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Archive for December, 2009

CNBC’s Retail Report Card

by David Bodamer December 28th, 2009

A discussion of the early numbers about the holiday shopping season. This is quoting Mastercard’s numbers, which generally aren’t the benchmark people use when assessing the season.

No Comments Related Topics: Commentary, News, Retail, Video |

Another Mall Defaults in Orange County; Kingsbridge Armory Project Officially Dead (Monday’s News & Notes)

by Elaine Misonzhnik December 28th, 2009

The week surrounding Christmas has historically been a quiet period for the real estate industry, as everyone concentrates on friends and family and tries to forget about business for a few days. Nevertheless, there was some hard news this past week, including a decisive vote by the New York City Council on a proposed retail redevelopment in the Bronx, a major retail property sale in Scotland and another mall default, this time in Orange County, Calif.

Bloomberg reports that Scotland’s second largest mall traded hands for $479 million.
Commercial brokerage firm CB Richard Ellis opened an office in Long Island City, the first outer borough office for any national brokerage firm, according to the New York Daily News.
A vote by New York City Council spelled doom for the redevelopment of the Kingsbridge Armory in the Bronx into a retail center, reports The New York Times. The decision came after Mayor Bloomberg vetoed the Council’s previous vote to scrap the redevelopment over wage disputes between the developer, The Related Companies, and local officials.
The Shops at Anaheim Garden Walk became the latest retail property to default on a loan and face foreclosure in California’s Orange County, according to The Orange County Register.
The Wall Street Journal posted a story indicating Excel Trust Inc. is planning a $300 million IPO.
National Public Radio posted a podcast from the New York ICSC conference that took place Dec. 7 and 8.
Mall of America revealed it expects a healthy increase in sales this holiday season, according to CNBC.
The Street.com ran a feature on the Crystals at City Center, a new high concept mall in Las Vegas.

Super Saturday Snowed Out; GGP’s Dividend (Weekend Roundup)

by David Bodamer December 21st, 2009

The big story from the weekend was the huge storm that made a giant dent in what is normally the largest shopping day of the year–the Saturday before Christmas. To compensate for the lost sales as shoppers stayed home to avoid the storm, many retailers are extending hours to give people more chances to shop. Some stores will remain open between now and Christmas as a way of spurring sales.

Here are a couple of other headlines from over the weekend.

The New York Times looked at the growing trend of consumers shopping with their cell phones–something we wrote about last week as well.
Last week, officials from several commercial real estate trade groups met with Treasury Secretary Tim Geithner to discuss possible measures to aid the industry. According to the story, “One source said the meeting did not generate any specific, imminent policy steps to help the industry, which is struggling to recover from the recession and financial crisis. The source described it as a ‘listening session’ for Geithner and several of his top aides.”
A bankruptcy court judge gave General Growth Properties a green light to use $100 million to pay shareholder dividends.
In a distressed transaction, lenders bought a struggling mall outside Boston for $51 million The owner had defaulted and the lender won an auction for the property.

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

Bronx Project Voted Down, Brooklyn Project Should Go Ahead (Wednesday’s News & Notes)

by Elaine Misonzhnik December 17th, 2009

Getting a retail project approved in New York City is always a challenge, but this week’s decision by the New York City Council to say no to Related Companies’ plan to redevelop a vacant armory in the Bronx into a shopping center brought forth an important dilemma: what’s a reasonable compromise between a community and a developer? Local officials wanted an assurance from Related that workers at the completed project would be paid a living wage. Worried that wage demands would scare off potential tenants, Related said no. Now, Related can’t go ahead with the project, but Bronx residents have also lost thousands of potential construction and retail jobs.

