the Editors of Commercial Property Executive
UPDATE: CMBS Shutdown May Have Sealed General Growth’s Fate
The drying up of CMBS financing played a significant role in General Growth Properties’ decision to seek Chapter 11 bankruptcy protection, according to one retail analyst. Steven Marks, a managing director & senior REIT analyst for Fitch Ratings, pointed out that General Growth, the second largest owner of retail malls in the U.S., shouldered a huge debt burden that stemmed largely from its $12 billion acquisition of The Rouse Cos. in 2004. More than four years later, two elements of that transaction came back to bite General Growth: the Rouse corporate debt assumed by General Growth as part of the…
CityCenter Soldiers on as MGM Secures More Funding
Despite the challenging lending market and financial hurdles that led to a recent lawsuit, MGM Mirage has soldiered on in its pursuit to rake in financing to continue construction of its $8.8 billion CityCenter project (pictured) on the Las Vegas Strip. The firm has secured an amendment of its credit facility, thereby paving the way for the company to pay the $70 million in construction costs due for the 18 million-square-foot mixed-use development no later than April 17. “Payment is due on Friday and the waiver allows the payment to be made,” a company spokesperson told CPN. Amendment of the…
CBRE: Property Values Down 20 Percent Since 4Q07
Since the fourth quarter of 2007, commercial real estate values have dropped about 20 percent altogether, a price decline worse than those in the early 1990s, said CB Richard Ellis analysts as part of a live web presentation Wednesday. Between the fourth quarter of 2007 and the end of 2008, commercial real estate prices dropped 11.5 percent with preliminary indications for the first quarter of this year looking like another 10 to 12 percent decline adding up to a cumulative impact of around 20 percent, said Raymond Torto, global chief economist with CBRE Research and Consulting. “By contrast to what…
A Billion-Dollar Week for AvalonBay
It seems apartment complex developer AvalonBay Communities Inc. is having little trouble getting its hands on capital of late. Just a week after closing a $400 million investment fund, the firm secured $741.1 million under a series of mortgage loans. AvalonBay on Wednesday entered into the mortgage loan commitment with Deutsche Bank Berkshire Mortgage Inc., on behalf of Freddie Mac. The $741.1 million in financing represents the total from 14 separate mortgage loans, each secured by one of AvalonBay’s apartment communities. The loans are scheduled to close no later than April 17, with interest fixed at 5.86 percent for 10…
Economic Update – CRE Refi Problems Loom
“Forbearance into foreclosures” was how the Wall Street Journal characterized prospects for the commercial mortgage-backed securities market over the coming years, when many billions of loans underlying CMBS will come due–$22 billion of which will be this year and next. For now, banks have been extending maturities in hopes of some kind of recovery in underlying asset values. But how long they will keep doing that is an uncertainty. It isn’t just a U.S. problem, either. Rating agency Moody’s Investors Service said this week that it might cut ratings for ¥1.4 trillion ($14 billion) worth of Japanese CMBS. Roughly ¥1.72…
Breaking News: GGP Declares Bankruptcy
Following months of negotiating with its creditors to secure the time necessary to establish a solution to the credit crisis facing the company, mall owner and operator General Growth Properties Inc. announced this morning that it has declared bankruptcy and has voluntarily filed for Chapter 11 protection in United States Bankruptcy Code. Moreover, nearly 158 regional shopping centers owned by the firm also filed for bankruptcy protection.The nation’s second-largest retail REIT ran into trouble after taking on some $27 billion in debt as a result of a buying spree that included the acquisition of mall owner Rouse Co. in 2004….
GGP Wholesale Asset Disposition Not in Game Plan, Chief Says
General Growth Properties will not undertake a large-scale asset disposition as the result of its filing this morning for Chapter 11 bankruptcy protection, according to Tom Nolan, General Growth’s president & COO. “Of our top 25 properties, as part of our restructuring, we may look at selling one or two,” Nolan said in a press conference this afternoon. But, overall, selling a “substantial amount” of the company’s assets is not being contemplated, he said. Nolan said that the REITs properties are performing well, with occupancy levels at 92.5 percent at the end of last year, which he said is the…
No Surprise: CBRE Report Details Occupancy Downswing Across Sectors
As the economy continues to show signs of weakness, a new report from CB Richard Ellis Inc. indicates that occupancy is down across all major sectors of commercial real estate. And should the economy continue to struggle, there isn’t likely to be a recovery anytime soon. “Commercial real estate evolves along with the economy,” Jon Southard, director of forecasting for Eonometric Advisors, a division within CBRE, told CPN. “As far as what it means for the rest of the year, I’m not so sure it means a continuation.” The rate of vacancy increase is notable, with the rates for the…
Amid Slow Investment Market, $1.9B Portfolio Goes on The Block
Given the sluggish property investment market, finding investors for any deal is a challenge these days, let alone for a massive portfolio of 52 properties valued at a total of $1.9 billion. Such is the task faced by the trio of Holliday Fenoglio Fowler L.P., Macquarie Capital Advisers Ltd. and UBS Securities L.L.C., which has been tapped to market the properties, which are owned by Macquarie DDR U.S. Trust, a joint venture involving Australia-based MDT and Developers Diversified Realty Corp. The team will also advise on a strategic review of the REIT’s assets in the U.S.MDT announced last month that…
Economic Update – Retail Sales Dip Unexpected – Except by Consumers
On Tuesday President Obama spoke of “glimmers” of hope for the economy, while Fed chairman Ben Bernanke, speaking separately, also waxed a tad optimistic by noting that there are “tentative signs” that the decline of the U.S. economy is slowing. Bernanke also said that the U.S. is faring better than other train-wreck economies around the world, though he was too diplomatic to put it quite that way, or name any names. The glimmers of hope might not apply to the retail industry just yet. Also on Tuesday, the U.S. Department of Commerce reported that retail sales were down 1.1 percent…