Commercial Real Estate Finance

Archive for the ‘Week in Review’ Category

Week in Review for May 18 – 24:

• In a follow-up to last week’s “25 REITs Most Likely to Sell You a Property in 2013,” CoStar Group‘s Mark Heschmeyer lists the 25 REITS Most Likely to BUY Your Property this year. A variety of asset classes are represented on this list, including office, medical office, senior living, shopping center and standalone retail, student housing, industrial, and data centers. Few multifamily investors appear on this list.

• Search engine giant Yahoo! (NASDAQ: YHOO) leases about 176,000 SF at 229 W. 43rd St. in Manhattan’s Times Square, reports CoStar. The company is merging its other downtown offices in this building, which is majority-owned by Blackstone Group (NYSE: BX).

• Two development teams, South Beach ACE and Portman-CMC, vie for the opportunity to redevelop the famous Miami Beach Convention Center. Miami Beach commissioners will consider the financial and design details of the competitors’ proposals. The redevelopment project es expected to cost over $1 billion.

• In Philadelphia, Councilwoman Maria Quinones Sanchez pushes for the establishment of a land bank, a city organization that would consolidate and efficiently sell off the city’s abundant vacant land. Proponents of this measure say the more efficient system would bring much-needed revenue to the city, whose school system continues to suffer from severe under-funding.

• In a sign of increased investor confidence, the CMBS market sees an uptick in single-asset CMBS demand. The assets backing these securities include regional shopping malls and trophy office buildings. The single-asset CMBS market all but vanished during the financial crisis but has grown significantly since last year. Read the rest of this entry »

Week in Review for May 11 – 17:

- CoStar Group releases a list of 25 REITs “Most Likely to Sell You a Property in 2013.” The list includes many well-known public REITs, and just about every major asset class is represented, including multifamily and healthcare properties.

- Post Brothers, an up-and-coming multifamily developer in Philadelphia, begins listing apartments for its latest development, a conversion of a former industrial property on the outskirts of Center City.

- In developing this property, Post Brothers had a tense stand-off with the city’s labor unions in response to their use of non-union workers.

- JW Pepper & Son acquires a 43,000 -SF office building in the Stone Ridge Corporate Center in Exton, PA, a suburb of Philadelphia. They acquired the property for $5.1 million ($118/SF), reports CoStar.

- In Los Angeles, Hines REIT sells the One Wilshire building, an office and retail property, to GI Partners for $437.5 million, as well as one other property for $112.5 million.  Read the rest of this entry »

Week in Review for May 4 – 10:

• As the Pennsylvania Gaming Control Board deliberates over which proposed casino will receive Philadelphia’s second casino license, community groups from South Philadelphia protest the three casinos planned for their neighborhood. Two other casinos have been proposed for Center City and one other for Philadelphia’s Fishtown neighborhood. Meanwhile, representatives of Sugar House, currently the only casino in the city, voice concern that a second casino would harm their business. 

• Last year, Pennsylvania overtook New Jersey as the state with the second-highest annual gaming revenue in the country (after Nevada).

• PERE News reports that private equity groups such as Blackstone (NYSE: BX), Carlyle Group (NASDAQ: CG), and KKR (NYSE: KKR) are becoming increasingly dominant CRE investors in Asia, overshadowing investment banks in the region.

• A joint venture begins renovation of a historic high-rise at 16th and Walnut Streets in Philadelphia. Federal Capital Partners, Cross Properties and Alterra Property Group have announced they will convert the building into a luxury residential property to be called “ICON,” reports CoStar Group. The building dates back to 1929. Developers anticipate occupancy will begin in early 2014.

• Also in Philadelphia, the Cradle of Liberty Council of Boy Scouts of America prepares to vacate its regional headquarters, which is located on city-owned land. The city has worked to evict the organization since 2008 because of the Boy Scouts’ anti-gay stance. The building is valued at $1.1 million, reports Curbed Philly. Read the rest of this entry »

