Commercial Real Estate Finance

Archive for February, 2010

Kimco CEO David Henry shares his thoughts on consumer spending habits…in his malls.

Pacific Sun’s Andy Martel tell us why Chinese Banks and Properties may be on the downswing.

For the Week of February 20-26

- Should Fannie and Freddie be converted to non-profit, US-owned entities?

- Simon Property Group and General Growth Properties (two of yesterday’s post’s top earners) head to bankruptcy court in the $10 bil buyout deal.

- Can real estate investors bank on Hollywood’s staying power?

- John Klopp of Morgan Stanley sees debt investing as a significant opportunity going forward for investment banks.

- Does a 75% increase in sales volume in December over the prior month signal a true bottom in the market? Read the rest of this entry »

Llenrock has sifted through the data of Forbes’ list of top paid executives to bring you the top paid CEOs of commercial real estate investment firms from 2009.

5. Adam S Metz - General Growth Properties - $3.78 mil
Adam S Metz, at 48 years old, has been CEO of General Growth Properties (GGP) for one year. General Growth Properties has been in the shopping center business for over fifty years. One of the nation’s largest REITs, General Growth owns, develops, operates, and/or manages shopping malls in 44 states.

4. David Simon - Simon Property Group - $4.88 mil
David Simon, at 47 years old, has been CEO of Simon Property Group (SPG) for 14 years. Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate
company. Simon Property Group operates from five retail real estate platforms: regional malls, Premium Outlet Centers,
The Mills, community/lifestyle centers and international
properties. It currently owns or has an interest in 387
properties.
Read the rest of this entry »

It’s been four full business days since the Fed announced a 25bps hike in the discount rate.  After a knee-jerk down, equities seemed to have basically yawned, until yesterday.  Interestingly, 10 year treasury yields rose after the announcement, held for a day, and they came way down today.

I think Bernanke was trying to get long term rates lower, and he knows it could mean a sustained bear market for equities.   He also knows he doesn’t really have a choice.  What it means for commercial real estate, however, remains a tough question; but, we’ll get to that later.

To start, I’m going to focus on why the fed chose to make a ’surprise’ inter-meeting announcement.  The answer is best revealed in a time line: Read the rest of this entry »

I have been confused as to why the Fed raised the discount rate on Friday.  Typically, increases in short term interest rates by the Fed follow increases in the expectation for short term inflation.  What is unusual about the current situation is that current and expected inflation is low. Read the rest of this entry »

Editor’s Note: As the second installment in a three week blog series, Questionable Brokers will  posit questions regarding Types of Capital. Last week, the first part of the series examined questions regarding Real Estate Metrics. Next Week week we will wrap up the series with questions Deal Structure. These are real questions from real real estate brokers. Enjoy!

Q: What is the difference between mezzanine debt and preferred equity?

Read the rest of this entry »

Medical Office Buildings, commonly referred to as MOBs, are one of the few darlings of the current real estate finance industry.  They garner low rates, great terms, and even bankers’ whose commercial loan portfolios took a drubbing want to lend in that space. Need proof? I was at lunch with a banker a couple weeks ago who said that they simply were not doing any construction lending of any kind, period.  When I followed up that comment asking him about medical office buildings, his response was “Oh, well, yeah.  We’d definitely make an exception there.”

While many real estate insiders expected a slow down of the medical office frenzy once Scott Brown’s surprise victory in taking Ted Kennedy’s vacant Senate seat potentially swayed the fate of the healthcare reform bill, it has simply delayed the inevitable.  The popular belief was that the future growth of the sector was going to be fueled only by the 30 million plus currently uninsured people the healthcare reform bill would have added to the system.  But when you figure demand will generate supply, you better make sure to look at the whole picture. Read the rest of this entry »

The PERE 30 (from Private Equity Real Estate Magazine) revealed that the top 30 real estate private equity firms raised $211.9 billion over the past five years, up from $190 billion as calculated by last year’s ranking. Listed are the top 10 largest real estate private equity firms.

As a note: the top two largest firms raised $25.6 billion and $20.15 billion respectively in dedicated real estate funds between January 2004 and April, 2009. Together the pair raised a fifth of all the direct-investment capital secured by the world’s 30 largest real estate private equity firms.

10. Westbrook Capital Partners
Westbrook has raised and invested $10 billion of equity in over $35 billion of real estate transactions in major markets throughout the world. Westbrook’s investment equity is committed by a broad base of institutional investors, which includes public and private pension funds, endowments, foundations, and financial institutions.

9. The Carlyle Group
The Carlyle Group is one of the world’s largest private equity firms, with more than $87.9 billion under management with funds across four investment disciplines (buyouts, growth capital, real estate and leveraged finance). Carlyle has committed more than $3.6 billion of its own capital to its funds.
Read the rest of this entry »

- The Fed is looking to to calm the markets down after the discount rate increase.

- General Growth Properties bluntly turns down Simon Properties’ publicly announced $10 bil offer.

- 11 US banks that received TARP money posted a 13% increase in loan originations in December.

- Wells Fargo tops 2009 mortgage servicers ranking list.

- Kansas’ own “Fedstradamus” grimly predicts that rising deficits and maintaining interest rates at zero, may be our demise again.
Read the rest of this entry »

After the New York close, the FOMC announced a hike in the Discount Rate (0.50% t 0.75%).  Please note: this is NOT the Overnight Rate (manipulated via Open Market Operations).  There is a significant difference and an inter-meeting hike, at this point, of the Overnight Rate would have been cause for a bit of panic.  The Overnight Rate effects all banks, right away.  The Discount Rate only effects banks that borrow at the Discount Window; i.e. tonight’s news immediately and directly effects only a tiny fraction of the financial world.

This does not mean, however, that tonight’s hike is without both real significance and real impact.  Don’t let the talking heads/cheerleaders on CNBC fool you.   This is a big deal and you should pay attention.

Read the rest of this entry »