January 1, 2008
Editor's Letter: Too Far, Too Fast
David Bodamer Editor-in-Chief Retail Traffic Magazine
The meteoric ascent of Centro Properties Group from a company few were familiar with a decade ago to a firm that controls one of the 10 largest portfolios in the United States always seemed too good to be true. It turns out, it was.
While Australian capital has long had a prominent presence in the U.S. (names like Westfield, Macquarie and Galileo come to mind), Centro's rise was somehow different. It collected properties as if they were stamps, amassing more than 700 in a matter of years through portfolio deals and outright acquisitions of companies. In the process it leapfrogged past firms with decades of experience owning and operating properties in the U.S. market. And 2007 provided the firm's master stroke: the acquisition of New York City-based New Plan, one of the oldest and largest retail REITs in the country.
A few months ago I had the chance to sit down with Centro CEO Andrew Scott when he was in New York attending an investors conference. One of the things I asked is how the company was able to move so far so fast. He pointed to the superannuation funds in Australia whereby every worker puts 9 percent of their money into retirement accounts. And a preference there has always been to invest in commercial real estate.
In Australia, however, the vast majority of investible real estate is already owned by funds like Centro. As a result, Australian firms have to be aggressive abroad in order to invest their funds.
Scott said that Centro constantly had money streaming in and was able to move from acquisition to acquisition without seemingly ever taking a breather to absorb the new properties. He even hinted that there might be more deals for the firm in the offing this year. As it turns out Centro's growth wasn't just the result of those funds. In reality, it was carrying an extremely heavy debt load, with much of that short-term financing stemming from its aggressive acquisitions strategy.
Now it's looking at billions of dollars worth of maturing debt that all needs to be paid back (or refinanced) by February 15. The initial reports coming out of Australia are that no bank is willing to do that unless Centro dramatically decreases its leverage levels. The only way it can do that is to sell assets quickly. And that creates a whole other problem.
Centro's fall is proving doubly painful because investors in U.S. retail REITs have gotten spooked by Centro's rapid fall. They are worried that U.S. REITs have followed suit and dumped REIT shares in the days after Centro's announcement sending many companies to new 52-week lows. That may hamper some REITs' ability (or willingness) to jump in and buy Centro's portfolio, especially if it would require them to take on more debt — something that's extremely tricky in the current environment.
In the end, there's a strong argument that Centro's problems are the result of bad timing and a too-aggressive strategy. It seems highly unlikely that other firms will face similar issues since no major retail REITs have similar leverage levels or are looking at the amount of debt maturing in 2008 that Centro faced.
But it also shows that getting a handle on the credit crisis may not be as easy as we thought a couple of months ago either.
© 2008 Penton Media. Displayed by permission. All rights reserved.
You may forward this article or get additional permissions by typing http://license.icopyright.net/3.5516?icx_id=retailtrafficmag.com/management/edletter/centro_properties_group_fall/index.html into any web browser. Penton Media, Inc and Retail Traffic logos are registered trademarks of Penton Media, Inc. The iCopyright logo is a registered trademark of iCopyright, Inc.
Wednesday, June 25, 2008
Tuesday, June 24, 2008
VIEW A TYPICAL SEM CONTRACT
Consultant:
Eugene Smith, Jr.
27 Danbury Street, S.W.
Washington, D.C. 20032
Email: corporate@mestizomedia.com
Phone: 571-276-9683
Goals
Develop an online marketing strategy and a viable plan that will enable client to efficiently attain targeted registered contacts within twelve months. Consult for Web site enhancement to compliment online marketing strategy. Customize a Client Response and Management system. Coordinate prospect delivery to account managers, and develop a tracking system to monitor account manager effectiveness. Facilitate Customer Service, Retention and Sales Training (Soft Sales).
Duration of Services
The typical term of the consulting engagement is three months. Consulting will automatically continue in one-month increments unless another agreement is made between the parties, or it is cancelled. Either party may cancel the agreement provided 15-days written notice (email is acceptable).
