Using Veritas to Construct the "Per…

29-04-2017 Hits:94613 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:85525 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:85899 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:89999 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:88435 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:88177 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:59312 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:87769 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:87309 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:87656 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:94068 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:91350 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Taubman Centers, Inc. 4Q09 results

TCO reported weak 4Q09 results with sagging core revenues and operating results. The rental income (minimum rents and percentage rents) declined 5.8% (y-o-y) to $92.5 mn from $98.2 mn in 4Q08. However, the decline in non-cash expenses like depreciation helped reduce the impact on bottom line from an accounting perspective with net income (excluding impairment charges and a litigation charge) declining lower 1.8% (y-o-y). Adjusted FFO which excludes the impact of non-cash items like deprecation declined 5.1% (y-o-y) to $76.6 mn from $80.8 mn in 4Q08.

Minimum rents declined 5.0% (y-o-y) to $87.1 mn from $91.6 mn in 4Q08. Average occupancy dipped to 89.5% from 90.5% in 4Q08 and average base rent declined 3.2% (y-o-y) to $42.56 PSF (per sq ft) from $43.96 PSF in 4Q08. While the tenant sales per square feet were reported to improve 3.8% (y-o-y), the percentage rents declined 17.1% (y-o-y) to $5.5 mn from $6.6 mn in 4Q08 largely owing to reduced occupancy and reduced percentage rents as % of mall tenant sales. Other revenues which include shopping centre related revenues and lease cancellation revenues dropped nearly 50% (y-o-y) to $8.4 mn from $16.8 mn in 4Q08 largely owing to negligible lease cancellation revenues of 0.5 mn against $7.5 mn in 4Q08. The decline in core revenues were offset by increase in management fees from Macao Studio City development fees as well as higher expense recoveries. Total revenues were down 1.9% (y-o-y) to $186.3 mn from $189.9 mn in 4Q08.


The Company recorded $126.3 mn of impairment charges in 4Q08. Excluding the one time impairment charges, total expenses declined 4.0% (y-o-y) or $6.4 mn largely coming from lower depreciation and amortization, reduction in shopping centre expenses, reversal of provisions for doubtful debts and lower interest expense. Some of decline in these expenses were offset by increase in general and administrative expenses.  Although the Company benefitted from improved expense recovery rate (recoveries as percentage of property expenses) of 114.3% in 4Q09 from 106.8% in 4Q08 adding nearly $4.8 mn to the bottom line, the same was largely offset by decline in gains from land sales by $0.8 mn and as well decline in equity income from unconsolidated JVs (excluding impairment charge and litigation charge) of $1.8 mn.

In aggregate, net income (excluding impairment charge and litigation charge) declined 1.8% (y-o-y). The Company has changed the accounting for minority interest from Jan 2009 owing to which the distributions in excess of net income are no longer deducted from the net income and the adjustment for the same is done through minority interest in the balance sheet. Consequently, the reported allocation of net income between the Company and the minority interest is not comparable with the previous years.

Adjusted FFO declined 5.1% (y-o-y) to $76.6 mn from $80.8 mn in 4Q08 while adjusted FFO available to common shareholders declined 4.7% (y-o-y) to $51.4 mn from $53.9 mn in 4Q08 owing to slight increase in ownership of TCO in TRG from 66.7% to 67.0%. Adjusted FFO per diluted share declined 7.0% to $0.93 from $1.0 in 4Q08. The Company maintained dividend of $0.415 which led to payout ratio increasing to 45% from 42% in 4Q08.

The Company's guidance for FFO per share within the range of $2.55 to $2.75 is in line with Boombustblog's estimates of $2.60 per share.

Reggie Middleton's view

TCO's results are a reflection of continued weakness in operating performance of retail REITs. While the Company is citing the positive year-on-year sales growth in tenant sales per square feet in 4Q09 as a sign of recovery, the year-on-year declines in occupancy and average rents shows continued weakness in demand for retail space. Also if we look at absolute level of TCO's TTM tenant sales per square feet in 4Q09, the tenant sales per sq feet continues to remain at low levels with only marginal uptick of 0.2% from TTM tenant sales in 3Q09. Reference pages 3 through 5 of the professional and retail versions of the TCO Forensic Analysis for our forecast of the same:

  1. TCO Report - Retail TCO Report - Retail 2009-11-27 11:41:15 355.95 Kb
  2. TCO Report - Professional TCO Report - Professional 2009-11-27 11:42:05 663.14 Kb


The occupancy and average rent continues the downward momentum in 4Q09 as accurately anticipated in page 4 of our subscriber forensic analysis TCO Report - Professional TCO Report - Professional 2009-11-27 11:42:05 663.14 Kb. In 4Q09, the occupancy further declined to 89.6% from 90.5% in 4Q08 and 91.1% in 4Q07. Average base rent in 4Q09 recorded year-on-year decline of 3.2%. The decline in occupancy and average rents are contributing to decline in minimum rents which declined 5.0% (y-o-y). However, the percentage rents are hit even harder owing to declining tenant sales and lower percentage rents as % of tenant sales owing to increased competition from excess supply in the market. The percentage rents declined 17.1% (y-o-y)



 The company did not report the opening rent for new leases signed in 4Q09. However, the previous data reveals sharp decline in opening rent reflecting substantial weakness in demand.

