Archive for August, 2008
by David Bodamer August 29th, 2008
While Simon Property Group struggles to fill vacancies in its malls in the U.S., it may be looking to Britain to boost its retail property portfolio.
On Tuesday, U.S. real estate investor Simon Property Group (nyse: SPG – news – people ) upped its stake in U.K. mall operator Liberty International to 4.22%, after raising its stake to 3.45% on Friday, a sign some think may mean it is preparing to bid for the entire firm.
But Simon may have some competition. Australia’s Westfield Group also announced on Tuesday that it increased its stake in Liberty to 2.96%. Westfield built up its stake, which now totals $41.9 million, between June and July.
Liberty shares jumped 5.3% to 995 pounds and 50 pence on Tuesday afternoon, after falling 13.1% in the last year as investors feared consumer spending in Britain would hurt business. Liberty owns retail assets throughout Britain including London’s Covent Garden.
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Related Topics: International, Investment, News, REITs, Retail Real Estate |
by David Bodamer August 28th, 2008
In the quarter ended August 4, Sears earnings dropped to $65 million, or 50 cents a diluted share, down from the year-ago quarter’s $173 million, or $1.15 a share. Per-share results benefited from a 15 percent decline in the number of diluted shares outstanding.
Revenues declined 4.1 percent to $11.76 billion from $12.26 billion a year earlier.
The second-quarter results “reflect the continued effects of a slowing economy, which contributed to the earnings declines we have experienced since the third quarter of 2007, said interim Chief Executive Officer W. Bruce Johnson.
While it was a “difficult quarter,” Johnson said, the company has lowered its inventory levels by $500 million,which should lead to less promotional pricing, and improved profit margins, in the year’s second half.
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Related Topics: News, Retail |
by David Bodamer August 26th, 2008
Delinquencies on CMBS have risen, but the increase is not nearly enough to account for the market’s weakness. Moody’s delinquency tracker, which follows delinquencies in excess of 60 days on loans backing U.S. CMBS transactions over the past 10 years, showed a delinquency rate in June of 0.45%, up one basis point from May and up 23 basis points from the low of 0.22% in July 2007.
At those rates, even if the delinquency rate triples, the commercial real estate market remains a solid investment and is not likely to see a collapse like the one residential real estate has experienced, Mr. Cotton said.
But some investors expect the value of CMBS bonds to fall and have been shorting the index used to price them, driving up the cost of CMBS by as much as 300 basis points and scaring away buyers, Mr. Vrchota said.
“There’s a pretty big disconnect between the [CMBS index] and the fundamentals,” he said. “It implies a very high default rate that we just don’t see anywhere.”
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Spotted at Deal Junkie.
Related Topics: Finance, Investment, News, Retail Real Estate, Trends |
by David Bodamer August 26th, 2008
In a 2-1 decision, the Ninth U.S. Circuit Court of Appeals in San Francisco overturned restrictions on picketing imposed by a company that manages shopping centers in Santa Cruz and Sacramento.
The decision follows a California Supreme Court ruling in December that declared unions have the right under state law to leaflet in malls and ask shoppers to boycott stores. By contrast, the U.S. Supreme Court has ruled that the U.S. Constitution does not protect freedom of speech in malls or any other private property.
Monday’s ruling addressed issues the state court did not consider, such as a shopping center’s ban on picket signs and on demonstrating at certain times of the year. A union lawyer in the case said the decision should send a message to mall management.
“Hopefully, now the malls will understand that they do have to accommodate criticism of the tenants (stores) and themselves,” said Sandra Benson, attorney for the United Brotherhood of Carpenters.
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Related Topics: Management & Leasing, News, Retail Real Estate |
by David Bodamer August 26th, 2008
Mall owners often talk about trying to find sources of ancillary income. I don’t think this is what most of them have in mind.
Agents found more than 200 marijuana plants inside a building at the Mall of the Americas in west Miami-Dade late Friday. Now they want to know who was cultivating them, and who set up the hydroponics lab that could have lit the mall on fire with flimsy wiring.
The Drug Enforcement Administration discovered the plants growing on the second floor of the mall in what agents said was a 400-square-foot storage area. An official with the D.E.A. told CBS4′S Shomari Stone that she’s never seen anything like this before.
