the Editors of Commercial Property Executive
Economic Update – Starwood Eyes Distressed Sector with $500M Fund
Yet another deep-pocketed real estate entity has jumped into the grave-dancing game—only please, don’t call it that, but rather strategic investment in distressed properties. The player is a newly formed investment company called Starwood Property Trust Inc., a creation of Starwood mogul Barry Sternlicht, which filed with the Securities and Exchange Commission late last week for a public offering that aims to raise half a billion dollars to do the distressed-property boogie. It will invest in not only physical properties, but mortgages and mortgage-backed securities. “We believe that the next five years will be one of the most attractive real…
Amid Troubled Hotel Sector, Companies Look to Boost Management Portfolios
Many hotel owners are looking at a troubling two years or so, as a large portion of their loans are coming due for refinancing in an environment of declining RevPar. In other words, many owners will be asked by lenders to contribute more equity into their loans, just when that money may be very hard to come by. In this environment, and with many owners unlikely to be able to transact a sale because of the continuing credit freeze-up, there has been more of a premium put on successful asset management. Two management companies announced their plans to beef up…
CRE Mortgage Starts Plummeted in ’08: MBA
After seeing phenomenal commercial mortgage originations in 2006 and 2007, figures from 2008 show a 65 percent decrease in volume, according to the Mortgage Bankers Association’s 2008 commercial real estate/multi-family finance report. “This is an important sign of the capital availability,” Jamie Woodwell, MBA’s vice president of commercial real estate research, told CPN. “While in 2006 and 2007, there were lots of loans being done very quickly, what this is showing is that there are fewer loans that are also probably taking longer to do.” If someone is looking to go into the market to borrow, it is important to…
Economic Update – Retailers See May Malaise
May comparable-store sales numbers are filtering down from various retailers, and the results aren’t inspiring confidence in the prospects for recovered consumer spending. Actually, most analysts expected average retail same-store sales to decline in May 2009 when compared with May 2008, but the trouble was they declined more than expected. On average, comps were down 4.8 percent in May at the 30 major retailers tracked by Thomson Reuters; analysts had predicted a 4.1 percent drop. In today’s climate, a decline of more than expected = bad news, while a decline of less than expected = good news. Target Corp., for…
Orinda, Octagon Eye Strong Area Fundamentals for Atlanta Conversion Project
The nationwide downturn in employment is chipping away at demand in the apartment market, but there are still those communities here and there where the call for more rental accommodations remains relatively strong. To that end, Orinda Corp. and Octagon Capital Partners, having found just such a community, have acquired a 350,000-square-foot office building in a college-laden district of Atlanta for a $35 million apartment conversion project.Occupying 2.1 acres downtown at 222 Mitchell St., the property, for which Atlanta-headquartered Orinda and Charlottesville, Va.-based Octagon shelled out all cash, was previously home to the NationsBank/Bank of America Operations Center. At the…
Economic Update – CRE Buyers Looking for Deals
Turns out that the recession is still on, at least if the latest numbers from payroll firm ADP accurately reflect the state of hiring and firing in the nation. According to ADP on Wednesday, U.S. companies cut an estimated 532,000 employees from their payrolls last month, with goods producers laying off 267,000 workers, and service providers shedding 265,000 positions. ADP doesn’t always agree with U.S. Department of Labor figures, however. Labor will be releasing its May unemployment report on Friday. Whatever the April numbers from the government later this week, unemployment is clearly bedeviling the nation’s cities. In a separate…
Lack of Leverage Lends Strength, REIT Week Panel Maintains
The bad news is, the United States is in a Great Recession and the commercial real estate market is likely to feel continued pain during the next two years as corporate cutbacks result in weaker fundamentals. The good news is, the public equity markets have been improving in the past few months, with returns bouncing back substantially and multiples back down to more reasonable levels as the market has responded to REIT success at raising capital through secondary offerings. In fact, the re-equitization of the market—with about $12 billion worth of common stock raised–has been extremely helpful to the market,…
Signs of Life in 2Q as Sales Volume, Capitalization Jump
Despite overall sales figures down double digits from last year, transactions are still move forward, albeit in smaller amounts. Another good sign of real estate activity is the re-equitization of the REIT industry that continued in May as more companies deleveraged their balance sheets with equity capital raised in the public markets. Thus far in the second quarter, Tulsa-based net leased sale broker Stan Johnson Co. closed 13 deals, as compared to nine deals the entire first quarter. The company recently completed the sale of a 5,900-square-foot free-standing medical property leased 100 percent to Fresenius Medical Care, located in West…
GM Filing Affects Industrial Sector, Local Economies
A major part of bankrupt carmaker General Motors’ plans to fast track its reopening as a new, sleeker firm in 60 to 90 days, are a number of real estate-related decisions that could have an effect on commercial property industry, especially the industrial sector. GM plans to close two assembly plants this year. The firm will close its Wilmington, Del., assembly plant in July and its Pontiac, Mich., assembly plant in October. At the end of this year, GM will also close its service and parts operations and warehousing and parts distribution centers in Boston, Jacksonville and Columbus. Stamping plants…
Henderson Eyes London Office Opportunities with $330M Fund
With industry players speculating that Central London’s office market will soon hit bottom, the timing appears to be just right to snap up assets in the revered locale, and London-based Henderson Global Investors is positioning itself to do just that, while taking others from around the globe along for the ride. The independent asset manager has just launched the Henderson Central London Office Fund II, with plans of raising an initial $330 million to invest in assets as the numbers on price tags decrease.”It certainly feels as if we are at or close to the bottom in terms of value,”…