The Los Angeles Times reports that retailers are turning back to discounting to drive sales this holiday season.
The Morning News offers a slideshow of vacant malls.
Developer Bruce Ratner has sold $511 million in tax-free bonds, almost enough to finance his Atlantic Yards project in Brooklyn, according to the New York Daily News.
The Daily News also ran a story about the New York City Council turning down a proposed Related project to redevelop a vacant armory in the Bronx. The project was voted down over a wage dispute.
Price Chopper Supermarkets made an offer to buy 22 Penn Traffic stores for $54 million in a private sale, according to our sister publication Supermarket News. Penn Traffic filed for Chapter 11 bankruptcy in November.
Chattanooga Times Free Press reports that Stephen D. Lebovitz will assume the position of CEO at regional mall REIT CBL & Associates Properties effective Jan. 1. He will succeed his father, Charles B. Lebovitz, in the position.

More Thoughts on General Growth

by David Bodamer December 17th, 2009

The story continues to evolve on General Growth Properties. The big news, of course, is that the firm’s reorganization plan on more than $10 billion in secured debt has been approved. But there’s still some more secured debt to take care of in addition to about $6 billion in unsecured debt. In addition, there’s the nagging issue of the possible takeover attempts by Brookfield and Simon.

Chicago Business made a key observation on Read the rest of this entry »

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

Next Steps for GGP

by David Bodamer December 17th, 2009

Now that it got its restructuring approved on 103 properties covering $10.25 billion in secured mortgages, General Growth is moving ahead with the next phases of its plan to emerge from bankruptcy. It has pending plans for another 10 properties covering $1.7 billion in debt and then has another $3 billion of secured property debt to restructure.

Beyond that, the firm needs to deal with several billion in unsecured debt–which might prove a little trickier.

It put out a statement outlining the next steps in its plans:

GGP is continuing to pursue a prompt resolution of approximately $3 billion of secured property debt remaining to be restructured. Concurrently, the Board of Directors and management are evaluating alternatives to reduce overall leverage and raise the capital necessary to emerge from bankruptcy in 2010. Financing alternatives include a public offering of GGP equity. In addition, the Board of Directors and management are considering all indications of interest in the Company.

“The confirmation of the plans of reorganization and the extension of mortgage maturities create the foundation for GGP to move forward to create a sustainable stand-alone capital structure which provides the basis of comparison for other strategic alternatives,” said Adam Metz, chief executive officer. “The GGP Board is committed to maximizing value for all stakeholders and will choose the alternative that best achieves this objective.”

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

Judge Green Lights GGP’s Restructuring Plan

by David Bodamer December 16th, 2009

General Growth Properties Inc., the second-largest U.S. mall owner, said it won permission from a bankruptcy judge to restructure about $10.25 billion in debt at some of its shopping centers and office buildings.

The Chapter 11 plan approved yesterday by U.S. Bankruptcy Judge Allan Gropper extends the company’s various loans, making none due before 2014, according to a company statement distributed by Business Wire. The plan covers 103 properties and 87 loan agreements. It leaves six more sets of properties, each with a number of leases, under court protection, Anup Sathy, a lawyer for the company, told the judge.

Confirmation of General Growth’s plan is significant because it resolves concerns about potential bankruptcy problems at other real estate companies that have also tried to shield assets using special-purpose entities, Gropper said in court earlier yesterday.

“Confirmation of these plans of reorganization is a monumental step towards completion of GGP’s overall corporate restructuring,” Thomas H. Nolan Jr., the company’s president and chief operating officer, said in yesterday’s statement.

Link.

No Comments Related Topics: Finance, News, REITs |

On the Lighter Side

by David Bodamer December 14th, 2009

Here’s a couple of odd videos that I’ve spotted in the last few days. One sings of the troubles in commercial real estate to the tune of “Oh Christmas Tree.” The other is a rap about the Downtown Mall in Charlottesville, Va. The Downtown Mall is one of the few open-air pedestrian malls built in the 1960s that managed to succeed and is still ticking today.

No Comments Related Topics: News, Quirky, Video |

Mobile Technology to Play a Large Role This Christmas; CMBS Investors Ready for New Issuance (Friday’s News & Notes)

by Elaine Misonzhnik December 11th, 2009

As we round off the first decade of the oughts, the way we shop has been changed dramatically by all the new technology that’s been developed in the past few years. Previously, we discussed the impact of social media sites on the way malls do business.

