Recent articles about commercial property investment which cite or quote Real Capital Analytics, the global commercial real estate research company. http://www.rcanalytics.com/press/press.aspx multifamily and commercial real estate lending is nowhere near what it was during the peak in 2007, capital flows are growing and borrowers and lenders are optimistic regarding 2012. Although lenders remain conservative, low interest rates keep buyers looking for finance.

According to data from Real Capital Analytics, total volume of commercial and multifamily sales rose 29% in 2011 to $162.8 billion. At the same time, data from the Mortgage Bankers Association shows their origination index hitting its highest point since 2007.

More than half of lenders and nearly half (44%) of borrowers are predicting more widely available credit in 2012.]]> Wed, 01 Feb 2012 15:49:19 GMT http://www.rcanalytics.com/article/1419/Capital-Markets-Continuing-to-Recover.aspx1419 office buildings to U.K. and U.S. money managers for about €900 million ($1.17 billion), in this year's first big test of investor appetite for Spain's battered property sector.

The deals by the two regional governments are a rare sign of life in a sector hit hard by the downturn. Sales of office space in Spain collapsed in 2009, falling 75% to €1.2 billion, according to global commercial property research firm Real Capital Analytics. To view a recent list of deals in Spain, click here.]]> Wed, 01 Feb 2012 08:35:14 GMT http://www.rcanalytics.com/article/1418/100-Properties-Valued-at--1-17B--Set-to-Close-in-Spain.aspx1418
The Russian government has been struggling for years to achieve low-digit inflation, in order to create a favorable investment climate and lure foreign investment. According to the Federal State Statistics Service, the country's consumer price inflation dropped to 6.1 percent in 2011, (Ross tat).

Global commercial property research firm Real Capital Analytics, , records $6.4 billion of sales in 2011. View more data about Russia's cross-border capital flows using RCA's Cross-border tracker tool and in Europe Capital Trends Year in Review.]]> Wed, 01 Feb 2012 08:17:35 GMT http://www.rcanalytics.com/article/1417/Russia-Seeks-Foreign-Investment.aspx1417
One sector that is getting a lot of notice from lenders is retail. Dan Fasulo, managing director at Real Capital Analytics, states that the interest in retail is a “global phenomenon, as people realize that the worst is over and [these properties] have tremendous intrinsic value”. The caveat that he also provided is that this only applies to the first and second tier properties, while tertiary level properties will still struggle.

Capital infusions are also another way to avoid looking for new financing while the LTV of a property is out of line. SL Green recently recapitalized a property in New York by pouring in cash and issuing shares, thus bringing down the LTV and leading to a new mortgage on the property.]]> Thu, 26 Jan 2012 12:13:24 GMT http://www.rcanalytics.com/article/1416/Refinancing-in-an-Interesting-Market.aspx1416
Special servicers, banks and other lenders may be more willing to resolve troubled property situations now. The number of recapitalizations has already blown up over the past year. Real Capital Analytics has researched over $13.3 billion worth of recapitalizations in the U.S. in 2011, the most since RCA began tracking commercial property sales in 2001. European banks are also driving more deal activity by offloading some of their American loan portfolios.

But not all borrowers will struggle — some landlords can simply pay down the loans. In January, Vornado Realty Trust refinanced a $430 million loan at 350 Park Avenue with $300 million in debt and $132 million in cash. It is currently in the market to refinance the maturing $232 million loan on the Manhattan Mall in Herald Square.]]> Wed, 25 Jan 2012 16:02:17 GMT http://www.rcanalytics.com/article/1415/Billions-in-Commercial-Real-Estate-Loans-Coming-Due-in-2012.aspx1415 Kushner Companies purchased 666 Fifth Avenue for a staggering $1.8 billion. The Midtown Manhattan office building was highly leveraged and when the recession hit rents declined and leases were scarce.

In 2010 the loan was transferred to a special servicer, but the lenders agreed to reduce the principal and defer some of the interest. At the same time Kushner's new partner, Vornado Realty Trust, agreed to invest in improving the 30% vacant building resulting in a happier ending for Kushner. In exchange for putting fresh cash into 666 Fifth Avenue, Vornado and Kushner will have the right to recoup this money (with interest, in Vornado’s case) before the subordinate loan is repaid. “By all appearances, it seems like a fantastic deal for Vornado,” said Robert M. White Jr., the chief executive of global commercial property research firm Real Capital Analytics.

Of the $11.8 billion in commercial loans in Manhattan that were classified as troubled since 2008, just $3.4 billion, or 29 percent, remains in distress, said Ben Carlos Thypin, the director of market analysis. About $3.5 billion in loans — covering 14 buildings, including 666 Fifth Avenue, 3 Columbus Circle and 280 Park Avenue — have been restructured.]]> Wed, 18 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1413/Kushner-Survives-18B-Purchase-of-666-Fifth-Avenue.aspx 1413
According to Real Capital Analytics, Russian commercial sales totaled around $6.3 billion last year, down 15 percent from 2010 and 48 percent from more attractive times in 2008. Despite this, Russia’s lack of high quality mall space has fueled a recent retail boom.

Meridian Capital, and Capital Partners, a local Russian firm, are selling the center after appointing Jones Lang LaSalle to sell the property last June. The deal is scheduled to close later this month.]]> Mon, 16 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1412/Morgan-Stanley-About-to-Close-on-Massive-Russian-Mall.aspx 1412 warehouse where workers once shaped and cut steel on Milwaukee’s north side is getting a second life. It’s being transformed into a charter school that’s scheduled to open in August.

A joint venture of Canyon Capital Realty Advisors LLC and former tennis champion Andre Agassi’s business partnerships is developing the property and will lease it to Lighthouse Academies of Wisconsin Inc. The Canyon-Agassi real estate fund has done one warehouse conversion in Philadelphia and is considering school projects in other U.S. cities, including New York and Houston.

Entertainment Properties Trust and Inland Public Properties Development Inc. also are among companies that are investing in buildings for charter schools as demand for campuses grows. More than 500 of the schools opened last year, bringing the U.S. total to about 5,600, according to the National Alliance for Public Charter Schools, a Washington-based advocacy group. The investors buy or develop properties and get income from renting to companies that operate the schools.

For Entertainment Properties, the charter-school investment yield is 9 percent to 10 percent, according to Keith Bokota, an analyst at Principal Global Investors. That compares with November’s 7 percent average capitalization rate for commercial property deals of more than $5 million, according to global commercial property research firm Real Capital Analytics Inc.

Leasing properties can entail risk because schools may be shut down for reasons including poor student achievement, low enrollment and financial troubles. About 150 U.S. charter schools didn’t reopen this academic year, according to the charter-school alliance.]]> Wed, 11 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1410/Charter-School-Investment-Has-Risks-and-Rewards-for-Property-Investors.aspx 1410
Sounds like a happy ending, right? Well it was for the Goldman venture, but not for some of the lenders that became involved in the deal.

Riding the real-estate boom, Goldman piled $465 million of debt on the 1920s-era hotel near Carnegie Hall. That enabled Goldman to take out all its equity and at least $150 million in profit, people familiar with the deal said.

But the debt was based on what turned out to be an overexuberant valuation. The Park Central continued to generate enough cash to stay current on debt service thanks to the fact that much of its debt had a low adjustable rate. But the music ended when all the debt came due last year, and the Goldman venture wasn't able to pay off all the creditors from the sale.

Similar scenarios are expected to play out this year, especially with commercial borrowers who, like homeowners that took out huge second mortgages, used lofty valuations to overleverage their real estate.

Manhattan hotel values are clearly below the records they hit during the boom years. But the New York market is outperforming those in other parts of the country.

In the 12 months through the third quarter of 2011, the price per hotel room acquired in Manhattan rose 20% from the year-earlier period to $440,454, according to global commercial property research firm Real Capital Analytics. The peak price was $628,815 paid in the fourth quarter of 2006.]]> Wed, 11 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1411/New-York-Outperforming-Other-Markets.aspx 1411 Asia Pacific region, believes that the Indian retail market has much room to grow due to the impending and continued growth of the middle class and the lack of retail infrastructure. “It is not who wants to come but why. The Indian retail market is under-developed, the density of organized retail is low and efficiency in the supply chain and distribution is missing,” Verma said in an interview with Business Standard.

Verma went on to say that the technology, banking, and finance sectors will be big drivers in Indian office space due to the global spread of large key tenants. Quoting data from Real Capital Analytics, he mentioned that Asia has been much quicker than the Americas or EMEA regions in bouncing back from recession and global capital flows showed this.]]> Mon, 9 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1409/Cushman--Wakefields-CEO-Asia-Pacific-Believes-Indian-CRE-will-Experience-Growth.aspx 1409
But London's commercial real estate sector has proven to be successful in sheltering from the effects of the eurozone crisis. Investors from Spain, Italy and Greece are increasingly looking toward London investments in a bid to shelter themselves from their countries' economic problems.

The FT quoted data from Real Capital Analytics, which showed that £10.21 billion was spent on London's commercial property sector by US, Middle Eastern, European and Asian institutions in 2011. A total of £13.2 billion was poured into the UK commercial property market, with London investments therefore accounting for 77% of this.]]> Fri, 6 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1408/Despite-Uncertainty-UK-Commercial-Property-Still-Popular-with-Overseas-Buyers.aspx 1408 refinancing of 11 Penn Plaza in New York City for $330 million the company stated in a press release. According to data from Real Capital Analytics, HSBC provided the financing.

The office building is located on the east side of 7th Avenue, between 31st and 32nd streets. Originally constructed in 1923, the 23-story building has 1.1 million square feet of leasable area.]]> Wed, 4 Jan 2012 12:00:45 AM http://www.rcanalytics.com/article/1406/Vornado-Refinances-11-Penn-Plaza.aspx 1406 foreign investors hitting the capital for a £1.3 billion ($2 billion) spending spree.

In a series of big-ticket deals, buyers from across Asia, Africa and Europe have snapped up skyscrapers, upmarket clothes shops and sprawling City office developments.