The ‘grow house” had plants growing from three-to-six-feet tall in an air conditioned environment along with camera surveillance in a storage area on the second floor of the mall. The wiring was flimsy, and could have sparked a fire in the popular mall.
Some estimates put the value of marijuana as much as $3,500 per pound on Miami streets. Overall, officials say millions of dollars of pot was found, since each plant could be harvested four times a year.
Related Topics: News, Quirky, Retail Real Estate |
by David Bodamer August 25th, 2008
Although Southern California mall owners say they are generally faring better than many of their counterparts in other parts of the country, they’re feeling the pinch and looking for ways to lure shoppers back.
“If you are complacent you are going to get hurt in this economy,” said mall owner Rick Caruso, who arranged free summer concerts and movies outdoors at his Grove and Americana at Brand shopping centers in Los Angeles County. The Wednesday night programs have produced sales spikes, he said.
“We’re spending more on marketing, programming and events,” Caruso said. “During times that are challenging you ramp it up.”
Times are definitely challenging for many stores and malls, according to the International Council of Shopping Centers.
The industry trade group said overall retail sales were up 2.6% in July compared with the year before, but the growth was mostly among warehouse-like club stores such as Costco and Sam’s Club. Clothing shops, department stores, jewelry stores and retailers catering to teenagers all reported declines in sales.
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Related Topics: Management & Leasing, News, Retail, Retail Real Estate |
by David Bodamer August 25th, 2008
This is a nice change from the stream of announcements of store closings. CVS is developing a new concept high-end beauty store.
CVS Caremark Corp will begin testing a high-end beauty store concept this year, looking to tap into growing demand for skin care and cosmetics seen at outlets like LVMH’s Sephora chain.
The drug store chain operator plans to open a store called “Beauty 360″ by the end of the year next to existing CVS stores on the U.S. East Coast and another on the West Coast shortly thereafter, CVS spokeswoman Eileen Howard Dunn said on Friday.
She declined to say where the stores would be located. But Women’s Wear Daily, which first reported the news, said the first would be opened in Washington, D.C., and the second in Sacramento, California.
Related Topics: News, Retail |
by David Bodamer August 21st, 2008
I just linked to S&P’s latest numbers (through May) from earlier this week. Today, Moody’s has reported their latest (through June) and it shows a bit bleaker picture.
Commercial real estate prices continued to decline in June, according to Moody’s/REAL Commercial Property Price Indices, Moody’s Investors Service said Wednesday.
The index fell 3.3 percent from May, and was down 9.6 percent from the year-ago level.
June was the fourth consecutive month that the index declined, Moody’s said. The CPPI now stands 11.8 percent below its peak in October 2007.
The index is based on repeat sales of the same properties across the U.S. at different points in time.
All four property types measured by the index went negative during the second quarter, Moody’s said. The national industrial market saw the largest price drop, down 9.3 percent during the quarter. National apartment market prices fell 7.1 percent, while office prices slipped 5.9 percent and retail declined 4.6 percent.
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Related Topics: Investment, News, Research, Retail Real Estate, Trends |
by David Bodamer August 21st, 2008
The mailboxes of Shoreway Shopping Center owners Marc Levin and James Ratner should soon be stuffed full of mail from Sheffield Lake.
Postcards preprinted with their addresses were passed out to hundreds of Sheffield Lake residents who flocked to the shopping center Monday in an effort to convince the owners to sell what many called a defunct “eyesore” ravaging the city’s economy.
“A lot of the signs you’re carrying make reference to slumlords holding the city hostage,” said Sheffield Lake Mayor John Piskura from atop a flatbed semitrailer. “The truth of the matter is they’ve been playing games with this city for over 30 years.”
Piskura asked residents to fill out the cards, supplied by a city resident, to help spur a reaction from the owners.
“It’s one of the last things we haven’t tried,” he said after the rally. “We need to raise awareness because I don’t think the beneficiaries of the trust (who own the shopping center) know what’s going on here. I think when they do, they’ll take interest and do something.”
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Related Topics: Management & Leasing, News, Quirky, Retail Real Estate |
NREI: Real Estate Recovery in 2011
by David Bodamer August 29th, 2008
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No Comments Related Topics: Commentary, Investment, News, Retail Real Estate |