Project Management Services
During the term of the engagement Consultant will oversee Client's online marketing program, make recommendations, react to Client input and decisions, and in approved cases act on the behalf of Client on various aspects of the program. Consultant is responsible for maintaining a timeline and working with sub-contractors to keep the project on schedule. The project includes several components as further described below, including Marketing Strategy, Search Engine Optimization, Web Site Enhancement, Online Marketing Planning, and Branding Strategy.
Marketing Strategy
• Consultant will apply online marketing knowledge and Internet technology
expertise to Client's ideas and business objectives to develop a plan that will achieve specific and measurable results toward the desired goal.
• Consultant will offer advice and additional ideas during regular discussions with Client.
• Consultant will create and maintain a central document that outlines specific elements of the plan and seek Client approval.
• Consultant will create a timeline to ensure elements of the plan are being acted upon.
The marketing strategy will be the first deliverable of the consulting engagement. All elements of the original marketing strategy will require approval by Client. Any future deviations from the original plan will require written approval by Client.
Search Engine Optimization Services
Consultant coordinates efforts of professional SEO firms to expeditiously make necessary changes to the site(s) to achieve better search engine rankings. During strategy development phase;
• Consultant will work with Client to identify keywords that will be targeted for high ranking.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. This may include additional SEO services and/or Media services. Because of industry contacts and relationships, Consultant may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will communicate to contracted firm the target list and monitor the results.
• Consultant will negotiate with contracted firm to efficiently build upon existing site infrastructure to avoid excess cost. Some Web site development work may be needed for SEO to be successful.
• Consultant will maintain communications to ensure project stays on schedule.
Web Site Development Services
SEO and adding functionality to the Web site(s) necessitates Web site development work. Using the Client approved marketing plan;
• Consultant will provide an itemized list of pages, applications and possible enhancements. Client will approve list.
• Consultant will develop the pages, or recommend that certain work be sub-contracted. Client will decide if work will be sub-contracted.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. Because of industry contacts and relationships, Contractor may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will maintain communications with web development firm to ensure project stays on schedule.
Online Marketing Planning and Execution
Concurrent to the work previously described, consultant will;
• Develop an online marketing plan that will achieve the defined goal.
• Communicate aspects of the plan to Client for approval.
• Negotiate the best rates and obtain insertion orders from selected advertising vendors.
Because of industry contacts and negotiation skills, often Consultant will be able to arrange CPA (Cost-Per-Action) deals that carry less risk for the Client.
• Implement approved elements and track effectiveness.
• Provide feedback on campaign successes and failures.
• Develop tracking mechanisms to determine effective CPA.
• Optimize marketing plan toward lowering CPA.
• Provide pacing reports and projections related to progress.
Intangible Services
There is an intrinsic value associated with the Consultant's unique qualifications, experience and know-how. Whether measured in cost savings, additional revenue, increased efficiency, alternate business opportunities, brand recognition, improved conversion rates, speed to market, or other business development improvements, by contracting services the Client acknowledges additional benefits not specifically identified in the agreement.
Fees
A retainer fee for work described in this proposal is determined to be $18,000.00, with payable upon acceptance of this agreement. A Schedule of Payments is expressed below under “Payment Terms & Conditions”. Subsequent months, pursuant to the automatic renewal clause under "Duration of Services" are per month at a rate of $7,000.00, payable no later than the fifth day of the month in which services are to be rendered.
Consultant will charge a campaign management fee based on 10% of the total cost of any advertising insertion orders that are negotiated and accepted by Client under this agreement. This fee is similar to, but lower than the standard advertising agency commission rate of 15% and is only applied to advertising orders made during the term of this agreement, which are negotiated on behalf of Client, recommended by Consultant, and accepted by Client. Campaign management fees are billed at the end of the month in which the order is accepted, payable within 15 days or no later than fifteen days prior to the end date of the engagement, whichever is earlier. An incentive-based prospect management fee of $100.00 per successfully captured account.
