Jun 11, 2009
By: Stephen J. Alter, Real Capital Markets
Ask yourself this one simple
question: Can you afford to give out confidential information without the
ability to control it?
What effect would a leak of your or a client’s
confidential information have on client confidence? What is the risk to your
company if information gets into the wrong hands? Can you put a specific
financial value on that?
The simple answer is, No. In today’s
environment, it is important to have a set of controls in place to protect your
company and your clients. Digital Rights Management protects the copyrights of data
circulated via the Internet or other digital
media, allowing for its secure distribution. Typically, DRM encrypts the data
so it can only be accessed by authorized users or marks the content
with a digital
watermark so it cannot be freely distributed.
Only recently introduced to commercial real
estate, banking and law firms as well as other institutions with sensitive
documents, DRM keeps documents safe even after they have been made accessible
to potential investors, partners and other authorized users. It
can help prevent the following methods of sharing data:
unauthorized
saving;
unauthorized
printing & copying;
forwarding;
cut/copy/pasting;
screen-grabbing.
Consider the following example: You
grant access to confidential documents to a potential investor via a virtual deal
room. The potential investor enters the virtual deal room and downloads various
documents to their computer. Later on, you find out that the potential investor
is actually a competitor, broker or other unauthorized user or that they have
breached your confidentiality agreement by sharing this sensitive information
with others. If you had used DRM to secure your documents prior to
distribution, you could immediately disable that person’s ability to open the
documents--even those already downloaded and saved.
DRM makes it possible to securely
deliver and protect documents. It simply comes down to defining the terms of
access on your own terms.
The currently anemic state of the hospitality sector has been well documented for some time now. Doubly stung by a sharp slowdown in both business travel and tourism—as well as the financing problems that have plagued the commercial property sector as a whole—it seems clear that the sector is in the midst of one of its toughest periods ever. The struggling state of the market, though, is apparently not discouraging the owners of the Arizona Biltmore Resort & Spa from moving ahead with a planned $600 million renovation project. Also undeterred is the Phoenix City Council, which okayed the plan late last week.
Transwestern has been awarded management of One Central Park East, a 485,720-square- foot office project Mesirow Financial Real Estate is constructing at 50 East Van Buren in Downtown Phoenix. Under construction and scheduled to open in the third quarter of 2009, the 26-story Class A property will also include 9,000 square feet of retail space and an executive fitness center. A recipient of the AIA Western Mountain Region Design Citation Award, it includes an advanced insulated window wall glass system featuring exterior horizontal and vertical shade fins to combat the harsh Phoenix sun.
On behalf of the owner, SCF Arizona, McShane Development Co. completed
the six-story, 186,000-square-foot Class A office complex, located at
44th and Washington Streets in Phoenix, Ariz.
The commercial property sector has been increasingly concerned with
energy efficiency for some years now. With ever-dwindling and
nonrenewable resources being consumed at faster rates than ever, the
industry has been among the leaders in efforts to increase efficiency.
And the current economic downturn has only served to render efficiency
even more vital to property owners’ bottom lines. Aiming to serve the
growing demand, Scientific Conservation Inc. has just launched a
software program that it says will enable owners to save up to 25
percent on energy costs. And for clients such as Santa Clara County in
California, that savings is more important now than ever.
Taking advantage of a new platform to create more interest from buyers
in auction-sold properties, Sperry Van Ness/Guardian launched the
MarketMaker auction platform to sell REO, bank ordered and developer
close-out properties.
Currently, buildings contribute the largest single source of emissions
to our environment. Approximately 40 percent of all carbon emissions
come from buildings, and these are the places where you live, work and
play. At the American Institute of Architects, we are approaching
sustainability and green buildings with a solutions-based approach that
embraces technological change and incorporates the business case for
green buildings, which has become immeasurably stronger during the past
decade, as prices for green materials have decreased and knowledge of
green design has increased.
Imagine it’s 1990. You’ve moved into a sparkling new office. On the
surface, it’s perfect: spacious, modern furnishings, convenient
parking. But the dynamism of the commercial real estate industry soon
exposes its shortcomings.
How effective are Internet security tools these days and what
new tools or processes should I be using to protect electronic access
to my business records and communications?
The JBG Cos. and Buvermo Properties Inc. have secured $32 million in financing for One Choke Cherry, a Class A office building fully-leased to the Government Services Administration in North Rockville, Md.
If Philadelphia mayor Michael Nutter meets his goal, the City of Brotherly Love could soon be called the City of Sustainability instead. He plans to make the nation’s first capital the greenest city in America. And he has set out 15 targets to achieve that goal by 2015, before his term is up.
Aslan Realty Partners III L.L.C., a fund sponsored by TranswesternInvestment Co., has inked a five-year, 62,200-square-foot lease withBranch Banking & Trust Company of Virginia Inc.
The apartment market held up relatively well during the early stages of the economy's descent--but even it is now in decline. And while many investors are shying away, industry veterans Jim Butz and Greg Lamb are jumping in with both feet. The two former principals of leading multi-family developer JPI East have teamed with office and mixed-use developer Akridge to launch Jefferson Apartment Group with the intention of acquiring--and eventually--developing apartment properties in the Mid-Atlantic and Northeast regions.
Consider the next few months a window of opportunity. That was the message delivered by Joel Naroff, chief economist for TD Bank N.A. and president of Naroff Economic Advisors, speaking on the opening panel of CPN’s Hidden Opportunities conference in Phialdephia on Wednesday.
Washington, D.C., is feeling the effects of the economic slump, but the area office market remains attractive enough to help reel in lenders willing to part with the big bucks. Perseus Realty L.L.C., with the assistance of affiliate Perseus Realty Capital L.L.C., has obtained $103.5 million in financing for its 309,500-square-foot Class A office property at 1110 Vermont Ave. N.W. in D.C.'s Central Business District.
A joint venture between Spectrum Partners L.L.C., Alex. Brown Realty
Inc. and Potomac Capital Advisors, has acquired Westgate Plaza Shopping
Center in Manassas, Va., for $25 million from Principal Real Estate
Investors.
Mounting concerns surrounding the health of the economy, meshed with
sluggish employment growth, continue to drag down markets across the
country. Orlando’s office market--although somewhat buoyed by
employment growth experienced in the hospitality and tourism
sectors--is no exception.
Not a single office market has been spared from the ravages of the
cruel demise of the economy, but Baltimore, unlike most other
metropolitan areas, is in a position to get back on its feet right on
the heels of the highly anticipated economic turnaround, according to a
Cushman & Wakefield Inc. second-quarter report.
Like so many real estate companies, ProLogis isn't developing spec
projects these days, but build-to-suits are a different story. The
Denver-based global industrial REIT just agreed to develop a
554,000-square-foot distribution center in The Netherlands for
Hi-Logistics, and if ProLogis has anything to do with it, more
build-to-suit transactions will materialize.
In the midst of the sluggish investment market, where most real assets
that are selling are on the smaller end of the spectrum, a major office
property in Vancouver has been acquired by Kingswood Capital Corp. The
21-story, 204,000-square-foot Grosvenor Building, located in the city’s
Downtown, was sold by property investor and developer Grosvenor
Americas, which will continue to make its home at the tower under a
leaseback agreement.
The net lease marketplace is hardly what it used to be, with deal volume at only a fraction of what it was during the mid-2000s boom years. But net lease never did quite grind to a halt, and there’s some evidence that the market is climbing out of the trough it found itself in during the last quarter of 2008.
Hartz Mountain Industries has agreed to a lease deal with Breeze-Eastern Corp., a publicly-traded designer of lifting devices for military and civilian aircraft.
Tropicana Atlantic City Casino & Resort is set to come under new ownership, just over one year after owner Tropicana Entertainment L.L.C. filed for Chapter 11 protection. But it's not a big-name gaming company that will take over the property's reigns. The United States Bankruptcy Court in Camden, N.J., has green-lighted a "stalking horse" asset purchase agreement calling for pre-petition lenders--a group that includes billionaire investor Carl Icahn's Icahn Capital--to take hold of the asset in return for forgiving $200 million of debt owed by Tropicana.
Newly-formed value-added real estate fund KABR Real Estate Investment Partners L.L.C. has purchased a 235,000-square-foot office building at 85 Challenger Road in Ridgefield Park, N.J., from AIG.
Tropicana Atlantic City Casino & Resort is set to come under new ownership, just over one year after owner Tropicana Entertainment L.L.C. filed for Chapter 11 protection. But it's not a big-name gaming company that will take over the property's reigns. The United States Bankruptcy Court in Camden, N.J., has green-lighted a "stalking horse" asset purchase agreement calling for pre-petition lenders--a group that includes billionaire investor Carl Icahn's Icahn Capital--to take hold of the asset in return for forgiving $200 million of debt owed by Tropicana.
Manhattan leasing activity increased in June and the monthly vacancy
rate held steady for the first time since February 2008, which together
with some otherindicators and more may show some steadying of
commercial real estate, particularly in the office market, according to
a midyear report released by Cushman & Wakefield.
Cadillac Fairview Corp. purchased a 49 percent interest in Macerich's Queens Center in the New York City borough of Queens for $150 million in net cash. The eighth joint venture between the two firms, the venture gives Canadian Cadillac Fairview, wholly owned by the Ontario Teachers' Pension Plan, entree to New York City. Queens Center is the top-performing asset in Macerich's portfolio: The 966,499-square-foot urban retail center, which at year-end 2008 was 97.5 percent occupied, was at that time producing annual mall sales of $876 per square foot. Macerich purchased it in 1995 and redeveloped and expanded it in 2004.
The current economic climate is certainly putting a drag on many in the
commercial property business. But Kevin Salmon is betting that now is a
time of opportunity. To that end, Salmon has launched Salmon and
Marshall Real Estate Investments, a new firm that will provide
investment sales and consultation services in Manhattan’s apartment and
condominium markets.
Call it the "Great Green Way." Following on the heels of Manhattan's iconic Empire State Building going green, Broadway is getting its first green theater.
With the country well ensconced in a recession and debilitated by the
credit crunch, the clatter of construction equipment on the streets is
not an oft-heard sound--unless you are at the site of the United
Nations headquarters in New York City. In the face of a global economic
meltdown, the international organization has not missed a beat with its
$1 billion Capital Master Plan for the sweeping renovation of the 2.6
million-square-foot complex. And now that Skanska USA Building Inc. has
kicked off the next phase of the project, the comforting buzz of
building activity is not going to stop anytime soon.
On the heels of announcing a major sustainability initiative, the
owners of Manhattan’s iconic Empire State Building have tapped Joseph
Bellina to serve as the tower’s new general manager.
With rumors circulating of a sale price around $100 per square foot,the sale of the 66-story American International Group headquarters in Lower Manhattan likely set the bar for the biggest sale in the areamarket thus far in 2009.
Jones Lang LaSalle has completed a 54,000-square-foot sublease for
EdisonLearning at 485 Lexington Avenue in Manhattan, also known as
Grand Central Square.
New York City’s office market is still feeling the effect of the global
industry and economic turmoil, according to a new report by Jones Lang
LaSalle.
Multiple landlords attempted to lure NBA Properties to other locations
in Manhattan and across the Hudson River but Olympic Tower Associates’ signed NBA Properties Inc. to a 10-year, 153,000-square-foot renewal at 645 Fifth Avenue.
After a rough 2008, Manhattan's property investment market has continued to take it on the chin thus far in 2009. Real estate sales in Manhattan reached a 25-year low in 2009's first quarter, according to a new report by Massey Knakal Realty Services.
Flying in the face of the still chilly credit market, SL Green Realty
Corp. has managed to get its hands on a $145 million leasehold mortgage
for the refinancing of the 1.2-million-square-foot office tower at 420
Lexington Ave. in Midtown Manhattan.
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Asking rental rates for Manhattan’s trophy-quality buildings suffered in the first half of the year as the average asking rental rates dropped 18.7 percent, falling to $83.66 per square foot from $102.85 per square foot in fall 2008, according Jones Lang LaSalle’s 2009 Skyline Review.
Post Properties Inc. sold Post Ridge in Atlanta to a locally based entity affiliated with Centennial Holding Company L.L.C. for $44.8 million following Monday's sale of Post Forest in Fairfax, Va., to an entity affiliated with Pantzer Properties Inc. for $57.5 million. CB Richard Ellis Inc. brokered the most recent transaction, while the Post Forest deal was brokered by Holliday Fenoglio Fowler L.P. The REIT expects to report net gains of approximately $54 million relating to the sales.
The nationwide downturn in employment is chipping away at demand in the apartment market, but there are still those communities here and there where the call for more rental accommodations remains relatively strong. To that end, Orinda Corp. and Octagon Capital Partners, having found just such a community, have acquired a 350,000-square-foot office building in a college-laden district of Atlanta for a $35 million apartment conversion project.
Real estate firm IDI has executed a 171,800-square-foot, five-year
lease in Lithia Springs, Ga., with Sensormatic Electronics Corp., a
provider of security and fire safety products and services for the
commercial and residential sectors.
Third-party leasing and management firm Crossman & Co. has been
named the exclusive leasing representatives for all Publix-owned retail
properties in Florida, Georgia, Alabama, Tennessee and South Carolina.
Highwoods Properties Inc. and USAA Real Estate Co. were awarded a build-to-suit lease by the U.S. General Services Administration to develop an approximately $45 million field office for the Federal Bureau of Investigation in Charlotte, N.C. The joint venture is scheduled to begin building the 171,000-square-foot, five-story Class A office building and annex in the first quarter of 2010 and complete it in the second quarter of 2011, with certification sought under the U.S. Green Building Council's Leadership in Energy and Environmental Design program. The project is Highwoods' third for the FBI, which is a repeat client of investor USAA's as well, and both have worked extensively with the GSA overall. Highwoods will retain a 10 percent ownership interest in the joint venture, as well as receiving development fees.
Miami commercial property veteran Tere Blanca’s new services firm looks to be coming out of the gate quickly, despite the industry’s current slump. Just weeks after she launched Blanca Commercial Real Estate, the company landed the exclusive leasing duties for 1450 Brickell, a Class A office tower currently under construction in Miami’s Brickell financial district.
CDS International Holdings Inc. has received approvals for its Atlantic Plaza II, a planned $325 million mixed-use community that will transform two city blocks in Delray Beach, Fla.
Grubb & Ellis Healthcare REIT Inc. agreed to purchase a 16-building portfolio from Greenville Hospital System of Greenville, S.C., including approximately 855,000 square feet of medical office and related space, for $161.7 million. The hospital system is among the largest healthcare service providers in the state and will continue to occupy 83 percent of the portfolio, most of which is on or adjacent to its hospital campuses, under a long-term lease agreement arrangement.
Despite sale and lease activity in the Los Angeles industrial market
well off from just a year ago, Westcore Properties and Dune Real Estate
Fund II have purchased a seven-building portfolio containing more than
760,000 square feet of L.A.-area industrial properties.
AMB Property Corp. has completed the $125 million sale of a land parcel
at Los Angeles International Airport to Los Angeles World Airports, the
owner of LAX.
Making a splash in the sluggish office leasing market, medical
manufacturer Advanced Bionics has just signed a 10-year deal for
146,400 square feet of space in Santa Clarita, Calif. According to the
landlord, the office lease is Los Angeles County’s largest of the year
thus far.
CB Richard Ellis Realty Trust acquired a new 238,370-square-foot state-of-the-art suburban Boston warehouse/distribution building built to suit for Best Buy Stores, which is occupying it on a long-term lease. Located at 140 Depot St. in Bellingham, Mass., the center is expandable and features pre-cast concrete construction, cross-docking, a 36-foot clear height, ESFR sprinklers and excess trailer parking. It will be used primarily as a regional distribution center for home delivery of large items, along with some service/repair and dispatching and scheduling work.
The frozen credit market and shattered economy have caused the interruption or outright cancellation of development project after development project across the country, but such is not the case for an unlikely 1.8 million-square-foot mixed-use endeavor in Plymouth, Mass., about 40 miles south of Boston. Having just secured the Plymouth Planning Board's approval of a master site plan, developers of Plymouth Rock Studios can now proceed with on- and off-site activities for the fully funded, $500 million film and television studio compound.
The Boston office of Holliday Fenoglio Fowler L.P has secured $25
million in financing for 101 Merrimac Street, a 10-story,
159,000-square-foot Class A office building in Boston.
Drug maker Alkermes Inc. last week became the latest in what has become a growing line of biotech firms leaving Cambridge, Mass., in search of less expensive office and laboratory space in the suburbs. The company plans to relocate to a 100,000-square-foot facility in Waltham early next year, a move that Alkermes says will eventually save some $750,000 a year.
Flying in the face of the frosty credit market, BioMed Realty Trust
Inc. has just gotten its hands on a $350 million loan secured by its
successful new 700,000-square-foot Center for Life Science | Boston.
John Hancock Life Insurance Co., TIAA-CREF, and Westdeutsche
ImmobilienBank AG stepped up to the plate to provide the financing.
