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NRF is sweet. Its got potential.But I just dont see it ever rising about 9 ot 10.
Capital Trust, Inc. operates as a real estate investment trust in the United States. It specializes in originating and managing credit sensitive structured financial products. The company makes investments for its own account, as well as manages a series of private equity funds on behalf of institutional and individual investors. Its investment program focuses on structured commercial real estate debt investments, including B Notes, subordinate CMBS, corporate mezzanine loans, first mortgage loans, and property mezzanine loans. The company also finances single properties, multiple property portfolios, and operating companies. It has elected to be taxed as a real estate investment trust and would not be subject to federal income tax, if it distributes at least 90% of its taxable income to its shareholders. The company was founded in 1966 and is headquartered in New York, New York.
Capitalist Trust? Thats a paper mill isnt? Or are you talking about another CT?
So, MWM, have you found any other sub dollar or 1 dollar commercial REITS lying around? Im on the hunt for the next GGP and DDR.
That should have been my strategy fo sure!
ive been on ddr and ggp since april,,,,set it and forget it
I've been fascinated with the reits for sometime now...
just pissed i really have not nailed one of them on the way back up, I had a ton of DDR calls that I was one month too early on last summer...
wow,just found this board,,,,,,,,,hehe. stupid me. MWM, knows my 2 favs......im here lookinng for the next ggp and ddr.......anyone have any riets in the pennie area that thing they have a good shot at getting to the double dollar range?
Those four REITs I liked are really doing well!
Excluding NRF...
Link back for chart
Simon makes $10 bln offer for General Growth
9:21a ET February 16, 2010 (MarketWatch)
BOSTON (MarketWatch) -- Simon Property Group Inc. on Tuesday said it has made an offer to acquire General Growth Properties Inc., the real estate investment trust that filed for bankruptcy last year, in a deal valued at over $10 billion, including about $9 billion in cash.
The offer includes a consideration to creditors totaling roughly $7 billion, Simon said.
Shareholders of mall operator General Growth would receive more than $9 a share, including $6 a share in cash, Simon said.
Shares of General Growth closed last week at $9.40. The stock was up nearly 9% in premarket trading Tuesday following the announcement from Simon.
General Growth filed for bankruptcy protection in April 2009 after it was unable to restructure its huge debt load. The mall REIT collapsed after a series of acquisitions funded by debt. It was the biggest real estate failure in history.
Simon on Tuesday said it is prepared to offer General Growth shareholders and creditors Simon equity instead of the cash consideration, in whole or in part, to those who want to participate in the upside of owing Simon stock.
The existing secured debt on General Growth's portfolio of assets would remain in place under Simon's offer, the company said.
"Simon's offer provides the best possible outcome for all General Growth stakeholders. Simon is in the unique position of being able to offer General Growth creditors and shareholders full, fair and immediate value," said Chief Executive David Simon.
"Our offer provides much-needed certainty to conclude General Growth's protracted reorganization process," the CEO said. "We are confident it is the best option for all General Growth constituencies and far superior to any other third-party proposal or stand-alone plan that could be completed."
A committee of General Growth's unsecured creditors has advised Simon it supports its offer.
"Full cash payment to all unsecured creditors and the substantial recovery for equity holders that Simon has proposed would be a great result," said Michael Stamer, counsel for the committee. "We fully support and encourage prompt engagement by the company with Simon."
Simon said its offer is subject to due diligence, which it believes can be completed with 30 days. The deal wouldn't be subject to any financing contingency.
In a letter to General Growth, Simon said the offer is not open-ended, "particularly given the uncertain economic environment that exists today."
Simon shares were up fractionally in premarket action.
Print
My top 4 REITs are holding up well today!
Link bak for the Charts!
Go NRF!
Despite empty stores, commercial real estate rebounding
By RAY ESTRADA — Jan. 15, 2010
Since office vacancies declined in the fourth quarter of 2009 in Santa Barbara, some market observers said that may point to more recovery trends on the South Coast.
However, the loss of revenue felt by government agencies because of recessionary trends such as lost hotel occupancy taxes are still being felt in he region.
“Transaction size increased, and the number if small offices previously available for lease has dropped significantly,” according to a report from Santa Barbara-based Pacifica Commercial Realty. Overall, vacancy rates held fairly constant here on the South Coast, sparing many property owners from the effects of the Great Recession felt throughout the nation.”
Pacifica reported fourth-quarter commercial occupancy rates at 3.8 percent in Santa Barbara, 4.1 percent in Carpinteria and 9.3 percent in Goleta.