For example, this winter a slew of new iPhone applications will allow shoppers to compare bargains found at their local store against those offered by other retailers or on the web. Both retailers and retail property owners better start thinking about how to use these applications to their advantage. The impact of this new technology is likely to be huge, and not just when it comes to consumer behavior.

Agent Genius discusses ways brokers can use new mobile applications to help them do business. Imagine augmented reality applications on smart phones that allow you to view a building through a phone’s camera and instantly be given listings on leasing availabilities or the building’s price. We’re just at the tip of an iceberg here.

Meanwhile, Web Designed Pinoy takes a look at how one iPhone application helps shoppers navigate retail properties. It allows shoppers to navigate shopping centers, search mall store inventories and lists available sales.

Lastly, Oklahoma per Square Foot had some thoughts on our story about Inland Western Retail Real Estate Trust’s successful Facebook campaign.

Here are some other news and notes from recent days.

Mobility Site looks at how more malls now feature Windows Phone kiosks.
Calculated Risk looks at how retail sales in December so far have been slow after a burst of activity during Black Friday weekend.
Luxury department store Barneys New York is looking into filing for Chapter 11 bankruptcy protection, and would like to be bought out by the owners of the Lord & Taylor chain, according to The New York Post.
The Wall Street Journal reports that mobile phone seller Nokia is also struggling in the U.S. and will close its flagship stores in New York and Chicago.
Real estate developers remain cautious. According to a new Reed Construction Data report, construction materials orders declined during the month of October.
There’s more movement on the financing front for individual properties. On the negative side, Forest City, recently missed a mortgage payment on its Atlantic Yards project, notes The Real Deal. However, West Oaks Mall is emerging from foreclosure, according to Chron Business. The 1.1-million-square-foot mall was recently purchased for $15 million.
Private equity fund managers and real estate partnership managers may face a huge increase through how carried interest is treated. The House passed a bill to raise the rates on carried interest from 15 percent to 35 percent–bringing it in line with capital gains tax rates. This is not the first time such a bill has passed the House. It has normally failed in the Senate. ICSC, among others, is urging industry pros to call their Senators and try to stop the tax.
Lending giant CIT Group completed its reorganization. We previously wrote about the potential impact of the reorganization on small retailers.
According to Reuters, an upcoming CMBS issue backed by Inland Western’s assets has attracted a lot of interest. Importantly, it was done without using TALF. And it speaks to a rise in interest among investors hungry for new CMBS bonds, according to the CoStar Group.

November Retail Sales Rise Inflated by Gas

by David Bodamer December 11th, 2009

According to the Commerce Department, November retail and food sales increased 1.5 percent from October and were 2.1 percent below September 2008.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $352.1 billion, an increase of 1.3 percent (±0.5%) from the previous month and 1.9 percent (±0.5%) above November 2008. Total sales for the September through November 2009 period were down 2.1 percent (±0.3%) from the same period a year ago. The September to October 2009 percent change was revised from +1.4 percent (±0.5%) to +1.1 percent (±0.2%).

Retail trade sales were up 1.4 percent (±0.5%) from October 2009 and 2.2 percent (±0.5%) above last year. Building material and garden equipment and supplies dealers were down 9.3 percent (±1.8%) from November 2008, but gasoline stations sales were up 8.9% (±1.3%) from last year.

However, don’t pop the champagne corks just yet. As Business Insider points out, a big part of the gain was a jump in gasoline sales.

(Click for larger image)

Calculated Risk’s take is here. On the positive side, at least consumer sentiment took a big jump in the most recent Reuters/University of Michigan index. The consumer sentiment index rose to 73.4 in early December from 67.4 in November. Calculated Risk’s retail sales chart and consumer index chart are below.

(Click for larger image)