Kindle, Faber, Minimum Wage, Lehman
– Here is a review of it:
– He has been very right for a very long time:
– Having works previously in an industry that hired these folks, when it goes up, they lose jobs….period..
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Visit msnbc.com for Breaking News, World News, and News about the Economy
Disclosure (“none” means no position):
This is a big win for General Growth Properties (GGWPQ). They now have control over the Chapter 11 process AND more importantly have increased leverage over lenders who want/need payments on debt to continue.
Here is the scenario:
GGP now has until the end of February to submit a plan. That means lender with billions in debt outstanding will be receiving nothing on that debt. GGP now has time on its side and lenders will be more willing to renegotiate loans on better terms to enable GGP to file its plan and resume payments before next February….
This is really good news…..
NEW YORK (Dow Jones)–A bankruptcy judge gave General Growth Properties Inc. (GGWPQ) a six-month extension to file its bankruptcy plan over opposition from a number of the mall owner’s lenders.
Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan extended the deadline for filing the reorganization plan to Feb. 26, rejecting calls from creditors for a shorter extension.
The extension granted by Gropper gives General Growth exclusive control over the path of its bankruptcy case by preventing creditors from filing rival reorganization plans with the court.
Marcia Goldstein, General Growth’s bankruptcy lawyer, said the Chicago-based mall owner will use the time to negotiate with lenders over a restructuring plan. General Growth filed for bankruptcy in April to lighten its $27 billion debt load.
“Six months is actually very ambitious. We hope to file the plan in this period” and negotiate an agreement with creditors, Goldstein told Gropper. “But that’s going to require a lot of work on multiple fronts.”
The six-month extension, she said, was reasonable for the largest real-estate bankruptcy case ever filed. She told Gropper there would be “chaos” if the court denied the extension because the company could face more than 100 rival plans from lenders to its malls.
Lenders and servicers – companies that handle defaulted loans to the malls on
behalf of lenders – objected to the six-month extension, saying it was too long. Most didn’t oppose an extension, but urged Gropper to approve a three-month extension, which they said would push negotiations forward.But Gropper said General Growth’s bankruptcy case will be “in a better position” with the longer extension, and he noted that the company made a commitment to provide restructuring proposals to lenders soon.
“The goal should be to have a plan or plans proposed within the six-month period,” he said.
Disclosure (“none” means no position):LONG GGWPQ
Ben Bernanke interviews from 2005-2007………
This goes to a post I did back in May,
Notice every metric they are now forecasting is worse than their expectations in January? This goes back to Bernanke saying in 2007 he thought the housing crisis would “be contained” and “would not effect overall economy”. The Bernake Fed has been consistently overly optimistic in its forecasts only to then have to lower them.
Now, the reason for being optimistic is obvious, to instill confidence in a fear ridden environment. But, after a while that strategy begins to backfire as folks begin to discount everything the Fed says as they begin to expect actual results to come in worse than expected. Then it becomes a “how much worse” guessing game.
I get the whole transparency effort vs Greenspan’s ramblings, but if we are going to do it this way, then the transparency has to be 100% honest and not an attempt to steer investor sentiment in a particular direction. In that case, the transparency is simply “transparent manipulation”.
Now, I also understand that no estimates are perfect, BUT, when over the course of a few years they almost to a 100% rate err in the same direction, then it is either intentional, OR the methodology to make them is flawed. Either scenario from the Fed is bad.
Just give it to us straight Ben, we can handle it far better than you think we can…
Disclosure (“none” means no position):
Ben Bernanke interviews from 2005-2007………
This goes to a post I did back in May,
Notice every metric they are now forecasting is worse than their expectations in January? This goes back to Bernanke saying in 2007 he thought the housing crisis would “be contained” and “would not effect overall economy”. The Bernake Fed has been consistently overly optimistic in its forecasts only to then have to lower them.
Now, the reason for being optimistic is obvious, to instill confidence in a fear ridden environment. But, after a while that strategy begins to backfire as folks begin to discount everything the Fed says as they begin to expect actual results to come in worse than expected. Then it becomes a “how much worse” guessing game.
I get the whole transparency effort vs Greenspan’s ramblings, but if we are going to do it this way, then the transparency has to be 100% honest and not an attempt to steer investor sentiment in a particular direction. In that case, the transparency is simply “transparent manipulation”.
Now, I also understand that no estimates are perfect, BUT, when over the course of a few years they almost to a 100% rate err in the same direction, then it is either intentional, OR the methodology to make them is flawed. Either scenario from the Fed is bad.
