Finance

For some time now, commercial real estate defaults have been one of the other shoes waiting to drop on the economy, and that day may be closer at hand. Real Capital Analytics has reported that delinquent commercial real estate loans grew by 43 percent by the end of the first quarter of 2009 to $65.9 billion, compared with $46 billion at the end of last year.That hardly means that investment activity is going to grind to a halt, though. Indeed, one owner’s serious misfortune is another’s opportunity. A large (even trophy) example of that would be last week’s sale of…

A subset of the overall job loss numbers in March included the evaporation of 48,000 retail positions, according to the U.S. Department of Labor. That number, though large, is down considerably from the recent peak of retail job-cutting, which was 91,000 jobs in November of last year. The Labor Department tracks employment in 12 different kinds of retail operations, and of those exactly one category had any kind of employment growth last month–namely general merchandisers, which includes discounters. That category saw a net gain of 13,800 jobs in March. Aside from the discount sector, where are retailers looking for growth…

Staying liquid is job one for many equity REITs these days, and the lack of a CMBS or unsecured market makes that a formidable task. Most of the choices bring both answers and potential pitfalls at a time of unusual urgency, contends Fitch Ratings in a recent report. “In essence, the clock is ticking for REITs to maintain adequate liquidity,” the report stated. Of all potential sources of capital, bank lines of credit will be the leading source of liquidity for REITs through 2010, Fitch predicts. By the end of last year, revolving credit facilities represented 64.4 percent of the…

Wall Street must be getting desensitized to bad news. While the number of Americans filing new claims for unemployment rose to 669,000 last week from a revised 657,000 in the previous week, the market seemed anything but worried. Much of the optimism might have sprung from the G-20 meeting in London, where the member nations agreed to a $1 trillion boost for the International Monetary Fund, and to closely monitor the global financial system.On the New York Stock Exchange, winners beat losers by more than seven to one on volume of 1.87 billion shares with advancers topping decliners by more…

As the job market continues to erode, it is employees at medium-size companies who are suffering the most. According to the newest ADP national employment report, almost one-half of the jobs lost from February to March were at companies with 50 to 499 workers. Overall, U.S. private employment decreased 742,000 from February to March, the report stated.The estimated change of employment from January to February was revised down by 9,000, from a decline of 697,000 to a decline of 706,000. March’s ADP Report estimates private employment in the service-providing sector fell by 415,000. Employment in the goods-producing sector declined 327,000,…

The volume of sale-leasebacks took a nosedive late last year, but given the credit environment, that can be said of most kinds of real estate transactions. However, there are hints that as the recession grinds on, companies will once again look to monetize their physical assets through sale-leasebacks, provided investors can be found with ready cash and an interest in long-term real estate holdings. In fact, the current state of the capital markets might even provide an incentive for companies to seek sale-leasebacks. “That’s because the current debt market is presenting a challenge for borrowers,” Maureen Ehrenberg, a principal with…

GM and Chrysler’s efforts so far to turn themselves around have proven to be lemons. That was the contention of the Obama administration as it gave failing grades to the automakers and vowed to perform a sweeping overhaul of both firms if they failed to get their financial ducks in a row soon. Under the current plan, the federal government will foot the bill for GM and Chrysler to operate over the next several weeks–with plenty of strings attached. The companies will have to undergo major restructuring, said the administration, lest the government make good on its threats of a…

The demise of familiar national brands like Circuit City, Linens ’n Things and Mervyns is having as big an impact on single-tenant leasing and investment as it is on the retail sector itself. Of the 73,000 store closings that the International Council of Shopping Centers estimates will take place during the first half of 2009, hundreds will involve net-leased properties. That, in turn, poses the challenge of re-tenanting properties ranging in size from a few thousand square feet to big-box locations of 100,000 square feet and up. On the whole, stores with small footprints may be relatively easy to re-tenant….

For the moment, the CityCenter development in Las Vegas–lately bedeviled by a feud between co-owners MGM Mirage and Dubai World–is still an ongoing thing, thanks to a $200 million payment by MGM to the joint venture late last week. “It is as an acceptable, albeit temporary, solution to the liquidity issues that MGM Mirage is facing,” Dubai World, which is owned by the emirate, said in a statement. Left unspoken was the fact that CityCenter’s main problem seems to be the unlucky timing of getting under way just ahead of a severe recession, something not even $200 million is likely…

Are the recent economic initiatives by the U.S. government putting the country on “the road to hell,” to quote a certain Czech politician whose own government imploded recently? It is worth noting that good intentions are known to be a common paving material on the road to that unpleasant destination. Or will our ultimate destination be a little less dramatic? The recently announced plan to get rid of toxic assets on the books of financial institutions through public-private action seems to be getting a positive, if cautious, reception. “We’re still learning about the plan, pretty much like everyone else,” Neil…