Industry news, views and occasional strange stuff.
RioCan Real Estate Investment Trust and Ramco-Gershenson Properties Trust have called off their planned $1.5 billion joint venture to co-own and develop shopping centers in the U.S.
Ramco instead has formed a $450 million joint venture with one of its previous partners, Heitman.
According to the Associated Press:
The Mills Corp. warned Tuesday that a heavy debt load could force the mall developer into bankruptcy if it is unable to follow through with its plans to sell all or part of the company.
The warning came in a Securities and Exchange Commission filing that also detailed the results of an internal audit showing accounting errors and possible executive misconduct.
Mills’ shares plunged more than 16 percent on the news.
Chevy Chase-based Mills said it may not have enough cash to continue operating beyond March 31 and that it would be forced to sell all or part of the company to pay off a $1 billion loan that is due on that date. It could be forced into bankruptcy, which would cause shareholders to “lose their entire investment,” the company wrote in the federal filing.
When covering retail real estate and largely talking to professionals that specialize in this sector, it’s easy to get caught up in the view that retail will continue to roll along. Sure, there will be some blips and most investors and developers think that retail is not going to see the same kind of growth in 2007 that it has in previous years. It’s no longer the leading light in commercial property circles either. But for the most part the mood is optimistic.
But stepping into a different circle and hearing what a different group of investors and financiers have to say provides a stark contrast. At the Commercial Mortgage Security Association’s CMBS Investors Conference in Miami, a gathering of investors, servicers, sponsors and other professionals involved in securitizing real estate debt, a morning panel discussed the prospects for commercial real estate in 2007. Retail didn’t fare well.
Traffic Court will be hitting the road this weekend. Check here next week for live reports from the Commercial Mortgage Securities Association’s annual CMBS Investors Conference being held January 7-9 in Miami, Fla.
It’s a race to the finish line in the holiday shopping season. There’s lots of reports of stores and malls operating on extended hours–some are opting to stay open 24 hours a day during the home stretch. It will be interesting to see how it all plays out as we begin to sift through the data next week.
In the mean time, here’s a few of the big headlines from around the industry for the past couple of days.
Mercury Real Estate Advisors LLC, a unit of real estate investment management company Mercury Partners LLC, urged the sale of Feldman Mall Properties Inc. in a shareholder proposal Monday.
Mercury owns about 1.3 million of the real estate investment trust’s shares, nearly 10 percent of the company’s 13.1 million outstanding shares. In a proxy proposal dated Monday, the stockholder said a sale of the company would be in the “best interests of stockholders and should be pursued immediately.”
Story here.
Illustrating just how far the race to label everything “mixed-use” has gone, yesterday’s New York Times, highlighted a recent transaction of the $11.5 million acquisition of a “mixed-use” site in New York’s Lower East Side neighborhood.
The image, scanned here, reveals a Manhattan tenement with street-level retail. Is that all it takes to be mixed-use?
In fairness, the buyers, Triangle West, may see some upside in the site. According to the Times, the deal includes three two-story buildings and two-five story buildings, but also includes 20,000 square feet of additional air rights.
Canada’s largest REIT RioCan REIT is expanding to the U.S. in a $1.5 billion joint venture with Ramco-Gershenson Properties Trust.
Vornado Realty Trust raised a quick $1 billion through an offering of 8.1 million shares priced after the close of trading yesterday. Vornado, fresh off agreeing to buy the Manhattan Mall for $689 million, says it is looking to make more buys, possibly spending up to $3 billion on properties or company buyouts.
If recent history is any guide, Vornado could have any number of deals up its sleeve. In the past 24 months its bought office and retail properties in one-off deals, but also has invested heavily in retailers, participating in the takeovers of Toys ‘R’ Us and Sears last year.
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Slatin: Inner City Retail Will Be Big Play in 2007
by David Bodamer December 28th, 2006
In his 2007 outlook, Forbes’ Peter Slatin points to inner city retail as one of the best investment bets.
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