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Commercial Real Estate: What Hancock Building's 50% Sales Price Means

Sorry, the Portfolio write-up of the sale has the correct numbers: they paid $20.1 million for the equity, for a total of $660 million. My mistake. And a HUGE writedown of a trophy property.

Commercial Real Estate: What Hancock Building's 50% Sales Price Means

I may be missing something, but isn't the $640 million first mortgage still in place? Doesn't this sale represent the foreclosure of the mezzanine (and whatever equity) interest? The mezzanine position was originally something like $725 million, correct? It's now just over $700 million, so this would represent about a discount of less than 10%. I can't really tell because the WSJ article is very poorly written, but it sounds like the mezz holder sold the foreclosed and sold the mezz/equity stake back to a partnership including itself. Any clarification Tom?

"Best in Class" Vornado Will Pay Dividend in Stock

First of all, this concept that Vornado is a "best in class" REIT is ridiculous. Vornado is basically a themeless real estate and real estate-related hedge fund run by two financial engineers, Fascitelli and Roth. Neither has much property development or management experience. They buy low and (hope to) sell high while collecting rents in the interim. They aren't great at redevelopment or repositioning; they're very good at doing deals. Their core FFO growth, if you strip out all the gains and special items (which should never have been lumped in in the first place), is mediocre. They're going to be severely tested during this downturn, primarily because no one in senior management has actually managed a real estate portfolio during a recession. I'm guessing the Vornado cult will come to the same conclusion relatively soon.

Long EPR, DLR, ARE, O common and preferreds hedged with SRS.

Target Decides to Let Stock Languish

Todd -

You're first paragraph after the Ackman presentation, Market Value, basically defeats your entire thesis. Target currently owns the real estate. Target has a "market value" today of $32.00 per share, including that real estate. If the market isn't wrong (and it isn't), there isn't any incremental value to be harvested from that real estate by this idiotic TIPREIT structure. Ackman made a poor investment decision. He bought TGT, a discount retailer with maybe 7%-8% annual core earnings growth, at roughly 20x earnings, twice where it's trading today. Financial engineering isn't going to unlock some illusory additional "market value" from the stock.

BTW, there aren't any "comps" for this REIT structure. There are no REITs that own land only. There are no REITs with 100% exposure to a single tenant. And the idea that this is comparable to TIP Treasuries is ludicrous. TIPs are backed by the U.S. Treasury. TIPREIT is backed by a mediocre discount retailer with lots of competition.

If Target wants to raise cash via its real estate, it should seek out a couple of sale/leaseback deals with major triple net REITs. If they're lucky, they'll get some nice 12%-13% money (with CPI escalators) in today's market.

I feel bad for Ackman's investors. Anybody with a clue listening to this presentation must realize the guy's "genius" is laughably overrated.

Top 15 Dividend Paying REITs

Also, I'm fairly certain your calc's for EPR, ARE, AMB and SLG are wrong, as their div's haven't grown by those percentages. All four came public in 1997, so I'm guessing you used their partial div's for the year for your base to calc div growth. AIV is also wrong; I don't know where your numbers are coming from. But hey, I tentatively think that the remaining five might be right! Just follow this simple rule: GGP should always come out #1 in historical dividend growth among REITs. If you get another result, your looking at the wrong info.

Long ARE, EPR, GGP & O

Top 15 Dividend Paying REITs

This article needs a bit more homework. GTY and RYN weren't REITs for the entirety of your timeframe, so their dividend growth is skewed upward by their REIT conversion. PEI's div growth doesn't reflect the fact that the company foundered through most of the 90's and had to cut its dividend and restructure through a backdoor UPREIT (in 1997) before starting to grow again. PSA's div growth is skewed by some of its formation transactions.

REITs: An Update

Thanks for the response Toro. I do a similar analysis, using the entire equity REIT universe (no mortgage REITs, no timber), adding in the small caps and new issues that don't show up in IYR but taking out the special situations, like MPG, MSW and PPS (for now), that do. Also, I don't use market cap weighting like IYR, which obviously skews both the yield and the multiple, just simple equal weights. That said, my FFO multiple calc is much higher, at 13.1x; my yield though is also higher at 5.6%. Where do you get the S&P FFO number? Thanks again for the analysis and response.

P.S. Larry, I'd avoid MPG. It's in serious trouble with the refi of its acquisition debt and will likely be broken up or sold on unattractive terms.

REITs: An Update

Hey Toro -

Can you provide the sources for your info, most pertitently, your FFO estimates for the IYR and S&P 500, as well as your yield calc for the IYR. These don't gibe at all with what I have. I am long SRS as well, but more as a hedge for my REIT longs (DLR, ARE, DDR, OFC, EXR, OHI, EPR, SKT, VTR, PLD, GGP, SLG, AHT, SHO, NRF) than as a bet against REITs in general. It seemed from your earlier posts that you recognized that IYR is a pretty poor proxy for REITs in general (which I agree with), yet you keep referring to it as a benchmark. I understand if what yo uhave is proprietary, just want to get an idea of where your analysis is coming from. Thanks.

Taubman Centers: Are All Retail REITs Overvalued?

Chris -

Taubman has a relatively complex structure for a REIT and it's clear you do not understand very much about this company or this sector. Two TCO properties, Stamford Town Center and Beverly Center, alone are worth in excess of $1.35 billion. I'm hoping (for your sake) that these posts are some sort of April Fool's joke played by Seeking Alpha. If not, I heartily encourage you to short this stock (and REITs in general). I'm always happy to have more idiots in the market. Easy money. Thanks and best of luck.

P.S. You should get in touch with Reggie Middleton. The two of you would make a great team.