Economy Watch: CBRE Profits From Asian Rebound

February 4, 2010
By Dees Stribling, Contributing Editor

As one part of the world (East Asia, say) starts to recover in earnest, genuinely global real estate operations are poised to take advantage of it. That seems to be the case even if their home countries (the United States, say) are recovering a little less vigorously than desired.

Case in point: Los Angeles-based CB Richard Ellis Group Inc. has reported net income of $64.3 million, or 21 cents a share, for 4Q09. That compares quite favorably with the same quarter in 2008, when the multinational brokerage lost $1.1 billion, or $4.70 a share. The profits were driven by business in Asia in particular, plus parts of Europe.

In fact, it was the first time in seven quarters that the company achieved year-over-year growth. “Macro market conditions–which showed anecdotal signs of stabilizing during the third quarter–have further improved, especially in Asia-Pacific and parts of Europe, where results were strongest,” noted Brett White, president and CEO, in a statement.

Lichtenstein’s Bubble Headache

David Lichtenstein, whose Lightstone Group once upon a time bought Extended Stay Inc. from Blackstone Group, has joined the in-crowd among underwater property owners by handing over the keys of 17 hotels to lenders. Could it be that the key return of Stuyvesant Town/Peter Cooper Village last month was so dramatic that it will become a permanent meme in the financial landscape of 2010? (Certainly a lot of much smaller property owners, such as drowning homeowners, are thinking hard about mailing in those keys now.)

In any case, Garrison Investment Group and Square Mile Capital Management are getting the 17 Homestead Studio Suites. All together, Extended Stay has 680 properties.

The Homestead Studio Suites transfer is really only a sideshow in the struggle between senior and junior debt holders about who’s going to be paid what as a result of Extended Stay’s bankruptcy last year. The juniors have accused the seniors of setting up the bankruptcy so as to shaft them. A court-appointed investigator is expected to report next month on what kind of bankruptcy-related shenanigans he has found, if any.

MBA Reports on CRE Loan Maturities

The Mortgage Bankers Association released its latest annual Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes this week, noting that the volume of non-bank commercial and multifamily mortgage debt maturing this year and during 2011 is only about 20 percent of the total. Of the $1.45 trillion in outstanding mortgages held by non-bank investors, $183.9 billion (13 percent) will mature in this year and $99.8 billion (7 percent) next year.

“Commercial and multifamily mortgages tend to be long-term loans, often for ten years or more,” said Jamie Woodwell, MBA’s vice president of commercial real estate research, in a statement. “The fact that a disproportionate share of commercial and multifamily mortgages were made in 2005, 2006 and 2007 means that for most investor groups, only a fraction of the balance will be maturing in the next couple of years.”

Certain kinds of loans held in CMBS are set to take a thumping in 2010, however. Among total commercial and multifamily loans held in CMBS, 12 percent will come due in 2010, including 7 percent of the $650 billion of loans in fixed-rate conduit CMBS. For loans in floating rate and large-borrower CMBS, it’s a different story: some 72 percent of the $54 billion worth of those loans will come due this year, with an undetermined number of them proving to be un-refinanceable.

Wall Street wobbled around all day, eventually ending mixed. The Dow Jones Industrial Average lost 26.3 points, or 0.26 percent, while the S&P 500 was down 0.55 percent. The Nasdaq eked out a 0.04 percent gain.