There is some debate in academic circles of American support for Israel.
This is in contrast to the US political scene where support of Israel is sacrosanct and Hamas and Hezbollah are invariably labeled as terrorist without any acknowledgement of the fact that both organizations are democratically elected and have been the targets of massive Israeli terror.
This is an excerpt from a front page story that ran in the New York Time on November 13 about Israel and America.
http://www.nytimes.com/2006/11/13/world/middleeast/13israel.html
But Mr. Zelikow's close ties to Ms. Rice are well known, and the furor over his comments was amplified because they appeared to some to echo criticisms published in March in The London Review of Books by two American scholars, John J. Mearsheimer of the University of Chicago <http://topics.nytimes.com/top/reference/timestopics/organizations/u/univers
ity_of_chicago/index.html?inline=nyt-org> and Stephen M. Walt of the Kennedy School of Government at Harvard.
http://www.lrb.co.uk/v28/n06/mear01_.html
They suggested that from the White House to Capitol Hill, Israel's interests have been confused with America's, that Israel is more of a security burden than an asset and that the "Israel lobby" in America, including Jewish policy makers, have an undue influence over American foreign policy. In late August, appearing in front of an Islamic group in Washington, Mr.
Mearsheimer extended the argument to say that American support of the war in Lebanon had been another example of Israeli interests trumping American ones.
The essay argued that without the Israel lobby the United States would not have gone to war in Iraq and implied that the same forces could drag the United States into another military confrontation on Israel's behalf, with Iran. It urged more American pressure to solve the Palestinian question as the best cure for regional instability.
Some Israelis worried that the implicit charge of dual loyalty would be underlined by the trial of two former officials of the prominent pro-Israel lobbying group, the American Israel Public Affairs Committee, on charges of receiving classified information about Iran and other issues from a Defense Department official and passing it on to a journalist and an Israeli diplomat. The trial is scheduled to begin early next year.
Mr. Walt, in an interview, argued that the first President Bush had worked to restrain Israel, and that Mr. Clinton worked to attain diplomatic concessions to achieve a peace. But when this Bush administration took office, "they first had no use for the Mideast, then took a more balanced position, calling for a two-state solution, and then were completely won over by Israel's argument that it is simply fighting terrorism."
Thursday, November 16, 2006
Friday, November 10, 2006
Chased by Gang Violence, Residents flee Mathare
Chased by Gang Violence, Residents Flee Kenyan Slum
November 10, 2006
Nairobi Journal
Chased by Gang Violence, Residents Flee Kenyan Slum
By JEFFREY GETTLEMAN
NAIROBI, Kenya, Nov. 9 — In the past five days, more than 10 people have been killed and 600 homes burned to the ground in an unusual burst of violence between Nairobi gangs.
The fighting has emptied out an entire slum in central Nairobi, and on Thursday, women fleeing with mattresses on their backs slogged through the streets, while men with hammers knocked down the metal shanties that used to be their homes, selling their very walls for scrap.
The bloodshed began with a bootlegging dispute, but it has been fueled by ethnic rivalry. The epicenter is Mathare, a cluster of slums with approximately 500,000 people, crammed between downtown Nairobi and an affluent neighborhood where many ambassadors live. Mathare is a landscape of rust — thousands of shacks squeezed together with rusted metal roofs and rusted metal sides, and the occasional rusted metal bridge between. Even the mud here, where not a blade of grass grows, is rust red.
The area is notorious as a pocket of anarchy in a relatively orderly city, a place where street gangs levy taxes and teenage boys with machetes and dreadlocks shake down people at checkpoints. Most days, the police are nowhere to be found. Residents say it has been like this for years.
“You pay security, you pay electricity, you pay for toilets and what do you get?” said Morris Odek, a father of three. “Nothing.”
On Sunday, violence erupted between the gangs fighting for control of this impoverished turf. One gang is the Mungiki, a secretive, quasi-religious sect whose members cut out their enemies’ navels and worship a leader who says he came from a ball of shining stars. The other is a band of vigilantes who call themselves the Taliban, even though they are Christian and have nothing to do with the original Taliban group that imposed a harsh brand of Islam in Afghanistan.
“They just wanted a name that sounded tough,” said George Wambugu, a youth counselor for a soccer league in Mathare. The Mungiki and the Taliban have clashed before, but not like this. According to residents, the Mungiki tried to impose a higher tax on brewers of chang’aa, an outlawed homemade liquor with a kick stronger than that of vodka.
The brewers resisted and enlisted the help of the Taliban to fight back. That led to a cycle of street rumbles, shanty burnings and reprisal killings. Most victims were hacked to death with machetes, though some apparently were shot.
Like so many of Africa’s conflicts, this one has an ethnic dimension, with most Mungiki from the Kikuyu tribe, one of Kenya’s biggest, while the Taliban are primarily Luo, another prominent tribe.
“That’s why this won’t end,” said Daniel Opiyo, a shoe seller whose home was burned down. “It’s tribal, and it will go on and on.”
The police flooded into Mathare on Tuesday, but the killing continued. On Wednesday, the Kenyan government sent in soldiers with machine guns and declared a dusk-to-dawn curfew.
On Thursday, the soldiers prowled the muddy streets, seemingly grabbing at random the few young men left.
“See this guy,” one soldier said, laying a thick hand on a boy with a string of beads around his neck. “Mungiki.”
After the boy explained that he was Borana, a tribe from northern Kenya, he was let go. Other boys, though, were marched through the streets with their hands tied behind their backs and tears in their eyes.
Thousands of people have been streaming out of Mathare, creating a refugeelike crisis in the middle of Nairobi, Kenya’s capital.
On Thursday, as shiny Mercedes-Benzes drove by, along with packed minibuses heading downtown, a crowd of Mathare residents huddled outside a nearby air force base. Beds, tables and rolls of soggy clothing were piled around them. Because it is the rainy season, many people have been sleeping on wet ground. Residents said several babies had died of exposure.
