Hat tip BoomBustBlogger Bill. It appears that the only one's who are actually ever chastised for defaulting on debt obligations are people. To think, some are still bullish on the banks.

Down to its last chance

Developers’ delays and funding woes spur the state to serve notice on Columbus Center, the $800m complex planned to span the Pike

(Boston Globe) Massachusetts transportation officials have begun severing ties with the developers of Columbus Center, the latest, and perhaps last, chapter in one of the most ambitious and controversial projects in Boston’s development history.

The state Department of Transportation yesterday told the project’s developers they are in default of their 99-year lease, after stalling on plans to build an $800 million complex above the Massachusetts Turnpike that would have united the Back Bay and South End neighborhoods.

The developers face termination of the lease not only because they have failed to complete construction, but because they have not properly maintained the property, said a top agency official. He asked that his name not be used because the default notice is not yet public.

Because of funding problems, the developers - the WinnCompanies and the California state pension fund, known as Calpers - stopped construction in April 2008 on the six-building complex of condominiums, hotel, stores, and parks on a massive deck over the highway. Since then, they have neither cleaned up nor secured the building site to the level the state has demanded, according to the transportation official with knowl edge of the situation.

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.

Hat tip BoomBustBlogger Bill. It appears that the only one's who are actually ever chastised for defaulting on debt obligations are people. To think, some are still bullish on the banks.

Down to its last chance

Developers’ delays and funding woes spur the state to serve notice on Columbus Center, the $800m complex planned to span the Pike

(Boston Globe) Massachusetts transportation officials have begun severing ties with the developers of Columbus Center, the latest, and perhaps last, chapter in one of the most ambitious and controversial projects in Boston’s development history.

The state Department of Transportation yesterday told the project’s developers they are in default of their 99-year lease, after stalling on plans to build an $800 million complex above the Massachusetts Turnpike that would have united the Back Bay and South End neighborhoods.

The developers face termination of the lease not only because they have failed to complete construction, but because they have not properly maintained the property, said a top agency official. He asked that his name not be used because the default notice is not yet public.

Because of funding problems, the developers - the WinnCompanies and the California state pension fund, known as Calpers - stopped construction in April 2008 on the six-building complex of condominiums, hotel, stores, and parks on a massive deck over the highway. Since then, they have neither cleaned up nor secured the building site to the level the state has demanded, according to the transportation official with knowl edge of the situation.

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.

Volcker is correct in that banks conflicts of interests need to be stemmed. One would not have to worry about over regulation if one does not attempt to regulate every single act or attempt to guess what might go wrong. What needs to be done is to use regulation to disincentivize banks from engaging in activities that engender systemic risks and/or harm clients. By putting everybody on the same side of the table, you don't have to worry about outsmarting the private sector.

From CNBC:

I have included ETFs that have exposure to the industries discussed in the post "Some Light Shown on My Developing China Thesis". The list of ETFs can be found here: Chinese ETFs with Exposure to Real Estate, Banks, Insurance and Export Industrials 2010-01-22 02:27:03 377.96 Kb.

The subscriber download to the aforementioned post is "A Note On Potential Short Opportunity Opinions in China 2010-01-21 01:13:06 475.18 Kb" which is available to retail and pro Subscribers as a 6 page PDF document, Pro subscribers are invited to the discussion/debate between myself and my analysts
on the merits of the China short as it compares to the up and coming
European Sovereign Crisis short opportunities I will be publishing very
soon (a preview is available here: Deflation, Inflation or Stagflation - You Be the Judge! - please excuse the fact that I compressed several European nations into EU charts).

I want it to be known that we are still formulating the empirical thesis behind the short, but I have decided to keep all subscribers abreast of the deliberations in real time, as well as offering the tools that I would use to take action if I deemed it prudent.

In continuing the rant on the possibility of the US entering a stagflationary environment, as was hinted by Alcoa's quarterly report (see "Is My Warning of the Risks of a Stagflationary Environment Coming to Fore?"), I have decided to graphically illustrate the historically most successful inflation hedges. Click graphic below to enlarge.

inflation_correlation.png

For those "gold bugs" who have never ran the numbers, gold offers less inflation protection than your house does. The same goes for WTI crude and probably most other categories of oil.

