RCA in the commercial property press:

iStar Looks to Dig Out as CRE Values Increase

Wall Street Journal reports: For the past two years, Jay Sugarman, CEO of iStar Financial, has been struggling to steer the commercial real estate owner and lender clear of bankruptcy. Wall Street bet against the company as a number of its borrowers defaulted and iStar grappled with its own debt obligations. (See earlier iStar reports.)

But as commercial property values rise in many parts of the country, there are signs Mr Sugarman might pull it off. The company's success at selling assets at higher-than-expected prices has helped it reduce its debt level in the past 12 months by $3.7 billion, to an estimated $7.0 billion. Now the company's shares have hit a 52-week intraday high of $8.30, and iStar was the second-best-performing REIT in 2010 behind Glimcher Realty Trust.

With interest rates at historical lows, investors have bid up the prices of office buildings, hotels, multifamily apartments and other property, particularly in top markets like Washington, DC and New York City. Most values still are well below their boom-year highs. But the value recovery "has given owners and lenders a whole plethora of exit options they didn't necessarily have last year," said Dan Fasulo, managing director at real-estate data firm Real Capital Analytics.

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Posted by: Matthew Stone

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