The nationwide downturn in employment is chipping away at demand in the apartment market, but there are still those communities here and there where the call for more rental accommodations remains relatively strong. To that end, Orinda Corp. and Octagon Capital Partners, having found just such a community, have acquired a 350,000-square-foot office building in a college-laden district of Atlanta for a $35 million apartment conversion project.
Post Properties Inc. sold Post Ridge in Atlanta to a locally based entity affiliated with Centennial Holding Company L.L.C. for $44.8 million following Monday's sale of Post Forest in Fairfax, Va., to an entity affiliated with Pantzer Properties Inc. for $57.5 million. CB Richard Ellis Inc. brokered the most recent transaction, while the Post Forest deal was brokered by Holliday Fenoglio Fowler L.P. The REIT expects to report net gains of approximately $54 million relating to the sales.
The Alter Group has announced plans to acquire King Mill, a 180-acre
site in Henry County, Ga., south of Atlanta, where it will develop a
two-phase industrial park.
Turner Construction Co. has been selected by the Centers for Disease
Control and Prevention to provide design/build services for a $93
million, 311,000-square-foot office complex.
With the recession in full swing, fewer people are taking chances at
the gaming tables, but that is not stopping the Eastern Band of the
Cherokee Nation from moving forward with its $633 million expansion of
the Cherokee Casino & Hotel in Cherokee, N.C. Tribal leaders just
broke ground on the 532-room hotel segment of the property's massive
upgrade.
Cobalt Capital Partners L.P., through its Cobalt Industrial REIT II
affiliate, has acquired a 1.7 million-square-foot, nine-building
industrial portfolio in Atlanta.
The current economy, plagued by job losses galore and belt-tightening
on the business and leisure travel fronts, has been more than unkind to the
hospitality industry, to say the least. Despite the inhospitable
climate, Starwood Hotels & Resorts has nabbed a buyer for its W San
Francisco hotel. Keck Seng Investments (Hong Kong) Limited has agreed
to fork over $90 million for the 404-room property.
Green building standards may not seem to be on the front burner of commercial real estate as much this year as last, simply because very little new development is breaking ground these days. Yet planning and policy shifts regarding sustainable real estate go on, anticipating the day when development will begin again.
Economist Nouriel Roubini, also known as Dr. Gloom (or is it Dr. Doom?)
for his voice-in-the-wilderness prediction of the soon-to-pop bubble
back during the bubble's expansion phase, opined in the New York Times
on Sunday that Federal Reserve chairman Ben Bernanke deserves another
term after his current one expires in January, crediting him with
"decisions [that] prevented the Great Recession of 2008-2009 from
turning into the Great Depression 2.0."
It's an age of loan delinquency. According to a report released Tuesday
by the American Bankers Association, delinquencies on consumer debt --
those debt holders more than 30 days late -- stood at a record 3.23
percent during 1Q09. That's only up a little from 4Q08, yet still the
highest rate since the organization began tracking such things in 1974.
The alphabet soup of government programs, from PPIP to TALF, introduced by the federal government to thaw the frozen credits may very well succeed in that mission--but the medicine will take time to take effect, a panel convened by Ernst & Young in New York concluded.
The tsunami of residential foreclosures may have started, back in the
days of easy mortgage money, with borrowers whose only qualification
was being able to fog a mirror. About half of those kinds of subprime
mortgages have resulted in a foreclosure outcome, and Alt-A-inspired
foreclosures are spiking too. But now, according to the Mortgage
Bankers Association, foreclosures on prime fixed-rate loans represent
the largest share of brand-new foreclosures.
The U.S. Department of Commerce reported that retail sales dropped by 0.4 percent in April, compared with the previous month. The decline was a little more than expected, but less than the revised March drop of 1.3 percent. The recent two months of decline followed unexpected increases in consumer spending in January and February.
General Motors was in the news over the weekend before the largest
bankruptcy in U.S. history (that is, its own), but more worrying for
many policymakers, economists and ordinary borrowers is last week's
sudden spike in mortgage interest rates.
The number of distressed assets continues to grow and lenders across
the country have been debuting new programs and establishing funds to
provide loans for owners and buyers of these troubled assets in a
climate where securing financing has become a monumental challenge.
Now, Boise, Idaho-based A10 Capital has jumped on the bandwagon with
$100 million in capital for the origination of first mortgage
commercial real estate loans and the supplying of financing for
commercial real estate-secured distressed debt acquisitions through its
new Lending Group.
On Wednesday, the eve of the stress test results, observers were
wondering just how much trouble sour commercial real estate loans are
going to cause those banks that hold them. Knee deep, waist deep, or up
to their eyeballs?
Federal Reserve Chairman Ben Bernanke, high oracle of the U.S. economy,
began two days of testimony before Congress on Tuesday, and said that
things will slowly get better, eventually. He also noted that he and
his banking brethren are watching developments in the commercial real
estate industry--that ticking time bomb--with all the attention that a
ticking time bomb deserves. Meanwhile, down in the trenches, there's a
gold rush of sorts going on to find profits in real estate debt.
At least two-thirds of the American CMBS loans maturing in the coming
decade could be at risk of default, according to a new report by
Deutsche Bank. However, a recent change to the Federal Reserve's TALF
program could act as a safety valve for the market.
Is the economy picking up or continuing to struggle? It seems to depend upon who you talk to and when you talk to them. While many reports gave a variety of accounts Tuesday, most supported bets that the pace of the recession is slowing.
CMBS loan delinquencies and defaults are pushing up special servicing
volume at a blistering pace, according to a pair of first-quarter
updates published last week by Fitch Ratings.
The latest Beige Book from the Federal Reserve is out, and the
message is that the economy is still fairly bad, but not quite as bad
as it was, or could be. Employers are still laying workers off, but not
as quickly as before. Lenders are still reluctant to lend and borrowers
are still reluctant to borrow. but there's a modicum of activity.
Regarding real estate, some member banks--Atlanta, Cleveland, San
Francisco--reported rising real estate loan delinquencies.
Commercial real estate took a drubbing in the second quarter, according
to Massachusetts Institute of Technology Center for Real Estate, whose
index tracking commercial properties sold by institutional investors
dropped 18.1 percent during 2Q09. The index is down 32 percent from the
end of 2Q08, and 39 percent from its mid-2007 (that is, bubble) peak.
Could spring 2009 have been the housing bottom everyone has beenwaiting for since the pop of the bubble? Residential real estatespecialists hope so. According to the National Association of Realtors,U.S. existing home sales were up 3.6 percent in June to an annualizedrate of 4.89 million. That's more than economists were predicting, andthe most since October 2008.
The residential refinancing boom that budded so promisingly in the spring has wilted, according to the latest predictions by the Mortgage Bankers Association. Back in March, the organization predicted refi activity to the tune of about $2.75 trillion nationwide by the end of 2009, spurred by historically low interest rates. Now that those low rates have evaporated, MBA says that total originations for the year will probably come in just above $2 trillion.
The weakening economy and continued credit crunch led to increases incommercial/multifamily mortgage delinquencies during the first quarter of 2009, according to the latest Commercial/Multifamily DelinquencyReport, released by the Mortgage Bankers Association.
Writing in the Wall Street Journal late last week, Stan
Liebowitz noted that "the evidence from a huge national database
containing millions of individual loans strongly suggests that the
single most important factor [in foreclosures] is whether the homeowner
has negative equity in a house..." Blaming subprime mortgage lending
for the current housing crisis, he asserted, misses the point.
The Government National Mortgage Association (Ginnie Mae) issued more
than $43 billion in mortgage-backed securities in June, marking the
first time the agency has broken the $40 billion barrier in a single
month.
The New Jersey office of Holliday Fenoglio Fowler L.P. has secured $17
million in financing for Columbus Crossing, a 142,000-square-foot,
grocery-anchored shopping center in Philadelphia.
In the midst of the sluggish economy and tight credit market, condominium developers are having a tough time selling units. As a result, many projects across the nation have been reverted to rental or stalled outright. But in the midst of one of the most hard-hit condo markets--South Florida--at least one developer is breathing a bit easier.
The weakening economy and continued credit crunch led to increases incommercial/multifamily mortgage delinquencies during the first quarterof 2009, according to the latest Commercial/Multifamily DelinquencyReport, released by the Mortgage Bankers Association.
New single-family home sales recorded an uptick in June, increasing 11
percent compared with May, to an annualized rate of 384,000. It looks
like a little pent-up demand for new homes is being unleashed,
especially since prices are still falling. The Commerce Department also
reported that the median price for a new house stood at $206,200 in
June, down 12 percent from last June.
Federal Reserve Chairman Ben Bernanke, wrapping up two days of
testimony to Congress on Wednesday, talked about a number of weighty
economic issues, including concerns about commercial real estate. The
ticking time bomb analogy didn't come up--pundits talk that way, not
central bankers--but the commercial real estate debt problem
nevertheless got a fair amount of attention.
The government's pumping up of the economy via various programs created by the nearly $800 billion economic stimulus package and interceding in the financial market will indirectly incite the revival of the commercial real estate market, according to a new report by Marcus & Millichap Real Estate Investment Services. But the major impact is unlikely to be felt this year.
The level of commercial mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association analysis of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multi-family mortgage debt outstanding recorded by the Federal Reserve was a decrease of $33 million from the fourth quarter of 2008. Multi-family mortgage debt outstanding grew to $908 billion, an increase of $5 billion, or 0.6 percent from the fourth quarter.
Throughout the credit crisis and their own internal financial trials,government-sponsored enterprises Fannie Mae and Freddie Mac have continued to steadily dole out loans in the multi-family market, and The Cafritz Cos. is among the latest firms to take advantage of the entities' willingness to lend. Cafritz has just secured $79.2million in permanent financing for a five-property portfolio in Metropolitan Washington, D.C., relying on Fannie Mae's multi-family lending programthrough M&T Realty Capital Corp.
Not-quite-so-bad news still passes for good news: the U.S. Department
of Commerce has revised its estimate of the annualized contraction of
the American economy in the first quarter of 2009 to 5.5 percent,
instead of the 5.7 percent previously estimated. Still, paired with the
4Q08 annualized contraction of 6.3 percent, the six months between last
October and this March represent the poorest economic performance for
the U.S. economy in over a half century.
After seeing phenomenal commercial mortgage originations in 2006 and 2007, figures from 2008 show a 65 percent decrease in volume, according to the Mortgage Bankers Association's 2008 commercial real estate/multi-family finance report.
Like a trailer for a monster movie, a new report by Deutsche Bank is promising scary things in the not-too-distant future. Assuming that housing prices continue a decline, the percentage of underwater mortgages might rise to 48 percent of the total, or roughly 25 million loans, by the first quarter of 2011. The bank is predicting that U.S. home prices will decline a further 14 percent from current prices by the first quarter of 2011.
A new report by Real Estate Econometrics, based on FDIC data, puts thecommercial real estate loan default rate at its highest level in morethan a decade and a half, at least those loans held by regulateddeposit-taking institutions—banks and thrifts, for the most part. Thedefault rate soared from 1.62 percent in the last quarter of 2008 to2.25 percent in the first quarter of 2009. That rate doesn’t includedefaults on loans associated with multi-family rental properties, whichReal Estate Econometrics put at 2.45 percent in the first quarter of2009, up 68 basis points from the previous quarter.
Is Disney a major lagging indicator for the U.S. economy? Maybe. In any
case, Walt Disney Co. CEO Robert Iger sounded like a central banker on
Thursday during the company's second-quarter conference call: "We do
see signs of economic stabilization, but the pace and strength of
recovery remain uncertain, and we are managing accordingly," he said.
The alphabet soup of government programs, from PPIP to TALF, introduced by the federal government to thaw the frozen credits may very well succeed in that mission--but the medicine will take time to take effect, a panel convened by Ernst & Young in New York concluded.
It's an age of loan delinquency. According to a report released Tuesday
by the American Bankers Association, delinquencies on consumer debt --
those debt holders more than 30 days late -- stood at a record 3.23
percent during 1Q09. That's only up a little from 4Q08, yet still the
highest rate since the organization began tracking such things in 1974.
As the commercial real estate market continues its downward decline, a
new Fitch Ratings report indicates that large hotels lead loans of
concern for U.S. CMBS with eight newly defaulted loans greater than
$100 million entering special servicing, according to Fitch’s 'What's
in Special Servicing' U.S. CMBS report.
GE Capital Corp. and Angelo, Gordon & Co. have been selected as a pre-qualified fund manager for the U.S. Treasury Department's Legacy Securities Public-Private Investment Program. GE Capital Real Estate will oversee GE Capital's role in the partnership, which also has a strategic relationship with CastleOak Securities and Park Madison Partners. The partnership is one of nine fund managers with the pre-qualification.
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
Flying in the face of the still chilly credit market, SL Green Realty
Corp. has managed to get its hands on a $145 million leasehold mortgage
for the refinancing of the 1.2-million-square-foot office tower at 420
Lexington Ave. in Midtown Manhattan.
Capmark has originated $52.5 million for a partnership equity
recapitalization and refinance of an existing loan for a
345,000-square-foot office tower in Conshohocken, Pa.
Commercial real estate took a drubbing in the second quarter, according
to Massachusetts Institute of Technology Center for Real Estate, whose
index tracking commercial properties sold by institutional investors
dropped 18.1 percent during 2Q09. The index is down 32 percent from the
end of 2Q08, and 39 percent from its mid-2007 (that is, bubble) peak.
Responding to the economic crisis facing the United States, President Obama has proposed vast regulatory changes, including the creation of a new consumer agency aimed at guarding against the kinds of lending abuses which resulted in many Americans being saddled with far more mortgage debt than they could handle.
It was a good way to start the week, economically speaking. According
to the Conference Board, the U.S. index of leading economic indicators
rose 0.7 percent in June, marking the third rise in the index in as
many months. In the first half of 2009, the index improved at an
annualized rate of some 4.1 percent , a clear contrast to the way it
shrank in the last half of 2008 at an annualized rate of 6.2 percent.
The struggling economy is making its mark on Minnetonka, Minn.,-based
Opus Group which now has a number of its subsidiaries filing for
bankruptcy. So far, Opus West Corp. and Opus South Corp. have filed
Chapter 11 bankruptcy. Opus East, meanwhile, has filed Chapter 7.
Austin’s Hill Country Galleria, developed by Opus West, filed for
Chapter 11, too.
On Wednesday, the eve of the stress test results, observers were
wondering just how much trouble sour commercial real estate loans are
going to cause those banks that hold them. Knee deep, waist deep, or up
to their eyeballs?
Could spring 2009 have been the housing bottom everyone has beenwaiting for since the pop of the bubble? Residential real estatespecialists hope so. According to the National Association of Realtors,U.S. existing home sales were up 3.6 percent in June to an annualizedrate of 4.89 million. That's more than economists were predicting, andthe most since October 2008.
The number of distressed assets continues to grow and lenders across
the country have been debuting new programs and establishing funds to
provide loans for owners and buyers of these troubled assets in a
climate where securing financing has become a monumental challenge.
Now, Boise, Idaho-based A10 Capital has jumped on the bandwagon with
$100 million in capital for the origination of first mortgage
commercial real estate loans and the supplying of financing for
commercial real estate-secured distressed debt acquisitions through its
new Lending Group.
It's been nearly two years since the lending market for commercial real estate investment began to freeze up--first a freeze, then a full-stop for a short period in the dark days of the fall of 2008, then a "new normal" of sluggish lending, tough underwriting standards and all-around financial miasma. No one knows how long the new normal is going to last, or whether it represents a pendulum that's moved too far away from the days of easy lending that will someday swing a little ways back.
The latest quarterly survey by the Real Estate Roundtable, released
Wednesday, found the commercial real estate sector in a funk, squeezed
by poor financing prospects, decreasing valuations and lower demand for
commercial real estate of all varieties.
Rumors of the Downtown Miami condominium market's death have beengreatly exaggerated. The Miami Downtown Development Authority recentlycommissioned the Residential Closings & Occupancy Study, whichindicates that industry talk about the area's stock of new condos beingcovered in cobwebs--or predominantly empty--may not be totallyaccurate.
General Motors was in the news over the weekend before the largest
bankruptcy in U.S. history (that is, its own), but more worrying for
many policymakers, economists and ordinary borrowers is last week's
sudden spike in mortgage interest rates.
The tsunami of residential foreclosures may have started, back in the
days of easy mortgage money, with borrowers whose only qualification
was being able to fog a mirror. About half of those kinds of subprime
mortgages have resulted in a foreclosure outcome, and Alt-A-inspired
foreclosures are spiking too. But now, according to the Mortgage
Bankers Association, foreclosures on prime fixed-rate loans represent
the largest share of brand-new foreclosures.
Fontainebleau Las Vegas L.L.C. and two of its affiliates are the latest to find themselves flat out of cash in Sin City after the owners of the 3,900-room resort, which is 70 percent complete and was setto open in October, filed for Chapter 11 bankruptcy protection.