Payment Terms & Conditions
Schedule of Payments
$9,000.00 (equivalent to 50% of the retainer fee) Due by June 22, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by August 10, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by September 21, 2007
Due to the intangible nature of the services rendered, Consultant expects timely payments. All fees billed under the terms of the agreement that remain unpaid for twenty-five (25) days after the invoice date will be considered a default by Client. At that time all services will cease until the balance is paid in full. If payment is not made, any outstanding deliverables will be rendered void. Consultant will pursue delinquent fees to the fullest extent possible under the law.
Option to Amend
This agreement may be modified at any time provided both parties agree in writing, to any modifications. Consultant will require that any changes of significance be made on a dated copy of this agreement, with acceptance indicated by original signatures. Other changes may be made through email correspondence at the discretion of Consultant.
Search engines that may be included in testing are, Google Adwords, Yahoo! Search Marketing (formerly Overture), FindWhat, Mamma.com, Enhance Interactive, Kanoodle, E-Pilot, among others.
Upon ratification of this agreement, the term of this consulting engagement will commence on the second Monday following the date of endorsement of all parties involved.
Develop an online marketing strategy and a viable plan that will enable client to efficiently attain targeted registered contacts within twelve months. Consult for Web site enhancement to compliment online marketing strategy. Customize a Client Response and Management system. Coordinate prospect delivery to account managers, and develop a tracking system to monitor account manager effectiveness. Facilitate Customer Service, Retention and Sales Training (Soft Sales).
Duration of Services
The typical term of the consulting engagement is three months. Consulting will automatically continue in one-month increments unless another agreement is made between the parties, or it is cancelled. Either party may cancel the agreement provided 15-days written notice (email is acceptable).
Project Management Services
During the term of the engagement Consultant will oversee Client's online marketing program, make recommendations, react to Client input and decisions, and in approved cases act on the behalf of Client on various aspects of the program. Consultant is responsible for maintaining a timeline and working with sub-contractors to keep the project on schedule. The project includes several components as further described below, including Marketing Strategy, Search Engine Optimization, Web Site Enhancement, Online Marketing Planning, and Branding Strategy.
Marketing Strategy
• Consultant will apply online marketing knowledge and Internet technology
expertise to Client's ideas and business objectives to develop a plan that will achieve specific and measurable results toward the desired goal.
• Consultant will offer advice and additional ideas during regular discussions with Client.
• Consultant will create and maintain a central document that outlines specific elements of the plan and seek Client approval.
• Consultant will create a timeline to ensure elements of the plan are being acted upon.
The marketing strategy will be the first deliverable of the consulting engagement. All elements of the original marketing strategy will require approval by Client. Any future deviations from the original plan will require written approval by Client.
Search Engine Optimization Services
Consultant coordinates efforts of professional SEO firms to expeditiously make necessary changes to the site(s) to achieve better search engine rankings. During strategy development phase;
• Consultant will work with Client to identify keywords that will be targeted for high ranking.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. This may include additional SEO services and/or Media services. Because of industry contacts and relationships, Consultant may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will communicate to contracted firm the target list and monitor the results.
• Consultant will negotiate with contracted firm to efficiently build upon existing site infrastructure to avoid excess cost. Some Web site development work may be needed for SEO to be successful.
• Consultant will maintain communications to ensure project stays on schedule.
Web Site Development Services
SEO and adding functionality to the Web site(s) necessitates Web site development work. Using the Client approved marketing plan;
• Consultant will provide an itemized list of pages, applications and possible enhancements. Client will approve list.
• Consultant will develop the pages, or recommend that certain work be sub-contracted. Client will decide if work will be sub-contracted.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. Because of industry contacts and relationships, Contractor may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will maintain communications with web development firm to ensure project stays on schedule.
Online Marketing Planning and Execution
Concurrent to the work previously described, consultant will;
• Develop an online marketing plan that will achieve the defined goal.
• Communicate aspects of the plan to Client for approval.
• Negotiate the best rates and obtain insertion orders from selected advertising vendors.
Because of industry contacts and negotiation skills, often Consultant will be able to arrange CPA (Cost-Per-Action) deals that carry less risk for the Client.
• Implement approved elements and track effectiveness.
• Provide feedback on campaign successes and failures.
