the Editors of Commercial Property Executive
With Pool of Distressed Assets on the Rise, A10 Kicks Off $100M Lending Program
The number of distressed assets continues to grow and lenders across the country have been debuting new programs and establishing funds to provide loans for owners and buyers of these troubled assets in a climate where securing financing has become a monumental challenge. Now, Boise, Idaho-based A10 Capital has jumped on the bandwagon with $100 million in capital for the origination of first mortgage commercial real estate loans and the supplying of financing for commercial real estate-secured distressed debt acquisitions through its new Lending Group. According to A10, it’s all about foresight. Seeing the credit crunch on the horizon, A10…
Economic Update – Looking for Green Shoots Among the Economic Indicators
Friday’s unemployment numbers from the U.S. Department of Labor, while hard to characterize as good, aren’t quite as bad as they have been in previous months. Unemployment is still going up, but not quite as quickly as before. That kind of thing is beginning to be called “green shoots,” to use an up-and-coming economic buzzword. Shoots or not, the U.S. economy lost 539,00 jobs in April, driving the unemployment rate up to 8.9 percent, the highest since 1983. In March, the loss was 663,000, but much of the difference between the two month is attributable to the fact that the…
Economic Update – Retail Finding a Bottom?
Whatever else is happening in the economy, U.S. consumers seem to have returned to the nation’s stores in somewhat greater numbers now that spring is here. According to consultancy Retail Forward, the 35 major retailers that it surveys saw a 0.9 percent increase in same-store sales in April compared with March, when sales had dropped 1.9 percent. Average same-store sales compared with April 2008, however, were down 3.7 percent. “The retail sales declines are finding a bottom, but it’s a bumpy bottom,” said Frank Badillo, senior economist at Retail Forward. Bumpy, and maybe murky like the sea bottom, so it…
New Faris Lee Office in NYC Aims to Navigate Tough Retail Waters
Despite the chilly economy, Faris Lee Investments is in an expansion mode. The company has opened a New York office, and has named Richard Berlinghof to head the retail investment sales and advisory firm’s East Coast team. The move is a natural for the firm, said Richard Walter, Faris Lee’s president. “We have a lot of clients on the East Coast, and there is a need for them to receive intelligence on a real time basis,” Walter said. “There is something new that happens every day, so we decided to move down the street from them.” Berlinghof (pictured), who has…
CMBS Market at Risk of Widespread Defaults, But TALF Change May Ease Burden
At least two-thirds of the American CMBS loans maturing in the coming decade could be at risk of default, according to a new report by Deutsche Bank. However, a recent change to the Federal Reserve’s TALF program could act as a safety valve for the market.The numbers get scarier as the Deutsche Bank report states that 80 percent of loans made in 2007 are also unlikely to qualify according to Reuters, which reported on the study. CMBS loans make up only about 20 to 25 percent of the entire commercial real estate market, yet other sources of financing, such as…
Panel: Despite New Government Programs, Significant CRE Problems Must be Addressed
While the federal government has unveiled an array of programs to unfreeze the credit markets, significant issues remain to be addressed in commercial real estate financing, according to a roundtable hosted this morning by the New York Metro CCIM Chapter. The federal government has had to invent new ways to unlock credit markets, as conditions exist today that are unprecedented, according to David Dubrow, partner in the law firm of Arent Fox L.L.P. In the savings & loan crisis of the early 1990s, the government found the remedy was to put troubled savings & loan institutions into receivership and sell…
Economic Update – Smaller Banks Face CRE Woes
On Wednesday, the eve of the stress test results, observers were wondering just how much trouble sour commercial real estate loans are going to cause those banks that hold them. Knee deep, waist deep, or up to their eyeballs?It depends on just how much a bank believed rising prices weren’t really a bubble back in the mid-2000s. The Wall Street Journal reported that, according to a document it obtained, the largest 19 U.S. banks are expecting losses of as much as 12 percent for the next two years on commercial real estate loans–a fair amount of believing in the durability…
Amid Uncertainty, $129M D.C. Apartment Project Tops Out
In the midst of a somewhat gloomy outlook for the Washington, D.C.-area multi-family market, developer Kittler has topped off a $129 million luxury apartment property. Dubbed The Millenium at Metropolitan Park, the project will open later this year to a market that has been affected by the economic slowdown, but will be somewhat bolsetered by job creation stemming from the federal government’s expansion efforts.While apartment construction will slow in Washington, D.C., more than 4,800 apartments came online in the first quarter and another 3,600 should be completed by year’s end, according to Marcus & Millichap Real Estate Investment Serices. Approximately…
Global Hotel Transactions Hit 7-Year Low in Q1, but Change is Afoot
In the first three months of the year, the worldwide economic crisis dealt its biggest blow yet to the hotel investment industry. As per recently released research by Jones Lang LaSalle Hotels, global transaction volumes fell from a fourth quarter 2008 figure of $2.1 billion to an even more conservative $1.9 billion, the lowest point since the 9/11-induced downturn during the first quarter of 2002. However, signs indicate that the market may very well have reached a bottom. Looking at regions around the world, the Americas, which had led the pack in transactions until the credit markets collapsed, continued to…
Atlanta Developers Postpone Construction Deals as M-F Demand Wanes
Decreased completions and continual job losses are anticipated to ease the rise in apartment vacancy in Atlanta through the rest of the year, according to a second-quarter report by Marcus & Millichap Real Estate Investment Services. A shortage of construction financing and unease over constant job losses in the city have resulted in developers postponing some plans until the market stabilizes. Last year, 4,500 units were delivered, whereas in 2009 completions are expected to total just 3,300 units. “Investment activity in the Atlanta apartment market is constrained and will be dominated by distressed sales in the coming months,” John Leonard,…