Economist Nouriel Roubini, also known as Dr. Gloom (or is it Dr. Doom?)
for his voice-in-the-wilderness prediction of the soon-to-pop bubble
back during the bubble's expansion phase, opined in the New York Times
on Sunday that Federal Reserve chairman Ben Bernanke deserves another
term after his current one expires in January, crediting him with
"decisions [that] prevented the Great Recession of 2008-2009 from
turning into the Great Depression 2.0."
The chilly credit market apparently warmed up for Vornado Realty Trust,
which just wrapped up the refinancing of its 442,000-square-foot office
property just outside of Washington, D.C., in Arlington, Va., courtesy
of an $82.5 million loan.
The bad news is, the United States is in a Great Recession and the commercial real estate market is likely to feel continued pain during the next two years as corporate cutbacks result in weaker fundamentals. The good news is, the public equity markets have been improving in the past few months, with returns bouncing back substantially and multiples back down to more reasonable levels as the market has responded to REIT success at raising capital through secondary offerings.
Extra Space Storage Inc. has entered into a definitive agreement to
contribute 42 of its wholly-owned properties into a newly formed joint
venture with an affiliate of Harrison Street Real Estate Capital L.L.C.
The difficult year 2009 is half over, and recent deals by one of the
world's largest landlords show two things about the current climate.
First, deleveraging is in. Second, there are buyers out there to help
sellers who want to raise some cash to do that deleveraging.
The Boston office of Holliday Fenoglio Fowler L.P has secured $25
million in financing for 101 Merrimac Street, a 10-story,
159,000-square-foot Class A office building in Boston.
Federal Reserve Chairman Ben Bernanke, high oracle of the U.S. economy,
began two days of testimony before Congress on Tuesday, and said that
things will slowly get better, eventually. He also noted that he and
his banking brethren are watching developments in the commercial real
estate industry--that ticking time bomb--with all the attention that a
ticking time bomb deserves. Meanwhile, down in the trenches, there's a
gold rush of sorts going on to find profits in real estate debt.
Fifty-four percent of delinquent loans in Fitch Ratings-rated transactions moved from 30 days to 60 days between June and July, the ratings agency found. It was the 10th consecutive month that such movement measured above 50 percent, a situation that the agency views as an "important precursor in helping to anticipate future performance for CMBS delinquencies," it quoted managing director Mary MacNeill as saying. The majority of Fitch Loans of Concern do continue to perform, accounting for 14.8 percent of multiborrower fixed-rate deals and 28.8 percent of floating-rate deals, but the number is rising.
The U.S. Department of Housing and Urban Development is approving plans submitted by state housing finance agencies for $1 billion to jump start affordable housing programs in states throughout the country that are currently stalled due to the economic recession. Funded through the American Recovery and Reinvestment Act of 2009, HUD's new Tax Credit Assistance Program will allow 26 state housing finance agencies to resume funding of affordable rental housing projects across the nation while stimulating employment in the hard-hit construction trades.
The slightly less hostile financial market during the second quarter
cracked open the window for many equity REITs to begin making a bit of
progress in easing monetary woes, but according to Fitch Ratings' new
REIT Report Quarterly, a few significant obstacles continue to encumber
the sector.
The sluggish travel industry has claimed another victim, as Extended Stay Hotels, an operator of mid-priced, extended-stay hotels in the United States and Canada, has filed for bankruptcy.
Is the economy picking up or continuing to struggle? It seems to depend upon who you talk to and when you talk to them. While many reports gave a variety of accounts Tuesday, most supported bets that the pace of the recession is slowing.
In the apartment market, job losses are starting to exact a high cost in terms of declining rents and rising occupancy levels, and for holders of multi-family debt and equity, there's more bad news on the horizon as loan maturities on overvalued assets begin to take hold over the next few years. In an effort to assist those facing the impending challenges, two industry veterans have just launched apartment consulting firm Caldera Asset Management, based out of Denver and Atlanta.
With unemployment still rising, Prudential executives expect more pain
to come for the commercial real estate market, but they also see some
signs of better health, according to their assessment of the industry
during yesterday’s mid-year commercial real estate outlook.
Trump Entertainment Resorts said that it will sell the company to
Donald Trump and BNAC Inc., an affiliate of Beal Bank Nevada, along
with restructuring some $486 million in debt.
CMBS loan delinquencies and defaults are pushing up special servicing
volume at a blistering pace, according to a pair of first-quarter
updates published last week by Fitch Ratings.
General Motors was in the news over the weekend before the largest bankruptcy in U.S. history (that is, its own), but more worrying for many policymakers, economists and ordinary borrowers is last week's sudden spike in mortgage interest rates.
Healthcare real estate firm Lillibridge has received a $30 million
equity commitment from Prudential Real Estate Investors to fund future
developments and acquisitions.
The latest Beige Book from the Federal Reserve is out, and the
message is that the economy is still fairly bad, but not quite as bad
as it was, or could be. Employers are still laying workers off, but not
as quickly as before. Lenders are still reluctant to lend and borrowers
are still reluctant to borrow. but there's a modicum of activity.
Regarding real estate, some member banks--Atlanta, Cleveland, San
Francisco--reported rising real estate loan delinquencies.
While the federal government has unveiled an array of programs to unfreeze the credit markets, significant issues remain to be addressed in commercial real estate financing, according to a roundtable hosted this morning by the New York Metro CCIM Chapter.
The residential refinancing boom that budded so promisingly in the spring has wilted, according to the latest predictions by the Mortgage Bankers Association. Back in March, the organization predicted refi activity to the tune of about $2.75 trillion nationwide by the end of 2009, spurred by historically low interest rates. Now that those low rates have evaporated, MBA says that total originations for the year will probably come in just above $2 trillion.
There's a great deal of trouble on the horizon for a bevy of commercial
property owners faced with near-term refinancing needs--about $2.2
trillion in trouble, according to a new U.S. Capital Trends report by
global commercial real estate research firm Real Capital Analytics. The
practically inconceivable figure represents the properties purchased or
refinanced after early 2004 that have since experienced a decline in
value--a decline that will make the challenge of securing refinancing
in the inhospitable credit market all the more difficult.
Times are still tough for the subset of the hospitality industry that
depends on gambling, but a few operators are betting on a return of the
gambling masses as the economy turns.
Acting through the Federal Housing Administration, the U.S. Department
of Housing and Urban Development is stepping up its efforts to assist
hospitals seeking refinancing at a time when private lenders remain
oh-so wary and tight-fisted. With the amendment of the Section 242
Mortgage Insurance Program for Hospitals, which previously included a
construction-element requirement, FHA will offer mortgage loan
insurance for pure refinancing deals.
The JBG Cos. and Buvermo Properties Inc. have secured $32 million in financing for One Choke Cherry, a Class A office building fully-leased to the Government Services Administration in North Rockville, Md.
At least two-thirds of the American CMBS loans maturing in the coming
decade could be at risk of default, according to a new report by
Deutsche Bank. However, a recent change to the Federal Reserve's TALF
program could act as a safety valve for the market.
As if the retail industry didn't have enough trouble, the prospect of a
CIT Group bankruptcy is blowing through the industry like an unexpected
squall. On Thursday, those new worries were reflected in the S&P
Retail Index, which fell 0.8 percent. If CIT does go under, many
smaller and mid-sized apparel retailers might also have trouble staying
afloat later this year, especially during the critical holiday season.
Citi Infrastructure Investors--a joint venture of Citigroup Inc., John Hancock Life Insurance Co. and Vancouver Airport Services-- will be unable to go through with a deal that would have seen the group buy Midway International Airport in Chicago for $2.5 billion. After previous extensions, the City of Chicago decided not to give the group any more time to close on the deal.
Washington, D.C., is feeling the effects of the economic slump, but the area office market remains attractive enough to help reel in lenders willing to part with the big bucks. Perseus Realty L.L.C., with the assistance of affiliate Perseus Realty Capital L.L.C., has obtained $103.5 million in financing for its 309,500-square-foot Class A office property at 1110 Vermont Ave. N.W. in D.C.'s Central Business District.
The Government National Mortgage Association (Ginnie Mae) issued more
than $43 billion in mortgage-backed securities in June, marking the
first time the agency has broken the $40 billion barrier in a single
month.
The weakening economy and continued credit crunch led to increases incommercial/multifamily mortgage delinquencies during the first quarter of 2009, according to the latest Commercial/Multifamily DelinquencyReport, released by the Mortgage Bankers Association.
Hypo Real Estate Holding AG, the only German lender that has been nationalized, with a current 90 percent holding, reported a 750 million euro, or $1.1 billion, loss in the second quarter. And its chief executive predicted continued losses, with a return to profitability delayed until 2012, according to the Associated Press.
The government's pumping up of the economy via various programs created by the nearly $800 billion economic stimulus package and interceding in the financial market will indirectly incite the revival of the commercial real estate market, according to a new report by Marcus & Millichap Real Estate Investment Services. But the major impact is unlikely to be felt this year.
Despite the ongoing weakening of industrial market fundamentals, banks are warming up to certain players like First Industrial Realty Trust Inc., which has just managed to get its hands on $154 million in the form of three loans secured by assets encompassing a total of 6.3 million square feet.
Commercial and multi-family mortgage originations haven’t escaped the trickle down of the recession and the credit crunch, with volumes 54 percent below last year's second quarter and 83 percent below the peak seen in the second quarter of 2007, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
On the heels of news Monday that new home sales were up a little, home
prices inched up as well--at least, those measured by the Standard
& Poor's/Case-Shiller Home Price Index in its raw form. In May, the
index, which measures prices in 20 metropolitan areas, rose 0.5 percent
over April, following a 0.6 percent drop the month from March to April.
The movement is notable as the first time the index has moved up in
three years.
Federal Reserve Chairman Ben Bernanke, wrapping up two days of
testimony to Congress on Wednesday, talked about a number of weighty
economic issues, including concerns about commercial real estate. The
ticking time bomb analogy didn't come up--pundits talk that way, not
central bankers--but the commercial real estate debt problem
nevertheless got a fair amount of attention.
New single-family home sales recorded an uptick in June, increasing 11
percent compared with May, to an annualized rate of 384,000. It looks
like a little pent-up demand for new homes is being unleashed,
especially since prices are still falling. The Commerce Department also
reported that the median price for a new house stood at $206,200 in
June, down 12 percent from last June.
The New Jersey office of Holliday Fenoglio Fowler L.P. has secured $17
million in financing for Columbus Crossing, a 142,000-square-foot,
grocery-anchored shopping center in Philadelphia.
Highwoods Properties Inc. closed on two secured loans totaling $162 million, one a $115 million, six-and-a-half-year loan provided by New York Life Insurance Co. at a fixed rate of 6.875 percent, secured by a pool of 10 assets in Nashville, Raleigh and Tampa, and the other a $47.3 million, seven-year loan from Western-Southern Life Assurance Co. at a fixed rate of 7.5 percent, secured by the office portion of RBC Plaza in Raleigh. Highwoods used a portion of the proceeds to pay off in full the $91 million outstanding under its $450 million unsecured credit facility.
Clothing retailer Men's Wearhouse has emerged victorious from a
feverish nine-hour auction of assets belonging to off-price chain
Filene's Basement, which fell victim to the retail market's downward
spiral and filed for Chapter 11 bankruptcy protection in early May,
just two weeks after its purchase by Buxbaum Group affiliate FB
Acquisition II. Acting through its affiliate, K&G Acquisition
Corp., Men's Wearhouse put forth the winning bid of $67 million for 17
to 20 of Filene's store leases, as well as the leases on the company's
Massachusetts corporate headquarters and distribution center, its
Maryland storage facility and-- possibly most important--the Filene's
Basement trade name.
In the midst of the sluggish economy and tight credit market, condominium developers are having a tough time selling units. As a result, many projects across the nation have been reverted to rental or stalled outright. But in the midst of one of the most hard-hit condo markets--South Florida--at least one developer is breathing a bit easier.
The Portland office of Holliday Fenoglio Fowler L.P. has
arranged a $38 million recapitalization of The 1000 Broadway Building, a
268,600-square-foot, Class A office tower in Portland, Ore.
Tropicana Atlantic City Casino & Resort is set to come under new ownership, just over one year after owner Tropicana Entertainment L.L.C. filed for Chapter 11 protection. But it's not a big-name gaming company that will take over the property's reigns. The United States Bankruptcy Court in Camden, N.J., has green-lighted a "stalking horse" asset purchase agreement calling for pre-petition lenders--a group that includes billionaire investor Carl Icahn's Icahn Capital--to take hold of the asset in return for forgiving $200 million of debt owed by Tropicana.
Writing in the Wall Street Journal late last week, Stan
Liebowitz noted that "the evidence from a huge national database
containing millions of individual loans strongly suggests that the
single most important factor [in foreclosures] is whether the homeowner
has negative equity in a house..." Blaming subprime mortgage lending
for the current housing crisis, he asserted, misses the point.
The special-purpose entity structure that has helped to power real
estate finance in recent years remains intact after recent court
decisions tied to the General Growth Properties Inc. Chapter 11
bankruptcy filing. However, the rulings may turn out to be less than a
total victory for bondholders in the long run.
Ory Schwartz, senior director of NorthMarq Capital’s Los Angeles
office, has arranged an $18 million first mortgage for Meadowridge
Apartments, a 176-unit multi-family complex located in Santa Clarita,
Calif.
The level of commercial mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association analysis of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multi-family mortgage debt outstanding recorded by the Federal Reserve was a decrease of $33 million from the fourth quarter of 2008. Multi-family mortgage debt outstanding grew to $908 billion, an increase of $5 billion, or 0.6 percent from the fourth quarter.
CPN Editor-in-chief Suzann D. Silverman spoke with Dale Anne
Reiss, who retired last June after 10 years as global director and more
than a decade more as a managing partner in Ernst & Young L.L.P.’s
real estate, hospitality and construction services practice. She
recently formed her own consulting firm, Artemis Advisors L.L.C. Now a
consultant for Ernst & Young, she last month also retained DLA
Piper as a client.
Beset by a still-icy lending climate, as well as continued weak
fundamentals as a result of the global economic slump, cash-strapped retailers are
increasingly finding themselves caught between a rock and a hard place
when it comes to monetizing their real estate holdings via sale
leaseback deals.
Is Disney a major lagging indicator for the U.S. economy? Maybe. In any
case, Walt Disney Co. CEO Robert Iger sounded like a central banker on
Thursday during the company's second-quarter conference call: "We do
see signs of economic stabilization, but the pace and strength of
recovery remain uncertain, and we are managing accordingly," he said.
Like all commercial property players, industrial REIT ProLogis has had
to deal with the challenges of the sagging economy and sluggish leasing
market. Despite the tumultuous environment though, the firm is still
getting deals done—including some very sizable transactions, like a
250,000-square-foot lease the firm recently inked with Roosevelt Paper
Co. near Chicago. That deal was the largest splash made by ProLogis in the region during
the second quarter, during which it racked up a total of nearly 600,000
square feet in leases.
Throughout the credit crisis and their own internal financial trials,government-sponsored enterprises Fannie Mae and Freddie Mac have continued to steadily dole out loans in the multi-family market, and The Cafritz Cos. is among the latest firms to take advantage of the entities' willingness to lend. Cafritz has just secured $79.2million in permanent financing for a five-property portfolio in Metropolitan Washington, D.C., relying on Fannie Mae's multi-family lending programthrough M&T Realty Capital Corp.
Flying in the face of the frosty credit market, BioMed Realty Trust
Inc. has just gotten its hands on a $350 million loan secured by its
successful new 700,000-square-foot Center for Life Science | Boston.
John Hancock Life Insurance Co., TIAA-CREF, and Westdeutsche
ImmobilienBank AG stepped up to the plate to provide the financing.
Tropicana Atlantic City Casino & Resort is set to come under new ownership, just over one year after owner Tropicana Entertainment L.L.C. filed for Chapter 11 protection. But it's not a big-name gaming company that will take over the property's reigns. The United States Bankruptcy Court in Camden, N.J., has green-lighted a "stalking horse" asset purchase agreement calling for pre-petition lenders--a group that includes billionaire investor Carl Icahn's Icahn Capital--to take hold of the asset in return for forgiving $200 million of debt owed by Tropicana.
Not-quite-so-bad news still passes for good news: the U.S. Department
of Commerce has revised its estimate of the annualized contraction of
the American economy in the first quarter of 2009 to 5.5 percent,
instead of the 5.7 percent previously estimated. Still, paired with the
4Q08 annualized contraction of 6.3 percent, the six months between last
October and this March represent the poorest economic performance for
the U.S. economy in over a half century.
After seeing phenomenal commercial mortgage originations in 2006 and 2007, figures from 2008 show a 65 percent decrease in volume, according to the Mortgage Bankers Association's 2008 commercial real estate/multi-family finance report.
If some esteemed economists testifying before the Joint Economic Committee of Congress Tuesday had their way, "too big to fail" would be a phrase of historical interest only--applying especially to that period of history just before 2008.
Clothing retailer Eddie Bauer Holdings Inc. has filed for Chapter 11 bankruptcy, becoming the latest firm to be stung by the retail industry’s sharp downturn.