• Develop tracking mechanisms to determine effective CPA.
• Optimize marketing plan toward lowering CPA.
• Provide pacing reports and projections related to progress.
Intangible Services
There is an intrinsic value associated with the Consultant's unique qualifications, experience and know-how. Whether measured in cost savings, additional revenue, increased efficiency, alternate business opportunities, brand recognition, improved conversion rates, speed to market, or other business development improvements, by contracting services the Client acknowledges additional benefits not specifically identified in the agreement.
Fees
A retainer fee for work described in this proposal is determined to be $18,000.00, with payable upon acceptance of this agreement. A Schedule of Payments is expressed below under “Payment Terms & Conditions”. Subsequent months, pursuant to the automatic renewal clause under "Duration of Services" are per month at a rate of $7,000.00, payable no later than the fifth day of the month in which services are to be rendered.
Consultant will charge a campaign management fee based on 10% of the total cost of any advertising insertion orders that are negotiated and accepted by Client under this agreement. This fee is similar to, but lower than the standard advertising agency commission rate of 15% and is only applied to advertising orders made during the term of this agreement, which are negotiated on behalf of Client, recommended by Consultant, and accepted by Client. Campaign management fees are billed at the end of the month in which the order is accepted, payable within 15 days or no later than fifteen days prior to the end date of the engagement, whichever is earlier. An incentive-based prospect management fee of $100.00 per successfully captured account.
Payment Terms & Conditions
Schedule of Payments
$9,000.00 (equivalent to 50% of the retainer fee) Due by June 22, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by August 10, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by September 21, 2007
Due to the intangible nature of the services rendered, Consultant expects timely payments. All fees billed under the terms of the agreement that remain unpaid for twenty-five (25) days after the invoice date will be considered a default by Client. At that time all services will cease until the balance is paid in full. If payment is not made, any outstanding deliverables will be rendered void. Consultant will pursue delinquent fees to the fullest extent possible under the law.
Option to Amend
This agreement may be modified at any time provided both parties agree in writing, to any modifications. Consultant will require that any changes of significance be made on a dated copy of this agreement, with acceptance indicated by original signatures. Other changes may be made through email correspondence at the discretion of Consultant.
Search engines that may be included in testing are, Google Adwords, Yahoo! Search Marketing (formerly Overture), FindWhat, Mamma.com, Enhance Interactive, Kanoodle, E-Pilot, among others.
Upon ratification of this agreement, the term of this consulting engagement will commence on the second Monday following the date of endorsement of all parties involved.
Wednesday, June 11, 2008
Lehman raising $6B in capital, expects $2.8B loss
June 9, 2008
By JOE BEL BRUNO
AP Business Writer
Lehman Brothers Holdings Inc. on Monday confirmed fears on Wall Street that the credit crisis isn't quite over, and it left investors to wonder if other major investment banks face the same set of risks.
The nation's fourth-largest investment bank said wrong-way trading moves and risky mortgage-backed securities plunged it into a nearly $3 billion second-quarter loss. It marks the first time Lehman was unable to post a profit since going public in 1994.
Its stock fell nearly 9 percent and helped drive a broad sell-off in bank and brokerage shares.
Lehman's top executives, who have repeatedly assured investors that their books were safe, will fund the firm's survival by raising $6 billion of fresh capital. It is a move many of Lehman's competitors have already been forced to make.
The announcements, made before the official June 16 release date of Lehman's results, were an attempt to calm a market still badly shaken by the near collapse of Bear Stearns in March. Analysts were disappointed that Lehman's loss was much deeper than they expected, and felt it could have an impact on rivals.
"There is a broader element to all this," said David Trone of Fox-Pitt Cochran. "Management considered this to be an aberration, but I think you'll see similar results in form and structure, just the magnitude will be smaller."
Sanford C. Bernstein analyst Brad Hintz, a former chief financial officer of Lehman, said one concern is the $130 billion of mostly residential and commercial real estate assets the firm sold during the quarter. Those sales triggered billions of dollars of gross mark-to-market adjustments — or accounting changes to the value of assets — since the beginning of last year.
