Archive for October 7th, 2008

Is GGP Hurting Other Mall REITs?

by David Bodamer October 7th, 2008

Today was just brutal for mall REITs. Many had been trading at or near 52-week lows already. But you could say that about a lot of companies in many sectors. And, for the most part, declines at mall REITs have been relatively in-line with the broader market. Today was a bit different, however. General Growth ended the day down 41.94 percent at $4.50 per share. The Dow was down 5 percent. Many other mall REITs fell by 10 percent or more.

Here’s a look at the bloodbath.

  • Taubman Centers, $35.70 -10.14 percent
  • Simon Property Group, $73.01, -10.23 percent
  • Macerich Co., $41.52, -11.23 percent
  • PREIT, $11.22, -19.16 percent
  • Glimcher Realty Trust, $6.19, -23.99 percent
  • CBL & Associates Properties, $9.02, -35.98 percent

In contrast, other retail REITs were down today, but not by nearly as large margins.

  • Saul Centers, $42.70, -0.93 percent
  • Kite Realty Group, $9.63, -2.73 percent
  • Agree Realty Corp., $23.87, -3.09 percent
  • Equity One, $17.90 -3.87 percent
  • Acadia Realty Trust, $22.04 -3.97 percent
  • Weingarten Realty Investors, $26.98, -5.40 percent
  • Regency Centers, $49.94, -6.37 percent
  • Federal Realty Trust, $66.32, -6.37 percent
  • Cedar Shopping Centers, $11.04, -6.91 percent
  • Inland Realty Corp., $12.25, -6.99 percent
  • Urstadt Biddle, $16.40, -8.02 percent
  • Kimco Realty Corp., $27.67, -8.71 percent
  • Ramco-Gersenson Properties Trust, $17.88, -11.00 percent
  • Developers Diversified Realty, $22.26, -12.74 percent

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

General Growth Near Bankruptcy?

by David Bodamer October 7th, 2008

As I’m writing this, General Growth’s stock is at $4.03 per share–down nearly 50 percent on the day.

The new round of selling comes as analysts raise the possibility of bankruptcy for the REIT.

Shares of General Growth Properties Inc. were down more than 45% in midday trade Tuesday on growing fears the real estate investment trust may not be able to refinance its debt, which could force it to seek a buyer or declare bankruptcy. “The REIT’s stress is mostly due to over-leveraging acquisitions in the past five years,” Stifel Nicolaus analysts wrote in a note. Last week, Moody’s Investors Service cut General Growth’s debt ratings, citing strained financial flexibility and expected profit pressure due to an economic slowdown. The company recently replaced its chief financial officer and suspended its dividend. General Growth shares were the biggest percentage decliner among stocks listed on the New York Stock Exchange at last check Tuesday.

I’m stunned at how quickly this now seems to be snowballing. There have been concerns about the company’s debt load for a while. It’s been more than a year. People have wondered about it ever since the credit crisis really took hold last September. I think the red flags really came out after Centro began to have its problems. Everyone looked around and realized that General Growth was the company with the most debt.

But things have really begun to spiral out of control in just the last 30 days. Could the company really be on its last legs this fast? It’s hard to fathom. There’s an even more harrowing question now to ask: If General Growth can fall, could we see other retail real estate companies on the brink?

Here are some links to older stories for reference:

No Comments Related Topics: Finance, News, REITs, Retail Real Estate, Trends |

Coverage of ICSC Atlanta Show

by David Bodamer October 7th, 2008

The Atlanta Journal-Constitution has a pair of articles about the ICSC show taking place in Atlanta right now.

Hardest hit have been restaurants and high-end stores. Even when customers do sit down at a nicer restaurant, Del Monaco said, they’re more likely to opt for water than wine with their meal.

“A lot of retail tenants have called me and said, ‘I’m scared,’ ” she said.

On the other hand, August sales were up at wholesale clubs and discount stores.

“There’s a lot of uncertainty out there, with people waiting to see who gets elected president and the impact of that,” said convention attendee Harold Shumacher, an Atlanta restaurant broker. “People are very guarded.”

Despite the drop in attendance at this year’s ICSC conference, he said, “The core constituency of deal-makers, landlords, developers and tenants will still be there because they have to be.”

“Those of us who are older have been through this before,” Schumacher said. “Sure, we’re not happy about things being slow right now. But what goes up must come down. The question is, how long is the recovery going to take?”

No Comments Related Topics: Conference Coverage, Development, Investment, News, Retail, Retail Real Estate |

A Big Project Bites the Dust

by David Bodamer October 7th, 2008

The proposed $800 million Central Park upscale retail development is dead, the latest victim of the uncertain economy.

Developer Peter Rubin told city officials on Friday that his Coral Co. no longer needs a rezoning issue on the Nov. 4 ballot for the project, billed as a transformation of the city’s business district into a town center.

Council voted to withdrawing the rezoning issue Monday night. The issue still will appear on the already-printed ballots. The county elections board told the city the votes won’t be counted, Mayor Kevin Patton said. Notices will be posted at the polls informing voters the issue has been removed.

Stores, parks, restaurants, a hotel, housing and offices all were part of the plan for 90 acres bordered by SOM Center, Solon, Bainbridge and Sharondale roads.

Rubin informed residents whose property made up the parcel last week that his company would not exercise its option to buy their land.

Link.

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

Some Relief from Credit Crisis?

by David Bodamer October 7th, 2008

According to Matt Pitcher at Live Oak Capital, agency lenders have begun lowering rates and easing some pressure in the credit markets.

Ending one of the most volatile weeks in U.S. financial history, fixed-interest rates for multi-family and commercial loans fell across the board as agency lenders came down about one-quarter percent and commercial banks pricing off of swaps lowered rates by a similar margin.

Many banks that are exercising extreme caution in the face of liquidity concerns held back on taking new applications or looked to combine their loans. In spite of the approval by the House of the rescue package on Friday, economic worries dominated the market as stocks fell and demand for short-term securities rose, pushing down yields.

The good news is that there is still money available for well-situated and first-rate properties in healthy markets. As swaps have fallen, I’ve been hearing about rates for three-year loans at below 5.5 percent. I would not use a three-year loan (too short) for our assets, but they exist at that rate for the right properties in the right markets for the right investors.

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