14 posts tagged “credit”
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.
Edward J. DeMarco, acting Director of the Federal Housing Finance Agency (FHFA), addressed the U.S. Senate Committee on Banking, Housing and Urban Affairs last week to address the future of the mortgage market. The FHFA is serving as conservator of Fannie Mae and Freddie Mac which tally combined losses of $165 billion from July 2007 through the first half of 2009, with $47 billion accounting for the first half of 2009. DeMarco said that their financial performance continues to be dominated by credit-related expenses and losses stemming principally from purchases and guarantees of mortgages originated in 2006 and 2007.
"These two companies have $5.3 trillion in mortgage exposure. Given the Enterprises' importance in the mortgage market, Enterprise activities to stabilize the housing and mortgage markets are closely linked to conserving assets," said DeMarco. "Over the long term, effective mortgage modifications, refinancings, short sales, and other loss mitigation activities assist homeowners and neighborhoods and will save the Enterprises billions of dollars."
Commercial Property Executive published an article about the Fannie and Freddie mortgage defaults. An excerpt:
What DeMarco said to the Senate Banking Committee was a little more formal than a Yogism: "We remain concerned and recognize the risk associated with increasing numbers of seriously delinquent loans."
He then backed up that concern with some statistics: the rate of seriously delinquent mortgages at Fannie and Freddie total 4.2 percent and 3.1 percent, respectively. What the government plans to do about Fannie and Freddie, now that they have been de facto government agencies for about a year, is still an open question, though reportedly it will be addressed in the Obama administration's proposed 2011 federal budget, which will be released in February.
For more news and information visit Blumberg Capital Partners.
Blumberg Capital Partners was featured in this month's Real Estate Forum Magazine in an article titled "From Policy to Progress".
An excerpt:
Positive results from the banking stress tests have further validated this position. Some observers credit the transparency of the financial institutions with improving investor confidence, helping to rally the stock market in the past few months.
Blumberg contends, however, that there is a false sense of economic prosperity within the banking sector, which is only going to drag out a recovery. "We know that leverage is the enemy of this economy. So we need write-downs. by reversing course on these programs, you are telling capital sources, 'Don't rely on anything we say'," he states.
To read more of the article, click here.
Starwood Hotels & Resorts Worldwide has signed an agreement to sell the W San Francisco for $90 million to Keck Seng Investments Limited, a hotel investment and property development company based in Hong Kong. The buyer, which currently owns three other Starwood hotels, will continue to manage the property under the W name. The sale of the W San Francisco represents one of a few select asset dispositions that Starwood is pursuing to further reduce its debt levels. Starwood says that it expects to continue growing the W brand from 25 hotels today to 60 hotels by 2011.
The price reflects continuing weakness in the hospitality sector and tightness in the credit markets, said Mark McDermott, senior managing director of San Francisco hotel advisory firm PKF Capital in a San Francisco Chronicle article. "We've finally basically bridged the buyer-seller gap, with sellers' expectations falling to levels where buyers are confident enough" to pursue deals, McDermott said. "We would expect this type of activity to represent, hopefully, the start of folks dipping their toes back into the water."
For more news and information, visit Blumberg Capital Partners.
Philip Blumberg appeared on CNBC Squawk Box Europe today on a segment titled "The Reality of Real Estate".
To view the full transcript, visit Blumberg Capital Partners.
The Federal Reserve announced Friday that it will launch a program in June to help revive commercial real estate lending. Yields on triple-A CMBS bonds have fallen to about 10% from 12%, according to Trepp, which tracks commercial-property debt markets. Policy makers believe it is critical to get credit flowing to the $6.5 trillion real-estate industry because a massive amount of commercial-real-estate debt is coming due, according to a Wall Street Journal article.
Currently, all TALF loans have maturities of three years. TALF loans with five-year maturities will be available for the June funding to finance purchases of CMBS, ABS backed by student loans, and ABS backed by loans guaranteed by the Small Business Administration. The Federal Reserve Board indicated that up to $100 billion of TALF loans could have five-year maturities; it will continue to evaluate that limit.
For more news and information, visit Blumberg Capital Partners.
Vantone Industrial Co. has signed a lease at One World Trade Center, also known as the Freedom Tower, which will create the China Center, a 190,800-square-foot business and cultural facility, according to a CoStar Group article. The Port Authority of New York and New Jersey and Vantone signed the 20 year and nine month lease, commencing when the building is completed in late 2013, to establish the China Center on portions of the 64th floor and the entire 65th through 69th floors. Immediately following the lease signing, China Center provided the Port Authority with a $10 million letter of credit.
Tianjin Teda Group Co., Ltd., is the biggest shareholder of Vantone Industrial Co., Ltd. China Center obtained vigorous support from TEDA Investment Holding Co., Ltd., as well as the Tianjing municipal government. Key components of the China Center will include an Executive Business Club, conference center, and first-class office space.
Port Authority Chairman Anthony R. Coscia said, "Signing up the China Center on competitive terms and in a struggling economy is a firm stamp of approval for the World Trade Center site as a world-class business destination. We look forward to building on today’s success and securing other quality tenants for One World Trade Center from around the globe."
For more news and information, visit Blumberg Capital Partners.
Atlanta is showing signs of a renewal in commercial property interest as small foreign investors are beginning to return to the market for the first time in 15 years, according to an Atlanta Business Chronicle article. These small private firms are seeking to take advantage of the falling property values in the market and are able to acquire distressed properties, benefiting from the weakened dollar for European investors.
"You have this Bermuda Triangle that many developers find themselves in, with rents and property values that are plummeting and credit lines that are locked down and a flow of capital that has all but come to a halt, said Phillip Thompson, a partner with the Atlanta office of Duane Morris LLP. Foreign investors, both firms and individuals, are hoping to benefit from participating in real estate amid a shortage of US capital.
Equity investors plan to increase investment by 40 percent globally and by 73 percent in the United States in the next year, according to an annual survey conducted by the Association of Foreign Investors in Real Estate. The survey reflected that foreign real estate lenders plan to increase lending by 54 percent globally and by 58 percent in the United States. The survey was carried out in the fourth quarter of 2008 among the association’s nearly 200 members.
For more news and information, visit Blumberg Capital Partners.
Blumberg Capital Partners was recently featured in a Saudi Gazette article titled "Commercial estate bailout needs ‘painful deleveraging’ to succeed".
An excerpt:
An analysis of commercial real estate values, leasing and vacancy trends shows that any government bailout of the industry will require a painful, significant deleveraging to succeed, Blumberg Capital Partners, one of US leading investment fund managers, said on Tuesday.
Blumberg Capital Partners’ new office market assessment, which takes into account the fresh economic data from the past two months, comes on the heels of its widely cited prediction in October that commercial real estate prices in 2009 could drop some 20 percent further- - on top of an anticipated 15 percent drop this year.
Blumberg Capital Partners was recently featured in an article on GlobeSt.com titled "Fundamentals Worsen as CRE Industry Eyes Bailout Funds".
An excerpt:
Up until September the commercial real estate industry had had just enough breathing room to keep from going into free fall. A credit squeeze had shelved or delayed many projects – but fundamentals were still strong, and the economy’s recession shallow.
A new report by investment fund manager Blumberg Capital Partners, found that maturing debt obligations will come under even more stress in 2009 with leasing rates poised to drop an additional 20%. Office vacancies could potentially rise to 25% by the end of the year, and take until 2011 to stabilize.
To read the rest of this article, click here.
