Since 42 pages is a lot to digest, let me post an excerpt from the pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb to illustrate a point.

REITs have ascended too far from their fundamentals -DJ US Real Estate Index has outpaced S&P 500 index by more than 50% during a time when their macro and fundamental outlook pale compared to that of the broad market. There is no "deal" to be had here! What you are witnessing is momentum trading, not fundamental value.

 S&P 500 increased 62.0% between March 9, 2009 and December 9, 2009, while the DJ US Real estate index increased by 96.2% over the same period. With many tribulations still plaguing the US REIT sector, the valuations appear quite stretched.

image029.gif

The ascending REIT index is again creating the potential for another upheaval similar to that witnessed after the Lehman debacle. The DJ US Real estate index which was at 228.91 on September 15, 2008 has reached at 171.6 as of December 9, 2009.

image030.gif

 

Since 42 pages is a lot to digest, let me post an excerpt from the pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb to illustrate a point.

REITs have ascended too far from their fundamentals -DJ US Real Estate Index has outpaced S&P 500 index by more than 50% during a time when their macro and fundamental outlook pale compared to that of the broad market. There is no "deal" to be had here! What you are witnessing is momentum trading, not fundamental value.

 S&P 500 increased 62.0% between March 9, 2009 and December 9, 2009, while the DJ US Real estate index increased by 96.2% over the same period. With many tribulations still plaguing the US REIT sector, the valuations appear quite stretched.

image029.gif

The ascending REIT index is again creating the potential for another upheaval similar to that witnessed after the Lehman debacle. The DJ US Real estate index which was at 228.91 on September 15, 2008 has reached at 171.6 as of December 9, 2009.

image030.gif

 

Monday, 07 December 2009 19:00

Subscriber Research Update

In keeping with the theme of Wall Street's ability to peddle nearly anything to the Name Brand enamoring masses, I have decided to offer an addendum to the recent REIT analysis for my subscribers that provides a scenario for an additional (this would be the second in 12 months) equity offering in an attempt to close the equity gap between what the maximum practical LTV on assets and the extant amount of debt to be refinanced. The original update only had scenarios for distressed sale of assets, distressed debt refinancing and voluntary allowance of foreclosure of assets. Although I would consider it unlikely that an equity offering could be pulled off, I have seen stranger things happen.

MAC Report_Consolidated_051209 equity offering addendum MAC Report_Consolidated_051209 equity offering addendum 2009-12-08 03:33:30 308.60 Kb

Monday, 07 December 2009 19:00

Subscriber Research Update

In keeping with the theme of Wall Street's ability to peddle nearly anything to the Name Brand enamoring masses, I have decided to offer an addendum to the recent REIT analysis for my subscribers that provides a scenario for an additional (this would be the second in 12 months) equity offering in an attempt to close the equity gap between what the maximum practical LTV on assets and the extant amount of debt to be refinanced. The original update only had scenarios for distressed sale of assets, distressed debt refinancing and voluntary allowance of foreclosure of assets. Although I would consider it unlikely that an equity offering could be pulled off, I have seen stranger things happen.

MAC Report_Consolidated_051209 equity offering addendum MAC Report_Consolidated_051209 equity offering addendum 2009-12-08 03:33:30 308.60 Kb

Sunday, 06 December 2009 19:00

The Latest REIT Updates are Now Available

In case subscribers haven't noticed, I have decided to decrease the frequency of analysis in order to increase the depth of the subjects analyzed. Due to the market's detachment from the fundamentals (a phenomenon that looks like it has just about run its course, btw), fundamental practitioners must tread very, very carefully. On that note, I am releasing the 2nd REIT analysis, which I feel makes for an  outstanding short opportunity, particularly in comparison to the previous analysis whose subject has no immediate and/or pressing concerns. This is the most comprehensive work performed in the real estate space since the GGP project, and has the potential to be just as successful as well. The professional version of the document is nearly 30 pages long, and although it is dense reading, I strongly recommend subscribers read through every page very carefully. The retail version is twice its normal length as well.

There will be a substantial amount of follow up analysis and opinion coming. Basically, I am at loggerheads with Goldman Sachs who has out a buy call on the banking and CRE space, wherein my readers know that I am very bearish on this space for fundamental reasons for 2010. I will present evidence to support my case both privately through the subscription services and public through the blog by pulling up instances in the past when GS turned bullish on real estate and what happened to those clients a year or two afterwards.

Enjoy!