Week in Review for April 27 – May 3

• Infrastructure Investor (requires free registration) reports that public-private investment partnerships are gaining traction in the Mid-Atlantic U.S. Last month, Maryland’s legislature passed the Transportation Infrastructure Investment Act of 2013, with which the state will fund two light rail projects to be developed over the next seven years. These two projects will serve the Baltimore and D.C. markets. Their combined development costs are estimated to exceed $4 billion.
• According to distressed real estate data service NewAcre, the month of April saw increased numbers of distressed properties throughout the U.S. This rise in distressed listings includes most asset classes, including multifamily. Florida listed the highest number of distressed properties in April.
• At the DLA Piper 11th Global Real Estate Summit in Chicago, industry executives report continued growth in the capital markets, including an overall recovery for CMBS. The event’s panelists include executives from Equity Residential (NYSE: EQR), Ventas, Inc. (NYSE: VTR) and Vornado Realty Trust (NYSE: VNO).
• In Fort Washington, a suburb of Philadelphia, pharmaceutical giant Bristol-Meyers Squib leases 45,000 SF in the Fort Washington Executive Center. The company will move into its new, Class A office space at the end of this year, reports CoStar.
• In Northeastern Pennsylvania, Equilibrium Equities closes on a 249,000-SF industrial property in the Keystone Industrial Park. The acquisition is near Interstate 81 in the Scranton area. Equilibrium, an investment and development firm based in the Philadelphia area, plans a number of capital improvements for this property. Read the rest of this entry »

Week in Review for April 20 – 26:

- Thanks to looser regulations and increasing economic strength, China’s international CRE investment activity soars to $4 billion in 2012, reports CNBC. At their current pace, Chinese investors will invest $5 billion in foreign real estate in 2013. According to analysts from Jones Lang LaSalle (NYSE: JLL), this would make China one of the most important players in the international CRE market.

- One Chinese investor, Soho China, is in the process of buying a 40% stake in Manhattan’s General Motors Building for $3.4 billion. (That’s right, $3.4 billion will only buy a portion of this property…)

- High-end home goods retailer Williams-Sonoma increases its presence in South Brunswick, New Jersey by leasing 751,000 SF of under-construction industrial space to use for warehousing, distribution, and other purposes. The company already leases over a million SF feet next door to the future facility. Cushman & Wakefield represented the landlord in this deal.

- The U.S. Commerce Department announces first quarter economic growth of 2.5%, an improvement over most of last year. Still, this number falls short of analysts’ expectations. Over the course of its 4-year recovery, the economy’s rate of growth has averaged around 2%, says the LA Times.

- As the CMBS market recovers, NOIs for properties tied to these bonds rise closer to pre-Recession levels. After examining a sampling of 2007 vintage CMBS loans, CoStar Group reports that their properties’ NOIs in 2012 far exceed those of 2011.

- Philadelphia-based Brandywine Realty Trust (NYSE: BDN) releases the report for its first quarter, which includes the sale of $221 million in assets. The REIT, which previously focused on office properties, is currently involved in joint ventures with Toll Brothers (NYSE: TOL) and Campus Crest Communities (NYSE: CCG) to develop multifamily and student housing, respectively. Read the rest of this entry »

Week in Review for April 13 – 19:

- Twenty closed-end private equity real estate funds hold final closes in Q1, and CoStar reports the funds collectively raked in $5.2 billion. While Q1′s total far surpasses that of the previous quarter, the private equity real estate sector faces more challenges than it did before the recession. Average fundraising periods at the start of 2013 are roughly double the averages reported in 2007, writes Mark Heschmeyer.

- In Georgetown, Kentucky, the American division of the world’s largest auto maker, Toyota (NYSE: TM), plans to expand its U.S. manufacturing to include Lexus sedans. This expansion is a positive sign for those working in heavy industrial real estate and gives an employment boost to the area. Still, it presents another reminder of Detroit’s waning dominance in American automotive manufacturing and consequences for its industrial real estate.

- Overseas Union Enterprise announces its intention of listing its hospitality real estate assets as a REIT on the Singapore Stock Exchange. OUE focuses on CRE opportunities in the U.S., China, and Singapore, reports the Wall Street Journal.

- In Philadelphia, competition for the city’s second casino license intensifies as six potential developers, ranging from local partnerships to the publicly traded Wynn Resorts (NASDAQ: WYNN) present their plans to the Pennsylvania Gaming Control Board. Read the rest of this entry »

 Week in Review for April 6 – 12:

- In Philadelphia, the Pennsylvania Gaming Control Board holds a hearing regarding a potential new casino for the city. The board hears testimony from developers, residents, architects, and union members. A number of different designs, brands, and locations have been proposed for the city’s second casino.

- Also in Philadelphia, co-developers PMC Property Group and Lubert Adler mull the sale of an in-progress multifamily development at 2040 Market Street, reports BizJournal’s Natalie Kostelni. The property, formerly an underperforming office building, is still under construction, but many suggest its prime location will fetch a record price even before its completion.

