Commercial Real Estate Finance

Posts Tagged ‘CRE finance’

Rina Cutler, Philadelphia’s Deputy Mayor of Transportation and Utilities, discusses the growth of the city’s real estate market, resurgent neighborhoods, and the latest innovations in urban planning. (This is Part II of Llenrock’s latest video interview. Visit our YouTube channel to see the rest of her fascinating interview!)

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Following our ranking of the 10 Most “Absorbent” Retail Markets, here’s a list of the Top 10 U.S. Retail Markets with the Highest Rents, based on data published in the Colliers 2013 Retail Outlook for North America (here’s the PDF). This ranking is based on shopping center stats from the end of 2012 for the country’s biggest retail markets (with the exception of New York City).

10. San Diego, CA (Quoted rent per SF: $20.28)

9. Oakland/East Bay, CA ($21.04)

8. Washington, DC ($22.25)

7. Los Angeles, CA ($22.41)

6. Orange County, CA ($22.70)

5. Long Island, NY ($23.35)

4. Miami-Dade County, FL ($23.55)

3. San Jose/South Bay, CA ($26.15) Read the rest of this entry »

Last month, we ran an interview with Rob Odell, chairman of commercial insurance service Odell Studner Group. I asked him what he thought were the biggest changes in his industry, and this was his reply:

In the last 10 years we saw two of the greatest changes affecting real estate clients. First, the terrorism events of September 11, 2001. Prior to September 11, terrorism was never considered by insurance carriers writing real estate domestically. Second, the economic events of late 2008 to January 2009. These events prompted new standards of detailed underwriting unlike anything I had seen in my first twenty-plus years representing real estate owners.

It’s plain to see how the recession impacted members of the commercial real estate industry. We talk about these impacts all the time: a shift in demand from one asset class to another, changing population trends, growing and deteriorating CRE markets, and diminished development and transaction activity are all salient examples of the world’s recent economic troubles.

The first example Mr. Odell cites, terrorism, may have had less of an impact on CRE, but there’s no denying it has affected the balance sheets and strategies of commercial real estate owners and operators–at least indirectly. The industry most affected by this tragedy (other than industries with military contracts) was the insurance business. Read the rest of this entry »

Executive Interview:

Carl Dranoff

Dranoff Properties

Civic leader, entrepreneur and urban visionary, Carl Dranoff is president and founder of Dranoff Properties. For over three decades, he has been a leader in creating unparalleled residential destinations that revitalize the urban core. Though based in Philadelphia, Dranoff’s work has gained national recognition and respect, with a portfolio range of historic rehabilitations, ground-up skyscrapers and complex mixed-use projects.

Dranoff earned his B.S. in Civil Engineering at Drexel University and his MBA from Harvard University. He has been awarded an Honorary Doctorate in Engineering from Drexel University and has been named “Entrepreneur of the Year” by Ernst & Young.

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Q: How did you get your start in the real estate development business?

From an early age I knew I wanted to be a builder.  To prepare, I armed myself with the proper education, graduating from Drexel University with a degree in civil engineering and earning an MBA at the Harvard Business School.

I started my career working for Jack Blumenfeld and Company on the 1500 Locust Street apartment project, then under construction.  I’ve always had a strong entrepreneurial spirit, and working for Blumenfeld helped feed my dream of establishing my own company.

Q: What is your favorite part of your job? What do you find most challenging?

I love proving the naysayers wrong, undertaking projects the pundits say are impossible or too risky. Our projects are complex and the coordination and management of all the aspects really separates us from the competition. We go into cutting edge locations, reinvigorate a neighborhood, and deliver an imaginative and high quality project.

Dranoff Properties employs the best and most experienced staff, along with our veteran executive leaderships.  However, we work in a very fast paced industry, and as any successful company can attest, keeping everyone on the same path can be challenging. Honestly, finding enough hours in the day is the biggest challenge I have. We have projects underway, irons in the fire and a strong vision for the future – it’s an exciting time for us.

Q: How have economic conditions affected Dranoff Properties’ strategy? Have you widened or narrowed your focus due to present conditions?  Read the rest of this entry »

This ranking is based on research published in Colliers’ 2013 Retail Outlook Highlights for North America (here’s the PDF). From 2012′s year-end absorption data for major retail markets, here are the Top 10 “Most Absorbent” Retail Markets in the U.S.!

