Has The Merrill REIT Equity Offering Well Run Dry?

In a surprising development on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 REIT scene, today cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Omaha World Herald announced that Merrill REIT group darling Simon Property Group is selling cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Crossroad Mall in Omaha on 72nd and Dodge Streets. With tenants such as Finish Line, LensCrafters, Old Navy, Victoria' Secret and near bankruptcy Claire's, it is not too hard to see why cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mall has fallen on hard times.

What is mildly troubling is that Crossroads is located less than three miles away from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 famous Borsheim's store at 120 Regency Parkway where cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 annual BRK B share circle jerk takes place, and where Becky Quicky has a lifetime 100% discount.



What should be much more troubling (especially to holders of REIT stocks), is that instead of simply doing a tactical drive by follow on offering (we are talking $$$ peanuts here), SPG is forced to stoop to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 level of actually selling assets for cash. What's wrong - not enough ammo left to institute a little REIT short squeeze? Someone is slipping.

Back to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mall - Omaha Herald notes that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 price will be "market value" and that in 2002 cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mall was appraised for $57.1 million "according to a JP Morgan" report. Add this to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increasingly larger number of CRE market tests currently percolating in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market place: someone may be very unpleasantly surprised with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 price this (and ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r) mall fetches. Also, whatever happened with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 whole premise that SPG would be an acquiror for real estate? Uhm, doesn't this refute both cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "logic" of both NAREIT and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 most recent Merrill upgrade, and I quote:

"We are moving from Neutral to Buy on Simon given cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company’s opportunity to boost external growth (and improve SPG’s core U.S. portfolio) as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y prepare to become a major player in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 emerging “M&A” market in U.S. retail real estate."

Sooo.... Schmidt was actually referring to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company being a divestor of assets, not acquirer....honest mistake - now it all makes sense. Sphere: Related Content

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Not So Deep SPG Thoughts Post The 2nd Equity Dilution

Everyone's favorite REIT analyst Craig Schmidt raising his Price Objective from $48 to $52 on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 second dilution orchestrated by his parent in just as many months.

I am Cohen And Steers' total lack of surprise.

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Geneal Growth Partners -Tenant Quid Pro Quo Begins

Interesting article out of WSJ, that dovetails with Zero Hedge's expectation that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mega REIT bankruptcy will portend only bad things for all ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r mall operators as this develops into a stressed "market test". WSJ reports that while retailers have said cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y would be willing to stay with GGP, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y will likely demand an arm and a bone in terms of concessions for remaining as a tenants. And cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 resulting looser lease terms will only have negative implications for even relatively healthy mall operators (SPG) who will be forced to meet GGP's reduced terms or risk losing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own tenants. Sphere: Related Content

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Simon Property Group Defaults On Mall Loan

And so it begins. Newsday reports what many were expecting: "The owners of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Mall at The Source in Westbury have defaulted on a $124-million interest-only balloon loan." The data was caught by Zero Hedge favorite TREPP: this could be cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 beginning of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 great unravelling for even cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 heretofore "healthy" REITs.

The mall - where stores of bankrupt retailers Fortunoff and Circuit City are liquidating cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir goods and where Steve & Barry's once had a location - had a 10-year-old balloon loan that matured on March 11, said Thomas Fink, senior vice president of Trepp, which tracks cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 performance of commercial real estate loans that have been securitized. The loan servicer, LNR Properties of Miami, listed cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 loan as a nonperforming mature balloon loan, he said, which means cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 servicer does not expect cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 balance of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 loan to be paid.

It originally was issued in 1999 by Nomura, and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 owner of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mall is listed as W&S Associates. Records from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 New York State Department of State show cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 address of W&S as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Simon Property Group, owner of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Roosevelt Field Mall, Walt Whitman Mall and Smith Haven Mall. The records were unclear regarding cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ownership composition of W&S.

"What's been happening is that more and more commercial properties have been having trouble refinancing balloon payments that are coming due," Fink said. "There's no market right now or cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market is not giving cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 proceeds or cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 rate cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y want to refinance cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mortgage."

This is a story we will be following closely as it fits closely with our expectations that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 CRE default explosion will wipe out cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bulk of "equity" value at highly leveraged public REITs.

Update

The oracles at RBC have decided to go all out here, and have lowered cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir target price on SPG from $80 to $70, which is only a 100%+ rise from current levels. Talk about a gutsy call. Sphere: Related Content

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REITs Continue The Dividend Trap

If only companies knew cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y would be rewarded with aggressive buying of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir stock after reducing and/or PIKing cash dividends cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y likely would have done so much, much sooner... After all why would investors demands cash out of "dividend stocks." This little trick however has not escaped REITs Mack-Cali and Simon Properties. CLI announced after market close today that it would be reducing its dividend by 30%, from $2.56 to $1.80 (a 30% reduction) and would pay cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 quarterly dividend of $0.45 on April 13 with an ex-div date of April 3.

This is not quite as egregious as what SPG did last Friday, when it decided to pay only 10% of its dividend in cash. But such is life when everyone is looking at your space as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next big potential blow up: saving cash is probably a good idea. Sphere: Related Content

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Yet More REITs Conserving Cash

REIT Simon Property Group announced results of its dividend election today, which for all practical purposes could be called anything but an "election." The final outcome is that shareholders will receive a dividend of $0.90/share consisting virtually entirely of stock (90%) and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 balance in cash. The irony is that when queried, shareholders predominantly opted for a cash distribution (193.6 million shares, or 93%), versus those opting for shares (15.2 million, or 7%), while 22.5 million "shares" didn't care eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r way.

The REIT, which has roughly $773 million in cash and $18 billion in debt currently, has reason to conserve cash, as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 deteriorating cash flow generation from its portfolio of regional malls and community shopping centers is likely being impacted very adversely as a result of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 accelerating bankruptcies among its retailer tenant base. Surprisingly, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company has a market cap of $8 billion, which, based on a closing share price of $34.73 and representing a 20x multiple of its consensus 2010 earnings of $1.73 (a number which could be in threat of reduction if ongoing deteriorating within cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 commercial real estate community continues), seems somewhat rich based on its growth prospects. Without doubt cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 primary factor in determining its recent share price moves is its short interest which at 24.3 million is slightly more than 10% of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company's total stock float of 212.7 million shares. Sphere: Related Content

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