gs_congrats.jpg

The world's most handsome and charismatic blogger stands outside his beloved friends at Goldman Sachs to congratulate them on the outstanding CMBS offering made through TALF government leveraging for Developers Diversified Realty (notice the funny looks that I am getting from the women in the background, haven't they seen a handsome and charismatic blogger before??? Cool). I have a few questions about follow on offerings and what that may portend for REITs who are in a even better situation than DDR, but let's read up on why I walked past GS headquarters in the first place. After the article excerpted below, we will discuss some tidbits of data and info that neither Goldman nor the REIT prolific Merrill Lynch, or anyone within a bonus' throw or subway distance from 85 Broad will bother to tell you about the REITs, save that handsome and charismatic guy who dares poke fun at the "Almighty at 85"!

From WSJ.com:

Demand is expected to be strong Monday for the first sale of commercial-mortgage-backed securities under a government rescue program designed, in part, to ease the mounting stress in the commercial-property sector.

But the strong demand is partly a reflection of the conservative underwriting of the $400 million in bonds backed by 28 Developers Diversified Realty Corp. shopping centers, in terms of the quality of the assets underlying the loan and the loan amount relative to the value of the properties. [If BoomBustBloggers remember, DDR is the company which was part and parcel of what appears to be (but only if you were to really use your imagination) a "pump'em, dump'em, double tax'em" plan with Merrill Lynch/BofA, see "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!"] While the deal may help reopen a vital funding source for some commercial-property investors, it will likely provide little solace to owners of tens of billions of dollars of office buildings, shopping centers and other commercial real estate that are now worth less than their mortgages. [more on this in a minute]



Published in BoomBustBlog
Monday, 16 November 2009 00:00

Reggie Middleton's CRE Short List, Part 1

Here is the short list of REITs that I have been promising subscribers for the last week: Commercial Real Estate Shortlist 11-2009 Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb. I plan on releasing a full forensic report this week (providing it passes the QA check before Friday) which will actually include property level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I
featured the work of a guest blogger whom I respect and I believe this
is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial real estate analysis, this is what has led us to this point:

japanese_land_vs_gdp.jpg

This really calls into question the usefulness of broad GDP reports in anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.


Published in BoomBustBlog

In Straight Talk From the Homebuilder CFO: The tricks builders use to disguise the true losses on their, the impairment game was discussed as a method of hiding losses on builders' balance sheets by taking impairments on what could be considered exaggerated book values. The exaggeration may not be that hard considering how far, how fast, and potentially how long property and land values can continue to fall.

Again, I refer to the comparative chart that shows the appreciation rate of Japan's major city real property values as their GDP started to ramp up and out of a major recession:

Published in BoomBustBlog
Sunday, 15 November 2009 19:00

Reggie Middleton's CRE Short List, Part 1

Here is the short list of REITs that I have been promising subscribers for the last week: Commercial Real Estate Shortlist 11-2009 Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb. I plan on releasing a full forensic report this week (providing it passes the QA check before Friday) which will actually include property level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I featured the work of a guest blogger whom I respect and I believe this is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial real estate analysis, this is what has led us to this point:

japanese_land_vs_gdp.jpg

This really calls into question the usefulness of broad GDP reports in anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.

Sunday, 15 November 2009 19:00

Reggie Middleton's CRE Short List, Part 1

Here is the short list of REITs that I have been promising subscribers for the last week: Commercial Real Estate Shortlist 11-2009 Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb. I plan on releasing a full forensic report this week (providing it passes the QA check before Friday) which will actually include property level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I featured the work of a guest blogger whom I respect and I believe this is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial real estate analysis, this is what has led us to this point:

japanese_land_vs_gdp.jpg

This really calls into question the usefulness of broad GDP reports in anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.

Thursday, 12 November 2009 00:00

I am still developing my REIT thesis

Thus, the first of the two reports for subscribers will probably be pushed off until next week. We had a problem sourcing market rents for some of the properties in the REIT's portfolios and I prefer to use actual numbers in lieu of assumptions so it took a little longer to populate the models as well.

I will discuss the rejects from the short list today, though. One aspect of crystallizing the thesis is dealing with the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!) as well as government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").

Published in BoomBustBlog

It's bound to happen if regulators don't stop playing hide the sausage and don't start forcing banks to take their medicine. First, a quick recap of the nonsense currently taking place. This post is designed to convince banks that they are considerably better off taking their medicine now than going on with the government endorsed plan of pretending your not sick and risking major surgery, plus chemo and radiation just a year or two later. My next post will be a selection of REITs that didn't make my shortlist, followed by a new REIT report for subscribers that will explicitly show property values of each and every property in said REITs portfolio (and potentially the lender or CMBS/mortgagee pool collateralized by said properties - that's right, someone may be called out).

After dealing with European banks during my work with GGP, I have come to the conclusion that most regional, community and even global banks have no where near the capacity and/or expertise to properly evaluate and value the projects/assets that they have invested in. Well, if that is the case, this is your chance to rectify that problem - on the cheap, at least on a relative basis. So if you are in an appropriate position in your bank, fund or lender - read this evidence that supports the proactive behavior of snatching the big crumbs off the table before there is a mad dash for the micro-specs of bread that may or may not be left if one were to wait it out while playing "hide the sausage games". I'll give you the tools to make a convincing argument, trust me. Here is the broader macro argument for lenders pulling bad debt from under the REIT and CRE industry, thus supporting a bearish thesis for said players.

First: A picture is worth a thousand words...

fasb_mark_to_market_chart.png

Instance asset gains and market value stemming from just a small tweak of truth. Financial stocks fly, moving farther and farther from their fundamental values.

