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HenryTo
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 Posted: Tue Sep 04, 2007 11:58 pm Post subject: Commercial Real Estate |
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http://www.bloomberg.com/apps/news?pid=20601087&sid=a6CPQun5.3bQ&refer=home
| Quote: | Average prices for commercial properties might drop 5 percent to 15 percent in the next two years depending on the type of property and its quality and location, said Matthew Ostrower, an industry analyst at New York-based Morgan Stanley, the second-largest U.S. securities firm by market value.
The Bloomberg Office Property Index of real estate investment trusts has dropped 24 percent since reaching a record high on Feb. 8, just as Zell sold his company to Blackstone in the largest real estate takeover. The index had dropped 27 percent through Aug. 30 before stocks rallied the next day after President George W. Bush and Federal Reserve Chairman Ben Bernanke pledged to prevent credit losses from snuffing out the country's economic expansion. |
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HenryTo
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| Posted: Fri Sep 16, 2011 11:05 pm Post subject: |
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Morningstar's latest comments on WYN:
| Quote: | Wyndham's timeshare operations are constrained by consumer deleveraging and tight credit conditions.
Wyndham Worldwide WYN is the largest global operator of timeshares and hotels, as measured by the number of timeshare units and hotels in its system. Wyndham has increased EBITDA margins significantly the last several years amidst a difficult economic environment by focusing on growing high margin fee-for-service revenue and tight costs controls. Wyndham possesses a narrow economic moat due to a network effect for its timeshare exchange, vacation rental services, and hotel operations, and switching costs for its hotel operations. Our uncertainty rating for Wyndham is very high, due to the cyclical nature of the hospitality sector. While we presently view Wyndham as undervalued, with it trading at a next-year free cash yield of over 10%, we would want a greater margin of safety before we would be active buyers of the stock, given the cyclicality of the hospitality sector.
We expect Wyndham's Vacation Ownership division, which generates more than 50% of revenue, to experience slow growth the next several years. Consumers have exhibited resistance to purchasing timeshares in a challenging economic environment, and consumers are in the process of deleveraging, significantly reducing demand for timeshares. In addition, credit conditions remain tight for timeshare purchases, and a weak securitization market has also limited growth. While Wyndham's timeshare division has limited growth prospects, the division has some attractive attributes that have not been fully appreciated by the market, in our view. The division generates approximately half of its annual EBITDA from high margin, recurring property management fees and other fee-for-service fees. Management is focused on increasing margins and ROICs by growing the Wyndham Asset Affiliation Model (WAAM) program, which offers fee-for-service turnkey solutions to other timeshare developers for timeshare sales, financing, and property management. We expect Wyndham's focus on growing high margin and high ROIC property management and WAAM fees to drive EBITDA margins for the division 400 basis points higher in the next several years.
Turning to Wyndham's Exchange & Rentals division, its timeshare exchange business possesses a substantial barrier to entry in that a potential new market entrant has to contend with a strong network effect inherent in the business. Without having a significant number of timeshare owners in an exchange, it is difficult for a new market entrant to attract property owners and developers to an exchange, and without having a significant number of property owners and developers, it is difficult for a new market entrant to attract timeshare owners to an exchange. Wyndham's vacation rental service business is also a classic network business, with a barrier to entry in that unless a vacation rental business has a significant number of potential renters, it is difficult to attract vacation property owners to exchange, and vice versa. Wyndham's exchange and rental division is relatively resilient in a recession, as timeshare members pay annual recurring fees to be part of the exchange. In 2009, revenue for the division decreased by only 8.5%, and division EBITDA actually increased due to cost-cutting measures.
