All GLG News Analyses Filed Under: Corporate Real Estate

Should Real Estate Developers Gear Towards Residential Property Recovery in the Philippines?

July 14, 2009

Analysis by: GLG Expert Contributor

Analysis of:Philippines' Megaworld to launch 5 new projects | business.inquirer.net

Residential property developers in the Philippines are feeling that the worst may be over for the local industry. The fact that most developers are already making plans and are already pursuing projects means they are gearing towards recovery. Large-scale construction of residential condominiums and high-rises should take about 2 years at the least. This means Megaworld, one of the biggest developers in the country, are trying to be prepared if ever market demand intensifies in the near term. However, this may also be risky as there are still a lot of residential condominium projects under construction in Metro Manila alone. With a still slow current demand (volume) for residential property, coupled with a huge supply pipeline, there is possibility that takeup of these new projects should slow.

Time to re-examine your office rent?

June 3, 2009

Analysis by: GLG Expert Contributor

Analysis of:Office rental market faces oversupply crunch | www.intellasia.net

Demand from new and existing customers for offices in HCMC has plummeted due to gloomy economic conditions and lower FDI growth.

Can One Sell Enough $5 Lattes to Justify These Rents?

February 2, 2009

Analysis by: GLG Expert Contributor

Analysis of:At Starbuck's, A Tall Order For New Cuts, Store Closures | online.wsj.com

Like so many other retailers and food service companies, Starbucks growth in recent years was fueled by the pressures on a public company to add stores and with it sales volume. But much of that new store and sales volume growth came at the expense of good business practices and even common sense.

Philippine employment and economy benefits from BPO industry's continued growth

April 3, 2008

Analysis by: GLG Expert Contributor

Analysis of:BPOs still top generator of jobs | www.businessmirror.com.ph

The continued growth of the BPO industry in the Philippines has led to subsequent growth in all other related industries as previously reported and analyzed by this GLG Real Estate Council member The announcement of more BPO locations in other cities aside from Metro Manila in Luzon, Visayas and Mindanao also mean wider spread of property investments, white-collar income and consumer spending.

Kenneth LeonardPrincipalLeonard Associates

Sears predicts jump in profit---But Not From Store Operations!

May 29, 2007

Analysis of:Sears predicts jump in profit | www.tribune.com

Just one more example of "irrational exuberance".  The investors who have been driving the price of SHLD through the roof continue to have blind faith in Mr. Lampert's ability to somehow transform this mortally wounded giant retailer into something resembling Mr. Buffet's empire. While anything is possible in today's climate with so much money chasing so few deals, I firmly believe there is no way that the turnaround will be the result of Sears or Kmart taking market share away from ANY of their primary competitors. Far better merchants and/or retail businessmen than Mr. Lampert have tried and failed.  There is simply no reason to think that Mr. Lampert, together with the less experienced team he has put together, will continue to wring profits out of SHLD by further cutting costs in the face of declining sales and market share. 

Kenneth LeonardPrincipalLeonard Associates

LAMPERT SQUEEZES SHLD

March 27, 2007

Analysis of:EVERY LAST PENNY | chicagobusiness.com

Eddie Lampert has proven he can squeeze profits out of SHLD. Now the marketplace is waiting to see if he can build the business

So far all he has done is trim costs and bought investment securities while sales and store appearances decline. He has built a cash hoard of almost $4 billion which he has used to buy back $816 million in stock and pay down $250 million of his debt. Meanwhile capital expenditures have been more than halved and last years investment in stores fell another 13% to $474 million. Industry experts estimate the company should be spending around $2.6 billion just to stay even with his big box competitors.

Kenneth LeonardPrincipalLeonard Associates

The Media Is Finally Waking Up

March 14, 2007

Analysis of:Risky Side of Sears:Retailer Is Recast As a Hedge Fund | www.washingtonpost.com

This is the first article I have seen in the public media that recognizes what SHLD has become.  It lists several well thought out reasons for their conclusions but the young author has overlooked a major item of concern that I have been writing about for the past year. 

Conventional wisdom continues to portray SHLD as having a sizable collateral value in their store real estate. This is simply NOT THE CASE! As I have pointed out in prior GLG News analysis, there are several very clear and obvious reasons why Mr. Lampert's cupboard is bare when he goes there looking for real estate value.
 
The Washington Post reporter, Mr. David Cho, is totally unaware of what is most obvious to shopping center industry observers. Mr. Cho writes that "Mr. Lampert sold off some of K mart's poorest performing stores". This is simply not true! The K mart stores that were sold were those that would bring the highest price from Home Depot, regardless of how well or poorly they were performing.

He also mentions the value that could be unlocked by selling the Sears stores as well. This is also false! The vast majority of owned Sears stores are in regional malls. These stores are subject to carefully worded contract restrictions as to their use, size, hours of operation, etc. Unless they were to be bought by another department store, THEY HAVE LITTLE , IF ANY, VALUE. 

Kenneth LeonardPrincipalLeonard Associates

SHLD profit up as stores go down

March 6, 2007

Analysis of:Sears posts 27% profit gain | www.chicagotribune.com

SHLD comp stores down 4.9% but 4Q profit up 27%. 

So far nothing Mr. Lampert has tried is helping to improve sales and some major investors are again wondering why he has not started selling some of his supposed valuable store properties.

In a long and rambling annual letter released in connection with his sales Mr. Lampert makes no mention of any plans to sell off properties and use the cash to buy other businesses. 

You Can Count On Change.

January 22, 2007

Analysis by: GLG Expert Contributor

Analysis of:Toyota eyes U.S. buildup | www.latimes.com

This is just the beginning of a trend as we move our economy ahead in capital goods and other manufacturing areas.  About 40% of our industrial property inventory is devoted to manufacturing as opposed to warehousing or speculative flex space.  This manufacturing percentage has been decreasing as we import inexpensive consumer goods from abroad.  The world now needs capital goods to develop infrastructure and repair the environment among other sectors.  They’re going to get the product from us, the leader of the world’s economies.  Furthermore, nations now can pay for the goods and services because we’ve put 3^rd world economies in business with our purchases.  And we’ve got more brains and brawn and a better political system to get it done as opposed to other industrialized nations.

You Never Know Who’s Going To Be Your Boss.

January 12, 2007

Analysis by: GLG Expert Contributor

Analysis of:HOME DEPOT DRAWS PROXY THREAT FROM INVESTORS | www.wsj.com

Old adages just keep turning up.  This company is being done in by the autocratic attitude of its now ex-CEO and the continuing concentration of power in the hands of Private Equity Capital.  Mr. Nardelli just wasn’t nice and when they could, the investors whined him out.  His results of doubling sales and profits in 6 years sounds good to me even on a present value basis.  The stock price just didn’t go up despite that.  He didn’t sell his program to investors because he didn’t think he had to.  He was wrong and it cost him his job.

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