Using Veritas to Construct the "Per…

29-04-2017 Hits:82075 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:77714 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:77284 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:82030 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:78621 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:80917 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:47801 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:79622 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:79149 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:79699 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:84665 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:81621 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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The unprecedented turn of events in the global financial space has frozen credit markets, jeopardizing global economic growth. This, coupled with a rapidly deteriorating retail climate and declining commercial real estate valuations, has severely damaged the fundamentals of real estate investment trusts (REITs) with significant amounts of debt maturities in the near-to-medium term. Macerich (MAC), which has nearly $4 bn of debt due over the next three years faces a daunting task ahead to navigate as a going concern. Further compounding the problems for MAC is the Company’s property portfolio, which is highly susceptible to the current crisis, built on high leverage (current LTV of 85% based on market value) and including a significant number of underwater properties with negative equity. As expectations of a recession are fast turning into a reality, a slowdown in consumer spending and a consequent impact on retailers would result in additional pressure on the Company’s occupancy levels, impacting its rental rate growth and net operating income.  As we navigate through future, the problems in the financial sector are expected to get worse before they stabilize wherein our expectations of the Distressed scenario (of the four scenarios explained in the report) could well turn into a reality.

REITs are very labor and intellectual capital intensive companies to value properly. General Growth Properties and Macerich consumed an enormous number of man (and woman!) hours and required extensice modeling, macro research and fact gathering. Thus, this particular professional report is 37 pages long, nearly twice the normarl report size, and this is after releasing over 100 pages of preliminary findings! The effort is well worth it, though, for it illustrates the anwer to the quesion: Is Macerich an undervalued victim of a bear market slaughter, or is it a bankruptcy waiting to happen?

The work that went into this...

We have arrived at MAC’s valuation by valuing each of MAC’s 103 properties (including that of consolidated and unconsolidated JVs) after consideration of their expected rental income and debt repayment obligations. Each individual property valuation assumes rental income based on the current prevailing market rentals for similar properties in the same location (zip codes) sourced through prominent info sources and brokers including Loopnet and CB Richard Ellis. The rental stream for each property has been projected for the next 20 years based on macro-economic factors like expected population and household growths at each of the subject property location. In addition, the valuation takes into account the total gross leasable area and rentable area, occupancy rates, property management expenses including insurance and taxes, renovation and maintenance capex, mortgage outstanding, and refinancing requirements.

The above methodology has been followed under four different scenarios - Refinancing scenario, Asset Sale scenario, Foreclosure scenario and Distressed scenario. We have arrived at MAC’s valuation based on weighted average (probability of likelihood being weights used) of valuations arrived at under each of these scenarios.

   A sizeable portion of MAC’s portfolio was acquired over the last 5 years, during the period when property prices were on an upswing. As of September 30, 2008, MAC had an ownership interest in 103 regional shopping centers and community shopping centers, primarily concentrated in the western US, with 80.7 mn square feet of gross leasable area. Of these properties, nearly 32% were acquired between 2002 and 2004, and 25% were acquired after 2004. With nearly 57% of the properties acquired in or after 2002, when the commercial real estate prices were witnessing a steep rise, a sizeable portion of MAC’s properties currently have a market value lower than the book value (purchase cost net of depreciation) and have a loan-to-value greater than 100%, representing negative equity.

  Subscribers may download the full reports here:

icon Macerich Forensic Valuation - Retail (264.45 kB 2008-11-28 14:49:36) 

icon Macerich Sensitivity Analyis - Pro (298.73 kB 2008-11-20 12:02:08)