He believes that if those prices are deeply discounted, it would set a precedent that could hurt rivals like Merrill Lynch & Co., Morgan Stanley, and Goldman Sachs Group Inc. "There could be a modest domino effect," Hintz said. Those companies have also had write-downs of mortgage-backed assets, with Merrill taking a heavy enough hit that it lost its CEO. Goldman is believed the be the strongest of the Wall Street companies.
Further, Lehman's investments to hedge against troubled assets on its books backfired, and CFO Erin Callan said they "were significantly impacted" during the past few months. She said the highest point of the market's disruption this year was in March, but conditions have eased since then.
Lehman said it expects to lose $2.87 billion, or $5.14 per share, for the period ended May 31, compared with the $1.3 billion, or $2.21 per share, it made in the year-ago period. Analysts had expected the company to report a loss of just 22 cents per share for the period, according to Thomson Financial.
CEO Richard Fuld said he was "very disappointed" in the quarterly results. However, he believes the additional capital — raised through an offering to yet unnamed investors — will help keep the company whole amid continued market turmoil.
There had been market speculation that Lehman was seeking outside investors to offset losses during the quarter and fortify its balance sheet. Some analysts felt the firm's balance sheet was the closest of all the Wall Street firms to Bear Stearns, which narrowly avoided bankruptcy in March through its government-sponsored sale to JPMorgan Chase & Co.
But so far, Lehman appears in better shape — and possibly has generated more confidence among investors — than Bear, which was badly undermined when panicky customers withdrew their money from the investment bank. Moreover, after the Federal Reserve helped engineer JP Morgan's buyout of Bear, investors have felt more secure that the government is unlikely to let a big investment bank fail.
Lehman is expected to raise capital by selling to mostly American investors $4 billion of new common shares and $2 billion of three-year mandatory convertible preferred stock. The convertible stock is required to be turned into common shares by the end of the three-year period.
The firm was under pressure after David Einhorn, who runs the hedge fund firm Greenlight Capital, vocally and publicly raised questions about Lehman's earnings during the first quarter. He said the company has not disclosed all of its losses, and felt Monday's announcement was only the start.
"Lehman is raising $6 billion that they said they didn't need to replace losses that they said they didn't have," he said in an interview. "Since the credit markets actually improved this quarter, such losses primarily reflect losses that might have been taken in prior quarters. A preliminary analysis of the pre-release and conference call suggests that there are still unrecognized losses on the balance sheet."
In addition, Lehman's stock sale will significantly dilute outstanding shares. As of March 31, Lehman had about 553.6 million shares outstanding. The common stock offering would add about 142.9 million shares, while the conversion on the preferred stock would eventually add as many as 71.4 million more shares.
Lehman shares fell $2.81, or 8.7 percent, to $29.48. Moody's Investors Service and Fitch Ratings both cut their ratings on Lehman, exacerbating the decline.
In this Jan. 24, 2008 file photo Chairman and CEO of Lehman Brothers, USA, Richard Fuld speaks during a working session at the World Economic Forum in Davos, Switzerland. Lehman Brothers Holdings Inc. on Monday said it will raise $6 billion in new capital to shore up its balance sheet after saying it expects to post an unexpectedly large second-quarter loss of nearly $3 billion. (AP Photo/Virginia Mayo, file)
By JOE BEL BRUNO
AP Business Writer
Lehman Brothers Holdings Inc. on Monday confirmed fears on Wall Street that the credit crisis isn't quite over, and it left investors to wonder if other major investment banks face the same set of risks.
The nation's fourth-largest investment bank said wrong-way trading moves and risky mortgage-backed securities plunged it into a nearly $3 billion second-quarter loss. It marks the first time Lehman was unable to post a profit since going public in 1994.
Its stock fell nearly 9 percent and helped drive a broad sell-off in bank and brokerage shares.
Lehman's top executives, who have repeatedly assured investors that their books were safe, will fund the firm's survival by raising $6 billion of fresh capital. It is a move many of Lehman's competitors have already been forced to make.