“I don’t want to be overly optimistic,” said Brian Johnson, sales agent with Radius Group in Santa Barbara. “But a lot of us a year ago didn’t we’d being doing as good; we thought it might take another six or 12 months.”
Johnson said the upswing in the third quarter of 2009 carried on into the fourth and looks like it will continue into the first three months of this year. “The phone is ringing, an there are deals to be made,” he said.
“It is feared that loan defaults in commercial real estate during 2010 will prohibit the commercial market’s recovery as the economy on a whole begins to rebound,” Pacifica officials said. “Many experts, though, believe that fundamentally, commercial properties do not have the imbalance that forced residential properties into foreclosures.”
Pacifica’s report said that if borrowers can hang onto their properties in the coming months, “rebounding businesses will hire workers and eliminate vacancies and increase commercial property values.”
South Coast commercial investors are seeing better deals because of depressed prices, the report said.
The report highlighted some large fourth-quarter office leases that included: 95,695 square feet by FLIR Commercial Vision, 70 Castilan St., Goleta; 48,483 square feet by Cencal Health, 4050 Calle Real, Santa Barbara; and 2,750 square feet by Lynda.com, 6430 Via Real, Carpinteria.
On the darker side, the Pacifica’s report noted that Santa Barbara municipal sales tax revenue dropped about 17 percent during the first, second and third quarters of 2009. Fourth-quarter statistics are not available yet. For example, the report noted, 2008 third-quarter revenue totaled more than $5.1 million compared to just less than $4.3 million during the same period of 2009.
As the county’s largest commercial area continues to churn, Johnson said look for more large commercial real estate deals on the horizon on Santa Barbara’s State Street.
While a dozen storefronts on State Street are seeking new tenants, large companies such as Deckers Outdoors are looking for better deals on office space. Why not? It appears most State Street-area property owners are offering significantly lower triple-net leases in the $2.50-per-square-foot range as opposed to $3.25 just two years ago.
Another economic indicator contained in Pacifica’s report showed that transient occupancy taxes, or TOT, for Santa Barbara dropped almost 20 percent in June 2009 compared to the same month the year before. That means in June 2008, the city reaped almost $1.3 million in TOT, while it took in about $1 million during the same month of 2009.
December TOT statistics aren’t available yet, buy Santa Barbara’s hotels and motels experienced an 11.9 percent drop in November compared to the same month in 2008. That means Santa Barbara TOT for November 2008 was $770,000 compared to just $678,405 for the same month last year.
Meanwhile, the South Coast’s new lodging construction remains at a stand still with projects such as Fess Parker’s hostel on State Street and Highway 101 and boutique hotel at Cabrillo Boulevard and Calle Cesar Chavez Street both sitting at various stages of unfinished construction.
The beachfront Miramar resort renovation project in Montecito also remains stalled because of a variety of reasons. Demolition or excavation was supposed to begin this month, but county officials said that won’t occur.
However, a new “green and sustainable” 6,500-square-foot, two-story commercial office building is under construction at 201 E. Figueroa St. Designed by architect JM Holliday associates, the building will house executive and law offices since is near court buildings and the police station.
MWM Keep up good working.. I love chart very much.
I look for good dividend with REIT.
GRT continues, last few Q's are showing .40 earnings...
Simon hires Lazard for General Growth bid--sources
Tue Nov 17, 2009 8:56pm EST
* Simon hires Lazard, Wachtell to explore bid
* General Growth is working on its own bankruptcy plan
* Simon would be able to put capital into the company
(Updates with background, recasts, adds byline)
By Paritosh Bansal and Emily Chasan
NEW YORK, Nov 17 (Reuters) - Mall firm Simon Property Group Inc (SPG.N) has hired investment adviser Lazard Ltd and law firm Wachtell Lipton Rosen & Krantz to help it explore a possible bid for all or part of bankrupt rival General Growth Properties Inc (GGWPQ.PK), according to people familiar with the matter.
Simon has held discussions with some of General Growth's creditor groups and has the ability to put some capital into the company, one of these people said. The people asked not to be named because the talks are not public.
General Growth, which filed for bankruptcy protection in April, is in the process of negotiating a stand-alone bankruptcy reorganization plan with its lenders and has the exclusive right to come up with its own plan through late February.
Simon is trying to come up with a strategy to do the deal, discussing various options for how to make a bid and a deal may not happen, these people said.
Lazard declined to comment.
General Growth, the second-largest U.S. mall owner and biggest real estate failure in U.S. history, has underscored the difficulties in the U.S. commercial real estate market, where there are now few sources of available funding amid the credit crisis. The retail real estate sector has been particularly hit hard due to falling rent and rising vacancies because of the U.S. recession and consumer pullback in spending.
