Originally Posted By Daannzzz They could retheme the exterior of the place and convert all those little shops to resort hotel suites sleeping 4-30 people.
Originally Posted By Dabob2 <Only if they could turn the kind of profit that Disney deems worth the investment.> Well, that's the crux of it, isn't it? How large a fraction of the debt price we're talking about, and what Disney thinks they could do with the property.
Originally Posted By Dr Hans Reinhardt "How large a fraction of the debt price we're talking about, and what Disney thinks they could do with the property." Well there's more to it than that. The question is more like how long would it take for the initial investment (let's say $200 million purchase price + whatever it takes to transform the place) to turn the kind of profit that Disney Co. deems acceptable. Maybe I'm a pessimist, but I just don't see a run-of-the-mill shopping mall like GW being a lucrative operation for Disney at any price. Nor does it fit into Disney's portfolio of attractions in Anaheim. It would take millions to make it into the kind of shopping destination worthy of the Disney brand (ie: DTD) and that expense would only make it that much more difficult for it to survive financially long term.
Originally Posted By Westsider Hans, I agree with all of your points. But, we are all assuming the mall would be branded "Disney's GardenWalk". It could simply be a mall owned by Disney, but without the "DISNEY'S" brand attached to it. Disney owns it, Disney manages it, Disney uses it's muscle to improve and polish it, Disney includes it in plans for the Resort District future... but it's not branded as a Disney property and an official Disneyland Resort offering. I'm trying to think of something similar Disney has done with property or possesions, and the Anaheim sports teams in the 1990's are all I can think of. There is a current precedent set with the Flamingo Crossings development in WDW, but that has been a victim of the Great Recession and hasn't gotten off the ground yet. But when Flamingo Crossings does get off the ground, as a shopping center owned/operated by Disney but not at all branded as "DISNEY'S", then that would be a pretty good analogy.
Originally Posted By Dabob2 <<"How large a fraction of the debt price we're talking about, and what Disney thinks they could do with the property." >> <Well there's more to it than that. The question is more like how long would it take for the initial investment (let's say $200 million purchase price + whatever it takes to transform the place) to turn the kind of profit that Disney Co. deems acceptable. > Well, sure - I would think that it would be understood that Disney would never think it could realize a profit immediately; they'll have to take into account the price of the property and what their plans are for it, and then think about how long it would take to get things in the black. <Maybe I'm a pessimist, but I just don't see a run-of-the-mill shopping mall like GW being a lucrative operation for Disney at any price> Neither do I. That's why several of us have said that if the price is cheap enough, Disney would be better off turning it into something else. Land in the DLR area is scarce, and if a third gate opens, GW suddenly becomes prime location. Also, DLR currently has no hotel property along the lines of DLP's DLH and arguably with the excellent occupancy rates of Disney properties, there's a market for that. They also have no "value" property as at WDW, and there's arguably a market for that. I think it would be conceivable - thinking long-term here - that the land (location, location, location) would be far more valuable than the mall per se. Some of the restaurants seem to be doing okay, so if Disney were to acquire the space, perhaps in the short term they'd let the restaurants continue and close the mall. Middle-term they'd open a new hotel and perhaps even the waterpark they were supposedly considering for one of the surface parking lots. A Disney-themed waterpark WOULD bring people across Harbor. Then long-term they'd open a second hotel there, and when the third park opened they'd have two properties right across Katella from the new park, and pretty easy walking distance from the other two. This, of course, assumes that they're serious about building a third park, and that the GW land can be had for a bargain. Two things that may not end up to be true. But if they were both true - I think Disney shouldn't pass up the opportunity to get its hands on that location.
Originally Posted By Kar2oonMan >>It could simply be a mall owned by Disney, but without the "DISNEY'S" brand attached to it.<< Touchstone GardenWalk?
Originally Posted By Ohana LOL Kar2oon, but actually Touchstone was a good brand. this would have to be Hollywood Pictures Gardenwalk. HA
Originally Posted By Dr Hans Reinhardt "Disney owns it, Disney manages it, Disney uses it's muscle to improve and polish it, Disney includes it in plans for the Resort District future... but it's not branded as a Disney property and an official Disneyland Resort offering." Good point, and I had thought about that. However, since GW isn't doing well now, the question is what would a new owner have to do to continue operations and make the place profitable. I just don't see Disney being interested in investing in a financially unstable mall with no proven track record. "That's why several of us have said that if the price is cheap enough, Disney would be better off turning it into something else." Yes, but you have to figure that it would take additional millions to close the place, tear it down, and build something new. The cost of the whole process of turning that huge development into a waterpark, hotel, etc, would be enormous with no guarantee that whatever they built would be a success. My opinion is that Disney will see such a development as too risky and of little benefit to their operations in Anaheim.