“But nobody really cares,” said Angelina Okumba, a 52-year-old mother of 11 children.
Kenyan officials have tried to reassure residents that the fighting is finished.
“It’s time to go home,” said J. K. Ndegwa, a police commander. “There’s no problem here.”
On a smoldering hillside, children played among shattered teacups while their parents packed the last of their things. The smell of char stung the nose, and though it had been pouring all week, the fires still burned.
November 10, 2006
Nairobi Journal
Chased by Gang Violence, Residents Flee Kenyan Slum
By JEFFREY GETTLEMAN
NAIROBI, Kenya, Nov. 9 — In the past five days, more than 10 people have been killed and 600 homes burned to the ground in an unusual burst of violence between Nairobi gangs.
The fighting has emptied out an entire slum in central Nairobi, and on Thursday, women fleeing with mattresses on their backs slogged through the streets, while men with hammers knocked down the metal shanties that used to be their homes, selling their very walls for scrap.
The bloodshed began with a bootlegging dispute, but it has been fueled by ethnic rivalry. The epicenter is Mathare, a cluster of slums with approximately 500,000 people, crammed between downtown Nairobi and an affluent neighborhood where many ambassadors live. Mathare is a landscape of rust — thousands of shacks squeezed together with rusted metal roofs and rusted metal sides, and the occasional rusted metal bridge between. Even the mud here, where not a blade of grass grows, is rust red.
The area is notorious as a pocket of anarchy in a relatively orderly city, a place where street gangs levy taxes and teenage boys with machetes and dreadlocks shake down people at checkpoints. Most days, the police are nowhere to be found. Residents say it has been like this for years.
“You pay security, you pay electricity, you pay for toilets and what do you get?” said Morris Odek, a father of three. “Nothing.”
On Sunday, violence erupted between the gangs fighting for control of this impoverished turf. One gang is the Mungiki, a secretive, quasi-religious sect whose members cut out their enemies’ navels and worship a leader who says he came from a ball of shining stars. The other is a band of vigilantes who call themselves the Taliban, even though they are Christian and have nothing to do with the original Taliban group that imposed a harsh brand of Islam in Afghanistan.
“They just wanted a name that sounded tough,” said George Wambugu, a youth counselor for a soccer league in Mathare. The Mungiki and the Taliban have clashed before, but not like this. According to residents, the Mungiki tried to impose a higher tax on brewers of chang’aa, an outlawed homemade liquor with a kick stronger than that of vodka.
The brewers resisted and enlisted the help of the Taliban to fight back. That led to a cycle of street rumbles, shanty burnings and reprisal killings. Most victims were hacked to death with machetes, though some apparently were shot.
Like so many of Africa’s conflicts, this one has an ethnic dimension, with most Mungiki from the Kikuyu tribe, one of Kenya’s biggest, while the Taliban are primarily Luo, another prominent tribe.
“That’s why this won’t end,” said Daniel Opiyo, a shoe seller whose home was burned down. “It’s tribal, and it will go on and on.”
The police flooded into Mathare on Tuesday, but the killing continued. On Wednesday, the Kenyan government sent in soldiers with machine guns and declared a dusk-to-dawn curfew.
On Thursday, the soldiers prowled the muddy streets, seemingly grabbing at random the few young men left.
“See this guy,” one soldier said, laying a thick hand on a boy with a string of beads around his neck. “Mungiki.”
After the boy explained that he was Borana, a tribe from northern Kenya, he was let go. Other boys, though, were marched through the streets with their hands tied behind their backs and tears in their eyes.
Thousands of people have been streaming out of Mathare, creating a refugeelike crisis in the middle of Nairobi, Kenya’s capital.
On Thursday, as shiny Mercedes-Benzes drove by, along with packed minibuses heading downtown, a crowd of Mathare residents huddled outside a nearby air force base. Beds, tables and rolls of soggy clothing were piled around them. Because it is the rainy season, many people have been sleeping on wet ground. Residents said several babies had died of exposure.
“But nobody really cares,” said Angelina Okumba, a 52-year-old mother of 11 children.
Kenyan officials have tried to reassure residents that the fighting is finished.
“It’s time to go home,” said J. K. Ndegwa, a police commander. “There’s no problem here.”
On a smoldering hillside, children played among shattered teacups while their parents packed the last of their things. The smell of char stung the nose, and though it had been pouring all week, the fires still burned.
Monday, October 02, 2006
Books about the American invasion of Iraq
Books about this subject were few and far between a couple of years ago, but with the three and a half year anniversary of the invasion, there are some notably good books:
The Assassins Gate, George Packer
Cobra II
Fiasco
Imperial Rule in the Emerald City
The Assassins Gate, George Packer
Cobra II
Fiasco
Imperial Rule in the Emerald City
Friday, May 05, 2006
Fw: Low interest rates to drive strong growth in Kenya
| ||||
Friday, April 14, 2006
Rasul Shariff
Rasul Shariff
Market DeclineHow a Glitzy Mall Developer Built Its Way Into Big Trouble
Mills Corp. Courted ShoppersWith Mini Golf, Massages;Now Banks Crack Down
'Larry, He Is a Salesman'
By RYAN CHITTUM and JENNIFER S. FORSYTHApril 14, 2006; Page A1
As recently as last summer, Mills Corp. was soaring.
Its giant retail and entertainment complex near Ft. Lauderdale, Fla., drew more visitors than Disney World, the mall company told analysts. Its development pipeline popped out a blockbuster project nearly every year. Its stock performance was the envy of the industry.
Larry Siegel, its 52-year-old chief executive, was credited with injecting new life into the nation's tired mall industry. His "shoppertainment" retailing formula offered customers more than just stores. There was glow-in-the-dark miniature golf, simulated Nascar driving and dining in faux rain forests. His staid competitors took notice.