Chicago-based General Growth owns or controls more than 200 regional malls, including valuable properties like South Street Seaport in New York, Fashion Show in Las Vegas and Faneuil Hall Marketplace in Boston.
Simon, the largest U.S. mall owner and largest U.S. real estate investment trust, has long been touted as a possible buyer for General Growth. David Simon said earlier this year that his company would consider property purchases or an acquisition of an entire REIT. Simon had access to about $6.3 billion in cash in August.
The case is In re: General Growth Properties Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-11977.
IRS Gives Servicers Flexibility to Modify CMBS Loans
Sep 15, 2009 - CRE News
The Internal Revenue Service has granted servicers of securitized commercial mortgages greater flexibility to extend those loans and otherwise modify their terms.
Effective Wednesday, servicers can extend and change the interest rates and other payment terms on securitized mortgages more than a year in advance of their maturity dates, if they foresee that the loan will not be paid off at maturity.
The IRS revised a rule that had limited servicers from modifying loans that are performing even though the paralyzed debt markets would make it unlikely for the borrower to get the new financing needed to take out the loan at maturity. Doing so would have caused the trusts that own the loans to lose their real estate investment mortgage conduits, or Remic, status, which exempts their entity-level profits from taxes.
Servicers have not been able to modify performing loans until after determining the borrower would be unable to find new financing or other alternatives to avoid defaulting at maturity. Under the IRS rule that changes Wednesday, that determination has been difficult to reach in time to grant the extension that could avert default.
In its rule change, the IRS noted, "It may be possible to foresee the risk of foreclosure even when no payment default has yet occurred."
In addition to extending securitized loans more than a year in advance of their maturities, the ruling also allows servicers to change loans' interest rates and amortization schedules, and forgive some of their principal payment. It also sets detailed criteria that servicers must meet in determining that a loan requires modifications.
The Real Estate Roundtable had been lobbying for the change since last year, noting the stalled credit markets has significantly reduced borrowers' access to new financing to take out maturing loans. Extending the maturity of securitized loans was not a major concern while debt markets were free-flowing before 2008.
In addition to the obvious benefit to the CMBS market, the IRS change is also a property-sales issue since the additional flexibility should help servicers avoid being forced to foreclose on loans and ultimately offer the loans or the properties backing them at discounted prices.
"This change removes a significant disincentive for the revision of commercial mortgages," said Sam Chandan, head of the New York research firm Real Estate Econometrics. "By reducing the cost of managing distress in mortgage portfolios, the adjustment has the potential to ameliorate outcomes for legacy CMBS, in particular."
The IRS revision does not address another Remic change sought by special servicers - the ability to originate loans from within existing trusts to facilitate the sale of foreclosed properties that had backed loans that were securitized through those deals.
Maguire Properties Warns of Loan Defaults
Creditors to Get Seven Buildings With $1.06 Billion in Debt; Vacancies and Falling Rents Pressure Landlords
http://online.wsj.com/article/SB124986079948018087.html#mod=rss_whats_news_us_business
Commercial real estate woes grow
Experts, lawmakers warn of mushrooming crisis in commercial real estate
By Alan Zibel, AP Real Estate Writer
On Thursday July 9, 2009, 11:27 am EDT
WASHINGTON (AP) -- Owners of shopping malls, hotels and offices are defaulting on their loans at an alarming rate, and the commercial real estate market is not expected to hit bottom for three more years, industry experts warned Thursday.
"The commercial real estate time bomb is ticking," said Rep. Carolyn Maloney, D-N.Y., who heads the congressional Joint Economic Committee.
Delinquency rates on commercial loans have doubled in the past year to 7 percent as more companies downsize and retailers close their doors, according to the Federal Reserve. Small and regional banks face the greatest risk of severe losses from commercial real estate loans.
The commercial real estate market's fortunes are tied closely to the economy, especially unemployment, which hit 9.5 percent in June. As people lose their jobs, or have their hours reduced, they cut back on spending, which hurts retailers, and take fewer trips, which hits hotels.
Funding for commercial loans virtually shut down last year as the financial system unraveled. Industry executives say financing is still extremely difficult to obtain, even for financially healthy properties.
While that may seem like an abstract problem, it has real-world consequences. New construction projects have come to a virtual standstill. That means reduced tax revenue for local governments and fewer construction jobs, said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, an industry group.
The commercial property industry is "not going to turn around until consumers and businesses start spending money again," he said.