- CoStar group reports that some are concerned the CRE lending market is heating up too quickly. The article’s author, Mark Heschmeyer, describes a trend of relaxed lending standards that has emerged in the last couple of years. This discussion follows a recent Morgan Stanley (NYSE: MS)/Bank of America (NYSE: BAC) CMBS offering. The conduit’s loan-to-value (LTV) is rated as 98.8%, significantly higher than other recent offerings.

- In Flint and Genesee County, Michigan, RACER Trust struggles to repurpose and sell large plots of land formerly used by General Motors. RACER Trust was formed to divest some of GM’s industrial properties following the car maker’s bankruptcy.  Read the rest of this entry »

Week in Review for March 30 – April 1:

- Improving home prices and a strengthening labor market suggest the U.S. economic recovery is gaining momentum. Some suggest it is time for the Fed to wind down its economic stimulus program through which it has purchased billions of dollars in securities to hold down interest rates. Others argue the Fed’s bond-buying should continue until the unemployment rate has fallen below 6.5%.

- Philadelphia-based multifamily operator Morgan Properties closes on $1.2 billion in refinancing for a portfolio of 73 properties. The refinancing, the largest in Morgan Properties’ history, was originated by Berkadia Commercial Mortgage, reports CoStar Group.  

- With the rejuvenation of many CRE markets and growing CMBS activity, buyers of higher-risk, B-rated bonds are showing increased appetite.

- The Libor scandal of the last couple years, which has triggered numerous lawsuits, investigations, and government inquiries, prompts some regulators to call for a new, more transparent benchmark for interest rates. Others, including the European Commission, hope to improve the current system, reports the New York Times.

- Philadelphia’s Equus Capital Partners announces the sale of a 330-unit student housing property in Chicago’s South Loop. The high-rise, sold for $58 million, serves Columbia College, Roosevelt University, and other Chicago schools. Equus Capital was previously known as BPG Properties, Ltd. Read the rest of this entry »

Week in Review for March 23 – 29:

- CoStar Group reports increased optimism toward distressed CRE assets in 2013. As many bank-owned assets approach market value, some analysts advise caution and a focus on higher-quality assets with a significant number of tenants.

- The Commerce Department announces strong consumer spending growth in February, signalling rising incomes and a recovering job market. Home sales increased by 0.7% in this period and major retailers such as Macy’s (NYSE: M), Pottery Barn, and Williams-Sonoma (NYSE: WSM) also reported an uptick in sales.

- In Manhattan, SL Green Realty (NYSE SLG) obtains $925 million in financing for the Sony Building at 550 Madison Avenue. The building was recently acquired for $1.1 billion by a consortium of buyers led by the Chetrit Group.

- In Philadelphia, Stockton Real Estate Advisors takes over leasing duties for Penn Mutual Towers, an under-performing office complex overlooking the city’s famous Independence Mall. The property is currently in receivership, but Stockton plans to upgrade and lease up the three-building property in preparation for eventual sale.

- BioMed Realty Trust (NYSE: BMR), a REIT specializing in properties serving the life sciences industry, acquires a subsidiary of Wexford Equities for $640 million. The acquisition will add an 11-property, 1.6 million SF portfolio to the REIT’s holdings. Read the rest of this entry »

Week in Review for March 16 – 22:

- American Realty Capital Properties (NYSE: ARCP) offers to buy the non-traded Cole Credit Property Trust III for $5.7 billion. However, CCPT is currently considering its own acquisition–real estate management firm Cole Holdings–casting doubt on American Realty Capital’s proposal. American Realty Capital invests in net-leased retail, office, and other properties.

- The financially troubled Philadelphia School District announces the closure of 23 of its schools in areas throughout the city. Curbed Philly explores the feasibility of acquiring and repurposing these aging properties.

- The city of Colorado Springs faces a different challenge to its education system. The town is experiencing decreased commercial occupancy and real estate values that correspond with declining enrollment in its schools. Colorado Springs Business Journal attributes these conditions to the city’s aging population.

- Rising food prices–especially for corn–lead to increasing land values throughout the Midwest, with many farmers selling land to investors. Some warn this market is at risk of becoming a bubble, reports the New York Times.

- In Center City Philadelphia, Santa Fe-based Rosemont Realty acquires the 29-story 2000 Market St. office building from a fund affiliated with CBRE (NYSE: CBG). The rumored purchase price of $110 million is more than double the building’s sale price in 2009. Read the rest of this entry »