Business Specialties

Data centers offer a digital-age wrinkle to the net lease industry. By most accounts, demand will grow steadily for the highly sophisticated facilities, which host mission-critical servers. Meanwhile, specialized technical elements and heavy capital investment create high hurdles to development. “Given the cost of adding new capacity—$1,200 to $1,800 per square foot—the lack of construction lending and an 18- to 24-month construction cycle, the data center sector will likely continue to enjoy high occupancy levels and rising rents during the next several years,” CapLease Inc. reported last month.Judging by their first-quarter activities, the two REITs specializing in data centers are…

The number of distressed assets continues to grow and lenders across the country have been debuting new programs and establishing funds to provide loans for owners and buyers of these troubled assets in a climate where securing financing has become a monumental challenge. Now, Boise, Idaho-based A10 Capital has jumped on the bandwagon with $100 million in capital for the origination of first mortgage commercial real estate loans and the supplying of financing for commercial real estate-secured distressed debt acquisitions through its new Lending Group. According to A10, it’s all about foresight. Seeing the credit crunch on the horizon, A10…

Friday’s unemployment numbers from the U.S. Department of Labor, while hard to characterize as good, aren’t quite as bad as they have been in previous months. Unemployment is still going up, but not quite as quickly as before. That kind of thing is beginning to be called “green shoots,” to use an up-and-coming economic buzzword. Shoots or not, the U.S. economy lost 539,00 jobs in April, driving the unemployment rate up to 8.9 percent, the highest since 1983. In March, the loss was 663,000, but much of the difference between the two month is attributable to the fact that the…

Whatever else is happening in the economy, U.S. consumers seem to have returned to the nation’s stores in somewhat greater numbers now that spring is here. According to consultancy Retail Forward, the 35 major retailers that it surveys saw a 0.9 percent increase in same-store sales in April compared with March, when sales had dropped 1.9 percent. Average same-store sales compared with April 2008, however, were down 3.7 percent. “The retail sales declines are finding a bottom, but it’s a bumpy bottom,” said Frank Badillo, senior economist at Retail Forward. Bumpy, and maybe murky like the sea bottom, so it…

At least two-thirds of the American CMBS loans maturing in the coming decade could be at risk of default, according to a new report by Deutsche Bank. However, a recent change to the Federal Reserve’s TALF program could act as a safety valve for the market.The numbers get scarier as the Deutsche Bank report states that 80 percent of loans made in 2007 are also unlikely to qualify according to Reuters, which reported on the study. CMBS loans make up only about 20 to 25 percent of the entire commercial real estate market, yet other sources of financing, such as…

While the federal government has unveiled an array of programs to unfreeze the credit markets, significant issues remain to be addressed in commercial real estate financing, according to a roundtable hosted this morning by the New York Metro CCIM Chapter. The federal government has had to invent new ways to unlock credit markets, as conditions exist today that are unprecedented, according to David Dubrow, partner in the law firm of Arent Fox L.L.P. In the savings & loan crisis of the early 1990s, the government found the remedy was to put troubled savings & loan institutions into receivership and sell…

On Wednesday, the eve of the stress test results, observers were wondering just how much trouble sour commercial real estate loans are going to cause those banks that hold them. Knee deep, waist deep, or up to their eyeballs?It depends on just how much a bank believed rising prices weren’t really a bubble back in the mid-2000s. The Wall Street Journal reported that, according to a document it obtained, the largest 19 U.S. banks are expecting losses of as much as 12 percent for the next two years on commercial real estate loans–a fair amount of believing in the durability…

Despite credit still playing hard-to-get, several REITs have recently managed to get their hands on sizable financing deals. The latest firm to add its name to the list of firms receiving funding is Federal Realty Investment Trust, which just closed a new $372 million unsecured term loan facility. Less than two weeks ago, CPN reported that H&R Real Estate Investment Trust secured C$425 million in financing to complete construction of a 58-story office tower in Downtown Calgary, Canada. The 42-month financing was provided by a syndicate of lenders led by RBC Capital Markets and TD Securities. On Tuesday, ProLogis closed…

In light of the current doldrums for both commercial and residential real estate, what’s a developer to do? Be ready for the eventual turnaround, if possible. Development is typically a multi-year activity, after all. It also helps to plan your project in an area that’s more economically resilient than many others, due to relatively high household income. This week the village council of Winnetka, Ill., an affluent northern suburb of Chicago, granted approval of a 167,800-square-foot mixed-use development downtown. Construction won’t begin for at least a year on the project’s 31 condos and 35,300 square feet of retail or other…

Is that the glimmer of good economic news ahead, or just a mirage? Time will tell, but for the moment it’s good to know that the pending home sales index rose 3.2 percent in March when compared with February, and 1.1 percent when compared with the same month a year ago, according to the National Association of Realtors. Not only that, the U.S Department of Commerce reported that construction outlays rose 0.3 percent in March compared with February, an uptick no one was expecting. The largest gain was in nonresidential construction, which scored a 2.7 percent increase. Public works was…