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Glimcher Realty Trust Message Board

  • ferdiefor ferdiefor Oct 18, 2000 6:06 PM Flag

    GRT on DJNewswires

    S&P revised outlook to negative. 40% of debt has
    to be refinanced in 2001. Higher interest rates and
    lower debt coverage ratios going into 2001. Haven't
    sold off older assets in the timeframe needed.

    I don't know what it all means but given that FFO
    has been going up last 5 years and dividend has
    remained same it seems to me that it amounts to some cents
    of FFO but we probably still cover the dividend very

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    • I'm nervous because of the maxed-out credit lines and the high debt ratios but I'm hoping the current dividend will hold. The rest will take care of itself if they aren't forced to cut the dividend.

    • I think that the Oct/Nov selloff has been over
      done. I don't see that much wrong from a value
      perspective. My tech side sees that GRT just has run ahead of
      itself when it went over 15 this summer. End of year tax
      sellers/profit takers are running their course.

      We will
      be back to at least $14 shortly after the first of
      the year when the selling dries up and the income
      seekers return to the market. If it takes the 2nd
      qtr...the yield makes it worth the


    • When a shopping mall is at 80% occupancy, the
      next step is 70% and when you get to 70%, it often
      closes because some newer or better mall is close

      I think GRT is a deal and some of their development
      has been going well, but I'm just not impressed with
      their low occupancy rates and as such, I've steered
      clear of GRT.

      But, at $12 a share or so, it's
      really cheap and they have handled problems of the past
      quite well. I'm here because I've been watching the
      stock and thinking about buying, but I've always been
      given gas in the past by buying junk at a discount, and
      I'm reluctant to buy into GRT even though the price
      is impressive.


    • In my opinion is the biggest risk that grt faces
      relates to debt. I don't feel highly confident that grt
      can roll over their current debt at lower rates than
      they currently have. The cost of corporate and real
      estate debt has been increaing and money appears to be
      getting tighter in this area. GRT's debt is 67% of the
      value of their assets, a high ratio as retail reits go.
      Also, they have drawn 91.7% of their available credit
      lines. This makes me uncomfortable. Of course, they may
      be able to increase these lines but who knows? It
      appears that their current course of selling non-core
      assets to improve liquidity is the way to go.

      may make additional investments in this company but
      I'm sitting on the sideline until better signals are
      available. I still believe that the market doubts their
      ability to maintain the dividend. I've been burned too
      many times by thinking I was smarter than the market.

    • To answer your questions:

      1) As far as
      what interest rates may do next year, your guess is as
      good as mine. I would not assume a drop in interest
      rates next year. There's a lot of factors that go into
      interest rates than just inflation, like supply and demand
      for money.

      2)Dividend may be OK since payout
      ratio is reasonable. The biggest risk in retail REIT's
      is tenate bankruptcies.

      3)No, I've never
      looked at duke weeks.

      REITS are for people who
      don't like the wild ride of technology stocks, like
      stedy income and can tolerate a small amount of price

      Hope this info helps

    • Has anyone heard any more news of them buying some of Dick Jacob's Malls?

    • A previous article had reported that 10% of GRT's
      income was from movie theatres. It probably was
      erroneous, and supposed to be 10% of the strip mall space.

      This was in the earnings report press release
      regarding the movie theatre situation:

      Commenting on
      the recent difficulties in the retail theatre market
      and the
      company's risk exposure, Cornely said,
      "Within our regional mall portfolio we
      have 14 theatre
      properties encompassing 158 screens. These locations
      annual rent of $7.2 million, which is approximately 3%
      of all minimum rents. We
      currently have two
      theatres where the exhibitor is operating under Chapter
      In both cases the theatres have remained open and
      are paying rent."

      Five state-of-the-art
      complexes featuring stadium seating house 85 screens
      generate more than 60% of our theatre rents. The balance
      of Glimcher's theatre
      rents are derived from
      seven multiplex theatres that operate between eight
      12 screens each, and two smaller locations with six
      or fewer screens. The
      average rent for these nine
      locations is approximately $10.60 per square foot
      according to management, to the extent they become
      available through either
      lease expiration or early
      termination, they represent an opportunity
      re-merchandise the space at a higher rent. The Company has
      already had some
      notable success in this initiative.
      For example in June, it terminated a
      9,600 square-foot theatre lease at the Dayton Mall
      eight months
      prior to its expiration to allow an
      expansion of Old Navy into that space to be
      this year.

      "We continue to monitor developments
      in the industry and work with the
      operators who exhibit in our properties," said Cornely. "In
      the near term, we
      anticipate there may be
      selective rent concessions and possibly
      terminations that could affect FFO for 2001. However, at this
      time we believe
      the direct financial impact will
      not exceed $0.03 to $0.05 per share and
      reduction can be recovered through higher occupancy rates
      and continued growth
      in average rents."

      GRT has dropped from 15 to 13 since the negative
      movie theatre article was first reported and .03 to .05
      in FFO is at worst 2%, the overselling due to movie
      theatre fears are way overblown. On the other hand, S&P
      downgraded the debt until the liquidation of more strip
      centers takes place, and this may be more difficult with
      empty theatres in some of them.

      The 2 biggest
      risks I see are the ability to refinance the 40% of the
      debt coming due next year, and the strength of the
      economy (either weak causing FFO to decrease, or strong
      causing further interest rate increase hurting the
      interest coverage ratio as they would have to borrow at
      higher rates on the variable rate debt that isn't hedged
      and on the re-financed debt.

      A significant
      problem is already priced in to the stock price
      considering the FFO has increased from $2.20 or so in 1997,
      $2.43 in 1998, $2.67 in 1999 and near $2.86-2.90 this
      year. If they get through the re-financing unscathed,
      the dividend appears to be much, much safer now than
      in 1996. It's worth the risk to me with a small

      • 1 Reply to richardb5
      • I added up the debt maturing in 2001 (from the
        1999 annual report) and noticed that over $300 million
        is maturing. Interest rates have gone up about 2
        percentage points which would add about $6 million in
        interest expense - or about 25 cents per share. So we
        could be looking at lower FFO next year - maybe in the
        $2.80 range (assumming they can continue to improve
        occupance and pricing to offset some of this). That would
        still keep the payout ratio around almost 70%. At $13
        if you never get a dime of price appreciation you'll
        still make almost 15%. That is much better than what I
        think the overall stock market will do over the next
        few years (my guess about 6% for the S&P500).