10. Baltimore, MD (Retail space absorbed in 2012: 514,444 SF)

9. Boston, MA (549,034 SF)

8. Cincinnati, OH (550,102 SF)

7. Washington, DC (708,954 SF)

6. Las Vegas, NV (825,682 SF)

5. Denver, CO (934,929 SF)

4. Atlanta, GA (1,004,274 SF)

3. Seattle/Puget Sound, WA (1,047,510 SF) 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:

Pennsylvania Real Estate Investment Trust

PREIT (NYSE: PEI), a retail and shopping mall investor not far from Llenrock’s offices in Philadelphia, has a good understanding of the opportunities and unique challenges of their sector. Malls, community centers, and other retail assets comprise an enormous segment of America’s commercial real estate inventory, and there are plenty of attractive core and value-add investment opportunities within this market. But retail (like so many other asset classes) has been the victim of overbuilding–not to mention dampened consumer confidence, big-name bankruptcies, and competition from the mighty Internet.

Yes, there are still revenue-producing malls full of high-end tenants and wealthy clientele, and fully leased community shopping centers anchored by Internet-proof businesses like grocery stores, gyms, and popular eateries. But to find the gems in the retail sector, one must sift though a lot of fairly mediocre inventory.

For a major retail REIT, navigating and growing in this challenging sector requires a big-picture strategy and some very selective investments. PREIT seems to have both. In the last few months, the REIT has pared down its non-core assets, selling off properties like Orlando Fashion Square Mall, Paxton Towne Centre and the Phillipsburg Mall, all of these sales part of the company’s ”previously-announced plan to improve the quality of its portfolio by selling certain non-core assets” (according to various related press releases). 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 »

Looks like it’s time to brush up on my Mandarin… 

See our previous polls here.

Imagine two office buildings of equal size, quality, and leasable space, sitting right next to each other. As far as anyone is concerned, these properties are identical. Now, imagine their landlord sells both properties–but rakes in far more money for one building than for the other. Why would this happen?

Even if these properties are physically identical, there is one essential feature that counts toward an asset’s value more than anything else: tenants. Maybe–and this isn’t much of a stretch, coming out of the Recession–Building A is fully leased, while Building B is completely vacant? Even if these properties have the same capacity for revenue, the fully leased property is the only one with potential, much less certainty, of future income. It all comes down to which businesses and residents reside–or plan to reside–in a particular property.

A dilapidated shanty in the middle of Siberia could sell for 300/SF–if it had a long-term lease with Google.

Also important is the question of what other businesses are located in the area, since these help determine the financial strength of a potential tenant or buyer. For members of the real estate community–whether investors, developers, brokers, capital advisors, or pretty much anyone else–a property’s tenants and neighbors have an enormous influence in deals and decision-making. Up until this point, however, discovering detailed tenant information usually took a bit of digging.

Aziz Akin, an experienced analyst in Manhattan, believes his product can make tenant research significantly easier. This service, Buzzfile, is an online search platform that locates and identifies companies throughout the United States, providing results according to street address, company, industry, city, number of employees, and other specifics.  Read the rest of this entry »

The Urban Land Institute’s reports aren’t just well-researched and informative; they’re colorful, too (a big plus for someone like myself, who reads tons of these things). As they have for similar reports, the ULI teamed up with accounting giant PwC to survey and analyze industry sentiment affecting real estate investment in Europe. This report, Emerging Trends in Real Estate – Europe, 2013 (click for PDF), includes a list of  7 general issues affecting Europe’s CRE market and investors’ attitudes toward these conditions. It isn’t a Top 10, but close enough… Here are the Top 7 Attitudes Affecting CRE Investment in Europe:

• London is overheated and overpriced (Agree: 44%)
• London is fairly priced as a safe haven (Agree: 28%)
• The crisis in southern Europe represents a great buying opportunity (Agree: 53%)
• Investment in southern Europe should be avoided until markets stabilize (Agree: 41%)
• European prices will be stagnant for the next five years (Agree: 44%)
• The U.S. represents a more attractive investment relevant to Europe (Agree: 33%)
• Asia represents a more attractive investment relative to Europe Agree: 43%)

I’m sure CRE professionals in Europe have plenty of other attitudes, too. Attitudes like, I hope Real Madrid plays better than they did in the last match, or, Let’s go mess with these American tourists! Or anything else people in Europe think about. Read the rest of this entry »