the Editors of Commercial Property Executive
Historic Solution
It can be very difficult and expensive to obtain a construction loan for a hotel these days. But there are ways to pull them off. One is by taking advantage of the Federal Historic Rehabilitation Tax Credit.The credit is an incentive from the National Park Service that commercial builders and developers can use in redeveloping structures that are at least 50 years old or are otherwise deemed historic. This route can reduce a developer’s required equity position to around 20 percent, according to John Campo, president of Campo Architects. It can also provide access to major urban markets, Campo said,…
LaQuinta Sees Potential for Overseas Expansion
While the hospitality sector downturn has forced many firms to put expansion plans on the back burner, LaQuinta Inns & Suites is not one of them. The company opened 11 hotels in seven U.S. states, and added more than 800 rooms in the first quarter of this year. The select service brand, which had 719 hotels and 75,000 rooms open at the close of the quarter, is aggressively targeting growth opportunities in foreign markets, particularly in Central and South America. “The economies of these countries are pretty strong,” said Rajiv Trivedi, (pictured), LaQuinta’s chief development officer & executive vice president…
Houston Industrial Market Down, but Deals Still Trickling In
The first three months of 2009 saw the first quarterly negative growth in Houston’s industrial market since 2003. The market posted a half-million square feet of negative net absorption in the first quarter, according to a report by Grubb & Ellis Co. The pullback comes on the heels of more than 7.5 million square feet of positive absorption recorded in 2008. The quarterly space loss was attributed to warehouse/distribution properties registering 397,900 square feet of negative absorption, while standard industrial type properties recorded 212,800 square feet of red ink, the Grubb & Ellis report stated. With leasing velocity coming to…
Economic Update – Sublease, Shadow Space Vex Office Owners
Office landlords have a lot on their minds these days. As companies contract, demand for space drops, and landlords are being pressured to lower rents–which no one wants to do–or increase incentives for tenants to stay, which is only a little more palatable. Sublease space, which bothered office property owners in the early 2000s, has also returned. So has shadow space. “Shadow space is definitely a reality that landlords will be forced to address in many major commercial real estate markets,” Kenneth Boyle, managing partner at Greenwich, Conn.-based Hanover Real Estate Partners, told CPN. “Current vacancy rates across the country…
Government-Sustained D.C. Office Market Attracts Bevy of Bidders for Fully Leased Building
The Washington, D.C., office market, has taken its blows like every other city, but with the federal government’s consistent need to house employees, office buildings that are fully leased by the feds are hot property. With solid demographics in play, a slew of hopeful buyers came out to look at the 228,000-square-foot One Choke Cherry office property (pictured) in Rockville, Md., and The JBG Cos. came through with the winning bid of $43.5 million.For JBG, the transaction marks a return to familiar ground, as the Chevy Chase, Md.-based company, which also owns Five Choke Cherry, previously owned One Choke Cherry…
Defying Credit Crunch, HRPT Office Portfolio Reels in $250M Credit Facility
Entering into a new $250 million secured credit facility, HRPT Properties Trust has joined the ranks of those real estate companies that have managed to secure big-ticket loans in the midst of one of the most unfriendly lending environments in recent history. The non-recourse credit facility, which matures April 24, 2012, and comes with an option for a one-year extension, is backed by a group of office assets owned by HRPT subsidiary Government Properties Income Trust. “As of December 31, 2008, there is 99 percent occupancy in the 29 government-tenanted buildings that secured this facility,” Timothy Bonang, HRPT director of…
Rockwood Latest Investor to Close Fund, Raising $964M
Hoping to capitalize on an unsettled real estate environment that could ultimately lead to the “best investment period in the last 20 years,” private real estate investment firm Rockwood Capital L.L.C. has closed an investment fund with some $964 million in capital commitments. The value-added fund, dubbed Rockwood Capital Real Estate Partners Fund VIII, will primarily invest in hotel, retail, office and residential properties in the United States. Fund VIII has a diverse investor base consisting of public and private pension funds, foundations and endowments, insurance companies and high net worth individuals, the company said. More than half of Fund…
On Heels of Opus South Bankruptcy, Sister Firm Reportedly Owes Big
Just days after Opus South Corp., a division of Opus Corp., filed for bankruptcy, one of the firm’s sister companies is reportedly some $160 million in debt.According to a report in the Arizona Republic, Phoenix-based Opus West Corp. reportedly owes banks more than $160 million in unpaid construction loans, interest and legal fees. An association of backers led by Bank of America issued a complaint in Maricopa County Superior Court on April 15, where the Valley’s largest developer is accused of failure to pay off the 10 loans in a timely matter. On April 23, CPN reported that Opus South–another…
Economic Update – Federal Stimulus Helps, Says Illinois Treasurer
“We’re seeing things loosen up a bit, but lending by Illinois banks isn’t where we’d like it to be,” said Illinois State Treasurer Alexi Giannoulias Tuesday morning at the monthly breakfast meeting of the Chicago Chapter of the Society of Industrial and Office Realtors, held in Rosemont, Ill., and attended by CPN.Early in the financial crisis last fall, Giannoulias, himself a former community banker who was elected state treasurer in 2006, oversaw the injection of about $1 billion in public money into Illinois banks and other financial institutions, ahead of the federal government’s much larger efforts. Since then, he stressed,…
Changes Ahead for Quieter 1031 Market
The $25.5 million sale of Crossroads Entertainment Center in Chino Hills, Calif., seemed unremarkable at first glance, at least by dollar value. The new owner, GAS Distomo Inc., bought the property from 26 Del Sur Crossroads L.L.C., a privately held seller represented by Faris Lee Investments. However, 1031-exchange deals are a rarity nowadays, making this deal something of a standout.Whether they involve single-tenant properties or multi-tenant assets like the Crossroads Entertainment Center, 1031-exchange volume is declining even more precipitously than are investment sales in general. By some accounts, 2009 totals have dropped 80 to 85 percent year over year. The…