Archive for August, 2007

Bush to Offer Aid to Homeowners

by David Bodamer August 31st, 2007

Offering federal help for strapped mortgage holders, President Bush is proposing to aid hundreds of thousands of borrowers hard hit by the housing slump.

The president on Friday was to talk about several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.

The official said Bush will direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders get services and products they need to keep them from defaulting on their loans. The official spoke on condition of anonymity to discuss details of the initiatives ahead of the presidential event.

Bush also planned to:

- Urge Congress to pass Federal Housing Administration overhaul legislation that would give the FHA more flexibility in assisting mortgage holders with subprime mortgages.

- Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.

- Call for rigorously enforcing predatory lending laws and strengthening lending practices.

More details here.

(Link via Real Estate Bloggers)

1 Comment Related Topics: News, Retail, Trends |

Market Corrections and Real Estate

by David Bodamer August 31st, 2007

NetGain Real Estate has a new essay up looking at the correlations between market corrections and real estate

What should real estate investors do? Follow a simple three-point program. Although there are exceptions to every rule, this program applies to most real estate.

1. After consideration of reasonable market debt (40% to 70%), does the property under consideration have cash flow (not including depreciation and non recurring expenses)? If not, discard the property and move along to the next one.

If number one passes muster, then move to number two.

2. Determine the quality of income. Expenses are very important and need to be carefully examined, but the success or failure of most properties will ultimately be determined by its income. The quality of income means exactly what it says. How sound is the income? What is the financial strength of the lessees? How committed are the lessees to staying at the property? How efficient (financially) is it to replace a lessee?

If number two passes muster, then move to number three.

3. What is the future growth of the income stream? Do the leases have annual bumps? Will lease increases be consistent with the market or will negative gaps develop? Are there sound reasons for believing that current and future lessees would pay more rent?

No Comments Related Topics: Commentary, Finance, Investment, News, Retail Real Estate |

Starbucks Two-Fer

by David Bodamer August 30th, 2007

A&P and Starbucks have reached a deal to bring in-store cafes to A&P’s new upscale concept.

A&P will operate the Starbucks shops under a licensing deal. The first locations are set to open in New Jersey in November. The company said the agreement covers select A&P Fresh and Gourmet/Fine Foods stores in the Northeastern United States. It was not immediately available to comment on how many stores would add Starbucks locations.

Meanwhile, Starbucks is also making its move into Russia.

No Comments Related Topics: News, Retail |

Carrefour Sells the House

by David Bodamer August 30th, 2007

The world’s biggest retailer after Wal-Mart is finally tapping the property market to bring up some cash for its shareholders. On Thursday France’s Carrefour announced it would sell a chunk of its enormous real estate portfolio through an initial public offering next year and would also sell other assets to fund a huge share buyback.

Shares in Carrefour were up 33 euro cents (45 cents), or 0.6%, at 52.47 euros ($71.42) in Thursday afternoon trading in Paris.

Carrefour said its real estate unit, Carrefour Property, made up of 280 hypermarkets and 540 supermarkets, was worth between 20 billion euros ($27.2 billion) and 24 billion euros ($32.6 billion). The company would keep hold of 80% of the unit but would sell the other 20% as shares for around 3 billion euros ($4.1 billion) between 2007 and 2008.

More at Forbes.

No Comments Related Topics: International, News, Retail, Retail Real Estate |

FBI Investigates String of Bomb Threats

by David Bodamer August 30th, 2007

Large grocery and discount stores across the country have been targeted by a caller who threatens to blow up shoppers and workers with a bomb if employees fail to wire money to an account overseas, authorities said.

Frightened workers have wired thousands of dollars — and in one case took off their clothes — to placate a caller who said he was watching them but may have been thousands of miles away. The FBI and police said Wednesday they are investigating similar bomb threats at more than 15 stores in at least 11 states — all in the past week.

“At this point, there’s enough similarities that we think it’s potentially one person or one group,” FBI spokesman Rich Kolko said from Washington.

No one has been arrested, no bombs have been found, and no one has been hurt, though the calls have triggered store evacuations and prompted lengthy sweeps by police and bomb squads.

Link here.

No Comments Related Topics: News, Security |

China Alters Foreign Investment Rules

by David Bodamer August 29th, 2007

China is tightening its grip once more on foreign investors in Chinese real estate, banning them from borrowing offshore in the latest effort to tame property prices and cool the economy.

The new rule, set out in a circular from the State Administration of Foreign Exchange , could squeeze foreign investors who take advantage of lower interest rates outside China.

Some may find it especially difficult to fund projects as Beijing has told its banks to cut back on loans for the construction industry. The central bank ordered Chinese banks to stop lending for land purchases as far back as 2003.

