Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63657 Thu, 22 Feb 2018 02:16:36 GMT Homeownership is increasingly for the wealthy http://implode-explode.com/viewnews/2018-02-21_Homeownershipisincreasinglyforthewealthy.html iehi-feed-63656 Thu, 22 Feb 2018 02:14:49 GMT Existing home sales in January see biggest drop in 3 years http://implode-explode.com/viewnews/2018-02-21_ExistinghomesalesinJanuaryseebiggestdropin3years.html U.S. home sales unexpectedly fell in January, leading to the biggest year-on-year decline in more than three years, as a chronic shortage of houses lifted prices and kept first-time buyers out of the market.

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The supply squeeze and rising mortgage interest rates are stoking fears of a lackluster spring selling season. The second straight monthly drop in home sales reported by National Association of Realtors on Wednesday added to weak retail sales and industrial production in January in suggesting slower economic growth in the first quarter.

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Existing home sales dropped 3.2 percent to a seasonally adjusted annual rate of 5.38 million units last month, with purchases declining in all four regions. Economists polled by Reuters had forecast home sales rising 0.9 percent to a rate of 5.60 million units in January.

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The shortage of properties is concentrated at the lower end of the market. While the number of previously-owned homes on the market rose 4.1 percent to 1.52 million units in January, housing inventory was down 9.5 percent from a year ago.

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iehi-feed-63650 Tue, 20 Feb 2018 22:33:19 GMT U.S. top court rejects investor appeals over Fannie Mae, Freddie Mac bailouts http://implode-explode.com/viewnews/2018-02-20_UStopcourtrejectsinvestorappealsoverFannieMaeFreddieMacbailouts.html The U.S. Supreme Court on Tuesday declined to revive litigation in which shareholders accused the federal government of overstepping its authority when it restructured mortgage finance firms Fannie Mae and Freddie Mac following the 2008 housing crisis. The justices left in place a lower court's 2017 ruling that the investors, led by hedge fund Perry Capital, could not pursue legal claims accusing the government of unlawfully channeling profits from Fannie Mae and Freddie Mac to the U.S. Treasury Department.

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Other shareholders that sued included Fairholme Funds Incand individual investors. Another hedge fund, Pershing Square Capital Management LP, the biggest common shareholder in both companies, filed a brief asking the justices to take the case.

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The appeals court said the government had the authority under a 2008 law that laid the groundwork for its seizure of the two companies.

Both companies are now under the conservatorship of the Federal Housing Finance Agency. Treasury Secretary Steven Mnuchin had said before taking office last year that the companies should be returned to private control but has since said that they should not be privatized.

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iehi-feed-63642 Sun, 18 Feb 2018 20:51:01 GMT "The Home Builder Rationalization" http://implode-explode.com/viewnews/2018-02-18_TheHomeBuilderRationalization.html The multi-family segment has been a drag on the construction sector for several years now, despite the occasional spike up in either permits or starts, or both... [But] according the National Association of Home Builders (NAHB), they have been over the past few months rarely ever more confident than now. You have to go back to the late nineties for similar expressed levels of optimism; the NAHB's index suggests that its members are more positive now than at any time during the housing mania.

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The problem with that result is obvious; they aren't building at a rate anywhere close to either the nineties or the height of the bubble. On a population-adjusted basis, the disparity is even greater.

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[The lack of] growth in household formation may not threaten to reverse the low-growth in home construction, but it sure does explain why more homes aren't being built. There is no additional demand above what appears to be minimal growth in home stock (which also helps explain the pullback in apartment construction around the "rising dollar" downturn; that it confirmed there isn't likely to ever be more than minimal growth).

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There are any number of surveys particularly of young adults describing the restlessness of this situation, and therefore if those stuck in it had the means they would change their circumstances if possible. In droves. It can be construed as a social trend, but it's often done so because by and large in the mainstream there isn't an economic problem according to Economists.

Maybe that in the end is what builders are so happy about. They see only a very small probability of a substantial decrease in their business while at the same time noting that any day now young Americans in light of full employment will start to move out of their parents' basement all at once. Like other similar rationalizations, the longer it goes where that hasn't happened, the more certain they have become that it will -- tomorrow for sure.

