Commercial Real Estate Finance

Archive for the ‘Banking & Finance’ Category

Take a look at this ranking of the Top 10 Most Transparent Real Estate Markets in Asia, which we originally published at the end of last year. This ranking comes from the Global Transparency Index published by Jones Lang LaSalle (NYSE: JLL) (here’s the PDF). Note that the increasing lightness of the text indicates greater overall transparency (clever, right?).

10. Indonesia

9. Philippines

8. China (Tier 1)

7. Taiwan

6. Japan

*5. Malaysia

4. Singapore

3. Hong Kong

2. New Zealand

1. Australia

Malaysia is an interesting place. As you can see from the ranking above, it is one of the better Asia-Pacific markets when it comes to the availability of reliable comps and other market information. Home to Petronas Towers–two of the highest skyscrapers in the world–and an increasingly global economy, Malaysia is seeing an increasing influx of foreign CRE capital. Still, transparency-wise, Malaysia isn’t in the highest tier of markets in the region (Australia and New Zealand) and is only considered “transparent” (as opposed to “highly transparent”) by the analysts over at Jones Lang LaSalle. On a worldwide ranking of market transparency, Malaysia appears at #23 (between Austria and the Czech Republic), while Hong Kong and Singapore are much higher.  Read the rest of this entry »

That title is a little deceiving.

In fact, this ranking from Ernst  & Young’s “European Real Estate Assets Investment Trend Indicator 2013″ (here’s the PDF) isn’t so much a ranking of “attractive” as a ranking of markets that think they’re attractive. So bear in mind that the European CRE professionals surveyed for this report may be a little, you know, biased. With that said, here is a list of the Top 10 Most Attractive European CRE Markets in 2013 …according to themselves:

Respondents were asked if they thought their market was “Very Attractive,” “Attractive,” or “Less Attractive.”

10. Austria (Very Attractive: 33% / Attractive: 48% /  Less Attractive: 19%)

9. Russia (23% / 64% / 13%)

8. Poland (45% / 45% / 10%)

7. UK (28% / 63% / 9%)

6. Switzerland (32% / 60% / 8%)

5. Belgium (23% / 70% / 5%)

4. Germany (41% / 58% / 1%) Read the rest of this entry »

The writers of the Simpsons are running out of ideas. This famous family has visited New York, Brazil, China, San Francisco, alternate dimensions, and the future. Now, they’re running out of places to visit. On one episode, after the Simpsons have been kicked out of Florida, they struggle to find a U.S. state that hasn’t yet banned them. Their last resort?

Delaware.

“I want to visit Wilmington!” Lisa exclaims.

Thus, the great state of Delaware and one of its largest cities are reduced to a punchline on an episode of the Simpsons.

To be honest, being made fun of by the Simpsons has become something of an honor. Still, this highlights the “second-class city” image some metropolises face–especially when they’re close to a much larger city (just ask Newark).  Though they are smaller, and offer smaller-scale economic drivers, such small- to medium-sized cities deserve a closer look, both from CRE investors and businesses looking to expand.

Last month, I discussed Baltimore, Maryland in a similar context. Baltimore offers a great deal of potential, more affordable CRE, and a large workforce. Unfortunately, CRE developers often pass over Baltimore for other larger cities. The same holds true, to a great extent, for Wilmington (granted, it’s a fraction of Baltimore’s size). Read the rest of this entry »

Mark Morris

Partner

Fox Rothschild, LLP

Mark is an experienced real estate practitioner with a particular focus on representing clients in the hospitality industry. He routinely handles a broad range of real estate matters, including acquisitions, development, joint ventures, leasing and finance.

As co-chair of the firm’s Hospitality Practice, Mark serves as lead attorney in more than 30 transactions annually involving the sale, acquisition, development and management of full-service and limited-service hotels throughout the United States. He is skilled in the negotiation of franchise and management agreements and has worked closely with major franchise companies, such as Marriott, Choice and Hilton, in transitioning franchisees and resolving disputes.

