by David Bodamer October 15th, 2008
Update 2:45 PM
Update 2 4:41 PM
I posted about REITs sliding yesterday. It’s happening again today. The news about Macerich and Developers Diversified doesn’t seem to be helping. DDR is down almost 12 percent and Macerich down nearly 16 percent as I write this. But the declines are across the board. General Growth is the only retail REIT in positive territory up 3.3 percent for the day. The losses are not isolated to retail REITs. The Morgan Stanley REIT index is down 9 percent today. But the losses do seem to be more acute at many retail REITs.
I imagine the grim retail sales figures are playing into this. But is there more at work?
Update: I just did a little math. The Morgan Stanley REIT index closed on Friday, Sept. 19 at 913.61–it’s highest point since June. That weekend, of course, was when the credit crunch morphed into full-fledged crisis mode. It was the weekend Lehman wasn’t bailed out, Bank of America agreed to buy Merrill and just a couple of days before the government nationalized AIG. Since that point, the Morgan Stanley index has lost about 34 percent of its value. (It’s now down about 7.4 percent for the day, up a bit from its session lows). In that same time period, the Dow Jones Industrial Average has dropped 22 percent.
The question is, does that make sense?
Update 2: The market ended the day on a major down note. The Dow Jones Industrial Average fell 7.9 percent. The Morgan Stanley REIT Index ended up down 12.9 percent. The Morgan Stanley REIT index had its highest ever close on February 7, 2007 at 1,233.66. At today’s close it stands at 565.42. That means its dropped 54.1 percent.
If REIT values are a proxy for commercial real estate values–which is something I’ve heard argued–then that would mean commercial real estate values have been cut in half in the past 18 months. But, I don’t think that makes much sense.
Related Topics: News, REITs, Retail Real Estate |
by David Bodamer October 15th, 2008
Related Topics: News, Retail, Trends |
by David Bodamer October 15th, 2008
Two more REITs now have seen executives forced to sell stock because of margin calls. General Growth got hit with a ton of selling because of margin loans, which eventually forced its CFO to step down. Now it has come to light that Macerich CEO Art Coppola and Developers Diversified Chairman and CEO Scott Wolstein both have had to sell stock because of margin calls. Coppola sold $13.9 million in shares while Wolstein sold $20.1 million in shares, according to company SEC filings.
Part of the problem at General Growth was that the firm had asked its way on to the short-sell ban list and then saw its executives sell shares. That created the appearance of impropriety. It made it seem like the company was protecting its share price while executives dumped stock. That’s not necessarily what was going on, but it certainly didn’t look good and is one of the reasons General Growth’s share price has tumbled so much.
That’s not the case at Macerich or Developers Diversified. Instead, the problem here seems to be that the share prices have fallen by so much that they forced margin calls. In Macerich’s case, according to a company SEC filing, Coppola had no choice in the matter.
There’s one other interesting tidbit on the Macerich front, however, which is that even before the margin call, several Macerich executives sold about $20 million in shares in recent weeks, most of which were held by the executives in custodianships for their minor children. At Developers Diversified, meanwhile, a company executive vice president was also forced to sell shares worth $600,000 because of a margin call.
Arthur Coppola, Macerich’s chairman and chief executive, unloaded 345,173 Macerich shares on Thursday and Friday for nearly $13.9 million to cover a collateral requirement on his line of credit with his broker, according to Securities and Exchange Commission filings. The sales amounted to 44% of the Macerich common shares held by Mr. Coppola.
Also last week, Scott Wolstein, chairman and chief executive of Developers Diversified, sold more than 1.2 million shares for roughly $20.1 million to cover margin calls, SEC filings show. The sales cut Mr. Wolstein’s holdings by 45%.
Related Topics: Finance, Management & Leasing, News, REITs, Retail Real Estate |
by David Bodamer October 15th, 2008
The Commerce Department released its latest results and they’re not good.
Retail sales dived by 1.2% last month, the Commerce Department said Wednesday.
It was a broad decrease and the third drop in a row. Sales in August decreased 0.4%, revised down from an originally estimated 0.3% decline. July sales fell 0.6%.
Economists expected a 0.7% drop in sales during September, the final month of the third quarter. The 1.2% drop was the biggest since 1.4% in August 2005.
The retail sales report illustrates where Americans are spending their money. Consumer spending is a big part of the economy. It makes up about 70% of gross domestic product, which is the scoreboard for the economy.
The drab readings over the summer on retail sales argue the case of many analysts: the U.S. is in a recession or heading for one.
Link.
Related Topics: News, Retail, Trends |
![RetailSales](javascript:pop_me_up("http://blog.retailtrafficmag.com/retail_traffic_court/wp-content/uploads/2008/10/retailsept08.jpg" , "RetailSales", "width=640,height=480,scrollbar=yes,toolbars=no,resizable=yes"))