London has absorbed £10.1 billion of foreign investment since the middle of the year, more than double that attracted by Paris, which, at £5 billion, is the next biggest draw for international capital, according to global commercial property research firm Real Capital Analytics.]]> Fri, 23 Dec 2011 12:00:45 AM http://www.rcanalytics.com/article/1407/Buying-Spree-in-London.aspx 1407
The office campus in Menlo Park, California, was renovated for $250 million in a “hacker” style intended to express the culture of the world’s largest social-networking company.

While most companies don't efficiently use their offices, technology firms are leading the wave of an emerging trend-redesigned office space using nooks, kitchens and stairways as places where workers can meet on the fly.

“Creative space” is outperforming other property types, said Dan Fasulo, managing director of global property research firm Real Capital Analytics Inc., citing a Moody’s Investors Service index of prime buildings in six major cities with tech sectors. The measure gained almost 33 percent from its low two years ago, more than double the 15 percent advance for the broader commercial property index.

“They’ve seen their value skyrocket,” Fasulo said of the properties tracked in Boston, Chicago, Los Angeles, New York, San Francisco and Washington. “A new generation of corporate leaders is looking at space-planning as a core part of business to increase productivity and keep people in the office. The old guard looked at it as an expense.”]]> Tue, 20 Dec 2011 12:00:45 AM http://www.rcanalytics.com/article/1405/Creative-Spaces-An-Emerging-Trend.aspx 1405 Peter Slatin, financial columnist with Forbes and editorial director for Real Capital Analytics said that as REITs grow and expand their presence in the commercial real estate landscape, more will begin to build global portfolios.

Mr. Slatin discussed his outlook for the future of the REIT approach to real estate investment. He said he expects to see diversification in a variety of ways: "We’ll see continued expansion, but we’ll also see increased variation as some companies experiment with financial structures, development ideas and locations."

Slatin also made the prediction that more institutional investors will gravitate to the REIT approach to property investment, increasing their allocations to commercial real estate securities over direct forms of commercial real estate investment.

Adding that transparency and liquidity are the enduring legacy of the REIT model, Slatin said "Without these two things, real estate would have remained—and some of it still does remain—a secretive, private, closed investment world."]]> Mon, 19 Dec 2011 12:00:45 AM http://www.rcanalytics.com/article/1404/More-Global-Expansion-Ahead-for-Real-Estate-Investment-Trusts.aspx 1404 Archstone has acquired Eastbridge Landing, a 209-unit, 22-story rental tower from sellers Madison International Realty and RFR Holding through an Archstone sponsored partnership, the company unveiled Tuesday morning. The site, located at 377 E. 33rd St., sold for a purchase price of $131 million.

The deal now brings Archstone’s total apartment portfolio in the New York-metropolitan area to 14 properties. It currently owns and manages 10 rental towers in Manhattan, one in Brooklyn and one on Long Island.

The property, which buffers the Murray Hill neighborhood, is located in close proximity to large employers such as the New York University Langone Medical Center and the United Nations. Rents range from $2,500 for studios and up to $5,400 for two-bedroom units. According to global commercial property research firm Real Capital Analytics, the property is 95% occupied.]]> Wed, 14 Dec 2011 08:40:27 GMT http://www.rcanalytics.com/article/1402/Archstone-Adds--131M-Apartment-Asset-to-Portfolio.aspx 1402
Throughout the downturn, the common practice of “extend and pretend,” where lenders hoped to delay the inevitable demise of troubled assets, was widely derided by distress hunters. After all, critics said, lenders were just kicking the can down the road, building a weak dam of false hope to hold back a flood of distress.

But even the staunchest critics would have to agree that extend and pretend actually worked. The swift rebound in values and continually improving capital markets gave lenders and troubled owners a way out this year, probably sooner than they could have hoped.

As a result, the 2011 Deals of the Year, a who’s who of large, distressed portfolios, signaled the endgame of extend and pretend.

At the starting line are overleveraged owners that bought at the height of the upturn and have since bought nothing but time. And waiting at the finish line is a bevy of hungry private investors, lured by the prospect of above-average returns on complicated capital restructuring deals.

“Extend and pretend allowed this to drag out, and now we’re starting to see a steady flow of distressed portfolios come to market,” says Dan Fasulo, managing director of global property research firm Real Capital Analytics. “There’s a window of opportunity now. And I think that will increase moving forward."]]> Tue, 13 Dec 2011 11:52:26 GMT http://www.rcanalytics.com/article/1401/Pretend-and-Extend-coming-to-an-end.aspx 1401
Just look at their histories: Vegas, the most modern of the three cities, was founded in 1905 and was mostly notable as an atomic bomb testing site for the Manhattan Project until mobsters built it into an oasis of gambling. Phoenix, so named because it was built on the ruins of a Native American civilization abandoned in 1450, was founded by a Confederate veteran who wanted to name it “Stonewall.” And Miami was the only major U.S. city conceived by a woman—Julia Tuttle, a citrus growing entrepreneur, who owned all of Miami’s land but gave nearly half of it to a railroad magnate to attract a train line to South Florida.

Yet in recent years, these three metros have all been linked in a tragic way—as the poster children for multifamily distress. All three markets reached dizzying heights in the run-up to the recession, then plunged to terrifying lows in 2008 and 2009. And market watchers and investors have been incredibly wary of whether any of the trio would ever be as strong as they were before the crash.

The forecasts are mixed: Vegas is the laggard, the only one of the three still truly distressed, though Phoenix continues to nurse a heavy hangover from overheated valuations. Miami is the healthiest of the three, confidently climbing out of a towering shadow of condos.

“This is just what happens in Phoenix and Miami every 10 to 15 years, and then it comes back to the surface. For Vegas, this is probably only their second boom/bust,” says Ben Thypin, a senior market analyst for global property research firm Real Capital Analytics (RCA). “When you’re investing in Phoenix and Miami, you can price in some rent growth or, at the least, population growth. Whereas in Vegas, the economic outlook is just so uncertain."]]> Mon, 12 Dec 2011 13:19:38 GMT http://www.rcanalytics.com/article/1400/Distressed-Las-Vegas--Phoenix----Miami-making-a-come-back.aspx 1400 hotel industry has spurred a wave of renovation projects, a trend likely to pick up speed in the coming year.

Hotel owners placed planned upgrades on the backburner as bookings dwindled and room revenue dried up three years ago. Now that travelers are back in the market with a full suite of options to choose from, hoteliers are sprucing up their properties to remain competitive.

The resurgence of demand and pricing power also sparked a flurry of hotel sales since 2010. Through the nine months ending September of this year, global commercial property research firm Real Capital Analytics said hotel sales soared 122 percent to $14 billion.]]> Mon, 12 Dec 2011 08:08:34 GMT http://www.rcanalytics.com/article/1399/Hotel-Renovations-Expected-in-2012.aspx 1399 hotels come due in the next two years, lenders are doing more to avoid foreclosure on lodging properties than on any other type of commercial real estate.

Workout agreements have been reached on 53 percent of distressed hotel loans since the start of 2008, the highest among six commercial-property categories, according to data from Real Capital Analytics Inc. a global commercial property research firm.
Special servicers, who negotiate with landlords on behalf of investors in commercial mortgage-backed securities, typically install a receiver or hire a broker to sell an office, apartment or industrial building with multiyear leases. Hotel rooms, on the other hand, rent by the night, and contracts with such operators as Marriott International Inc. may be terminated if a property is repossessed, making it harder to run or market.

Among hotel loans being worked out is $1.44 billion in financing backed by 355 La Quinta Inns & Suites owned by a unit of New York-based Blackstone Group LP. It will mature on July 9, 2012, after three one-year extensions. The loan was transferred in September to the special servicer, Bank of America Corp., after the borrower requested modification.]]> Wed, 07 Dec 2011 10:28:22 GMT http://www.rcanalytics.com/article/1398/-17-5B-in-Hotel-Loans-Come-Due--Foreclosure-Looming-.aspx 1398 Walton Street Capital LLC hired CBRE Group Inc to sell 95 industrial properties that it acquired for about $2.8 billion in 2007, when CRE prices peaked, as a debt payment on the buildings comes due in June.

Property owners have had difficulty refinancing debt amid the decline in US real estate values from their highs and upheaval in the commercial mortgage-backed securities market since July. Walton Street has a $2.45 billion loan repayment deadline in June. Blackstone Group LP, the world’s largest private-equity firm, has acquired almost $600 million of debt on the buildings, putting it in a position to take control if the borrower defaults.

“Walton Street would have to come up with a lot more money to hang onto this,” said Dan Fasulo, managing director at Real Capital Analytics Inc., a global commercial property research firm in New York. “The problem is they bought this portfolio very much at the height of the market, and I’m not sure these assets are worth that anymore.”

Walton Street paid about $120 per square foot for the CalWest properties, which total 23.4 million square feet (2.2 million square meters) and are mostly located in California. While it’s difficult to generalize, Fasulo estimates industrial assets are now valued at about $80 to $100 per square foot.

“They’re actually fortunate that most of the assets are in California, where there is significant demand,” Fasulo said. “They’re hoping someone will come along and see the value and help them work out of a difficult situation.”]]> Mon, 05 Dec 2011 10:56:33 GMT http://www.rcanalytics.com/article/1397/Walton-Street-Seeks-Buyer-for-95-Industrial-Props-Purchased-for--2-8B-in-2007.aspx 1397
NAR Chief Economist Lawrence Yun said that corporations are sitting on big cash reserves, the stock market is performing and job gains are slowly improving. Foreign buyers, attracted to U.S. investment opportunities are on the lookout for properties, according to Yun.

The weak housing market, with financially struggling owners transitioning to rentals or doubling up with family rather than buying, is helping to stir activity in multifamily properties, which is the strongest of the commercial property sectors by far, Yun said.

SVP Richard Peach of the Federal Reserve Board of New York offered a unique suggestion that was particularly suitable for Veteran’s Day: to improve the housing sector, help military personnel who served abroad purchase foreclosed properties.

