Tag Archives: Real Estate

Saudi Investment Freeze Doesn’t Amount to Much in Canada

The decision by Saudi Arabia to halt new investments and unload assets in Canada is likely to have limited impact.

Saudi assets in Canada are confined mainly to stakes in upscale hotel operators, some small stock holdings in companies like Canadian National Railway Co., and grain facilities.

Most investments have been made by Saudi billionaire Prince Alwaleed Bin Talal through his Kingdom Holding Co., a Riyadh-based conglomerate with investments in hotels, real estate and equities. The company’s international hotel unit joined Bill Gates’s Cascade Investment and Canadian Isadore Sharp in a 2007 buyout of management company Four Seasons Hotels Inc., taking a 47.5 percent stake.

“The matter does not affect the day-to-day operations of Four Seasons,” spokeswoman Sarah Tuite said in an email. “It is business as usual as we continue to welcome guests to our hotels and resorts worldwide.”

Alwaleed’s influence in the kingdom has diminished after his arrest last year in an anti-corruption sweep by Crown Prince Mohammed bin Salman, who is seen to be sending a message to critics of his leadership with this latest reaction against Canada.

Wheat Board

G3 Global Grain Group, a joint venture between state-owned Saudi Agriculture & Livestock Investment Co. and U.S. agri-food company Bunge Ltd., bought a 50.1 percent stake in the Canadian Wheat Board for C$250 million ($192 million) in 2015. SALIC boosted its stake to 75 percent a year later. The partnership also holds an interest in a grain export terminal being built near Vancouver. On Tuesday, officials of the Winnipeg, Manitoba-based G3 said the company continues to buy and sell grain as usual. Officials didn’t immediately return requests for comment on Wednesday.

Last year, Toronto-based technology startup QD Solar Inc. received funding from a group that included Saudi’s King Abdullah University of Science and Technology and Netherlands-based venture capital firm DSM Venturing.

Saudi lender National Commercial Bank has an asset manager that held investments in 41 Canadian companies including Suncor Energy Inc., Canadian Natural Resources Ltd. and Canadian Pacific Railway Ltd. in its AlAhli North America Index Fund, according to May 2017 filings. CN Rail, at $473,500, was the largest Canadian investment of the fund’s $148.2 million portfolio.

Trading With the Kingdom

Oil made up 99 percent of Canadian imports from Saudi Arabia in 2017

Source: Statistics Canada

Two-way trade between the two countries is tiny — around 0.4 percent of Canada’s total trade in 2017. Canada exported C$1.37 billion worth of goods to Saudi Arabia last year, mostly tanks and other armored fighting vehicles and their parts, according to Statistics Canada. The country imported C$2.63 billion in goods from Saudi Arabia over that period, mostly crude imported to the Irving Oil Ltd. refinery in Saint John, New Brunswick.

Export Development Canada, the country’s trade financing agency said it has exposure of about C$2 billion to Saudi Arabia, and about 250 customers operating in the kingdom.

“Canada stands up firmly and respectfully for human rights,” Canadian Prime Minister Justin Trudeau told reporters Wednesday in Montreal, sidestepping questions on the impact of the Saudi moves. He also declined to say whether Canada would apologize for its statements about the women’s activists.

The tanks and armored vehicles are manufactured by General Dynamics Land Systems Canada, based in London, Ontario, a unit of U.S. defense giant General Dynamics Corp., under a C$15 billion contract with Saudi Arabia signed by the Canadian government in 2014.

Currency Reverses

Saudi’s move had a brief impact on the Canadian dollar, with the loonie depreciating as much as 0.5 percent to C$1.3120 per U.S. dollar after the Financial Times reported the Saudi Arabia central bank and state pension funds instructed overseas asset managers to dispose of Canadian assets starting Tuesday.

Canada’s currency later reversed those losses to trade 0.3 percent higher at 4:29 p.m. in Toronto. The S&P/TSX Composite Index closed 0.2 percent higher at 16,315.08. Yields on 10-year government bonds fell 1 basis point to 2.36 percent.