A familiar face within the hospitality community, Mark has written and spoken on matters of interest to executives in the industry, as well as to shopping center owners and tenants. He has taught at the Institute for Paralegal Training in Philadelphia and lectured on commercial leasing topics to developers and retailers.

Mark’s leadership roles within the firm include serving as a member of the firm’s Executive Committee, managing partner of the firm’s Philadelphia office and former chair of the firm’s Real Estate Department.

In law school at Boston University, Mark received the Paul J. Liacos, Edward P. Hennessey, and G. Joseph Tauro scholarly designations.

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(This is Part Two of our interview. Click here for Part One!)

Q: Philadelphia’s office market has seen some challenges in recent years. What can be done to revive this asset type? Is the answer simply to convert office to something else (multifamily, etc.)?

It’s still a zero-sum game. There hasn’t been significant downtown construction in years. Even with limited space, there haven’t been enough projects to increase the value of that space. Right now, Philadelphia’s businesses are just trading places with each other, not absorbing more space. Many service-oriented businesses have downsized because of new technology and better efficiency, which drives down office demand. There aren’t many office-based businesses moving into the area, except to the Navy Yard, and to some extent demand driven by the universities and medical centers. Read the rest of this entry »

Looks like our readers still see some opportunity in the ‘burbs. Personally, I’m going with Zombie Apocalypse…

See our previous polls here.

Mensch 

Noun, informal. A decent, upright, mature and responsible person. 

Schlemiel 

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser. 

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Mensch of the Week:

Toyo Ito, Architect

Even though the Llenrock Blog is ostensibly about CRE finance, we like to branch out to other sectors and specialties in the real estate world. It’s nice to have a little variety.

One of my favorite topics to explore is architecture, partly because of the fascinating news and profiles I see in this field, party because it makes for prettier pictures.  Discussions about CMBS loans rarely offer interesting visuals, unless you’re really into line graphs.

I’m happy to report today’s Mensch of the Week is a fascinating architect named Toyo Ito. The Korean-born, Japan-based architect recently received the Pritzker Prize–sort of the Nobel Prize in architecture–for his “iconoclastic” building designs. Read the rest of this entry »

Mensch:

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel:

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser.

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Mensch of the Week:

Allan Domb

Greater Philadelphia Association of Realtors

Back in January, the Philadelphia Business Journal announced that Allan Domb, a local realtor specializing in luxury condominiums, had been appointed the 88th president of the Greater Philadelphia Association of Realtors.  

As usual, I’m about two months late in congratulating Mr. Domb, but better late than never.

Allan Domb is a major force in Philly’s luxury residential niche, marketing and leasing properties in the city’s most desirable locations: Rittenhouse Square, Washington Square, the Delaware waterfront, etc. As a longstanding member of Philly’s real estate community, he was a clear choice as new leader for GPAR, which calls itself “The voice of real estate in Philadelphia.”

Unfortunately, high-demand neighborhoods like those of Center City are generally rare for Greater Philadelphia. A trade organization such as GPAR is essential to this city, where the commercial and residential markets have significant room to grow–provided the right conditions are in place. Read the rest of this entry »

For a while now, we’ve been seeing increased public interest in commercial real estate investment–for a variety of reasons. Record-low interest rates, stock market volatility, and the relative stability and returns of CRE assets have drawn greater and greater amounts of capital from every branch of the investment world. Previously, I have discussed the increased real estate allocations of private equity groups, pension funds, and other alternative investors. Last Tuesday, we looked at legislation that will create new real estate investment opportunities for individuals by broadening the definition of what an “accredited investor” is. 

Now–showing up a little late to the party, perhaps–we have hedge funds.

For the record, this discussion of hedge fund investment in commercial real estate isn’t simply an excuse to do a “hedge” pun, much less a Sonic the Hedgehog tie-in.

Well, okay. It kind of started out that way.