Just give it to us straight Ben, we can handle it far better than you think we can…
Disclosure (“none” means no position):
Alan Blinder, a Professor of Economics and Public Affairs at the Woodrow Wilson School and co-director of Princeton`s Center for Economic Policy Studies, discusses the financial crisis.
Disclosure (“none” means no position):
Onion, Debt, REITS, Energy
– The Onion is just about the funniest site out there…
Mexico Builds Border Wall To Keep Out US Assholes
– Take a minute to understand this number…..it is stunning
– Some are going to win huge
– This is the time to be buying these names. The valuations of them are disjointed from norms.
Disclosure (“none” means no position):
Onion, Debt, REITS, Energy
– The Onion is just about the funniest site out there…
Mexico Builds Border Wall To Keep Out US Assholes
– Take a minute to understand this number…..it is stunning
– Some are going to win huge
– This is the time to be buying these names. The valuations of them are disjointed from norms.
Disclosure (“none” means no position):
Anyone want to take a guess at what the two new investments are?
“Large US based multinationals”…are what Ackman says they bought, one of which has had rapid price appreciation.
Pershing- Square- Q2- Letter –
For more analysis on this you should visit Market Folly
Disclosure (“none” means no position):
There was a nice little piece this weekend in the WSJ about on of our favorite stocks/companies here at ValuePlays, Phillip Morris International (PM)
From the WSJ:
With most of the world in recession, expensive habits are fading fast. But international tobacco companies are still making smokers pay up for a hit.
While many consumer-products companies have capped prices, the likes of Philip Morris International and London-listed British American Tobacco are raising them. With cigarette sales likely in permanent decline in some markets, producers have focused on price.
Heard on the Street columnist John Jannarone explains to Simon Constable how premium cigarette manufacturer Philip Morris is actually getting a boost from foreign governments. Plus how industry consolidation is giving profits an extra lift.
That has helped some tobacco companies smoke market expectations. PMI’s shares have risen 8% since Thursday morning, when it said higher prices had boosted second-quarter profits. In the European Union prices rose about 5%, the fastest pace in over a year, according to Thilo Wrede of Credit Suisse.And tax laws can actually work in favor of premium tobacco companies. Many countries tax cigarettes by the pack rather than as a proportion of the retail price.
That has caused low-end cigarette prices to rise more quickly than premium cigarettes. In France, for instance, premium cigarettes only cost 15% more than the cheapest option, according to Morgan Stanley’s David Adelman.
PM reported last week and raised full year guidance. Shares are up over 40% from the March lows and 8% last week as a result of earnings. They currently have a dividend yield of 4.5%.
Disclosure (“none” means no position):Long PM
Some very interesting items were discussed recently on the Developers Diversified (DDR) earnings call. As I read it I was struck how much of what was being said contradicts some of what is being assumed out there regarding the retail environment. Diversified is seeing strong leasing activity, rental rates that are not collapsing and assets they do not want (not prime) are selling for cap rates of 8.5% to 9%. One could assume from that prime properties would go for below 8.5%. These cap rates gel with what Macquarie CountryWide Trust (MCW.AU) recently sold assets for.
None of these numbers are nearly as dire as you would be lead to believe watching/reading media reports.
Here are some highlights:
Regarding leasing activity:
The short term macroeconomic headlines may suggest otherwise, but the current retail real estate environment presents a unique opportunity for retailers to aggressively seek external growth at significantly lower costs. Over the course of the second quarter, out leasing team held many key meetings with retailers to understand revolving platforms, and as a result we leased a historic amount of GLA.
Specifically, we signed 147 new leases during the quarter representing over 900,000 square feet of GLA at an average rental rate spread of negative 16.6. Additionally, there were 259 renewal deals executed during the quarter representing over 2.1 million square feet of GLA at an average spread of positive 1%. On a blended basis, there were 406 deals executed during the second quarter representing nearly 3.1 million square feet of GLA at an average spread of negative 4.72%. Compared to the previous quarter, we executed 58 more leases and leased 1.2 million more square feet of GLA.
I’d like to point out that of the 900,000 plus square feet of new deals signed during the second quarter, 45% represent space that was recently vacated by bankrupt retailers. The spread on new deals signed to backfill space formerly occupied by bankrupt retailers was negative 24.2%, which is consistent with our expectations and past guidance, while the average rental rate spread on new deals, excluding those signed to backfill bankrupt retailers, was negative 9.8%.