But now Mills, a real-estate investment trust based in Arlington, Va., is drawing attention for different reasons. Its recent developments have largely been flops. One in five employees has left or been laid off, including its development director, raising doubts about whether it can finish the projects it hasn't already abandoned. Last month, the Securities and Exchange Commission launched an investigation into its accounting practices. Its stock has plummeted 55% over the past eight months. On Wednesday, its lenders forced it to slash dividend payouts and to submit biweekly financial reports while it readies itself for a likely sale.
Mr. Siegel stumbled during one of the hottest real-estate markets in years by pushing into markets that were either too small or too competitive to support the company's mammoth malls. Mills compounded its problems, say investors and analysts, by focusing more on development than on managing its existing properties. Its current struggles raise questions about whether its unique and expensive approach to retailing can survive.
"I think their projects are the most creative of any developer out there," says Warren Weiner, executive vice president of Philadelphia-based Deb Shops Inc., which has 340 teen fashion stores nationwide and six in Mills properties. "The question is: Is it possible to be that creative and be financially successful?"
Mills, which has 42 malls in the U.S. and abroad, has said it is exploring "strategic alternatives," but declines to elaborate on disclosures it has already made about its current financial troubles. Mr. Siegel declined to be interviewed for this article.
In recent years, mall companies have performed well as consumers continued to spend despite recession, terrorism and the war in Iraq. The nation's major mall developers -- now big public companies mostly run by the scions of the original mall magnates -- expanded primarily by buying other mall companies.
Mr. Siegel decided to expand by building new properties. A balding, gregarious Philadelphia native, he got his start in retailing as a leasing agent for a predecessor company of Mills, and ascended to the chief executive position shortly after Mills went public in 1994.
Mr. Siegel saw most malls as ho-hum rectangles with four large anchor stores. The outlet malls that came in the 1980s and '90s, which carried name brands at discount prices, often offered no place to eat or sit down. Mr. Siegel decided to marry two concepts: to build full-service malls with food courts and even massage zones and skateboard parks, then fill them with outlet retailers.
He wasn't the only mall developer to explore ways to combine retailing and entertainment. The Simon family of Indianapolis and Sheldon Gordon of Greenwich, Conn., were also moving in that direction. But Mr. Siegel became one of its most enthusiastic proponents.
He pursued retailers not typically found in malls, such as Bass Pro Shops, which offers a 60,000-gallon aquarium and an archery range along with its outdoor supplies. Mills was one of the first mall companies to offer prominent space to IMAX theaters instead of sticking movie theatres in an unused corner of the parking lot, says Paco Underhill, who runs a New York-based retail consulting firm, Envirosell Inc., and has written about the mall industry.
Shoppers flocked to Mills's early projects, such as Potomac Mills near Washington, D.C., and Sawgrass Mills outside Fort Lauderdale. So Mr. Siegel picked up the development pace. After building just four large malls between 1985 and 1995, over the next decade Mills built 13 malls and converted two more to its shoppertainment formula.
Mr. Siegel planned on an especially large scale. Mills's properties typically sprawl over about 1.5 million square feet, compared with about 1 million square feet for other major regional malls. At its enormous Xanadu project now under construction in the New Jersey Meadowlands, the company spent some $120 million or more before it even won the right to develop the site, analysts estimate. Mills promised an indoor ski slope, a roller coaster and a 300-foot-tall Ferris wheel.
More Vulnerable
While a typical large mall draws customers from a 10- to 20-mile radius, many Mills malls are so big they need to draw from a larger area to attract enough customers. As a result, Mills became more vulnerable to new competitors, including outlet centers, discount stores and the hot new model -- open-air "lifestyle centers," which adhere to a "Main Street" approach, with stores opening onto a street, says Steven H. Gartner, president of Metro Commercial Real Estate Inc., a Conshohocken, Penn., retail consultant. And high gas prices made shoppers less willing to drive long distances for a deal on a pair of blue jeans.
To stand out from the crowd and draw traffic, Mills began adding more entertainment components. But the entertainment offerings took away valuable retail space, pushing down average sales per square foot at the properties.
All along, Mills had been attempting to lure more shoppers by allotting more space than a typical mall does to anchor tenants, which usually pay lower rent than smaller specialty stores and post lower sales per square foot. As a result, Mills's properties brought in an average of about $370 of annual sales per square foot in 2004, below the average for regional mall REITs.
Its aggressive development mentality rendered the management of its existing properties a second priority, analysts say. "They focused more on the next great development and less on continuing to run the properties they had and [getting] the full values out of those properties," says Rich Moore, an analyst with New York-based RBC Capital Markets.
Mills took on projects in Singapore, Madrid and Scotland in an effort to become a global REIT. In the U.S., it was becoming difficult to find large new markets where the Mills concept would still be novel. Mills pushed into the outskirts of the Pittsburgh and St. Louis markets, which already had quality malls and didn't have enough demand to support newcomers. Last year, in Pittsburgh, Mills resorted to its first-ever "soft opening," starting operations without a big marketing campaign due to a low number of retail tenants.
Mills's growth plans began to outpace its ability to finance new projects, forcing the company to borrow more and enter into joint ventures that gave its partners preferred returns. Mills had little margin for error in its developments. The company's ratio of debt to market capitalization reached 72%, compared with 53% for the average regional mall REIT, according to Harris Nesbitt, the U.S. research and investment-banking subsidiary of Toronto-based BMO Financial Group.
Newer projects struggled. In Lakewood, Colo., Mills had projected Colorado Mills to have annual sales of about $300 million. The mall, which opened in late 2002, so far has generated average annual sales of $215 million, says city spokeswoman Stacie Oulton. The expected $4.5 million in annual sales taxes from the mall has averaged only $3.2 million, she says. Malls in St. Louis and Cincinnati also fell short of company projections.
Over the past decade or so, malls built by Mills have earned the company about 20% less than it projected, estimates Greg Andrews of Green Street Advisors, a Newport Beach, Calif., real-estate research firm.