In regards to the impairment charges, I reference the post in which the TCO Forensic Analysis was initially released (seeThe Taubman Properties Research is Now Available):

The following table summarizes the valuation of each property through NOI-based and CFAT-based approaches. Individual property valuations will be discussed in detail separately, and released to professional subscribers.

Click to enlarge...

The two deep underwater properties - The Piers Shops at Caesars and Regency Square were written down to the fair value by recording impairment charge in 3Q09. While the former is being handed over to the lenders for auction proceedings, the latter still remains with the Company and the Company continues to service its debt obligations.  Additionally, there are 5 more properties with LTV of more than 80%, making them highly susceptible to reach the negative equity territory in case of further declines in rentals or increase in cap rates.

It is noteworthy that properties with high LTV include a) the new developments during 2005- 2008 phase and b) the existing properties against which additional debt was raised during 2005-2008. Among the properties with LTV of more than 80%, Northlake Mall was the new development in 2005, The Piers Shops was acquired in 2007, while additional debt was raised against International Plaza, The Mall at Short Hills, The Mall at Wellington Green and Waterside Shops during 2005-2008.

Additionally, there are four properties - MacArthur Center, The Mall at Partridge Creek, Stony Point and Westfarms - with LTVs in the "immediately at risk" zone.

So, I am sure many are wondering if these properties are destined to be written off, or what??? Well, let's look at the trend...


Sharply rising cap rates combined with...


  Click here to subscribe to BoomBustBlog proprietary research.

Institutional and high net worth CRE investors and consumers of Wall Street asset management services may find my analysis of the returns of private real estate funds of extreme interest. See "Wall Street is Back to Paying Big Bonuses. Are You Sharing in this New Found Prosperity?".

Anyone who has an interest in the CRE space should download my free 47 page outlook for the sector in 2010:  see Reggie Middleton's CRE 2010 Outlook (42 pages).

I also have a long and rich history analyzing GGP, the largest real estate bankruptcy in the history of the indsutry, after announcing their problems and profitably shorting them a year in advance of their failure. GGP has been in the news again after Hovde and Ackman decided to wage a PR battle against each other. See my take on the exchanges and GGP's valuation: 

1. It was bound to happen. Reggie Middleton vs Ackman vs Hovde on GGP!
(Reggie Middleton's Boom Bust Blog/MyBlog)
...s who own opposing positions on the stock. Ackman/Pershing square, who are long the company's stock, and Hovde Capital Advisors, who are short the stock, and Reggie Middleton, the original player! ...
Saturday, 26 December 2009

2. The next step in the GGP saga
(Reggie Middleton's Boom Bust Blog/MyBlog)
Hovde has issued a reply to Ackman's second GGP presentation. These hedge funds put out more analysis than the bank analysts that follow GGP, SERIOUSLY! For those that need a recap: My responses to
Tuesday, 29 December 2009

3. Thoughts on Ackman's GGP analysis and trade
(Reggie Middleton's Boom Bust Blog/MyBlog)
BoomBustBlogger NDbadger commented in the "It was bound to happen. Reggie Middleton vs Ackman vs Hovde on GGP!" thread: I didn't find Hovde's analysis compelling. Would have liked Ac
Tuesday, 29 December 2009

Additional CRE opinion...

5. Reggie Middleton on the Recent Ackman Short - Realty Income "O"
(Reggie Middleton's Boom Bust Blog/MyBlog)
Note to readers: due to a formatting error, a significant amount of this article was not published. If you read the article before 7 am 10/23/09, I suggest you peruse through it one more time.
Wednesday, 21 October 2009

6. Real Estate and REIT Short Ideas?
(Reggie Middleton's Boom Bust Blog/MyBlog)
I recently received this heads up via email: Reggie, I just got out of the Great Investors Best Ideas conference in Dallas and thought you'd like Bill Ackman's short. He actually said there'
Thursday, 08 October 2009

7. A Granular Look Into a $6 Billion REIT: Is This the Next GGP?
(Reggie Middleton's Boom Bust Blog/MyBlog)
This is a corrected and extended update of my glance into the Macerich update. This post was delayed due to material data input errors which have been rectified. I've decided to offer a peak into th
Monday, 07 December 2009