Commercial Real Estate Finance

Archive for January, 2010

FDIC chairman Sheila Bair discusses banks failures in 2010.
Bair states that commercial real estate loans will continue to play a large role in bank failures.

Indian billionaire Adi Godrej discusses how the Indian central bank’s increase of the reserve requirement will effect real estate markets in India, and the opportunity this presents to foreign investors.

The Week of January 24-30

- Will 2010 set the record for commercial loan defaults?

- Stuyvesant Town and Peter Cooper Village got handed over to creditors.

- Obama was centrally focused on job creation in his first State of the Union Address with little talk of real estate markets.

- The Fed decided to go forward with a plan to end it $1.25 trillion program of mortgage-debt purchases in March.

- Did dealmakers get stuck on the issue of who will negotiate tenant rental concessions at Peter Cooper Village and Stuyvesant Town?
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President Obama, in his recent State of the Union Address asserted that, “the worst of the storm has passed, but the devastation remains.” Of course, Obama was referring to the economy in general, however, there are some indicators in particular real estate markets that seem to support the president’s assertion. In December, CNBC.com published a list of housing markets most likely to have hit bottom. CNBC did not rank the list, however, based on the numbers, below are what I believe to be the the top 10. The criteria for the ranking was a combination of the overall decline in prices by percent, number of months with year-over-year favorable change, last year’s overall change, and December’s month-to-month change.

10. Philadelphia, PA
Fall from peak: 10.6%
Months with YoY favorable change: 7
Current YoY change: -4.1%
Current month-to-month change: N/A

9. New Haven, CT
Fall from peak: 13.5%
Months with YoY favorable change: 8
Current YoY change: -1.3%
Current month-to-month change: 0.8%
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In her latest blog entry, a woman named Megan McArdle took a brave stance!  She said that Tishman and Blackrock’s collective decision to buy Stuyvesant Town for $5.4 Billion was a “…breathtakingly stupid deal.”

Well, if it was the largest commercial real estate trade of all time, then she’s about the biggest Monday-morning-quarterback of all time.

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Editors Note: This post is the second in a three day, three person opinion on the aftermath of the Stuyvesant Town/Peter Cooper Village deal going kaput. Yesterday Dave Jacobs wrote about its effect on the capital stack. Today Rich Weidel examines the effect on the CMBS market. Tomorrow, Dave Weinstein will explore the world of risk/reward. Stay tuned and enjoy!

Stuyvesant Town, bought for $5.4 billion in 2006 is now valued at $1.8 billion. After reading that Tishman is walking away from Stuyvesant Town and the $4.4 billion of debt piled up against the property, I’m wondering if CMBS defaults are going to become the next sub-prime mortgages. Is this the bottom, or just the beginning? Will CMBS defaults rip through the structured products market? It seems that we are at a crossroads, with arguments and predictions being made both ways. Regardless of what your gut tells you, the following chart from PREI shows the problem: Read the rest of this entry »

Editors Note: This post is the first in a three day, three person opinion on the aftermath of the Stuyvesant Town/Peter Cooper Village deal going kaput. Today Dave Jacobs writes about its effect on the capital stack. Tomorrow Rich Weidel examines the effect on the CMBS market. Thursday, Dave Weinstein will explore the world of risk/reward. Stay tuned and enjoy!

So by now I’m sure you’ve heard about Tishman Speyer giving back the keys (deed -in-lieu of foreclosure) to its creditors on the Peter Cooper Village/Stuyvesant Town Apartment deal in Manhattan.  Once the largest price ever paid for a residential building in the world (a record $5.4 billion dollars in 2006) to original developer and seller MetLife Insurance, it is now the poster child for capital market chaos and rapid devaluation.  Rather than tell the sob story again, we’ve decided to look specifically at how this transaction was capitalized, and how it will soon be capitalized. Read the rest of this entry »

Wondering how to squeeze some more liquidity from credit markets still thawing at a glacial pace? The solution may lie in your property itself. Traditionally a developer apportions 100% of the cost of improvements among initial buyers. Each buyer then has no choice but to pass along these costs to future buyers. What if there were a way to share such burden with future buyers of your asset, and capitalize on it today? Read the rest of this entry »

European commercial real-estate investment grew to $36.9 billion in the fourth quarter of 2009

But where is it going? “Investors are very interested in what we call prime real estate,” Michael Haddock from CBRE says.

UK & Europe aren’t the Only Foreign CRE Markets with a Good Outlook

Things are looking up for Singapore’s property sector.

The Week of January 16-22

- Are the credit markets reaching their peak?

- Good news for U.S. CRE?  European transactions have increased by 42%.

- Europe’s largest insurance company, Allianz, is increased CRE investment allocations.

- Earlier this week, Capmark Investments, a subsidiary of Capmark Financial, filed for bankruptcy.

- Has London surpassed Washington D.C. as the world’s favorite CRE market?
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Half way through 2009, we posted a list published by CNBC.com of the largest bank failures we had seen to that point.  I thought we’d revisit this topic since the second half of ’09 proved to be even worse.  To put things in perspective, consider this: Silverton Bank, which was the second largest failure on CNBC’s list in July just barely made their new version of the list at #10.  8 of the 10 banks on this list went under in the second half of ’09.

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