Second: We have the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!). Zerohedge speculates "Is Goldman Preparing To Upgrade The REIT Sector?"

Third: We have government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").

Fouth: We have a false sense of security that nearly everybody believes should make us insecure, yet somehow we have those long in the markets feelng warm and fuzzy. See You've Been Bamboozled, Hoodwinked and Lied To! Here's the Proof. What Are You Going to Do About It?.

Now, for those of you who believe that the government's "pretend and extend" policy has any chance in hell of working, or better yet, that we are not following in the footsteps of Japan, let's take a pictorial trip through recent history. There are nearly no Japanese banks in the top 20 bank category on global basis by 2003 - NONE (save potentially Nomura, which arguably survived in name, alone). As you can see, they literally dominated 90% of the space in 1990!

Click to enlarge...

top_20_banks.jpg

Source: Cap Gemini Banking M&A

I want the banks that read my upcoming real estate analysis to take heed to history. It truly does tend to repeat itself. If you are an officer in a bank with CRE exposure, reach out to me from your work email and I will supply you with an abbreviated copy of one of the recent reports, gratis. This should whet your appetite to subscribe for more.

Well, are we following the Japanese "Lost Path". Notwithstanding the damning evidence of hide the truth and hide amongst lies linked to above, ponder the following rather dated, but still quite poignant data...

Published in BoomBustBlog

I just received this email and thought my readers may find this of interest. DDR is the company that was featured in the "bailout" post (Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!), a must read if you haven't done so already:

I am in the premium xxxxxx business and own a retail store in metro Atlanta. The area that I lease is in a diverse affluent part of town. I believe that this is considered a class A shopping center. DDR is the current owner and this is one of the 28 shopping centers that was put up as collateral for GS in exchange for a 400 million dollar loan that they are going to try to roll up into TALF. To the best of my knowledge DDR acquired this shopping center from Inland a little over 2 years ago.

 

Published in BoomBustBlog
Wednesday, 11 November 2009 19:00

I am still developing my REIT thesis

Thus, the first of the two reports for subscribers will probably be pushed off until next week. We had a problem sourcing market rents for some of the properties in the REIT's portfolios and I prefer to use actual numbers in lieu of assumptions so it took a little longer to populate the models as well.

I will discuss the rejects from the short list today, though. One aspect of crystallizing the thesis is dealing with the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!) as well as government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").

It's bound to happen if regulators don't stop playing hide the sausage and don't start forcing banks to take their medicine. First, a quick recap of the nonsense currently taking place. This post is designed to convince banks that they are considerably better off taking their medicine now than going on with the government endorsed plan of pretending your not sick and risking major surgery, plus chemo and radiation just a year or two later. My next post will be a selection of REITs that didn't make my shortlist, followed by a new REIT report for subscribers that will explicitly show property values of each and every property in said REITs portfolio (and potentially the lender or CMBS/mortgagee pool collateralized by said properties - that's right, someone may be called out).

After dealing with European banks during my work with GGP, I have come to the conclusion that most regional, community and even global banks have no where near the capacity and/or expertise to properly evaluate and value the projects/assets that they have invested in. Well, if that is the case, this is your chance to rectify that problem - on the cheap, at least on a relative basis. So if you are in an appropriate position in your bank, fund or lender - read this evidence that supports the proactive behavior of snatching the big crumbs off the table before there is a mad dash for the micro-specs of bread that may or may not be left if one were to wait it out while playing "hide the sausage games". I'll give you the tools to make a convincing argument, trust me. Here is the broader macro argument for lenders pulling bad debt from under the REIT and CRE industry, thus supporting a bearish thesis for said players.

First: A picture is worth a thousand words...

fasb_mark_to_market_chart.png

Instance asset gains and market value stemming from just a small tweak of truth. Financial stocks fly, moving farther and farther from their fundamental values.

Second: We have the obvious manipulation that is occurring in the REIT space (see Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!). Zerohedge speculates "Is Goldman Preparing To Upgrade The REIT Sector?" 

Third: We have government complicity in the purposeful opacity of the values of the mortgage assets (see the FDIC "Prudent Commercial Real Estate Loan Workouts" guidance issued Oct 30th, as reported by the WSJ: Banks Hasten to Adopt New Loan Rules and the new FDIC guidance that states performing loans "made to creditworthy borrowers" will not require write downs "solely because the value of the underlying collateral declined").

Fouth: We have a false sense of security that nearly everybody believes should make us insecure, yet somehow we have those long in the markets feelng warm and fuzzy. See You've Been Bamboozled, Hoodwinked and Lied To! Here's the Proof. What Are You Going to Do About It?.

Now, for those of you who believe that the government's "pretend and extend" policy has any chance in hell of working, or better yet, that we are not following in the footsteps of Japan, let's take a pictorial trip through recent history. There are nearly no Japanese banks in the top 20 bank category on  global basis by 2003 - NONE (save potentially Nomura, which arguably survived in name, alone). As you can see, they literally dominated 90% of the space in 1990!

Click to enlarge...

top_20_banks.jpg

Source: Cap Gemini Banking M&A

I want the banks that read my upcoming real estate analysis to take heed to history. It truly does tend to repeat itself. If you are an officer in a bank with CRE exposure, reach out to me from your work email and I will supply you with an abbreviated copy of one of the recent reports, gratis. This should  whet your appetite to subscribe for more. 

Well, are we following the Japanese "Lost Path". Notwithstanding the damning evidence of hide the truth and hide amongst lies linked to above, ponder the following rather dated, but still quite poignant data...