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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (186856)	2/27/2009 4:41:11 PM
From: Perspective	Respond to of 306849

I hate analyzing REITs!!! I still don't have an intuitive feel. So when a REIT like DDR says their FFO looks great finance.yahoo.com but the stock is getting slaughtered, what ultimately causes them to go under? I mean, DDR says that its FFO were $0.74 after taking out the charges. That works out to about $3/share annualized. That's lease revenue minus costs, before depreciation. So can't they just run the business down for the next several years? Abandon their development, and just milk what they already have? They're carrying $9B in property and investments on $6B debt - that doesn't seem too bad. But their debt-to-capitalization is enormous, around 95%. What sinks them? Is it that they can't meet a balloon payment for an existing mall down the line out of their cash flow? What are the lenders looking at if the FFO are fine? Do they look at the overall leverage of the REIT and say "sure, your FFO are fine, but if they go south, you have no way to make us whole". I would have thought the lender would be fine with repossessing the property. Oh wait, I guess that's it. DDR needs to put down enough on the refi such that the LTV gives the lender coverage? So DDR is in trouble because they don't have the cash FFO to cover an upcoming balloon, and they don't even have enough cash FFO to make a large enough down payment to line up a lender? Or is it a development loan - I see they have several projects running. Do they go BK if they have a project that wraps up and they can't find refi when the project completes? Expected Initial Net Cost Anchor Location Owned GLA ($ Millions) Opening * Description ----------------------- --------- ------------ ---------- ----------------- Ukiah (Mendocino), California 228,943 $ 66.9 2H 11 Mixed Use Guilford, Connecticut 137,527 48.0 2H 10 Lifestyle Center Miami (Homestead), Florida 272,610 79.7 2H 08 Community Center Miami, Florida 391,351 148.8 2H 06 Mixed Use Boise (Nampa), Idaho 431,689 126.7 2H 07 Community Center Boston (Norwood), Massachusetts 56,343 26.7 2H 09 Community Center Boston, Massachusetts (Seabrook, New Hampshire) 210,855 54.5 2H 10 Community Center Elmira (Horseheads), New York 350,987 55.0 1H 07 Community Center Raleigh (Apex), North Carolina (Promenade) 72,830 16.9 2H 09 Community Center Austin (Kyle), Texas 443,092 77.2 2H 09 Community Center --------- ------------ Total 2,596,227 $ 700.4 ========= ============ Sheesh, I hate trying to analyze these pigs. Help! `BC