Total losses in securities backed by commercial property loans could be as high as $90 billion in the coming years, according to Deutsche Bank analyst Richard Parkus. He says even more losses -- up to $140 billion -- are expected from construction loans made by regional and local banks, rather than those sold as securities held by investors.
"We believe the bottom is several years away," Parkus told lawmakers.
In April, the second-largest owner of shopping malls in the nation, General Growth Properties Inc., buckled under $27 billion in debt and filed for Chapter 11 bankruptcy protection.
And the pain is spreading throughout the economy.
GE Capital, the financial arm of the conglomerate General Electric Co., has seen its profits from commercial real estate snuffed out recent quarters.
It went from making $476 million in the 2008 first quarter from its portfolio of office buildings, retail centers and manufacturing facilities to a loss of $173 million in the first quarter of this year and warned that losses on its commercial real estate loans and property holdings could reach $6 billion this year.
At the hearing, a Federal Reserve official said the central bank is paying extra attention to banks' books as losses from sour commercial real estate loans keep mounting.
Jon Greenlee, associate director of the Fed's division of banking supervision, told the panel that the central bank has stepped up training of its bank examiners so they are ready to deal with rising losses from the commercial real estate industry.
AP Business Writer Stephen A. Manning contributed to this report.
America's Most Endangered Malls
By Rick Newman
On Friday June 26, 2009, 1:58 pm EDT
http://finance.yahoo.com/news/Americas-Most-Endangered-usnews-1952033275.html?x=0&.v=1
Birmingham's Century Plaza mall was a consumer mecca when it opened in 1971, drawing shoppers from outlying suburbs and even from other states. Over the years, however, people moved outward from central Birmingham, and new shopping centers sprouted around them. Sales at Century Plaza declined. Three of the mall's four big "anchor" tenants eventually left, and smaller retailers followed. By 2008, Century Plaza was a shadowy hulk with more shuttered stores than open ones. Then the last anchor tenant, Sears, announced it was leaving. The mall finally closed for good in early June.
[Slideshow: America's Most Endangered Malls]
Malls have a natural lifespan, as population centers shift, architecture evolves, and shopping habits change. But a sharp recession is clearly accelerating the demise of vulnerable retailers--and some of the shopping centers they inhabit. Plunging sales are one obvious reason. Many retailers are also saddled with heavy debt taken on in recent years to fund aggressive growth. And the credit crunch has made cash scarce for firms that need it most.
Those tough conditions have already driven retailers like Circuit City, Linens 'N Things, and Steve & Barry's out of business. Other chains are closing stores and slashing costs as they fight to survive. General Growth Properties, a Chicago firm that operates more than 200 malls--and owns the remnants of Century Plaza--declared bankruptcy in April and is working on a restructuring plan.
[See America's most profitable malls.]
The churn is transforming America's retail landscape. "During times like this, good malls tend to get better and bad malls tend to get worse," says Steve Sterrett, chief financial officer of Simon Property Group, the nation's largest mall operator. The first sign of trouble is often the departure of department stores and other anchor tenants, especially if those spaces stay vacant. High-quality, name-brand merchants often follow, with discounters--or nobody--replacing them. Shoppers sense the ennui, and gravitate toward malls that feel more vibrant, which only deepens the distress at troubled properties. By some estimates, about 10 percent of the America's malls could close within the next few years.
To gauge which malls are in trouble, U.S. News analyzed data from Green Street Advisors, an investment research firm in Newport Beach, Calif., that specializes in publicly owned real estate companies. Their data includes occupancy rates, sales per square foot, and quality grades for about 650 of America's biggest shopping centers. The average property in the data set has sales of about $420 per square foot and an occupancy rate of 92 percent, good for an A- grade.
[See how to tell if a mall is in trouble.]
The malls at the bottom of the list earn grades of C- or D, with falling sales at many stores and a high proportion of discount retailers that tend to draw the least lucrative consumers. As a rule of thumb, malls with sales of $250 per square foot or lower are struggling. "It's hard for many retailers to be profitable at $250," says Jim Sullivan of Green Street. And nine out of 10 malls at the bottom of Green Street's list have sales at or below that threshold.
The data we used doesn't cover strip malls and other shopping centers owned by private firms, which tend to be smaller, less profitable, and more vulnerable to a bad economy than regional malls. But the following 10 malls still represent bleak snapshots of some of the weakest spots in the nation's retail economy.
