Commercial Real Estate Finance

Posts Tagged ‘acquisitions’

Commercial Real Estate Week in review for the week of January 1 to January 7.

-Nontraded REIT transparency is improving as more companies report share value of common stock.

-Neuberger Berman Real Estate Fund is  looking for REITs to beat the market.

-Pebblebrook Hotel Trust is looking toward acquisition possibilities.

-Healthcare Trust of America finalized the acquisition of  medical office buildings.

-Brett White, says commercial real estate is in the early days of a recovery.
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Commercial Real Estate Week In Review for the week of December 4 to December 10.

-Telecom tower firms turn to the REIT approach to remain tax efficient.

-Glimcher Realty Trust is taking a measured approach to growth.

-REITs experienced a slight setback in November.

-Realty Income increased the number of shares in a public offering.

-Starwood Property Trust has secured $275.2 million from two lenders.
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Commercial Real Estate Week In Review for the week of November 27 to December 3.

-Lenders are increasing financing for hotels as this asset outperforms other sectors.

-Green Street Advisors expect REITs to grow 2% to 3% per year.

-Simon Property Group is preparing to make an offer for CSC Group.

-Hunt Power is creating 2 REITs that will invest $2.1 billion in electricity and gas transmission and distribution assets.

-Commercial mortgage default rates rose to 4.36% in the third quarter.
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Commercial Real Estate Week In Review for the week of November 6 to November 12

-Canadian REITs are following a similar trajectory to those in the U.S.

-All major commercial real estate categories posted price increases this quarter.

-Lend Lease and NRDC Equity Partners formed a partnership to acquire Centro Properties.

-Bryce Blair, Avalon Bay Communities, was elected as the new NAREIT chair.

-First Potomac has $300 million in pending acquisitions.
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Commercial Real Estate Week in Review for the week of October 23 to October 29

-General Growth Properties wants Vornado Realty Trust’s Sandeep Mathrani to be its CEO.

-Apple REIT Nine acquired four hotels in Texas and PA for $60 million.

-Retail centers need to look at new use cases and redevelopment for growth.

-First Capital Realty acquired 2 Canadian retail centers with redevelopment opportunities.

-SL Green Realty provided financing to keep Manhattan office tower from foreclosure.
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Commercial Real Estate Week in Review for the week of October 16 to October 22

-Phillips Edison launched a REIT to acquire 150 shopping centers.

-Investors were not impressed by earnings with the growing foreclosure issue.

-Asking rents for commercial office buildings in Washington topped those in NY.

-Behringer Harvard agreed to purchase a medical office portfolio for $46.6 million.

-Big Shopping Centers, DDR acquired San Fransisco retail for $36 million.
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Commercial Real Estate Week In Review for the week of October 9 to October 15

-Avalon Bay Communities has acquired 2 multifamily complexes for $146M

-FelCor Lodging Trust has emerged from the recession unscathed.

-NY projects have been resurrected due to thriving market for distressed RE loan sales.

-Health Care REIT invested $702.5M in senior housing, medical office buildings and others.

-Hines & Antarctica Capital Real Estate agreed to buy 11 properties for  $2.33 billion.
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Commercial Real Estate Week In Review for the Week of August 28-September 3

- What do the bankers think about the new tough regulatory rules?

- Will the Dodd-Frank Act ruin the capitalistic spirit of America’s financial firms?

- Count JPMorgan Chase among those that do not believe a mortgage refinancing wave will strike anytime soon.

- Simon Property finalized its purchase of Prime Outlets.

- Did the TARP program buy a recovery, or just time?
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Vornado Realty Trust VNO.N, owner of office and retail properties, said last Wednesday it now expects to raise net proceeds of $710 million from its equity offering, up from an earlier $617 million, as underwriters exercised their option to purchase additional shares.

The company, the most recent real estate investment trust to tap the equity markets for capital, said it intends to use the proceeds for general corporate purposes, including repaying debt and funding acquisitions.

Although the debt markets have been reluctant lately to make large loans to commercial real estate companies, equity investors have shown an appetite for new shares.

Property companies that have turned to the equity market for capital over the past month include Simon Property Group Inc SPG.N, AMB Property Corp (AMB.N), Kimco Realty Corp KIM.N and ProLogis PLD.N.

This makes it easier for these big public REITs to acquire, especially to acquire assets of recently bankrupt General Growth Properties.

All of this news of REITs raising equity with public offerings raises an interesting question. Is this the wave of the immediate future? Are REITs better suited than private real estate companies to capitalize on opportunities in the short run, and thus are better poised for success in the long run?

While private real estate companies, much like REITs can be both narrowly focused by product type, as well as well diversified, both have been hit hard during the current economic downturn. There are several advantages each have over the other.

REITs have the clear advantage in the ability to raise capital. In this environment, the astute investor can see an undervalued stock rather easily, since many stocks are based on historical valuations, dividends, growth etc. Since REITs are relatively lower levered than private real estate funds, their purchasing power is higher during the current economic climate. On the flip side, many worried private investors who haven’t seen strong returns from their current and previous investments in private funds may be more hesitant to commit capital in the next fund. As any private operator will tell you, fundraising is as tantamount to large scale success in the industry as finding the right deals to buy. REITs also pay dividends, and are very liquid, which means investors can and will see returns on their investments much more quickly. With funds, capital is promised back to investors within a certain time frame, which if necessary can be many years.

Yet, there are still some clear cut advantages for private companies. The first is return thresholds. Most private real estate funds promise returns in the mid to high teens, sometimes doubling or tripling the returns of many REITs. Private funds are also not subject to the scrutiny of regulators because ownership remains private. As an aside to this fact, private funds aren’t focused on quarterly results, and do not have to meet analysts’ projections in order to stave off a sell off of their stock, and thus, their capital base. Also, unlike with any public company, with many private funds, returns, to a certain extent are promised, and not subject to the fluctuations of the markets. That being said, if a private operator fails and goes bankrupt, how secure are those returns? An investor is taking a lot of faith that the operator knows what they are doing, and is more innovative than the next guy in being able to remain afloat during unforeseen circumstances, like the tumultuous market we know find ourselves in.

One thing does remain clear in this debate. Cash is king. And REITs have more of it.

What are your thoughts on who is better poised to take advantage of current market conditions?