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GLG News by this Author

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No Surprises Here

February 6, 2009

Analysis of:High-End Housing Market Ravaged by Stock Selloff | www.cnbc.com

These are unusual times to be certain. But these statistics from The National Association of Realtors should not come as a surprise. Though the media focus has been on the lower and middle parts of the market......and on the subprime borrowers.....for the first time in memory, the economic pain may actually be greater at the top.

Can One Sell Enough $5 Lattes to Justify These Rents?

February 2, 2009

Analysis of:At Starbuck's, A Tall Order For New Cuts, Store Closures | online.wsj.com

Like so many other retailers and food service companies, Starbucks growth in recent years was fueled by the pressures on a public company to add stores and with it sales volume. But much of that new store and sales volume growth came at the expense of good business practices and even common sense.

All is Not as it Appears

December 22, 2008

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.

And This Was the Good News?

December 19, 2008

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.

Consider The Source

December 17, 2008

Analysis of:What's Ahead For Real Estate In 2009? ForSaleByOwner.com's Predictions | www.marketwatch.com

It is important to make note of the source for the "market data" that is released as "news" these days. Often the underlying data is manipulated or couched in a way so as to promote the interest of the party that is releasing the data. In some cases this can be akin to reading a restaurant review written by the chef of the restaurant.

This is a Product of Too Much Debt

December 17, 2008

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.

More Empty Boxes Than Christmas Morning

December 12, 2008

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 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.

There Will Be More to Follow

December 5, 2008

Analysis of:Kimball Hill Calls it Quits, For Good | www.bigbuilderonline.com

Is the business model for regional and national homebuilders sustainable in the current market? Can other regional and national players survive a prolonged recession?

All In The Name of Avoiding Taxes

December 4, 2008

Analysis of:LandAmerica's Collapse Leaves Investors Looking For Cash | online.wsj.com

On the heels of the Chapter 11 filing by DBSI, Inc., this is a sign of serious trouble in the world of title insurers and 1031 Tax Deferred Exchange facilitators. Is this another sector of the financial system that can't be trusted? Is a major industry shake-out ahead? Where is the regulation?

Lenders and Regulators Will Control How Bad This Crisis Becomes

December 3, 2008

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.

A Short Sighted Move By Target

November 19, 2008

Analysis of:Target Reduces Capital Spending by $1B, Cuts Back on New Store Openings | www.commercialpropertynews.com

Early in my career a mentor told me that cutting back on advertising when business is bad is akin to turning back the clock in an effort to save time. While the capital expenditure reduction will save Target money in the near term, the move is likely to cost it more money in the future, and most likely will cost it some market share as well.

Could Anyone Not See This Coming?

November 19, 2008

Analysis of:DBSI Failure Shows Spread of Turmoil in Real Estate | online.wsj.com

As I have written here before, anyone investing in a real estate TIC to avoid paying 15% capital gains tax on the gain from a sale of a whole-ownership property should have their head examined. The structure is cumbersome, if not outright silly, and the rules are onerous. But the business model for DBSI was, it turns out, nothing more than a legal Ponzi scheme.

Realogy Looks To Be Headed For a Chapter 11 Reorganization

November 17, 2008

Analysis of:Realogy works to avert default on loans | www.inman.com

Given its overwhelming debt of more than $6 billion and the bleak prospects for any quick recovery in the housing sector, Realogy may have no alternative but to file for Chapter 11 reorganization in order to survive this economic downturn.

Misguided Optimism From a Weak Player in the Commercial Markets

November 17, 2008

Analysis of:Inertia of Buyers and Sellers to End in 2009, Predicts Grubb & Ellis | nreionline.com

Much like the National Association of Realtors (NAR), many players in the residential and commercial real estate markets make predictions of improving market conditions hoping that the such prophecies will come true. Once again, we are seeing a case of irrational exuberance.

Value of Land Depends on What You Can Do With It

November 11, 2008

Analysis of:How To Evaluate Land | www.builderonline.com

This article takes a very interesting look at how homebuilders and their lenders are now valuing land holdings, both improved and unimproved. But the bottom line is - and always has been - that the value of land is wholly dependent upon what you can do with it.

There Is An Upside To All These Store Closings

November 11, 2008

Analysis of:Circuit City Closures Add to Retail Woes | www.globest.com

Linens-N-Things is liquidating and closing its 400 plus stores. Circuit City is closing 150 stores and is unlikely to survive this economic tsunami. Bombay Company is gone. Sharper Image is history. Say goodbye to Tweeter (aka Sound Advice and HiFi Buys). It seems as if all of the news coming from the retail sector thsese days is grim. But there is an upside amongst all this turmoil.

We Have Just Begun to See the Impact of Retail Store Closings

November 10, 2008

Analysis of:Store Closings Could Double in 2009 | www.retailtrafficmag.com

Retail store clsosings in 2008 are already up 25% over 2007 and are expected to double in 2009. The impact of these closings on retail centers, their owners and lenders will be significant.

Any Good News is Simply Anectdotal

October 24, 2008

Analysis of:California Home Sales Revive, But Not Without Intense Pain | online.wsj.com

If this is what serves as "good news" in the housing sector, it is akin to receiving a "compliment" at a cocktail party that "you aren't as fat as you used to be".  Most, if not all, of the "good news" regarding housing markets that has been bantered about and splashed across headlines in the last several months is not good news at all but simply a comparison of current bad data against prior data that was worse.

How Secure Are Those Credit Tenant Leases?

October 16, 2008

Analysis of:Starbucks Leases in Dispute | online.wsj.com

This article regarding the treatment of leases and landlords by Starbucks as they go through the process of closing some 600 stores - or walk away from new lease deal already committed to - raises significant issues as to the security of "credit tenant" leases in the commercial real estate industry.

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