Robert White of commercial real estate research firm Real Capital Analytics says much of the activity across sectors has been in higher-end properties in primary markets. However, the industry is now starting to see more activity in other property types and in secondary or tertiary markets. “It’s been a bifurcated market,” he said, “and that's starting to change.”

White predicts $200 billion in sales volume across sectors by the end of the year and a slight increase from that in 2013. “Lots of buyers are interested,” White said, in part because the risk premium is so attractive right now. Cap rates, at 7.9 percent, are particularly attractive in the industrial sector. The continuing difficulty in getting financing is still the biggest obstacle standing in the way of further recovery.]]> Tue, 15 Nov 2011 16:26:47 GMT http://www.rcanalytics.com/article/1394/Slow-But-Steady-Pace-in-CRE-Recovery.aspx 1394 AREA Property Partners’ global chief executive officer Lee Niebart asked a small audience of CRE professionals whether they’d invest capital in Europe, only a few lowly hands went up. “That presents a challenge,” Niebart said, during a panel discussion held by Property Investor Europe magazine at DLA Piper’s Midtown Manhattan headquarters on Tuesday morning. “At the end of the day, our business is not to make stupid mistakes,” he added. “We have to be somewhat defensive when nobody raises their hand to invest in Europe that we have to be very, very careful in what we do.”

The panelists discussed the benefits--and risks--of European commercial real estate investment amid economic turbulence and sovereign debt issues. Despite those problems, Robert White, founder & president of global commercial property research firm Real Capital Analytics said property sales are performing well in Europe, showing $32.2 billion in investment during the third quarter alone.

Much of the activity, White said, is driven by Asian and Canadian capital in the UK, France, Germany and Poland. “It is probably just the tip of an iceberg,” he said, adding that one of the biggest things that separates Europe from every other market is a high proportion of institutional capital. “It is causing this risk aversion and the defensive acquisitions, the institutions still comprise about 50% of the European buyers,” he said. “We are starting to see an uptick in the cross-border activity within Europe and that capital is much more willing to explore a greater array of markets. Capital is flowing, and London is capturing the greatest portion of that, and Germany increasingly so, but it is still centric on the major markets.”]]> Wed, 09 Nov 2011 04:57:40 GMT http://www.rcanalytics.com/article/1393/CRE-Investment-in-Europe-Has-Risks-and-Rewards.aspx 1393 CMBS market that provided the cheap financing at that time has since been replaced by banks, insurance firms and mortgage-financiers Fannie Mae and Freddie Mac.

Despite these originations, Real Capital Analytics states that $49.8B in property transacted in the third quarter, a drop from the $58.5B transacted during the previous three months. Speculation in the market may be that prices are rising while the number of transactions may have fallen.]]> Thu, 03 Nov 2011 00:00:40 GMT http://www.rcanalytics.com/article/1392/US-Commercial-Loan-Originations-Highest-since-2007.aspx 1392
95 billion Euros in property sold through the first nine months of the year, mainly driven by large shopping center transactions. These included a half interest of Westfield Stratford City selling in London, as well as large mall deals in Frankfurt and Warsaw.

Total volume for the year will likely exceed 140 billion Euros.]]> Tue, 01 Nov 2011 11:31:40 GMT http://www.rcanalytics.com/article/1390/European-Property-Deals-Reaching-2008-Levels.aspx 1390 multi-family apartment blocks and residential homes in the US in the past year as investors seek a global safe haven in increased American demand for rental property.

In absolute terms, the dollar volume of foreign purchases of multi-family property to September 2011 has exceeded 2010’s full-year total by 73 percent, according to data by global commercial property research firm Real Capital Analytics (RCA). Ben Thypin, director of market analysis at RCA, said he expected the year-on-year gain to be close to 100 per cent.

“Investors are seeking less risky assets whose value won’t be as volatile as many of the other investment opportunities available in this turbulent global economy,” said Mr Thypin.

Foreign investment represents 5.8 percent of all multi-family purchases, up from 3.7 percent in 2010, according to RCA. More statistics on the global market can be found in an article released on October 6, "Foreign Investment Continues to Grow" and more extensive data will be included in an upcoming publication "Global Capital Trends".

A weaker dollar, international market volatility and a continuing foreclosure crisis have combined to create an unlikely safe haven for international investors.

Foreign investors, who can include wealthy individuals as well as foreign pension funds, insurance companies, sovereign wealth funds and real-estate companies, have directly invested nearly $4.2bn in the US multi-family property market since the start of 2009, according to RCA data. Analysts say that the market share of such property owned by foreigners is significantly larger as the data does not include indirect investment through local intermediaries, which is difficult to track.]]> Thu, 27 Oct 2011 15:32:25 GMT http://www.rcanalytics.com/article/1389/Foreign-Investment-Rising-for-US-Commercial-Real-Estate.aspx 1389 Kennedy Wilson, a Beverly Hills, California-based real estate investment and services firm, and its institutional partners purchased a loan portfolio from the Bank of Ireland for $1.8 billion. The loans are secured by class-A office, retail and multifamily properties located in London. Kennedy Wilson will complete the transaction in two phases. It has already closed on the first part of the acquisition valued at $1.4 billion on Oct. 21. At the end of November, it will close on an additional $400 million.

“This is a landmark deal for Kennedy Wilson,” Chairman and CEO William McMorrow said in a statement. “Under the leadership of Mary Ricks, our new team in Europe played a significant role in this success and the closing adds to our already strong base of business in Europe.”

Although recent reports have noted that NYC tops London as a favorite for commercial property investment in the first half of the year, United Kingdom saw $24.3 billion in commercial property sales, representing a 14 percent increase over the same period last year, reports global commercial property research firm Real Capital Analytics.]]> Tue, 25 Oct 2011 16:32:25 GMT http://www.rcanalytics.com/article/1388/Kennedy-Wilson-Increases-Assets-Under-Management-with-18B-Purchase-in-London.aspx 1388 Blackstone Group LP, the world’s largest private-equity firm, agreed to pay $1.08 billion to buy Duke Realty Corp.’s suburban office holdings in U.S. cities including Chicago, Dallas and Atlanta.

Blackstone Real Estate Partners VII will buy the 82 buildings with a combined 10.1 million square feet (938,000 square meters) of space, Indianapolis-based Duke Realty said in a statement. They include “substantially” all of Duke’s wholly owned suburban office properties in the Midwest and South.

Blackstone has invested more than $7 billion in real estate this year, and has raised $4 billion for its latest property fund that the New York-based firm expects to exceed $10 billion, Chairman Stephen Schwarzman said yesterday.

“Blackstone has a lot of capital to deploy so they need to deploy it in large chunks,” Ben Thypin, director of market analysis for global commercial real estate research firm Real Capital Analytics Inc., said in a telephone interview. “It seems like they got a good discount to what comparable properties have been trading for in those regions, especially considering how well-leased and relatively new the properties are.”]]> Mon, 24 Oct 2011 16:32:25 GMT http://www.rcanalytics.com/article/1387/Blackstone-Agrees-to-Buy-Duke-Realtys-Suburban-Office-Holdings-for-108B.aspx 1387 hotel in New York City is becoming more affordable than buying as demand from publicly traded investors helps drive a surge in property prices.

Increased competition for purchases has led developers to plan the opening of about 50 new hotels this year through 2013 in New York, more than triple the number in Washington. Sixty-eight more are set for completion in 2014 and after.

Hotel developers, many of whom stopped building in Manhattan and other New York boroughs when financing dried up during the recession, are returning following a gain in commercial-property prices, which are at their highest since a record reached in 2006.
Manhattan lodging properties sold for an average of $505,157 a room this year through Sept. 30, up from $344,799 for all of last year and $413,644 in 2009, according to global commercial property research firm Real Capital Analytics Inc. At the 2006 peak, the average was $632,894. Meanwhile, companies including DiamondRock Hospitality Co. (DRH) and Hidrock Realty Inc. are building hotels for $300,000 to $450,000 per room.]]> Mon, 24 Oct 2011 14:26:25 GMT http://www.rcanalytics.com/article/1386/Hotel-Development-on-the-Rise.aspx 1386
“You can’t have a recovery when only a handful of markets are experiencing the price appreciation and everything else is left out,” Real Capital Analytics founder and president Bob White states. “The recovery is becoming more inclusive.”

Investors are most likely looking for greater yields than what can be found with the usual trophy assets and the large amount of capital in the market is beginning to find a home.]]> Fri, 21 Oct 2011 11:34:40 GMT http://www.rcanalytics.com/article/1385/2011-US-YTD-Volume-Ahead-of-2010-Numbers.aspx 1385
Dan Fasulo, managing director at Real Capital Analytics, states that many Canadian investors are yield buyers who are interested in a five or six percent return. He goes on to state that these investors are finding the need to diversify as there are only so many large assets in Canadian markets such as Toronto.

Over US$2B in properties have been acquired in New York by Canadian investors so far this year, the highest total since at least 2001.]]> Mon, 17 Oct 2011 13:12:25 GMT http://www.rcanalytics.com/article/1384/Canadians-Look-to-NYC-for-Higher-Yields.aspx 1384 According to RCA Managing Director Dan Fasulo, many investors need patience to wait for these distressed assets as negotiations take place behind the scenes. Note purchases often prove to be a convenient way to gain access to a property.

Private equity will most likely continue to invest in commercial real estate as the lure of potential double digit returns is too great to pass up when few other investments are currently offering such yields. ]]> Thu, 13 Oct 2011 13:25:25 GMT http://www.rcanalytics.com/article/1383/Private-Equity-Continues-Investment-in-CRE.aspx 1383 Europe and Asia has slowed with continued economic uncertainty. However, foreign capital continues to flow into the Americas, according to a recent report by global commercial property research firm Real Capital Analytics. Preliminary data shows cross-border acquisitions into the US will top $5 billion in the third quarter, a figure not seen since 2007.

The country isn’t created equal in drawing property dollars, however. About two-thirds of all the investment into the US has been into one of six major gateway markets, with Manhattan taking up 40%. Other cities popular for other countries have been Miami, Phoenix, Dallas and Houston.

