7 posts tagged “real capital analytics”
Property and Building Ltd. and Koor Industries Ltd., both subsidiaries of Israeli holding company IDB Holding Corp., have bought the HSBC New York headquarters on Fifth Avenue from HSBC Holdings for $330 million in cash in a sale-leaseback deal. The two companies made the purchase through a joint subsidiary owned in equal shares with each company putting up $165 million in equity for the purchase. HSBC will lease back the entire 29-story office structure at 452 Fifth Ave. at about $381 a square foot according to company filings.
"The fact that an investor is willing to pay all cash for a several hundred million-dollar asset is a very bullish sign for the Midtown office market," said Dan Fasulo, managing director of New York-based Real Capital Analytics Inc., in a Bloomberg article. "At some point these cash deals are going to add up and give investors the confidence to return en masse."
"The IDB group has been operating in recent years, alongside its holdings in leading properties in Israel, to diversify its investments abroad by taking advantage of business opportunities created by the global economic crisis," IDB said in a statement on Saturday.
For more news and information visit Blumberg Capital Partners.
The Moody’s/REAL Commercial Property Price Index (CPPI) has been released by Real Capital Analytics showing a 7.6% decline in May 2009, leaving the index 34.8% below the peak measured in October 2007. And, as reported on Bloomberg.com, about $2.2 trillion of U.S. commercial properties bought or refinanced since 2004 are now worth less than the original price, raising the threat of more foreclosures.
The CPPI measures the change in actual transaction prices for commercial real estate assets based on the repeat sales of the same assets. RCA notes that large commercial real estate price declines in the last two months suggest that a bottom may be starting to form, although higher transaction volumes would be necessary in order to draw any more definitive conclusions. There were 282 transactions in May, 52 of which were repeat-sales transactions, passing the old low set in the early 2000’s.
"We have evidence that prices have fallen over 30% and the leverage you can get is 50-60% of value, so for owners holding on to properties, they're going to have to come up with a big check," Dan Fasulo, managing director with RCA, told CPN. "On non-healthy properties, lenders are foreclosing on those assets; they're throwing in the towel, and on development sites, as well. There's no income anyway, so they might as well take it back."
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.
General Growth Properties, the second largest mall operator in the world's largest economy, has filed for Chapter 11 Bankruptcy Protection, collapsing under nearly $27.3 billion in debt and stirring new concerns about the coming tide for the commercial real estate market. "General Growth has been crippled now for a year and a half," said Gregory Leisch, founder of Delta Associates, in a Washington Post article. "They haven't been able to sell anything. They haven't been able to buy anything. They haven't been able to redevelop anything."
"Here in the U.S., the majority of the issues are more at the property level than the company level right now," said Robert M. White Jr., the president of Real Capital Analytics. Real Capital's recent market reports show that the global credit crisis, weakening retail demand and rising unemployment have taken a toll on commercial property around the world, and at least $153 billion worth of property is already in distress. General Growth president and COO Tom Nolan stressed that the firm's assets are key to generating NOI and enabling the REIT to emerge from Chapter 11 bankruptcy protection. "It's our obligation to consider all strategic opportunities, but we look at [our portfolio] as integral for establishing the entire platform for the company," Nolan said.
For more news and information, visit Blumberg Capital Partners.
Real Capital Analytics has released a report showing a 70% decrease in commercial real estate sales around the world in the first quarter of 2009, with just over 1,000 buildings sold valued at $47 billion. Another worrisome sign, reports the San Jose Business Journal, is the rise in the number of distressed properties. Real Capital reported that another $55 billion worth of assets fell into default on their mortgages during the first quarter, bringing the total value of assets known to be in distress to "a stunning $153 billion," a jump of 56% over the fourth quarter of 2008.
At the end of last year, the vacancy rate for commercial office buildings was 14.5%; that number is expected to climb to 16.7% this year as more and more companies and individuals file for bankruptcy. According to Mark Scott, Senior Vice President of NorthMarq Capital LLC, 2009 could be a banner year for commercial defaults. "In the office market, you’re starting to see signs of mammoth job losses, and as people aren’t buying as many goods, they’re not shipping as many goods, so [now] we have stress in the industrial market."
For more news and information, visit Blumberg Capital Partners.
AIG is reportedly putting its 66-story Art Deco headquarters in New York up for sale, according to a Commercial Property News article. AIG has owned the building since the 1970s, and is one of the more famous structures in New York City. Completed in 1932, 70 Pine St. is the fifth tallest building in New York and 39th in the world. Company spokesman Mark Herr said AIG "is evaluating the potential sale of its headquarters building at 70 Pine Street and the 72 Wall Street building."
"I dare not even venture a guess on a price because this is exactly the type of asset lenders are avoiding like the plague right now," said Dan Fasulo, managing director at research firm Real Capital Analytics Inc. One of the prospective buyers is the union that represents doormen and porters and office and apartment buildings, sources told the New York Post. "Institutional investors say they would pay only around $50 million and others would be hard-pressed to pay $100 million," one investment adviser said.
For more news and information, visit Blumberg Capital Partners.
Lehman Brothers filed for bankruptcy early Monday morning, becoming the largest financial firm to fail in the global credit crisis, after federal officials refused to help other companies buy the venerable investment bank by putting up taxpayer money as a guarantee. The end of Lehman Brothers, the country's fourth-largest investment bank, and the sale of brokerage firm Merrill Lynch sent U.S. stocks plunging today in one of the toughest trading sessions in years, with the Dow Jones industrial average losing more than 504 points. The 504-point fall is the Dow's sixth-largest point drop ever and was the biggest loss for the Dow since the terror attacks of Sept. 11, 2001.
In refusing to offer federal backing for Lehman, leaders of the Federal Reserve and Treasury Department decided that the firm was unlike the investment bank Bear Stearns, whose sudden collapse in March threatened the world financial system, or Fannie Mae and Freddie Mac, whose potential insolvency did the same. Government and private officials had been bracing Sunday night for an upheaval in a range of financial markets that have never before experienced the bankruptcy of such a large player. To keep cash flowing normally through these markets, the Federal Reserve announced new lending procedures, while 10 major banks combined to create a new $70 billion fund.
“If the markets get worse and the S&P continues to drop and credit markets continue to deteriorate, we will certainly see more layoffs,” James Feldman, an analyst with UBS, recently told GlobeSt.com. Dan Fasulo, managing director of research at Real Capital Analytics, says that "Lehman has not been a major player since last year, so the impact will be more indirect through further risk repricing and negative investor sentiment," he says, noting that "a majority of the Lehman real estate assets are good."
For more real estate news and information, visit Blumberg Capital Partners.