Even as more and more preconditions of a global economic recovery are
being met, the path toward a commercial property market rebound is
uneven and yielding divergent regional trends. Occupancy, ADR, property
values, transaction pricing levels, and debt availability are all
showing evidence of this uncertainty, according to a new report by
Jones Lang LaSalle.
A new report by Real Estate Econometrics, based on FDIC data, puts thecommercial real estate loan default rate at its highest level in morethan a decade and a half, at least those loans held by regulateddeposit-taking institutions—banks and thrifts, for the most part. Thedefault rate soared from 1.62 percent in the last quarter of 2008 to2.25 percent in the first quarter of 2009. That rate doesn’t includedefaults on loans associated with multi-family rental properties, whichReal Estate Econometrics put at 2.45 percent in the first quarter of2009, up 68 basis points from the previous quarter.
There’s been plenty of evidence in both the political and business worlds over the past few days that the recent talk of an economic turnaround in the near future may have been a bit premature.
Steelbridge Capital has tapped Jay Caplin, formerly executive director
of Cushman & Wakefield Inc.’s capital markets group, as managing
principal. In his new role, Caplin will play a major role in
Florida-based Steelbridge’s return to active investment in commercial
property market—a game the firm stayed out of in recent years of sky
high pricings and cap rate compression.
Despite the fact that widespread job losses have begun to take a toll
on the multi-family market, owners of this asset type are still able to
secure financing in what remains a frigid lending environment. Just
three months after having wrapped up a $350 million secured credit
facility, Colonial Properties Trust has landed another major financing
deal with the closing of a new $156.4 million secured credit facility.
From the historical baseball metaphor to hurricane terminology,
speakers at the first Cityscape Connect business breakfast yesterday
evaluated commercial real estate’s recessionary progress—and agreed to
disagree.
Steve Bram is president & co-founder of George Smith Partners Inc. An expert on multi-family finance, he has personally arranged over $2.5 billion of financing in over 150 transactions during his 25 years at George Smith, including all types of construction, bridge and permanent financing on commercial and residential properties along with joint venture and equity placements. He recently spoke with CPN’s sister magazine Multi-Housing News about what lies ahead for the multi-family market.
With development projects stalled across sectors, the need to deal with loans that have gone bad is one of the few growing niches of the commercial property industry. To that end, Diversified Properties has formed a partnership with industry veteran Jonathan Stein to form Diversified Realty Advisors, a real estate advisory and turnaround group providing lenders with interim portfolio or individual asset management services during the workout or foreclosure stage, as well as long-term strategies such as asset and construction management, acquisition support and disposition services.
Homebuyers seem to be returning to the existing-home market this summer, according to the latest report by the National Association of Realtors on existing U.S. housing sales. The sales of single-family homes, condos and coops rose 2.4 percent in May compared with April, coming on top of a gain for that month compared with March, thus marking the first back-to-back monthly increase in existing home sales since 2005.
While many real estate investors sit on the sidelines waiting for
property prices to fall dramatically or the credit market to defrost,
National Health Investors Inc. is actively enhancing its portfolio in
one of the most stable property sectors in the current economic
climate-- skilled nursing, a subtype of the seniors housing sector. The
healthcare REIT just shelled out $55.5 million in cash for four
skilled nursing facilities, all of which will be leased back to the
seller and tenant, Legend Healthcare L.L.C.
No part of the commercial real estate industry has been spared by the economic crisis, but the senior living sector has been less brutally impacted than others have. And according to a new report issued jointly by a quintet of industry groups, the assisted living sub-sector is achieving the seemingly impossible these days--high occupancy levels.
Global secondary private market advisory, trading and research firm NYPPEX released a report finding that secondary buyers have been acquiring interests in commercial real estate partnerships at 20 to 40 percent below replacement cost and at 40 to 60 percent below net asset value relative to private equity partnerships, with median secondary bids continuing to decline. Primary concerns, the entity found, include refinancing risk for mortgage loans originated during the 2005 to 2008 period, as well as loan size risk and risks associated with property type.
Another California trend? CalPERS, the nation's largest pension fund, has filed suit against the three largest credit-ratingsagencies, essentially asserting that the agencies gave away highratings like gold stars to kindergartners back in the days when realestate only went up. Or to use the language of the lawsuit, "wildlyinaccurate and unreasonably high" ratings on various structuredinvestment vehicles caused the pension fund to lose a cool billiondollars.
Flying in the face of the still chilly credit market, SL Green Realty
Corp. has managed to get its hands on a $145 million leasehold mortgage
for the refinancing of the 1.2-million-square-foot office tower at 420
Lexington Ave. in Midtown Manhattan.
As one Las Vegas mega-project hits a snag, the site for a possible new
development is set to go up for auction. Just a day after the
announcement of a lawsuit brought by a co-developer of the massive
CityCenter project against its partner comes word that a 22-acre parcel
for a proposed Asia-themed casino resort will be sold at a bankruptcy
auction in May.
Prices for commercial real estate dropped at a record level in the second quarter despite an increase in sales, according to an index developed by the Massachusetts Institute of Technology Center for Real Estate. In a report released on Monday and first appearing on Reuters, the center quoted its index as finding that property sold by major institutional investors dropped 18.1 percent, to a level that is down 22 percent for the year, 32 percent from a year ago and 39 percent from its mid-2007 peak, despite transaction volume that increased for the first time since last summer. The decline is greater than the 27 percent drop in the late 1980s/early 1990s and even with it when adjusted for inflation, which brings both periods to a 41 percent drop.
Commercial real estate took a drubbing in the second quarter, according
to Massachusetts Institute of Technology Center for Real Estate, whose
index tracking commercial properties sold by institutional investors
dropped 18.1 percent during 2Q09. The index is down 32 percent from the
end of 2Q08, and 39 percent from its mid-2007 (that is, bubble) peak.
Federal Reserve Chairman Ben Bernanke, high oracle of the U.S. economy,
began two days of testimony before Congress on Tuesday, and said that
things will slowly get better, eventually. He also noted that he and
his banking brethren are watching developments in the commercial real
estate industry--that ticking time bomb--with all the attention that a
ticking time bomb deserves. Meanwhile, down in the trenches, there's a
gold rush of sorts going on to find profits in real estate debt.
Is the economy picking up or continuing to struggle? It seems to depend upon who you talk to and when you talk to them. While many reports gave a variety of accounts Tuesday, most supported bets that the pace of the recession is slowing.
With $132 billion having been set aside in the stimulus package for road, highway and various other transit related projects across the United States, the issue of the country's outdated infrastructure is at the forefront. The Urban Land Institute and Ernst & Young note in a new report that while the funding will certainly boost the job market, what is of even more vital importance is a long-term infrastructure plan for digging the nation out of an economic slump and shoring up the country to be competitive on an international level in the future.
Healthcare real estate firm Lillibridge has received a $30 million
equity commitment from Prudential Real Estate Investors to fund future
developments and acquisitions.
Cadillac Fairview Corp. purchased a 49 percent interest in Macerich's Queens Center in the New York City borough of Queens for $150 million in net cash. The eighth joint venture between the two firms, the venture gives Canadian Cadillac Fairview, wholly owned by the Ontario Teachers' Pension Plan, entree to New York City. Queens Center is the top-performing asset in Macerich's portfolio: The 966,499-square-foot urban retail center, which at year-end 2008 was 97.5 percent occupied, was at that time producing annual mall sales of $876 per square foot. Macerich purchased it in 1995 and redeveloped and expanded it in 2004.
There’s been plenty of evidence in both the political and business worlds over the past few days that the recent talk of an economic turnaround in the near future may have been a bit premature.
On the heels of news Monday that new home sales were up a little, home
prices inched up as well--at least, those measured by the Standard
& Poor's/Case-Shiller Home Price Index in its raw form. In May, the
index, which measures prices in 20 metropolitan areas, rose 0.5 percent
over April, following a 0.6 percent drop the month from March to April.
The movement is notable as the first time the index has moved up in
three years.
The Hong Kong government has increased its equity share in its joint venture with Walt Disney Co. as the Hong Kong Disneyland park plans an expansion within the next five years.
Citi Infrastructure Investors--a joint venture of Citigroup Inc., John Hancock Life Insurance Co. and Vancouver Airport Services-- will be unable to go through with a deal that would have seen the group buy Midway International Airport in Chicago for $2.5 billion. After previous extensions, the City of Chicago decided not to give the group any more time to close on the deal.
The level of commercial mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association analysis of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multi-family mortgage debt outstanding recorded by the Federal Reserve was a decrease of $33 million from the fourth quarter of 2008. Multi-family mortgage debt outstanding grew to $908 billion, an increase of $5 billion, or 0.6 percent from the fourth quarter.
Another day, another dollar the government plans to use to
run private industry as Citigroup Inc. began a
$58 billion stock swap that could leave the government with a 34 percent stake
in the nation's third-largest bank.
Bear Stearns Cos. was in the news again Thursday, in case anyone
remembers back far enough to recall the last time it was big news--a
time when the disappearance of that company into JPMorgan Chase seemed
unfortunate, but not necessarily a harbinger of vast financial problems
ahead. Which, in fact, it turned out to be.
If some esteemed economists testifying before the Joint Economic Committee of Congress Tuesday had their way, "too big to fail" would be a phrase of historical interest only--applying especially to that period of history just before 2008.
The U.S. commercial real estate market, plagued by high vacancies and declining property values, is not at its most appealing right now, but according to a new report by Deloitte, sovereign wealth funds are beginning to see a great opportunity for investment.
Hoping to capitalize on an unsettled real estate environment that could ultimately lead to the "best investment period in the last 20 years," private real estate investment firm Rockwood Capital L.L.C. has closed an investment fund with some $964 million in capital commitments.
Transwestern has been awarded management of One Central Park East, a 485,720-square- foot office project Mesirow Financial Real Estate is constructing at 50 East Van Buren in Downtown Phoenix. Under construction and scheduled to open in the third quarter of 2009, the 26-story Class A property will also include 9,000 square feet of retail space and an executive fitness center. A recipient of the AIA Western Mountain Region Design Citation Award, it includes an advanced insulated window wall glass system featuring exterior horizontal and vertical shade fins to combat the harsh Phoenix sun.
Opus Corp. is seeking to sell its property-management business, according to a report on bizjournals.com, the Web site of American City Business Journals. It quoted a company spokesperson as stating that selling off Opus Property Services would help the company renew its focus on its "core competency," along with its being a good time to sell because property management firms currently have an "appetite ... to grow their (business)." Opus' management portfolio totals about 30 million square feet of office, retail, industrial and corporate space.
CAS Financial Advisory Services, the asset management arm of CAS Partners, launched Green Capital Needs Assessment, designed to measure quantitatively the value of incorporating green improvements into multi-family properties. For discussion on another green tool, the Corporate Realty, Design & Management Institute's Model Green Lease, designed for use across commercial properties, log on to CPN Radio later today.
On the heels of announcing a major sustainability initiative, the
owners of Manhattan’s iconic Empire State Building have tapped Joseph
Bellina to serve as the tower’s new general manager.
Essex Realty Management has been awarded the leasing, property
management and construction management assignment for an
800,000-square-foot portfolio of multi-tenant business parks in Orange
County, Calif.
Bargain prices for namebrand merchandise. No, it isn’t a sale at Macy’s
or Nordstrom, it is the market for resort properties. The sale of the
exclusive ski lodge for the rich and famous in Big Sky, Mont. – the
Yellowstone Club – was finalized this week for $115 million. Reports
show that the resort could have sold for somewhere around $400 million
just a year ago.
Trump Entertainment Resorts said that it will sell the company to
Donald Trump and BNAC Inc., an affiliate of Beal Bank Nevada, along
with restructuring some $486 million in debt.
As the commercial real estate market continues its downward decline, a
new Fitch Ratings report indicates that large hotels lead loans of
concern for U.S. CMBS with eight newly defaulted loans greater than
$100 million entering special servicing, according to Fitch’s 'What's
in Special Servicing' U.S. CMBS report.
Times are still tough for the subset of the hospitality industry that
depends on gambling, but a few operators are betting on a return of the
gambling masses as the economy turns.
The Building Owners and Managers Association of Chicago has launched an effort to develop the country's first commercial office building smart grid program, delivering a utility-scale, clean, virtual generator through implementation of smart grid technology in more than 260 commercial buildings in downtown Chicago. With the potential to provide as much as 200 megawatts of demand response capability, the program would lower costs and avoid the need to construct expensive new generation plants. It requires upgrading the buildings' electric metering infrastructure, with significant building-level upgrades. To help address the estimated $185.4 million program cost, the city's BOMA chapter filed an application for $92.7 million in matching funds from the U.S. Department of Energy's Smart Grid Investment Grant Program, which was formed under the recently passed American Reinvestment and Recovery Act.
New England-based real estate firm Altid Enterprises L.L.C. has inked a
246,000-square-foot office lease renewal with apparel maker The
Timberland Co., in Stratham, N.H.
Flying in the face of the still chilly credit market, SL Green Realty
Corp. has managed to get its hands on a $145 million leasehold mortgage
for the refinancing of the 1.2-million-square-foot office tower at 420
Lexington Ave. in Midtown Manhattan.
The chilly credit market apparently warmed up for Vornado Realty Trust,
which just wrapped up the refinancing of its 442,000-square-foot office
property just outside of Washington, D.C., in Arlington, Va., courtesy
of an $82.5 million loan.
After three years of Silicon Valley-based GlobalFoundries and the State
of New York working together to lay the financial groundwork,
construction of GlobalFoundries' $4.2 billion semiconductor wafer
manufacturing facility at the new 1,400-acre Luther Forest Technology
Campus in Malta, N.Y., has just commenced. Officials expect the
GlobalFoundries development to create 1,400 new manufacturing jobs, and
they are keeping their fingers crossed that the 1.3-million-square-foot
Fab 2 will spur additional investment in the area.
With rumors circulating of a sale price around $100 per square foot,the sale of the 66-story American International Group headquarters in Lower Manhattan likely set the bar for the biggest sale in the areamarket thus far in 2009.
After a rough 2008, Manhattan's property investment market has continued to take it on the chin thus far in 2009. Real estate sales in Manhattan reached a 25-year low in 2009's first quarter, according to a new report by Massey Knakal Realty Services.
The frozen credit market and shattered economy have caused the interruption or outright cancellation of development project after development project across the country, but such is not the case for an unlikely 1.8 million-square-foot mixed-use endeavor in Plymouth, Mass., about 40 miles south of Boston. Having just secured the Plymouth Planning Board's approval of a master site plan, developers of Plymouth Rock Studios can now proceed with on- and off-site activities for the fully funded, $500 million film and television studio compound.
Taking real estate expertise and combining it with technology has given birth to REonomy.com, a real estate information Web site designed to serve a range of professionals, from investors to brokers, by providing integrated parcel data, MLS and comprehensive property research tools in one location.
The apartment market held up relatively well during the early stages of the economy's descent--but even it is now in decline. And while many investors are shying away, industry veterans Jim Butz and Greg Lamb are jumping in with both feet. The two former principals of leading multi-family developer JPI East have teamed with office and mixed-use developer Akridge to launch Jefferson Apartment Group with the intention of acquiring--and eventually--developing apartment properties in the Mid-Atlantic and Northeast regions.
Call it the "Great Green Way." Following on the heels of Manhattan's iconic Empire State Building going green, Broadway is getting its first green theater.
After a rough 2008, Manhattan's property investment market has
continued to take it on the chin thus far in 2009. Real estate sales in
Manhattan reached a 25-year low in 2009's first quarter, according to a
new report by Massey Knakal Realty Services.
Capmark has originated $52.5 million for a partnership equity
recapitalization and refinance of an existing loan for a
345,000-square-foot office tower in Conshohocken, Pa.
Tropicana Atlantic City Casino & Resort is set to come under new ownership, just over one year after owner Tropicana Entertainment L.L.C. filed for Chapter 11 protection. But it's not a big-name gaming company that will take over the property's reigns. The United States Bankruptcy Court in Camden, N.J., has green-lighted a "stalking horse" asset purchase agreement calling for pre-petition lenders--a group that includes billionaire investor Carl Icahn's Icahn Capital--to take hold of the asset in return for forgiving $200 million of debt owed by Tropicana.
Drug maker Alkermes Inc. last week became the latest in what has become a growing line of biotech firms leaving Cambridge, Mass., in search of less expensive office and laboratory space in the suburbs. The company plans to relocate to a 100,000-square-foot facility in Waltham early next year, a move that Alkermes says will eventually save some $750,000 a year.
It's an office trade of such a size that has not been seen in
Connecticut, no less challenged by job losses and economic malaise than
most other markets, in quite a while. Matrix Connecticut L.L.C. has
just taken over ownership of the 1 million-square-foot Danbury
Corporate Center in Danbury, Conn., from GERA Danbury L.L.C. in a $72.4
million merger transaction. The deal is a coup for Connecticut, as well
as its neighbors, as it marks the largest multi-tenant office
transaction in the suburban New York Tri-State area so far this year.