Canada continues to be the most active investor into the US, with about one-third of all acquisitions, according to the RCA report. However, US acquisitions by investors based in China and Hong Kong increased by $1.5 billion in Q3 2011 from a year earlier, with South Korea also boosting its US investment to more than $1.1 billion for the year, the report said.

Download a free special report on cross-border acquisitions here.]]> Wed, 12 Oct 2011 00:00:40 GMT http://www.rcanalytics.com/article/1381/Cross-border-Investment-in-the-US-Growing.aspx 1381 retail and mid-level brands making a comeback just before the holiday shopping rush, financial services firm TIAA-CREF and developer CBL & Associates Properties Inc. proved that the mall is still in style after closing on a $1.09 billion joint venture in four shopping malls in the Southeast. The malls include: West County Center in St. Louis; CoolSprings Galleria in Nashville; the Oak Park Mall in Kansas City, KS; and the Pearland Town Center Pearland, TX.

According to global commercial property research firm Real Capital Analytics, the 1.5-million-square-foot Oak Park Mall, anchored by Nordstrom, Dillards and AMC Theaters was purchased for $289 million; the 1.1-million-square-foot West County Center anchored by Nordstrom, Macy’s and JCPenney was bought for $395 million; the 1.1-million-square-foot CoolSprings Galleria anchored by Macy’s, Belk, Sears and Dillards was purchased for $200 million; and the 1.1-million-square-foot Pearland Town Center anchored by Macy’s, Dillards, Sports Authority and Barnes & Noble is worth $204 million.]]> Fri, 07 Oct 2011 17:46:25 GMT http://www.rcanalytics.com/article/1382/Large-Retail-Joint-Venture-Finalized-Between-TIAA-CREF-and-CBL.aspx 1382
Compared with a year earlier, investments grew 166% to $29.7 billion in the NYC area in past the 12 months through August. London commercial property investment increased 2.4% to $27.2 billion, according to the report based on data compiled by information service provider Real Capital Analytics.

The report added that Chicago, New York, Boston and Atlanta made up four of the five fastest growing real estate investment markets by volume. Frankfurt and Germany’s Rhine-Ruhr metro area ranked fourth, with growth of 126%.

A resurgence of the CMBS market in the US in the first half of this year spurred the increase in investment, said Joseph Kelly, director of market analysis at Real Capital Analytics. But that market is now “starting to slow down,” he added. "Distressed debt is a much greater concern in Europe than the US and that’s holding back new funding in the market, particularly for second-tier assets," Kelly said.

Kelly said there has been a “resurgence” in interest in London from US investors. Half of the money spent on property investment in London during the period came from abroad. Maintaining its spot as the number one city for cross-border property investment, London was followed by Paris, New York, Singapore and Beijing.

In a recent report, RCA's preliminary results for Q3’11 showed that transaction volumes globally should be flat to slightly ahead of Q3’10, but will fall short of reaching levels recorded in Q2’11.]]> Wed, 05 Oct 2011 00:00:40 GMT http://www.rcanalytics.com/article/1380/NYC-Tops-London-as-Favorite-Destination-for-Commercial-Property-Investment.aspx 1380 Blackstone has contracted to acquire 36 mainly grocery anchored strip centers from publicly traded REIT Equity One for a total of $473.1M. The properties are located throughout the southeast US with a special focus on Florida and Georgia, and the transaction is scheduled to close during the fourth quarter of this year. According to commercial property research firm Real Capital Analytics, sales of US grocery anchored centers in just the first half of this year have already exceeded the total transacted for all of 2010. This is the second large retail acquisition for Blackstone this year, following up on June’s $9 billion acquisition of Centro’s US portfolio. Lazard Freres advised Equity One, while Eastdil advised Blackstone.]]> Tue, 27 Sep 2011 15:12:25 GMT http://www.rcanalytics.com/article/1378/Blackstone-on-the-Retail-Acquisition-Path.aspx 1378 seniors housing and care transactions that closed in the first half of 2011. The foundation of the report is a strategic alliance between RCA and NIC and a jointly developed database aimed at increasing property valuation and pricing transparency in the seniors housing and care sector.

The report is available for purchase in the RCA Publications Shop.

"For the twelve months ending June 30, 2011 the seniors housing and care market produced its highest ever transaction volume, posting nearly $20 billion in closed deals. The spectacular amount of transaction activity continues to generate interest and accelerate the sector's advancement as a commercial real estate class in its own right," said RCA Founder and President Bob White.

Those active or considering investing in the rapidly growing seniors housing and care sector demand data at the level of detail and scope of coverage available to other commercial real estate property types. The RCA-NIC Seniors Housing & Care U.S. Quarterly Report provides unbiased and comprehensive information to monitor sales, track pricing, gather competitive information and identify market trends, including:

- investment trend activity,
- market fundamentals,
- top buyers and top sellers; pinpointing dealmakers,
- specific details for most transactions.

The firms' alliance, database and co-branded quarterly report have been nearly three years in the making and emphasize the commitment of RCA and NIC to provide quantitative data, drive transparency and facilitate investment decisions. "RCA and NIC MAP subscribers now have enhanced access to comprehensive time series data including sales transactions and market fundamentals detailing the trends within the seniors housing and care property market," said NIC's President Robert Kramer. "Our alliance with RCA is designed to keep those interested in seniors housing and care up to date with property pricing and valuation trends."

About National Investment Center for the Seniors Housing and Care Industry
For 20 years, the National Investment Center for the Seniors Housing & Care Industry (NIC) has been committed to advancing the quality of seniors housing and care by facilitating informed investment decisions for investors, lenders, owners, operators and developers through groundbreaking research, actionable data and dealmaking events. NIC is the leading provider of historical and trend data on the industry through its NIC MAP® Data and Analysis Service that tracks more than 12,000 properties on a quarterly basis in the 100 largest metropolitan markets. Proceeds from its annual conference and other events are used to fund data and research on issues of importance to lenders, investors, developers, operators, and others interested in meeting the housing and care needs of America's seniors. For more information, visit www.nic.org.

About Real Capital Analytics
Real Capital Analytics, Inc. (RCA) is a global research firm based in New York City. The firm's proprietary research is focused exclusively on the investment market for commercial real estate. Within that arena, Real Capital Analytics offers the most in-depth, comprehensive and current information of activity in the industry. In addition to collecting transactional information for property sales and financings, RCA interprets data such as capitalization rates, market trends, pricing and sales volume. RCA also quantifies the market forces and identifies the trends that affect the pricing and liquidity of commercial real estate around the world. The firm publishes a series of Capital Trend reports and offers an online service that provides current transaction and troubled asset information for all markets globally. For more information, visit www.rcanalytics.com.]]> Mon, 26 Sep 2011 13:27:25 GMT http://www.rcanalytics.com/article/1379/Real-Capital-Analytics-and-NIC-Release-Seniors-Housing-Report.aspx 1379 Global Capital Trends report provided by Real Capital Analytics. This London total was more than any other city worldwide; according to the Global Capital Trends report, over 180 significant ($10m+) properties were sold in London, representing a 19% increase year on year. But following the August 2011 riots, it seems only the highest of high-end trophy properties are attracting investment.

A major component of this year’s growth has been the influx of capital from Asian and Middle Eastern investors, along with some German, Spanish, and American capital filling in the gaps. But these investors are looking for the safe haven that London provides, and are often partnering with a local investor to further hedge their bets.

Alternative investments may prove significant in coming months as investors seek to diversify; student housing and residential portfolios are rumored to be targets.]]> Mon, 26 Sep 2011 11:13:40 GMT http://www.rcanalytics.com/article/1377/London-real-estate-market-stalls-except-for-top-end-commercial-property.aspx 1377 REIT to buy over $200 million in grocery-anchored retail centers as demand for commercial property climbs. The Cincinnati-based non-listed REIT will add $52 million to the partnership, and clients of CBRE Investors contribute $50 million.

Supermarket-focused retail centers attract buyers in a sluggish economy because of the presumed safety of properties that consumers must visit for necessities.

Through the first half of 2011, over $5.5 billion were sold, 22% more than the $4.5 billion in ALL of 2010, according commercial property research from Real Capital Analytics. The 2011 total for grocery-anchored properties is the highest since 2007 (the peak of the CRE market).]]> Wed, 21 Sep 2011 09:39:40 GMT http://www.rcanalytics.com/article/1376/CBRE-Forms-200-Million-JV-with-REIT-to-Acquire-Grocery-Shopping-Centers.aspx 1376 Starwood Property Trust and Colony Capital, US mortgage investors formed amid an expected surge of distressed debt, are turning to Europe as banks tighten lending and sell real estate loans.

Despite the turmoil in the debt markets, the founder of Connecticut-based Starwood, Barry Sternlicht calls Europe a “fertile field.” He has made deals including a $71.5 million loan on a group of 45 properties leased by a unit of Metro AG, Germany’s largest retailer. California-based Colony, led by Thomas Barrack, invested $30 million in July for a stake in five non-performing loans backed by buildings in Frankfurt and Berlin.

The REITs are seeking transactions overseas, expecting that delinquencies will rise, and that banks will dispose of more bad debt and make fewer loans in a weakening economy.

Dan Fasulo, managing director at Real Capital Analytics said “It’s hard to find a rock that hasn’t been overturned in the US. It doesn’t surprise me that some of the major players here would turn to Europe, where there remains a lot of skeletons in the closet.”]]> Mon, 19 Sep 2011 16:17:25 GMT http://www.rcanalytics.com/article/1375/Europe-Draws-Mortgage-REITs-Seeking-Distressed-Property-Deals.aspx 1375 REO properties - to be online by October 6.

The $2 billion portfolio includes retail, mixed-use, hotel, land, industrial, office, and multifamily apartment properties in Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Bids start as high as $10.5 million.

Auction.com has focused on residential properties, but run commercial auctions since the 90s. Auctioning non-performing notes and commercial REO properties has become a bigger part of their business since the commercial real estate downturn.

At Real Capital Analytics, managing director Dan Fasulo thinks the Southeast auction could provide useful economic insights. “This year, as the primary markets got pricey, we started to see the recovery spread out to secondary markets across the country — but then this summer happened.”