Some investors and analysts became skeptical of Mr. Siegel's promises. "Larry, he is a salesman," says Dionisio Meneses, an investment manager with Global Real Analytics LLC in San Francisco, which holds an undisclosed number of Mills shares. "You have to discount some percentage of what he says."
The SEC investigation begun in March has added to the uneasiness of investors. Company filings indicate about a dozen areas of accounting are under review, including revenue recognition, lease accounting and cost capitalization. Mills capitalized its pre-development costs to spread them over several years, for instance, rather than expensing them all at once like most real estate companies do. Mills says it may have to restate six years of financial results.
Investors and analysts have also expressed frustration over company disclosure about joint-venture deals with partners, saying a lack of details makes it difficult to accurately value the company's assets.
As its problems mounted, Mills faced increasing competition from other companies pursuing similar strategies for merging retail and entertainment. Rajendra Sisodia, a professor of marketing at Bentley College in Waltham, Mass., notes that there are now IMAX theaters in a chain of furniture stores in the Boston area.
New Formulas
Moreover, new retail formulas are gaining popularity. Mr. Gartner, president of Metro Commercial, a Philadelphia-based retail consultant, contends that "the behemoth mall is clearly giving way to more manageable, accessible and open-air centers."
"It isn't that the huge center doesn't have a future. It's just that it's no longer a slam-dunk proposition that it used to be," says Mr. Underhill, the retail consultant. "The shopping malls that are being built in the U.S. now are being built basically to steal other people's markets."
The pact Mills struck with its lenders earlier this week makes it likely that the company will be sold, analysts and investors say. Some assets are expected to be coveted by competitors. The bank deal included a refinancing of Sawgrass Mills that valued that property alone at $780 million. "Sawgrass is 10% of the value of this company," says David Fick, an analyst with St. Louis-based Stifel Nicolaus who was once Mills's chief financial officer. "It's worth more than all their bad stuff combined, times three."
Many of its competitors, including Simon Property Group Inc. of Indianapolis and Vornado Realty Trust of New York, are taking a look at the company, which owns 51 million square feet of property in the U.S. and abroad.
"The issue that somebody's going to have to decide is: Does the model work or not?" says David Lichtenstein, owner of Lightstone Group, Lakewood, N.J., one of the largest private owners of real estate in the U.S., who says he intends to bid. "I think the buyer is going to have to be convinced that Larry Siegel's dream can become reality and not a nightmare. He's an absolute visionary. But very often the first visionary isn't successful."
Write to Ryan Chittum at ryan.chittum@wsj.com1
URL for this article:http://online.wsj.com/article/SB114497463938925711.html
Hyperlinks in this Article:(1) mailto:ryan.chittum@wsj.com
Market DeclineHow a Glitzy Mall Developer Built Its Way Into Big Trouble
Mills Corp. Courted ShoppersWith Mini Golf, Massages;Now Banks Crack Down
'Larry, He Is a Salesman'
By RYAN CHITTUM and JENNIFER S. FORSYTHApril 14, 2006; Page A1
As recently as last summer, Mills Corp. was soaring.
Its giant retail and entertainment complex near Ft. Lauderdale, Fla., drew more visitors than Disney World, the mall company told analysts. Its development pipeline popped out a blockbuster project nearly every year. Its stock performance was the envy of the industry.
Larry Siegel, its 52-year-old chief executive, was credited with injecting new life into the nation's tired mall industry. His "shoppertainment" retailing formula offered customers more than just stores. There was glow-in-the-dark miniature golf, simulated Nascar driving and dining in faux rain forests. His staid competitors took notice.
But now Mills, a real-estate investment trust based in Arlington, Va., is drawing attention for different reasons. Its recent developments have largely been flops. One in five employees has left or been laid off, including its development director, raising doubts about whether it can finish the projects it hasn't already abandoned. Last month, the Securities and Exchange Commission launched an investigation into its accounting practices. Its stock has plummeted 55% over the past eight months. On Wednesday, its lenders forced it to slash dividend payouts and to submit biweekly financial reports while it readies itself for a likely sale.
Mr. Siegel stumbled during one of the hottest real-estate markets in years by pushing into markets that were either too small or too competitive to support the company's mammoth malls. Mills compounded its problems, say investors and analysts, by focusing more on development than on managing its existing properties. Its current struggles raise questions about whether its unique and expensive approach to retailing can survive.
"I think their projects are the most creative of any developer out there," says Warren Weiner, executive vice president of Philadelphia-based Deb Shops Inc., which has 340 teen fashion stores nationwide and six in Mills properties. "The question is: Is it possible to be that creative and be financially successful?"
Mills, which has 42 malls in the U.S. and abroad, has said it is exploring "strategic alternatives," but declines to elaborate on disclosures it has already made about its current financial troubles. Mr. Siegel declined to be interviewed for this article.
In recent years, mall companies have performed well as consumers continued to spend despite recession, terrorism and the war in Iraq. The nation's major mall developers -- now big public companies mostly run by the scions of the original mall magnates -- expanded primarily by buying other mall companies.
Mr. Siegel decided to expand by building new properties. A balding, gregarious Philadelphia native, he got his start in retailing as a leasing agent for a predecessor company of Mills, and ascended to the chief executive position shortly after Mills went public in 1994.
Mr. Siegel saw most malls as ho-hum rectangles with four large anchor stores. The outlet malls that came in the 1980s and '90s, which carried name brands at discount prices, often offered no place to eat or sit down. Mr. Siegel decided to marry two concepts: to build full-service malls with food courts and even massage zones and skateboard parks, then fill them with outlet retailers.
He wasn't the only mall developer to explore ways to combine retailing and entertainment. The Simon family of Indianapolis and Sheldon Gordon of Greenwich, Conn., were also moving in that direction. But Mr. Siegel became one of its most enthusiastic proponents.
