All GLG News Analyses Filed Under: REITs/Operating & Development

Kenneth LeonardPrincipalLeonard Associates

A PERFECT EXAMPLE OF HOW MERGERS AND ACQUISITIONS IMPACT REITs

January 22, 2008

Analysis of:Macerich countersues Whole Foods | dailycamera.com

This is a poorly understood phenomenon, taking place before our eyes, that is likely to become the single most important factor affecting the values of both mall and strip center REITs. It is not unlike the problems resulting from the proposed "monetizing" of the underperforming SHLD stores or the ongoing problems of disposing of the 88 duplicate stores resulting from the May-Macy merger.

Kenneth LeonardPrincipalLeonard Associates

Duh! Overfinancing Is Risky!

January 14, 2008

Analysis of:Credit Woes Hit Retail | license.icopyright.net

This article talks about the real estate-driven credit crunch as being bad for all REITs, but I disagree. The article ignores the fact that over-financing in the shopping center world is hardly a new phenomenon.  This kind of thing has been going on ever since the first shopping center lenders started allowing developers to borrow 110% of the cost of developing their projects. Centro, one of the featured companies in this article, is a classic case of very aggressive expansion. However not only are they guilty of very rapid expansion and the attendant rapid buildup of debt, but what is less evident is that in their haste to expand, they overpaid for some very mediocre properties.

Ancient Agora and Central Place Theory meet Wal-Mart In Value Exchange

December 31, 2007

Analysis by: GLG Expert Contributor

Analysis of:Wal-Mart Gets Discount on Land Purchase | chicagorealestatedaily.com

       The article is relevant, but is not a template.  Each situation is different in terms of demographic and market context.  Similarities are found in modern large retail anchors as a continuation of historic human population activities, whereby populations and activities are aggregated to create a 'draw', a 'magnet', or more pointedly, 'a critical mass' sufficient for other activities to flourish.  That private enterprise can assimilate those concepts to create modern agoras is classic capitalism and can be viewed as a value exchange between the developer and box retailer.  The problem arises when the same concepts of extraction from developer by the big box retailer are applied to government in an effort to excise substantive monetary or other benefit from the public domain.  

Michael MillerFormer Independent ConsultantIndependent Consultant- Michael Miller

Shopping Center Development

December 28, 2007

Analysis of:Wal-Mart Gets Discount on Land Purchase | chicagorealestatedaily.com

The article while factual just scratches the surface of center development. It just gives an indication of one of the incentives available to major tenants.

Kenneth LeonardPrincipalLeonard Associates

A Peek Inside the World Of Development

December 27, 2007

Analysis of:Wal-Mart Gets Discount on Land Purchase | chicagorealestatedaily.com

This article provides one of the most accurate and insightful snapshots of the realities of how today's strip shopping centers are developed. Although it relates to a specific suburban location in the Chicago Metropolitan area, it reflects an all-to-common reality of how developers treat anchor stores (or more accurately,how anchor stores take advantage of their bargaining power) all over the United States.

Kenneth LeonardPrincipalLeonard Associates

A FIGHT OVER CHEESECAKE

November 12, 2007

Analysis of:Jury Tells Mall Giant to Pay $74 Million | www.nytimes.com

When General Growth Properties acquired The Glendale Galleria (along with the rest of the Rouse Company), they set in motion their standard market research methodology to determine future competitive risks for each project.  When they determined that The Glendale Galleria was being threatened by unfair competition that was being subsidized by the City of Glendale, they started to take actions to combat this competition. This article discusses the results of those actions.

Huge Prospect expected from the 4th Downtown International Flight Check-in Worldwide

November 12, 2007

Analysis by: GLG Expert Contributor

Analysis of:Foreign Interests Seen in Taipei, Taiwan Railway Main Station Gemini Tower Development Project | udn.com

After Kuala Lumpur, Hong Kong and London, Taipei will be the 4th city world wide equipped with down-town international flight check-in center. The new Gemini project will combine traffic, offices, department stores and hotels functions. Estimation is 500,000 persons per day will visit this complex.

Can newly amended REITs law of Korea activate the Korean real estate investment market?

November 7, 2007

Analysis by: GLG Expert Contributor

Analysis of:New REITs Law of Korea | www.moleg.go.kr

Newly amended REITs law became effective as of October 15, 2007. The law was revised in order to encourage the establishment of more REITs by easing the establishment requirements, while the previous law was criticized to be too complicated and to give much discretion to the Ministry of Construction and Transportation (MOCT) when it approves a new REITs company.

Kenneth LeonardPrincipalLeonard Associates

Mall REITs Get No Respect

October 31, 2007

Analysis of:Regional Mall Reits Ring Up Solid Quarter | retailtrafficmag.com

IOSC reports September sales increase @ 1.7% below year-to-date average of 2.3%.  Economists expect GDP to grow at about 2%, the weakest figure since 2002, with projections that 2008 won't be much better. However the Regional REIT's sector continues to show gains and the obvious question is "what's happening?"  

Kenneth LeonardPrincipalLeonard Associates

A Perfect Example of a Department Store Vacancy Solution

September 20, 2007

Analysis of:PREIT Zips Up Former Strawbride's Space | www.globest.com

This article explains in more detail than any other I have read in recent years, the mechanics of what happens when a successful regional mall ($446 psf) finds itself with a sudden vacancy of a key anchor tenant.  It shows the approximate costs associated with finding a replacement tenant and gives a final resting place to the widely held belief that department store real estate has some intrinsic value.

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