Century III Mall, Pittsburgh, Pa. (Occupancy rate: 70 percent; sales per square foot: $200*). About 30 of the 120 stores at this suburban Pittsburgh mall have closed recently, including anchor tenant Steve & Barry's and KB Toys (both of which have declared bankruptcy), Old Navy, Ruby Tuesday's, and Macy's Furniture Outlet. The 30-year-old complex targets value shoppers but competes with nearby discounters like Wal-Mart and Kohl's. Other area malls with more upscale stores are doing better. Century's owner, Simon Property Group, may be looking to sell Century III.
Chambersburg Mall, Chambersburg, Pa. (62 percent; $234). Sales have held steady over the past year, but a bucolic location 60 miles southwest of Harrisburg makes this sleepy mall a perennial underperformer. K.B. Toys, Value City, and B. Moss closed their stores after declaring bankruptcy. Newcomers include discounters like Bolton's and Burlington Coat Factory, which are likely to generate little excitement.
[See some restaurants that are on the ropes.]
Crossroads Mall, Omaha, Neb. (68 percent; $200*). Shoppers are fleeing this 50-year-old mall in central Omaha for suburban shopping centers that feel safer and more vibrant. The departure of Dillard's in 2008 left one of three anchor slots vacant. The Zales and Gordon's jewelry chains are also gone, along with Gap and most of the mall's food-court restaurants. According to press reports, owner Simon Property Group recently put the property up for sale. A buyer could try to resuscitate the mall or convert it to a different kind of retail or commercial complex.
Hickory Hollow Mall, Nashville, Tenn. (82 percent; $187). Dillard's has left, and other departed tenants include Linens 'N Things and Steve & Barry's, two of the biggest casualties of the recession. Two of four anchor slots are vacant, and the theater recently switched from first-run movies to late-run discount flicks. With a lack of retailers, the mall may convert some of its space to office use. One new tenant: the local police, who recently opened a recruiting station at the mall.
Highland Mall, Austin, Tex. (61 percent; $150*). While gleaming new stores have been springing up in some parts of Austin, this 38-year-old mall along I-35 has struggled to keep stores open--and avoid embarrassing controversies. Anchor JCPenney left in 2006, and this year Dillard's sued the mall's owners, claiming they let the mall become a "ghost town." The owners countersued, claiming that the suit is part of a scheme to help Dillard's get out of its lease early.
Palm Beach Mall, West Palm Beach, Fla. (82 percent; $250*). A year ago, the plan was to renovate this fading 42-year-old property. But that changed with the recession. Anchor tenants Dillard's and Macy's bolted within the last year, and in April, the mall's owners defaulted on a big bank payment, triggering a foreclosure lawsuit that could force the sale of the property. The power company even threatened to shut off the mall's electricity, but the bill was paid at the last minute. While remaining tenants like Sears and JC Penney await the outcome of litigation, other nearby malls are adding space and gaining customers.
[See why more companies are likely to fail this year.]
SouthPark Mall, Moline, Ill. (84 percent; $225). The owners spent a couple of years trying to sell this Quad Cities landmark, built in 1974, but they finally gave up late last year. Local officials would like to see the aging property converted to a more modern "lifestyle mall" with boutiques, lounging areas, and an upscale ambience. But modest local incomes probably can't support the major investment that would require. For now, the only upgrades at SouthPark are the construction of a few strip centers on "outlots" surrounding the mall, to be occupied by cheap restaurants and local service businesses.
Southridge Mall, Des Moines, Iowa. (84 percent; $168). The 2007 arrival of Steve & Barry's was supposed to mark a revival for this 34-year-old complex on Des Moines's South Side, which has been losing shoppers to more gentrified suburban malls. Then the discounter went bankrupt and closed its stores. The mall's owners have been trying to sell the property, and city officials have been working on ways to revitalize the entire area. They better hurry: At $168 per square foot, Southridge's sales are among the lowest for big malls.
Towne Mall, Franklin, Ohio. (49 percent; $207). This aging structure between Cincinnati and Dayton has been troubled for years, as the owner, CBL & Associates, and local officials have deliberated over whether to tear it down and build something more modern. Towne Mall has one of the highest vacancy rates of any operating mall, with more closed stores than open ones. A decision on the mall's fate is supposed to come soon.
Washington Crown Center, Washington, Pa. (70 percent; $265). Three of its biggest retailers--Macy's, Bon-Ton, and Gander Mountain--have suffered deep losses as consumers have cut spending. The mall's owner, Pennsylvania Real Estate Investment Trust, is revamping some of its properties--but not Washington Crown Centre, one of the weakest malls in its portfolio. PREIT could end up selling some of its subpar properties, which leaves this mall vulnerable.