Fasulo says he believes the recovery may slow down because of the recent debt ceiling crisis and the increasing potential of a double-dip recession.

“I think this portfolio of notes and properties could be a good barometer of how deep the demand is in secondary markets right now, coming out of a pretty volatile summer,” says Fasulo.]]> Tue, 13 Sep 2011 17:38:25 GMT http://www.rcanalytics.com/article/1374/Over-325-Southeast-REO-Commercial-Properties--Loans-Coming-to-Auction.aspx 1374
Dr. Fisher served as professor of finance and real estate at Indiana University’s Kelley School of Business, and was director of the Benecki Center for Real Estate Studies. He has been on the Board of Directors of the Pension Real Estate Association (PREA), the Homer Hoyt Institute, the National Council of Real Estate Investment Fiduciaries (NCREIF) and was a Trustee of The Appraisal Foundation. Dr. Fisher has received numerous accolades and has become a well-known expert in the industry through his extensive research and publications.

“This is a great opportunity for me to work with ARGUS Software as they integrate state-of-the art technology with market data from leading information providers like Real Capital Analytics to enhance the transparency and efficiency of commercial real estate markets,” commented Dr. Fisher.

“Having been a member of our advisory board for years, Dr. Fisher has been instrumental in guiding ARGUS to create solutions that address the needs of our clients,” said Mark P. Kingston, president of ARGUS Software and chief knowledge officer of Altus Group. “His expertise and vision have helped create methodologies and standards that have shaped the global commercial real estate community. In his expanded role, his savvy will guide the ARGUS team towards building the right solutions to improve the way our clients do business.”

“We are pleased to be strengthening our bonds with both Dr. Fisher and ARGUS,” said Bob White, founder and president of RCA. “Having worked with Jeff on a number of projects over the years, I am confident that he will help keep ARGUS and RCA at the forefront of innovation for commercial real estate information and technology.”

About ARGUS Software

For over 25 years, ARGUS Software has been the leading global provider of software and solutions for analysis and management of commercial real estate investments. ARGUS products are the industry standard and provide a complete solution for managing and growing a commercial real estate portfolio. More than 4,600 of the real estate industry's leading owners, managers, financial institutions, brokerages and REITs, in 45 countries and on five continents use ARGUS solutions to improve the visibility and flow of information throughout their critical business processes. These solutions include asset management, asset valuation, portfolio management, budgeting, forecasting, reporting and lease management. Now a part of Altus Group Limited, ARGUS continues to provide up to date and relevant solutions to our clients. For further information, visit www.argussoftware.com

About Real Capital Analytics

Real Capital Analytics, Inc. (RCA) is a global information service provider with offices in New York City, San Jose, London and The Hague. Started in 2000, the firm's proprietary research is focused exclusively on the investment market for commercial real estate. In addition to collecting transactional information for current property sales and financings, RCA analyzes and interprets the data, providing valuable insight on commercial real estate investment. Among other reports, RCA publishes Global Capital Trends, Europe Capital Trends and US Capital Trends. Covering all markets globally, RCA’s investment market data and analysis is relied upon by all segments of the real estate community: buyers, developers, brokers, lenders and regulatory agencies. Timely, complete and accurate reporting of investment activity is the hallmark of Real Capital Analytics. For further information, visit www.rcanalytics.com.]]> Mon, 12 Sep 2011 00:01:40 GMT http://www.rcanalytics.com/article/1373/Dr-Jeffrey-Fisher-Strengthens-ARGUS-and-RCA-Partnership.aspx 1373 Three First National Plaza office complex in Chicago. Although Hines declined to disclose details, the transaction price was near $350 million, according to commercial real estate research firm Real Capital Analytics.

The buyer was a partnership of Downtown Properties, which is the US associate of Hong Kong-based Gaw Capital Partners, and a South Korean consortium.

Hines originally developed the property in 1981, and restructured the ownership in 2005, with ownership changing hands between Hines affiliates Hines-Sumisay (Sumitomo) Fund. The sale price recorded at that time was $245.3 million or about $170 per square foot.]]> Thu, 01 Sep 2011 13:17:25 GMT http://www.rcanalytics.com/article/1372/Hines-Sells-Chicagos-3-First-National-Plaza-for-Nearly-350-Mil.aspx 1372 Google has spent $115 million to acquire 16 buildings in Mountain View, CA this year. In all, the company is planning to add 3.5 million square feet to the 4.3 million square feet they already occupy in Mountain View.

Google's largest Silicon Valley outpost outside of Mountain View is a recently leased four-building Sunnyvale complex named Technology Corners. Google spent $1.8 billion last winter for a 15-story building in Manhattan, the biggest transaction of 2010 involving a single U.S. building, according to Real Capital Analytics data. Google also spent over $150 million this year to buy the tallest commercial block in Dublin, Ireland.

Google currently has 29,000 employees worldwide, but with approximately 2,000 positions available on their job site (not to mention the 19,000 Motorola additional staff that Google will add after the planned merger), these expansion plans are only the start. Many of these commercial properties are under review for possible expansion or rebuilding.]]> Wed, 31 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1371/Google-Expands-Real-Estate-Strategy-in-Silicon-Valley.aspx 1371 Cerberus Capital Management LP at an auction for Innkeepers’ USA Trust properties in May, Five Mile Capital partners may have a second chance at 64-hotel package now that Cerberus has dropped out of the deal. Bloomberg recently reported that the Stamford, CT-based investment firm is currently in negotiations with Innkeepers’ for a separate set of 140 limited-service Red Roof Inns, but may arrange to make a move for Cerberus’ additional 64 properties.

Bloomberg contacted Real Capital Analytics’ Ben Carlos Thypin for his outlook on Five Mile now that they have the potential to scoop up a significant portion of Innkeepers, which filed for bankruptcy protection this time last year. Mr Thypin told Bloomberg that, “Bidders who lost the last time may jump at the chance to re-engage with Innkeepers now that the original deal has been terminated . . . As Five Mile closes in on a potential acquisition of Red Roof, they may be more competitive now that they have a chance to significantly grow their footprint in this sector.”]]> Thu, 25 Aug 2011 12:35:25 GMT http://www.rcanalytics.com/article/1370/Five-Mile-May-Take-a-Larger-Slice-As-Innkeepers-USA-Gets-Carved-Up.aspx 1370 occupancy rates trump nearly every everything else in cutting a deal. An article in the Wall Street Journal detailed the recent sale of the Business and Research Center in Garden City, NY to illustrate this simple suburban selling rule. The brutish six-level concrete buildings, constructed in the 1960s, are an eyesore to some and uniquely attractive to others. More important, however, the complex attracted the attention of bidders due to its high occupancy level and recent renovations.

Metropolitan Realty Associates purchased the property for just $7.4 million in 2005 as the market was approaching its peak; shortly thereafter its primary tenant vacated the space and Metropolitan took the opportunity to give the desolate property a facelift and reposition it as a multi-tenant business center, rather than a laboratory industrial space. After $15 million in renovations, Metropolitan was able to lease up the space and the property sold this year for $39.3 million – a handsome profit, proving flips involving properties purchased during the boom years do occur.

In explaining the sale, Real Capital Analytics Managing Director Dan Fasulo told the Journal that, “Investors active in suburban markets are almost singularly focused on well-leased assets.”]]> Wed, 24 Aug 2011 10:23:40 GMT http://www.rcanalytics.com/article/1369/Suburban-Long-Island-Complex-Flips-after-Successful-Repositioning.aspx 1369 yields (averaging 8.3 percent during the second quarter) and solid economic trends, Australia has reemerged as a top cross-border capital destination for investors squeezed out of competitive first-tier markets around the world.

Investment & Pensions Europe recently cited data aggregated by Real Capital Analytics and featured in the mid-year review edition of its Global Capital Trends report to state that the Australian market has seen cross-border acquisitions spike to nearly $4.0 billion in 2011—accounting for 42% of total Australian acquisition activity during the same period—and dispositions fall as well. Australia, once a favorite of global players, saw its level of cross-border inflows plunge during the downturn as investors pulled their capital back to domestic, familiar markets.

The report also stated that Melbourne, the second-largest city in Australia, has attracted the largest share (over 50 percent) of cross-border capital, with investors’ strongest focus on retail and office properties. It also discovered that the three global zones – the Americas, Asia Pacific, and EMEA – each accounted for a similar share of cross-border sales into Australia the past 12 months.]]> Tue, 23 Aug 2011 09:28:40 GMT http://www.rcanalytics.com/article/1368/Love-of-the-Didgeridoo-or-Higher-Yields-Attracts-Cross-Border-Capital-Back-to-Oz.aspx 1368 retail properties falling into distress will not actually occur this cycle? According to Retail Traffic, which cited data aggregated by Real Capital Analytics (RCA) in a recent article, just $1.6 billion in US retail properties fell into distress during the second quarter. This was the lowest absolute amount since the third quarter of 2008. Concurrent to the trend of less new distress, resolutions of current outstanding distress have accelerated, with lenders having worked out more than half of this cycle’s retail distress as of the end of the past quarter.

Retail Traffic interviewed RCA Managing Director Dan Fasulo on these results, and his initial observation was that, “That’s good news for retail property owners looking to sell or refinance their centers, but bad news for investors looking for steep discounts on core properties.” Mr Fasulo focused on the metrics behind workouts, stating that sales of retail properties out of distress now account for around 15 percent of total retail sales in any given month. That comes as a clear sign that the lender practice of “extend and pretend” is coming to an end and that the investment opportunities this distress cycle was forecasted to yield may not come to fruition.

For more on Mr Fasulo’s thoughts on retail distress an what it means for that sector in general—including geographical trends, how a double-dip recession might play out for retail, and a comparison of this cycle to others in the past—please see the full interview on Retail Traffic’s site.]]> Tue, 23 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1367/Mountain-of-Retail-Distress-May-Contain-Just-a-Molehill-of-Opportunities.aspx 1367
Though prices for trophy properties in London, Paris, and Stockholm are sky-high compared to just two years ago, Bloomberg cited RREEF Global Chief Pierre Cherki to explain investors’ continued interest in Europe’s best properties and markets: “For investors with a 10 to 15-year horizon, deals still make sense” because of attractive cash flows and some scope for higher rents and values.”

