Commercial Real Estate Finance

Posts Tagged ‘General Growth Properties’

Week in Review for December 15 – 21:

- 2012 comes to a close with a high level of real estate activity, CoStar Group reports. Many investors are hurrying to complete deals prior to 2013, fearing higher tax rates in the new year.

- In Philadelphia, Post Commercial Real Estate, LLC, acquires the 1,015-unit Presidential City Apartments from BLDG Management Company. Presidential City, the largest apartment complex in the area, was sold for $51 million (roughly $52,000/unit).

- In Columbia, Maryland, the city planning board approves a planned 380-unit apartment and retail complex, as well as an open-air expansion for the nearby Columbia Mall. The 75,000 SF shopping plaza, proposed by the mall’s owner, General Growth Properties (NYSE: GGP), would create space for 8-10 retail tenants and 2 restaurants.

-   Dollar stores such as Family Dollar (NYSE: FDO), which have shown surprising resilience since the recession, become increasingly popular among triple-net retail landlords.

- American Realty Capital (NASDAQ: ARCT) announces the acquisition of another REIT, American Realty Capital Trust III. Their combined assets will total $3 billion, reports Bloomberg.  Read the rest of this entry »

The commercial real estate market, like most other markets, seems very confusing at times. As we track industry activity, whether through large business journals or industry-specific news sources like CoStar, it’s easy to come across a great deal of conflicting reports. Positive news about office properties is followed by negative news the next day, and this seems to be the case for a majority of assets and investment vehicles in the real estate world. There’s no single litmus test for the health of the market or any of its submarkets.

Even so, I have been rather surprised, in the last few months, to hear good news for the U.S. retail sector. We have been inundated with news about bankruptcies, store closures, and declining sales in numerous markets throughout the country. While I don’t believe brick-and-mortar retail can ever be replaced–no matter how successful Amazon becomes–I had begun to think of retail properties as investments to avoid. But as usual, market activity proved my black-and-white view to be too simplistic.

Read the rest of this entry »

Here’s the logic behind REITs, as far as I understand them: while conforming to the government’s regulations for pass-through entities, investors pool massive amounts of capital to acquire and profit from large amounts of real estate, controlling portfolios well beyond the reach of smaller investment vehicles.

Or, to put it even more simply, the logic behind REITs is this: they’re big.

Holding fast to the idea that a REIT’s success is in pretty much direct proportion to its size, I was surprised to read this report on REITs’ activity in the recently completed first quarter. As the Wall Street Journal explains, the big winners in terms of revenue (which is generally how “winning” is decided in such things) were not the usual REIT behemoths (Simon Property Group (SPG), General Growth Properties (GGP) , etc.). Rather, the Dow Jones All-REIT Index shows the highest returns came from the “smaller” REITs:  Read the rest of this entry »

Week in Review for March 31 – April 6:

- J.P. Morgan Chase (JPM) announces it will sell $132 million in distressed CMBS. According to analysts, if investors show interest in these underperforming assets, it would be a strong sign of recovery in the commercial real estate market.

- Major banks–including Citigroup (C), Bank of America (BAC), and Morgan Stanley (MS)–brace for possible downgrades by Moody’s. The credit-rating agency says it will consider these downgrades in May.

- The student housing sector enjoys increased business thanks to rising enrollment in U.S. colleges.

- CommonWealth REIT (CWH) acquires the tallest building in Connecticut. The REIT purchased the 38-story CityPlace I office building, in Hartford, for $99 million. It was sold by CityPlace, LLC, which has owned the tower since its construction.

- UBS plains to sell $412 million in CMBS backed by the famous Fontainebleau Hotel in Miami. Read the rest of this entry »

Downtown shopping centers and malls enjoy a significant advantage over their suburban counterparts: tourism. While outlying retail centers draw only those who are interested in shopping, major cities’ retail centers are visited by thousands of people each year who are attracted by the reputation or non-retail attractions of the place. In many ways, retail centers such as Faneuil Hall Marketplace in Boston, the South Street Seaport in Manhattan, and the Navy Pier in Chicago benefit from something of a captive audience. Their customers are already visiting as tourists.

Given this advantage–plus the cost of property in such geographically prime areas–these tourist-driven retail centers are expected to perform significantly better than other shopping centers. In some cases, though, it seems their performance has been lackluster, their retailers and unique “brand” falling short of expectations. Read the rest of this entry »

Week in Review for February 25 – March 2:

- Morningstar analysts are ambivalent about multifamily REITs’ long-term outlook, despite current favorable conditions in the apartment sector.

- General Growth Properties (GGP) buys 11 Sears locations from Sears Holdings (SHLD), including locations in Florida, Utah, and Iowa. Perhaps most importantly to GGP, the deal included a Sears store at the high-performing Ala Moana Center in Honolulu.

- Also in Honolulu, Pacific Office Properties Trust (PCE) has sold its First Insurance Center property to Senior Housing Properties Trust (SNH) for $70.5 million. The deal is expected to close on June 30th.

- The National Association of Business Economics (NABE) predicts overall economic growth in 2012, including gradual improvements in employment, home construction, and spending.

- The Dubai-based owners of the five-star Mandarin Oriental in Manhattan reach a $175 million refinancing deal with the Bank of China.  Read the rest of this entry »

What do kids do for fun today? Certainly not “hang out at the local mall,” based on my recent experience at the Granite Run Mall in suburban Philadelphia. The place was a ghost town.

The declining popularity of shopping malls is not unreasonable. First of all, who wants to park in a lot, walk a few hundred yards to the front door, then walk past 20 stores just to get to The Children’s Place?  Personally, I prefer the efficiency and direct storefront access of a Target (TGT). Read the rest of this entry »

Week in Review for December 17 – 23:

- 2011 was a big year for senior housing and care investments, with most financing going to existing rather than new facilities

- REITs performed well during 2011, thanks to their access to capital, and many CRE experts predict 2012 to be another strong year

- In other REIT news, Peter Slatin of Real Capital Analytics predicts continued movement toward global portfolios

- Morningstar (MORN) analysts voice concern over some aspects of multifamily investments, despite the optimism of many in this sector

- With CMBS from 2007 maturing in 2012, Standard & Poor’s analysts warn of refinancing difficulties Read the rest of this entry »

Commercial Real Estate Week in Review for the Week of October 15th to October 21st

- CMBS Originators Consider Joining Forces

- Mortgage REITs are Falling Behind

- APG Acquires Stake in Retail Portfolio

Read the rest of this entry »

The CMBS market is most likely not going to recover to the 2007 level of $234 billion, but is the market continuing to grow?  With only $3.4B sales in 2009, the market clearly has a long way to go to get back to those numbers, but most likely, the market will not be able to support this.

We’ve seen even this year as large banks have been struggling to move their CMBS even after a strong first two quarters, including JP Morgan.  With about $11.5 billion in commercial mortgage-backed securities changing hands in 2010, 2011 has already seen $25.6 billion on the market to date.  Certainly an increase over $3.4B, the market looks poised for additional increases.

One of the drivers we may be able to look to here is still declining interest rates.  General Growth Properties announced refinancing of $966M in mortgages for just four of their properties today for a savings of 103 basis points and eliminating adjustable rates and more risk.

As the common trend is for additional refinancing once the loan matures to remove equity,  JP Morgan analysts see that the market is poised to continue increased transactions, with their projections of $20-30B in 2012 as a large number of commercial mortgages are due to mature next year.  Will the market continue to grow yet again as low interest rates and refinancing opportunities abound?