Consolidating Financials To Pressure CRE Further [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Commercial Real Estate and Real Estate Investment Trusts [REITs]

General Growth Properties' High-Risk Strategies Hit Home. “General Growth's (GGP) stock [fell] 73% in the past year… Since August, CFO Bernie Freibaum, COO Bob Michaels and seven other executives have sold a collective 5.6 million of their shares -- for roughly $112 million. SEC: Most of those sales were made to meet margin calls… General Growth [has] $27 billion of debt, $19 billion of it due by the end of 2011. Coming problems include the company's need to refinance $1B in mortgages tied to its Fashion Show mall and Shoppes at the Palazzo, both in Las Vegas, which is due in November… GGP has to repay $600M in unsecured bonds in the spring.” (WSJ, Oct. 1) 

At Lehman, How a Real-Estate Star's Reversal of Fortune Contributed to Collapse. “As the head of Lehman Brothers Holdings Inc.'s vast commercial-real-estate operations, Mark Walsh left the firm holding more than $32.6 billion of loans and assets, some of them acquired as the real-estate market peaked in 2006-2007. That commercial-real-estate exposure was among the culprits in Lehman's collapse. Lehman has been forced to mark down investments that were made under Mr. Walsh's watch by $3.6B this year. In addition, it has sold about $7B of commercial mortgages and mortgage securities this year, some at losses of up to 20%.” (WSJ, Oct. 1) 

WaMu Sale To Impact West Coast CRE. “JPMorgan Chase (JPM): Less than 10% of the combined [WaMu/Chase] branch network would be shuttered. Given Chase has about 3,200 branches and WaMu approximately 2,200, 10% would be 540 branches. The branch closures are expected to occur in markets where Chase and WaMu retail locations overlap, [like] Houston, Dallas, Phoenix, Denver, Salt Lake City and the New York area… The administration side… is likely to affect the West Coast because WaMu’s headquarters are in Seattle while its credit card and commercial banking operations are based in California… WaMu occupies more space than any other company in Downtown Seattle. [More than 1.6M-sf.]” (Globe St., Oct. 1) 

Downtown Minneapolis Only Bright Spot In Commercial Real Estate Summer Report. “The third-quarter report from Colliers Turley Martin Tucker indicates that local commercial real estate remains sluggish, with downtown Minneapolis being the one local bright spot. Overall, the office market saw modest gains, while the industrial and retail markets both lost ground. Downtown Minneapolis did post more than 297,000-sf of absorption in Q3. That accounts for more than 82% of all positive absorption (about 360,000-sf) in the Twin Cities office market from July through September.” (Finance and Commerce, Oct. 1) 

Selling Well: 'Outlet' REITs. “An index of 108 [commercial real estate] stocks tracked by the National Association of REITs eked out a 5.6% total return for this past quarter and is up 1.8% so far this year… REITs whose fortunes rose as the economy's prospects sank [include] Tanger Factory Outlet Centers (SKT), a REIT with 31 discount shopping centers in 22 states, [which] gained 22% in Q3. Simon Property Group (SPG), a giant mall REIT that includes the Chelsea Premium Outlets, rose 7.9%... REITs investing in shopping centers, which tend to be anchored by supermarkets or big-box retailers, posted a gain of almost 11% last quarter.” (WSJ, Oct. 1) 

Team Wins Bid for $800M+ Stadium Project. “In an attempt to keep the Minnesota Vikings football franchise in the city, the Metropolitan Sports Facilities Commission is moving forward on a stadium reconstruction project… The cost for the reconstruction project, which would add a retractable roof to the closed dome in the Downtown, is now known yet, according to the commission, [but could be as high as] $954 million.” (Globe St., Oct. 1) 

REIT History Bodes Well For Outlook In Current Volatile Market. “Even though commercial- property values are decreasing, equity real estate investment trust prices will likely rise if historical trading trends are an indication, some industry observers predict… Equity REIT share prices have tended to decline, trough and rebound a year or two ahead of commercial-property prices shown on the NCREIF Property Index, from the National Council of Real Estate Investment Fiduciaries in Chicago. If this trend holds up during this cycle, equity REITs, which were up about 2% in the first eight months of 2008, should continue ticking up even though commercial-real-estate values will likely be falling.” (Investment News, Sept. 28) 

Retail Remains Strong In City. Connecticut: “Retail developments in the city, including the Danbury Fair mall, dominate the list of its top 10 taxpayers. Nearly 5% of the city's grand list -- or about $7.5 million in taxes annually -- come from retail developments, according to information released by the city's tax collector's office. The city collects about $152.7M in taxes… Danbury Mall Associates, which owns the mall along Backus Avenue, alone pays nearly $5.3 million annually and is the city's highest taxpayer.” (News Times, Sept. 28)

Real Estate Insiders See Market Upheaval Into 2010. “National survey conducted by law firm DLA Piper: The majority of all respondents – 62% -- don’t expect the real estate markets to stabilize until 2010, and 22% don’t expect to see stabilization until 2011. The majority of all respondents – 51%-- expect foreign investors to be the most active in the U.S. during the next year. And most – 90%-- describe themselves as bearish, up sharply from 68% from last October’s survey. And eight out of 10 respondents do not believe that the recent developments concerning Lehman Brothers, AIG and Merrill Lynch signal the “bottom” of the cycle, nor do respondents think they provide the “first sign of light” at the end of the credit crisis.” (Albany Business Review, Sept. 26)

Chase-Wamu Deal Watched Closely In Real Estate Circles. “The impact of the government-orchestrated sale of Washington Mutual to J.P. Morgan Chase will ripple through the Bay Area commercial real estate market from San Francisco to Pleasanton. WaMu’s total footprint in the Bay Area is 497,000-sf, enough space to accommodate just under 2,000 employees. The bank occupies about 160,000-sf of space in San Francisco… Another 70,000-sf of office space is scattered through Dublin, Emeryville, Oakland, Campbell, and Palo Alto… In Pleasanton, the bank occupies 267,000-sf.” (East Bay Business Times, Sept. 26)

Manhattanites May Soon Have Less To Bank On. “The era in which Manhattanites could find two, three, sometimes even four retail banking outlets on the same city block could be ending, according to a number of retail brokers who are readying themselves for a shedding of banking outlets caused by the crisis in the financial sector. Hundreds of thousands of square feet of available commercial space could be hitting the market... NY State Banking Dept.: There are now about 660 bank branches, up from 466 in 1998. To put that in perspective, there are about as many banking branches in Manhattan today as there are Starbucks and Dunkin' Donuts outlets combined.” (NY Sun, Sept. 25)

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.