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iehi-feed-63632 Wed, 14 Feb 2018 23:09:12 GMT Rumored-Struggling HNA Group of China sells Upper East Side NYC mansion for $90M http://implode-explode.com/viewnews/2018-02-14_RumoredStrugglingHNAGroupofChinasellsUpperEastSideNYCmansionfor9.html HNA bought the 18,860-square-foot mansion at 19 East 64th Street from art heir David Wildenstein in April 2017 for $79.5 million and planned to use it as an office. The company funded the deal with a $50 million mortgage from Ullico.

Bloomberg recently reported that HNA plans to sell $4 billion worth of U.S. properties to help pay off its mounting debt. That includes office tower 245 Park Avenue, which the company bought for $2.2 billion in May.

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iehi-feed-63599 Sun, 04 Feb 2018 18:59:00 GMT Everything must go: Chinese investors sell off their foreign RE holdings http://implode-explode.com/viewnews/2018-02-04_EverythingmustgoChineseinvestorssellofftheirforeignREholdings.html iehi-feed-63590 Thu, 01 Feb 2018 22:14:45 GMT You'll Never Guess Who's Pushing Homeownership Higher http://implode-explode.com/viewnews/2018-02-01_YoullNeverGuessWhosPushingHomeownershipHigher.html iehi-feed-63578 Tue, 30 Jan 2018 15:25:17 GMT Home prices surge to new high, up 6.2% in November http://implode-explode.com/viewnews/2018-01-30_Homepricessurgetonewhighup62inNovember.html The supply crisis in the housing market is not letting up, and consequently neither are the gains in home values.

National home prices continued their run higher in November, rising 6.2 percent annually on S&P CoreLogic Case-Shiller's most broad survey, up from 6.1 percent in October. Another S&P index of the nation's 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.

Prices nationally are now 6 percent higher than their 2006 peak, while those in the top 20 markets are still 1.1 percent lower.

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iehi-feed-63563 Thu, 25 Jan 2018 17:20:00 GMT WeWork becomes central London's biggest office occupier http://implode-explode.com/viewnews/2018-01-25_WeWorkbecomescentralLondonsbiggestofficeoccupier.html WeWork, the US co-working group backed by Softbank's Vision Fund, has become the largest corporate office occupier in central London, underlining the speed of growth of one of the world's most highly valued start-ups.

WeWork, which was valued at more than $20bn following its last fundraising in August, has rented more space in the key office districts of London since 2012 than any other company, leasing 2.6m sq ft of space, according to estate agency group Cushman & Wakefield. This has made WeWork the biggest occupier of offices in the capital after the UK government.

The company has become increasingly important to commercial property markets in cities such as London and New York, both leasing and buying buildings to offer shared offices. WeWork started in 2010 as a trendy co-working space aimed at millennial tech start-ups -- enticing participants via memberships, rather than leases, and through communal activities and perks such as free beer. But it is now working with larger companies to offer flexible working conditions.

In London, WeWork's take-up has been nearly double that of Google, which leased 1.3m sq ft over the five-year period, while Amazon and Deutsche Bank leased just over 1m sq ft and 0.9m sq ft, respectively. "Have they won the race for scale?" said Elaine Rossall, head of UK offices research and insight at Cushman & Wakefield. "Yes, I don't think anybody could keep up with their pace of growth."Rival property executives in the London property sector have been surprised at the rate of its expansion, with its City of London footprint alone more than doubling in 2017.

Some have raised questions about how sustainable its growth will be given worries over the strength of the London office market after Brexit.

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In August last year, SoftBank and its Saudi-backed technology fund agreed to invest a combined $4.4bn in WeWork in one of the largest single investments into a private company on record.Other big financial groups are also moving into the flexible working space. Brookfield, the world's second largest real estate fund manager, has approached IWG, the world's largest shared office group. It last week made a bid for the company that valued it at £2.5bn, but was rebuffed. Blackstone, the world's biggest real estate fund manager with around £100bn in assets under management, bought flexible workspace provider The Office Group last June in a move which valued the company at about £500m.

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iehi-feed-63541 Sat, 20 Jan 2018 01:41:53 GMT Kushner's Deutsche Bank-Backed Times Square Property Stung by Tenant Troubles http://implode-explode.com/viewnews/2018-01-19_KushnersDeutscheBankBackedTimesSquarePropertyStungbyTenantTroubl.html In a six-floor retail space near Times Square, the Guy Fieri restaurant has closed and construction hasn't begun on celebrity chef Todd English's food hall. A tourist attraction featuring a 1/87th scale model of New York City was behind on rent for two months as of December, according to loan documents. It wasn't supposed to be this way.