The announcements, made before the official June 16 release date of Lehman's results, were an attempt to calm a market still badly shaken by the near collapse of Bear Stearns in March. Analysts were disappointed that Lehman's loss was much deeper than they expected, and felt it could have an impact on rivals.
"There is a broader element to all this," said David Trone of Fox-Pitt Cochran. "Management considered this to be an aberration, but I think you'll see similar results in form and structure, just the magnitude will be smaller."
Sanford C. Bernstein analyst Brad Hintz, a former chief financial officer of Lehman, said one concern is the $130 billion of mostly residential and commercial real estate assets the firm sold during the quarter. Those sales triggered billions of dollars of gross mark-to-market adjustments — or accounting changes to the value of assets — since the beginning of last year.
He believes that if those prices are deeply discounted, it would set a precedent that could hurt rivals like Merrill Lynch & Co., Morgan Stanley, and Goldman Sachs Group Inc. "There could be a modest domino effect," Hintz said. Those companies have also had write-downs of mortgage-backed assets, with Merrill taking a heavy enough hit that it lost its CEO. Goldman is believed the be the strongest of the Wall Street companies.
Further, Lehman's investments to hedge against troubled assets on its books backfired, and CFO Erin Callan said they "were significantly impacted" during the past few months. She said the highest point of the market's disruption this year was in March, but conditions have eased since then.
Lehman said it expects to lose $2.87 billion, or $5.14 per share, for the period ended May 31, compared with the $1.3 billion, or $2.21 per share, it made in the year-ago period. Analysts had expected the company to report a loss of just 22 cents per share for the period, according to Thomson Financial.
CEO Richard Fuld said he was "very disappointed" in the quarterly results. However, he believes the additional capital — raised through an offering to yet unnamed investors — will help keep the company whole amid continued market turmoil.
There had been market speculation that Lehman was seeking outside investors to offset losses during the quarter and fortify its balance sheet. Some analysts felt the firm's balance sheet was the closest of all the Wall Street firms to Bear Stearns, which narrowly avoided bankruptcy in March through its government-sponsored sale to JPMorgan Chase & Co.
But so far, Lehman appears in better shape — and possibly has generated more confidence among investors — than Bear, which was badly undermined when panicky customers withdrew their money from the investment bank. Moreover, after the Federal Reserve helped engineer JP Morgan's buyout of Bear, investors have felt more secure that the government is unlikely to let a big investment bank fail.
Lehman is expected to raise capital by selling to mostly American investors $4 billion of new common shares and $2 billion of three-year mandatory convertible preferred stock. The convertible stock is required to be turned into common shares by the end of the three-year period.
The firm was under pressure after David Einhorn, who runs the hedge fund firm Greenlight Capital, vocally and publicly raised questions about Lehman's earnings during the first quarter. He said the company has not disclosed all of its losses, and felt Monday's announcement was only the start.
"Lehman is raising $6 billion that they said they didn't need to replace losses that they said they didn't have," he said in an interview. "Since the credit markets actually improved this quarter, such losses primarily reflect losses that might have been taken in prior quarters. A preliminary analysis of the pre-release and conference call suggests that there are still unrecognized losses on the balance sheet."
In addition, Lehman's stock sale will significantly dilute outstanding shares. As of March 31, Lehman had about 553.6 million shares outstanding. The common stock offering would add about 142.9 million shares, while the conversion on the preferred stock would eventually add as many as 71.4 million more shares.
Lehman shares fell $2.81, or 8.7 percent, to $29.48. Moody's Investors Service and Fitch Ratings both cut their ratings on Lehman, exacerbating the decline.
In this Jan. 24, 2008 file photo Chairman and CEO of Lehman Brothers, USA, Richard Fuld speaks during a working session at the World Economic Forum in Davos, Switzerland. Lehman Brothers Holdings Inc. on Monday said it will raise $6 billion in new capital to shore up its balance sheet after saying it expects to post an unexpectedly large second-quarter loss of nearly $3 billion. (AP Photo/Virginia Mayo, file)
Subscribe to:
Posts (Atom)