Commercial Real Estate Finance

Archive for the ‘Mensch & Schlemiel of the Week’ Category

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:

Todd Schuster, Ares Commercial Real Estate

Ares Commercial Real Estate (NYSE: ACRE) has been busy. The mortgage REIT, which focuses on mid-market multifamily loans, recently announced the acquisition of AREA Property Partners in a move that quadruples the company’s capital to $8 billion, according to Commercial Property Executive. Last week, ACRE bought EF&A Funding (better known as Alliant Capital LLC) for almost $63 million while also announcing a new co-CEO, Todd Schuster.

Mr. Schuster is a board member with both ACRE and an Alliant Capital affiliate, which makes him ideal to lead the unification of these these two companies. This appointment is also an extremely high-profile one and likely pleasing to investors. 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:

Curbed

For sheer entertainment value, my favorite real estate website (or really, family of sites), is Curbed. This site (which has local pages for many major markets) seems to go for more fun or unusual news from the world of development, real estate policy, and related issues, which can be a nice break from the more dry, data-driven stuff we usually see. You won’t get a market-by-market analysis of cap rates by asset class, but you will find out about the house Kelsey Grammer put on the market, or get a slide show of the coolest works of architecture in the U.S.

The site’s emphasis of architecture, both historic and recent, is what makes it especially interesting to me, and their recently announced “Curbed Young Guns 2013″ Competition makes them our Mensch of the Week.  Here are a couple snippets from the announcement:

…we’re excited to announce the launch of Curbed Young Guns, our search for the next wave of up-and-coming architects, developers, and interior designers. …Now we don’t necessarily mean we’re looking for the next Frank Gehry (though obviously we’ll take him). We’re also looking for the junior architect who’s the rising star of a start-up, the designers dreaming up yet-unbuilt schemes, and the decorators creating the next big thing in interiors. The rules are simple: nominees must be under the age of 35 and they must be based in the United States.

Best of all, it’s a totally democratic voting process; a nomination form can be found on their site.

Even though we mostly talk about the financial and economic sides of the commercial real estate industry, I like to touch on issues related to architecture and design now and then. Despite it’s glamorous reputation, most of the architecture industry’s members toil in obscurity, working on projects with far less profile than the latest Frank Gehry or Cesar Pelli masterpiece. Granted, a non-glamorous design gig (a no-frills affordable housing project, a future Walgreens) is still appealing to many in the industry who’ve struggled to find work in the recent development drought. 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:

Pennsylvania Real Estate Investment Trust

PREIT (NYSE: PEI), a retail and shopping mall investor not far from Llenrock’s offices in Philadelphia, has a good understanding of the opportunities and unique challenges of their sector. Malls, community centers, and other retail assets comprise an enormous segment of America’s commercial real estate inventory, and there are plenty of attractive core and value-add investment opportunities within this market. But retail (like so many other asset classes) has been the victim of overbuilding–not to mention dampened consumer confidence, big-name bankruptcies, and competition from the mighty Internet.

Yes, there are still revenue-producing malls full of high-end tenants and wealthy clientele, and fully leased community shopping centers anchored by Internet-proof businesses like grocery stores, gyms, and popular eateries. But to find the gems in the retail sector, one must sift though a lot of fairly mediocre inventory.

For a major retail REIT, navigating and growing in this challenging sector requires a big-picture strategy and some very selective investments. PREIT seems to have both. In the last few months, the REIT has pared down its non-core assets, selling off properties like Orlando Fashion Square Mall, Paxton Towne Centre and the Phillipsburg Mall, all of these sales part of the company’s ”previously-announced plan to improve the quality of its portfolio by selling certain non-core assets” (according to various related press releases). 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.

Mensch of the Week:

Robert Squires

The Kislak Company

In a nation full of strip malls, parking lots, and general sprawl, it’s nice to know that “Main Street” is more than just a nostalgic buzzword thrown around by politicians pretending they’re not backed by large, multinational conglomerates. There are still towns (not just big cities) with bustling CBDs and local, independent businesses. These towns may be few and far between, and their mom-and-pop businesses more scarce, but they do exist.

Montclair, New Jersey, is one of these places. The small New Jersey community’s claims to fame include its association with HBO’s The Sopranos and its appearance at #9 on CNN Money‘s “Best Places for the Rich and Single.” As you can tell from the picture, Montclair has a distinctly “Main Street” image, with everything from brick sidewalks to quaintly horizontal traffic lights.

