Archive for February, 2007|Monthly archive page
Have you ever wondered what would happen if…
Leave a CommentI guess I never really thought about what would happen, but this is what happens if you put a few cell phones in a blender…
The Cell Phone Junkie Show #37
The Cell Phone Junkie Show #37 55:33
Show Notes
A wide variety of topics this week! We discuss the new Windows OS and get into some detail about the advantages and disadvantages of prepaid. We also discuss a new Blackberry, Verizon rejecting the iPhone and Google Maps on Windows Mobile.
Intro
News/Reviews
Windows Mobile 6 announced
WM6 first impressions
Laptop Mag review of WM6
Blackberry 8800 on BJR
Verizon and the iPhone
Advantages and Disadvantages of Prepaid
Credit Check’s for Free
Lock your credit report in 26 states
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602-903-4116
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Crazy for REIT’s
I found this article today on the Motley Fool website about the values of the countries REIT’s (Real Estate Investment Trust’s). The reason that this story caught my eye is that my is that my company is mentioned in it. Anyway, it is a great explanation of why our stock has been going through the roof recently!
http://www.fool.com/community/pod/2007/070209.htm
By Reitnut
It would be easy, looking at the price action of REIT stocks on Wednesday (when some retail REITs generated the return equivalent of almost two years in dividends in a single day), to come to the conclusion that those buying REIT stocks this week are cavorting in La-La Land.
And perhaps they are. The movement in REIT stocks these days certainly does reflect at least a modest amount of “heavy breathing.” But perhaps there is also a bit of “method” in their madness.
The Blackstone/Vornado bidding war for EOP has turned more than a few heads, and has caused serious investors to revisit their cap rate assumptions when looking at their valuation models. Blackstone is far from an investment weirdo; they have a reputation of being a very savvy investor, not prone to overpaying for their acquisitions. And, of course, the very same can be said for Steve Roth. Accordingly, investors have marked down the cap rates used to value office REITs, causing these stocks to levitate.
But this realization hasn’t, until very recently, filtered into other real estate sectors. Of course, cap rates for apartment assets have dropped significantly, commencing a few years ago, but sizeable cap rate compression has generally been limited to apartments and, now, to offices. Can investors be wondering whether retail real estate deserves the same treatment? Would that explain the 3-4% spikes in retail REITs such as GGP, MAC and SPG?
It sure could. Green Street’s estimated NAV for, say, Macerich, is at $85.50, and is based upon company-average cap rates of 6% (nominal) and 5.3% (economic). So, the stock, at $102.20 as I write, is trading at an NAV premium of 19.5%. That would make MAC more than a tad expensive. But what if we adjust the cap rates we assign to MAC? The price paid for EOP’s assets by Blackstone, at $55.50 per share, translates into cap rates for EOP’s assets of 5.3% (nominal) and 4.4% (economic). And certainly not all of EOP’s assets are located in hot markets such as Manhattan.
So would it be outrageous to think that Macerich’s high-quality malls would trade, if exposed to the market, at an economic cap rate of 4.8%, which is 40 bps higher than that of EOP? After all, there is a lot of built-in NOI growth in the portfolio, malls are one of the most stable of all property types, and competition from new developments is very, very modest.
Applying an economic cap rate of 4.8% (rather than the 5.3% now being used by Green Street) would result in an NAV estimate for Macerich, using all of Green Street’s other assumptions for the values of its assets and liabilities, of $102.69 — suggesting that MAC’s stock is now trading at an NAV discount. And this, of course, allows us to conclude that MAC stock isn’t overvalued after all. A similar exercise could be used for other retail REITs with property of high quality in protected markets.
So it’s certainly possible to conclude that REIT stocks are overvalued at the present time, and investors’ emotions can justifiably be described as frothy; a couple of down-days should certainly be expected. However, if serious investors are today willing to accept initial returns of 4.4% on good quality commercial real estate assets and believe that internal rates of return on these assets over a period of a few years will be acceptable (perhaps something like 7.5% unlevered, as Blackstone and Vornado were apparently willing to do), well, perhaps today’s buyers of the shares of the retail REITs with the best quality assets are not so crazy after all.
Anyway, something to think about before dumping all of our REIT shares.
Ralph
Time to step down from Qusers.com
Some of you may know that I have been a moderator for the Qusers.com website that is completely dedicated to the Motorola Q. The time came today when I decided that between everything that is going on in my life, I needed to let go of this one and step down.
I spend quite a bit of time at Mobility Today and feel that it is only fair to Dave and the other moderators and members that I focus my moderating efforts on that community. Dave has been a big supporter of me for the past year and I owe a lot to him. He helped me get going on my own podcast, The Cell Phone Junkie and has really been a good friend!
While I will still enjoy reading the things that the Qusers community has to say, I will just not be in the thick of it on a daily basis. Thanks to Cord and the rest of the Qusers moderators for thier support and help!
Mickey
Should I make the switch?
Over the past few weeks, I have started looking at different upgrade options for my 5 year old tattered and used HP desktop. It still runs, but is nearing the end of it’s life I fear. At this point, i have 2 options for upgrading, Vista, and Apple OSX. I know everyone has thier own opinion on what is best, but I haven’t decided yet. I have been a loyal Windows user for the past 10-15 years, and I don’t know if Mac is going to be worth the money to me. I found this article on Crunchgear that talks about how to switch, and the things you need to do. We’ll see if I make it to that point!
I think I’m in love…
I’ll be honest, I love BMW’s. I found this video of the Alpina B10. There are only 572 of this Alpina ever produced. Enjoy!
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The Cell Phone Junkie Show #36
The Cell Phone Junkie Show #36 43:40
Show Notes
We’re back for another questions and comments show. We’ve got 10 questions and comments from the listeners over the last few weeks with the some great content and discussions. Also, note our new crisper cleaner audio! We’ve upped our equipment and are excited about the new sound.
Comments from Dan
Comment from Seamus
Comment from Dan
Question from Mark-Link1-Link2
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