Commercial Real Estate Finance

Archive for December, 2012

There’s no avoiding the year-end list-making, so why fight it? Once again, it’s time to gather the events of the past year and assign an arbitrary number to each one, just like your favorite TV clip show. Without further ado, let the arbitrary ranking begin!

The Top 12 Commercial Real Estate Stories of 2012!

12. Large Private Equity and Alternative Investment Companies Invest More Heavily in CRE

With increasing trepidation toward high-leverage deals and stock-market investment, many private firms are deploying even more capital into commercial real estate investment. Blackstone Group (NYSE: BX) is leading the charge.

11. Sears Holdings Pares Down Its Portfolio

Sears Holdings (NYSE: (SHLD), owner of Sears and Kmart stores, announces the closure of over 100 of its locations in response to lackluster sales over the 2011 holidays. Sears has opted to cut its under-performing stores rather than prop them up as they’ve done in the past, focusing the company’s energies on their more successful locations. It’s not especially surprising, since Sears is a company many experts feared was headed for bankruptcy.

10. The World’s Biggest Real Estate Company Gets Even Bigger

The S&P 100 index brings in a new member: shopping mall REIT Simon Property Group. Simon is the first REIT to join the prestigious list.

9. Large Banks Continue to Make People Angry

This time through widespread manipulation of the Libor, an important benchmark in international finance. Over the course of the year, local and international investigations lead to many high-profile “resignations” and whopping government fines.

8. The Empire State Building Goes Public

Well, it tries to. Following years of expensive retrofits, the storied skyscraper becomes the subject of a legal battle between its legacy investors and Malkin Holdings, which wants to take the property public as part of Empire State Realty Trust.

7. Dubai Buys a Boat

That about sums it up. Read the rest of this entry »

Matthew Shay, President and CEO of the National Retail Federation, responds to early reports of a disappointing holiday shopping season:
Read the rest of this entry »

From Retail-Insider.com, a Canadian retail news site, here is a ranking of the

Top 10 Best-Performing Shopping Malls in North America:

(Note: Each mall’s activity is measured in sales per leasable square foot)

10. Rideau Centre, Ottawa ON Canada: $1020/sq ft

9. Mall at Millenia, Orlando FL USA: $1040/sq ft

8. Mall at Short Hills, Short Hills NJ USA: $1050/sq ft

7. Chinook Centre, Calgary AB Canada: $1055/sq ft

6. Oakridge Shopping Centre, Vancouver BC Canada: $1200/sq ft

Week in Review for December 22 – 28:

- Toll Brothers (NYSE: TOL), a luxury-home builder based in Philadelphia, agrees to a $16.2 million settlement following claims that it provided misleading information to investors.

- In the run-up to New Year’s Eve, many office buildings around Times Square prove lucrative even without full occupancy. Many office high-rises generate substantial income for landlords simply through their abundance of billboards, reports the Wall Street Journal.

-  For real estate investors who were first to buy portfolios of distressed single-family homes (to be converted to rentals), the aggregate-housing strategy seems to be paying off. Even in housing markets especially battered by the recession, such as Arizona, rental housing has proven profitable for a few early investors.

- A joint venture of Terranova Corp. and Acadia Realty Trust (NYSE: AKR) acquires a retail property in South Beach, Miami for $139 million (over $2,600/SF), reports CoStar. The fully leased, 53,000-SF property was sold by Tristar Capital, which bought the retail space in 1998 for only $15.75 million. Read the rest of this entry »

Executive Interview:

Greg Rogerson, Principal

J.G. Petrucci Co.

Greg Rogerson is a principal of J.G. Petrucci Co., Inc. (“JGPCO”).  An attorney, Greg oversees the negotiation of all contracts, leases and municipal approvals for each JGPCO project.  As such, he effectively directs and manages all legal and financial transactions pertaining to acquisitions, leasing and commercial development, including complex zoning and land use approvals.  Greg has also developed great insight into the unique issues involved in the re-development of brownfield sites in both New Jersey and Pennsylvania, which has become an important area of focus for the company.  In all, Greg has overseen the acquisition and disposition of more than $350 million worth of real estate transactions. 

 Mr. Rogerson received his law degree from Temple University School of Law and his Bachelor of Arts in History from the University of Delaware, where he was a three-year letterman in football. He is a member of the New Jersey Bar and resides in Bucks County, PA with his wife and three (3) children.  In his spare time Greg enjoys golf and coaching his children’s sports teams.

