Commercial Real Estate Finance

Archive for the ‘Political’ Category

Thanks in part to Hollywood, developers have a reputation as the “bad guys”–the greedy corporate bulldozers whose plans always run counter to the will of the community and woodland sprites. This certainly isn’t the case in many locales. Here in Philadelphia, long-abandoned row homes, overgrown lots, and industrial facilities are being converted to town homes and multifamily properties–and I’m yet to hear anyone complain (except maybe a few union members not hired for the project). Often, developers–whether it’s just a couple local guys or a major firm like Trammel Crow or Toll Brothers (NYSE: TOL)–receive resounding approval from community members who appreciate the economic growth that comes with new projects.

Sometimes, however, new residential and commercial projects, no matter how feasible from a market perspective, meet vocal resistance from members of the community. And the fear of losing green space and a nice view is only one of the many reasons residents will fight a proposed development or commercial tenant. Here are a few other businesses and commercial projects that have struggled with public opposition:     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:

Robert Rubin

Co-chair, Council on Foreign Relations & Former U.S. Treasury Secretary

Earlier this month, Robert Rubin spoke to CNBC about a comment made by Sandy Weill, his former colleague at Citigroup (NYSE: C). Mr. Weill said, in essence, that it would be wise for the U.S. government to split up financial institutions that are “too big to fail.”

Any matter that involves public and private interaction tends to be complex, not to mention controversial. Though many have railed against the “cozy” relationship between government and commercial entities, the interdependence of these two groups doesn’t always mean one side understands the other. Maybe the economic and regulatory problems highlighted by the Great Recession are just as much a product of this lack of understanding as they are of government/Wall Street cronyism?

Luckily, there are people like Robert Rubin, who have a depth of experience on both sides of the public/private divide. Mr. Rubin spent years as an executive with Goldman Sachs and later Citigroup, but also served as the Treasury Secretary during the Clinton years. Such a resume affords him a unique insight into the complex world of financial regulation. Read the rest of this entry »

2013 is looking fairly positive, according to our weekly readers’ poll:

See our previous polls here.

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 »

I used the Spanish spelling of “revolution” because it sounds especially revolutionary.

Commercial real estate, like so many other industries, is built on relationships: between professionals, between service and client, and especially between the industry and its community.

Last Tuesday, a Boulder, Colorado commissioners’ meeting on the county’s oil and gas regulations was stricken by protests, disruptions, and even so-called “bullying” by opponents of the energy sector’s hydraulic fracturing process (a/k/a “fracking“).

As I discussed a while back, fracking–despite the public outcry over environmental and health risks–has emerged as a major economic stimulus for communities that sit above America’s shale gas plays. With increased interest from large  energy companies comes elevated demand for industrial and other CRE development, plus an overall boost for the local economy (say proponents).

But fracking has its share of opponents. Proposing natural gas drilling in a community like Boulder is a little bit like opening a vegan tapas restaurant in Dead Horse, Alaska. In the last few months, there have been many instances of commercial and real estate interests colliding with community concerns. Each situation, of course, comes with slightly different challenges, so there’s rarely a clear strategy for a prospective investor or developer. It’s worth looking at the role of community dissent when it comes to real estate investment and development, since commercial decisions that are “legally approved” or “profitable” aren’t always backed by popular opinion.

Whatever economic and real estate benefits the energy sector may bring to Boulder County, it’s probably not worth the fight. In Boulder, after all, it’s not uncommon to face public intimidation for failing to recycle. God forbid you light a cigarette. (Trust me, I used to live in Boulder. My cigarette-smoking didn’t go over too well, nor did my fracking.)    Read the rest of this entry »

Week in Review for November 3 – 9:

- Barack Obama wins reelection, defeating Republican challenger Mitt Romney.

- As a result, many in the investment and finance industries who backed Romney fear cumbersome financial regulations and the expiration of Bush-era tax cuts.

- In the industrial real estate market, warehouse vacancies show a nominal decline to 9.2% in the third quarter, but warehouse properties are showing far greater performance than in the same period last year. With an increased demand for “big-box” warehouses, some developers are tentatively constructing new supply, says CoStar.

- In Collegeville, Pennsylvania, Williams Form Engineering Corp. has agreed to a $2.5 million purchase of three acres of land and a 30,000 SF factory and distribution facility. The built-to-suit facility is being constructed by Gorski Engineering, which is also the seller. WFE is slated to move into its new property in January.

- American Realty Capital (NASDAQ: ARCT) acquires 229 W. 36th Street for $65 million. The REIT believes its acquisition, which is 100% leased, is in a Midtown neighborhood that offers great potential for rent growth.   Read the rest of this entry »

Since the preelection debate has focused a great deal on Wall Street, the auto industry, and their hefty government bail-outs, let’s take a look at the Top 10 Most Bailed-Out U.S. Corporations Since the Recession Began:

(Parentheses contain total disbursed, in billions. Yes, billions.)

10. Chrysler ($10.7)

9. GMAC / Ally Financial ($16.2)

8. Wells Fargo ($25)

7. JPMorgan Chase ($25)

6. Citigroup ($45)

5. Bank of America ($45) 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:

Douglas Kinney, Carlyle Group

Carlyle Group (NASDAQ: CG)’s newest hire is our Mensch of the Week. Douglas Kinney, a former executive with Greenhill & Co. (NYSE: GHC), has joined the Washington, D.C.-based alternative asset firm as its managing director for international real estate fundraising. Carlyle Group is an enormous fund manager, with assets reportedly in excess of $150 billion, so the fact that this extremely powerful firm (whose previous employees include numerous world leaders) is strengthening its real estate fundraising team is excellent news for the global real estate industry.

As PERE News reports:

 The move is seen as a successful stroke for Carlyle’s investor relations team, which expanded in the run-up to the firm’s initial public offering in May and in the wake of raising $2.3 billion for the firm’s sixth US real estate fund, Carlyle Realty Partners VI, in December. According to two people familiar with the matter, Carlyle is expected to launch an Asia-focused real estate fund in the very near future and possibly another US vehicle.  Read the rest of this entry »

Who built it? We built it!

This election is shaping up to be the biggest marketing battle since Coke Vs. Pepsi. As the Republicans’ and Democrats’ war of words intensifies, one issue has remained at the forefront of American politics: the economy. Whether flying the We Built It flag or the Forward. flag, politicians have relied almost exclusively on economic matters–job creation, industry growth, etc.–for their talking points.

While the conventions and catchy slogans may or may not affect public opinion (we’re a pretty jaded public, these days) there is one thing we can all accept as true: the recession (while, officially, “over”) continues to affect our economy, both on a global and national level. In keeping with this reality, both the RNC and DNC narratives have focused on this idea: America needs to grow its manufacturing sector. 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:

 Online Brokerage Start-Ups

Certain industries have been exceptionally slow to embrace the opportunities of online commerce. Commercial real estate has been one of the worst offenders. Only recently have CRE professionals begun to discuss how social media, blogs, multimedia, and other technology can generate and optimize business. Perhaps it’s because real estate is such an old industry. Perhaps it’s because CRE deals require a level of trust that can’t be replicated online.

Whatever the case, the office real estate sector finally is beginning to embrace the Internet in a crucial sector: brokerage. As the Wall Street Journal reports, Internet start-ups are making leasing and property information more publicly available, co-opting the role of traditional brokers with what amount to Match.com’s for office leasing. Read the rest of this entry »