50 posts tagged “cre”
LoopNet conducted a poll of its members -- groups of investors, brokers and owners -- last month and asked where they thought the commercial real estate market was headed in the coming year. Optimism for 2010 may have broken as respondents seem to have grown somewhat pessimistic about the timing of recovery, continued price declines, and access to affordable debt financing. Expectations for the timing of a market recovery continue to drift with nearly half of the respondents expecting improvement in 2011 or later.
"Despite the declines in pricing seen over the past quarter, respondents’ expectations for future pricing declines remain almost unchanged from the last survey," LoopNet expounded in their CRE blog. At the beginning of Q3, 52% of respondents expected to see future declines of 11% or more. At the beginning of Q4, that number is 53%. This suggests that future expectations of cash flow and value have continued to deteriorate, preventing pricing from stabilizing even after the declines in Q3.
For more news and information visit Blumberg Capital Partners.
The Federal Deposit Insurance Corp., the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency released a new policy statement to assist examiners in evaluating institutions' efforts to renew or restructure loans to creditworthy CRE borrowers. The statement supports prudent commercial real estate loan workouts, stressing that performing loans, including those renewed or restructured on reasonable modified terms, will not be subject to adverse classification solely because the value of the underlying collateral declined.
An excerpt from the 33 page statement:
The regulators have found that prudent CRE loan workouts are often in the best interest of the financial institution and the borrower. Examiners are expected to take a balanced approach in assessing the adequacy of an institution's risk management practices for loan workout activity. Financial institutions that implement prudent CRE loan workout arrangements after performing a comprehensive review of a borrower's financial condition will not be subject to criticism for engaging in these efforts even if the restructured loans have weaknesses that result in adverse credit classification. In addition, renewed or restructured loans to borrowers who have the ability to repay their debts according to reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance.
For more news and information, visit Blumberg Capital Partners.
The Federal Reserve Board released the latest Beige Book this week showing either stabilization or modest improvements in many sectors, but still finding commercial real estate on shaky legs with conditions described as either weak or deteriorating. An excerpt:
Commercial real estate continued to weaken across the 12 Districts, although even this sector had scattered bright spots. Each District indicated that demand for private commercial real estate was weak, with New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco all characterizing activity as declining further since the last report. An inability to obtain credit was often cited as a problem for businesses that wanted to purchase or build space. High vacancy rates were noted as a key concern especially for landlords who were not offering concessions. And, while industrial real estate in the Richmond District was generally weak, renewed interest by retailers to revisit postponed expansion plans was also noted. Finally, public nonresidential construction activity funded by federal stimulus projects was a source of strength in the Cleveland, Chicago, Minneapolis, and Dallas Districts, but gains were often offset by state and local government cutbacks.
For more news and information visit Blumberg Capital Partners.
3150 Fairview Park Drive, a 252,613 square foot trophy office building in Fairfax County, Virginia was sold by ING Clarion Partners to Franklin Street Properties Corp. for $73 million according to CPE. ING's managing Director Robert Greer said in a statement that the sale of the class-A office building supports ING Office Fund's strategy of selectively rebalancing its portfolio, while also gaining additional liquidity for future investment opportunities.
The eight-story building was constructed in 2001 and is currently 100% leased through January 2017 on an absolute triple net basis, including space that serves as headquarters for non-profit Noblis. "The quality of Noblis' headquarters building allows the Fund to exit at attractive pricing in today's marketplace," said Greer in a GlobeSt article. ING Clarion originally acquired the property in 2004 for $92.8 million from Hines Corporate Properties, LLC who originally developed the building at a cost of around $60.3 million.
For more news and information visit Blumberg Capital Partners.
Commercial Property Executive published an Economy Watch article looking at REIT IPOs and opportunities in commercial real estate finance, observing a market cool-down in the sector as companies reduce their IPOs and the Federal Reserve slows its purchases of mortgage securities. Apollo Commercial Real Estate Finance Inc. and Colony Financial Inc. both cut their IPOs in half this week according to SEC filings with Apollo cutting their shares from 20 million to 10 million, and Colony scaling back to 12.5 million shares from 25 million.
An excerpt from the article:
The theory behind the recent REIT IPOs is that banks will soon want to unload some of their bum real estate assets, either mortgages or properties that they've foreclosed on. But that hasn't been happening quite as fast as some investors had hoped, as both borrowers and lenders continue to kick the can down the road. Investors interested in commercial mortgages, as well as the underlying properties themselves, are in something of a holding pattern.
"Pricing isn't mark-to-market yet," commercial real estate veteran Steve Grant told CPE, discussing his specialty, office buildings. "We're getting closer, but aren't there yet for a number of reasons. Asset owners are going to make a go of it until they can't any longer, and lenders aren't showing a willingness to mark valuations down if the borrower is paying on its debt."
For more news and information visit Blumberg Capital Partners.
