Archive for the ‘Retail Real Estate’ Category
by David Bodamer January 18th, 2007
There’s an update on the Mills being acquired by Brookfield, from thefirst report.
One of the big questions about the proposed acquisition is why its happening now. But as the report illustrates (which first appeared on our sister site NREI Online), a looming debt deadline played a big part in Mills reaching an agreement.
But the saga isn’t over yet. Gazit-Globe, which has been pursuing Mills aggressively since October, upped its recapitalization offer after the Brookfield deal was announced. That means that Mills could change its mind on Brookfield or that Brookfield may eventually be forced to increase its $21 per share offer for the beleagured REIT.
Gazit-Globe, which owns about 9 percent of Mills stock, originally offered Mills $1.2 billion in October, proposing to buy Mills stock and extend the firm new lines of credit. Then on Tuesday-the day before the Brookfield deal was announced-Gazit upped its offer to $21 per share, amounting to $1.8 billion in acquiring stock and new debt, including an offer to refinance the Goldman Sachs loan. Another shareholder, Farallon Partners, which holds 10.9 percent of all Mills shares – offered to buy $499 million of new Mills stock, offering $20 per share. (In October, Farallon had entered into a standstill agreement with Mills.)
Either of the offers could have helped to solve Mills most pressing problem – a March 31 deadline to pay a $1.06 billion mortgage loan from lenders represented by Goldman Sachs Mortgage Co. Farallon’s equity was to have been augmented with CMBS proceeds to pay down the loan, while a Gazit-Global share purchase would have paid down the debt and been coupled with a refinancing of the remaining balance with the Royal Bank of Canada.
Related Topics: Finance, Investment, News, REITs, Retail Real Estate |
by David Bodamer January 16th, 2007
Circuit City will unveil a new prototype store in June. It isn’t releasing too many details yet on what the new concept will be like.
Perhaps Circuit City is looking to emulate Best Buy, which has operated several test stores selling merchandise geared towards more select audiences.
Read the rest of this entry »
Related Topics: Development, News, Retail, Retail Real Estate |
by David Bodamer January 16th, 2007
Simon Property Group is forecasting its 2007 funds from operations and earnings per share will be below analysts estimates.
It’s not a major shift. It’s looking at FFO of $5.70 and $5.80 per share compared with analyst estimates of $5.81, and earnings per share between $1.82 and $1.92 per share compared with analyst estimates of $1.94.
But it’s a downgrade nonetheless.
Related Topics: Investment, News, REITs, Retail Real Estate |
by David Bodamer January 11th, 2007
The Miami Herald earlier this week had an interesting profile of Chaim Katzman and his ongoing quest to turn around Mills Corp.
The opportunity Katzman has his sights set on now: the struggling Mills Corp. Gazit-Globe owns 9 percent of Mills and has offered $25.50 per share for a recapitalization plan worth about $1.2 billion. It’s a move that started confrontationally with litigation but has since cooled off with Katzman signing a confidentiality agreement and agreeing not to trade any of his shares until the end of March.
The Mills situation has thrust Katzman onto the public stage he normally avoids. If successful, the move would vault him from being one of the largest owners of strip shopping centers in the Southeast into the elite circle of major national mall developers. Mills owns a combination of 39 mega-outlet malls, entertainment centers and traditional malls across the nation, including Sawgrass Mills, The Falls, Westland Mall and Broward Mall.
”There is a lot of upside in this portfolio,” said Katzman, who believes the Mills’ properties should be improved rather than the pieces of the company sold off. “I don’t claim we’re the only one who can do it, but I’m not too shy to say we can’t. We feel we can compete.”
Related Topics: Development, International, Investment, Management & Leasing, News, REITs, Retail Real Estate |
by David Bodamer January 10th, 2007
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.
Related Topics: Development, International, Investment, News, REITs, Retail Real Estate |
by David Bodamer January 9th, 2007
The state’s highest court today heard a second round of arguments in a case claiming that a popular mall gift card cheats customers.
The Georgia Supreme Court heard arguments in the same case back in October, but in an unusual move — and without giving a reason — the justices asked attorneys in the high-profile case to return to rehash their arguments for a second time.
On one side, former Gov. Roy Barnes asked the court again to stop mall owner Simon Property Group from imposing fees and expiration dates that he says are illegal and “a scam.” The cards lost $2.50 in value each month after six months and expired after 18 months.
Barnes likened the cards’ expiration date to a mechanic saying he can keep a vehicle if left at his shop after close of business.
“Even if you have a contract, it would be unconscionable to allow that,” he said.
Read the full story at the Indianapolis Star.
Related Topics: Management & Leasing, News, REITs, Retail, Retail Real Estate |
by David Bodamer January 9th, 2007
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.
Related Topics: Development, Investment, News, REITs, Retail Real Estate, Trends |
by David Bodamer January 8th, 2007
Commercial real estate financiers are getting a lot of mileage out of their newest toy–commercial real estate collateralized debt obligations. Everyone at the show calls them CRE CDOs. (It rolls off the tongue easier the more you practice saying it.) The final data for 2006 presented at CMSA’s CMBS Investor Conference shows that CRE CDO issuance grew to $34.3 billion in 2006–a 62 percent gain from 2005 and more than four times the volume of issuances in 2004. (Robert Ricci, managing director for Wachovia Securities projects 2007 volume to reach $60 billion)
There are a lot of differences between CMBS and CDO–too many to try and encapsulate here. The key difference is that issuers have the option to actively manage the pool of assets inside CRE CDOs. They can cycle loans in and out, change property types, change geographic distribution (all within limits, of course). Issuers are also not limited to fixed-rate mortgages. It can include that, but more commonly includes floating rate debt of all stripes. Managed pools can also include REIT and REOC debt, mezzanine financing, preferred equity and other derivatives. Another difference is that unlike with CMBS issuances, sponsors can (and often do) retain ownership of some of the pool.
From a sponsor standpoint, it seems to be an attractive option and CRE CDOs promise to play a growing role in provding financing for the commercial real estate sector. And, because the pools are actively managed, sponsors can charge higher fees–as high as 45 basis points compared with 20 basis points for CMBS.
Despite the explosion in CRE CDO issuances, it does have a long way to go to catch up to the popularity of CMBS. CMBS issuances reached $299.2 billion in 2006–a $60 billion gain over 2005 and more than double 2004’s volume of $128 billion.
Related Topics: Conference Coverage, Finance, News, Retail Real Estate |
by David Bodamer January 8th, 2007
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.
Read the rest of this entry »
Related Topics: Conference Coverage, Finance, Investment, News, Retail Real Estate, Trends |
by David Bodamer December 30th, 2006
Are things looking up for Mills Corp.?
The chief executive of The Mills Corp. assured shareholders Friday that there are no undisclosed financial problems looming as the mall developer prepares to file its long-delayed financial earnings reports early next year.
Mark Ordan said the process of restating Mills reports has been “stunningly complex,” but he provided few details about the reports and the reasons the real estate investment trust pushed back its expected filing dates several times this year. He said there were no issues beyond the previously disclosed accounting errors, which the company is trying to fix.
“You should not read any of my remarks to say that there is some smoking gun out there that we are hiding,” Ordan said at Mills’ annual meeting.
Related Topics: News, REITs, Retail Real Estate |