Saudi holdings of Canadian dollar reserves are between C$10 billion and C$25 billion, with the upper end of that estimate representing 10 percent of daily Canadian dollar trading volume, according to estimates from the Canadian Imperial Bank of Commerce.

Gold, Engineering

Canadian direct investors in Saudi Arabia, meanwhile, include Barrick Gold Corp., the world’s second-biggest producer, and SNC-Lavalin Group Inc., Canada’s biggest engineering and construction company.

SNC, which has been operating in the kingdom for five decades, said late Wednesday it’s not yet been able to “fully assess” the impact of the tensions with Saudi Arabia on its business. SNC had revenue of about C$993 million in the country last year, representing about 11 percent of total sales.

“If a widespread commercial embargo on Canadian commercial interests in the Kingdom of Saudi Arabia were to be implemented on a prolonged basis, there will be an impact on our future financial performance,” SNC said in a statement.

As for Barrick, the Toronto-based miner said it doesn’t expect its copper mine in Saudi Arabia to be affected by the escalating tensions with Canada.

(Updates with SNC-Lavalin comment in penultimate paragraph.)

    Read more: https://www.bloomberg.com/news/articles/2018-08-08/saudi-arabia-investment-freeze-doesn-t-amount-to-much-in-canada

    Shale Country Is Out of Workers and Dangling 100% Pay Hikes

    Jerry Morales, the mayor of Midland, Texas, and a local restaurateur, is being whipsawed by the latest Permian Basin shale-oil boom.

    It’s fueling the region and starving it at the same time. Sales-tax revenue is hitting a record high, allowing the city to get around to fixing busted roads. But the crazy-low 2.1 percent unemployment rate is a bear. As the proprietor of Mulberry Cafe and Gerardo’s Casita, Morales is working hard to retain cooks. As a Republican first elected in 2014, he oversees a government payroll 200 employees short of what it needs to fully function.

    “This economy is on fire,” he said from a back table at the cafe the other day, watching as the lunchtime crowd lined up for the Asian Zing Salad and Big Mo’s Toaster hamburger.

    Fire, of course, can be dangerous. In the country’s busiest oil patch, where the rig count has climbed by nearly one third in the past year, drillers, service providers and trucking companies have been poaching in all corners, recruiting everyone from police officers to grocery clerks. So many bus drivers with the Ector County Independent School District in nearby Odessa quit for the shale fields that kids were sometimes late to class. The George W. Bush Childhood Home, a museum in Midland dedicated to the 43rd U.S. president, is smarting from a volunteer shortage.

    The oil industry has such a ferocious appetite for workers that it’ll hire just about anyone with the most basic skills. “It is crazy,” said Jazmin Jimenez, 24, who zipped through a two-week training program at New Mexico Junior College in Hobbs, about 100 miles north of Midland, and was hired by Chevron Corp. as a well-pump checker. “Honestly I never thought I’d see myself at an oilfield company. But now that I’m here — I think this is it.”

    That’s understandable, considering the $28-a-hour she makes is double what she was earning until December as a guard at the Lea County Correctional Facility in Hobbs. When the boom goes bust, as history suggests they all do, shale-extraction businesses won’t be able to out-pay most employers anymore. Jimenez said she’ll take the money as long as it lasts.

    And this one could go on for a while. Companies are more cost-conscious than ever, and the evolution of oilfield technology continues to make finding and producing oil quicker and cheaper in the pancaked layers of rock in the Permian. It now accounts for about 30 percent of all U.S. output.

    There’s no question the economic upside is big in the basin, which covers more than 75,000 square miles in west Texas and southeastern New Mexico. Midland saw year-over-year increases of at least 34 percent in sales-tax collections in each of the last four months. Morales said coffers are full enough that he may ask for raises for city workers — so they don’t bolt for the oil fields.

    Another surprise: Some of his students, with two-year associate degrees, can make more than he does, with his master’s in science, electrical and electronic engineering. At Midland College’s oil and gas program, which trains for positions like petroleum-energy technician, enrollment is down about 20 percent from last year. But schools that teach how to pass the test for a CDL — commercial drivers license — are packed.

    “A CDL is a golden ticket around here,” said Steve Sauceda, who runs the workforce training program at New Mexico Junior College. “You are employable just about anywhere.”