Multiple landlords attempted to lure NBA Properties to other locations
in Manhattan and across the Hudson River but Olympic Tower Associates’ signed NBA Properties Inc. to a 10-year, 153,000-square-foot renewal at 645 Fifth Avenue.
A former Verizon call center in Upper Darby, Pa., has been acquired by a buyer with plans to transform the 84,000-square-foot property into office space.
Newly-formed value-added real estate fund KABR Real Estate Investment Partners L.L.C. has purchased a 235,000-square-foot office building at 85 Challenger Road in Ridgefield Park, N.J., from AIG.
New England-based real estate firm Altid Enterprises L.L.C. has inked a
246,000-square-foot office lease renewal with apparel maker The
Timberland Co., in Stratham, N.H.
Asking rental rates for Manhattan’s trophy-quality buildings suffered in the first half of the year as the average asking rental rates dropped 18.7 percent, falling to $83.66 per square foot from $102.85 per square foot in fall 2008, according Jones Lang LaSalle’s 2009 Skyline Review.
In today's stalled condo market, many developers are looking for creative ways to attract buyers. To that end, Emanon Equities, a Long Island-based real estate development and construction firm, and Ramsgard Architectural Design have turned The Seitz Building, a collapsing historic building in Downtown Skaneateles, N.Y., into a luxury mixed-use condominium complex.
Hartz Mountain Industries has agreed to a lease deal with Breeze-Eastern Corp., a publicly-traded designer of lifting devices for military and civilian aircraft.
Newport Beach, Calif.-based Master Development Corp., the managing
member of Ontario Two L.L.C., has inked a tenant to a six-year lease
valued at $3.5 million in Phase II of its Thoroughbred Business Park, a
2 million-square-foot industrial park located in Ontario, Calif.
Architecture firm Stoutenborough Inc. has signed been selected by theKrausz Cos. of San Francisco to handle the design of a320,000-square-foot sustainable, mixed-use community on the island ofMaui, Hawaii.
Omega Commercial Finance Corp. has signed a definitive agreement to acquire a majority interest in EcoCalifornia L.L.C., a firm currently in the process of developing a golf resort and housing project in the Fresno, Calif., area.
Industrial property sales in San Joaquin County in California's Central Valley have been practically nonexistent this year, but USAA Real Estate Co. just broke the monotony with the acquisition of a 658,000-square-foot distribution facility in the city of Tracy, about an hour east of San Francisco.
Southern California-based private real estate investment firm Hager Pacific Properties has leased a 108,700-square-foot office/industrial property in Ontario, Calif., to Kim Lighting, a division of Hubbell Lighting Inc.
A 1.2-million-square-foot industrial park touted as the largest
speculative industrial project in the U.S. became one of the largest
overall projects in California to receive LEED certification. Developed
by Dallas-based Hillwood, the project was sold to CB Richard Ellis
Investors a year ago, but Hillwood staff recently completed the Silver
LEED certification process on behalf of the new buyer.
The current economic turmoil might well have the commercial propertyindustry feeling pain for some time to come. But according to anewly-hired executive with Buchanan Street Partners, the tumult willalso create an environment rife with opportunities.
Ory Schwartz, senior director of NorthMarq Capital’s Los Angeles
office, has arranged an $18 million first mortgage for Meadowridge
Apartments, a 176-unit multi-family complex located in Santa Clarita,
Calif.
A 158-unit multi-family property in Santa Clarita, Calif., has traded
for $23 million in what a firm involved in the deal says is the largest
multi-family transaction in the region in three years.
In what is being described by industry players as the second-largest industrial user-sale transaction in Southern California this year,Ashley Furniture Industries Inc. has acquired a two-building portfolio totaling 439,000 square feet in the Cooley Ranch Industrial Park in Colton, Calif., a submarket of the Inland Empire. Overton Moore Properties sold the vacant buildings about 18 months after purchasing them.
Net lease real estate firm W.P. Carey & Co. has been looking to amp
up its activity on the international scene of late, and the latest move
by the firm is a big step in that direction.
General Growth Properties Inc. named Glenn Rufrano to its board of directors. Rufrano is CEO of Centro Properties Group, a role he was appointed to in January 2008, leading it through a difficult restructuring effort. Australia-based Centro threatened to be an early victim of the credit crisis. Rufrano had been heading the shopping center company's U.S. operations, having served as longtime CEO of New Plan Excel Realty Trust Inc. before Centro purchased the public REIT in 2000. General Growth filed for Chapter 11 bankruptcy protection earlier this year.
Opus Corp. is seeking to sell its property-management business, according to a report on bizjournals.com, the Web site of American City Business Journals. It quoted a company spokesperson as stating that selling off Opus Property Services would help the company renew its focus on its "core competency," along with its being a good time to sell because property management firms currently have an "appetite ... to grow their (business)." Opus' management portfolio totals about 30 million square feet of office, retail, industrial and corporate space.
Another California trend? CalPERS, the nation's largest pension fund, has filed suit against the three largest credit-ratingsagencies, essentially asserting that the agencies gave away highratings like gold stars to kindergartners back in the days when realestate only went up. Or to use the language of the lawsuit, "wildlyinaccurate and unreasonably high" ratings on various structuredinvestment vehicles caused the pension fund to lose a cool billiondollars.
The struggling economy is making its mark on Minnetonka, Minn.,-based
Opus Group which now has a number of its subsidiaries filing for
bankruptcy. So far, Opus West Corp. and Opus South Corp. have filed
Chapter 11 bankruptcy. Opus East, meanwhile, has filed Chapter 7.
Austin’s Hill Country Galleria, developed by Opus West, filed for
Chapter 11, too.
Leaner inventories and a shift in state sales-tax holidays hampered
U.S. chain store sales in July, which were off 5 percent on a
same-store basis, compared with the same period last year, according to
the International Council of Shopping Centers.
Still feeling the impact of rising unemployment and thrifty consumers,
restaurant traffic in the spring quarter ended May 2009, posted the
sharpest decline in the industry since 1981, according to market
research company The NPD Group.
Closely watched retail figures from the National Retail Federation show
that June retail sales took a small dip of 0.2 percent when compared to
May, and were down 3.8 percent when compared to June 2008. These
figures differed somewhat from those of the U.S. Department of
Commerce, which released its own retail sales figures last week that
showed a slight improvement in sales in June when compared with
May--growth of 0.6 percent. The difference is that Commerce includes
cars, gasoline and restaurant sales, . In fact, the only category to
have grown since this time last year was health and personal care
stores, up 3.7 percent since 2008. Could it be due to the "lipstick
effect"?
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
Yet another deep-pocketed real estate entity has jumped into the grave-dancing game—only please, don’t call it that, but rather strategic investment in distressed properties. The player is a newly formed investment company called Starwood Property Trust Inc., a creation of Starwood mogul Barry Sternlicht, which filed with the Securities and Exchange Commission late last week for a public offering that aims to raise half a billion dollars to do the distressed-property boogie. It will invest in not only physical properties, but mortgages and mortgage-backed securities.
U.S. Commercial mortgage-backed securities delinquencies grew in June
by a record $2.2 billion, according to Fitch Ratings. Last month there
was a 2.6 percent delinquency rate among U.S. CMBS, up 48 basis points
from the previous month. In June, at least, problems in retail
properties and the hospitality industry inspired much of the upward
bounce in delinquencies. But there's more to come, especially in the
beleaguered hotel sector.
In a major expansion of the Term Asset Backed Securities Loan Facility (TALF), the Federal Reserve said on Tuesday that investors will be able to buy existing securities backed by commercial real estate loans--so-called "legacy" CMBS. The commercial real estate industry has been pushing for this for some time, and it will at last be possible starting in July.
British retailer Tesco Plc. inked a sale-leaseback of 14 properties. The sale-leaseback followed on the heels of the company's successful
completion of the sale of commercial mortgage-backed securities. The offering by Tesco may mark the glimmering beginnings of a new, simpler CMBS market.
RaceTrac Petroleum Inc., which owns and operates 530 convenience stores
and gas stations in 12 states, has tapped CB Richard Ellis Inc.'s
global corporate services unit to exclusively manage a sale/leaseback
program..
Development in the retail sector, which began its nosedive with the
collapse of the housing and credit markets, is hardly booming. However,
the situation is quite different at Fort Bliss in El Paso County,
Texas, where the Base Realignment and Closure Act of 2005 will bring an
estimated 127,000 new military personnel and family members to the area
by 2012.
It was a good way to start the week, economically speaking. According
to the Conference Board, the U.S. index of leading economic indicators
rose 0.7 percent in June, marking the third rise in the index in as
many months. In the first half of 2009, the index improved at an
annualized rate of some 4.1 percent , a clear contrast to the way it
shrank in the last half of 2008 at an annualized rate of 6.2 percent.
The dismal economy continued its stranglehold on the commercial real
estate industry, as per CBRE Econometric Advisors' recently released
analysis, pushing up vacancies in the office, industrial and retail
property markets. But there was one surprise. Demand in the
multi-family sector, despite the ongoing job losses that are hindering
the formation of new households, was essentially unchanged from the
first quarter of the year.
The residential market made a surprising turn on Friday, with the U.S.
Department of Commerce reporting that housing starts were up 3.6
percent in June when compared with May: an annualized total of 582,000
units versus 562,000 units. Economists weren’t expecting that many.
Cadillac Fairview Corp. purchased a 49 percent interest in Macerich's Queens Center in the New York City borough of Queens for $150 million in net cash. The eighth joint venture between the two firms, the venture gives Canadian Cadillac Fairview, wholly owned by the Ontario Teachers' Pension Plan, entree to New York City. Queens Center is the top-performing asset in Macerich's portfolio: The 966,499-square-foot urban retail center, which at year-end 2008 was 97.5 percent occupied, was at that time producing annual mall sales of $876 per square foot. Macerich purchased it in 1995 and redeveloped and expanded it in 2004.
As if the retail industry didn't have enough trouble, the prospect of a
CIT Group bankruptcy is blowing through the industry like an unexpected
squall. On Thursday, those new worries were reflected in the S&P
Retail Index, which fell 0.8 percent. If CIT does go under, many
smaller and mid-sized apparel retailers might also have trouble staying
afloat later this year, especially during the critical holiday season.
Macquarie CountryWide Trust agreed to sell the majority of its interest in Macquarie CountryWide-Regency II L.L.C., a four-year-old partnership with Regency Centers Corp. that owns 86 retail shopping centers valued at $1.7 billion, to Global Retail Investors L.L.C. , a joint venture between the California Public Employees' Retirement System and an affiliate of First Washington Realty Inc. The phased sale will result in Global Retail Investors owning 60 percent of the partnership, with Regency having the option to increase its ownership from 25 percent to 40 percent. Otherwise, the remaining interest would be sold to Global Retail Investors or elsewhere, depending on two possible options.
Third-party leasing and management firm Crossman & Co. has been
named the exclusive leasing representatives for all Publix-owned retail
properties in Florida, Georgia, Alabama, Tennessee and South Carolina.
Vertical retailing--building retail destinations higher instead of
wider--has long been a success in cities like Hong Kong and Shanghai,
but the trend has yet to catch on in the United States. However, given
the country's growing population and dwindling pool of developable land
in major cities, the time may be just right for the nation's
metropolises to jump on the bandwagon, or so believes Charles Chan,
president of commercial real estate brokerage firm Harvest
International.
Marcus & Millichap Real Estate Investment Services has arranged the
sale of an 8,540-square-foot single-tenant net-leased property, located
in Westville, Ill.
Clothing retailer Eddie Bauer Holdings Inc. has filed for Chapter 11 bankruptcy, becoming the latest firm to be stung by the retail industry’s sharp downturn.
This might count as good news: U.S. consumer spending and personal income both rose in May. Spending jumped by a small but noticeable 0.3 percent when compared with April, and personal income spiked upward by 1.4 percent, the strongest jump in more than a year, according to the U.S. Department of Commerce. The question now for retailers and their landlords is how much of that is going to go toward buying things.
Clothing retailer Men's Wearhouse has emerged victorious from a
feverish nine-hour auction of assets belonging to off-price chain
Filene's Basement, which fell victim to the retail market's downward
spiral and filed for Chapter 11 bankruptcy protection in early May,
just two weeks after its purchase by Buxbaum Group affiliate FB
Acquisition II. Acting through its affiliate, K&G Acquisition
Corp., Men's Wearhouse put forth the winning bid of $67 million for 17
to 20 of Filene's store leases, as well as the leases on the company's
Massachusetts corporate headquarters and distribution center, its
Maryland storage facility and-- possibly most important--the Filene's
Basement trade name.
A joint venture between Spectrum Partners L.L.C., Alex. Brown Realty
Inc. and Potomac Capital Advisors, has acquired Westgate Plaza Shopping
Center in Manassas, Va., for $25 million from Principal Real Estate
Investors.
The New Jersey office of Holliday Fenoglio Fowler L.P. has secured $17
million in financing for Columbus Crossing, a 142,000-square-foot,
grocery-anchored shopping center in Philadelphia.
Homebuyers seem to be returning to the existing-home market this summer, according to the latest report by the National Association of Realtors on existing U.S. housing sales. The sales of single-family homes, condos and coops rose 2.4 percent in May compared with April, coming on top of a gain for that month compared with March, thus marking the first back-to-back monthly increase in existing home sales since 2005.
Even in a recession, there will be winners. Even in the retail world,
which has taken such a beating lately, there will also be winners--such
as Family Dollar Stores Inc., which reported its fiscal third-quarter
numbers on Wednesday. Its earnings spiked upward by 36 percent, which
the discount retailer attributed to strong sales of necessities.
Comparable-store sales, an important metric in the retail game, were up
6.2 percent.
As expected, June was a lousy month for retail sales--except at a few
retailers, probably including Wal-Mart Stores Inc., though the giant
retailer doesn't report monthly comparable-store sales. Target Corp.,
on the other hand, reported a 6.2 percent comp-store drop from June
2008, while Costco Wholesale Corp. dropped 6 percent. Major department
store chains took a comp-store drubbing as well: Nordstrom Inc., down
10 percent; Macy's, down 8.9 percent; J.C. Penney down 8.2 percent;
Dillard's Inc. down 14 percent.
The U.S. Department of Commerce reported that retail sales dropped by 0.4 percent in April, compared with the previous month. The decline was a little more than expected, but less than the revised March drop of 1.3 percent. The recent two months of decline followed unexpected increases in consumer spending in January and February.
It's a peculiar time in history when a retailer can influence the debate about national healthcare policy. Yet Wal-Mart is doing just that by coming out earlier this week in favor of the government forcing employers to provide health insurance to workers. It was seen as something of a surprise. The Wall Street Journal characterized the National Retail Federation as "flabbergasted" by Wal-Mart's decision. (Were NRF officials sitting around in conference rooms, being flabbergasted together?)
May comparable-store sales numbers are filtering down from various retailers, and the results aren't inspiring confidence in the prospects for recovered consumer spending. Actually, most analysts expected average retail same-store sales to decline in May 2009 when compared with May 2008, but the trouble was they declined more than expected.
In May, both Chrysler and General Motors cut loose thousands of dealerships --
some 789 by Chrysler as part of its bankruptcy proceedings, and then about
another 1,100 by GM even before its bankruptcy. The moves were part of the
aggressive scaling back by both companies to meet the stipulations of the
federal government's Auto Task Force.
Like a trailer for a monster movie, a new report by Deutsche Bank is promising scary things in the not-too-distant future. Assuming that housing prices continue a decline, the percentage of underwater mortgages might rise to 48 percent of the total, or roughly 25 million loans, by the first quarter of 2011. The bank is predicting that U.S. home prices will decline a further 14 percent from current prices by the first quarter of 2011.
If some esteemed economists testifying before the Joint Economic Committee of Congress Tuesday had their way, "too big to fail" would be a phrase of historical interest only--applying especially to that period of history just before 2008.
Beset by a still-icy lending climate, as well as continued weak
fundamentals as a result of the global economic slump, cash-strapped retailers are
increasingly finding themselves caught between a rock and a hard place
when it comes to monetizing their real estate holdings via sale
leaseback deals.
With Texas' business climate not quite as dire as in other parts of the
country, Fort Worth’s AllianceTexas development hit almost record
levels of leasing in the first three months of 2009 with more than 1.2
million square feet.
As green development continues to thrive across the country, Houston’s
First City Tower has earned LEED Gold certification for an existing
building from the U.S. Green Building Council, marking a milestone for
sustainable development in the market.
Fontainebleau Las Vegas L.L.C. and two of its affiliates are the latest to find themselves flat out of cash in Sin City after the owners of the 3,900-room resort, which is 70 percent complete and was setto open in October, filed for Chapter 11 bankruptcy protection.
On behalf of the owner, SCF Arizona, McShane Development Co. completed
the six-story, 186,000-square-foot Class A office complex, located at
44th and Washington Streets in Phoenix, Ariz.
