Commercial Real Estate Finance

Posts Tagged ‘CoStar Group’

Week in Review for December 29, 2012 – January 4, 2013:

- On New Year’s Day, the U.S. House of Representatives passed legislation to prevent automatic tax increases in 2013, otherwise known as the “fiscal cliff.” The last-minute deal comes after months of partisan bickering, media speculation, and investor nervousness.

- CoStar Group releases its 12 CRE Predictions for 2013, based upon data from Jones Lang LaSalle (NYSE: JLL)’s 2013 Cross Sector Survey. CoStar’s predictions include further growth for the equity REIT market, strong office performance on the West Coast, and an increase in sales among properties purchased early in the CRE market’s recovery.

- BGC Partners, which acquired bankrupt real estate services firm Grubb & Ellis last year, buys two companies affiliated with its Newmark Grubb Night Frank (NGKF) operations. BGC has acquired Smith Mack in Philadelphia and Frederick Ross Co. in Denver, which had become Newmark affiliates in the last few years.

- In Greencastle, Pennsylvania, kitchenware company World Kitchen renews its lease of a million-SF warehouse and distribution center. Its landlord, Matrix Development Group, has committed to a capital improvement effort for the facility expected to cost over $10 million.

- New York City sees a huge increase in available class A office space. The city’s 14.5 percent availability is largely a product of recent downtown developments, including 4 World Trade Center and the World Financial Center, says Bloomberg.  Read the rest of this entry »

CoStar recently published an article about (slowly) improving fundamentals in U.S. commercial real estate, pointing out that distressed property transactions, while still very high, have nonetheless stabilized. Observing this data alone, all we know is things aren’t getting any worse at the moment–not exactly confidence-inspiring news. However, when you look at the volume of non-distressed transactions, sales that signify market stability and improvement, we see some growth over previous periods.

As CoStar reports:

Based on year-end 2011 data for sales of office, industrial, retail and multifamily properties, distressed property sales totaled $21 billion last year. That compares to $20.6 billion in 2010.  Read the rest of this entry »

Despite the current economic situation, the U.S. credit downgrade and uncertainty within the stock markets, commercial real estate continues to be strong. Commercial real estate is tangible, and in many cases that is a very valuable thing. So, should you be investing in real estate? Does commercial real estate look promising moving forward into the future?

Read the rest of this entry »

Almost one year ago, I wrote about a Wall Street Journal article that detailed how the Mortgage Bankers Association, supposedly having expertise in real estate debt, managed to bungle their own building into a mystifying horrendous loss. In a follow up to that article,  the WSJ highlights how the operator who bought the distressed building from the Mortgage Bankers Association, has added insult to injury in a very short period of time. Read the rest of this entry »

The top ten high profile cases of victims of the economy are listed below as found on agentgenius.com, many of which are in New York City and involve office buildings.

10. The Watergate Hotel in Washington, D.C. ($25 million)

The Watergate Hotel went into foreclosure after the owner defaulted on a $40 million loan, but the plan to refurbish the 251-room hotel may still happen, although a legal dispute between the bank and neighboring residents has delayed these efforts.

9. Resorts Casino Hotel in Atlantic City, NJ ($115 million)

Although this is Atlantic City’s first casino, it was not shielded from the effects of the economy. Fewer visitors and declining revenues caused mortgage troubles to mount in late 2008. The next year it’s keys were handed over to lenders.

8. Maui Prince Resort in Maui ($192.5 million)

An investment fund run by Morgan Stanley joined forces with a local firm in Maui to buy this resort in 2007 for $575 million to develop it. When tourism dropped in  the state due to recession these plans could not be fulfilled.

7. Pearson Building in New York City ($241 million)

This building was lost in an auction to Otera Capital for $241 million, according to CoStar Group, less than half what Macklowe Properties paid for it in 2006.

6. Canyon Ranch in Miami ($308.5 million)

The renovated Carillon Hotel opened in 2008 as a hotel and condominium under the name of Canyon Ranch. Economic downturn soon had its effects on the hotel and its developers handed over the 300-plus unsold condos to its creditors. Now the Canyon Ranch development plans seem to be in recovery.

5. Universal City Plaza in Universal City, California ($304.8 million)

This property became one of the more high-profile casualties of the Southern California commercial real estate market since the start of the recession. The Plaza is home to a number of media and entertainment companies, including NBC Universal and Universal Music, but this 36-story building is now jointly owned by a pair of East Coast distressed investment firms.

4. John Hancock Tower in Boston ($660.6 million)

A New York City-based investment firm bought this New England office building for $1.3 billion with huge amounts of financing, with the hopes that Boston’s office rental market and commercial property values would remain red hot. A decline in property values and a spike in the unemployment rate dramatically weakened demand for office space across the country.  The property was sold in a foreclosure auction for less than half of the original purchase price.

3. Treasure Island Hotel Casino in Las Vegas ($775 million)

Due to the difficult economic climate and hopes of raising quick cash, the casino operator sold the resort and its famous pirate battle display for a $775 million to Kansas billionaire Phil Ruffin.Various estimates have placed the site’s value at about four times that amount, according to CoStar Group.

2. General Motors Building in New York City ($2.9 billion)

In 2007, Harry Macklowe acquired seven Manhattan office buildings from private equity giant Blackstone Group. The loans used to make those purchases became nearly impossible to refinance once credit markets started to freeze up. Macklowe’s firm was then forced to sell off his most prized trophy: the General Motors building.

1. Stuyvesant Town & Peter Cooper Village in New York City ($3 billion)

MetLife put this 11,000-unit apartment complex on the block in 2006, and it quickly started a fierce bidding war. In three years buyers began defaulting on the massive amount of debt used to finance the purchase, and handed over the property to creditors.

Maybe the Mortgage Bankers Association (MBA) needs to get an M.B.A. in real estate. As a recent Wall Street Journal article detailed, the company charged with helping borrowers source financing, drank their own financing Kool-Aid and succumbed to a tanking economy and real estate market.  Its one thing for an unknowing and unsuspecting homeowner to get a variable rate mortgage.  Its another for an organization of professionals taught to understand the pitfalls of such financing in an economy with unsustainable low interest rates.  The MBA sold their Washington D.C. headquarters, which they bough in 2007 for $79.1 million,  to commercial real estate data provider CoStar Group for just $43 million.

Rather than writing a blog post, I figured I would simply make the following comments, and let you, the reader respond with your own: Read the rest of this entry »