Bloomberg also quoted RCA Managing Director Dan Fasulo as stating that he believes the primary markets of Europe still have some ways to go in their spectacular recovery. As squeamish investors watch, “The latest declines in stock prices and bond yields…The real investment momentum is in those countries viewed as a place of stability. There’s a huge pool of capital out there just focused on core real-estate markets.”]]> Thu, 18 Aug 2011 16:24:25 GMT http://www.rcanalytics.com/article/1364/Europes-Leading-Markets-Still-Magnetizing-Investment-Capital.aspx 1364 institutional-type investors are looking to expand their horizons beyond, to markets that, according to the Raleigh-based News & Observer, “have characteristics, or are home to certain institutions, that have helped them weather the recent economic storm better than others.”

One of those markets is the News & Observer's own; Raleigh, a part of North Carolina’s economically-charged “Research Triangle,” which saw second quarter retail sales rise by 186 percent year-over-year according to data aggregated by Real Capital Analytics.

The News & Observer detailed the recent sale of the large White Oak retail mega center to exemplify investor’s growing interest in cities such as Raleigh. For more on the that sale, which Inland American Real Estate Trust closed last week for $95 million, please see the full article on the News & Observer’s site.]]> Thu, 18 Aug 2011 12:31:25 GMT http://www.rcanalytics.com/article/1365/North-Carolina-Triangle-a-Favorite-Alternative-to-Primary-Markets.aspx 1365 CMBS activity had nowhere to go but up. And up it did, with Retail Traffic Editor-in-Chief David Bodamer describing the formerly down-and-out securitized debt vehicle as “…having a pretty good year in 2011.” With more than $20.0 billion in new issues through July, forecasts had new CMBS reaching up to $50.0 billion by year-end.

The past month’s macroeconomic turmoil has put a dent in that bullish outlook. Spreads have widened as a result of that trouble to their widest level since last Fall, leading originators astray as they attempt to price the third quarter’s issuances. If things calm down on Wall Street, however, the year may still finish off strong. Mr Bodamer cited Real Estate Analytics Managing Director Dan Fasulo’s expert opinion on the matter: “I’m pretty sure CMBS is going to take off the rest of August and come back after Labor Day…But CMBS as an asset class still remains attractive in my mind on a risk adjusted basis compared with a lot of other things out there.”

More than anything, the article in Retail Traffic emphasized that solid securitization packages are what will allow the CMBS market’s recovery to continue. Quoting David Lynn, managing director at New York-based Clarion Partners, Mr Bodamer concluded with “All things considered CMBS looks relatively good, with the caveat being it has to be simpler and well underwritten.”]]> Thu, 18 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1366/Equity-Market-Turmoil-May-Fail-to-Stifle-CMBS-Recovery.aspx 1366
So stated Retail Traffic Associate Editor Elaine Misonzhnik in a recent article detailing how, at least for Florida investors, core product in major cities remains at the top of commercial property buyers’ shopping lists. Ms Misonzhnik relied on data aggregated by Real Capital Analytics (RCA) to state that, while nationally, $2.1 billion in retail sales in the first six months of 2011 posted a 33 percent gain over the same period last year, “…the the vast majority of investors looking for acquisitions in Florida want core assets in primary markets…preferably grocery-anchored centers or power centers.”

This has led to some aggressive competition among investors, which has driven initial yields on primary market retail properties down by 53 basis points over the past 12 months, to 7.5 percent, and the average price for space up by 14 percent, to $144 per square foot. Many market analysts are pointing out the similarities between many recent quality Florida retail property sales and some market-peak sales of 2005 or 2006.]]> Wed, 17 Aug 2011 16:17:25 GMT http://www.rcanalytics.com/article/1363/Florida-Investors-Still-Playing-it-Safe-with-Focus-on-Core-Properties.aspx 1363 Fortress Investment Group and Colony Capital, among others, are raising pools of funds to invest in commercial real estate, Real Capital Analytics’ (RCA) Ben Carlos Thypin explained to Bloomberg that, “Despite the turmoil of 2008, sponsors can still make a compelling pitch that there are opportunities to invest in commercial real estate either by making loans or buying properties and debt.”

Private equity shops certainly are seeing the same opportunities Mr Thypin refered to, as a recent study done by the London research firm Prequin Ltd found that there are 441 private equity companies currently raising real estate-focused funds. This is 63 more than last year and more than twice the number that were on the prowl during the market’s nadir in 2008.

RCA first recognized commercial real estate’s currently high initial returns, at least compared to other available investment vehicles, as early as last year. Private investors seem to have also recognized the opportunities now available, and are pouring money into private equity shops. At the same time, Wall Street’s largest banks have spent the past two years pulling out of the same market, licking wounds they received from bad commercial property investments during the market downturn. The article on Bloomberg suggested the two investment groups' activity were related, with private equity seeing bank’s diminished role as a way in to the lucrative investment sales and debt markets.]]> Wed, 17 Aug 2011 13:30:25 GMT http://www.rcanalytics.com/article/1361/Private-Equity-Firms-Grow-their-CRE-Investment-War-chests.aspx 1361 pension funds – an important slice of the institutional-grade investment class, which targets such top-tier assets – are “starting to back away from trophy properties in the most expensive real-estate markets over concerns a new bubble is inflating.”

The Journal illustrated just how frothy pricing in the nation’s leading markets has gotten over the past two years by citing data aggregated by Real Capital Analytics: “In May, a 36-story Manhattan tower at 750 Seventh Ave. sold for $485 million with a capitalization rate of 4% . . . A similar 44-floor building nearby at 1540 Broadway, sold for $355 million with a 6% capitalization rate in 2009.

The strong demand that has caused pricing for trophy properties to bounce sky-high since the downturn, and that has not been matched by a similar increase in income produced by such properties, has caused pension fund giants California State Teachers’ Retirement System and the Texas Municipal Retirement System to begin looking for other opportunities.]]> Wed, 17 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1362/Pension-Funds-Reevaluate-as-Trophy-Property-Pool-Dries-Up.aspx 1362 US Capital Trends Special Report, Puget Sound Business Journal's Jeanne Lang Jones described how the Seattle metro market has seen sales of development sites follow the nationwide market on a cautious, but visible, climb upwards over the past year.

According to the RCA Special Report, land sales rose to $3.2 billion in the first half of 2011 for the entire US, up by 64 percent from the same period last year. The report compared the 2009 through 2011 year-to-date period with the 2006-2009 period, and discovered that the average price per buildable unit fell in Seattle’s CBD between the two periods, from $60,941 to $39,913. Nonetheless, this drop compares favorably with many other less-visible markets across the US, as the city has many attractive “fully committed parcels in prime locations” that are commanding higher prices.]]> Mon, 15 Aug 2011 12:30:25 GMT http://www.rcanalytics.com/article/1359/Seattle-Gets-Back-to-Building-Multifamily-Properties.aspx 1359 Retail” is no longer a single corridor along Fifth Avenue, recent reports cited by an article on Bloomberg spoke of the Big Apple’s Meatpacking District, and the large luxury retail “cachet” it has developed over the past decade. With well-heeled designers from around the globe flocking to the trendy neighborhood that the instantly-popular High Line park and other new amenities now call home, rents for retail space have spiked to levels well above nearby retail areas. Bloomberg quotes the Meatpacking District’s average retail rent to average $400 to $500 a square foot, as compared to $103 per square foot for all retail space below 14th Street in Manhattan, or $268 per square foot for Soho.

With the Meatpacking District now a real contender for retail leases, commercial property investors are now taking a harder look at opportunities in the neighborhood too. Bloomberg cited data reported by Real Capital Analytics to state that, “In a neighborhood where properties traditionally have been owned by a few families, there have been at least 12 commercial- property transactions in the past five years, with a total value of $314.3 million.” Two transactions account for nearly half of that total alone.

The one problem with all the up and up in rent rates seems to be the loss of local, small boutiques, as national and international retailers gain an edge in being able to afford space in the district. Stores such as Apple and Sephora are quickly squeezing out exclusive yet low-volume designer boutiques as well as other retailers with only a local presence.]]> Fri, 12 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1357/Soho-Retail-Trailing-Meatpacking-Districts-High-Line-Rent-Rates.aspx 1357 US Capital Trends Mid-Year Review, 19 apartment properties sold during the first half of 2011 for a total of $435 million. Those sales represented nearly half of all commercial transaction volume in the Florida city during the same period, a statistic that the Gulf Coast Business Review cited as a sign of health for the market’s multifamily market.

Retail deals in Tampa totaled $286 million during the first six months of 2011, while office sales racked up another $187 million. Just two hotels sold during the first half of the year, totaling $15 million in transaction volume.]]> Fri, 12 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1358/Tampas-Multifamily-Market-Posts-Strong-First-Half.aspx 1358 Parsons Corp complex in Pasadena, CA, which Morgan Stanley Real Estate Investing and Lincoln Property Co purchased in June for $325 million, as the largest office transaction on the West Coast in 2011. That ceiling was shattered when JPMorgan Asset Management acquired two significant office towers in downtown Seattle for a combined $480 million.

Located at 1918 Eighth Avenue (668,000 square feet over 36 stories) and 818 Stewart Street (232,000 square feet over 14 stories, the sale of the two CBD buildings is a signal that investors are still willing to pay top-dollar for quality assets.]]> Thu, 11 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1356/Office-Tower-Duo-Sells-in-Seattle-for-480M--Confirming-Interest-in-Trophy-Assets-Still-Strong.aspx 1356 CMBS pipeline could occur if more uncertainty grows around the bond ratings of European nations and the US.