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Q: How did you get your start in the real estate business?

Jim Petrucci hired me right out of law school. My legal background helped a lot in the complex world of real estate development.

Q: What is your favorite part of your job? What do you find most challenging?

My favorite part is the redevelopment of obsolete brownfield sites and turning them into productive commercial projects that provide jobs and a stable rateable for the community. The most challenging aspect of this industry is the entitlement process in high barrier to entry markets.

Q: How have economic conditions affected J.G. Petrucci’s strategies? Have you widened or narrowed your focus due to present conditions?  Read the rest of this entry »

The 2012 Global Real Estate Transparency Index, published by Jones Lang LaSalle (NYSE: JLL), is a great source of information and context for the most (and least) invested-in real estate markets. We’ve covered every region but one. Wrapping up our “Top 10 Real Estate Markets for Transparency” series, here’s a ranking of the

Top 10 Most Transparent CRE Markets in the Middle East & Africa:

10. Kuwait

9. Lebanon

8. Kenya

7. Saudi Arabia

6. Bahrain

5. Mauritius

4. Botswana Read the rest of this entry »

Merry Christmas!

It’s time to roll up our sleeves, stand too close to the camera, and get really excited for today’s Commercial Real Estate Top 10! In the first of what I hope will be an annual Christmas Day event, here are my Top 10 Jim Cramer REIT Interviews!

10. Jim Cramer talks about REITs’ potential with David Hoster, CEO of industrial REIT EastGroup Properties

9. Jim Cramer sits down with the CEO of Entertainment Properties Trust

8. Jim Cramer talks to Debra Cafaro about the strong performance of healthcare REIT Ventas

7. Jim Cramer talks to CEO Mark Oran about Sunrise Senior Living’s merger with Health Care REIT

6. After a brutal day on the stock market, Jim Cramer “goes on a hunt for bulls” and finds Federal Realty Trust, which saw significant growth in 2011

5. Jim Cramer makes elaborate hand gestures while discussing holiday shopping trends and retail REITs like Simon Property Group Read the rest of this entry »

Have you ever stayed in a very low-end motel (think noisy neighbors, no hot water, the kind of bed you’re afraid to sleep in, etc…)? After that, even an average “economy” hotel will seem like the Ritz-Carlton. The hospitality market, like the business world in general, is a place of relative values. A market, submarket, or individual property doesn’t need 100% hotel occupancy and sky-high rates to become attractive for investment–it just has to be better than the competition.

In today’s bleak economy–and I wish I could put this more nicely–mediocre is the new good.

Domestic and international investors are most concerned with stability, so a market or asset showing potential for even modest returns and an assurance of economic security may be the recipient of investment capital. While U.S. hotels vary greatly in terms of quality, demand, and property value, the fact remains: there are much worse markets in which to invest.

Hooray for a lack of alternatives!

Even without New York City’s average occupancy (what is it now? 86%?), America’s largest markets are looking very attractive to REITs, private equity groups, and other investors because of their relative stability. A bit of good news for a sector that took a massive hit in 08-09. Read the rest of this entry »

On CNBC, Gibson Smith of asset management group Janus Capital (NYSE: JNS) discusses the stability and future prospects of the bond market, including mortgage-backed securities:

Read the rest of this entry »

Universities want our money long after the degree has been granted and the last tuition check clears. Years after graduating, I still get mail (and occasional phone calls) from my alma mater requesting financial support. Though I never provide a forwarding address, and no matter how many times I move, they always find me. It’s unsettling.

Considering each student spends a year’s income (or the equivalent in incurred debt) on a degree, you’d think that would keep most colleges and universities relatively satisfied. But no amount of tuition, charitable donations, and alumni fundraising seem sufficient for the ever-growing industry.

The New York Times published a great article about the increasing debt of U.S. colleges. Public and private, schools are borrowing more than ever in order to update, beautify, and expand their facilities. As higher education becomes increasingly competitive (among both traditional universities and for-profit, partly online schools like the University of Phoenix), the prestige of an extravagant new library or residence hall has become a way to attract students.

Of course, this surge of development has been great for the real estate and construction industries. But it comes at a cost, the New York Times explains:

Read the rest of this entry »