Commercial Real Estate Finance

Archive for the ‘Owners & Developers’ Category

In a recent CNN Money article, the author hoots and hollers about the next big real estate rip-off: home resale fees.  The fee, which essentially stipulates that as a housing development is being developed, the developer writes into all home purchase contracts that they are to receive a 1% resale fee every time that home is sold in the future for up to 99 years.  The article claims that this is such a rip-off, compares into to nothing more than price gouging, and says it has absolutely no value to consumers.  Hence, it has politicians and consumer advocates’ attention.  But are these groups really all that informed? Read the rest of this entry »

Sure, it might clog your arteries, but its still a safer (and tastier) wager.

The popular casino game Blackjack coined the term “double down”.  Above, KFC might have perfected (or ruined) the term. What Tennessee-based real estate developer Leon Heron is doing might be doubly stupid. Per this WSJ article, here is the background: Read the rest of this entry »

Any of you familiar with poker have heard the expression “betting on tilt.”  Essentially, it describes a player who has let their emotions get the best of them, and is overbetting a particular hand (or multiple hands) to try and make back the money they just lost on a big hand.  Rather than play the cards in from of them, they have let a bad beat cloud their judgment into making poor decisions.

And that brings us to Lehman (remember them?), the once upon a time Wall Street behemoth who crumbled into oblivion with bad commercial real estate bets.  Well, now they are doubling down on commercial real estate, betting that we have reached a bottom. Read the rest of this entry »

Think foreclosure is the worst thing that can happen to you as a landlord?  I suppose the answer to that question depends upon whether your loan was non-recourse or not, exposing your personal assets.  Even still, that may not be the worst thing that can happen, as Stuyvesant Town & Peter Cooper Village owner Tishman Speyer (TSO) learned this past week. Read the rest of this entry »

Of course a better question might be: Is the added construction cost worth any reduction in your insurance premiums?

A developer in Florida is touting his newly constructed office building as “hurricane proof” in this WSJ article (subscription required). This is a poignant topic, considering many meteorologists are predicting this year’s hurricane season to be among the worst on record.  And if it seems that you’ve heard that before, its probably because its true.  Hurricanes seem to be more voracious than ever (global warming deniers can feel free to dismiss the previous sentence at your own risk/ignorance).  If this is true, places like Florida will be lambasted by storms year after year after year, with more and more damage to an already brutal commercial real estate market. Read the rest of this entry »

A “desert island” is one that is uninhabited by humans.  Usually this is because it hasn’t been discovered yet, the terrain is too tough to develop, or it is simply is too far away from a mainland to realistically support an economy. But what happens when islands that are created nearby a mainland for the sole purpose of development and occupancy by humans goes indefinitely uninhabited?  Perhaps those qualify as ‘deserted desert islands’. And if you want the scenic view of the economic crisis, deserted desert islands might be the place to start.  While Florida might provide you with some (oily) sand, vacant shoreline buildings, and some stalled beachfront developments, it is nothing compared to the picture above. That picture is of “The World,” a cluster of man-made islands off the coast of Dubai.  Read the rest of this entry »

General Growth Properties (NYSE: GGP) has filed a reorganization plan to get them out of bankruptcy. Much of commercial real estate trades privately, so public trades are good opportunities for price discovery.

What can we learn from this plan? Read the rest of this entry »

When it comes to the financing of commercial real estate, the “extend and pretend” approach taken by many banks is well known.  However, it feels like more and more stakeholders in the commercial real estate industry are doing their part to kick the can down the road.  The latest evidence of this is the Permit Extension Act, signed into law last week by Governor Rendell and the Pennsylvania Legislature.  The law extends expiration dates on permits, approvals, and other agreements issued by local governments and agencies in Pennsylvania authorizing real estate development.  While the Act provides a gasp of fresh air to developers who are stuck in a tight spot on their stalled development projects, it is yet another blow to folks waiting on the sidelines with dry powder to pick up distressed deals. 

Read the rest of this entry »

There was a very interesting article on Globest.com yesterday that caught my eye.  It was titled exactly the same as above, but without the questioning. A mortgage broker helped an owner/user acquire a small, 11,000 square foot vacant office building for $4.2M by obtaining financing on the buyer’s behalf for almost the entire purchase price.  Unfortunately, the writer of the article either didn’t ask how this was achieved, or the broker dodged such lines of questioning purposely.  Sometimes, appearing intelligent, or in this case as a miracle-worker, is in what you don’t say.  So let’s make some assumptions as to why, and or how, this deal possibly could have gotten done in today’s capital markets. Read the rest of this entry »

Sorry James Dolan, but while we wait to see if LeBron James will give hope to your New York Knickerbockers, the trade for the Knickerbocker Hotel has given great hope to the commercial real estate industry. Its not the fact that something of significance traded hands, but more so the pricing at which it traded hands.  The competitive bidding environment for this property, at this point in the cycle, may indicate a paradigm shift in investment strategy for those rich with capital to deploy.  Let’s examine further. Read the rest of this entry »