David Simon: new development is dead

Assuming anyone is still there, if you work in the development group at Simon Properties, you may want to polish your resumes.

While David Simon tried to assure analysts about the dividend, he also said the company doesn’t plan to begin construction on new projects or major redevelopments in 2009 and there will be little new U.S. retail construction for years to come.

“The new development business is dead for a decade,” Simon said on today’s call. “Maybe it’s eight years. Maybe it’s not completely dead. Maybe I’m over-dramatizing it for effect.”

That's probably overdramatic and hopefully limited to regional malls. But for big deals in the exurbs? It may be a while. In spite of rosy predictions in this article where I live, I doubt we'll see much dirt pushed this year.

H/T Traffic Court.

Read more »

Good Morning, Manila! (and Good Evening, Chicago)

Magandang Umaga! It is mid-morning Monday in the Philippines and Sunday evening in Chicago, and I just learned the Bears lost, blowing any chance they had of the playoffs. I never expected them to be even close, so I am not bummed out. Now I pin my hopes on a Rose Bowl victory by USC against Penn State.

I am still astounded by the amount of dirt being pushed here in the Philippines. We had a terrific visit yesterday to Tagaytay Highlands, an upscale, private real estate development about 60 minutes from Manila. The facilities, security and dirt were all nothing short of magnificent. The views are among the most beautiful I have seen. Gichael de Leon was kind enough to give us a grand tour of the facility, and his boss was good enough to give us a guest pass to the club facilities, which allowed us to eat at one of the many restaurants on site. We chose the American style steakhouse, and my US-imported ribeye was a touch of home 800 miles away. Many of the buildings are constructed with logs imported from Canada. Great attention to detail. We have some serious considering to do about investing for the future.

On the real estate front back home, I have a few tidbits for your consideration.

First it was the developers, who are concerned about short term debt expiring. Now retailers want a piece of the bailout action too. What next? How about real estate lawyers, title companies and bloggers? We did not even do anything wrong.

Here's the latest on CMBS delinquencies in commercial real estate. Is 0.64% really that bad? Or even the 2% being predicted? Would someone care to tell me what I am missing here? Is the sample skewed? Maybe the heat and humidity are getting to me.

Frustration department: interest rates are crazy low for residential real estate right now and leading many to want to refi, but credit is still tight to the point that the market is stagnant. The mid-2009 predictions, or about 150ish days after Obama takes the oath, are making sense for the beginnings of a turnaround. Let's hope we don't print too much money and/or drive ourselves deeper in a hole.

I am going back into the city tomorrow where I will havve a more reliable high-speed connection, not to mention air conditioning and a 40" flat screen TV. Comforts of home and all that. But I am really having a terrific time so far away from home. I miss my family, yes, but I am happy to be with my in-laws and enjoying the comforts and cultual awakenings of this place.

Read more »

I'm not dead yet....

This is exciting for people who live and work in the River West area, and is personally good for me given where my Chicago office is. U.S. Equities has obtained Phase 1 financing from Eurohypo for the long-awaited Metra Market project. The press release says they have $25 million in financing plus TIF money to boot. I'm excited to see the project get off the ground because I honestly thought it might be dead. Congrats! Apparently three anchors, including a French market and a CVS, are on board. I think this bodes well for my work neighborhood, and I look forward to seeing construction begin.

When you think about it, the legal issues alone can make a project like this daunting. You have air and structural maintenance rights from the UP to deal with, probably a ton of other crazy title issues to work through with the lender, and on top of all that the fun that is TIF financing. I can see why they went to Eurohypo. I've done one or two deals with them and they are smart. Tough, too, but not unfair. I don't know what, if anything, the choice of lender or legal issues had with getting the deal done, but hey, it isn't my deal so I can speculate!

Courtesy of Crain's.

Read more »

What is $190 million among friends? A LOT of money!

That is how much Crain's estimates that Teng & Associates has plunked into the Waterview Tower/Shangi-La Hotel development on Wacker Drive. Other than a $20 million bridge loan from LaSalle Bank, that's apparently all cash we're talking here.

Neither I nor Crain's has seen any much activity there in weeks, and the trade reports that there are at least nine mechanic's liens that have been filed. (That is an UGLY statute in Illinois to deal with, by the way.) Often that's a sign of major league trouble. But the lender insists that the loan will be done and construction will then proceed. Good. I like staying at Shangri-La in Asia.

And, as you probably know, Teng is not alone. I have not heard anything about financing for the Chicago Spire either, but I assume Kelleher and Anglo-Irish (presumably a syndicate) will eventually do something to get that deal done as well. If you look at pictures, the hole in the ground is dug. There's a YouTube post with rumors (you can look it up if you care; no link here). Of course, I've seen holes dug and no building built thereafter for a looong time, but I don't know how this will turn out. I'm hoping, of course, the deal gets done.

Read more »

OK, I can finally talk about this one

I have said time and again that I do not make news, I just report it. So, if I know about a deal (whether I am working on it or not), I don't leak it. Not my job, and I do not even want to think about the privilege and confidentiality issues that abound. (I also don't want my clients worrying about it.)

The good news is that GlobeSt.com reported today that a deal I worked on last year, the redevelopment of the New City YMCA property in Chicago, is moving along. Roundy's Supermarkets, which we discussed here recently, has signed an 80,000 sf lease. (Full disclosure: I did not negotiate that deal.) Other tenants are in the works, and, as my friend Jeff Berta says, “Unfortunately, we cannot announce any particular names at this time.” They are still talking about how to deal with some of the residential portions of the property.

I'm looking forward to a summer groundbreaking for multiple reasons.

Read more »

All I can say is "Wow"

If you could see this now....

I know this property is in Bucktown. I know Bucktown is hotter than hot for development. I know prices can be high there.

But $767 per square foot? I repeat: wow. If the national retailers can come in with high rents, and with parking available on this site that makes it a premium location, on top of a great corner, this could be a good deal. But boy, that's going to be an interesting pro forma. And you still have to get it through the alderman and zoning and into a PUD.

Read more »