He pursued retailers not typically found in malls, such as Bass Pro Shops, which offers a 60,000-gallon aquarium and an archery range along with its outdoor supplies. Mills was one of the first mall companies to offer prominent space to IMAX theaters instead of sticking movie theatres in an unused corner of the parking lot, says Paco Underhill, who runs a New York-based retail consulting firm, Envirosell Inc., and has written about the mall industry.
Shoppers flocked to Mills's early projects, such as Potomac Mills near Washington, D.C., and Sawgrass Mills outside Fort Lauderdale. So Mr. Siegel picked up the development pace. After building just four large malls between 1985 and 1995, over the next decade Mills built 13 malls and converted two more to its shoppertainment formula.
Mr. Siegel planned on an especially large scale. Mills's properties typically sprawl over about 1.5 million square feet, compared with about 1 million square feet for other major regional malls. At its enormous Xanadu project now under construction in the New Jersey Meadowlands, the company spent some $120 million or more before it even won the right to develop the site, analysts estimate. Mills promised an indoor ski slope, a roller coaster and a 300-foot-tall Ferris wheel.
More Vulnerable
While a typical large mall draws customers from a 10- to 20-mile radius, many Mills malls are so big they need to draw from a larger area to attract enough customers. As a result, Mills became more vulnerable to new competitors, including outlet centers, discount stores and the hot new model -- open-air "lifestyle centers," which adhere to a "Main Street" approach, with stores opening onto a street, says Steven H. Gartner, president of Metro Commercial Real Estate Inc., a Conshohocken, Penn., retail consultant. And high gas prices made shoppers less willing to drive long distances for a deal on a pair of blue jeans.
To stand out from the crowd and draw traffic, Mills began adding more entertainment components. But the entertainment offerings took away valuable retail space, pushing down average sales per square foot at the properties.
All along, Mills had been attempting to lure more shoppers by allotting more space than a typical mall does to anchor tenants, which usually pay lower rent than smaller specialty stores and post lower sales per square foot. As a result, Mills's properties brought in an average of about $370 of annual sales per square foot in 2004, below the average for regional mall REITs.
Its aggressive development mentality rendered the management of its existing properties a second priority, analysts say. "They focused more on the next great development and less on continuing to run the properties they had and [getting] the full values out of those properties," says Rich Moore, an analyst with New York-based RBC Capital Markets.
Mills took on projects in Singapore, Madrid and Scotland in an effort to become a global REIT. In the U.S., it was becoming difficult to find large new markets where the Mills concept would still be novel. Mills pushed into the outskirts of the Pittsburgh and St. Louis markets, which already had quality malls and didn't have enough demand to support newcomers. Last year, in Pittsburgh, Mills resorted to its first-ever "soft opening," starting operations without a big marketing campaign due to a low number of retail tenants.
Mills's growth plans began to outpace its ability to finance new projects, forcing the company to borrow more and enter into joint ventures that gave its partners preferred returns. Mills had little margin for error in its developments. The company's ratio of debt to market capitalization reached 72%, compared with 53% for the average regional mall REIT, according to Harris Nesbitt, the U.S. research and investment-banking subsidiary of Toronto-based BMO Financial Group.
Newer projects struggled. In Lakewood, Colo., Mills had projected Colorado Mills to have annual sales of about $300 million. The mall, which opened in late 2002, so far has generated average annual sales of $215 million, says city spokeswoman Stacie Oulton. The expected $4.5 million in annual sales taxes from the mall has averaged only $3.2 million, she says. Malls in St. Louis and Cincinnati also fell short of company projections.
Over the past decade or so, malls built by Mills have earned the company about 20% less than it projected, estimates Greg Andrews of Green Street Advisors, a Newport Beach, Calif., real-estate research firm.
Some investors and analysts became skeptical of Mr. Siegel's promises. "Larry, he is a salesman," says Dionisio Meneses, an investment manager with Global Real Analytics LLC in San Francisco, which holds an undisclosed number of Mills shares. "You have to discount some percentage of what he says."
The SEC investigation begun in March has added to the uneasiness of investors. Company filings indicate about a dozen areas of accounting are under review, including revenue recognition, lease accounting and cost capitalization. Mills capitalized its pre-development costs to spread them over several years, for instance, rather than expensing them all at once like most real estate companies do. Mills says it may have to restate six years of financial results.
Investors and analysts have also expressed frustration over company disclosure about joint-venture deals with partners, saying a lack of details makes it difficult to accurately value the company's assets.
As its problems mounted, Mills faced increasing competition from other companies pursuing similar strategies for merging retail and entertainment. Rajendra Sisodia, a professor of marketing at Bentley College in Waltham, Mass., notes that there are now IMAX theaters in a chain of furniture stores in the Boston area.
New Formulas
Moreover, new retail formulas are gaining popularity. Mr. Gartner, president of Metro Commercial, a Philadelphia-based retail consultant, contends that "the behemoth mall is clearly giving way to more manageable, accessible and open-air centers."
"It isn't that the huge center doesn't have a future. It's just that it's no longer a slam-dunk proposition that it used to be," says Mr. Underhill, the retail consultant. "The shopping malls that are being built in the U.S. now are being built basically to steal other people's markets."
The pact Mills struck with its lenders earlier this week makes it likely that the company will be sold, analysts and investors say. Some assets are expected to be coveted by competitors. The bank deal included a refinancing of Sawgrass Mills that valued that property alone at $780 million. "Sawgrass is 10% of the value of this company," says David Fick, an analyst with St. Louis-based Stifel Nicolaus who was once Mills's chief financial officer. "It's worth more than all their bad stuff combined, times three."
Many of its competitors, including Simon Property Group Inc. of Indianapolis and Vornado Realty Trust of New York, are taking a look at the company, which owns 51 million square feet of property in the U.S. and abroad.