On the heels of news Monday that new home sales were up a little, home
prices inched up as well--at least, those measured by the Standard
& Poor's/Case-Shiller Home Price Index in its raw form. In May, the
index, which measures prices in 20 metropolitan areas, rose 0.5 percent
over April, following a 0.6 percent drop the month from March to April.
The movement is notable as the first time the index has moved up in
three years.
New Miami Dolphins owner Stephen Ross, chairman & CEO of The Related Cos., has asked Related Group chairman Jorge Perez to become vice chairman of the team, according to the Miami Herald.
Rumors of the Downtown Miami condominium market's death have beengreatly exaggerated. The Miami Downtown Development Authority recentlycommissioned the Residential Closings & Occupancy Study, whichindicates that industry talk about the area's stock of new condos beingcovered in cobwebs--or predominantly empty--may not be totallyaccurate.
Miami commercial property veteran Tere Blanca’s new services firm looks to be coming out of the gate quickly, despite the industry’s current slump. Just weeks after she launched Blanca Commercial Real Estate, the company landed the exclusive leasing duties for 1450 Brickell, a Class A office tower currently under construction in Miami’s Brickell financial district.
"Anyone who follows the multi-family market knows that Dallas/Ft. Worth has been the golden child of the multi-family industry for a while," asserts Matt Summers, president of management at Kaplan Management Company Inc.
National numbers show the industrial market tanking, but the Alliance Global Logistics Hub in Fort Worth, Texas, has already leased 1.9 million square feet this year compared to a total of 1.1 million square feet at Alliance in all of 2008. While the industrial market nationwide took a turn for the worse in the first quarter of 2009, with vacancy rising rapidly and absorption and construction activity plummeting, tenants are taking advantage of the situation—as evidenced by the half-million-plus-square-foot lease renewals ATC Logistics & Electronics just inked at Fort Worth’s Alliance.
For the most part, banks still aren't lending and business and leisure travelers--inhibited by economic decline and job losses--have not exactly been escalating their travel plans, but such conditions are not stopping the City of Dallas from moving forward with its plan to develop a large luxury hotel. In a unanimous vote, the Dallas City Council has green-lighted an ordinance that paves the way for the sale of $514 million in municipal revenue bonds for the development of the $346 million Omni Dallas Convention Center Hotel, which is now scheduled to deliver in 2012.
With Texas' business climate not quite as dire as in other parts of the
country, Fort Worth’s AllianceTexas development hit almost record
levels of leasing in the first three months of 2009 with more than 1.2
million square feet.
In news that caught most everyone's attention on Friday, the U.S.
Department of Labor said that the nation's unemployment rate actually
went down 10 basis points in July, to 9.4 percent. It's being called a
sign of stabilization because monthly changes in the unemployment rate
that small tend to be revised out of existence eventually, but at this
point, "stabilization" looks pretty good.
Leaner inventories and a shift in state sales-tax holidays hampered
U.S. chain store sales in July, which were off 5 percent on a
same-store basis, compared with the same period last year, according to
the International Council of Shopping Centers.
Commercial and multi-family mortgage originations haven’t escaped the trickle down of the recession and the credit crunch, with volumes 54 percent below last year's second quarter and 83 percent below the peak seen in the second quarter of 2007, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
Like a trailer for a monster movie, a new report by Deutsche Bank is promising scary things in the not-too-distant future. Assuming that housing prices continue a decline, the percentage of underwater mortgages might rise to 48 percent of the total, or roughly 25 million loans, by the first quarter of 2011. The bank is predicting that U.S. home prices will decline a further 14 percent from current prices by the first quarter of 2011.
The Building Owners and Managers Association of Chicago has launched an effort to develop the country's first commercial office building smart grid program, delivering a utility-scale, clean, virtual generator through implementation of smart grid technology in more than 260 commercial buildings in downtown Chicago. With the potential to provide as much as 200 megawatts of demand response capability, the program would lower costs and avoid the need to construct expensive new generation plants. It requires upgrading the buildings' electric metering infrastructure, with significant building-level upgrades. To help address the estimated $185.4 million program cost, the city's BOMA chapter filed an application for $92.7 million in matching funds from the U.S. Department of Energy's Smart Grid Investment Grant Program, which was formed under the recently passed American Reinvestment and Recovery Act.
The severely wounded economy and ongoing job losses continue to inhibit
travel among the leisure and business sets, but the lackluster
conditions are not stopping Hyatt Hotels & Resorts from planning a
new 214-room Hyatt Place within the 190-acre mixed-use Lake Pointe
Towne Center in Sugar Land, Texas, about 20 miles southwest of Houston.
As green development continues to thrive across the country, Houston’s
First City Tower has earned LEED Gold certification for an existing
building from the U.S. Green Building Council, marking a milestone for
sustainable development in the market.
While Texas struggled later and possibly not as much as the rest of the country when the bottom fell out late last year, Houston’s office market continued to thrive until just recently with rising vacancies and more projects under construction. Recent delivery of projects like Citycentre’s mammoth 425,000 square feet of mixed use space right now might not be ideal timing, but developer Midway Cos. hopes to weather the difficult market.
ProLogis announced today full occupancy at ProLogis NorthPark, a recently developed, four-building, 531,000- square-foot distribution park located in Houston.
Asking rental rates for Manhattan’s trophy-quality buildings suffered in the first half of the year as the average asking rental rates dropped 18.7 percent, falling to $83.66 per square foot from $102.85 per square foot in fall 2008, according Jones Lang LaSalle’s 2009 Skyline Review.
New England-based real estate firm Altid Enterprises L.L.C. has inked a
246,000-square-foot office lease renewal with apparel maker The
Timberland Co., in Stratham, N.H.
Cassidy & Pinkard Colliers has been selected by The Bernstein Cos.
to provide exclusive marketing and leasing services for 12220 Sunrise
Valley Drive, a 72,100-square-foot office building in Reston Sunrise
Park in Reston, Va.
Newport Beach, Calif.-based Master Development Corp., the managing
member of Ontario Two L.L.C., has inked a tenant to a six-year lease
valued at $3.5 million in Phase II of its Thoroughbred Business Park, a
2 million-square-foot industrial park located in Ontario, Calif.
U.S. office vacancy rates have reached their highest point in four
years, and rents are falling as a result, according to a report from
Cushman & Wakefield Inc. Vacancies reached 13.7 percent at midyear,
matching second-quarter 2005 figures, though they still trailed the
decade high of 15.5 percent, reached in the second and third quarters
of 2003.
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
ProLogis has leased 215,000 square feet of recently completed
distribution space near Chicago to Sanyo Logistics Corp., a logistics
services provider and business unit of Sanyo Electric Co. Ltd.
CB Richard Ellis Realty Trust has purchased a Class A industrialwarehouse facility that is fully leased to Walgreens in the Northwestsubmarket of Minneapolis.
Monday was an historic day in Detroit, and arguably for the entire U.S.
manufacturing sector, even though GM's formal announcement of
bankruptcy, along with President Obama's promise for more than $30
billion for a company in which the U.S. Government will soon own a
controlling interest, weren’t surprises . A little more surprising
(only a little) was the quick approval by Chrysler's bankruptcy judge
of the sale of most of its assets to a group led by Fiat SpA, meaning
that the Detroit automaker will continue to exist in one form or
another, albeit with Italian bosses. But the fact that both events
happened the same day is an unusual coincidence indeed.
Commercial and multi-family mortgage originations haven’t escaped the trickle down of the recession and the credit crunch, with volumes 54 percent below last year's second quarter and 83 percent below the peak seen in the second quarter of 2007, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
Confidence has waned about a near-term recovery in the commercial real
estate industry, according to a new poll by commercial property listing
service LoopNet Inc.
When the credit markets froze, so did the development of much-needed
affordable housing across the nation, but the U.S. Housing & Urban
Development is making strides in tackling the issue. The agency, acting
through its new $2.25 billion Tax Credit Assistance Program, which is
funded via the American Recovery and Reinvestment Act of 2009, has just
approved the second dispensation of approximately $1.2 billion to state
housing finance agencies in 26 states to finance the resurrection of
various affordable rental housing programs.
The current economic climate is certainly putting a drag on many in the
commercial property business. But Kevin Salmon is betting that now is a
time of opportunity. To that end, Salmon has launched Salmon and
Marshall Real Estate Investments, a new firm that will provide
investment sales and consultation services in Manhattan’s apartment and
condominium markets.
Post Properties Inc. sold Post Ridge in Atlanta to a locally based entity affiliated with Centennial Holding Company L.L.C. for $44.8 million following Monday's sale of Post Forest in Fairfax, Va., to an entity affiliated with Pantzer Properties Inc. for $57.5 million. CB Richard Ellis Inc. brokered the most recent transaction, while the Post Forest deal was brokered by Holliday Fenoglio Fowler L.P. The REIT expects to report net gains of approximately $54 million relating to the sales.
Though the intensity of the economic crisis may be in the process ofdiminishing, it continues to have a vice-like grip on countries aroundthe world. Yet for the commercial real estate industry, investment insustainability remains a priority--although not necessarily for themost altruistic reasons. According to the second quarterly RICS-CPEGlobal Commercial Property Sustainability Survey, despite financialchallenges, real estate industry players remain willing to pay money togo green today, particularly with regard to energy consumption, inorder to benefit from cost savings tomorrow..
Ground has broken on a 280,000-square-foot refrigerated warehouse at
Lingang Logistics Park in Shanghai, China, for Newark, N.J.-based
Preferred Freezer Storage. For China, the property will become the
country's largest and most sophisticated single-story cold storage
facility. For PFS, the build-to-suit structure marks the company's
entrée into China, as well as the beginning of its pursuit to
accommodate the burgeoning demand for cold storage facilities across
the country.
Times are still tough for the subset of the hospitality industry that
depends on gambling, but a few operators are betting on a return of the
gambling masses as the economy turns.
Transwestern has been awarded management of One Central Park East, a 485,720-square- foot office project Mesirow Financial Real Estate is constructing at 50 East Van Buren in Downtown Phoenix. Under construction and scheduled to open in the third quarter of 2009, the 26-story Class A property will also include 9,000 square feet of retail space and an executive fitness center. A recipient of the AIA Western Mountain Region Design Citation Award, it includes an advanced insulated window wall glass system featuring exterior horizontal and vertical shade fins to combat the harsh Phoenix sun.
Industrial property sales in San Joaquin County in California's Central Valley have been practically nonexistent this year, but USAA Real Estate Co. just broke the monotony with the acquisition of a 658,000-square-foot distribution facility in the city of Tracy, about an hour east of San Francisco.
Signs of growth in distressed properties are mixing with evidence that the U.S. and global real estate markets are starting to stabilize, according to a recent analysis by Jones Lang LaSalle Inc.
The slightly less hostile financial market during the second quarter
cracked open the window for many equity REITs to begin making a bit of
progress in easing monetary woes, but according to Fitch Ratings' new
REIT Report Quarterly, a few significant obstacles continue to encumber
the sector.
The chilly credit market apparently warmed up for Vornado Realty Trust,
which just wrapped up the refinancing of its 442,000-square-foot office
property just outside of Washington, D.C., in Arlington, Va., courtesy
of an $82.5 million loan.
For the most part, the investment community has been holding back on
commercial real estate acquisitions, waiting and waiting for the market
to hit bottom. But according to a new report by CB Richard Ellis
Investors, while the bottom may not be at hand just yet, it's close
enough.
In the apartment market, job losses are starting to exact a high cost in terms of declining rents and rising occupancy levels, and for holders of multi-family debt and equity, there's more bad news on the horizon as loan maturities on overvalued assets begin to take hold over the next few years. In an effort to assist those facing the impending challenges, two industry veterans have just launched apartment consulting firm Caldera Asset Management, based out of Denver and Atlanta.
Like so many real estate companies, ProLogis isn't developing spec
projects these days, but build-to-suits are a different story. The
Denver-based global industrial REIT just agreed to develop a
554,000-square-foot distribution center in The Netherlands for
Hi-Logistics, and if ProLogis has anything to do with it, more
build-to-suit transactions will materialize.
The difficult year 2009 is half over, and recent deals by one of the
world's largest landlords show two things about the current climate.
First, deleveraging is in. Second, there are buyers out there to help
sellers who want to raise some cash to do that deleveraging.
SL Green Realty Corp. has jumped on the bandwagon of REITs that, facing credit markets that are frozen like a block of ice, have opted to raise funds through public offerings. The company, which is still New York City's largest office landlord, just walked away with net proceeds of approximately $387.4 million after selling 19.55 million shares of common stock.
The bad news is, the United States is in a Great Recession and the commercial real estate market is likely to feel continued pain during the next two years as corporate cutbacks result in weaker fundamentals. The good news is, the public equity markets have been improving in the past few months, with returns bouncing back substantially and multiples back down to more reasonable levels as the market has responded to REIT success at raising capital through secondary offerings.
The special-purpose entity structure that has helped to power real
estate finance in recent years remains intact after recent court
decisions tied to the General Growth Properties Inc. Chapter 11
bankruptcy filing. However, the rulings may turn out to be less than a
total victory for bondholders in the long run.
During the fourth quarter of 2008 and first quarter of 2009, the fundamentals of the apartment industry steadily eroded, and the forecast for rental demand remains uncertain. Still, the overall outlook for the multi-family REIT sector is stable, according to a report by Moody's.
Despite the fact that widespread job losses have begun to take a toll
on the multi-family market, owners of this asset type are still able to
secure financing in what remains a frigid lending environment. Just
three months after having wrapped up a $350 million secured credit
facility, Colonial Properties Trust has landed another major financing
deal with the closing of a new $156.4 million secured credit facility.
Despite overall sales figures down double digits from last year, transactions are still move forward, albeit in smaller amounts. Another good sign of real estate activity is the re-equitization of the REIT industry that continued in May as more companies deleveraged their balance sheets with equity capital raised in the public markets.
Despite the ongoing weakening of industrial market fundamentals, banks are warming up to certain players like First Industrial Realty Trust Inc., which has just managed to get its hands on $154 million in the form of three loans secured by assets encompassing a total of 6.3 million square feet.
Cobalt Capital Partners L.P., through its Cobalt Industrial REIT II
affiliate, has acquired a 1.7 million-square-foot, nine-building
industrial portfolio in Atlanta.
Turns out that the recession is still on, at least if the latest
numbers from payroll firm ADP accurately reflect the state of hiring
and firing in the nation. According to ADP on Wednesday, U.S. companies
cut an estimated 532,000 employees from their payrolls last month, with
goods producers laying off 267,000 workers, and service providers
shedding 265,000 positions.
Flying in the face of the frosty credit market, BioMed Realty Trust
Inc. has just gotten its hands on a $350 million loan secured by its
successful new 700,000-square-foot Center for Life Science | Boston.
John Hancock Life Insurance Co., TIAA-CREF, and Westdeutsche
ImmobilienBank AG stepped up to the plate to provide the financing.
Is Disney a major lagging indicator for the U.S. economy? Maybe. In any
case, Walt Disney Co. CEO Robert Iger sounded like a central banker on
Thursday during the company's second-quarter conference call: "We do
see signs of economic stabilization, but the pace and strength of
recovery remain uncertain, and we are managing accordingly," he said.
Like all commercial property players, industrial REIT ProLogis has had
to deal with the challenges of the sagging economy and sluggish leasing
market. Despite the tumultuous environment though, the firm is still
getting deals done—including some very sizable transactions, like a
250,000-square-foot lease the firm recently inked with Roosevelt Paper
Co. near Chicago. That deal was the largest splash made by ProLogis in the region during
the second quarter, during which it racked up a total of nearly 600,000
square feet in leases.
Grubb & Ellis Healthcare REIT Inc., currently among the minority of
real estate investment concerns that have the cash on hand to make big
purchases, has signed an agreement to acquire a 16-building healthcare
property portfolio in metropolitan Greenville, S.C., from Greenville
Hospital System. The $161.6 million deal will allow the hospital to
lease back the portions of the 855,000-square-foot portfolio of medical
office and healthcare related facilities it currently occupies.
Architecture firm Stoutenborough Inc. has signed been selected by theKrausz Cos. of San Francisco to handle the design of a320,000-square-foot sustainable, mixed-use community on the island ofMaui, Hawaii.
Those economic green shoots, so eagerly awaited this spring, got a
blast of frost here in mid-summer when jobs numbers came in weaker than
expected for June late last week. Yet on Monday, the Institute for
Supply Management’s index of non-manufacturing businesses, which gauges
the pulse of about 90 percent of the economy, improved for the third
straight month.
While Texas struggled later and possibly not as much as the rest of the country when the bottom fell out late last year, Houston’s office market continued to thrive until just recently with rising vacancies and more projects under construction. Recent delivery of projects like Citycentre’s mammoth 425,000 square feet of mixed use space right now might not be ideal timing, but developer Midway Cos. hopes to weather the difficult market.
Omega Commercial Finance Corp. has signed a definitive agreement to acquire a majority interest in EcoCalifornia L.L.C., a firm currently in the process of developing a golf resort and housing project in the Fresno, Calif., area.
