All GLG News Analyses Filed Under: Corporate Real Estate

Kenneth LeonardPrincipalLeonard Associates

HOME DEPOT WILL NOT GO QUIETLY

January 3, 2007

Analysis of:HOME DEPOT DRAWS PROXY THREAT FROM INVESTORS | www.wsj.com

A so called "activist investor" owning less than .06% of Home Depot's stock announces that it knows more than all the people running Home Depot about how best to run Home Depot.

Mr. Whitworth, principal of Relational Investors, a manager of a 6.5 billion fund, further suggests that he should have a seat on the Board and have everyone listen to his ideas about how best to increase the value of the stock for the maximum short term gain.

Mr. Whitworth cites HD's new efforts to acquire building supply companies as the reason their stock has not increased in value and wants the company sold so that the "hidden value" of their real estate can be realized.

Kenneth LeonardPrincipalLeonard Associates

SEARS FLAGSHIP JUST A FLAG?

December 18, 2006

Analysis of:SEARS FLAGSHIP STORE TO HOUSE WEB CENTER | www.chicagotribune.com

Two very important but unspoken implications of this article are that Sears cannot find a way to make money in their newest and most prominent store in their own home town and that they have not yet found a way to keep up with other department stores in generating on line business.

These two factors are but two more leading indicators of the health of Sears/Kmart as a viable retail entity in the coming years.

Kenneth LeonardPrincipalLeonard Associates

SPEED DOES NOT WIN RETAIL RACE

December 11, 2006

Analysis of:THE SOFTER SIDE OF SPEED | chicagobusiness.com

This article outlines the latest strategy employed by Sears and Mr. Lampert to improve their declining sales during the holiday season. The strategy involves extensive advertising about how any merchandise ordered on line will be available within 15 minutes after ordering at any nearby Sears store.

The article also points out that thus far the advertising program has not worked as sales continued to accellerate their decline from 2.5% down in the second quarter to 4.8% down in the third quarter.

It seems that Mr. Lampert's program of cost cutting and elimination of investing in store remodling is having its' predicted negative results even sooner than most analyst expected.

Kenneth LeonardPrincipalLeonard Associates

COLONY CAPITAL SMARTER THAN ALL OTHER DEVELOPERS?

November 30, 2006

Analysis of:Colony Capital Gets Mack-Cali's Xanadu Share | www.globest.com

XANADU has been shopped around to every mall developer in the industry. They all turned it down as being either too risky or too expensive or both.  Along comes Colony and ups the price that all the "pros" turned down. WOW!

While I agree with Mr. Burns that this sale removes a huge Albatross around Mill's neck, I cannot agree with his view that Mills is now on the road to better days.

Kenneth LeonardPrincipalLeonard Associates

Cracks in Sears Armor are Starting to Show

November 30, 2006

Analysis of:SEARS NOT SO GRAND,NOT SO ESSENTIAL | www.suntimes.com

Sears CEO Aylwin Lewis gave a talk to the Orange County chapter of The National Association of Retired Sears Employees Inc. in which he was quoted in their newsletter as confessing for the first time that none of the Sears Grand or Sears Essentials Stores have yet proven to be successful.

He also indicated that Sears is hopeful of finding a way to sell the Martha Stewart line of merchandize which is exclusive to Kmart until their contract expires in 2009.

The newsletter also reported that HALF of the store managers have left the company since the merger on 3/24/05. 

Mills is a Clearer Picture Now.

November 28, 2006

Analysis by: GLG Expert Contributor

Analysis of:Colony Capital Gets Mack-Cali's Xanadu Share | www.globest.com

A lot has happened here all of a sudden:  Canada’s Ivanhoe has taken over the offshore developments, the Chicago development has been sold and now Colony Capital has removed the Xanadu property from the Mills table.  Mills announced that sales for the last 12 were $ 392 per sq. ft. versus $376 for the previous 12.  In my mind that puts the portfolio at an average “C” quality when compared which the Mall REIT’s.  Simon is operating at an average $ 474 per sq. ft. and the last General Growth numbers I saw were at or around $ 450.  General Growth’s numbers are reduced by the Price portion of the portfolio which operates at lower numbers in smaller Western U.S. communities.  Occupancy for Mills now stands at 87 + %, up marginally from a year ago.

Kenneth LeonardPrincipalLeonard Associates

SHLD--A HOLDING COMPANY NOW?

November 20, 2006

Analysis of:At Sears, Investing-Not Retail-Drive Profit | wsj.com

This article adds yet another strong piece of evidence to the retail industry's long held belief that SHLD should not be viewed as a retail investment.

The article details the continuing deterioration of same store sales and profits coming from Mr. Lampert's skill as a high risk speculator in "exotic derivatives".

Kenneth LeonardPrincipalLeonard Associates

WILL RITE AID NEED TUMS?

November 2, 2006

Analysis of:THE RITE PLAY | retailtrafficmag.com

Rite Aid, the no. 3 drug chain behind Walgreens and CVS, is buying 1,521 Eckerd stores and 337 Brooks stores.

Rite Aid already has had serious problems making money from the stores they have owned and operated for many years.  Any industry veteran can attest to the difficulty of making money with stores that must be converted to new systems, new management, new procedures and new distribution models.

This article is subtitled "Rite Aids' deal is good news for net lease investors."  I respectfully disagree.

Kenneth LeonardPrincipalLeonard Associates

UBS HAS ENOUGH ROPE TO HANG ITSELF

October 27, 2006

Analysis of:UBS tosses $780-million rope to Sears Tower | www.chicagobusiness.com

UBS announces a new $780-million loan @ a 6.26% interest rate, to Sears Tower in the face of a 22% vacancy rate and a 20% decline in NOI to only $59 million. The article also mentions the well known fact that many of the leases made during the period when space was at a premium, are now coming up for renewal  at rates expected to be lower than their current rents. This will undoubtedly drive next years NOI even lower.

To me the Key implication of this article is that this is a perfect example of how a plentiful supply of cheap mortgage money is creating a return to the "dumb lender" days of the last real estate "bubble".

Detroit to Dubai

September 29, 2006

Analysis by: GLG Expert Contributor

Analysis of:Big Box At The Airport | retailtrafficmag.com

Cities have historically been located at transportation hubs.The earliest were located at the confluence of rivers or at ocean fronts to take advantage of the boat.Next the railroad brought us up against the marshalling yards.Now the primary modes of transportation are the automobile, the jet and the PC.The automobile moves people efficiently and the PC moves information efficiently.

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