    And you can make a whole lot more money than waiting tables at Gerardo’s Casita. Jeremiah Fleming, 30, is on track to pull down $140,000 driving flatbed trucks for Aveda Transportation & Energy Services Inc., hauling rigs.

    “This will be my best year yet,” said Fleming, who used to work in the once-bustling shale play in North Dakota. “I wouldn’t want to go anywhere else.”

    Morales, a native Midlander and second-generation restaurateur, has seen it happen so many times before. Oil prices go up, and energy companies dangle such incredible salaries that restaurants, grocery stores, hotels and other businesses can’t compete. People complain about poor service and long lines at McDonald’s and the Walmart and their favorite Tex-Mex joints. Rents soar.

    “This is my home town. I don’t want that reputation,” he said. He’s not yet quite sure what to do about it as mayor of a city that has been on the oil-industry rollercoaster for nearly 100 years.

    He has, though, come up with strategies for his restaurants. For example, he now issues paychecks weekly, instead of twice monthly, and offers more opportunities for over-time hours. He also makes common-sense bids to employees tempted by the Permian’s siren call.

    His pitch: “If you’ll stay with me, I can give you three quarters of what the oil will give you but you don’t have to get dirty or worry about getting hurt.” And just maybe, when crude crashes, they’ll still be employed.

      Read more: https://www.bloomberg.com/news/articles/2018-06-06/shale-country-dangles-100-pay-raises-as-labor-market-runs-dry

      Duterte to Shift Thousands of Government Workers to New City

      Thousands of government workers will be moved from Manila to a new city that’s being built in a former U.S. military base, as President Rodrigo Duterte’s administration seeks to ease a traffic gridlock in the capital.

      The government and private companies are investing more than 50 billion pesos ($1 billion) to build an administrative center in New Clark City. Within five years, the area is expected to have at least eight mid-rise government towers, 8,000 housing units and a train connecting it to Manila, about 100 kilometers (62 miles) away.

      “The vision is to build a new thriving city outside metro Manila that’s well-planned, future proof,” said Vince Dizon, president of the state-run Bases Conversion Development Authority which is overseeing the 9,450 hectare development. “We will slowly move some government activities to Clark to pump-prime the city.”

      The project is part of Duterte’s plan to decentralize state offices away from Manila’s gridlocked streets. The capital, home to 13 million people and accounting for about one-third of the nation’s economy, will become a “dead city” within 25 years, Duterte said in a speech last month supporting the development of the city, whose name is derived from the former Clark Air Force Base that was closed in 1991.

      About 1 million people in the capital region work for the government, adding to traffic congestion that a 2014 Japan International Cooperation Agency study said costs the economy about 2.5 billion pesos a day in lost productivity. That’s expected to climb to 6 billion pesos a day by 2030.

      Gridlock

      Philippine drivers are the most dissatisfied in the world

      Source: Waze Inc.

      Index ranks driver experience on a scale of 1-10, with 1 the least satisfying. Factors include traffic density, road quality and infrastructure.

      Bases Conversion will start moving to Clark this year. The Department of Transportation transferred its office to Clark in 2017.

      The first phase of the 200-hectare administrative center also involves the development of back-up offices for government agencies to ensure continuity in case of disaster. An aquatics and athletics center that will serve as the venue for the 30th SEA Games in late 2019, is also planned, Dizon said.

      An expansion of Clark Airport is scheduled to be completed by the first half of 2020, enabling it to handle 12 million passengers a year and double the number of domestic flights from about 240 weekly. Bases Conversion, the manager of former military properties, will publish the bidding terms for the contract to operate Clark Airport this week.

      At least 12 billion pesos of roads and bridges will be built in the next two years, while an industrial park planned by Filinvest Land Inc. may have an initial investment of at least 10 billion pesos, Dizon said.

      To help fund the Clark City development, Dizon said Bases Conversion will sell up to 60 hectares of real estate in Taguig City near the financial district of Makati, where land prices are at a record high.

        Read more: http://www.bloomberg.com/news/articles/2018-01-29/duterte-to-build-a-1-billion-new-city-for-thousands-of-workers