Some hotel investors might see deteriorating hotel occupancy and rates as a reason to pull back, but one recently launched hotel investment group, Fairwood Capital L.L.C., is capitalized with $150 million in equity to buy hotels.The principals are hospitality and real estate veterans: Robert Solmson is the former chairman & CEO of RFS Hotel Investors Inc., a publicly traded hotel REIT. Ed Ansbro was senior vice president of Equity Inns Inc., another publicly traded REIT that was sold to Whitehall Street Global Real Estate L.P. in 2007. And Richard Reiss is chairman of Georgica Advisors L.L.C. and other private investment…

The price structure of non-traded hotel REITs is putting investors that are in it for the long haul at a disadvantage, according to a report from the Cornell University School of Hotel Administration’s Center for Hospitality Research titled “Non-traded REITs: Considerations for Hotel Investors.” The report argues that while REITs can be appealing buy-and-hold investments, thanks largely to their hefty dividend payouts, those payments are lower for long-term investors.“In effect, the early investors subsidize the commissions paid to the dealers who sell to late-term investors,” states the report, written by John Corgel, Robert C. Baker professor of Real Estate for…

A stark realization was thrust upon me this week. As Citi Property Investors Research looked at third-quarter property market fundamentals the world over, one fact could not be ignored. While we had been focusing on distress in developed markets in Western Europe and North America, worrying endlessly about faltering mortgage performance and financial layoffs, I had not been appreciating the entire picture. What I had been taking too lightly was the possibility of a dramatic worsening of office fundamentals in the emerging markets.Now, I won’t go so far as to say that I had been ignorant of slowing absorption and the…

The 187 million-square-foot Los Angeles office market is not immune from the recessionary U.S. economy, as vacancy rates continue to inflate. Vacancy rates have continued to increase for four consecutive quarters and reached 11.4 percent by the end of the third quarter, according to a Grubb & Ellis Co. report.Sublease space has flooded the market. Residential real estate firms and mortgage companies are responsible for a good part of that space, but the report found that other companies, such as Amgen Inc. and Yahoo! Inc., are also putting space back on the market.The economic downturn carries with it some positives…

London’s West End remains the world’s most expensive office market with occupancy costs totaling $248.66 per square foot per year, according to CB Richard Ellis Inc.’s semiannual “Global MarketView/Office Occupancy Costs” survey. The report is based on occupancy costs, defined as rent plus local taxes and service charges, for the 12 months ending Sept. 30.The remaining top 10 cost-heavy office markets are Moscow ($234.73), Hong Kong’s central business district ($231.59), Tokyo’s Inner Central ($184.26), Mumbai’s CBD ($170.85), Dubai ($156.53), Tokyo’s Outer Central ($151.69), London’s City ($146.61), Singapore ($135.13) and Hong Kong’s Prime Districts ($132.97).No North American markets cracked the top…

Faced with a global economic recession and evidence that it could deepen, the industrial property market is rife with uncertainty.Since the middle of September, visibility into the credit markets and the outlook for the global economy has deteriorated dramatically. Decisionmaking on many fronts has ceased, and the capital markets are essentially frozen. Recent capital injections by the Department of the Treasury, the Federal Reserve System and other central banks, however, give hope for eventual relief.Tenants are handling new space commitments with greater deliberation, making only time-critical decisions. National industrial absorption data remain negative, and industrial vacancy stands at 10.7 percent,…

Not long ago, some industrial real estate executives had reason to expect that manufacturing in emerging and mature economies around the world just might be strong enough to pick up some slack from the weakening U.S. manufacturing sector. But as 2008 nears its close, it appears that mature or emerging nations both may lack the industrial muscle to prop up global demand for distribution space and manufacturing and other facilities.Confirming this trend, a monthly global survey of purchasing managers found that the manufacturing sector worldwide last month dropped to the lowest level in its nearly 11-year history. The overall benchmark…

Same-property cash net-operating income for industrial REITs rose 3.2 percent in the third quarter, up from a 2 percent gain accrued in the second quarter, according to RBC Capital Markets’ “3Q08 Office/Industrial Earnings Wrap-Up.” But a move toward less leasing activity will probably put enhanced pressure on earnings and cash flow for the remainder of the year. Meanwhile, same-property occupancy is showing signs of downward pressure, according to the report, coming in at 92 percent in the third quarter, down from 92.1 percent in the previous quarter and 94.6 percent during 2007’s third quarter.“The recent weakness in the industrial subsector…

The recent capital-adequacy problems of major financial institutions has increased volatility, decreased liquidity and stalled multi-family property transaction volume, though multi-family volume is clearly ahead of commercial property volumes. This has created significant challenges for multi-family investors gauging expected cap rates and pricing.Now would seem an appropriate time to apply the time-tested principle of triangulation, the process of navigating uncharted waters by measuring the distance to known fixed points, to the difficult questions before investors in commercial real estate.We frame our analysis with three known points compared with the many uncertainties of the marketplace:• current debt and equity return hurdles,…

A large number of empty condominium units is challenging South Florida’s apartment rental market, and apartment owners are looking for more ingenious ways to attract tenants. One company, Altman Development Corp., is offering early leasing residents the opportunity to customize apartments at Satori, a 279-unit luxury complex in Fort Lauderdale.Steven G. Inc.’s flooring, carpet, granite and paint color options will decorate the only rental community in Florida that offers rental-unit customization, the developer said. Phase I of the four-building complex will be completed in March 2009, and construction is slated for completion by the end of 2009.Altman is offering the…