Eola Capital, an Orlando, Florida-based real estate investment company, has acquired the general partnership interests of over 7.6 million square feet of commercial office space in a portfolio of properties valued at $1.1 billion from America's Capital Partners. The acquisition nearly doubles Eola's company in size and extends their presence to include Philadelphia and the DC metro area reports the Orlando Business Journal.
"In what are clearly challenging times for our industry, this transaction stands out as an example of just one of the opportunities that exists to create value for our partners, tenants and employees," said Jim Heistand, founder and Chairman of Eola Capital. Rudy Touzet, the co-founder of America's Capital Partners, will acquire an interest in Eola Capital and join the firm as Chief Executive Officer.
For more news and information, visit Blumberg Capital Partners.
SL Green Realty Corp. (SL Green) has secured a $145 leasehold mortgage for the refinancing of 420 Lexington Avenue in NYC provided by TIAA-CREF. Cushman & Wakefield Sonnenblick Goldman served as the advisors to SL Green; Morton Holliday, managing director at Cushman, noted that the financing arrived "during one of the most turbulent times in the credit market history and in a severe economic downturn".
The property, known as the Graybar Building, was named after one of its original tenants Graybar Electric, and is a 31-story, 1.5-million square foot office and retail building towering above Grand Central Terminal. The building is currently 97% leased with major tenants including Bank Leumi USA, Metro-North Commuter Railroad Co., New Plan Excel Realty and New York Life Insurance. SL Green acquired the property in 1998 and has completed an $84 million capital improvement program that included a lobby upgrade, façade repair, new storefronts and significant leasing related tenant improvements.
For more news and information visit Blumberg Capital Partners.
The Federal Reserve releases its latest Beige Book, a running commentary on current economic conditions, based on information collected before August 31, 2009. The reports from the 12 Federal Reserve Districts indiate that the nation's economic activity continued to stabilize in July and August, but the data on commercial real estate suggest that the demand for space remained weak and that nonresidential construction-related activity continued to decline. The report summarized the Real Estate and Construction sector as follows:
Reports on commercial real estate markets indicated that demand for space remained weak and that construction continued to decline in all Districts. Atlanta, Philadelphia, Richmond, and San Francisco reported that vacancy rates increased, while rates held steady in the Boston and Kansas City Districts and were mixed in New York. Boston, Dallas, Kansas City, Philadelphia, and Richmond commented that the demand for space remained weak. Commercial rents declined according to Boston, Chicago, New York, Philadelphia, and Richmond. Rent concessions were reported in the Richmond and San Francisco markets, and Richmond noted that some landlords had postponed property improvements in an effort to conserve cash. Construction remained at very low levels, with modest improvements noted in public construction in the Chicago, Cleveland, and Minneapolis Districts.
For more news and information, visit Blumberg Capital Partners.
Newmark Realty Capital, Inc. has arranged financing in the amount of $64,700,000 for Carillon Point, a 26 acre mixed-use property located in Kirkland, Washington, according to a Commercial Property Executive article. Michael Taylor of Newmark secured the financing for the owners with John Hancock Life Insurance Company. The loan has a fixed rate, a 20 year term and is amortized over 25 years. Mr. Taylor had arranged the original financing on the property in 2001, a debt replaced by the new fixed-rate loan.
Carillon Point includes 445,000 square feet of Class A office space, the boutique 100 room Woodmark Hotel and a 200 slip marina. The land has been owned by the same family since World War II and was developed to its current use between 1989 and 1991. "Carillon Point is one of the premier properties in the regions, and there was extremely low leverage on it, but the biggest challenge was its size," Taylor told CPE. "In this market, few lenders are making loans over $25 million, and for loans over $50 million, there are even fewer. For this property, we had lenders compete for it, but it was less than a handful; three years ago there would have been dozens."
For more news and information, visit Blumberg Capital Partners.
California's Silicon Valley took its lumps after the tech bubble burst. Now, according to the Mercury News, the high-tech hub is feeling the force of the nation's recession and, like in most areas, its sagging commercial real estate market is proof recovery is not yet in hand. CB Richard Ellis recently issued a report stating there are 12.6 million square feet of empty office space in the valley and 39 completely vacant office buildings. That includes four six-story office buildings with 427,000 square feet of space in San Jose developed by Legacy Partners and the still-empty Moffett Towers in Sunnyvale.
Local real estate agents still have reason to be optimistic after surviving similarly lean times less than a decade ago. "We were the epicenter in 2003, but this was much more of a global recession which hit us on so many fronts," Phil Mahoney of Cornish and Carey said. As the economy rebounds, agents expect businesses will initiate expansions that have been put on hold. "We're not really oversupplied if we have any normal kind of recovery." During the tech bust, "companies just evaporated," said Mike Field of the Sobrato Organization. "This time, companies have contracted but they haven't evaporated."
For more news and information visit Blumberg Capital Partners.