When Kushner Cos. bought the property for $296 million in 2015, then-Chief Executive Officer Jared Kushner had big plans to capitalize on the tens of millions of tourists who visit the area every year. Deutsche Bank AG financed the endeavor before selling most of the debt to investors across Wall Street a year ago. Those investors were shown disclosures describing the retail space as 100 percent occupied and estimating it would throw off $24 million of rent annually.

But Fieri, English and Gulliver's Gate, the operator of the miniature Manhattan, account for $9.9 million of that rent estimate, which underpinned a market-defying appraisal boost and helped justify $370 million of loans, the disclosures show. Problems with these spaces could make the economics challenging.

Last year, New York prosecutors requested documents from Deutsche Bank related to the property, where the Kushners used the debt to take out $59 million in cash. It isn't clear what prosecutors are looking for. But mortgages granted under generous financial assumptions then sold to others who will bear the risk have piqued their interest in other cases. A spokesman for the Brooklyn U.S. Attorney declined to comment, as did a spokesman for Deutsche Bank.

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Gulliver's Gate was cited due to a technicality and payments were only a few days late, she said. The company has a letter of intent for the Fieri space from a prestigious tenant at a higher rent, and the operator of the food hall is making final adjustments to its plan, she added, saying the changes are increasing the value of the property and will attract more visitors. A spokeswoman for Gulliver's Gate said that it "is up to date on their rent and paid in full on their lease" and there are "no concerns" about its future there.

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Even if they were brief, the missed payments by Gulliver's Gate, the second most lucrative tenant, triggered a clause in the Kushners' loan documents allowing creditors to demand any excess cash from the property until the problem was resolved, according to reports from debt servicers. Managers also put the retail space on watch lists for potentially troubled debt because it lost money for nine months through September 2017 after accounting for interest payments, the reports show. That's because new tenants were given millions in free rent, a common tactic used to fill store spaces. Kushner Cos. set aside $11 million of the loans for the free rent. Disclosures don't describe that figure as including funds for vacancies.

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In truth, maintaining full occupancy looked tough from the start. When the debt was sold to investors, the 500-seat Guy's American Kitchen & Bar had been beset by negative reviews, and Todd English and his partners hadn't yet taken possession of the space for his food hall. The chef, who has pulled out of another project, was scheduled to open for business there last April. Gulliver's Gate, reportedly a $40 million endeavor, had not yet opened and was an untried competitor amid the glitz of Times Square.

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When Kushner Cos. bought the property in 2015 from Africa-Israel, the distressed firm of Russian diamond magnate Lev Leviev, online retailers were ascendant, and the future of brick-and-mortar stores was uncertain. So filling the property with tenants offering experiences seemed smart.

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The expected surge in income preceded a new appraisal in October 2016 at $445 million plus additional cash in accounts, indicating a stunning growth in value that far outstripped the broader Manhattan retail market, which had suffered a slowdown. Against that valuation, the $370 million of loans represented only 83 percent of the value, the investor disclosures showed. But Moody's and Kroll, the risk-assessment firm, found in independent calculations that the loans exceeded the value.

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The situation might get worse before it gets better. In an October legal complaint against the Plaza Hotel, which contains a Todd English restaurant, the chef is accused of sexual harassment. In November, S&P downgraded the debt of another tenant, Guitar Center, saying it thought a potential debt restructuring could occur in the next six months, "a transaction that we would view as tantamount to a default." A Guitar Center spokeswoman declined to comment.

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iehi-feed-63537 Fri, 19 Jan 2018 15:01:32 GMT Jeddah Tower, the world's next tallest skyscraper, set to open in Saudi Arabia http://implode-explode.com/viewnews/2018-01-19_JeddahTowertheworldsnexttallestskyscrapersettoopeninSaudiArabia.html When the 3,280-feet-tall (1,000-meter-tall) Jeddah Tower, in Saudi Arabia, opens in 2020, it will knock Dubai's iconic Burj Khalifa off its throne as the tallest skyscraper in the world by 236 feet (72 meters). Construction of the landmark is estimated to cost $1.4 billion... While today the site is surrounded by desert, upon completion the tower will be the center of the Jeddah Economic City development... Jeddah Tower's construction fits into Saudi Vision 2030, a government plan that aims to diversify the economy in the kingdom and reduce its dependence on oil...