Despite the challenges of backfilling space formerly occupied by bankrupt retailers, we have seen solid improvement in the rental rates from the first quarter to the second quarter. In the second quarter, we leased 466,000 square feet of space that was previously occupied by bankrupt retailers versus the 233,000 square feet leased in the first quarter. And the average rent per square foot increased 63% for that space from the first quarter to the second quarter, resulting in an overall positive impact on our average base rent per square foot portfolio wide.
The most active retailers include Bed, Bath and Beyond and its various concepts, Best Buy, hhgregg, Hobby Lobby, JoAnn stores, Nordstrom Rack, Dollar Tree, AC Moore and regional grocers, such as Sprouts. Also very active are Staples, Michaels, and the TJX companies, the parent company for T.J. Maxx, Marshalls, A.J. Wright and HomeGoods. We have multiple executed leases or inactive lease or LOI negotiations with each of the retailers that I just mentioned.
I would also like to highlight the fact that two of our largest tenants, Wal-Mart and TJX, recently announced significant long-term debt refinancing transactions. The low cost of capital of many of our largest tenants is likely to encourage and fund their future growth.
From the Developers Diversified Q & A:
Jay Haberman – Goldman Sachs
And just switching gears for a moment, could you walk through I guess the bid as spreads on asset sales. I mean it seems, as cap rates seem to be moving above 9%, are you seeing a lot more interest on the part of buyers?
Scott Wolstein- Chairman and Chief Executive Officer
There’s been a little bit of an increase in cap rates in terms of our pipeline. Most of it’s been related to the quality of assets that we’re selling. Obviously, the lower the quality, the higher the cap rate and we’ve been highly focused on selling the assets that we don’t want to own.
But the assets have reasonably good quality that may not make the cut for our prime portfolio that are under contract and we’re negotiating. We’re still trading in the mid-eights to the low nine kind of cap rate range. So I think that there hasn’t been a really significant change.
And I also think, obviously, there is a big print on the trade for McCrory Countrywide to CalFirst and First Washington. I think it’s a little dangerous for people to extrapolate from a transaction of nearly $1 billion in size as to what it means for cap rates on individual asset sales.
In a transaction of that magnitude, as you can image, there’s very limited competition and it’s a much more difficult negotiation. On the one-off deals, it’s a very, very different landscape in terms of leverage. And you shouldn’t expect to see any significant difference in terms of future asset sales here on a cap rate basis from what we’ve been able to achieve earlier this year
Later:
Carol Kemple – Hilliard Lyons
Where do you all expect to see occupancy at December 31st?
Dan Hurwitz- President and Chief Operating Officer
We think that occupancy will go up, as I mentioned, nominally in the second quarter and again – I mean in the third quarter and again in the fourth quarter. So at the very high end, we think we can end the year at about 50 basis point plus in occupancy from where we are today, and on the low end somewhere in the 20 to 30 basis point movement.
Again, does this mean it is all system go? Of course not. But I think some of the more dire CRE predictions out there may prove to be well off base, especially if the TALF-CRE program actually get the traction many are now thinking it may and the host of CMBS REIT’s that are planned gain traction.
Now this does not mean there will not be significant CRE stress and probably more REIT’s that go under. But it also means that there will be survivors and simply avoiding the whole sector due to armageddon scenarios I think will cause many to miss some significant opportunity.
Disclosure (“none” means no position):None
Buffett, TALF, Gas, Happy Hour
– Worried about inflation……welcome aboard
– This market may just be starting to shake loose a bit
– Some predictions for Natural Gas
– Nice program. @Dasan as alway has some very interesting thing to say
Disclosure (“none” means no position):
Buffett, TALF, Gas, Happy Hour
– Worried about inflation……welcome aboard
– This market may just be starting to shake loose a bit
– Some predictions for Natural Gas
– Nice program. @Dasan as alway has some very interesting thing to say
Disclosure (“none” means no position):
Everyone has heard about the “cash for clinkers” program but not too many people know if it is a good deal. well, here is some help.
Make sure if you decide to do it to visit your local AutoNation (AN) dealership…
Disclosure (“none” means no position):Long AN
Talking about Phillip Morris International (PM) and natural gas (UNG)
Disclosure (“none” means no position):Long PM, UNG
Talking about Phillip Morris International (PM) and natural gas (UNG)
Disclosure (“none” means no position):Long PM, UNG
