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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Artful Dodger
"Neko no me"
Initial specs will be announced. It's no problem if they're surpassed. Telsa routinely upgrades its models during the year w/o waiting for a new model year. Their development cycle is the 'week', not the 'year'.
Which makes Oldsmobiles 'weak'.
Cheers!
Why couldn't Tesla simply sublease those stores to subtenants?
Mike Smith
Active Member
Landlords to Tesla: You’re Still on the Hook for Your Store Leases
The WSJ has made the brilliant observation that no, landlords don't let you just walk away from leases. I haven't read it all because I won't pay for WSJ and I'm sure it's full of garbage, but here's an actual estimate of what this will cost. There's four ways out of a commercial lease:
1) lease expires soon
2) lease has an exit clause
3) make a deal with the landlord
4) sublet
I'm guessing between these four possibilities they'll end up paying on average 8 months per lease
I'm guessing the leases average $20,000/ month
So if they close 100 stores immediately they would take a charge of $16M.
The WSJ has made the brilliant observation that no, landlords don't let you just walk away from leases. I haven't read it all because I won't pay for WSJ and I'm sure it's full of garbage, but here's an actual estimate of what this will cost. There's four ways out of a commercial lease:
1) lease expires soon
2) lease has an exit clause
3) make a deal with the landlord
4) sublet
I'm guessing between these four possibilities they'll end up paying on average 8 months per lease
I'm guessing the leases average $20,000/ month
So if they close 100 stores immediately they would take a charge of $16M.
Depends on what their lease contract allows.
Mike Smith
Active Member
It takes time to find a tenant, and there are always inducements for new tenants as well as realtor fees. It could be the best option depending on the time remaining on the lease and demand for the space.
I was talking about SR+, not SR above. I'd say 80%+ chance SR+ is currently a depopulated LR pack currently (no software limitation, just excess pack structure) - the new weights on the website line up exactly to this being the case (far too much of a coincidence that a typo on their website could make the weight exactly line up like this), and we know SR+ is currently available while SR is still ramping up. Once the new pack/module line is fully up and running I'm sure they will transition SR+ to the new pack design, probably imminently.
Tesla's website weights also tell us the SR is a software limited SR+ battery, but for this one it could very easily just be a copy paste error on Tesla's part. Still, it is conceivable (but probably <20%) that a LR pack becomes unstable when depopulated down to SR cell count and Tesla are currently selling a software limited SR pack until the new Grohmann line gets running.
I'm liking the recovery, but I'll keeping my hedges against TSLA in place until the latest SEC mess is resolved. A negative outcome there could definitely drive the stock back down.
Depends on whether the landlords allow that in the lease contracts. With so much going on, Tesla does not need to staff a real estate operation to administer subleases of small, pricey store fronts in diverse, widely separated markets. It's probably better to try to negotiate a reduction in liquidated damages and move on.
This is finally starting to get some coverage by the media. Let's see if it spreads.
Barron's - 15 minutes ago: Tesla Locks Up a Loan for Its Chinese Factory
Barron's - 15 minutes ago: Tesla Locks Up a Loan for Its Chinese Factory
Artful Dodger
"Neko no me"
Also, those expensive rental leases will tend to be the high traffic locations where Tesla will want to keep Galleries. The bigger saving is actually in letting go the commissioned sales
The best Tesla sales person is a current owner.
Cheers!
Thumper
Active Member
Malls in general are struggling. Sublets may not be easy to find. Maybe the malls where Tesla is are an exception.
......and TMC is mentioned around minute 54..........
edit:
and it seems to be an old interview, but still salient
Umm Duh?, they owe the landlords the money anyway (that's what a lease contact is...) ...
EVNow
Well-Known Member
They can hire an agency to do that.
Buckminster
Well-Known Member
Extensive research complete - here is my full report on the Tesla killers that came out of Geneva this year:
A lot to take in I know - I will let you chew on that.
A lot to take in I know - I will let you chew on that.
DurandalAI
Member
P100D was released August 2016. I know Elon said they wouldn't go past 100kWh, but at 7% a year, they could have at least a 110kWh pack, right?The Y is 1-2 yrs out. Tesla averages 7% increase in bty energy density per year. It's not going to be a problem.
