davidbdc

General Growth Properties: Rebutting the Bears

NOI $2.4 billion

Minus senior debt service* $1.1 billion

Minus cap ex $0.3 billion

Equals cash flow of $1.0 billion
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This is very very optimistic IMO.....I think you have to expect a further drop in NOI in the short term, and don't expect the second round of negotiations to be as advantageous as the first - which means the senior debt service might further erode NOI through the forced sale of assets. At the very least I'd expect the second round to be 20% worse to GGP than the first (you do the easy stuff first in BK to try to set precendent). That would mean another $200 million or so....and cap ex needs to increase to attract new retailers into empty space. I think that optimistically over the next few years GGP has cash flow of $200-$500 million. Then you can apply whatever multiple you'd like on that. And I believe thats the optimistic scenario - I believe that the remaining creditors will dig in and force either the whole thing to be sold or for a large chunk of GGP to be sold.

And I've never seen David Simon overpay for assets out of the kindness of his heart..........I think the money has been made in GGP. For those that bought it was a good ride and congrats, but remember a bird in the hand.........

Commercial Real Estate Time Bomb Ticking for REITs

REITs are already down more than 50% across the board and many are down 80%+.....its a little late in the game to start shorting.

Those REIT's that were buying properties in the past 5 years will have trouble and some others will end up in BK. But many are going to work their way through their problems and investors will be well rewarded for the risk.

RPT, PEI, CBL, SHO, are all good risk/reward investments. Is there a lot of risk? yes.....is there a lot of reward? IMO yes.

And what is Buffet's saying - be fearful when others are greedy, and be greedy when others are fearful.....well REIT FEAR is everywhere today - newspapers, MSNBC, blogs, etc. Must be time to buy!!!