There appears to be an increasing air of optimism among real estate owners and investors with the recent increase in housing starts and apparent stabilization in the stock market. However, financing remains limited and expensive as spreads remain very wide and LTV’s very low. Unlike the early 1990’s, when banks and the FDIC dumped real estate assets, the banks today are exercising far more patience and appear willing to hold and manage foreclosed assets until pricing improves. Based on the proposed federal assistance that the feds plan to give to banks and the relaxation of mark-to-market accounting sales, we…

  Cash is increasingly becoming king. This is evidenced on several fronts: Major corporations are increasingly evaluating the sale and leaseback of corporate facilities to generate cash. Longer leases (15 years or more) and parent guarantees are becoming the norm. Lenders on commercial properties are requiring far more equity than in the past. Life companies are requiring 40% – 50% in equity and only lend on the highest quality real estate. Funds that can write the check for the entire acquisition price without the need for financing are the preferred buyer among sellers. The assuredness of closing typically wins out…

  As we approach the 2nd quarter of 2009, several trends are becoming apparent: Many institutional owners are under pressure to sell assets in order to redeem capital to their investors and, in some cases, to avoid violating loan covenants. Special servicers for CMBS commercial loans in default appear increasingly willing to provide time to negotiate terms. Many want a pay down in the debt balance – most start foreclosure proceedings at default. Strong regional and National banks are making more acquisitions and refinance loans, particularly for well capitalized owners. Their terms are often more competitive than life companies and…

With 2009 well underway, we see continued challenges in the capital markets. Though general sales volume across the country is considerably lower than the same period one year and two years ago, properties that offer solid real estate fundamentals are still attracting significant interest from real estate investors. We are finding that properties with central locations, low lease roll, and a history of good cash flow have the best chance at transacting. Additionally, properties with assumable debt have particular interest because the debt can be accretive, providing higher leverage and better terms than possible in today’s market. Despite the perception…

 As we rapidly approach the end of January and seek to find some form of clarity on valuations moving forward, we continue to be faced with tight credit markets and deteriorating property fundamentals. While we are encouraged by the strong level of investor interest in a number of our property offerings and the fact that two of our deals have gone “hard” over the last two weeks, as well as the amount of equity on the sidelines, risk aversion continues to be the primary focus of many investors. Assets with any significant level of risk suffer from investors requiring disproportionately…