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

Kenneth LeonardPrincipalLeonard Associates

IS THE SKY FALLING?

June 26, 2008

Analysis of:U.S. RETAIL STORE CLOSURES FLIRTING WITH SIX-YEAR HIGH | retailtrafficmag.com

This analysis, as is the case with most of my analyzes for GLG News, could properly be classified under several different overly restrictive GLG News "Subjects".  It involves important impacts in "Retailing", "Finance",Stock Market Activity, and Shopping Center Real Estate(which as yet is not a separate category). Instead I chose to label it under the REITs category.  However, whichever category the GLG reader is interested in, the primary import of this article remains the same: ALL RETAILERS ARE NOT CREATED EQUALLY AND RETAILERS ARE NOT COMMODITIES! The author, who should know better but has been previously found guilty of spicing up headlines to increase her readership, treats the closing of a 1000 sq. ft. store in a strip center with the same import as the closing of a 150,000 sq. ft. department store anchor in a regional mall.  Therefore the meaning becomes garbled. I will attempt to clarify. 

Kenneth LeonardPrincipalLeonard Associates

ANOTHER EXAMPLE OF HOW CHEAP MONEY CORRUPTS

June 25, 2008

Analysis of:Steve & Barry's Faces Cash Crunch | online.wsj.com

This article is important for at least three reasons. The first and most important is the "Domino" affect the restructuring or demise of Steve & Barry's will have on most, if not all, Mall REITs. The vast majority of their 270 existing stores are in former anchor stores that, if returned to their former vacant status, would have profound negative impact on the entire "wing" of the regional mall they would be vacating. The second and equally negative monetary impact will be on the bottom line of "inline" specialty retailers who have been depending upon the customer traffic generated by Steve & Barry's as a replacement for the vacant department store anchor. The third impact is the further verification of the "MYTH" of DEPARTMENT STORE REAL ESTATE VALUES". If the SHLD investors needed any additional proof that Messrs. Lampert and Ackman were totally misguided in their claims of between $15 & $20 Billion in real estate value, this is it. 

Kenneth LeonardPrincipalLeonard Associates

ARE ALL THE BANK ANALYSTS BLIND?

May 7, 2008

Analysis of:Sears Holdings price cut by Deutsche Bank | www.reuters.com

While I realize that the Title is somewhat provocative and the Subject somewhat misleading, both are well deserved.   As my Commentary will show, those analysts who have been following SHLD and singing the praises of Eddie at every opportunity, are finally becoming disenchanted with his efforts. However they continue to blindly repeat their mantra about the stock having an "intrinsic collateral value" based solely upon some uninformed and ludicrous calculation of leased and owned real estate values.

Howard LiggettPresident and CEODistressed Real Estate Consulting Services, Inc.

Will Rogers was REIT~Buy Land;Especially Residential

April 22, 2008

Analysis of:The REIT Time? | www.forbes.com

The nation's homebuilders have an enormous inventory problem and it is not limited to only completed homes sitting idle on the market.  Many builder-developers with planned for housing communities have seen the blueprints shelved as existing home sales have stalled and new homes garner little more than drive-by attention.  As the misery index rises,many of the large land tracts committed to subdivision housing are being sold as cash starved builders try to weather the storm.

Kenneth LeonardPrincipalLeonard Associates

The Clouds Of Danger Are Gathering Over Carrefour's Horizon

April 16, 2008

Analysis of:Family Bids Adieu to Carrefour Control | online.wsj.com

One of the major reasons for Carrefours success thus far is about to become its biggest lability! By keeping its' occupancy costs low through ownership of many of its' locations, Carrefour has managed to pass along the benefits of below market rents to its' shareholders in the form of increased profits.  Now under the plan of the private equity group called Blue Capital, the rents will rise to "market rates" and the "spread" between the market rate rents and the below-market occupancy costs determined by conservative family management, will go toward a front end payment to the Blue Group and other stock holders at that time. Who wins and who loses from this new arrangement?

Kenneth LeonardPrincipalLeonard Associates

Is It Cause For Alarm When Bottom Tier Companies Fail?

April 16, 2008

Analysis of:RETAILING CHAINS CAUGHT in a WAVE OF BANKRUPTCIES | www.nytimes.com

There are two glaring problems with this New York Times Article.   First of all, its' headline is very misleading and designed to stir up controversy, while the body of the article is a well reasoned and evenhanded analysis of a far less disturbing trend. One could almost finish reading this with a positive feeling about the sudden realization of certain lenders that they should think twice about lending lots of money to people that could not pay it back!  Next, while it further verifies what readers of GLG News have been reading about for many weeks; that the real reason behind this wave of bankruptcies has less to do with the current recessionary economy than with the ridiculous levels of debt that these bottom tier retailers have been carrying, it only deals with this issue "in the fine print" at the end of the article.

A bright spot in the single family housing market but be careful....

April 10, 2008

Analysis by: GLG Expert Contributor

Analysis of:A Bright Spot for Housing Investors? | www.nytimes.com

1. Investors still need to be wary of single family Investments as housing valuse are falling 2. Rental Rates are falling on single family homes 3. Renters are being affected with loss of jobs and income

Kenneth LeonardPrincipalLeonard Associates

WHERE HAVE ALL THE GROCERS GONE?

April 10, 2008

Analysis of:GROCERY ANCHORED CENTERS GET SQUEEZED | retailtrafficmag.com

This article is important because it provides an early impression of what is happening around the country  to vacancy rates,  asking rents and effective rents.  Obviously if true, this limited survey by Reis Inc., could provide an early indicator of a growing problem in the shopping center industry However, based upon my experience in this industry over many years and many economic cycles, I suspect that not only is the information rather shaky, but that it needs much more in the way of careful analysis to be meaningful for use in making investment decisions.

Kenneth LeonardPrincipalLeonard Associates

Another Example Of Disastrous Over-leveraging

April 8, 2008

Analysis of:Centro Suitors Submit Buyout Bids | online.wsj.com

With debt of of roughly $17 billion and $3.4 billion in short term debt due to be paid or refinanced by April 30, can even the most ardent suitors expect to be able to do the necessary due diligence to come up with any kind of a rational offer within the next 3 weeks? Alternatively, is this another Bear Sterns $2.00 a-share-type buyout? It is my belief that the outcome of this bidding process will reveal a great deal about whether or not the retail real estate bubble has really burst or if investors have learned anything about valuing troubled and over-leveraged REITs.

Kenneth LeonardPrincipalLeonard Associates

A Lot Of Money Wasted On A "Clumsy Trick"

April 3, 2008

Analysis of:Private equity boom was nothing more than a clumsy trick | www.ft.com

In a rare moment of candor, Henry Kravis, Alan Bond, Hamilton James and David Rubinstein confess at the Super Returns private equity conference, that the private equity market is simply a "proxy for the credit markets".  They also agree that the private equity buyouts are "now recognized as reality triumphing over hope" and are seen to "count for very little". The retail industry was a major target of private equity buyouts and have come to an abrupt halt with the onset of the credit crisis. The big question is whether the buyouts that did occur will end up working out?

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