“The outlook darkened in the past month amid a selloff in securities linked to debt on properties such as office buildings and retail outlets. Top-ranked commercial mortgage-backed securities yielded about 298 basis points, or 2.98 percentage points, more than Treasuries as of yesterday, according to a Barclays Plc index.” Real Capital Analytics (RCA) Managing Director Dan Fasulo described the spike in yields as “…another hiccup we didn’t need in this recovery.” RCA reported that US commercial property sales increased to $55.6 billion in the second quarter, while offerings were up by 79 percent to $76.2 billion during the same period. A reduction in the amount of available credit would stifle this momentum going into the second half of the year.

Leading CMBS issuers have subsequently revised their forecasts for the second half of this year, including JPMorgan Chase & Co as well as Goldman Sachs, Citigroup, Deutsche Bank, and UBS. The Bloomberg article also stated that a slowdown in CMBS issuance would be especially apparent in the availability of debt in secondary and tertiary markets.]]> Wed, 10 Aug 2011 16:17:25 GMT http://www.rcanalytics.com/article/1355/CMBS-Pipeline-Narrowing-after-US-T-Bond-Downgrade.aspx 1355
Retail Traffic recently cited Real Capital Analytics’ (RCA) projection that commercial real estate transaction volume will reach $200.0 billion in the US this year, or comparable to 2008’s level of activity, to state that the industry may have enough wind in its sails to offset some of the turbulence in capital markets. On the other hand, Mortgage Bankers Association Vice President Jamie Woodwell reminded Retail Traffic that, “Property values and interest rates - coupled with job growth, consumer spending, household growth and other macro-economic trends that drive demand for commercial real estate - will be keys to how property owners seek and qualify for mortgage financing going forward.”

Loosening of credit markets has been a driving factor behind the commercial real estate markets recovery, and CMBS specifically is a major source of debt for transactions. RCA Managing Director Dan Fasulo told Retail Traffic that, “We’re getting close to the point where the market cannot continue to see tremendous growth without CMBS as a source of liquidity…There are a lot of deals where borrowers can engage balance-sheet lenders directly. But that can’t go on forever.”]]> Tue, 09 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1353/Can-CRE-Activity-Sustain-Through-the-Macroeconomic-Shocks.aspx 1353 institutional investors looking to acquire single-tenant triple-leased properties. Those opportunities – typically found outside primary markets and, thus, harder to locate – come with the safety of a long-term creditworthy tenant that is responsible for the property’s upkeep and insurance.

NREI cited data aggregated by Real Capital Analytics (RCA) to point out that single-tenant office properties in the US currently have a 7.9% initial cap rate, compared to just 6.5% for multi-tenant CBD office properties. The cap rate for single-tenant industrial properties is even higher, at 8.3%. NREI also pointed out via RCA data that the supply of single-tenant properties is growing, thereby reducing the price-down effect caused by competition, and sellers of single-tenant properties are achieving a larger percentage of their asking prices.

For more on this break-out trend, please see the full article on the National Real Estate Investor’s site.]]> Tue, 09 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1354/Cant-Afford-a-Trophy-Office-Tower-Single-Tenant-Properties-May-be-an-Alternative.aspx 1354 UDR Inc, the third largest publicly traded apartment real estate investment trust in the US, recently announced that it would purchase a downtown Manhattan apartment tower to expand its presence in the nation’s largest market to 1,916 units. The acquisition will be funded with $275 million in cash from recent apartment dispositions and $50 million in operating partnership units.

Using data recorded by Real Capital Analytics, Bloomberg reported that UDR has acquired Dwell95, a 507-unit apartment complex on Wall Street that was the former headquarters of JPMorgan Chase & Co. The building was purchased in 2006 by the Moinian Group, which converted it to apartments.

UDR Chief Executive Officer Tom Toomey described the purchase as a “…unique opportunity to further our presence in the Financial District, an area of Manhattan that we believe will continue to benefit from the redevelopment of the World Trade Center…”]]> Mon, 08 Aug 2011 16:17:25 GMT http://www.rcanalytics.com/article/1349/UDR-Rapidly-Expanding-in-Manhattan.aspx 1349 distressed commercial properties was recently cited on GlobeSt.com to discuss the “paradox between rising distress totals and the general improvement in real estate markets…” Writer Bob Howard pointed out that, while outstanding distress in the US continues to mount, RCA data displays that inflows of troubled assets and lender real estate owned (REO) properties has slowed over the past year, and workouts of existing distress have begin in earnest.

Mr Howard stated that, "Data from RCA shows that new inflows to distress totaled $3.1 billion in May, the latest month for which figures are available. That $3.1 billion is half the average monthly inflow of $6.2 billion from the previous 12 months.”

Predictably, for market analysts at least, RCA data illustrates that the most outstanding distress still lies in the Western region of the US, with the Southeastern region a close second. The Mid-Atlantic markets have seen the least outstanding distress mount during the current cycle.]]> Mon, 08 Aug 2011 13:29:25 GMT http://www.rcanalytics.com/article/1352/Latest-RCA-Distressed-Asset-Update-Speaks-to-Health-of-Market.aspx 1352 CMBS market has hit a snag…For the past six months the CMBS market was recovering nicely: spreads were tightening, new issuances were increasing, and delinquency levels were dropping. But recently this trend has reversed.”

Real Capital Analytics Managing Director Dan Fasulo expressed trepidation over the future of CMBS, stating that, “A lot of the property owners and potential buyers that own large assets in places like San Francisco are counting on a CMBS market that is continuing to improve. Any disturbance to the CMBS market would impact the ability to finance acquisitions.” He did admit, however, that it may be too early to tell what direction the capital market will take in coming months: “If we have learned anything it’s that the capital market don’t always run in synch with underlying economic factors…They just do what they want.”]]> Mon, 08 Aug 2011 12:29:25 GMT http://www.rcanalytics.com/article/1350/Macroeconomic-Troubles-May-Stymie-CMBS-Pipeline.aspx 1350 Global Capital Trends Mid Year-Review edition to state that global transaction volume of commercial properties rose to $165.3 billion in the second quarter of 2011. This was 36 percent higher than the same period of last year, and pushed global year-to-date volume to $350 billion.

Quotidiano acknowledged that the continued growth in property sales was owed mostly to the United States, which posted a remarkable 147 percent jump over the previous year in the second quarter. The EMEA region, which has been destabilized by debt crises in the Eurozone over the past year, posted just a 10 percent improvement over 2010. Italy has narrowly avoided the debt crisis thus far, while the solid northern economies of Germany and the Scandinavian nations posted the largest increases in property sales during the second quarter.]]> Fri, 05 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1360/EMEA-Lagged-Global-Growth-in-Property-Sales-during-Q2.aspx 1360 CommonWealth REIT of Massachusetts has agreed to buy New Orleans's tallest skyscraper, One Shell Square, from MetLife for $107 million.

The real estate investment trust has spent more than $2 billion scooping up dozens of office buildings through the downturn, making it one of the biggest buyers of US office properties in this cycle, according to Real Capital Analytics. Among its other deals: Earlier this year it paid $171 million for Office Depot Inc.'s headquarters in Boca Raton. Commonwealth's operations are managed by Reit Management & Research LLC, owned by Barry and Adam Portnoy.

In the New Orleans deal, CommonWealth is paying approximately $85 per square foot. At the market's peak, some New Orleans office properties sold at a price as high as $200 per square foot.]]> Wed, 03 Aug 2011 00:00:40 GMT http://www.rcanalytics.com/article/1348/CommonWealth-REIT-Buying-NOLAs-Tallest-Skyscraper.aspx 1348 multifamily market has been heating up. A rush of CRE investment activity has lifted the Seattle apartment market with about $396 million in transactions in Q2, more than double the first quarter’s $172 million, according to property market research firm Real Capital Analytics.

"Seattle is one of those markets where you’re seeing an economic recovery, some job growth, and some really positive absorption trends," says Dan Fasulo, managing director at Real Capital Analytics.

In Q2, the average price per unit jumped to more than $143,000, up from $89,000 per unit in the previous quarter. And average yields fell from 6.8% in Q1 to 5.1% in Q2, according to RCA's data. Of the 13 significant property trades closed in Seattle since the beginning of June, no less than five showed cap rates of less than 5%.

Interest from institutional investors has picked up in a big way. Last year, only 8% of all multifamily transactions were bought by large investors. But so far this year, 35% of the $568 million in transactions has been sold to firms like JP Morgan, Deutsche Bank and UBS. And foreign investment interest in Seattle is accelerating with 12% of this year’s transactions coming from cross-border investors, compared with about 3% in 2010.

Non-subscribers can get a report of RCA's latest Seattle Apartment trend data here.]]> Tue, 02 Aug 2011 11:30:40 GMT http://www.rcanalytics.com/article/1347/Multifamily-Apartment-Prices-and-Sales-Volume-Rising-in-Seattle.aspx 1347
“Investment in European commercial property stalled in the second quarter of the year as interest in real estate tailed off after six consecutive quarters of strong year-on-year gains in transactions.”

Relying on data aggregated by Real Capital Analytics (RCA), the FT cited that while Europe overall was "sluggish," the macro numbers masked impressive investment growth in Germany, the Nordics, and many of the exclusive submarkets of London and Paris.

Among the countries that contributed to slower commercial property investment in Q2'11 were the UK and France, as well as Greece, Portugal, Spain, and Ireland.]]> Mon, 01 Aug 2011 12:30:25 GMT http://www.rcanalytics.com/article/1345/Commercial-Real-Estate-Sales-Stall.aspx 1345
In this article, Time compares city centers in horizontal Los Angeles and vertical New York City, noting some new developments in the City of Angels: Anschutz Entertainment Group's "Farmers Field" football stadium proposal.]]> Sat, 30 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1346/The-Manhattanization-of-Downtown-LA.aspx 1346 seniors housing & care market in the US, one of the largest owners of such properties in North America has announced its intentions to cash out on as much as 40% of its holdings. The Wall Street Journal recently reported that Canada-based “Chartwell Seniors Housing Real Estate Investment Trust, which owns or partially owns 23,826 units in Canada and the U.S., estimates that the U.S. property sales could fetch as much as US$500 million.”