Cassidy & Pinkard Colliers has been selected by The Bernstein Cos.
to provide exclusive marketing and leasing services for 12220 Sunrise
Valley Drive, a 72,100-square-foot office building in Reston Sunrise
Park in Reston, Va.
The chilly credit market apparently warmed up for Vornado Realty Trust,
which just wrapped up the refinancing of its 442,000-square-foot office
property just outside of Washington, D.C., in Arlington, Va., courtesy
of an $82.5 million loan.
The JBG Cos. and Buvermo Properties Inc. have secured $32 million in financing for One Choke Cherry, a Class A office building fully-leased to the Government Services Administration in North Rockville, Md.
Mounting concerns surrounding the health of the economy, meshed with
sluggish employment growth, continue to drag down markets across the
country. Orlando’s office market--although somewhat buoyed by
employment growth experienced in the hospitality and tourism
sectors--is no exception.
The Washington, D.C., metropolitan area experienced negative overall
net absorption for the third consecutive quarter, according to a report
by Cassidy & Pinkard Colliers, but there are some signs that the
market may be at or near a bottom.
Washington, D.C., is feeling the effects of the economic slump, but the area office market remains attractive enough to help reel in lenders willing to part with the big bucks. Perseus Realty L.L.C., with the assistance of affiliate Perseus Realty Capital L.L.C., has obtained $103.5 million in financing for its 309,500-square-foot Class A office property at 1110 Vermont Ave. N.W. in D.C.'s Central Business District.
Throughout the credit crisis and their own internal financial trials,government-sponsored enterprises Fannie Mae and Freddie Mac have continued to steadily dole out loans in the multi-family market, and The Cafritz Cos. is among the latest firms to take advantage of the entities' willingness to lend. Cafritz has just secured $79.2million in permanent financing for a five-property portfolio in Metropolitan Washington, D.C., relying on Fannie Mae's multi-family lending programthrough M&T Realty Capital Corp.
Like all commercial property players, industrial REIT ProLogis has had
to deal with the challenges of the sagging economy and sluggish leasing
market. Despite the tumultuous environment though, the firm is still
getting deals done—including some very sizable transactions, like a
250,000-square-foot lease the firm recently inked with Roosevelt Paper
Co. near Chicago. That deal was the largest splash made by ProLogis in the region during
the second quarter, during which it racked up a total of nearly 600,000
square feet in leases.
ProLogis has leased 215,000 square feet of recently completed
distribution space near Chicago to Sanyo Logistics Corp., a logistics
services provider and business unit of Sanyo Electric Co. Ltd.
A 206-unit luxury apartment complex in the Chicago suburb of Lake
Zurich, Ill., has been sold by Landings Acquisition Co. in an
off-market deal brokered by Apartment Realty Advisors.
The Building Owners and Managers Association of Chicago has launched an effort to develop the country's first commercial office building smart grid program, delivering a utility-scale, clean, virtual generator through implementation of smart grid technology in more than 260 commercial buildings in downtown Chicago. With the potential to provide as much as 200 megawatts of demand response capability, the program would lower costs and avoid the need to construct expensive new generation plants. It requires upgrading the buildings' electric metering infrastructure, with significant building-level upgrades. To help address the estimated $185.4 million program cost, the city's BOMA chapter filed an application for $92.7 million in matching funds from the U.S. Department of Energy's Smart Grid Investment Grant Program, which was formed under the recently passed American Reinvestment and Recovery Act.
Sears Tower, the tallest building in the Western Hemisphere, became Willis Tower yesterday in a ceremony featuring Joseph Plumeri, chairman & CEO of insurance broker Willis Group Holdings, and Chicago mayor Richard Daley. Willis will occupy more than 140,000 square feet in the 36-year-old building this summer in a consolidation of 500 associates from five area offices. The site will join New York City and London as one of the company's largest offices.
In news that caught most everyone's attention on Friday, the U.S.
Department of Labor said that the nation's unemployment rate actually
went down 10 basis points in July, to 9.4 percent. It's being called a
sign of stabilization because monthly changes in the unemployment rate
that small tend to be revised out of existence eventually, but at this
point, "stabilization" looks pretty good.
The latest quarterly survey by the Real Estate Roundtable, released
Wednesday, found the commercial real estate sector in a funk, squeezed
by poor financing prospects, decreasing valuations and lower demand for
commercial real estate of all varieties.
Commercial real estate took a drubbing in the second quarter, according
to Massachusetts Institute of Technology Center for Real Estate, whose
index tracking commercial properties sold by institutional investors
dropped 18.1 percent during 2Q09. The index is down 32 percent from the
end of 2Q08, and 39 percent from its mid-2007 (that is, bubble) peak.
Times are still tough for the subset of the hospitality industry that
depends on gambling, but a few operators are betting on a return of the
gambling masses as the economy turns.
"Green shoots" is so second quarter. Will "V-shaped recovery" be the
latest economic trope? Is there something to it? As usual, economists
disagree with each other on the prospects.
Is Disney a major lagging indicator for the U.S. economy? Maybe. In any
case, Walt Disney Co. CEO Robert Iger sounded like a central banker on
Thursday during the company's second-quarter conference call: "We do
see signs of economic stabilization, but the pace and strength of
recovery remain uncertain, and we are managing accordingly," he said.
The latest Beige Book from the Federal Reserve is out, and the
message is that the economy is still fairly bad, but not quite as bad
as it was, or could be. Employers are still laying workers off, but not
as quickly as before. Lenders are still reluctant to lend and borrowers
are still reluctant to borrow. but there's a modicum of activity.
Regarding real estate, some member banks--Atlanta, Cleveland, San
Francisco--reported rising real estate loan delinquencies.
New single-family home sales recorded an uptick in June, increasing 11
percent compared with May, to an annualized rate of 384,000. It looks
like a little pent-up demand for new homes is being unleashed,
especially since prices are still falling. The Commerce Department also
reported that the median price for a new house stood at $206,200 in
June, down 12 percent from last June.
Economist Nouriel Roubini, also known as Dr. Gloom (or is it Dr. Doom?)
for his voice-in-the-wilderness prediction of the soon-to-pop bubble
back during the bubble's expansion phase, opined in the New York Times
on Sunday that Federal Reserve chairman Ben Bernanke deserves another
term after his current one expires in January, crediting him with
"decisions [that] prevented the Great Recession of 2008-2009 from
turning into the Great Depression 2.0."
Could spring 2009 have been the housing bottom everyone has beenwaiting for since the pop of the bubble? Residential real estatespecialists hope so. According to the National Association of Realtors,U.S. existing home sales were up 3.6 percent in June to an annualizedrate of 4.89 million. That's more than economists were predicting, andthe most since October 2008.
Federal Reserve Chairman Ben Bernanke, wrapping up two days of
testimony to Congress on Wednesday, talked about a number of weighty
economic issues, including concerns about commercial real estate. The
ticking time bomb analogy didn't come up--pundits talk that way, not
central bankers--but the commercial real estate debt problem
nevertheless got a fair amount of attention.
Federal Reserve Chairman Ben Bernanke, high oracle of the U.S. economy,
began two days of testimony before Congress on Tuesday, and said that
things will slowly get better, eventually. He also noted that he and
his banking brethren are watching developments in the commercial real
estate industry--that ticking time bomb--with all the attention that a
ticking time bomb deserves. Meanwhile, down in the trenches, there's a
gold rush of sorts going on to find profits in real estate debt.
It was a good way to start the week, economically speaking. According
to the Conference Board, the U.S. index of leading economic indicators
rose 0.7 percent in June, marking the third rise in the index in as
many months. In the first half of 2009, the index improved at an
annualized rate of some 4.1 percent , a clear contrast to the way it
shrank in the last half of 2008 at an annualized rate of 6.2 percent.
The residential market made a surprising turn on Friday, with the U.S.
Department of Commerce reporting that housing starts were up 3.6
percent in June when compared with May: an annualized total of 582,000
units versus 562,000 units. Economists weren’t expecting that many.
As if the retail industry didn't have enough trouble, the prospect of a
CIT Group bankruptcy is blowing through the industry like an unexpected
squall. On Thursday, those new worries were reflected in the S&P
Retail Index, which fell 0.8 percent. If CIT does go under, many
smaller and mid-sized apparel retailers might also have trouble staying
afloat later this year, especially during the critical holiday season.
Another California trend? CalPERS, the nation's largest pension fund, has filed suit against the three largest credit-ratingsagencies, essentially asserting that the agencies gave away highratings like gold stars to kindergartners back in the days when realestate only went up. Or to use the language of the lawsuit, "wildlyinaccurate and unreasonably high" ratings on various structuredinvestment vehicles caused the pension fund to lose a cool billiondollars.
Closely watched retail figures from the National Retail Federation show
that June retail sales took a small dip of 0.2 percent when compared to
May, and were down 3.8 percent when compared to June 2008. These
figures differed somewhat from those of the U.S. Department of
Commerce, which released its own retail sales figures last week that
showed a slight improvement in sales in June when compared with
May--growth of 0.6 percent. The difference is that Commerce includes
cars, gasoline and restaurant sales, . In fact, the only category to
have grown since this time last year was health and personal care
stores, up 3.7 percent since 2008. Could it be due to the "lipstick
effect"?
U.S. Commercial mortgage-backed securities delinquencies grew in June
by a record $2.2 billion, according to Fitch Ratings. Last month there
was a 2.6 percent delinquency rate among U.S. CMBS, up 48 basis points
from the previous month. In June, at least, problems in retail
properties and the hospitality industry inspired much of the upward
bounce in delinquencies. But there's more to come, especially in the
beleaguered hotel sector.
As expected, June was a lousy month for retail sales--except at a few
retailers, probably including Wal-Mart Stores Inc., though the giant
retailer doesn't report monthly comparable-store sales. Target Corp.,
on the other hand, reported a 6.2 percent comp-store drop from June
2008, while Costco Wholesale Corp. dropped 6 percent. Major department
store chains took a comp-store drubbing as well: Nordstrom Inc., down
10 percent; Macy's, down 8.9 percent; J.C. Penney down 8.2 percent;
Dillard's Inc. down 14 percent.
Even in a recession, there will be winners. Even in the retail world,
which has taken such a beating lately, there will also be winners--such
as Family Dollar Stores Inc., which reported its fiscal third-quarter
numbers on Wednesday. Its earnings spiked upward by 36 percent, which
the discount retailer attributed to strong sales of necessities.
Comparable-store sales, an important metric in the retail game, were up
6.2 percent.
It's an age of loan delinquency. According to a report released Tuesday
by the American Bankers Association, delinquencies on consumer debt --
those debt holders more than 30 days late -- stood at a record 3.23
percent during 1Q09. That's only up a little from 4Q08, yet still the
highest rate since the organization began tracking such things in 1974.
Those economic green shoots, so eagerly awaited this spring, got a
blast of frost here in mid-summer when jobs numbers came in weaker than
expected for June late last week. Yet on Monday, the Institute for
Supply Management’s index of non-manufacturing businesses, which gauges
the pulse of about 90 percent of the economy, improved for the third
straight month.
Writing in the Wall Street Journal late last week, Stan
Liebowitz noted that "the evidence from a huge national database
containing millions of individual loans strongly suggests that the
single most important factor [in foreclosures] is whether the homeowner
has negative equity in a house..." Blaming subprime mortgage lending
for the current housing crisis, he asserted, misses the point.
Job-cutting is still the rule in the U.S. economy. The question now is
whether the pace going forward will continue to be as relentless as
earlier this year.
It's a peculiar time in history when a retailer can influence the debate about national healthcare policy. Yet Wal-Mart is doing just that by coming out earlier this week in favor of the government forcing employers to provide health insurance to workers. It was seen as something of a surprise. The Wall Street Journal characterized the National Retail Federation as "flabbergasted" by Wal-Mart's decision. (Were NRF officials sitting around in conference rooms, being flabbergasted together?)
The difficult year 2009 is half over, and recent deals by one of the
world's largest landlords show two things about the current climate.
First, deleveraging is in. Second, there are buyers out there to help
sellers who want to raise some cash to do that deleveraging.
Sometimes lost in the din of bad economic news in the United States isthe worldwide impact of the current recession on commercial realestate. Markets everywhere have been affected to some degree, someworse than others, and players in those markets are only now beginningto sort things out, as they are here at home.
This might count as good news: U.S. consumer spending and personal income both rose in May. Spending jumped by a small but noticeable 0.3 percent when compared with April, and personal income spiked upward by 1.4 percent, the strongest jump in more than a year, according to the U.S. Department of Commerce. The question now for retailers and their landlords is how much of that is going to go toward buying things.
Not-quite-so-bad news still passes for good news: the U.S. Department
of Commerce has revised its estimate of the annualized contraction of
the American economy in the first quarter of 2009 to 5.5 percent,
instead of the 5.7 percent previously estimated. Still, paired with the
4Q08 annualized contraction of 6.3 percent, the six months between last
October and this March represent the poorest economic performance for
the U.S. economy in over a half century.
Earlier this week, there were glimmers of green shoots in existing home sales, which have been trending upward lately. No such shoots have been sprouting in new home sales, however, to the apparently surprise of economists forecasting an uptick. Compared with April, new home sales in May were actually down 0.6 percent, according to the U.S. Census Bureau on Wednesday.
Homebuyers seem to be returning to the existing-home market this summer, according to the latest report by the National Association of Realtors on existing U.S. housing sales. The sales of single-family homes, condos and coops rose 2.4 percent in May compared with April, coming on top of a gain for that month compared with March, thus marking the first back-to-back monthly increase in existing home sales since 2005.
The residential refinancing boom that budded so promisingly in the spring has wilted, according to the latest predictions by the Mortgage Bankers Association. Back in March, the organization predicted refi activity to the tune of about $2.75 trillion nationwide by the end of 2009, spurred by historically low interest rates. Now that those low rates have evaporated, MBA says that total originations for the year will probably come in just above $2 trillion.
British retailer Tesco Plc. inked a sale-leaseback of 14 properties. The sale-leaseback followed on the heels of the company's successful
completion of the sale of commercial mortgage-backed securities. The offering by Tesco may mark the glimmering beginnings of a new, simpler CMBS market.
Despite jobless number climbing yet again, there appears to be some light at the end of the tunnel as the number of already unemployed workers filing claims dropped for the first time in more than six months. Couple that with the four-week average of job cuts at its lowest since mid-February and you’ve got a one-two punch of what passes these days as some very positive news.
Responding to the economic crisis facing the United States, President Obama has proposed vast regulatory changes, including the creation of a new consumer agency aimed at guarding against the kinds of lending abuses which resulted in many Americans being saddled with far more mortgage debt than they could handle.
Is the economy picking up or continuing to struggle? It seems to depend upon who you talk to and when you talk to them. While many reports gave a variety of accounts Tuesday, most supported bets that the pace of the recession is slowing.
There’s been plenty of evidence in both the political and business worlds over the past few days that the recent talk of an economic turnaround in the near future may have been a bit premature.
Stocks were higher Thursday closing at highs for recent
months with hopes that economic recovery is on its ways, while investors
concerned that the government’s spending spree and mounting debt will lead to
inflation caused treasuries to surge as an $11 billion sale of 30-year bonds
drew the highest yield in almost two years.
Another day, another dollar the government plans to use to
run private industry as Citigroup Inc. began a
$58 billion stock swap that could leave the government with a 34 percent stake
in the nation's third-largest bank.
A new report by Real Estate Econometrics, based on FDIC data, puts thecommercial real estate loan default rate at its highest level in morethan a decade and a half, at least those loans held by regulateddeposit-taking institutions—banks and thrifts, for the most part. Thedefault rate soared from 1.62 percent in the last quarter of 2008 to2.25 percent in the first quarter of 2009. That rate doesn’t includedefaults on loans associated with multi-family rental properties, whichReal Estate Econometrics put at 2.45 percent in the first quarter of2009, up 68 basis points from the previous quarter.
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
Yet another deep-pocketed real estate entity has jumped into the grave-dancing game—only please, don’t call it that, but rather strategic investment in distressed properties. The player is a newly formed investment company called Starwood Property Trust Inc., a creation of Starwood mogul Barry Sternlicht, which filed with the Securities and Exchange Commission late last week for a public offering that aims to raise half a billion dollars to do the distressed-property boogie. It will invest in not only physical properties, but mortgages and mortgage-backed securities.
May comparable-store sales numbers are filtering down from various retailers, and the results aren't inspiring confidence in the prospects for recovered consumer spending. Actually, most analysts expected average retail same-store sales to decline in May 2009 when compared with May 2008, but the trouble was they declined more than expected.
Turns out that the recession is still on, at least if the latest
numbers from payroll firm ADP accurately reflect the state of hiring
and firing in the nation. According to ADP on Wednesday, U.S. companies
cut an estimated 532,000 employees from their payrolls last month, with
goods producers laying off 267,000 workers, and service providers
shedding 265,000 positions.
Despite overall sales figures down double digits from last year, transactions are still move forward, albeit in smaller amounts. Another good sign of real estate activity is the re-equitization of the REIT industry that continued in May as more companies deleveraged their balance sheets with equity capital raised in the public markets.
