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Note: An explanation of abbreviations: Op = operation expenses. Ad and Admin = administrative expenses. Exp - total expenses. Rev = revenue. Dep and Deprec = depreciation expenses. Int = interest. Total expenses was calculated by subtracting 'net income' from revenue. Thus some 'one time charges' not included in pro-forma statements are included in these expenses. I am persuaded by the accounting vigilantes who say that there are no one time charges that should be excluded. Restructuring charges should not be excluded - because restructuring is a constant/ongoing process in modern America. Price to book was calculated by taking assets minus liabilities (to get 'capital') and then dividing by total shares. Everything that was not equity (listed as common stock, additional paid-in capital, and retained earnings) was considered a liability - and that included preferred shares. PKY did not break expenses down into components, so PKY's components (Admin, Dep, Op Exp, Int) are guestimates. HIW was downgraded by two firms after their conference call this week. But those downgrades are not yet reflected in the stats taken from WSJ. [The downgrade is reflected in stats at Yahoo, falling from 3.0 to 3.2 - but I guestimate that the 3.2 reflects only 'one' downgrade.] FFO is presumably lowered also, but this too in not reflected in the stats. [A Brief Editorial Tangent: If I had not been doing this update - I would not have realized how out-of-date so many stats are at Yahoo and WSJ. And these are stats used to make buying and selling decisions! WSJ is still using Q3-ending stats - and those could have been updated for most stocks over two weeks ago.] ARI and VNO have yet to release Q4 stats, so they are not represented in most of the tables. I am including VNO with the office REITs, when in truth it is a hybrid. I thought GL paid dividends monthly, but that dividend may be suspended - else it is yielding over 40%. So I presumed a quarterly dividend - and that may well be in error. Some companies may expenses their employee option programs - and that may result in large variances between one company's Admin Exp and anothers. Note: An explanation of abbreviations: Op = operation expenses. Ad and Admin = administrative expenses. Exp - total expenses. Rev = revenue. Dep and Deprec = depreciation expenses. Int = interest. While stats in the 'Industrial Update' tables [below] flowed easily from income and balance sheet statements into neat categories - that was NOT the case with the Mall REITs. There are 'interim' stats for 'total expenses' plugged in for GGP, MLS, SPG and RSE [I used 75% of revenues for all but MLS]. Administrative stats for RSE and SPG are guestimates. MLS's administrative expense is so out of line to be hard to believe - but came straight from their earnings release. [There is data from Green Street's Q2-02 Retail update that supports MLS's abnormal administrative expenses. GS quotes overhead as a percent of current asset value - and that MLS expense is almost twice the average for malls.] MLS stated their expenses for '02 were $129,406 - but totaling the three categories stated above came to over $172,000. So MLS's total expenses [at $192k] are probably understated - even thought they are already the highest [as a percent of revenues] of the group. I wanted to include TCO, but their data took too much imagineering to plug into these categories. TCO also omitted data that all other REITs included. GGP's dividend must pay only twice a year - but I presumed four times a year - until I verify otherwise. That may explain the high yield and low coverage ratios. However - you can take the first three data tables without many grains of salt. Even the out of line 'price to book' stats have been double checked with old stats at WSJ. There is a possibility of a small amount of error, due to using 'Q4 weighted average fully diluted' shares, and those stats could already be out of date. Note: An explanation of abbreviations: Op = operation expenses. Ad and Admin = administrative expenses. Exp - total expenses. Rev = revenue. Dep and Deprec = depreciation expenses. Int = interest.
Although there are no precise rental figures for all apartments, the average rent for larger complexes in Southern California was $1,130 last year, up 2% from the previous year but 30% more than it was in 1998, according to a survey by RealFacts, an industry research firm that tracks data for apartments with 100 or more units. In December, monthly rents ranged from $774 in San Bernardino to $998 in Anaheim to $2,436 in Santa Monica, according to the RealFacts study. Depending on location, the average monthly rent across the Greater Los Angeles region -- including the Inland Empire and Orange County - is expected to increase 8% to 15% between now and the end of September 2004, according to a forecast that will be released today by the USC Lusk Center for Real Estate. Rent trends in Southern California are running counter to what's happening in many other cities. During 2002, the monthly rent at large complexes in Los Angeles rose by 5.4% to $1,274, according to RealFacts. But average rents at similar properties in the San Francisco area fell 12% to about $1,663. In Seattle, rents remained virtually flat at $865. Bad Times for Southern Cal Home Buyers Reuters via LA Times 2-7 Just 28% of California households could afford to buy a median-priced house in the most populous U.S. state in December, the smallest share since 1991, when the average stood at 25%, according to the California Assn. of Realtors. The median price of a detached, existing single-family home in California in December rose 20.2% to $338,110 from $281,330 a year earlier, the industry group said. A household required a minimum gross annual income of $81,120 in December to buy a house in the state, based on a typical 30-year, fixed-rate mortgage at 6.10% and assuming a 20% down payment, the industry group said. The minimum household income needed to buy a home a year earlier in California was $71,450, assuming a prevailing interest rate of 6.77%, the group said.
