32 posts tagged “market”

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.

Transaction Timing

"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.

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.

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.

The commercial real estate decline, driven by falling production, fewer jobs, and negative return on investment,  appears to be slowing, according to a new report from the National Association of Realtors. Lawrence Yun, NAR chief economist, noted the pace of decline moderated, but the leading indicator has fallen sharply and quickly from the peak, suggesting much lower business opportunities for commercial real estate practitioners engaged in leasing, sales and property management. "The reduction in commercial real estate activity is expected at least through the first quarter of 2010. Any meaningful recovery is not likely to occur before the second half of next year."

"I'm encouraged that we're seeing -- albeit one observation -- a stabilization in the decline in prices, coupled with a growing volume of transactions," said Neal Elkin, president of Real Estate Analytics in a Reuters article. "The money is coming in from the sidelines." The report does continue to explain that the activity last quarter was at its slowest in 15 years, and that weakness would persist into 2010, but finds encouragement in  recent actions by the Federal Reserve to improve some flow of capital into commercial lending.

For more news and information, visit Blumberg Capital Partners.

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.

The Moody's/REAL Commercial Property Index (CPPI) results are in for April, showing a return of negative 8.6% for the all properties national index. The index now sits 25.3% below its level from this time last year, and 29.5% below the peak prices measured in October 2007. "Unlike other areas where people are comfortable that the pace of change is positive, in commercial real estate pricing the pace of change is negative," Neal Elkin, REAL president, told CPN. "January was one of the largest changes in pricing ever seen before, but in April prices are deteriorating faster."

The CPPI is a periodic same-property round-trip investment price change index of the U.S. commercial investment property market based on data from MIT Center for Real Estate industry partner Real Capital Analytics, Inc (RCA). Moody's observes that April's negative return partly reflects that most deals closed during this time were negotiated at the end of 2008 and beginning of 2009 when securities markets plunged. "Primary markets are outperforming compared to the others. If you look at the Southern region, industrial properties are down 28.8 percent," said Elkin. "When you look into the numbers you see a return to the premium of primary markets. Prices are falling much faster and farther in secondary and tertiary markets and you're seeing that in other property types."

For more news and information, visit Blumberg Capital Partners.

Real Estate Forum published "A Conversation With Blumberg Capital Partners' Philip Blumberg: Finding investment opportunities in a down market". An excerpt:

What types of investments do you play for the new fund?

We are clearly looking to make investments in the US debt markets. I think there are some outstanding opportunities on the debt side. That means buying existing loans at significant discounts where you feel you're within a margin of safety and can generate double-digit returns.

To read the full article, click here.

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.

Blumberg Capital Partners was recently featured in a Real Estate Channel article by Alex Finkelstein titled "Blumberg and Maguire See Nothing but Gloom Ahead for Commercial Real Estate Markets".

An excerpt:

Despite some recent highly publicized signs of economic improvement, two of the savviest commercial real estate strategists in the U.S. today see nothing but gloom ahead for the commercial real estate markets.

Phillip F. Blumberg, chairman and CEO of 30-year-old Blumberg Capital Partners in Coral Gables, FL, and Robert F. Maguire III, chairman and CEO of 29-year-old Maguire Investments in Santa Monica, CA, agree that burgeoning debt is the killer in the commercial market and will remain that way until 2013.

Blumberg says he is certain the commercial real estate market will be "getting significantly worse. Every job layoff pegs to our commercial real estate market. It's a contraction in tenant space. The real story isn't the performance in the market--it's the debt.

"Think about this: in the next three years, 2010, which is when it really starts, to 2013, we've got about 300 million CMBS, of which 70 to 100 billion is not refinanceable."

To read the rest of this article, click here.