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

Waiting for dawn...

January 9, 2009

Analysis by: GLG Expert Contributor

Analysis of:All tunnel, no light | www.property-report.com

Job losses continue to escalate

Gavin CampbellManaging PrincipalSteelbridge Capital LLC

Its All About the Fundamentals

January 6, 2009

Analysis of:REIT Rebound Hinges on Credit Thaw, Recession's Depth | online.wsj.com

The public markets have traditionally been a leading indicator of trends in the private real estate markets, and with the continuing deterioration in property fundamentals across most property types, it is hard to conceive of a broad based REIT rebound this year. Longer term, it is important to remember that the REIT model of the first part of this decade was predicated less on property and market fundamentals and more on creating attractive dividends through cheap debt. That era is over, and the successful companies will be those who can create dividends and stock price increases through back to basics value creation at the property level.

Kenneth LeonardPrincipalLeonard Associates

FFO vs. NOI vs Reality

January 2, 2009

Analysis of:REIT Rebound Hinges on Credit Thaw, Recession's Depth | online.wsj.com

The Dow Jones Equity ALL REIT Index is the subject of this article which tries to predict where the index will be in 2009. Although the WSJ reporter managed to assemble some of the truly "best and brightest" minds in the REIT industry for his article, he failed miserably when it came to asking them meaningful questions. Not one of these REIT owners or analysts commented on the coming barrage of bankruptcies or space reductions being discussed openly in trade journals by the major space users in almost all sectors of the REIT industry. For example, David Simon, CEO of the Simon Property Group and Steven Roth, CEO of Vornado Realty Trust, totally ignored the impact on 2009 FFO and NOI the previously announced closing of hundreds of anchor department or discount stores will have in their malls and/or shopping centers.  

Michael MillerFormer Independent ConsultantIndependent Consultant- Michael Miller

Fact or Fiction Anchor Mall Real Estate has no value

December 22, 2008

Analysis of:PREIT, Cafaro Lend Boscov's a Helping Hand | www.printthis.clickability.com

Is it fact or fiction that  Real Estate Value of Department Stores in Malls has no value. Loans to Department stores prove nothing....

Everyone Is in the Boat Together

December 22, 2008

Analysis by: GLG Expert Contributor

Analysis of:PREIT, Cafaro Lend Boscov's a Helping Hand | www.printthis.clickability.com

Just as we see banks working with overlevered borrowers to extend or alter terms of loans in this environment, landlords are helping struggling tenants. The incentives are even stronger in retail versus other property types as dark storefronts quickly can impact a center's appeal. Taken further out, co-tenancy clauses can kick in, which can lead to a death-spiral as tenants invoke their right to either not pay rent or potentially exercise an early termination clause. Unfortunately for investors, the lease and co-tenancy terms are generally not made public and vary from property to property and landlord to landlord. What does this mean for GLG clients? It means that increasingly we are seeing how lenders/borrowers and landlords/tenants are in the ship together and each is bailing as fast as they can. This situation is not good for asset values, of course, and thus until we see this trend slow, one would expect property values to remain under pressure.

Future land use trumps existing activity in establishing land values, over a long term horizon.

December 22, 2008

Analysis by: GLG Expert Contributor

Analysis of:PREIT, Cafaro Lend Boscov's a Helping Hand | www.printthis.clickability.com

Yes, the viability of department stores is questionable, but the real estate is a prime platform to apply market driven future land use activites which can more efficiently bring 'traffic' to malls, and/or act as a catalyst for the re-development of malls.   As such, there is value to the real estate.  Let the department stores go bankrupt and convert the real estate to more efficient, market driven uses.

All is Not as it Appears

December 22, 2008

Analysis by: GLG Expert Contributor

Analysis of:PREIT, Cafaro Lend Boscov's a Helping Hand | www.printthis.clickability.com

There is much more behind this story than the headlines indicate. In a different economic climate this deal may not have gotten done...but then again, it may have.

Kenneth LeonardPrincipalLeonard Associates

The Myth Of Department Store Real Estate Value Is Finally Put To Rest

December 19, 2008

Analysis of:PREIT, Cafaro Lend Boscov's a Helping Hand | www.printthis.clickability.com

For the first time in history, two major shopping center REITs are helping keep a regional department store company in business through substantial unsecured loans. This should lay to rest any notion that a troubled department store company such as SHLD, could use the so called "collateral value" of their real estate holdings as a means of raising funds when bankruptcy threatens.

Kenneth LeonardPrincipalLeonard Associates

NAVs and Other Fictional Characters

December 17, 2008

Analysis of:A Year of Tumult For REITs | www.nytimes.com

This article highlights the financial community's dependence on what is in reality a myth! By measuring the level of discounted value in relation to some real or imagined NAV or value of the underlying assets, the financial community is looking through the wrong end of the telescope. Further, this reliance on NAV makes no allowance for the impending increase in anchor tenant vacancies that have already been announced by several of the department store anchors. These vacancies and the attendant "domino effect" they will have on the nearby inline stores, are sure to have a profound impact on the 2Q and beyond FFO and NOI of all Mall REITs! 

Kenneth LeonardPrincipalLeonard Associates

How Much Equity In Equity REITs?

December 17, 2008

Analysis of:U.S. Equity REITs Susceptable to Downgrades in 2009 | www.printthis.clickability.com

Fitch Ratings lowered its outlook for the Equity REIT sector to negative.  In this writer's opinion they did it for many of the wrong reasons and ignored some of the most important reasons for not downgrading the sector further.

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