However, GGP plans to spend $525 million over the next two years on new developments, redevelopments and expansions of existing malls, with the larger projects all west of the Mississippi River, expected to come on line in the second half of 2004. The capital expenditures are expected to yield a 10% return or better, says CFO Bernard Freibaum. 'We hope retail sales will be more robust by then,' Freibaum says during an earnings conference call Tuesday. 'Most of these projects are substantially pre-leased or committed.' However, if the economy continues to sputter or slip back into recession, the projects also can be delayed, Freibaum adds. General Growth Properties posted double-digit funds from operations growth last year for the ninth year in the last 10, with a 17.5% increase last year. Meanwhile, occupancy remained flat at 91% with sales at the mall also static at $355 per sf. The trend for 2003 is expected to be a continued plateau for occupancy and sales, says president and COO Robert Michaels. The tenant base remains strong, REIT officials say, with fewer store closings and financial difficulties reported last year compared to 2001. Meanwhile, 2003 acquisitions may range anywhere from none to $1 billion, according to the company. 'You donÌt know if youÌre going to acquire anything in a given year, but we do expect to see opportunities this year,' Freibaum says. 'But thereÌs no way to say where, or how many.'
Last month, the company announced that it sold ExecuCentre, a collection of furnished, ready-to-use offices. That caps off sales of strip shopping centers, offices and side businesses. Rouse said the trend will continue. The move to streamline could make the company an attractive acquisition target, analysts said. More immediately, it could make Rouse more efficient, make it less heavily loaded with properties in two locations (Columbia and Summerlin) and less leveraged. Randall M. Griffin, president and chief operating officer, said it is not a good time for Rouse to sell the Maryland office portfolio because some of the buildings have vacancies resulting from the economic downturn. Griffin estimated that the Rouse office portfolio would be worth $200 million to $300 million, depending on vacancy rates at sale time. Rouse's most recent earnings, for the third quarter reported in October, show that income from offices remains flat, while the largest share of income comes from retail - and continues to rise. Net operating income from retail centers was $123.1 million in that quarter, compared with $94.4 million in 2001. Rouse attributed the increase to recently purchased malls from the Rodamco portfolio. Income from the office portfolio fell to $30 million from $32.5 million the year before. Rouse blamed the decline on the dipping occupancy related to corporate cutbacks and weak demand. Occupancy was 89 percent, down from 93 percent the year before.
The nation's third-largest general merchant is building a prototype for a freestanding store in West Jordan, Utah, a rapidly growing middle-class bedroom community in the Salt Lake City metropolitan area. If the store is a hit, it could be a model for Sears' future growth, Sears Chief Executive Alan Lacy said last week. After all, few new shopping malls are being built. The things that Sears learns from the experiment could show up in its mall-based department stores as well. So far, Sears' plans are getting high marks from retail experts. "It sounds like what they should have done a long time ago," says Sid Doolittle, retail consultant with Chicago's McMillan/Doolittle. "If it does work, it could be a big win for them." Shoppers want to get in and get out, he adds. Rightly or wrongly, they believe that going to a mall takes longer than driving up and parking outside a freestanding store. And there's another advantage - shoppers become a captive audience because there aren't any other stores to distract them, Doolittle says. If the prototype doesn't pan out, it's no big deal, retail experts agree. "You can always stop doing it if it doesn't work," Doolittle says. At a minimum, it could answer the question of where Sears goes from here. With 870 full-line stores around the country and few shopping malls being built, Sears doesn't have much room to grow its core business. But standing still isn't an option for retail companies because investors insist on top-line growth and healthy profits. When retail experts talk about innovative retailers, Sears isn't usually at the top of the list. Maybe it should be. Since the early 1990s, it has built a freestanding hardware chain, launched NTB, a tire and battery store, and created from scratch the Great Indoors, an upscale home remodeling and redecorating chain that now numbers 20 stores. NAREIT on Dividend Reform We are supportive of the president's aim and believe that if his overall plan, including the dividend component, results in economic revival, it will be good for real-estate investment generally, including REITs. The net effect of that dividend is to provide - as real estate does - an income-based return together with protection against inflation and some degree of capital appreciation over time. That won't go away under the president's proposal, however it is adopted. There are a few ways the plan could be beneficial. One, is that the president is looking to accelerate rate cuts for individual income tax rates, and for those people receiving dividends, it would be a benefit. And the second is that the plan puts a real spotlight on dividend-paying stocks. If you look at the data at year end over the past one, three, five, 10 and even 30 years, REITs have outperformed all the major indices, whether it's the S&P 500, Nasdaq or Dow Jones. REITs have done better and with less volatility. (Steven A. Wechsler, president and CEO of National Association of Real Estate Investment Trusts, WSJ 2-13) CMBS Update Commercial-mortgage whole loans and commercial mortgage-backed securities are performing extraordinarily well, despite deteriorating real-estate fundamentals, especially in the office-building sector. According to the Giliberto-Levy Commercial Mortgage Performance Index, whole loans registered a total return of 15.26% for 2002, about on par with investment-grade CMBS at 15.45%, but way ahead of the Lehman Brothers Triple-B Bond Index, which weighed in at 8.28%. Indeed, CMBS were the best-performing sector in the Lehman Brothers' Bond Index last year. (John Levy, Barrons 2-10) Home Page Previous REIT Update Top Sites
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