the Editors of Commercial Property Executive
As Number of Distressed Assets Grow, Broad Street Launches New Division
With a trifecta of falling asset prices, a deep global recession and waves of loans coming up for refinancing in a Draconian lending environment, the roster of distressed commercial real estate assets is growing, as well as the number of companies seeing a market opportunity to pilot these assets through rough seas. Broad Street Development, an owner and manager of commercial and residential New York City properties, announced today it was entering the fray, launching an asset management equity investment arm. The new division will partner with institutional owners and lenders to provide asset management services, and has $500 million…
Economic Update – For-Sale Residential Developers Turn to Incentives
It’s no secret that for-sale multi-family properties most everywhere are moving as slowly as glaciers in the days before global warming. Not only has it been difficult simply to get financing for the purchase of a multi-family unit, but there are also other obstacles for buyers. Earlier this month, for instance, Fannie Mae added new fees to condominium loans, even for those buyers with high credit scores, and some lenders are refusing to make loans on condos that aren’t occupied by the seller. But that isn’t keeping developers and brokers from dreaming up incentives to drum some interest in their…
Some Good News for Struggling Vegas Development Market as CityCenter Clears Hurdle
Las Vegas’ struggling development market is breathing a bit easier, now that co-developers MGM Mirage and Dubai World have buried the hatchet over the massive CityCenter mixed-use project there. The $8.5 billion development looks to be on its way to completion now that the developers have agreed to a deal with lenders for the financing of the remainder of construction.Dubai World, the real estate investment arm of the Dubai government, filed a lawsuit against development partner MGM Mirage in April after the latter ran into financial difficulties–both in terms of funding the CityCenter project, as well its overall company balance…
Location Key as Pennsylvania Retail Project Bucks Slow Economy
While projects across the country stall or delay until the economy turns a corner, a half-million square foot Pennsylvania retail development dubbed Exeter Commons is bucking the trend with 94 percent of its space pre-leased as a late summer opening approaches. The 490,000-square-foot project is located about 40 miles southwest of Allentown, Penn., and is being developed by Exeter JV Associates L.P., a partnership of The Goldenberg Group and Ironwood Property Group. The cost of the project was not disclosed. What key element that allowed Exeter Commons to proceed when others stalled was location, according to Kevin Trapper, senior vice…
Is the Price Right? Retail Valuation Shows Ties to Education, GLA
Retail property owners in Atlanta have done a lot more head scratching than trading in the past year. Even if debt had been more readily available, the virtual absence of local sales comparables would have made it almost impossible to price assets, noted Jones Lang LaSalle Inc. managing director Kris Cooper. “It caused not only us but also sellers and owners a huge challenge,” he observed. The often unanswerable question, he explained, was, “How do (you) value that property?”Countless investors, developers and lenders around the country could echo the frustration of Cooper’s clients. But the issue of valuing retail properties…
A Sense of Responsibility
By its very nature, commercial real estate is an opportunistic business. So it is really not surprising that a growing number of U.S. investors are forming funds, positioning themselves so that as soon as they perceive a bottom to the market, they can buy. And the funds are sizable: At press time, for instance, Rockwood Capital L.L.C. had just closed an investment fund at $964 million.Nor are Americans alone or the deals to consider only domestic. “Everywhere you look, there are opportunities for investors,” observed Louis Armstrong, CEO of The Royal Institution of Chartered Surveyors, better known as RICS, during…
Vetting the Lender
While many lenders are looking for any hint of poor financial health among borrowers, those looking for funds might also look under their lender’s hoods. Or so office owner and developer Thomas Properties Group discovered during a recent complex transaction. Thomas Properties and some partners completed a debt restructuring for a portfolio of office buildings in Austin, replacing a $100 million unfunded commitment from Lehman Brothers Inc. with a $60 million priority credit facility that the ownership group will use for lease-up costs and property improvements.Lehman Brothers, whose bankruptcy last September shook the financial world to its core, owned half…
Title Insurance in Mexico: Double-Checking
As U.S. commercial real estate investors continue their global outreach, they desire the same sense of security across borders that title insurance companies provide for United States-based transactions. The field of conflicting and varying regulations and legalities on different countries’ and municipalities books prevent the enactment of simple, standard practices. From lack of surveying experience in parts of Asia-Pacific to village-green laws in the United Kingdom, title insurance firms must help their clients wade through crossborder transactions on a case-by-case basis.In Mexico, for example, state governors appoint notarios publicos—a different role than the United States’ notary public—to confirm titles. But…
A Lighter Shade of Green: Tenants Search for Economical Side of Sustainability
The green building revolution is hitting its stride just as the recession challenges corporations to prop up their bottom lines. Thus some green development has had to take a back seat to economic reality, said Commercial Tenant Real Estate Representation president Marisa Manley.As of nine months ago, one of her clients intended to include plenty of green features in a 180,000-square-foot suburban office building planned for Connecticut’s Fairfield County. Economic concerns, however, led the corporation to first scale back its green commitment and later cancel the entire project. It is difficult to pay a premium for green if companies cannot…
Condo Bet
Where many investors may see nothing but trouble in condominium properties, one company is busily scouting the Western United States in search of these types of assets. Newly formed Sycamore Urban Properties wants to acquire new and converted condominium properties that have fallen into distress.The company recently made its first acquisition, a 41-unit, newly constructed town home development in Rancho Cucamonga, Calif. Sycamore Urban purchased the note for the asset in September 2008, navigated the bankruptcy process and took title to the property via foreclosure in early March.The firm is working with financial institutions to acquire notes for distressed multi-family…