Turning to Wyndham's hotel operations, Wyndham generates nearly 90% of hotel revenue from franchised hotels, primarily focusing on the midscale and economy segments. Franchised hotels have significantly lower fixed costs than owned hotels and have historically performed more strongly in recessions than owned hotels, and the midscale and economy segments have performed better in recessions than the upscale and luxury segments. Franchised hotels are also attractive from the standpoint of locking hotel owners into 10- to 20-year contracts, with owners facing switching costs in the event that they exit the company's system. Wyndham's franchising model has limited growth prospects, though, as many emerging international markets are not conducive to franchising due to a limited supply of hotel managers and unfavorable franchising laws. More than 80% of Wyndham's hotels are in the U.S. and Canada, and its pipeline of new hotel rooms as a percentage of existing rooms was only 18% as of June 2011, compared with 28% for Hyatt H and 29% for Starwood HOT.
Wyndham's senior management is currently focused on utilizing the company's significant free cash flow to pursue share repurchases and increase the company's dividend payout ratio. We expect Wyndham to buy back more than $600 million in stock in 2011, and expect management to reduce total shares outstanding by more than 15% the next several years. The company has increased dividends per share more than three-fold since 2008. While we presently view Wyndham as undervalued, with the stock trading at a more than 30% discount to our fair value estimate, we would want a greater margin of safety prior to being active buyers of stock, given significant economic uncertainty in the U.S. and Europe. |
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HenryTo
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| Posted: Wed Aug 03, 2011 12:16 pm Post subject: |
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Morningstar on Tanger Factory Outlet Centers' 2Q earnings:
| Quote: | | Mall real estate investment trust Tanger Factory Outlet Centers' SKT second-quarter results impressed us, and we plan to increase our forecasts and fair value estimate (the latter probably to the mid-$20s) to reflect stronger-than-anticipated rental revenue growth prospects from higher lease rates and recently announced acquisition and development plans. For the quarter, on a year-over-year basis, revenue and EBITDA increased 10.4% and 8.0%, respectively, driven partly by an increase in revenue-generating assets. Reported same-center net operating income, which we think is more representative of internal growth, increased 3.8% for the quarter. Portfolio metrics also showed improvement, as occupancy increased 90 basis points year over year to 97.8%, and Tanger was able to achieve an 18.6% cash re-leasing spread, meaning the leases signed in the quarter will garner rental rates that are 18.6% higher than the last rent paid on the expiring lease. Stronger occupancy and higher rental rates portend well for continued internal growth in Tanger's portfolio. In addition, acquisitions that the company closed around the quarter's end should contribute to solidly double-digit increases in EBITDA throughout the next 12 months. Beyond that, newly announced developments should begin contributing as well. With a solid balance sheet, relatively low tenant occupancy costs, and healthy retailer demand for the outlet retail format, Tanger should be able to take advantage of additional cash flow growth opportunities from a combination of acquisitions, developments, and internal growth on its legacy portfolio. While other mall REITs are expanding into outlets, Tanger remains the only pure-play operator, and we believe it is well positioned relative to peers. |
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HenryTo
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| Posted: Thu Jul 28, 2011 1:06 am Post subject: |
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Morningstar on SPG's 2Q earnings:
| Quote: | | Mall landlord Simon Property Group SPG reported second-quarter results that were ahead of our expectations, and we're placing our analysis under review to re-examine our assumptions and increase our forecasts. For the quarter, on a year-over-year basis, revenue and EBITDA increased 12.5% and 13.7%, respectively, driven mostly by recent acquisitions and partly by improved performance in its legacy portfolio. (We remove Simon's reported other income from its revenue and EBITDA figures.) Reported comparable-property net operating income (a measure of internal performance) increased 3.5% at Simon's core mall and outlet properties. Other operating metrics were also up, as occupancy increased 30 basis points year over year to 94.0% and tenant sales per square foot incre ased 8.9% to $502 at Simon's consolidated regional mall and premium outlets. Furthermore, re-leasing spreads on its regional mall and premium outlet portfolio were 9.1%, meaning new leases in the quarter will garner initial rents that are 9.1% higher than the last rent paid on the expiring leases. These higher occupancy rates and rental rates suggest that near-term financial results will remain positive; higher tenant sales allow Simon's tenants to afford to pay rent increases over time. We had expected Simon's quality property portfolio to continue to produce solid financial results, but it looks as though we may have been underestimating the strength of its portfolio. When we update our analysis, we expect our fair value estimate to rise. |
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rffrydr
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| Posted: Thu Mar 03, 2011 7:31 am Post subject: |
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Zell: no market but no supply. No distressed vulture assets.
http://www.cnbc.com/id/15840232?video=3000008432&play=1
Asks the big question: How much CMRE do we need? What's not said, buy banks.