"The issue that somebody's going to have to decide is: Does the model work or not?" says David Lichtenstein, owner of Lightstone Group, Lakewood, N.J., one of the largest private owners of real estate in the U.S., who says he intends to bid. "I think the buyer is going to have to be convinced that Larry Siegel's dream can become reality and not a nightmare. He's an absolute visionary. But very often the first visionary isn't successful."
Write to Ryan Chittum at ryan.chittum@wsj.com1
URL for this article:http://online.wsj.com/article/SB114497463938925711.html
Hyperlinks in this Article:(1) mailto:ryan.chittum@wsj.com
Rasul Shariff
Rasul Shariff
Waiting for the results of the KenGen IPO.
In the meantime, Ugandan equities look cheap.
Waiting for the results of the KenGen IPO.
In the meantime, Ugandan equities look cheap.
Sunday, March 05, 2006
The 'war on terror' is out of control
Clumsy Leadership
The furor over Dubai's planned takeover of some U.S. ports is a sign of how out of control the ‘war on terror’ has become.
WEB-EXCLUSIVE COMMENTARY
Newsweek
Updated: 12:53 p.m. ET Feb. 22, 2006
Feb. 22, 2006 - Revolutionaries need several ingredients to succeed: charisma, for one; organization, for another. But what they need most of all is an incompetent regime, one that makes their ideas look good by comparison. "Bliss was it in that dawn to be alive," William Wordsworth famously wrote after the French Revolution, romanticizing the "enfants de la patrie" who marched on the Bastille. But no one ever quotes the next line in his poem about the "meager, stale, forbidding " old regime that collapsed so easily there. The early Bolsheviks were nobodies in Russia before the 1917 Revolution, but thanks to the combined ineptitude of Tsar Nicholas II and Alexander Kerensky—the first one representing bumbling monarchy, the latter the most indecisive sort of democracy—Lenin and Co. established their "dictatorship of the proletariat" with a swiftness that surprised even them.
Listening this week to the latest excerpts from Osama bin Laden's and Ayman al Zawahiri's taped messages, it is hard not to marvel at how lucky these would-be revolutionaries have been in their enemy. Who would have thought that, four and a half years on, facing down the mightiest power in history, this sociopathic pair would still be out there talking trash, their continued existence a daily desecration of the memory of the 9/11 dead? Or that bin Laden and Zawahiri would have been able to whip what had been a bare ember of “global jihad”—one barely smoldering on 9/10/01—into a global conflagration? Was that a smirk I detected on Zawahiri's face as he advised George W. Bush that it was not too late for him to convert to Islam? You could not miss the contempt in bin Laden’s voice when, in a tape said to be several months old, he mocked Bush's aircraft carrier-staged declaration in April 2003 that major conflict in Iraq had ended.
What a contrast to four years ago, when the rapid collapse of the Taliban caught bin Laden by surprise as he sought to escape the Afghan mountains of Tora Bora. It was probably the last time, we must now conclude, that the terror impresario was surprised at all. As Gary Berntsen, the CIA officer in charge of the operation, records in his new book "Jawbreaker," (Crown, 2005) bin Laden told his followers, "Forgive me," and apologized for getting them pinned down by the Americans (Berntsen's men were listening on radio). Bin Laden then asked them to pray. And, lo, a miracle occurred. As Berntsen stewed in frustration over the Pentagon’s refusal to rush in more troops to encircle the trapped “sheikh,’ bin Laden was allowed to flee. And not only did Bush stop talking about the man he wanted “dead or alive,” the president began to shift U.S. Special Forces (in particular the Arabic-speaking 5th Group, which had built close relations with its Afghan allies) and Predator drones to the Iraq theater.
It is time to have an accounting of just how badly run, and conceived, this "war on terror" has been. You won't hear it from the Democrats, who have been running a severe testosterone shortage since Vietnam. And there's certainly no need to take my word for it.
Instead, just listen to what the president's own party is saying. Let's start with Donald Rumsfeld, the man we thought was in charge of the GWOT, the global war on terror. Speaking last week at the Council on Foreign Relations in New York, Rumsfeld lamented how much better bin Laden and Zawahiri were at understanding the nature of the war. He quoted Zawahiri as saying (way back in July 2005), "We are in a media battle in a race for the hearts and minds of Muslims," and then proceeded to complain that "the U.S. government”—some entity the Defense Secretary is not on familiar terms with, presumably—“still functions as a five and dime store in an eBay world." Al Qaeda, Rumsfeld said, as if he were still head of some blue-ribbon commission questioning the competence of the Clinton administration, has made better use of the technologies we invented than we have. "Our enemies have skillfully adapted to fighting wars in today's media age, but for the most part we, our country, our government has not adapted," he said.
Uhhh, that failure to adapt, wouldn’t that be your failure, Mr. Rumsfeld? Or the president's? But Rummy was his usual unflappable self, just as full of brio and self-confidence as he appears in Eugene Jarecki's new movie, "Why We Fight," when he raps the podium in prewar 2003 and says, "We know Saddam has weapons of mass destruction.”
Again, lest I'm accused of being partisan (I'm really just a reporter, and a very disappointed hawk), I would just refer you to the rebellion within Bush's own party. The way the war was supposed to have been fought—a way that would really have distressed bin Laden and Zawahiri—was that Al Qaeda was supposed to be so isolated by now that we had most of the Arab world on our side. Deals like Dubai Ports World 's takeover of the London company that administers some U.S. ports were supposed to be pretty much routine. After all, as one commentator said to me during an appearance on al Jazeera the other day, isn't this the way globalization is intended to work: you co-opt everyone, even your rivals, into the international system? Instead, so mistrusted is the Bush administration—and so out of control has the war on terror become—that even leading Republican politicians this week sought to cancel the Dubai contract (Bush, to his credit, did manage a presidential response, vowing to veto).