The latest issue of the Mid-Atlantic Real Estate Journal reports a recent, significant sale of unique CBD properties in Montclair and Hasbrouck Heights. The  three-property portfolio, marketed and represented by the Kislak Company’s Robert Squires, sold for about $5.3 million. According to Kislak’s press release, Mr. Squires helped the (unnamed) seller divest the following assets: 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:

Marla Thalheimer, Director of Sustainability

Liberty Property Trust 

I’m a little late, as usual, but I want to tie this in with Earth Day. Even though this occasion has been around for decades, it’s agenda is becoming increasingly relevant, and increasingly viable, in the business world. Today, Earth Day isn’t simply about third-graders planting trees and elaborate Google Doodles. Today, both customers and businesses are more conscious of energy consumption, carbon output, and so on. Even Walgreens has gotten in on the act.

In the commercial real estate industry, one company at the forefront of sustainable development is office/industrial REIT Liberty Property Trust (NYSE: LRY). Over the years, the Pennsylvania-based company has been recognized as a leader in green development by organizations such as the EPA (Energy Star), NAIOP, USGBC, and NAREIT. Marla Thalheimer, Liberty’s Director of Sustainability, is crucial to the REIT’s leadership in this area. 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. 

Mensch of the Week:

Dan Gilbert, Bedrock Real Estate Services

Like many other cities (Flynt, Michigan; Gary, Indiana; Chester, Pennsylvania; et al), the city of Detroit has come to symbolize the decline of America’s 20th century city. Thanks to de-industrialization, decades of corporate incompetence, and a legacy of political corruption culminating in the conviction of former mayor Kwame Kilpatrick, Detroit is the poster child for urban decline.

In a Top 10 list we published last year, the Top 10 Ghost Towns in the U.S., Detroit came in at #4 with a rental vacancy rate of 16.9% and a homeowner vacancy rate of 1.7% (1.7% doesn’t sound bad at all, until we consider the possibility that no one in Detroit can sell their homes).

Dan Gilbert, the Quicken Loans billionaire and Detroit native, hopes to change that. 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. 

Mensches of the Week:

Fannie, Freddie

It’s very rare that large, cumbersome financial entities earn the coveted title of “Llenrock Blog’s Mensch of the Week.” It’s even rarer to find this award going to controversy-ridden quasi-governmental institutions such as this week’s winners: Fannie Mae and Freddie Mac (better known by their catchy nicknames: the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation).

Here is why Fannie and Freddie are this week’s Menches: the two institutions, both of which were bailed out (along with numerous traditional financial institutions) during the subprime mortgage debacle, are continuing to grow in profitability. The news of regained profitability officially broke last year. Thanks to the gradual recovery of the housing market, both companies were finally able to sustain themselves without further federal bailout money. Up until this point, reports the Los Angeles Times, Fannie and Freddie had received a combined total of over $180 billion from taxpayers.      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. 

-

Mensch of the Week:

Pittsburgh, Pennsylvania

With a few notable exceptions, most U.S. cities have reported little good news about their office markets. Contracting businesses coupled with lower space demands have created a less-is-more scenario in most office markets (except Manhattan, San Francisco, and a few others). Greater efficiency and consolidation in this sector wouldn’t be a problem if it wasn’t for (what turned out to be) massive overbuilding of the asset class up through 2007.

Back in January, Reis Reports noted that a great deal of office inventory would remain unleased until the labor market enters a significant recovery period. Of course, the average vacancy rate at the close of 2012, 17.1%, is a respectable improvement over the 17.6% reached earlier in the financial crisis, but it’s a far cry from 2007′s 12.6%. For most markets, the only way to lower the vacancy rate is to demolish or repurpose current assets. 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. 

-

Mensch of the Week:

The City of Denver

After single-family, office real estate was one of the asset classes most hurt by the financial crisis of 2008-09. The factors that created the precipitous drop in office demand were something of a perfect storm: widespread corporate cutbacks (and outright closures) decreased the number of tenants, while changing workplace trends and more efficient technology limited the office footprints of many other companies.

Recent news of increased activity and values in the office sector is one clear indication of the overall economic recovery. Once again, companies have the confidence to expand and lease.

But the office recovery is more noticeable in certain markets, such as our Mensch of the Week: Denver, Colorado. According to research from CBRE (NYSE: CBG), the Mile High City enjoyed the greatest decline in vacancies among the top office markets surveyed in the first quarter.

Denver ended 2012 with a 15.1% vacancy rate but ended the first quarter of 2013 with a rate of 14.5%. While this pales in comparison to, say, downtown San Francisco, it shows strong improvement for the local market and looks especially positive when compared to the dismal national average (which has been hovering around 17% for quite some time). 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. 

-

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 »