MAC Report Consolidated 051209 Retail MAC Report Consolidated 051209 Retail 2009-12-07 03:46:49 580.11 Kb

MAC Report Consolidated 051209 Professional MAC Report Consolidated 051209 Professional 2009-12-07 03:48:11 1.03 Mb

Sunday, 06 December 2009 19:00

The Latest REIT Updates are Now Available

In case subscribers haven't noticed, I have decided to decrease the frequency of analysis in order to increase the depth of the subjects analyzed. Due to the market's detachment from the fundamentals (a phenomenon that looks like it has just about run its course, btw), fundamental practitioners must tread very, very carefully. On that note, I am releasing the 2nd REIT analysis, which I feel makes for an  outstanding short opportunity, particularly in comparison to the previous analysis whose subject has no immediate and/or pressing concerns. This is the most comprehensive work performed in the real estate space since the GGP project, and has the potential to be just as successful as well. The professional version of the document is nearly 30 pages long, and although it is dense reading, I strongly recommend subscribers read through every page very carefully. The retail version is twice its normal length as well.

There will be a substantial amount of follow up analysis and opinion coming. Basically, I am at loggerheads with Goldman Sachs who has out a buy call on the banking and CRE space, wherein my readers know that I am very bearish on this space for fundamental reasons for 2010. I will present evidence to support my case both privately through the subscription services and public through the blog by pulling up instances in the past when GS turned bullish on real estate and what happened to those clients a year or two afterwards.

Enjoy!

MAC Report Consolidated 051209 Retail MAC Report Consolidated 051209 Retail 2009-12-07 03:46:49 580.11 Kb

MAC Report Consolidated 051209 Professional MAC Report Consolidated 051209 Professional 2009-12-07 03:48:11 1.03 Mb

As illustrated in my last post, Goldman Sachs has upgraded the US REIT sector, an action that was obvious to those who know that Wall Street analyst departments are basically marketing arms for their broking, trading and underwriting arms. Tyler at ZeroHedge saw it coming months in advance (see Is Goldman Preparing To Upgrade The REIT Sector?) and the writing on the wall had already cured as they hawked their first CMBS offering in quite some time (see Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off).

We all know what's next. The products that they are hawking to finance these ailing companies must have their paths paved by glorious upgrades and buy recommendations - damn be the facts and the obvious observations (which you will definitely get from me). Many of these actions can easily be seen as a REIT pump and dump scheme by Wall Street - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!." I have already released independent and unbiased subscription research on Taubman (TCO Report - Professional, TCO Report - Retail), whom Goldman Sachs has issued a buy recommendation on. I am also researching the CMBS that contain the properties from the REITs that I am analyzing (part and parcel of the analysis is an independent review of the property portfolio) and will be creating reports on the actual performance of assets behind the CMBS. You know, the type of work that the rating agencies should have done before they stamped these things with that AAA market, yet you know they never bothered to perform.

As illustrated in my last post, Goldman Sachs has upgraded the US REIT sector, an action that was obvious to those who know that Wall Street analyst departments are basically marketing arms for their broking, trading and underwriting arms. Tyler at ZeroHedge saw it coming months in advance (see Is Goldman Preparing To Upgrade The REIT Sector?) and the writing on the wall had already cured as they hawked their first CMBS offering in quite some time (see Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off).

We all know what's next. The products that they are hawking to finance these ailing companies must have their paths paved by glorious upgrades and buy recommendations - damn be the facts and the obvious observations (which you will definitely get from me). Many of these actions can easily be seen as a REIT pump and dump scheme by Wall Street - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!." I have already released independent and unbiased subscription research on Taubman (TCO Report - Professional, TCO Report - Retail), whom Goldman Sachs has issued a buy recommendation on. I am also researching the CMBS that contain the properties from the REITs that I am analyzing (part and parcel of the analysis is an independent review of the property portfolio) and will be creating reports on the actual performance of assets behind the CMBS. You know, the type of work that the rating agencies should have done before they stamped these things with that AAA market, yet you know they never bothered to perform.

The TCO reports are now available. Here is an excerpt from the Professional level report:

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...

tco_ltvs.png                      
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...

cap_rate_trend.png

Sharply rising cap rates combined with...

mall_vacancies.png

  Dramatically increasing mall vacancies.

Subscribers can download the full reports here:

TCO Report - Retail TCO Report - Retail 2009-11-27 11:41:15 355.95 Kb

TCO Report - Professional TCO Report - Professional 2009-11-27 11:42:05 663.14 Kb

I will probably be releasing the lenders to these properties in the upcoming week. Any banks that have economic interests in these properties, or others should feel free to reach out to me via phone or email to discuss my research.

The TCO reports are now available. Here is an excerpt from the Professional level report:

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...

tco_ltvs.png                      
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...

cap_rate_trend.png

Sharply rising cap rates combined with...

mall_vacancies.png

  Dramatically increasing mall vacancies.

Subscribers can download the full reports here:

TCO Report - Retail TCO Report - Retail 2009-11-27 11:41:15 355.95 Kb

TCO Report - Professional TCO Report - Professional 2009-11-27 11:42:05 663.14 Kb

I will probably be releasing the lenders to these properties in the upcoming week. Any banks that have economic interests in these properties, or others should feel free to reach out to me via phone or email to discuss my research.

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