Best of luck to you as well!
Summer will tell the story IMHO. Hope ur doing good Mike.
All the best
We'll see, they have been calling for the commercial real estate bubble to explodes for many moons now...
'Vultures' circling commercial properties
Real estate investors anticipating skid in nonresidential sector
http://www3.signonsandiego.com/stories/2009/jun/22/1b22vulture225820-vultures-circling-commercial-pro/?business&zIndex=120528
By Mike Freeman, Union-Tribune Staff Writer
2:00 a.m. June 22, 2009
Now that the housing crash appears to be nearing bottom, all eyes have turned to offices, hotels and other commercial real estate as the next properties that might be poised to collapse.
So-called vulture investors have begun popping up in search of troubled commercial buildings, which they hope to acquire at steep discounts.
In San Diego, the latest of these investors is Cypress Realty Advisors LLC, founded by commercial real estate veterans Ron Lack and Mark Wayne.
They say they have commitments from wealthy investors – they wouldn't disclose the amount – to help fund the purchases of offices and other distressed commercial properties in San Diego County, Orange County and Silicon Valley.
“Look at anybody who purchased commercial real estate in the last three years, 2005 to 2008. They're upside down,” said Wayne, a former broker with Cushman & Wakefield. “Their equity has evaporated, their occupancy has evaporated, and their debt is maturing.”
Cypress isn't alone. Pathfinder Partners of San Diego has been buying troubled mortgages backed by multifamily projects and office buildings for more than a year.
It initially raised $5 million to get started. Last month, it raised a $50 million fund to purchase additional mortgages. Recent acquisitions include the first mortgage on the 62 remaining units in the 102-unit Mer Soleil condo project in Otay Ranch. It also bought the mortgage on a 44,000-square-foot office building in Sorrento Valley.
“We're seeing deals,” said Lorne Polger, a real estate lawyer and co-founder of Pathfinder Partners. “But we haven't seen the pricing that is attractive to us. That's starting to change.”
Cypress and Pathfinder say they're early to the market for distressed commercial property. Steps by the federal government to shore up banks and loosen credit markets may help rescue commercial landlords – leaving vulture funds with slim pickings.
But firms like Cypress and Pathfinder are betting that the problems in commercial real estate are large enough – and that banking regulators won't let them linger on lender balance sheets – that attractive deals will hit the market within the next year or two.
Driving the predictions of pain for commercial landlords are crumbling business fundamentals and the freezing up of credit markets.
Demand is down in everything from offices to hotels to retail buildings. The result is higher vacancy rates and lower rents. Because commercial buildings are valued on cash flow, they often are worth less today than they were two or three years ago.
Owners of the tony W Hotel in downtown San Diego said this month they would default on a $65 million mortgage because the hotel's value has plunged below the loan amount.
On top of that, the credit crunch has dried up the market for commercial mortgage-backed securities. About $170 billion of commercial mortgages held by nonbank investors come due this year, according to the Mortgage Bankers Association.
That could make it difficult for landlords to refinance. Delinquencies on commercial mortgage-backed securities are at record highs of 1.85 percent in the first quarter, said Jamie Woodwell, the bankers association's vice president of commercial real estate research.
Pathfinder and Cypress are focusing on smaller buildings, in the $5 million to $20 million range. They eventually expect to be able to attract larger, institutional investors to their funds to buy bigger commercial buildings.
Others aren't so sure. They wonder if the dire predictions for commercial real estate may be overblown, and they suspect the very low prices that vulture buyers seek won't be as widespread as some experts believe.
“I'm not saying there won't be opportunities and there won't be very attractive pricing, but it won't come on fast,” said Brian Driscoll of Grubb & Ellis/BRE Commercial's Capital Markets Group. “It's going to stretch out for a long period of time.”
Alex Zikakis, president of Carlsbad-based real estate investment firm Capstone Advisors, agrees that the timing of a possible commercial real estate bust is tough to predict.
Zikakis compared the dire forecasts for commercial buildings with what has happened in housing construction and land purchases.
Even though the housing market fell apart in 2006, some banks still haven't written off large chunks of residential land and housing development loans they made during the boom, he said.
“The real question to me is, are the banks going to keep extending everybody's debt trying to bridge through this, much like they're trying to bridge though the home-building and land-development industries?” Zikakis said.
FYI on LEN
LEN. Vote may give boost to housing developer
http://www3.signonsandiego.com/stories/2009/jun/02/business-briefing/?business
A bankruptcy court in Delaware ruled to allow creditors to vote on a proposal that would take the massive Southern California residential development Newhall Ranch out of bankruptcy.