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HenryTo
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| Posted: Fri Feb 25, 2011 9:43 pm Post subject: |
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Bridgewater on US commercial real estate:
| Quote: | | Consistent with the general improvement in economic conditions, recent data indicate that a few key indicators of the commercial real estate market have stabilized. Vacancies have stopped rising, rents have stopped declining, prices of trophy properties have rallied off their lows, the flow of new delinquencies has dropped and the securitization market (CMBS) has begun to reopen. While this stabilization is a shift in the right direction, significant challenges remain as a result of the depressed level of prices, cash flows and activity. Substantial debt rollovers remain, and there is still a large section of properties that is not refinanceable given current revenues, valuations and underwriting standards. And while aggregate credit growth in the economy has improved, credit creation related to commercial real estate is still contracting, although at a slower rate. When we put the whole picture together we see another $400 billion in losses ahead, on top of the $120 billion that have been taken so far (though we think that most of this has been recognized via mark-to-market accounting and loan-loss provisioning). So this uptick in the recent data represents less incremental deterioration, not good health. And unless conditions improve markedly it is likely that there will be a wave of liquidations that will put modest downward pressure on asset prices and credit growth. |
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rffrydr
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| Posted: Fri Feb 25, 2011 9:28 am Post subject: |
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Got out of my leveraged position about 10% too early--and smiling about it. Outside the trophy properties, medical, the obvious yielders; outside the securitizable, cap-raising properties there is plenty to worry about. Double a balanced vacancy rate and 15 Empire State buildings worth of space to fill in booming NY alone leave plenty of jitters.
Waiting for bigger selloff on rates and market conditions but will be back in this "space" at some point.
http://media.bloomberg.com/bb/avfile/Markets/Analyst_Calls/vovd.CJazf1Y.mp3
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HenryTo
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rffrydr
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HenryTo
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| Posted: Mon Nov 01, 2010 3:24 pm Post subject: |
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Morningstar on Simon Property's 3Q earnings:
| Quote: | | We plan no change to our fair value estimate for Simon Property Group SPG following the retail real estate investment trust's release of third-quarter results. For the quarter, on a year-over-year basis, our reckoning of revenue (we exclude Simon's reported other income from revenue) increased 5.3%, and EBITDA fell 1.4%. The decline in EBITDA can be attributed to nonrecurring transaction expenses, without which EBITDA would have increased 6.4%. Simon's reported mall and premium outlet center comparable-property net operating income (a measure of internal growth) increased 3.6%. Property operating metrics were also positive. For its consolidated portfolio, occupancy increased 80 basis points to 94.2%, and comparable tenant sales per square foot increased 7.0% to $474. Across its entire portfolio, Simon achieved a positive 2.8% re-leasing spread, meaning new leases in the quarter had rents that were 2.8% higher on average than the expiring rental rates. These positive operating metrics suggest that Simon is likely to be able to continue to grow internally and will get the benefit of its recently completed $2.3 billion acquisition of Prime Outlets for the next few quarters as well. Concurrent with its release of third-quarter results, Simon announced an increase to its quarterly common dividend to $0.80 per share from $0.60 previously. |
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HenryTo
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| Posted: Thu Oct 28, 2010 3:46 pm Post subject: |
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Morningstar on HOT's 3Q results:
| Quote: | | Starwood Hotels & Resorts HOT reported third-quarter results reflecting a lodging recovery. The firm is trending ahead of our full-year projections, and its initial outlook for 2011 is more robust as well. We intend to take another look at our fair value estimate, but do not anticipate any significant changes. Revenue increased 8.6% to $1.3 billion on the back of strong performance from the hotel portfolio. Global systemwide revenue per available room grew 10%, or 11.1% excluding foreign currency. Occupancy is at or above 2007 levels, and the company is experiencing increased rate, with both business and leisure demand strong. We are encouraged to hear these results, as it indicates that the travel market continues to be in a gradual recovery. Strong revenue growth drove operating margins to 9.7% from 7.4% in the prior-year period. Starwood remains vigilant on the cost line and expects head count to remain flat in 2011 compared with 2010 levels. This should help drive margin expansion as the property portfolio improves. Starwood said next year's supply in the upper upscale and luxury segments is forecast to decline 0.5%. The muted supply should help existing properties recover the rate lost over the economic downturn. |
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rffrydr
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rffrydr
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| Posted: Tue Oct 19, 2010 3:56 pm Post subject: |
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....Yet the IYR is over its april highs. How much is this an "index" of anything. --More an indicator of how much marginal RE got into the mix.