This is not your father's Oldsmobile.
Cheers!
Updated March 8, 2019 12:13 p.m. ET
Tesla Inc.’s TSLA +1.17% plans to save money by closing most of its retail stores and selling all cars online face a big potential hurdle: Store landlords show no signs of giving the company an easy way out of its leases.
The electric car maker has offered few details about which of its 106 stores and galleries in 26 states it plans to close. Even many shopping center landlords say they have heard nothing from the company about whether their Tesla store will be shut down, according to real-estate brokers and landlords.
What is clearer is how much Tesla owes in future rent payments. The company has total lease obligations of $1.6 billion, with $1.1 billion due between this year and 2023, according to its securities filings. The payments include leases for stores, galleries and other uses including real estate abroad.
In a February securities filing, Tesla said it has “various non-cancellable operating lease agreements,” and any effort by the company to terminate those leases could result in legal battles. Landlords could seek a court injunction to prevent Tesla from closing stores before the lease expiration. Property owners have challenged in court recent efforts by StarbucksCorp. and Kenneth Cole Productions Inc. to break leases.
Tesla “is a company with a viable balance sheet that is going to owe a lot of landlords a lot of money,” said Robert Taubman, chief executive officer of Taubman Centers Inc., at the Citi 2019 Global Property CEO conference in Hollywood, Fla., this week.
His U.S. properties have eight Tesla stores, including ones at the Dolphin Mall in Miami and Cherry Creek Shopping Center in Denver. Tesla also rents space from big mall ownersSimon Property Group and Macerich Co.
A Tesla representative didn’t respond to requests for comment.
Many mall owners said that Tesla stores have produced strong sales numbers and that they were surprised by the car maker’s announcement. Only a month ago, Tesla signed a new lease at Santa Monica Place in California that goes through 2025. As recently as last month, Tesla was negotiating and signing leases, according to executives at Taubman and Macerich.
Retail tenants generally can’t break their leases without penalty unless certain conditions are met, like a retailer files for bankruptcy protection or the shopping center suffers from persistent vacancies that allows a tenant to leave before the lease expires. Mall tenant leases typically run five to 10 years.
“The bottom line is, this is a business of contracts,” said Don Wood, CEO at Federal Realty Investment Trust, who indicated that landlords will enforce their contracts and expect Tesla to honor its obligations. Federal Realty owns two shopping centers with Tesla leases.
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Tesla tends to occupy prime locations in malls and often brings cache to the shopping center. The company’s sales stores and galleries, which are showrooms where people can view the cars but can’t buy them on-site, typically occupy 2,000 to 4,000 square feet with a couple of cars and a handful of employees.
The car maker hopes to save money from the store closings, and it could use the cash. As of Dec. 31, it had $3.7 billion in cash and equivalents on its books, with more than $5 billion in accounts payable and accrued liabilities, as well as nearly $10 billion in long-term debt. Another $541 million of debt is due in November, according to FactSet.
While Tesla has reported two consecutive quarters of profit to end 2018, the company said it is moving all sales—including the $35,000 version of its Model 3 sedan—to online only, which will allow the car maker to be “financially sustainable.”
Real-estate brokers speculated that Tesla may keep its most high-traffic stores, and even stores that close wouldn’t be as devastating a blow to mall landlords. Some also suggested that Tesla stores may have already served their purpose for the company.
“It’s like an expensive billboard to get the name out to people,” said Scott Holmes, national director of the retail division at Marcus & Millichap, a real-estate services and consulting firm. “Tesla believes that it has received benefit from that.”
This doesn't matter. Someone in EM's position should know marijuana is illegal per federal law regardless of any lenient state law. Hasn't he noticed that people are out to get him? He needs a minder.
The ID Lounge might have legs. Reveal in April at the Shanghai auto show.
Mike Smith
Active Member
Making a deal with the landlord is by far the most common way out of commercial leases. On the leases with more than a few years remaining they'll probably have to pay around a year's rent. It's especially bad for companies like Tesla where they're closing stores but not going bankrupt. If you don't have an escape clause (which are usually a year or more anyway), there's absolutely nothing you can do to get out of a commercial lease.
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