All GLG News Analyses Filed Under: Commercial Market Trends

Kenneth LeonardPrincipalLeonard Associates

No Surprise, The Bubble Has Burst

December 28, 2008

Analysis of:Circuit City's Failed Auction Indicates Developing Excess Space | www.printthis.clickability.com

Circuit City has 715 stores just prior to their bankruptcy. They had 155 leased stores that were losing money, apparently losing more than the rental costs, so that closing them would save money for the stock holders.  To give an "insiders" look at the mindset of the current management, one of their seniormost officials reasoned that there would be enough other retailers (bigger fools?) that would be interested in paying a premium to take over their old, unsuccessful stores that it made sense to hold an auction.  Surprise! The day before the auction, they called it off due to lack of bidders. What a waste of corporate resources and what an embarrassment to spotlight how misguided the current management has been when it comes to their real estate strategy.

And This Was the Good News?

December 19, 2008

Analysis by: GLG Expert Contributor

Analysis of:Centro Avoids Liquidation by Granting Lenders 90% of Its Stock | online.wsj.com

This is an extremely creative "reorganization" outside of the courts that we are likely to see repeated with other large landlords and developers as lenders struggle to mitigate potentially huge losses.

This is a Product of Too Much Debt

December 17, 2008

Analysis by: GLG Expert Contributor

Analysis of:Mall Owners Sent Reeling by Spiraling Credit Woes | online.wsj.com

Is there weakness in the commercial real estate markets? Absolutely. Is the retail sector in for some hard times? Certainly. Are some sectors overbuilt? Yes. But let's not paint with a broad brush here. The headline grabbing stories of failing and/or defaulting landlords has much more to do with unreasonably high debt than it does with weakness in the markets.

What goes up quickly may come down even quicker

December 17, 2008

Analysis by: GLG Expert Contributor

Analysis of:Dubai to see a slowdown in construction | www.propertywire.com

Construction is a multi-mega-Trillion dollars industry world-wide.  Global and local economic melt-downs affect construction activities and the construction and real-estate industry at large, sometimes much more adversely than they should. Builders and real estate developers should always have alternative plans to be able to balance the “good times” with “bad times” over a long run.     

More Empty Boxes Than Christmas Morning

December 12, 2008

Analysis by: GLG Expert Contributor

Analysis of:Office Depot to Close 9% of Its Stores | www.globest.com

Add another 112 empty boxes to the growing inventory of retail vacancies. Following the announcements by Circuit City, Sears, Linens-N-Things, Tweeters and other national and regional chains of hundreds and hundreds of store closings, this announcement by Office Depot will only add to the woes of retail landlords.

Its The Blackstone Curse

December 10, 2008

Analysis by: GLG Expert Contributor

Analysis of:Extended Stay Could Transfer Chain to Lenders | online.wsj.com

It would be a mistake to look at this story as a precursor of what's to come in the lodging sector. Yes, there is some weakness and some overbuilding in certain markets, but the root cause of the problems at Extended Stay has nothing to do with the economy or the problems facing the industry as a whole. Be careful not to paint here with a broad brush.

Robert CanterPresident-FounderPerformance Realty Solutions, LLC

Once again Wall St and Bond investors continue to demonstrate their ignorance of commercial real estate

December 10, 2008

Analysis of:Banks May Face Big Write-Downs On Commercial MBS In 4Q | money.cnn.com

By the constant down grading of commercial mortgage backed securities (bonds), the value of commercial real estate will have no choice but to slide as well. In many cases there is no correlation, unfortunately in recent years the problem hasn’t been the real estate but the borrowers, lenders and Wall St.

Jack KernManaging DirectorKern Investment Research

Commercial Concerns Rise Faster Than Delinquencies

December 3, 2008

Analysis of:Commercial Mortgage Delinquencies on Rise | www.financialweek.com

Commercial properties are seeing some real stress in many markets and as the economy has continued to falter, there are reasons to feel concerned about the status of their mortgages and prospects for remaining current. In many respects, commercial properties are more insulated from failure because of the structure of ownership and the strong economic incentive not to walk away from a loan. The reality is that the scale of failures so far, however small pales in comparison to the press coverage the impending problem receives.

Lenders and Regulators Will Control How Bad This Crisis Becomes

December 3, 2008

Analysis by: GLG Expert Contributor

Analysis of:Commercial Mortgage Delinquencies on Rise | www.financialweek.com

As commercial mortgage defaults rise, and as CBMS maturities approach, we could face a crisis similar to, although not as severe as, the subprime meltdown in the residential lending markets. A significant increase in commercial defaults and foreclosures could have a significant negative impact on regional and community banks that were heavy real estate lenders.

Kenneth LeonardPrincipalLeonard Associates

Believe Half of What You See and None Of What You Read

November 25, 2008

Analysis of:Mag Mile Maul | www.chicagobusiness.com

This front page article from one of the Midwest's leading business publications is the perfect example of the kind of silly journalism I predicted would flourish during the bursting of the retail bubble. Ms. Monee Fields-White is a new and know nothing business reporter who is quite good at spinning a few quotes about the coming shopping season along the Mag Mile into a scream that "The Sky Is Falling". The key implication of my analysis is to point out how ludicrous and dangerous articles of this type can be to the GLG client base.

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