Monday was an historic day in Detroit, and arguably for the entire U.S.
manufacturing sector, even though GM's formal announcement of
bankruptcy, along with President Obama's promise for more than $30
billion for a company in which the U.S. Government will soon own a
controlling interest, weren’t surprises . A little more surprising
(only a little) was the quick approval by Chrysler's bankruptcy judge
of the sale of most of its assets to a group led by Fiat SpA, meaning
that the Detroit automaker will continue to exist in one form or
another, albeit with Italian bosses. But the fact that both events
happened the same day is an unusual coincidence indeed.
General Motors was in the news over the weekend before the largest
bankruptcy in U.S. history (that is, its own), but more worrying for
many policymakers, economists and ordinary borrowers is last week's
sudden spike in mortgage interest rates.
The tsunami of residential foreclosures may have started, back in the
days of easy mortgage money, with borrowers whose only qualification
was being able to fog a mirror. About half of those kinds of subprime
mortgages have resulted in a foreclosure outcome, and Alt-A-inspired
foreclosures are spiking too. But now, according to the Mortgage
Bankers Association, foreclosures on prime fixed-rate loans represent
the largest share of brand-new foreclosures.
The special-purpose entity structure that has helped to power real
estate finance in recent years remains intact after recent court
decisions tied to the General Growth Properties Inc. Chapter 11
bankruptcy filing. However, the rulings may turn out to be less than a
total victory for bondholders in the long run.
In a major expansion of the Term Asset Backed Securities Loan Facility (TALF), the Federal Reserve said on Tuesday that investors will be able to buy existing securities backed by commercial real estate loans--so-called "legacy" CMBS. The commercial real estate industry has been pushing for this for some time, and it will at last be possible starting in July.
SL Green Realty Corp. has jumped on the bandwagon of REITs that, facing credit markets that are frozen like a block of ice, have opted to raise funds through public offerings. The company, which is still New York City's largest office landlord, just walked away with net proceeds of approximately $387.4 million after selling 19.55 million shares of common stock.
The U.S. Department of Commerce reported that retail sales dropped by 0.4 percent in April, compared with the previous month. The decline was a little more than expected, but less than the revised March drop of 1.3 percent. The recent two months of decline followed unexpected increases in consumer spending in January and February.
American International Group is finally in the news for something other than being a multibillion-dollar black hole for the U.S. Treasury; namely, a property sale. The beleaguered insurer has inked a deal to sell the AIG Otemachi Building and a one-acre site in Tokyo to Nippon Life Insurance Co.
On Wednesday, the eve of the stress test results, observers were
wondering just how much trouble sour commercial real estate loans are
going to cause those banks that hold them. Knee deep, waist deep, or up
to their eyeballs?
Is that the glimmer of good economic news ahead, or just a mirage? Time
will tell, but for the moment it's good to know that the pending home
sales index rose 3.2 percent in March when compared with February, and
1.1 percent when compared with the same month a year ago, according to
the National Association of Realtors.
It's a whole new world for corporate real estate owners, according to the 2009 State of the Industry Report by CoreNet Global, which was released Monday. The report distilled the views and opinions of more than 60 corporate real estate executives from around the world, along with information gleaned from various corporate real estate case studies.
Bear Stearns Cos. was in the news again Thursday, in case anyone
remembers back far enough to recall the last time it was big news--a
time when the disappearance of that company into JPMorgan Chase seemed
unfortunate, but not necessarily a harbinger of vast financial problems
ahead. Which, in fact, it turned out to be.
If some esteemed economists testifying before the Joint Economic Committee of Congress Tuesday had their way, "too big to fail" would be a phrase of historical interest only--applying especially to that period of history just before 2008.
Citi Infrastructure Investors--a joint venture of Citigroup Inc., John Hancock Life Insurance Co. and Vancouver Airport Services-- will be unable to go through with a deal that would have seen the group buy Midway International Airport in Chicago for $2.5 billion. After previous extensions, the City of Chicago decided not to give the group any more time to close on the deal.
CB Richard Ellis Realty Trust acquired a new 238,370-square-foot state-of-the-art suburban Boston warehouse/distribution building built to suit for Best Buy Stores, which is occupying it on a long-term lease. Located at 140 Depot St. in Bellingham, Mass., the center is expandable and features pre-cast concrete construction, cross-docking, a 36-foot clear height, ESFR sprinklers and excess trailer parking. It will be used primarily as a regional distribution center for home delivery of large items, along with some service/repair and dispatching and scheduling work.
Ground has broken on a 280,000-square-foot refrigerated warehouse at
Lingang Logistics Park in Shanghai, China, for Newark, N.J.-based
Preferred Freezer Storage. For China, the property will become the
country's largest and most sophisticated single-story cold storage
facility. For PFS, the build-to-suit structure marks the company's
entrée into China, as well as the beginning of its pursuit to
accommodate the burgeoning demand for cold storage facilities across
the country.
Opus Corp. is seeking to sell its property-management business, according to a report on bizjournals.com, the Web site of American City Business Journals. It quoted a company spokesperson as stating that selling off Opus Property Services would help the company renew its focus on its "core competency," along with its being a good time to sell because property management firms currently have an "appetite ... to grow their (business)." Opus' management portfolio totals about 30 million square feet of office, retail, industrial and corporate space.
Newport Beach, Calif.-based Master Development Corp., the managing
member of Ontario Two L.L.C., has inked a tenant to a six-year lease
valued at $3.5 million in Phase II of its Thoroughbred Business Park, a
2 million-square-foot industrial park located in Ontario, Calif.
After three years of Silicon Valley-based GlobalFoundries and the State
of New York working together to lay the financial groundwork,
construction of GlobalFoundries' $4.2 billion semiconductor wafer
manufacturing facility at the new 1,400-acre Luther Forest Technology
Campus in Malta, N.Y., has just commenced. Officials expect the
GlobalFoundries development to create 1,400 new manufacturing jobs, and
they are keeping their fingers crossed that the 1.3-million-square-foot
Fab 2 will spur additional investment in the area.
When it comes to saving energy, windows constitute the weak link for buildings. Despite heavily insulated walls and ceilings and the popularity of low-e glass, 25 to 35 percent of the energy used in buildings and homes is wasted due to inefficient glass. In fact, it should come as no surprise that glass is responsible for greater than 10 percent of the total carbon emissions in the United States annually and is a major contributor to global warming.
The latest quarterly survey by the Real Estate Roundtable, released
Wednesday, found the commercial real estate sector in a funk, squeezed
by poor financing prospects, decreasing valuations and lower demand for
commercial real estate of all varieties.
As the recession continues to grip nations around the world, commercial real estate property transactions are still moving along at a snail's pace and, in general, without the premium price tags seen just two years ago. Global research and consulting firm Real Capital Analytics concludes in its most Global Capital Trends report that, while sales activity is likely to pick up soon, a full recovery is still a long way off.
British retailer Tesco Plc. inked a sale-leaseback of 14 properties. The sale-leaseback followed on the heels of the company's successful
completion of the sale of commercial mortgage-backed securities. The offering by Tesco may mark the glimmering beginnings of a new, simpler CMBS market.
Cadillac Fairview Corp. purchased a 49 percent interest in Macerich's Queens Center in the New York City borough of Queens for $150 million in net cash. The eighth joint venture between the two firms, the venture gives Canadian Cadillac Fairview, wholly owned by the Ontario Teachers' Pension Plan, entree to New York City. Queens Center is the top-performing asset in Macerich's portfolio: The 966,499-square-foot urban retail center, which at year-end 2008 was 97.5 percent occupied, was at that time producing annual mall sales of $876 per square foot. Macerich purchased it in 1995 and redeveloped and expanded it in 2004.
Ground has broken on a 280,000-square-foot refrigerated warehouse at
Lingang Logistics Park in Shanghai, China, for Newark, N.J.-based
Preferred Freezer Storage. For China, the property will become the
country's largest and most sophisticated single-story cold storage
facility. For PFS, the build-to-suit structure marks the company's
entrée into China, as well as the beginning of its pursuit to
accommodate the burgeoning demand for cold storage facilities across
the country.
The London commercial property investment market saw its first overall
increase in activity in two years during 2009’s second quarter, said
real estate services firm Cushman & Wakefield Inc.
As the U.S. hotel market continues to tumble hand-in-hand with the flailing economy, many hotel concerns are finding opportunities for projects in less hindered travel destinations abroad, and MGM Mirage is no exception. The Las Vegas-based gaming and hospitality company has just announced a partnership with Egypt's New Giza for Real Estate Development to develop a new resort just outside of Cairo, Egypt.
Global industrial REIT ProLogis has leased 90,000 square feet of newly-developed space in Bucharest, Romania, to Geodis, a third party logistics and international transport provider.
Net lease real estate firm W.P. Carey & Co. has been looking to amp
up its activity on the international scene of late, and the latest move
by the firm is a big step in that direction.
Though the intensity of the economic crisis may be in the process ofdiminishing, it continues to have a vice-like grip on countries aroundthe world. Yet for the commercial real estate industry, investment insustainability remains a priority--although not necessarily for themost altruistic reasons. According to the second quarterly RICS-CPEGlobal Commercial Property Sustainability Survey, despite financialchallenges, real estate industry players remain willing to pay money togo green today, particularly with regard to energy consumption, inorder to benefit from cost savings tomorrow..
ProLogis has leased 75,000 square feet of recently completed
distribution space near Heathrow International Airport in the United
Kingdom to City Link, the UK's parcel delivery service and subsidiary
of Rentokil Initial.
Most of the country is waiting for the economy to turn, or even for the federal stimulus to have some measurable effect on local economies, but at least one part of the country has a third option. In the Florida panhandle, in particular the Panama City area, a new international airport--under construction, scheduled for completion next year--promises economic stimulation, both in terms of business growth and real estate development.
Jadwa Investment, an investment management firm with ownership by the Saudi royal family, has targeted U.S. and U.K. commercial real estate as good focuses for investment, according to the Financial Times. With its first action a bid on a $1.1 billion U.K. sale by insurance company Aviva in partnership with CIT, the newspaper quoted its chief economist, Brad Bourland, as saying it is eying "areas where there is currently a favourable exchange rate, attractive asset prices and a historical connection," which includes the United States and the United Kingdom.
Signs of growth in distressed properties are mixing with evidence that the U.S. and global real estate markets are starting to stabilize, according to a recent analysis by Jones Lang LaSalle Inc.
The difficult year 2009 is half over, and recent deals by one of the
world's largest landlords show two things about the current climate.
First, deleveraging is in. Second, there are buyers out there to help
sellers who want to raise some cash to do that deleveraging.
Like so many real estate companies, ProLogis isn't developing spec
projects these days, but build-to-suits are a different story. The
Denver-based global industrial REIT just agreed to develop a
554,000-square-foot distribution center in The Netherlands for
Hi-Logistics, and if ProLogis has anything to do with it, more
build-to-suit transactions will materialize.
Warsaw’s first certified green building also earned the recognition as
the largest commercial real estate transaction so far this year for
Central and Eastern Europe, selling for €117 million, or $164 million.
But commercial real estate markets in many parts of the world continue
to fact debt repayment issues, declining values and deteriorating rents
and occupancies in different combinations.
The Hong Kong government has increased its equity share in its joint venture with Walt Disney Co. as the Hong Kong Disneyland park plans an expansion within the next five years.
American International Group is finally in the news for something other than being a multibillion-dollar black hole for the U.S. Treasury; namely, a property sale. The beleaguered insurer has inked a deal to sell the AIG Otemachi Building and a one-acre site in Tokyo to Nippon Life Insurance Co.
Hypo Real Estate Holding AG, the only German lender that has been nationalized, with a current 90 percent holding, reported a 750 million euro, or $1.1 billion, loss in the second quarter. And its chief executive predicted continued losses, with a return to profitability delayed until 2012, according to the Associated Press.
Starwood Capital is finalizing negotiations to acquire the Switzerland-based multi-brand hotel company Golden Tulip Hospitality, creating an alliance between Starwood's budget hotel division Louvre Hotels and the Golden Tulip brands.
As is the case in the U.S., the commercial real estate market in Europeis in flux, but when those price tags begin to drop, as is widelyexpected, the Blackstone Group will be perfectly prepared to pounce onthose golden opportunities. The investment company has just completedthe final closing of Blackstone Real Estate Partners Europe III, with atotal of approximately $4.3 billion in equity capital commitments.
The U.S. commercial real estate market, plagued by high vacancies and declining property values, is not at its most appealing right now, but according to a new report by Deloitte, sovereign wealth funds are beginning to see a great opportunity for investment.
Sometimes lost in the din of bad economic news in the United States isthe worldwide impact of the current recession on commercial realestate. Markets everywhere have been affected to some degree, someworse than others, and players in those markets are only now beginningto sort things out, as they are here at home.
Plagued by the global recession that has slashed both business and
pleasure travel, the hotel market is suffering on an international
level and investors have backed away from buying or building in most
locations, with a few exceptions--like Brazil. According to a new
report by real estate services firm Jones Lang LaSalle Hotels, the
positive long-term growth forecast for Brazil is popping up on the
radar of those who are in the position to invest.
Signs that the global economic slowdown is easing could point to
recovery starting late this year or in early 2010, according to new
reports by Cushman & Wakefield Inc.
Tenants have the edge in most of the world’s major office markets, concludes an analysis by CB Richard Ellis Inc. Class A rents are sliding dramatically and vacancy is ticking upwards in nearly every region, according to the study published last week.
Hotels in five German cities outperformed the rest of Europe in the May
2009 European Hotel Review, a joint project of Smith Travel Research
Global and Fairmas.
The Chrysler reorganization and sale to Fiat, which
was to have been a model of a quick turn-around, has hit a snag in the
form of a court order by U.S. Supreme Court Associate Justice Ruth
Bader Ginsburg. Pension funds that hold some of Chrysler’s secured loan
are objecting to the goings-on, claiming it isn’t fair to them, and so
petitioned Justice Ginsburg for the measure. It isn’t clear how long
the temporary stay will delay the sale, or whether it will kill the
sale, or whether the full court will reverse the stay in a few days.
It’s unlikely, though, that the legal wrangling will affect the fate of
the Chrysler dealerships slated for closing, or change the amount of
real estate their closing will put on the market.
Monday was an historic day in Detroit, and arguably for the entire U.S.
manufacturing sector, even though GM's formal announcement of
bankruptcy, along with President Obama's promise for more than $30
billion for a company in which the U.S. Government will soon own a
controlling interest, weren’t surprises . A little more surprising
(only a little) was the quick approval by Chrysler's bankruptcy judge
of the sale of most of its assets to a group led by Fiat SpA, meaning
that the Detroit automaker will continue to exist in one form or
another, albeit with Italian bosses. But the fact that both events
happened the same day is an unusual coincidence indeed.
Despite more than 2 million square feet of new product completed this
quarter, Seattle’s office market saw one of the largest leases this
year when international law firm Perkins Coie L.L.P. renewed its
269,000-square-foot lease at 1201 Third Avenue, a 55-story tower in the
heart of the city’s Central Business District.
AMB Property Corp. has leased more than 516,000 square feet of
industrial space to health and hygiene company Kimberly-Clark, at AMB’s
East Valley Warehouse in the Kent Valley submarket of Seattle.
The Portland office of Holliday Fenoglio Fowler L.P. has
arranged a $38 million recapitalization of The 1000 Broadway Building, a
268,600-square-foot, Class A office tower in Portland, Ore.
If Philadelphia mayor Michael Nutter meets his goal, the City of Brotherly Love could soon be called the City of Sustainability instead. He plans to make the nation’s first capital the greenest city in America. And he has set out 15 targets to achieve that goal by 2015, before his term is up.
Consider the next few months a window of opportunity. That was the message delivered by Joel Naroff, chief economist for TD Bank N.A. and president of Naroff Economic Advisors, speaking on the opening panel of CPN’s Hidden Opportunities conference in Phialdephia on Wednesday.
The New Jersey office of Holliday Fenoglio Fowler L.P. has secured $17
million in financing for Columbus Crossing, a 142,000-square-foot,
grocery-anchored shopping center in Philadelphia.
Essex Realty Management has been awarded the leasing, property
management and construction management assignment for an
800,000-square-foot portfolio of multi-tenant business parks in Orange
County, Calif.
?CPN Executive Outlook? A roundtable discussion on market strategies with John C. Cushman III, Chairman of Cushman & Wakefield, Inc., Gordon DuGan, President and CEO of W. P. Carey & Co., and Mark Rauenhorst, Chairman and CEO of Opus Group.; CPN; Cushman & Wakefield; Gordon DuGan; John C. Cushman III; Mark Rauenhorst; Opus Group; W. P. Carey & Co.; Eugene Gilligan, Senior Editor for Commercial Property News interviews Bob Bach, National Director, Market Analysis Grubb & Ellis Company at Multi Housing World.; Bob Bach; Commercial Property News; Eugene Gilligan; MHN; Multi housing news; multi housing world; hompage
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