by David Bodamer September 19th, 2008
According to an SEC filing, Inland American Real Estate Trust, one of the Inland Real Estate Group of Cos., is in talks with CapLease about a merger or purchasing all of its assets. On September 16, Inland purchased 1.3 million shares of CapLease Inc. at $7.59 per share. That’s $10 million. Overall, Inland American now owns 9.9 percent of CapLease due to previous transactions. It previously bought a chunk of stock from the company back in July.
Update 4:51 PM: A closer look at SEC filings clears up the picture a bit. CapLease used the $10 million to pay down some short-term debt. The stock sold was a new offering. So it issued new stock, sold it to Inland American and used the proceeds to lower its debt levels. The terms give Inland the right to talk further with CapLease, but it doesn’t mean anything definitive will happen. It does seem like a smart move overall. In this environment, anything you can do to pay down debt is a good move. And this didn’t involve selling assets, although it did mean CapLease did dilute its share base a little. On the flip side, it establishes a partnership between two firms that could be the basis of more action.
It should be noted, as well, that his happened on Sept. 16, according to the filing. The stock market since then has plummeted dramatically and then rebounded dramatically. CapLease is up to $9.10 per share. But it’s hard to imagine that the activity with Inland had anything to do with that. REIT stocks in general have fluctuated wildly this week.
Related Topics: Finance, Investment, News, REITs, Retail Real Estate |
by David Bodamer September 19th, 2008
The WSJ has the scoop. The bottom line is that General Growth had to up its recourse levels from 25 percent to 50 percent to secure debts. The company, however, is emphasizing that it felt comfortable doing this because it is confident in its ability to repay. So they don’t think they’ll have to face the scenario of lenders needing to come after assets. As I’m typing this, General Growth’s stock is up 13.7 percent today. It’s currently the biggest gainer among all retail real estate REITs. The stock remains well off its 52-week high, however.
Chicago-based General Growth, which owns more than 200 malls, has been struggling in the ailing credit market because it faces nearly $19 billion in debt coming due through 2011. The company also announced yesterday that it had landed another $100 million in capital for refinancing debt, bringing its total raised so far to $1.51 billion of the $1.75 billion it has targeted.
Analysts read the revised recourse provision as a sign that General Growth had lost bargaining position with its lenders. A few analysts published research notes speculating that the loan’s sponsors – Eurohypo AG, Wachovia Corp. and ING – had forced General Growth to accept a concession.
But Bernie Freibaum, General Growth’s chief financial officer, said in an interview late Thursday that the greater recourse was granted to attract additional lenders, not to mollify those already committed. “It doesn’t cost us any money,” Mr. Freibaum said of the recourse change. “It doesn’t change the interest rate. And if it helps us complete the deal, then it was a good business decision.”
Related Topics: Finance, News, REITs, Retail Real Estate, Trends |
by David Bodamer September 19th, 2008
Boscov’s Department Store LLC, the U.S. department store chain that filed for bankruptcy protection last month, said it signed a letter of intent for a sale of most of its assets to private equity firm Versa Capital Management Inc.
The terms of the deal were not immediately available.
Under the bankruptcy procedures, Versa will serve as the “stalking horse” bid that sets a minimal level for any other offers. The auction process will be overseen by the U.S. Bankruptcy Court in Delaware.
Boscov’s said it was in the process of negotiating a definitive agreement with Versa and any deal is subject to financing. A higher offer also could emerge in the auction process, Boscov’s said.
Link.
Related Topics: Investment, News, Retail |
by David Bodamer September 19th, 2008
Retailers typically fund their businesses with short-term lines of credit and long-term loans that usually require the company to meet certain financial conditions. If they don’t meet them, the banks can call in the loans. Retailers also can borrow for the short term against money due from customers or against their inventory, or long term in the debt markets by issuing bonds.
“A credit crisis is the last thing retailers need facing this already grim holiday season,” says Carol Levenson, co-founder and director of research at the bond research firm Gimme Credit.
The retailers that need to ask their banks to waive the requirements they must meet will be most at risk, says Levenson, because “the banks might be less lenient in the future.”
Mid-level retailers, many of whose customers are cutting back on discretionary purchases and trading down to discounters, will likely be in the toughest spot, says Michael Dart, a strategist with the retail consulting firm Kurt Salmon Associates.
Link.
Related Topics: Finance, News, Retail |