If endorsed by creditors and confirmed by the court, the proposal would allow home builder Lennar to buy 15 percent of the Newhall Ranch project along with other properties for $140 million. Lennar had a 16 percent stake in the developer of Newhall Ranch before the developer sought Chapter 11 protection.
Other equity holders, including the California Public Employees Retirement System, would see their investments wiped out in the deal. The pension fund paid nearly $1 billion for a majority stake in the venture.
Associated Press
Simon Says Things Will Get Better (SPG, GGWPQ, KIM, TCO, BXP, VNO)
May 25, 2009 | By Greg SushinskyThe number one shopping mall REIT, Simon Property Group (NYSE: SPG), sees better things ahead despite slashing its dividend after its recent first-quarter earnings report and the current difficulties in the real estate market. The REIT's FFO, or funds from operation, the customary measure for REITs rather than earnings per share, showed improvement, mostly on lowered costs, but the company still trimmed its dividend to conserve cash through these challenging times. But is the company’s mild optimism for the economic climate for REITs next year warranted?
IN PICTURES: Eight Ways To Survive A Market Downturn
Perilous Malls
General Growth Properties (OTCBB: GGWPQ), the nation's second-largest mall owner, filed for Chapter 11 bankruptcy protection on April 16, 2009, a casualty of the potent downward forces in the recession, with the loss of shoppers, tenants and difficulties in the credit markets all converging to severely pressure commercial REITs. In comparison, Simon Property, which saw its FFO climb to $476.8 million ($1.61 per share) from $420.1 million ($1.46 per share), has obviously performed well despite the brutal conditions for shopping center REITs. Simon had previously gone to a combination cash and stock dividend (which REITs are now allowed to do), the total value of which was 90 cents a share, but was lowered to 60 cents per share. The intent, Chief Executive David Simon said, is to get through the severe downturn and eventually "restore the full cash dividend". The company recently had a stock offering and lowered its full-year FFO outlook.
Strip Centers Hurt as Well
Kimco Realty Corp. (NYSE: KIM), which operates strip centers, had to deal with tenant bankruptcies and an occupancy rate of 92.6%, due to the harsh economy, which dampened their FFO to 43 cents a share from a year ago 64 cents, or $117.8 million, down from $164.4 million. With consumers pulling away from large malls more to the strip centers in recent years, Kimco would perhaps have been expected to fare better.
Taubman Centers Inc. (NYSE: TCO), another large mall operator, saw a nearly 3% increase in its year over year first-quarter FFO which, excluding special charges, would be a 7.4% increase from the quarter ended March 31, 2008. Taubman's occupancy rate ending the quarter for March 31, 2009 was 88.6%, so their strong FFO performance in the face of tenant bankruptcies is noteworthy.
The depth of the economic downturn has seen both the strip centers and malls strongly affected. Given consumer wariness, it's not clear how soon either will rebound. For the large mall operators, though Simon and some others are clear exceptions, the fate of REIT giant, General Growth Properties, may have signaled serious permanent damage to the large mall concept.
Office REITs Feeling the Pressure Too
Boston Properties (NYSE: BXP), owner of prime office buildings on the east coast, saw its FFO for the quarter rise 3%, but still plans to cut its dividend to 50 cents from 68 cents per share, a move that would save $100 million. Boston Properties' move is a proactive one, as the company is not under the kind of stress some of the shopping center REITs are. Vornado Realty (NYSE: VNO), a Washington and New York office building REIT, reported a slight increase in FFO, excluding special charges. The softer New York market was offset by the stronger Washington one, showing, as does Boston Properties' performance, that there is currently more resilience in the office building market than the shopping center and mall market.
While the office REITs have not experienced the dramatic pressures that the shopping center REITs have, the credit market scarcity has dampened prospects in both areas, at least for expansion, if not survival for the weaker players. There is an estimated $1 trillion credit exposure to the commercial real estate market, about half of what the consumer or residential credit market had been. But values haven't plummeted for commercial real estate in the same way, though the business has been highly leveraged in the last few years. Look for an earlier and stronger rebound in the office building REITs than the shopping center REITs, as the office sector has held up better throughout the economic downdraft.
So Should You Buy?