Originally Posted By SuperDry <<< Good point, and I had thought about that. However, since GW isn't doing well now, the question is what would a new owner have to do to continue operations and make the place profitable. >>> You seem to keep missing the point. The current landlord has to service a $210 million bond (perhaps with semi-annual payments) in addition paying expenses. If they're unable to do so, the property could be foreclosed to satisfy the defaulted bond and perhaps sold at auction. If that happens, then a) any equity the current owners put into it is gone, b) the bondholders get whatever the property sells for at auction, which could be just a fraction of the $210 million, and c) the new owner owns it free and clear (or owes someone else the money they borrowed to pay for the auction price). The key thing is that the auction is a cash sale and the $210 million debt goes away. If the auction winner pays $50 million, then even if they borrow the entire amount, GW only has to service a $50 million bond instead of a $210 million bond. That would cut debt service by over 75%.
Originally Posted By Dabob2 Exactly. If Disney is serious about a third park, then presumably they'll want more hotel properties SOMEWHERE. And with GW's distressed status, they may find that land a greater bargain then trying to acquire it later could ever be.
Originally Posted By Dr Hans Reinhardt You seem to keep missing the point. Maybe, but the distressed pricing of GW doesn't mean that property is useful for Disney's purposes. There's that detail about there being a dud of a mall on the property that would require millions to resuscitate or demolish. Even if Disney was able to reduce its risk by acquiring the property at a bargain the question remains what would it require financially to turn the place around, tear it down, or whatever, in order to make the asset useful for its operations in Anaheim.
Originally Posted By Manfried Looking at it from a birds-eye view. It is a very desirable property to own from a Disney perspective. They don't care what it once was or how unsuccessful it was. They would probably bulldoze it down completely anyway.
Originally Posted By dshyates I still think Disney should buy the place and go ahead and call it DtD East. Add one large moderate and one even larger value resort and connect it to The Esplanade via people mover or moving sidewalk. I don't see why it wouldn't be a valuable addition to the resort. But the hotels and easy access to the esplanade are necessary.
Originally Posted By dresswhites yeah the place is a ghost town. the only good thing about is the restaunts. the theater is way overpriced!
Originally Posted By Dabob2 <Even if Disney was able to reduce its risk by acquiring the property at a bargain the question remains what would it require financially to turn the place around, tear it down, or whatever, in order to make the asset useful for its operations in Anaheim.> Well, sure, and I'm sure Disney is crunching the numbers. I'm not saying it's a no-brainer, because I (and all of us) lack very basic pieces of info - like how much they could pick it up for in the first place. I'm just saying that if they could get it relatively cheaply, they may regret not doing so if a third gate opens and they need more space for hotels and/or waterpark. It's likely they'll never get that land cheaper than they could now.
Originally Posted By cheesybaby When is prime Anaheim real estate going to be cheaper than this? If Disney doesn't buy GW now, when would they ever buy more land in Anaheim?
Originally Posted By Sport Goofy << When is prime Anaheim real estate going to be cheaper than this? >> The commercial real estate bust isn't even close to being over. It's only just begun.
Originally Posted By cheesybaby <<The commercial real estate bust isn't even close to being over. It's only just begun.>> Well, yes, you are correct on a macro level. But as for prime real estate across the street from DL on Harbor or Katella, who else is in danger of default? Who else in that area has the debt load of a brand-new development built during a bubble? I would guess that the small hotels and restaurants on Harbor/Katella that have been there for decades are doing just fine paying their mortgages. Are there other new properties/developments I am not recalling?
Originally Posted By Sport Goofy << I would guess that the small hotels and restaurants on Harbor/Katella that have been there for decades are doing just fine paying their mortgages. >> Why would you guess that? Sales in the restaurant business have been off as much as 50% during the recession. Hotel occupancies have been off a great deal as well. I think a lot of people presumed that there were folks in their neighborhood who had been there for years would not be subject to foreclosure, yet there are hundreds of thousands of these stories to tell.
Originally Posted By cheesybaby <<Why would you guess that?>> Because (1) they have been around for decades and therefore have relatively small debt loads and (2) although susceptible to risk they exist in a "protected" area/location. I am talking within the context of land which Disney can pick up at a cheap price. A usably large parcel of land. Times are bad, I agree. But do you see anything near the corner of Harbor and Katella coming close to the attractiveness of the GW parcel in terms of size, price, and timing/urgency? I guess we'll just have to agree to disagree.
