Archive for January, 2008
by David Bodamer January 2nd, 2008
NREI reports on a drop in the latest S&P/GRA Commercial Real Estate Indices updated through September.
Monthly returns for a national index of commercial properties posted a negative 0.8% in September, the first monthly decline since November 2006, Standard & Poor’s reported on Dec. 18 when it released September results of its S&P/GRA Commercial Real Estate Indices. The month’s decline marked a reversal of August’s 1.1% gain and a 0.6% increase reported in July.
On a rolling 12-month basis, the national index still showed a positive 5.1% return in September. Yet that rate of return was down more than a full percentage point from summer figures, including annual returns of 6.6% in June, 6.4% in July and 6.2% in August.
“On a national scale, annual returns appear to be speeding up in their rate of deceleration,” says David Blitzer, managing director and chairman of the Index Committee at Standard & Poor’s. September results of the indices revealed “annual returns at levels not seen since early 2004,” Blitzer added.
Previous posts on the S&P/GRA Indices can be found here, here and here.
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by David Bodamer January 2nd, 2008
Macy’s Inc., the owner of its namesake chain and Bloomingdale’s, said Friday that it would close stores deemed to have inadequate sales and eliminate 899 jobs.
Macy’s will shut locations in Akron, Canton and North Randall, Ohio; Lake Charles, La.; Riverdale, Utah; Indianapolis; Oklahoma City; Houston; and Dallas. Final clearance sales will begin in the next few weeks, the retailer said.
The company will operate 815 Macy’s after shutting the stores, all of them locations the chain acquired when it bought May Department Stores in 2005, a spokesman, Jim Sluzewski, said. The retailer’s sales growth has been hurt by the former May stores, which were converted to the Macy’s name last year, analysts said.
“They are certainly muddling through, but not muddling through very well,” Patricia Edwards, a portfolio manager at Wentworth, Hauser & Violich in Seattle, said of the merger. “It’s a big bite to chew off, and these customers are used to different things.”
Link.
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by David Bodamer January 2nd, 2008
With only five days left before the Terrorism Risk Insurance Act was set to expire on Dec. 31, 2007, President George Bush signed into law legislation that reauthorizes the federal backstop for seven years.
Some key provisions of HR 2761 or the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007 include extending the current program for seven years; eliminating the distinction between foreign and domestic terrorism; and requiring the U.S. General Accountability Office (GAO) to conduct two studies. One study to address the issue of providing terrorist insurance coverage for nuclear, biological, chemical or radiological (NBCR) events and how best to expand such coverage; and the other — to be completed in six months — to examine the issue of high-risk areas in the United States that are faced with unique capacity constraints. Furthermore, the bill makes adjustments to the current mandatory recoupment requirements of the TRIA program through the use of accelerated policyholder surcharges during the first four years of the seven-year extension (2008-2012).
“We are pleased that President Bush has signed into law the Terrorism Risk Insurance Program Reauthorization and Extension Act of 2007, which reauthorizes the Terrorism Risk Insurance Program for seven years, through Dec. 31, 2014,” said Joseph Annotti, senior vice president of the Property Casualty Insurers Association of America, in a written statement. “This seven-year extension brings unprecedented certainty and stability to the terrorism insurance market and keeps in place an extremely successful and important public/private partnership that helps commercial insurance buyers and the entire economy protect themselves from the financial devastation of a future terrorist attack.”
The bill was signed by the President on Wednesday aboard Air Force One.
Link.
Related Topics: Management & Leasing, News, Retail Real Estate |
by David Bodamer January 2nd, 2008
The pre-holiday blitz is over. ICSC published the data for same-store sales through Dec. 29 (pdf). During the last week, sales were up 2.3 percent over the same period last year–a bit weaker than the prior week’s figure. Overall, sales look to be in-line with ICSC’s projection for a 2.5 percent gain in same-store sales during the holiday shopping season.
Through Dec. 29, the weekly year-over-year figures look like this:
| Week |
YOYGain |
| Dec. 1 |
3.1% |
| Dec. 8 |
2.3% |
| Dec. 15 |
2.1% |
| Dec. 22 |
2.8% |
| Dec. 29 |
2.3% |
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by David Bodamer January 2nd, 2008
As 2008 begins, evidence is building that the luxury market is losing its luster.
Neiman Marcus Group Inc. characterized the environment as “somewhat challenging” and is offering an extra 25 percent off already reduced designer merchandise through Friday. Coach, the highflying leather goods firm, anticipates its smallest fourth-quarter gain in six years and uncharacteristically lowered prices on some handbags just before Christmas. Sales at Nordstrom have stumbled as fewer shoppers reached for the stores’ expanded assortment of designer brands. And even Starbucks’ “affordable luxury” allure has cooled as measured by the first-ever drop in visitors to the coffee chain’s U.S. stores.
While the triple threat of declining housing values, tighter credit terms and rising energy prices have weighed most heavily on the average consumer, taken together the events have created “ennui” among luxury shoppers that is starting to put a damper on their spending, according to Unity Marketing, a firm that tracks luxury consumers.
After years of robust growth, the shift is expected to put luxury retailers to the test in the year ahead, particularly retailers that have relied on so-called aspirational shoppers, or consumers who “stretch” into designer territory when they are flush with cash.
Link.
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by David Bodamer January 2nd, 2008
The Washington Post has a good piece up on the continuing retrenchment affecting private equity players. The subprime fallout stopped the private equity tsunami in its tracks midway through 2007 and things don’t seem any closer to opening up now. Pros in the story say that the days of the massive buyouts are over for now. But we may see smaller deals that aren’t as hard to finance–up to $2 billion or $3 billion–continue to take place.
“The next 18 months should be the best in a long time for small, nimble firms that only need to borrow at their historical levels to complete deals,” said Halifax founder David Dupree.
If the U.S. buyout market looks exhausted, the big private-equity firms will continue to expand their buyout presence in such places as China, India, Brazil, the Middle East and South Africa, where some economies are growing faster than here.
Look for private equity to increase its presence in other, non-traditional lines of business such as venture capital, real estate and distressed debt. Private equity may look to buy some of the $100 billion or so in distressed debt, at a discount, that banks are holding on their balance sheets. Some of that debt is from private equity’s own buyout deals in 2007.
The disruption in the financial markets will make it likely that private equity may begin trolling for investments in devalued banks and lenders, similar to the $30 billion or so in investments that Middle East and Asian governments have made in the past couple of months in ailing financial firms like Merrill Lynch, Citigroup and Bear Stearns. Carlyle already has a new team exploring that area.
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The End of Sprawl?
by David Bodamer January 2nd, 2008
Eduardo M. Penalver, an associate professor at Cornell Law School, where he teaches property and land-use law, makes the argument that rising gas prices will mean that even after the housing market bounces back, the days of sprawl may be over. He predicts development will continue in cities and less on the outskirts. That fits into the pattern of development in recent years where there has been less action in new suburbs and more development taking place on brownfields as part of urban revitalization efforts. But Penalver is suggesting that this isn’t just a cyclical thing.
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