Real Insight. Real Estate.

CRE Investing Advice from Grubb & Ellis and Invesco AIM

Insight into the Current Outlook for Hospitality

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The Week of March 6-12

- Senator Dodd proposed that the Fed continue its oversight of the largest banks.

- The FDIC loan auction could mean trouble for still-healthy banks.

- Dubai World is seeking to restructure $26 billion worth of debt….good luck with that.

- Should the Fed be gradually decreasing its balance sheet? The EVP of the Fed Reserve Bank of New York thinks so.

- Creditors have offered nearly $4 billion in commitments to GGP.
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Hint: Stuy-Town's not the biggest

Toward the end of last year, Jerry Ascierto of Apartment Finance Today published a list of the largest multi-family real estate transactions to have taken place in the ‘oughts.’  It’s no surprise that many of these deals were acquisitions of REIT assets considering few private owners own as many units as the large public companies.  The most interesting transaction in the list, in my opinion, is the #1 largest multi-family deal; not because of its size, but because the deal went through in spite of a collapsing CMBS market.  That deal was a harbinger of things to come.  When CMBS financing was unavailable, Fannie and Freddie stepped in to push the deal through.  Hmmm…that sounds like every other multi-family deal that has traded since then.

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I’ve become increasingly interested in agricultural investments. Although Farmland makes up only about 1% of institutional real estate investments, it is an asset class that has strong fundamentals. According to research by UBS Agrivest[1], agriculture investments provide:

- Competitive returns with a strong income component

- Low return variability

- Diversification benefits

- Effective hedge against inflation

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A couple of months after I quit my job at JPM to join Llenrock, I had dinner with my former trading colleagues.  True to form, all we really talked about was trading.  And that, of course, led to talk about specific trades.  It’s the trading analogue to fishing stories about ‘the one that got away’.

In my book, at the time of my departure, was a losing trade.  i.e. I had already lost money on a trade, but had not yet cut my losses in the belief that the market would move my way.  In response to some teasing about the ‘bad trade’ I pointed out that, in fact, the traded ended up moving my way after I left.  I was basically saying, “Hey, I’m not such a dummy after-all.  While I lost money initially, the trade turned and ended up actually making money.”

The response to me: “It’s a mark to market business.” Read the rest of this entry »

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Daniel R. Brenna, Jr.
Founder & Principal
Capital Real Estate Group

Daniel Brenna is the principal of Capital Real Estate Group, a real estate development and investment firm in Trenton, New Jersey. Daniel is currently focused on Vista Center, a master planned, mixed-use development at the Trenton Transit Center. The project includes a 25 story office tower located adjacent to the station and over 300 residential units.

He received an MS in Real Estate Development and Investments from New York University and a BS in Industrial and Management Engineering from Rensselaer Polytechnic Institute.

Q: As a company, tell me about the niche you have carved out for yourself and how you feel you are different from the competition. Why do you find this product type more appealing than alternative real estate asset classes?

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There is an article in this week’s Philadelphia Business Journal about one of Texas-based Behringer Harvard’s Philadelphia assets.  BH owns, among other buildings downtown, 1650 Arch Street.  After having lost the real estate law firm Wolf Block (after its dissolution last summer) as one of its long term anchor tenants, the property faced significant challenges. While vacancy issues are a problem for all landlords (and can subsequently worry its tenants base…after all who wants to reside in a half empty building with a landlord who has to skimp on maintenance due to belt tightening?), BH showed that at the end of the day, cash is still king. Read the rest of this entry »

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What’s a Regional Fed’s take on the Current State of the Economy?

Is Industrial Real Estate Currently a Good Buy?

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For the Week of February 27 - March 5

- Does a strong REIT recovery after its drop in January signal the ability for REITs to go on the offensive?

- Could a Beijing real estate bubble pose a threat to world markets?

- Apartment REITs may debate build vs. buy as demand grows in the near future.

- While many REIT managers say demand for their offices, stores and warehouses is on the rebound, data shows that the real draw for tenants is falling rents.

- Colonial Properties is selling up to $50M of stock. Read the rest of this entry »

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For this week’s top ten, Llenrock is looking back at some of the largest M&A deals of the past decade involving a REIT on either side of the deal. While these top ten deals all carry substantial price tags, they are only a small fraction of the $215 billion in total transactions from 2004 to 2009. Not surprising, there were no deals done in 2009. For the complete list of deals see REIT.com’s statistical publications page.

10. Blackstone Group LP acquires CarrAmerica Realty Corp. $5.6 bil
Deal Completed on Jul. 13 2006

9. SL Green Realty Corp. acquires Reckson Associates Realty Corp. $6.0 bil
Deal Completed on Jan. 25 2007
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