But the project hasn't been smooth sailing. There have been various delays since construction began in 2013. Since November 2017, two of the project's most prominent backers -- Saudi Arabia's Prince Al-Waleed bin Talal, a prolific investor and businessman, and Bakr Bin Laden, chairman of Jeddah Tower's construction company Bin Laden Group -- have been caught up in the kingdom's anti-corruption purge, which saw hundreds questioned on accusations of corruption.

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iehi-feed-63520 Sun, 14 Jan 2018 18:45:24 GMT Trump Floated Post-2007 By Secretive, High Money Laundering-Risk Condo Purchases http://implode-explode.com/viewnews/2018-01-14_TrumpFloatedPost2007BySecretiveHighMoneyLaunderingRiskCondoPurch.html More than one-fifth of Donald Trump's US condominiums have been purchased since the 1980s in secretive, all-cash transactions that enable buyers to avoid legal scrutiny by shielding their finances and identities, a BuzzFeed News investigation has found.

Records show that more than 1,300 Trump condominiums were bought not by people but by shell companies, and that the purchases were made without a mortgage, avoiding inquiries from lenders.

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Treasury's financial-crimes unit has, in recent years, launched investigations around the country into all-cash shell-company real-estate purchases amid concerns that some such sales may involve money laundering. The agency is considering requiring real-estate professionals to adopt anti-money-laundering programs.

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The surge was driven by the opening of 11 Trump condo buildings between 2008 and 2010 as Trump shifted his real-estate business from developing high-rises to licensing them. Nine were Trump-licensed, and they drew hundreds of shell companies that paid an average of $1.2 million in cash for a condo. In six of the licensed buildings, cash-paying shell companies bought at least a third of the condos, records show.

It's not clear how much Trump received from the sale of Trump-licensed condos, but when Trump announced his candidacy in 2015, he said his "real estate licensing deals" and other brands were worth $3.3 billion.

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Eighty-three percent of the secretive sales occurred in markets that FinCEN is investigating for possible money laundering in real estate sales. In those markets -- Manhattan, South Florida, and Honolulu -- FinCEN is examining every luxury-home sale to a shell company that paid cash.

At least 28 shell companies resold their Trump properties within six months of buying them in cash. The National Association of Realtors says that immediate resales can indicate money laundering, "especially if the resale price is significantly higher or lower than the original purchase price."

At the Trump SoHo Hotel Condominium New York in Manhattan, 77% of the sales were to shell companies that paid cash. One of the project's Russia-born developers was convicted of money laundering in the 1990s. A pending lawsuit calls Trump SoHo a "monument to spectacularly corrupt money-laundering and tax evasion," though it says in a footnote that "there is no evidence that Trump took any part in, or knew of, their racketeering."

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iehi-feed-63486 Sun, 07 Jan 2018 16:16:46 GMT SEC Now Investigating Kushner's Use of "Cash for Visas" Program (EB-5) http://implode-explode.com/viewnews/2018-01-07_SECNowInvestigatingKushnersUseofCashforVisasProgramEB5.html The Securities and Exchange Commission sent the Kushner Companies a subpoena asking for information about the firm's petitions for EB-5 visas, which allow wealthy foreign nationals to obtain green cards if they invest in job-creating projects in the U.S.

The subpoena, which had not been previously disclosed, was sent in May 2017, The Wall Street Journal reported Saturday, citing people familiar with the matter.

Kushner Cos. makes frequent use of the EB-5 program to raise investment capital for its real estate development projects. The company came under scrutiny last year when it was reported that Jared Kushner's sister, Nicole Kushner Meyer, was using the family's connection to the White House in presentations to Chinese investors. In her presentation, Meyer suggested the company was in a position to guarantee approval of the EB-5 applications because Trump was a "key decision maker" in the process.''

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The program is also susceptible to massive fraud schemes. In several cases in recent years, U.S.-based real estate developers have collected hundreds of millions of dollars from unsuspecting foreigners for projects that never materialize or were outright fabrications from the start.

Chinese investors dominate the EB-5 program -- roughly two-thirds of the 10,000 investors visas issued in 2016 were given to Chinese nationals.