Following the empirical evidence that banks share price moves are outstripping their fundamental performance, I have decided to run the same analysis with REITs that have beat the S&P 500. In the chart below, General Growth Properties had to be stripped out since it had a 3,000% return, it made the rest of graph participants illegible. Click to enlarge.

reit_over_broad_market.png

The metrics used to segregate the companies were:

1. TTM NOI / Current EV
2. Y-o-Y Growth in Rental Income
3. Q-o-Q growth in Rental Income
4. Y-o-Y Growth in NOI
5. Q-o-Q growth in NOI
6. Y-o-Y Growth in FFO
7. Q-o-Q growth in FFO
8. EBITDA/Interest expenses
9. Total debt-to-Gross real estate investments
10. Total Debt-to-Current EV
11. Trailing 12 months EBITDA
12. Trailing 12 months interest expenses
13. Trailing 12 months NOI
14. Plus a whole host of other performance related criteria. All in all, very rich and informative model for those interested in the space.

A heat map was created to visualize the trend in fundamentals for those companies whose performance bested that of the broad market. As one may have guessed, the heat map is throwing off a lot of red, with implied cap rates (NOI/EV) going up as quarter over quarter net operating income declines in the face of both rising share prices and drastically falling rents and land values. Below is a snapshot of the heat map. Although this is a subscriber download, there is definitely something to be gleaned from trends highlighted below. Twilight zone, here we come...

Following the empirical evidence that banks share price moves are outstripping their fundamental performance, I have decided to run the same analysis with REITs that have beat the S&P 500. In the chart below, General Growth Properties had to be stripped out since it had a 3,000% return, it made the rest of graph participants illegible. Click to enlarge.

 reit_over_broad_market.png

1. TTM NOI / Current EV               
2. Y-o-Y Growth in Rental Income               
3. Q-o-Q growth in Rental Income           
4. Y-o-Y Growth in NOI
5. Q-o-Q growth in NOI
6. Y-o-Y Growth in FFO
7. Q-o-Q growth in FFO
8. EBITDA/Interest expenses
9. Total debt-to-Gross real estate investments
10. Total Debt-to-Current EV
11. Trailing 12 months EBITDA
12. Trailing 12 months interest expenses
13. Trailing 12 months NOI               
14. Plus a whole host of other performance related criteria. All in all, very rich and informative model for those interested in the space.

A heat map was created to visualize the trend in fundamentals for those companies whose performance bested that of the broad market. As one may have guessed, the heat map is throwing off a lot of red, with implied cap rates (NOI/EV) going up as quarter over quarter net operating income declines in the face of both rising share prices and drastically falling rents and land values. Below is a snapshot of the heat map. Although this is a subscriber download, there is definitely something to be gleaned from trends highlighted below. Twilight zone, here we come...

Following the empirical evidence that banks share price moves are outstripping their fundamental performance, I have decided to run the same analysis with REITs that have beat the S&P 500. In the chart below, General Growth Properties had to be stripped out since it had a 3,000% return, it made the rest of graph participants illegible. Click to enlarge.

 reit_over_broad_market.png

1. TTM NOI / Current EV               
2. Y-o-Y Growth in Rental Income               
3. Q-o-Q growth in Rental Income           
4. Y-o-Y Growth in NOI
5. Q-o-Q growth in NOI
6. Y-o-Y Growth in FFO
7. Q-o-Q growth in FFO
8. EBITDA/Interest expenses
9. Total debt-to-Gross real estate investments
10. Total Debt-to-Current EV
11. Trailing 12 months EBITDA
12. Trailing 12 months interest expenses
13. Trailing 12 months NOI               
14. Plus a whole host of other performance related criteria. All in all, very rich and informative model for those interested in the space.

A heat map was created to visualize the trend in fundamentals for those companies whose performance bested that of the broad market. As one may have guessed, the heat map is throwing off a lot of red, with implied cap rates (NOI/EV) going up as quarter over quarter net operating income declines in the face of both rising share prices and drastically falling rents and land values. Below is a snapshot of the heat map. Although this is a subscriber download, there is definitely something to be gleaned from trends highlighted below. Twilight zone, here we come...