We did not have a clash of civilizations four years ago, but we're getting closer to one now. As violent anti-Western protests sweep the Islamic world, and what remains of the moderate Muslim community is cowed into silence, how unbearably sad it is to cast one 's mind back to the eve of 9/11. As Wall Street Journal reporter Alan Cullison wrote in a too-little-noted article in The Atlantic in September 2004, Al Qaeda was then a small fractious group that could not even agree among itself about what its goal was. Members had been hounded from the Arab world, from Sudan, into the hands of a lunatic fringe regime in Afghanistan. Qaeda had one A-team, and one big roll of the dice to make, with 9/11 mastermind Khalid Sheikh Mohammad and his ace psychopath, Mohammed Atta. Cullison, quoting a remarkable series of letters he found on Zawahiri’s old computer in Afghanistan, wrote that jihadis who were members of Zawahiri's Egyptian Islamic Jihad—the biggest component of Al Qaeda—still wanted to make Egypt the main enemy. One of them even compared the grandiose war against America to tilting at "windmills." Cullison is worth quoting at length on this:
"Perhaps one of the most important insights to emerge from the computer is that 9/11 sprang not so much from Al Qaeda’s strengths as from its weaknesses. The computer did not reveal any links to Iraq or any other deep-pocketed government; amid the group's penury the members fell to bitter infighting. The blow against the United States was meant to put an end to the internal rivalries, which are manifest in vitriolic memos between Kabul and cells abroad. Al-Qaeda’s leaders worried about a military response from the United States, but in such a response they spied opportunity: they had fought the Soviet Union in Afghanistan, and they fondly remembered that war as a galvanizing experience, an event that roused the indifferent of the Arab world to fight and win against a technologically superior Western infidel. The jihadis expected the United States, like the Soviet Union, to be a clumsy opponent."
Not in their fondest dreams did they realize how clumsy.
It is just as sad to remember the support that once existed for the United States, then at the pinnacle of its power and prestige. On 9/10/01 America had adversaries, but mainly on the fringes. The invasion of Afghanistan brought barely a peep from the Arab street. No one had much use for Al Qaeda, even in the Islamic world. Global polls like those taken by Pew and the German Marshall Fund showed a remarkable degree of global consensus in favor of a one-superpower (in other words, American-dominated) world. The silver lining of 9/11 was a chance to reaffirm the legitimacy of America's role as trusted overseer of the international system. That is why Bush had so much support when he ousted the Taliban in Afghanistan, who were clearly harboring bin Laden, and so little backing when he shifted attention to Saddam, whose connection to bin Laden was plainly manufactured. The post-9/11 period was a fantastic opportunity for alliance- and institution-building. All that was required was American leadership.
How then did we arrive at this day, with anti-American Islamist governments rising in the Mideast, bin Laden sneering at us, Qaeda lieutenants escaping from prison, Iran brazenly enriching uranium, and America as hated and mistrusted as it ever has been? The answer, in a word, is incompetence. We now have testimony from enough Republicans and Bush loyalists—from former Treasury Secretary Paul O'Neill to former CIA senior director Paul Pillar — that the administration knew all along how flimsy its WMD case against Iraq was. We also now know, from Berntsen and others, that the administration knew then how solid the intel on bin Laden's and Zawahiri's whereabouts was. So catastrophic was Bush's decision to shift his attention and resources to Iraq, when bin Laden was panting at Tora Bora, that one is tempted to rank it with Adolf Hitler's decision to invade the Soviet Union in June 1941, at a time when Great Britain was prostrate and America was still out of the war (a decision that almost certainly cost Hitler the war then and there). Yes, Iraq may some day become a legitimate democracy. But for now it is mainly a jihadi factory, cranking out new generations of hardened bomb-ready Islamists, as we have seen with the cross-pollination that has brought Iraqi-style suicide bombs back to Afghanistan.
Bush of course has been lucky in his adversaries as well—not bin Laden, but the Democrats (not to mention many a media pundit). To this day they seem afraid to make the case that the great war presidency has been a disastrous war presidency, in large part because of the fraudulent Iraq invasion. Has any presidential candidate ever had a better talking point than this, as John Kerry did in 2004? But Kerry, a true combat hero, turned out to be a political coward, declining to attack while the Bush-Rove machine slowly emasculated him. Today the only Democratic candidate with the necessary money and renown to run for president, Hillary Clinton, is also one who must prove her presidential timber by out-hawking the hawk-in-chief. So forget about her calling it as she sees it. No wonder Karl Rove is telling the GOP that the war on terror is still the president’s ace issue in 2006, as it was in 2002.
So, yes, bin Laden and Zawahiri have been fortunate in their enemies. Had the Bush administration been more competent, these two would have long since been bloody pulp, perhaps largely forgotten. Luckily for the rest of us, the Al Qaeda revolutionary program is so abhorrent that most of the world still has no choice but to stick with us, through thick and thin—and dumb and dumber. How long we can test the world’s patience is another matter. Alan Cullison’s 2004 article based on Zawahiri’s private thoughts is again instructive here. "Al Qaeda understood that its attacks would not lead to a quick collapse of the great powers,” he wrote. “Rather, its aim was to tempt the powers to strike back in a way that would create sympathy for the terrorists. ... One wonders if the United States is indeed playing the role written for it on the computer." What I wonder is, how many more years will we have to wait for Rumsfeld to figure that one out?
Friday, March 03, 2006
Media raid piles pressure on Kenya's Kibaki
Media raid piles pressure on Kenya's Kibaki
By C. Bryson Hull 1 hour, 54 minutes ago
NAIROBI (Reuters) - Fallout from a police raid on a major media group put Kenyan President Mwai Kibaki's weakened government further on the defensive on Friday, with newspapers denouncing the action as "state thuggery."
Thursday's heavy-handed raid sparked a storm of domestic and foreign condemnation and split Kibaki's cabinet, heaping more pressure on his administration.
The operation was particularly harmful to Kibaki's image because he was elected in 2002 on a promise to usher in reform after the autocratic rule of President Daniel arap Moi.