Collectively holding hundreds of billions in investment dollars, hedge funds are better-positioned than most to invest in this capital-intensive sector. In today’s climate of low interest, low yield, and generally sluggish economic recovery, hedge funds have been among the droves of investors seeking higher yields through CRE holdings. One particularly attractive asset among some hedge funds is the junior class of commercial mortgage-backed securities.

Bloomberg’s Sarah Mulholland and Kelly Bit write,

Ellington Management Group LLC, Saba Capital Management LP and a fund of MatlinPatterson are among investors considering purchases of so-called B-pieces of newly issued commercial property bonds, according to people familiar with the three firms’ plans…

The pool of buyers is poised to widen as new issuance soars and investors try to ferret out ways to get high-yielding returns as the Federal Reserve holds interest rates close to zero into a fifth year.

Read the rest of this entry »

Week in Review for February 23 – March 1:

 - The Securities and Exchange Commission announces a May 14th roundtable to discuss possible reforms for the credit-rating industry, which many argue lacks transparency and accuracy. Credit-rating agencies, especially Moody’s, S&P, and Fitch (collectively known as the Big Three) have an enormous influence over the commercial real estate investment and lending markets.

-  The Greater Philadelphia market gained 2.9 million SF of new industrial real estate in the fourth quarter of 2012, reports CoStar Group. This includes a new distribution facility for Dollar General (NYSE: DG). The figure shows a slight increase over the previous quarter’s total of new inventory.

- The U.S. Senate confirms Jack Lew as the new Treasury secretary, replacing outgoing secretary Tim Geithner. Mr. Lew is a former executive with Citigroup (NYSE: C).

- The announced merger of big-box office supply retailers OfficeMax and Office Depot signals potential changes for retail real estate, reports CoStar.  Read the rest of this entry »

Today we’re excited to feature our first guest post from our friends at Integra Realty Resources! From their IRR on Real Estate blog, here is IRR Managing Director Jim Andrews to discuss the complex, ever-changing world of real estate valuation. Many thanks to the IRR Blog and Jim Andrews for the contribution!

Why Consistent International Valuation Standards Are Essential

There’s no shortage of valuation standards today, such as the Royal Institution of Chartered Surveyors (RICS) “Red Book,” the Uniform Standards of Professional Appraisal Practice (USPAP), and the International Valuation Standards (IVS), to name a few. Use of these standards varies by country and based on the clients’ needs. But the real property and business valuation community is increasingly boiling down these rules into a more consistent set of standards as the members of these organizations collaborate in defining the guidelines for appraisals.

I spoke about this topic [last November] at the RICS Summit of the Americas on a panel discussion I helped spearhead, titled “Comparison of Valuation Standards and Movement to Globalization.” Joining me were current and former committee members of the organizations that produce the various standards, such as RICS, the Appraisal Foundation, the Appraisal Institute of Canada, and the International Valuation Standards Committee (IVSC).

Everyone on the panel expressed interest in having a more consistent set of standards. We delved into the reasoning more deeply, and I wanted to share it with you.

1. Enhance the reputation of the profession and promote its usefulness around the world. 

Currently, the U.S. uses Generally Accepted Accounting Practices (GAAP) as its set accounting principles. Nearly every other significantly developed country has already adopted the International Financial Reporting Standards (IFRS). The U.S. still hasn’t moved toward total adoption of the IFRS measures, but it has begun integrating IFRS with GAAP. An established set of consistent standards would help in appraising assets and liabilities for financial reporting, especially for companies that control assets in various countries and work across national borders. For valuations for other purposes, the reputation of the profession would be enhanced if the clients could expect consistency in valuation reporting internationally.

2. Simplify the appraisal process.

USPAP is the accepted set of standards for valuation in the U.S. But if a member of RICS is performing the appraisal, it should also comply with RICS standards, which differ in subtle ways. In the Caribbean, I work across U.S. and British territories, which typically require different standards, as well as Dutch, French, and Latin American islands where there are generally no nationally accepted standards. A single set of standards and guidance notes would enable appraisers to produce a credible valuation with a similar report structure regardless of membership or the location of the asset to be valued. Read the rest of this entry »