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rffrydr
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| Posted: Thu Oct 14, 2010 10:56 am Post subject: |
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50/50 being called out tomorrow....right above the strike.
As predicted property has become a bond again--those that are "bondable":
US commercial property
Published: October 14 2010 10:15 | Last updated: October 14 2010 17:05
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The trick to eating the curate’s egg is to sample only the good parts. Investors in US commercial property are showing they know how to do this. In the six top metropolitan markets – New York, Chicago, Boston, San Francisco, Los Angeles and Washington – prices have bounced. Real Estate Analytics calculates a trophy index using repeat transactions worth more than $10m in the Moody’s/REAL commercial property price index. After falling two fifths from the October 2007 peak, it is up 19 per cent from the trough, while the overall market has had a 7 per cent bounce. For many investors, ultra-low bond yields make the rental yields on the safest properties look all the more appealing.
Meanwhile, much of the country is spoiling. Prices in distressed areas are so depressed that yields are typically twice that for trophy spots. Consultants Reis put the office vacancy rate nationally at 18 per cent. This is below the 1992 peak of 19.2 per cent, but the latest boom was not accompanied by the same levels of excess building, meaning a lack of demand is now the problem. Companies must start hiring again if the available space is to fill up. |
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rffrydr
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rffrydr
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| Posted: Tue Sep 07, 2010 11:47 pm Post subject: |
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Excerpt from Simon Property Q2:
| Quote: | ....Development activity, we are higher than our budget given improving economic conditions. We originally budget around $100 million. We think we'll end up spending close to $200 million, and we expect to have double-digit returns on this capital. We're also excited to announce that we'll start the construction of Merrimack premium outlets in Merrimack, New Hampshire this fall with our projected opening in 2012. And we have two outlet centers undergoing significant expansions, Houston Premium Outlets and Las Vegas Outlet Centers.
Also, we've done a very good job in our tactical projects, redevelopment opportunities as we've re-claimed certain departments locations and big boxes. During the first six month of 2010, we opened 14 new anchors for big boxes, including Nordstrom, Best Buy, Bed Bath & Beyond, H.H. Gregg. In addition, we have 15 additional stores under construction and schedule to open in 2010 and again, they include Forever 21, Whole Foods, Crate & Barrel and Target.
On the international front, there are two new Premium Outlet Centers projected to open in 2010: Paju Premium in South Korea commenced construction in late March, that's in the northern part of Seoul; and Johor Premium Outlets is going to break ground in August, that will serve the Singaporean market. We're partnering with the Genting Group, a well-known and well-respected company in Malaysia and throughout the world. And on completion in 2011, we will have 11 premium outlet centers in Asia.... |
Their dividend payout is pegged to the floor even with all the deleveraging and their stock has had no problems rising through the eurosclerotic summer.
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