the Editors of Commercial Property Executive
Foreign Tourism Keeps Hotels Afloat
As of September, hotel loan delinquencies accounted for a mere 0.23 percent of all outstanding hotel loans, according to Fitch Ratings’ latest U.S. CMBS loan delinquency index. But while foreign tourism has been a cornerstone of the U.S. lodging sector and international visitors may continue to visit travel hot spots, thanks largely to the wobbly dollar, lagging international markets may force more overseas consumers to cut back considerably on travel to the United States. The property type will also have to grapple with declining business and leisure travel. As for prospects for property subsectors in the coming year, on a…
Leasing, Absorption Get Hit in Third Quarter
The industrial market, like every other major property sector, is trying to cope with the housing slump and weak economy. Leasing activity within the sector has declined considerably, and the industrial market also realized negative absorption in the second quarter, its first drop in occupancy in five years, according to a report from Colliers International. The report, “U.S. Real Estate: Caught in the Middle of a Credit Crisis and Faltering Economy,” also notes that the vacancy rate is forecast to grow at a rate of 1 to 1.5 percent over the next year. Rental rates, which have already decreased, are…
Top 2007 Apartment Lenders Now Subject to Mergers
What a difference a year makes. Last year, 2,739 multi-family lenders provided more than $147.7 billion in financing for apartment buildings with at least five units and closed 48,577 individual loans, according to a report from the Mortgage Bankers Association. The average loan size came in at $3 million, while the average lender provided 18 multi-family loans in 2007. Wachovia Corp., Washington Mutual Bank, Deutsche Bank Commercial Real Estate, Capmark Financial Group Inc. and Wells Fargo Bank N.A. were the top five multi-family lenders in 2007 based on total dollar volume. The report–based on data from the MBA 2007 Commercial…
Vacancies Rise in Many Southern Markets; New York City Nets Top Performance
While overall the U.S. office market’s vacancy rate experienced a 30-basis-point increase, hitting 14.3 percent for the third quarter, according to a third-quarter office market report from Grubb & Ellis Co., 47 markets saw their third-quarter vacancy rates rise while 12 realized declines, compared with 39 markets that increased and 20 that declined in the second quarter.Detroit notched the highest vacancy rate with 23 percent. Moreover, Phoenix, Austin, Las Vegas, Palm Beach County, Orange County and San Diego struggled, with each market experiencing a year-over-year jump in vacancy of at least 400 basis points, and California’s Inland Empire saw its…
Tough Times In Sight
Retail real estate is in for a rough ride, according to the latest “Emerging Trends in Real Estate” report by the Urban Land Institute and PricewaterhouseCoopers L.L.C. “Retail stays down for a while,” the report stated.According to the report’s assessment of the prospects for 11 subsectors–three of which are retail–neighborhood/community centers have the best outlook among the retail subsegments. On a scale of 1 to 9, with 1 meaning “abysmal,” 5 representing “fair” and 9 signifying “excellent,” that subsegment earned a mark of 4.67 for investment projects and a tally of 4.08 for development prospects. Power centers pulled in a…
Kilroy Reports Revenues Up in Q3
Kilroy Realty Corp has reported financial results for its third quarter ended September 30, 2008 with net income available for common stockholders of $13.2 million, or $0.40 per share, compared to $9.0 million, or $0.28 per share, in the third quarter of 2007. Revenues from continuing operations in the third quarter totaled $77.1 million, up from $65.1 million in the prior year’s third quarter. Funds from operations (FFO) for the period totaled $34.5 million, or $1.00 per share, compared to $28.2 million, or $0.81 per share, in the year-earlier period. For the first nine months of 2008, KRC reported net…
EMS service in Connecticut May Use Lease Sale-Back Scheme
New Britain EMS got a unanimous OK from the common council recently to let it sell its assets to the city. It will then lease them back, according to a report in the Hartford Courant. EMS in New Britain has been hit hard in recent years, as have other such emergency medical service providers nationwide. The New Britain provider has been buffeted by expenses and low-ball Federal payments that don’t cover true costs of many of its services.Three years ago the city loaned $2.1 million to the EMS. The heart of the trouble, according to lawmakers is that the Federal…
Restaurant Franchising Turns to Sale-Leaseback for Capital in Tough Market
The sale-leaseback deal was mostly invented to provide an alternate source of capital for a company that dislikes too much debt, or simply wants more capital than its bank cares to lend it. These days, it seems, that alternative can be all the more useful for corporate finance, now that banks in general are hesitating to lend, regardless of the creditworthiness of the borrower. One real estate owner tapping into the sale-leaseback source in a big way recently is DineEquity Inc., franchisor and operator of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants, which just inked deals with an assortment…
GM CEO Pushes for Share of Federal Bailout Pie, More Banks Line Up
Those who do not study history, it’s said, are condemned to repeat it, which suggests that the Big Three automakers’ libraries might have gathered a thick layer of dust. It was just about 29 years ago that the legendary Lee Iacocca (remember those patterned shirts with the white collars?), then CEO of Chrysler, approached Congress to ask for about $1.5 billion in loan guarantees. Congress eventually agreed, and then-President Carter signed the legislation into law in January 1980. The action, essentially unprecedented at the time, worked in spades. The automaker, previously on the verge of bankruptcy, introduced some successful new…
Financial Market Update: After the Closing Bell-Tues., Oct. 28
The whipsawing stock market took a wild swing upward today, with the Dow Jones gaining 889 points–its second-biggest one-day jump ever–as the Federal Reserve began a two-day meeting, during which it is expected to cut interest rates. The Standard & Poor’s 500 index gained 91.6 points, also its second-biggest one-day point gain ever.While the stock market soared, it was not all good news for the economy today. U.S. consumer confidence is down, says the Conference Board. Down to a record low of 38 this month, following the largest one-month decline (from 61.4 in September) since the organization devised the index…