Kibaki was already in deep trouble over graft scandals that have forced three of his ministers to resign and angered Western donors. He is also still smarting from a humiliating defeat last November in a constitutional referendum.
In the most aggressive assault on mainstream media since independence in 1963, at least 30 elite police and paramilitary commandos stormed the offices of the Kenya Television Network (KTN) and the presses of its sister newspaper the Standard.
Thousands of newspapers were burned during the raids. The paper reopened on Thursday and produced a special edition. KTN was also back on the air on Thursday.
About half of Kibaki's cabinet protested against the raid, while other ministers defended it.
"This is completely a betrayal of the people who elected this government," said Ludeki Chweya, a political science lecturer at the University of Nairobi.
"The action was so drastic that nothing in the Moi era is comparable. So it takes the country so far back."
Kibaki on Friday ordered a new session of parliament on March 21 after he closed down the assembly following the referendum. He also appointed a committee to work on a new constitution -- a demand of many Kenyans.
"LAUGHABLE FICTION"
Kenyan media united against him.
"There are few dictators, even in past years, who were capable of the actions carried out by the Kibaki administration in the past 24 hours," Kenya's biggest newspaper, the Nation, said in an editorial.
Moi's government enacted tough press laws and routinely arrested and beat journalists who wrote critical articles.
The Standard in an editorial called the police justification -- that they had evidence of a plot to bribe reporters to write articles fomenting ethnic hatred -- "a piece of laughable fiction that even they know is complete nonsense."
"State Thuggery" proclaimed the front page of the Kenya Times newspaper.
The Standard wrote to the police on Friday demanding an inventory of items taken from its office, and identity of those who entered. "We are concerned there could be attempts to manipulate the contents in our CPUs (computers) as no attempt was made to jointly verify the same," its letter added.
The Kenyan media have angered the government not only with hard-hitting exposes of corruption but with stories about political intrigue and about Kibaki's wife.
First lady Lucy Kibaki last year harangued reporters in the Nation newsroom for hours and slapped a television cameraman over a story. And last week police held staff from the Weekly Citizen newspaper over a story alleging a feud between Lucy Kibaki and another woman many call the president's second wife.
Several reporters, mostly from sex and scandal tabloids, have been arrested and charged with press crimes.
The government had said it would crack down on journalists who make up stories or engage in extortion by threatening to publish damaging material. But the assault on a respected mainstream media group shocked many Kenyans.
(Additional reporting by Andrew Cawthorne)
Thursday, March 02, 2006
We paid six lawyers Sh72 million, says Govt
By Joseph Murimi
The Government has admitted paying Sh72 million to six lawyers who represented it in a case that sought to block last year’s referendum.
Solicitor-General Wanjuki Muchemi defended the payment, saying the amount was reasonable. He scoffed at reports alleging impropriety on the part of the State Law Office, saying it had acted "diligently, conscientiously and transparency".
He said there was nothing improper with the attorney-general hiring external lawyers and consultants as he was mandated to do so by law.
"We wish to confirm that (the) Sh72 million was a global figure to cover all such legal services as the team had been engaged to provide and included all expenses, disbursements and Value Added Tax of Sh9,931,034.45, which was deducted upfront and remitted to the relevant authorities,’’ Muchemi said.
He said the fee was reasonable given the national importance of the constitutional review process, the urgency with which the case had been lodged and the complex issues that had to be argued out.
MP Joe Khamis and 21 others had filed the referendum case with others against the AG, Justice and Constitutional Affairs minister, the Constitution of Kenya Review Commission and the Electoral Commission of Kenya.
The advocates appointed by the AG to tackle the case were Dr Gibson Kamau Kuria, Mr Waweru Gatonye, Mr Fred Ngatia, Mr Kioko Kilukumi and Mr Njoroge Regeru.
Revelations of the amount paid to the six lawyers has raised eyebrows and opened a floodgate of condemnations. They represented the Government in the review case, which lasted only five days.
Elsewhere, the Kenya Section of the International Commission of Jurists said Wako should be sacked if there was to be any progress in prosecution of corruption cases.
ICJ council member Albert Kamunde said Wako had failed to demonstrate willingness to prosecute corruption related offences. He said according to a report by the Kenya Anti-Corruption Commission, several files referred to the AG have not been acted upon.
Saitoti grilled by police and has catered lunch brought in
By Evelyn Kwamboka
Former Vice President, Prof George Saitoti, was on Wednesday questioned over his role in the Goldenberg scandal.
It took him more than five hours to explain to the detectives at CID headquarters, why he granted 15 per cent ex-gratia payments for gold and diamonds to Goldenberg International Limited in 1990.
"I had a candid discussion with the officers and explained my role in the 15 per cent ex-gratia genesis and how it was handled," he said.
This was over and above the 20 per cent export compensation that was stipulated under the Export Compensation Act.
Saitoti said he had nothing to do with the Sh5.8 billion and Sh13.5 billion paid between April and August 1993.
"It is not me who triggered the payments in Goldenberg. I was not there in 1993 or at the Central Bank of Kenya," he said.
The payments were made during former VP Musalia Mudavadi’s tenure. Mudavadi was the first to be questioned over the scandal by the detectives on Tuesday.
Saitoti, who declined to comment on Tuesday on the Goldenberg matter, saying it was in court, arrived in the company of his lawyer, Fred Ngatia, at the CID headquarters.
The Kajiado North MP had lunch, brought in by a catering firm, with the officers as they continued to gather information from him.
"I did come here in order to assist with the investigations. I had nothing to do with the Sh5.8 billion," he said.
Saitoti told journalists that it "would not be prudent" for him to discuss details of the matter since he had already moved to court.
The court barred police from arresting and charging him last week on the offences based on the Bosire report on the Goldenberg scandal.
Justice John Nyamu granted Prof Saitoti temporary leave to challenge the findings of the report handed over to the President on February 3
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