priority.

-Sale of Mortgage:

• Assignment of Mortgages (sell): a document indicates that a mortgage has been transferred from the original lender/borrower to 3rd party.

-Sale of Mortgaged Properties

>> Due on sale, Assumption (recourse), Subject to (nonrecouse), Novation