“The only alternative is to fund the entire equity,” said Andrew McGinty, a partner at the law firm Lovells in Shanghai.

More at China Daily.

(Via a long and interesting post at OverseasPropertyMall.com)

No Comments Related Topics: International, Investment, News, Retail Real Estate |

Forget Curfews. Try Mosquitos.

by David Bodamer August 29th, 2007

As we’ve documented before, an increasing number of U.S. mall owners are adopting curfews to control teen populations at their properties. But here’s an interesting solution being tried in Canada.

It’s called the ‘Mosquito,’ but a security device new to Canada actually chases away humans – of the teenage persuasion.

Two months ago, Vancouver-based Dynatrac Systems Inc. bought the distribution rights for the ‘Mosquito’ from its makers, Compound Security Systems (CCS), based out of Britain.

According to CCS, the Mosquito emits a high frequency sound that people older than 25 can’t hear because of natural hearing loss.

“From what I understand, it’s a very, very annoying sound,” said Dynatrac spokesman Michael Gibson.

Gibson said a major convenience store chain is testing the device in three of its stores in B.C. and is finding that it scatters loitering youth within four or five minutes of being exposed to the sound.

More here.

For previous entries on mall curfews:

Retail Traffic also reported on the issue in March.

No Comments Related Topics: Management & Leasing, News, Quirky, REITs, Security |

Inside China’s Malls

by David Bodamer August 28th, 2007

For a closer look at China’s sizzling economy, walk the marble floors of Beijing’s latest luxury mall. From its Japanese-style food court selling $4 chocolate éclairs to its glittering floors of branded international fashion, Shin Kong Place is a palace of conspicuous consumption.

The only thing missing, on a sizzling summer afternoon, was customers. Sales staff idled at display racks as a trickle of young visitors looped around the frigid mall. Most were content to window-shop, dreaming of the day when they could afford to drop $100 on a tassled tote bag. “These prices are too expensive. People can’t afford it,” says Xu Tao, a car repairman who was visiting with his girlfriend.

As investors continue to pour money into malls, analysts say the signs of a real estate bubble are growing, as are predictions that some retailers may be heading for trouble. Empty malls are just one indicator of an overheating economy – growing at its fastest clip in over a decade – that is proving hard to cool.

More here.

For our take, check Inside the Chinese Box, from our May issue.

No Comments Related Topics: Commentary, Development, International, News, REITs, Retail Real Estate, Trends |

Conduit Loan Assumption Nightmares Pt. II

by David Bodamer August 28th, 2007

SimpleRe has an update on his quest to get a conduit loan assumption approved in order to sell a property.

My original frustration was that they were moving so slowly. On 8/15/07, the day after my last post about this matter, I started calling around to see if I could get an ally within Key Bank to exert some pressure. To my pleasant surprise that same day I received a call from the head of the Transactions Group in Dallas before any of my acquaintances within Key had a chance to call or email them. It turns out that the management is competent and had, on their own, realized that my file was languishing and reached out to me to assure me that they were prioritizing it. They told me that it would soon be passed from their hands into the hands of the Special Servicer. In fact, they said it should all be written up and passed along by Monday, August 20th.

So far so good. I had a smile on my face. I couldn’t believe my good fortune.

But then things took a turn for the worse. On Monday the 20th both the Buyer and I get a last minute request for some additional information. I was perturbed because it was information that they could have requested weeks ago if only they had reviewed the file more carefully at some point in the first 14, 21, or even 30 days.

Now today, a week later, our underwriter calls the Buyer to tell him she is not inclined to approve the assumption. I’m blown away. Her reason is that the Buyer doesn’t have the experience needed to make her comfortable with him doing his own property management.

Read on. It gets better.

I wonder if this is reflective of conduit lenders new underwriting standards. A lot has been written of late about conduit lenders repricing loans and dropping some of the more generous provisions that were available in recent years. Here, I wonder if there’s some hesitancy on the lender’s part to let someone assume a loan that they don’t have a prior relationship with as a way of reducing risk.

Update: There’s another update on the saga.

The original post can be found here.

1 Comment Related Topics: Commentary, Finance, News |

Wal-Mart’s Small Idea

by David Bodamer August 28th, 2007

Job postings on Wal-Mart Stores Inc. ’s Web site are not necessarily a sign that the world’s largest retailer is preparing a new, smaller-store format to respond to changing shopper patterns and the impending U. S. arrival of No. 1 British retailer Tesco PLC, the company said Monday.

Then again, the spokesmen said, the company is always evaluating possible changes. Four recent job postings mention store formats and design.

Tesco is preparing to open small-scale stores in California, Arizona and Nevada under the banner Fresh & Easy Neighborhood Markets. The company goes head-to-head with Wal-Mart’s Asda chain in the United Kingdom.

Link.

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