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Northwest One

Globest.com reported Northwest One, a 127,000 sq ft Class B office building in Houston, has changed owners. RPD Catalyst purchased the building less than three years ago and has made some capital improvements. Transwestern's Rudy Hubbard helped broker the deal and disclosed the buyer, Fausset-Neely, paid more than $5 million in cash for the property. According to Rick Fausset, the plan is to offer aggressive rental rates in an attempt to stabilize the building, which is currently 44% occupied.

Fausset-Neely is also in negotiations for a property in Dallas that they expect to close in January 2010. "Our formula is simple," Rick Fausset told GlobeSt.com. "We buy properties substantially below replacement cost in markets that are good for job growth, then sell early. That way, we miss the next down cycle."

For more news and information visit Blumberg Capital Partners.

Blumberg Capital Partners was featured in an article today  titled "Blumberg Capital plans to invest in office space in Delhi & Mumbai" discussing the company’s investment plans for India in an exclusive interview with Moneylife. An excerpt:

We are looking at opportunities in developed commercial office space in Tier I cities, but at present we are more concerned about the regulations. Once the new real-estate regulations are implemented, then we will surely invest in India. If laws are changed, we will create more India-focused funds.

There are many investors like large pension funds in the Netherlands, insurance companies and banks in Germany, public funds in the United States and innumerable foreign and high net-worth individuals (HNIs) in the US, who want to invest about $500 million, but they are waiting for stricter regulation to be implemented in the real-estate market.

Click here to read the full article, and for more news and information visit Blumberg Capital Partners.

According to the Mortgage Bankers Association's (MBA) Q3 2009 Commercial/Multifamily Mortgage Delinquency Rates report delinquency rates continued to increase for most commercial mortgage investor groups. "Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans."

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows:

• CMBS:  4.06 percent (30+ days delinquent or in REO);
• Life company portfolios:  0.23 percent (60+days delinquent);
• Fannie Mae:  0.62 percent (60 or more days delinquent)
• Freddie Mac:  0.11 percent (90 or more days delinquent);
• Banks and thrifts:  3.43 percent (90 or more days delinquent or in non-accrual).

"The market is going to take a hit on the CMBS side, and the mutual funds and insurance companies are going to have some good opportunities in 2010," said Carla Gazzola, executive vice president with Santa Ana, CA-based RiverRock Real Estate Group in a CoStar article. "Not everyone will like the price, but properties are going to start trading. The pipeline of money that's available is stunning."

For more news and information visit Blumberg Capital Partners.

Investing in India's Real Estate Sector

Airtime: Wed. Dec. 9 2009 | 0:00 ST ET

Philip Blumberg, founding chairman & CEO of Blumberg Capital Partners, sees signs of a turnaround in India's real estate sector. He sheds more light on investing in this sector, with CNBC's Oriel Morrison.

For more news and information visit Blumberg Capital Partners.

This week Gramercy Capital Corp. announced it will be settling a loan with Wachovia Bank, according to BusinessWire.com. Gramercy owed an approximate $44.5 million through a secured term loan, credit facility as well as related guarantees. The deal, negotiated by Clifford Chance LLP, has Gramercy making a $22.5 million one time cash payment and delivered a subordinate participation interest in Gramercy's 50% interest in 1 of 4 mezzanine loans originally listed in the credit agreement.

Wachovia could receive $21 million maximum in cash proceeds pursuant to the subordinate participation interest. When Gramercy's payment was received, Wachovia released all security interests and liens, while Gramercy contributed two mezzanine loans and two of its CDOs.

For more news and information visit Blumberg Capital Partners.

The Troubled Asset Relief Program is seeing a higher than expected repayment rate from banks and the White House now expects the program to cost taxpayers $141 billion, although earlier this year the CBO estimated it is likely . As recently as August, some officials expected long-term costs to reach $341 billion, according to CNNMoney.com. To date, banks have repayed almost $71 billion to taxpayers, and Bank of America announced plans in December to return the $45 billion in funds it received over the past year.

Other businesses aren't expected to return any of the money lent by the government. AIG, for example, has said it has not generated enough earnings to repay the remaining $62 billion it owes the government, despite recording two straight profitable quarters. Others, like General Motors and Chrysler, continue to post losses.

For more news and information visit Blumberg Capital Partners.

As local economies continue to shake out from the financial crisis, Portland is showing signs the worst isn't over yet. Marcus & Millichap has announced their forecasts for major real estate markets around the country and Portland could be facing a 15% vacancy rate at the end of 2010, due to continuing job cuts and consolidations. According to the Business Journal, the current vacancy rate, about 11%, is the highest the area has seen in 5 years, and an increase of 3% from just the beginning of this year, can be attributed to major layoffs and cutbacks by Daimler Trucks North America (also known as Freightliner) and Laika, a Portland-based animation studio that created the movie Coraline.

Portland has been largely insulated from large tenant vacancies, thanks to a concentration of smaller tenants. Jeff Borlaug, vice president and director of brokerage for NAI Norris, Beggs & Simpson, a commercial real estate firm, told the Business Journal: “Our sweet spot for office space is in that 3,500- to 5,000-square foot range.” In 2009, 14% of the space leased and only 5% of all transactions were attributed to large tenants.

For more news and information visit Blumberg Capital Partners.

According to a pair of articles by the Tampa Bay and Washington Business Journals, job losses in both areas will further depress regional demand for office space weak. Citing a report from real estate investment services firm Marcus & Millichap, the Washington Business Journal noted white-collar head counts fell by 0.7% and the office vacancy rate increased 250 basis points and is expected to reach 13.5% by the end of the year. Submarkets situated near mass transit are faring best, with the Clarendon-Ballston area's 4.2% vacancy rate coming in as the lowest in the area. Communities located farther from the District are faring far worse, for example Sterling, VA & Greenbelt, MD have a 33.3% and 25.4% vacancy rates respectively.

In the Tampa region, the Tampa Bay Business Journal reported regional employment is expected by over 54,000 jobs in December alone, with the office vacancy rate expected to reach 20.5% by the end of the year. According to the Marcus & Millichap report, Property owners and investors are waiting for the turning point that will signal the onset of an economic recovery. Effectives rents are projected to fall 7.9 percent to $17.23 a square foot following a 1.3 percent slide in 2008.

For more news and information visit Blumberg Capital Partners.

Real Estate Econometrics released fourth quarter projections for bank-held commercial mortgages and the outlook isn't great. The New York-based firm expects rates to reach 4% at year end 2009, down slightly from a possible 4.1%, which can be attributed to "FDIC’s policy changes that will give lenders the ability to keep performing underwater loans on their books have impacted the forecasted default rate slightly," according to NREOnline.com.

In its announcement of the report, reeconometrics noted "the default rate will peak in 2011. The largest losses will occur at regional and community banks, principally due to higher concentrations in commercial real estate. At 28.4 percent, commercial real estate concentrations are greatest among banks with $100 million and $1 billion in assets." However, during an interview with Reuters, Chief Economist Sam Chandan cautioned commercial real estate lending should not be generalized. "Don't say it's a regional bank problem," he said. "The conditions of each bank need to be evaluated on their own merit."

For more news and information visit Blumberg Capital Partners.