Business Specialties

Lehman Brothers Holdings Inc., in an effort to both staunch its massive losses and tap into a burgeoning market for commercial real estate debt, is reportedly exploring a strategy that would have it set up a company to acquire some of its mortgage assets. The company would be capitalized by other investors. The plan, which Lehman has not confirmed for CPN or any other media outlet, comes in the wake of a $2.8 billion loss for the company ($5.14 per share) in its second fiscal quarter of 2008, compared with net income of $1.3 billion for the second quarter of…

Lehman Brothers Holdings Inc.’s sale of its commercial real estate assets may entice opportunity funds with the patience to wait for a positive turn in the real estate cycle, according to two real estate professionals. According to media reports, Lehman is looking to peddle about $14 billion of its $40 billion in commercial property and securities. A group that includes BlackRock Inc. is negotiating with Lehman to buy the assets, according to a report last week from Bloomberg. “Lehman has an awful lot of real estate that is clogging up their balance sheet, and they have to get rid of…

In business parlance, doom usually comes paired with gloom, and the current state of the real estate market – even commercial sectors whose fundamentals aren’t that bad – inspires people to haul out that set of words. But not everyone sees things that way, least of all in the net lease business.Andrew Sandquist, senior vice president in the Oak Brook, Ill., office of CB Richard Ellis Inc., and a net lease investment specialist with the company’s investment properties group, points out that the pace of net lease investment sales may be slower than it once was, but that deals are…

There’s little doubt that debt, besides being the raw material of the real estate crunch, is also a pretty hot commodity in some ways, as property values decline and loan-to-value ratios shift. In recent weeks, as reported by CPN, such investors as the new Investcorp Real Estate Credit Fund L.P. and Inland American Real Estate Trust have been eager to snap up real estate debt. New York-based Apollo Real Estate Advisors has also stepped up its interest in real estate debt recently, raising additional capital for its debt investment fund, Apollo Real Estate Finance Corp. (AREFIN). All together, the firm…

Led by the retail and multi-family sectors, a measure of CMBS investment risk has edged upward for the first time in four years, a study by Fitch Ratings has concluded. The analysis of five major property sectors in 379 markets shows that the average cash-flow volatility of properties nationwide score reached 2.98 in 2007, a slight increase from the 2.94 score tallied in 2008. The 306 secondary markets studied showed more volatility than did the 73 primary markets. According to Fitch, the results jibe with expectations generated by a slowing economy. “I think you’re starting to see the effect of…

Though the acquisition of real estate debt isn’t new, current market conditions seem to have given investors new impetus to acquire such debt. Recently, Investcorp’s U.S.-based real estate group formed a new entity, Investcorp Real Estate Credit Fund L.P., to do just that, and more recently, it has closed on real estate debt valued at $210 million for an undisclosed, but presumably discounted, price. The acquisition involved several mezzanine loans collateralized by various single-asset properties and multiple-asset hotel portfolios across the United States. Both junior and senior mezzanine loans were included in the deal. Investcorp completed these transactions using capital…

Current tepid deal volume in the net lease market should continue, though the impact on his company would be relatively small, Realty Income Corp.’s CEO Tom Lewis advised during his latest company conference call. This assessment comes not long after he struck an agreement with the bankrupt Buffets Holdings Inc. regarding 104 net leased retail properties (as reported by CPN in July). Realty Income ended its second fiscal quarter with occupancies of 96.8 percent among the 2,367 properties that it already owns, or about 60 basis points lower than at the end of the first quarter, he noted. “I think…

The automotive aftermarket retailer Pep Boys, whose full corporate name is The Pep Boys Manny, Moe & Jack, has completed a sale-leaseback of 22 properties for $77.5 million. The company will continue to operate the properties as Pep Boys stores, for a lease term of 15 years, with four, five-year extension options. According to the Philadelphia-based Pep Boys, proceeds from the transaction, together with other funds, were used to purchase 27 store properties and two distribution centers that had been leased by the company under a master operating lease for $116.3 million. That lease had been scheduled to expire on…

ING Real Estate is the latest firm to introduce a new set of sustainability guidelines for acquisitions, development projects and asset management of its real estate investments, designed to encourage more green transactions and practices as part of ING Group’s worldwide commitment to reduce its carbon footprint.The company’s initiatives are based in part on the U.S. Green Building Council’s Leadership in Energy and Environmental Design system, so the firm is requiring that, in most instances, ground-up development will be certified under LEED New Construction, LEED Core & Shell or LEED Neighborhood Development standards, with a targeted Silver or higher certification….

Chicago-based Harrison Street Real Capital has closed on a new private equity fund after raising about $430 million. Harrison Street Real Estate Partners II L.P., as the fund is known, began raising capital in March, and according to Christopher Merrill (pictured), co-founder and managing principle of Harrison Street, a good number of investors were keen on getting in on the fund.”Certain investors are very interested in the focus of the fund,” Merrill told CPN. “We’ve structured it — and this has been our strategy since founding the first fund — to invest in properties that will do relatively well in…