That’s always the question for investors. Neither Simon's nor the other REITs move to a combination cash and stock dividend has been appealing, as income investors often buy REITs for their cash yield. Although the stock prices have been beaten into the ground, this doesn't necessarily make these companies attractive yet. It might be better to see FFO increases for a couple of quarters, wait until the cash dividends are fully restored and keep an eye on both the debt load as well as their access to the credit market. Though Simon is optimistic about their near-term future, we're not yet convinced. Be a bit more cautious and monitor these REITs and real estate market conditions; watching and waiting seems to be the best course for now. (Learn about how REIT valuations in our article: Basic Valuation Of A Real Estate Investment Trust)
REITs Seize a Chance to Deleverage, at Discounted Prices
Top Players Like ProLogis and iStar Buy Back Their Debt Below Face Value
In the race to shed debt, several real-estate investment trusts have come up with a new approach: They are buying back their public bonds at steep discounts.
While bond buybacks are just one of many deleveraging methods REITs are pursuing, analysts said the bond buying can provide the biggest impact per dollar. "If the bond market perceives that there is high credit risk and they're willing to sell bonds back to the company at 50% of face value, then the company can use $1 to retire $2 of debt," said David Loeb, a REIT analyst with R.W. Baird & Co.
DDR is gonna go here soon, it should be fast when it happens...
Maybe time for an upgrade...
Loaded the boat on DDR calls she's ready!
DDR one to watch, has a lot of room to run imo...
Developers Diversified tops outlook, pares debt
Fri Apr 24, 2009 1:05pm EDT
By Ilaina Jonas
NEW YORK, April 24 (Reuters) - Shopping center owner
Developers Diversified Realty Corp (DDR.N) posted
better-than-expected quarterly results and kept its forecast,
despite a decline in occupancy and sluggish rent upticks,
sending its shares up nearly 26 percent. The company, which owns more than 700 shopping centers, has
been hard hit by bankruptcies of tenants such as Goody's,
Circuit City Stores Inc (CCTYQ.PK), Linens 'N Things Inc
[LNNHDL.UL], and Steve & Barry's. Investors have been highly concerned about its debt --
roughly $4.4 billion maturing through 2012. Developers Diversified, which owns and builds shopping
centers anchored by big-box and discount department stores, said
it has addressed the $103 million of debt maturing for the
remainder of 2009 and $800 million maturing in 2010. It has been trying to rehabilitate its balance sheet by
raising capital from new investments from the German real estate
owner Alexander Otto and his family, repurchasing debt at a
significant discount, selling assets, mortgaging property and
paring down the cash portion of its dividend. "We are confident in stating we will be able to meet all of
our near-term debt maturities with these initiatives and look
forward to emerging from this challenging part of the cycle as a
stronger, more focused and lower leverage company," David Oakes,
chief investment officer, told analysts on a conference call. For the first quarter, Developers Diversified reported funds
from operations of $140 million, or $1.08 per share, compared
with $96.3 million or $0.80 per share in the year-ago period. FFO removes the profit-reducing effect of depreciation, a
noncash accounting item. Excluding impairment-related charges and gains from
repurchasing debt at a discount and from property sales, FFO was
66 cents a share, well above the 62 cents a share analysts on
average had expected, according to Reuters Estimates. Developers Diversified maintained its forecast for 2009 FFO
of $2.10 to $2.25 per share, excluding items, higher than the
$1.97 analysts had forecast. Shares were up 46 cents or 13.1 percent at $3.96 on the New
York Stock Exchange on Friday afternoon, off an earlier high at
$4.40. The retailing sector has been a major casualty of the U.S.
recession, as consumers have sharply curtailed spending. That
has forced several retailers out of business, leaving stores
empty. Other retailers have curbed their expansion plans and
played hardball while negotiating new leases. During the first quarter, Cleveland, Ohio-based Developers
Diversified saw net operating income for centers open more than
a year fall for the first time in its history, off 2.2 percent.
Occupancy dropped to 88.4 percent from 95.8 a year ago, as
bankruptcies mounted. New leases called for rents that were on average just
slightly more than a half percent higher than those that
expired. Still, Developers Diversified was able to sign leases for 2
million square feet of space, of which 570,000 square feet were
for new leases.
(Reporting by Ilaina Jonas, additional reporting by Jennifer
Robin Raj in Bangalore; editing by Lincoln Feast and Matthew
Lewis)
Real Estate Investment Trusts
Residential http://biz.yahoo.com/p/445mktd.html
Retail http://biz.yahoo.com/p/446mktd.html
Industrial http://biz.yahoo.com/p/444mktd.html
Office http://biz.yahoo.com/p/441mktd.html
Diversified http://biz.yahoo.com/p/440mktd.html
A real estate investment trust, or REIT, is a company that owns, and in most cases, operates income-producing real estate. Some REITs finance real estate. To be a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
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