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iehi-feed-63469 Wed, 03 Jan 2018 16:42:24 GMT Canada's insane housing bubble is just starting to burst with home values dropping for the first time since Q1 2009 http://implode-explode.com/viewnews/2018-01-03_Canadasinsanehousingbubbleisjuststartingtoburstwithhomevaluesdro.html iehi-feed-63463 Sat, 30 Dec 2017 17:17:50 GMT Zillow: As Rents Rise, More Renters Turn to Doubling Up http://implode-explode.com/viewnews/2017-12-30_ZillowAsRentsRiseMoreRentersTurntoDoublingUp.html iehi-feed-63460 Thu, 28 Dec 2017 21:42:05 GMT Zillow: U.S. homes gained $2 trillion in value this year http://implode-explode.com/viewnews/2017-12-28_ZillowUShomesgained2trillioninvaluethisyear.html iehi-feed-63456 Wed, 27 Dec 2017 02:58:12 GMT California renters will come out ahead with new tax plan while homeowners will see a higher tax bill http://implode-explode.com/viewnews/2017-12-26_Californiarenterswillcomeoutaheadwithnewtaxplanwhilehomeownerswi.html iehi-feed-63453 Tue, 26 Dec 2017 15:47:00 GMT China Tightens Overseas Investment To Reduce Risks http://implode-explode.com/viewnews/2017-12-26_ChinaTightensOverseasInvestmentToReduceRisks.html China has followed up earlier restrictions on outbound investment with new regulations on foreign investment by private firms. The 36-point code of conduct for private firms seeks to ensure that overseas deals are rational and legal. This is part of an effort to regulate outbound investment, which had been strongly encouraged between 2012 and 2016, in order to reduce risks.

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Outbound investment reached $170 billion in 2016, but was curtailed at the end of 2016 as yuan depreciation pressures mounted. At that time, authorities cracked down upon companies with fraudulent or "irrational" foreign investment. In addition, this past August, specific categories were created to specify banned, restricted, and encouraged overseas investment industries for mergers and acquisitions. As a result, this year saw a decline in the value of outbound direct investment, dropping 42% year-on-year in the first three quarters of this year. The new measures imposed on private firms will further reduce capital outflows and debt used to finance overseas deals.

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iehi-feed-63450 Tue, 26 Dec 2017 04:36:48 GMT When Trump forbade a Christmas tree -- and other forgotten stories from the ‘war on Christmas' http://implode-explode.com/viewnews/2017-12-25_WhenTrumpforbadeaChristmastreeandotherforgottenstoriesfromthewar.html In the 1980s, his political rise still decades away, Trump bought an old apartment building across the street from Central Park in New York that he hoped to tear down and rebuild as a high-rent tower.

When the longtime residents wouldn't move out voluntarily, the New York Times wrote, Trump hired a management company that essentially ran the building into the ground.

And while Trump threatened to house homeless people in the building, the management company used creative tactics that included covering windows in tin and forbidding Christmas decorations in the lobby.

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Bill O'Reilly aired an exposé in 2004 on how the generic word "holiday" was supplanting traditional "Christmas" language. It would be even longer before Trump demonstrated any real concern about the distinction... While Trump continued wishing "happy holidays" for years, his first use of the word "Christmas" on Twitter appears to have been in 2011 -- shortly after he expressed interest in running for president.

As Bill Murray says in "Scrooged" when transported by the Ghost of Christmas Present to a sub-terranean NYC gutter: "Where are we, Trump Tower?" (classic!)

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iehi-feed-63449 Mon, 25 Dec 2017 15:54:50 GMT New York's vanishing shops and storefronts: 'It's not Amazon, it's rent' http://implode-explode.com/viewnews/2017-12-25_NewYorksvanishingshopsandstorefrontsItsnotAmazonitsrent.html "It's not Amazon, it's rent," says Jeremiah Moss, author of the website and book Vanishing New York. "Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that."

Part of the problem is the changing make-up of New York landlords. Many are no longer mom-and-pop operations, but institutional investors and hedge funds that are unwilling to drop rents to match retail conditions. "They are running small businesses out of the city and replacing them with chain stores and temporary luxury businesses," says Moss.

In addition, he says, banks will devalue a property if it's occupied by a small business, and increase it for a chain store. "There's benefit to waiting for chain stores. If you are a hedge fund manager running a portfolio you leave it empty and take a write-off."

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But there are glimmers of turn-around. Zendell has observed five deals in SoHo in the past month, indicating that landlords are becoming too nervous to sit around. "They helped to create the bubble, but now it's our market."

Renters insist landlords have an investment in the game, either through taking a performance-based interest in the tenant or some other mechanism. Retailers that signed 10-year leases at a high number per sq ft and then had to pay to get out of that lease are insisting on some participation.

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