Chartwell’s move comes as investors find the seniors housing & care sector on a clear, upward trajectory in terms of fundamentals and valuation. The Journal cited a recent report by the National Investment Center for the Seniors Housing & Care Industry (NIC), based on data aggregated by Real Capital Analytics (RCA), which described this trajectory, which stated that occupancy in the sector – at 88% in the first quarter of 2011 – is approaching its former high of 92% posted in 2006. Investors expect occupancy to continue rising in the next decade.

Download RCA’s recent presentation to the National Investment Center for the Seniors Housing & Care Industry, featuring data aggregated by RCA on seniors housing & nursing care property transactions.

The Journal also cited that sales volume of seniors housing & care properties tallied $16.7 billion in the first half of 2011, and RCA Founder and President Bob White added that, “The volume has just exploded…” since last year. With multiple large-scale portfolios trading and some significant M & A activity, the sector's momentum has prompted current seniors housing & care property owners to reevaluate their investment strategies, including Chartwell. The firm intends to dispose of large chunks of its portfolio to revitalize its core properties and expand in high-growth potential markets such as Florida, Texas and Colorado among others.]]> Tue, 26 Jul 2011 13:32:25 GMT http://www.rcanalytics.com/article/1344/Positive-Momentum-of-Seniors-Housing--Care-Sector-Sparks-Investors-to-Strategize.aspx 1344
The Real Deal went on to present some recent deals, recorded by Real Capital Analytics (RCA), which have rivaled even the frothiest sales done during the mid-2000s bubble. CB Richard Ellis realized a 42% return in just two years when they sold 1450 Broadway in Manhattan to Zar Property Group for $204 million last May. In the same month, RCA registered an incredible 4 percent cap rate on a $845 per square foot sale of Manhattan’s 750 Seventh Avenue, when Kuwait-based Fosterland Management paid a price that rivaled the former 2007 trade.

These competitively-priced, possibly over-valued deals are being facilitated by low borrowing rates and an increased pace of CMBS activity. The Real Deal quoted RCA Managing Director Dan Fasulo as stating that, “CMBS will likely account for 15 to 20 percent of commercial real estate transactions in the nation this year, compared to almost none during the recession.”

Mr Fasulo went on to make it clear he doubts there will be a bubble in commercial real estate any time soon, pointing out that loan-to-value ratios still remain 20-30 percentage points below where they were during the last real estate bubble. “These ratios are starting to creep up…We have seen some in the 70s during the last couple quarters…at least this time investors are using some of their own money…I don't think lenders will let it get crazy again."]]> Mon, 25 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1343/Bubble-Bubble-LTV-and-Trouble.aspx 1343 foreclose in greater numbers and sell them to buyers in the US and abroad who’ve been waiting on the sidelines to buy at bargain prices,” stated a recent article reflecting on the Las Vegas commercial property market put out by Vegas Inc, a Las Vegas-based business publication.

The article, featuring on-the-ground information about Las Vegas’ beleaguered commercial real estate market, cited data aggregated by Real Capital Analytics (RCA) to quantify just how far the city has fallen from a few years ago, when it was riding the commercial property boom higher than most: “Las Vegas has the highest percentage of distressed commercial real estate in the country by far…[with] nearly $19 billion in distressed properties, which includes more than $4 billion in properties that have been foreclosed upon.”

The silver lining of all this distress is that it has become a huge pool of opportunity for Vegas investors to benefit from. The article identified Newport Beach-based MIG Real Estate as one of the most bullish investors in distressed Vegas property at the moment, having acquired five properties in the market over the past nine months. Of this firm’s strategy, which the article reminds readers may take years to come to fruition, RCA Managing Director Dan Fasulo stated that, “These are guys who’ve been in the industry a long time and know how to buy right and create value and execute a leasing strategy.”

For more in-depth information on the Las Vegas commercial real estate market, please see the full article on Vegas Inc’s site.]]> Sun, 24 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1342/For-Vegas-Todays-Pain-Will-Be-Tomorrow-or-Many-Years-from-Nows-Gain.aspx 1342 cross-border investment. Relatively speaking, the article summarized that, “Israel is a small country with a large shadow - proportionally a very large shadow - in the US income-producing real estate market.”

Among the headline-purchases made by Israeli investors within the US over the past year, the majority occurred in Manhattan, Boston, Chicago, and, less intuitively, landlocked cities such as Houston, TX. As a recent article on Israeli-business news source Globes stated, “There is no question that Israelis have again fallen in love with Manhattan. Almost 40% of deals (in dollar terms) in the past year were in Manhattan, and 46% were in the metropolitan New York area.”

The article also reminded readers that last year’s significant investment from Israeli investors comes as activity universally rose in the US commercial real estate market. Transaction volume more than doubled between the first half of 2011 and the same period last year, with rising US investment driving a 25% increase in global commercial sales over the same time frame. Additionally, foreign investment into the US was up by 33% in the first half of 2011, as investors from Israel were joined by firms from Canada, Singapore, and Switzerland, among others in seizing US opportunities.]]> Thu, 21 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1340/Israeli-Investors-Splurge-on-US-CRE.aspx 1340 corporate headquarters to 1355 Market St, an office tower on a gritty six-block stretch of San Francisco’s Market Street that borders the southern line of the city’s Tenderloin district, the area’s prospects have significantly brightened. Just a few blocks away from the new hub-of-tweets, privately held TMG Partners recently entered into contract for 1275 Market Street, and may be paying up to $48 million for the 17-story office tower, according to a article in the Wall Street Journal.

The firm, which has put up about 20 million square feet of office space in the San Francisco metro in previous years, is betting large that other technology firms will “follow” Twitter in moving out of the more-pricy downtown area to places such as Market Street. The Journal relied on data collected by Real Capital Analytics to state that in May of this year, TMG also purchased a vacant building located at 500 Terry Francois Boulevard, paying $300 per-square-foot for the see-through property. The current leaseholders at 1275 Market Street plan to vacate the building as of October, freeing up more space for TMG to lure tech firms into the area.

To read the case made for and against TMG’s strategy, please see the full article on the Journal’s site.]]> Wed, 20 Jul 2011 12:32:25 GMT http://www.rcanalytics.com/article/1341/San-Francisco-Office-Sub-Market-All-A-Twitter.aspx 1341 the stalled development site in 2005. That firm subsequently sank $9.7 million into the site in preparation of a planned condo development, before the project stalled and the site was disposed of to Queensboro Development LLC in 2009.

Now, however, the site is getting a second chance. Under New York City Department of Housing Preservation & Development’s Housing Asset Renewal Program (HARP), Queenseboro has received millions in low-cost loans to erect an apartment complex with 117 units, 108 of which will be affordable to middle income families. New York City Council members took the opportunity to pat themselves on the back over the publicly-funded program’s success, with Speaker Christine C Quinn – who originally proposed the HARP program – quoted on GlobeSt.com as saying, “The Queensboro development is a perfect example of how our HARP program is really a win-win for New York City.”]]> Wed, 20 Jul 2011 12:25:25 GMT http://www.rcanalytics.com/article/1339/Low-Cost-Loans-Help-Fill-Stalled-Development-Site-in-Queens-NY.aspx 1339 office space and apartments rising, it has been reported that the industrial sector’s inventory is being leased up as well. PR Newswire recently cited a report put out by Cassidy Turley that covered the positive direction for demand in industrial space, and quoted Cassidy Chief Economist Kevin Thrope as stating that, “The current pace of net demand for industrial space is on par with activity experienced during the robust real estate years of 2005 and 2006.”

Cassidy’s report on the industrial sector’s recovery from the downturn also included statistics aggregated by Real Capital Analytics, which registered $1.8 billion in industrial investment sales during May 2011. This was up from the previous month, and 78% higher year-over-year.]]> Fri, 15 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1337/Rising-Demand-for-US-Industrial-Space-Drives-Sectors-Investment-Sales.aspx 1337 distressed commercial real estate in the US, they cited data aggregated by Real Capital Analytics (RCA) to state initially that, $320.0 billion in distress has been registered between 2007 and May of 2011, including defaults, foreclosures, and bankruptcies. More than half that total has been worked out, with banks taking back $39.0 billion in loans and restructuring another $53.0 billion, while $85.0 billion in loans have been through a full sale or refinancing.

IBD used those statistics to point out that the proportion of cumulative distress worked out would be much lower currently if banks weren’t harboring so much additional legacy trouble on their balance sheets through “extend and pretend” practices. However RCA Managing Director Dan Fasulo told IBD that as values have risen on commercial properties over the past year, “It’s pretty clear from where we’re sitting that the worst is over.”

The policy of allowing banks to maintain toxic and overleveraged assets on their books for an extended period of time is quite different from the last cycle of heavy distress in the commercial property sector of the early 1990s. During that “Resolution Trust” era, banks were encouraged to quickly purge their distressed holdings, with the result being a massive asset devaluation period. However, the current cycle’s policy may carry with it another unintended consequence: “…it could lead to the same slow growth that has afflicted Japan for years.”]]> Thu, 14 Jul 2011 14:35:25 GMT http://www.rcanalytics.com/article/1336/Extend--Pretend-Protecting-Asset-Values---Hurting-Long-Term-Prospects.aspx 1336 Anglo Irish Bank Corp portfolio of US commercial property loans on August 9, and the competition is heating up. Bloomberg recently identified the four leading bidders for the pool of loans valued at $9.7 billion, which currently includes Centerbridge Capital Partners LLC and American International Group, Blackstone Group LP and Deutsche Bank AG, as well as Paulson & Co and BlackRock Inc that are mulling standalone offers.

Of the portfolio itself, Real Capital Analytics’ Ben Carlos Thypin told Bloomberg that, “These consortia may be leading this process because they have sufficient firepower and expertise to take down the whole portfolio…A winning consortium is likely to retain some of the assets and quickly flip the rest to smaller firms that were unable to compete in the auction.”

The portfolio includes loans on US commercial and multifamily properties, and potential bidders may make an offer on the entire portfolio or for one of eight segregated pools within. Anglo Irish Bank was nationalized by Ireland’s government in 2009.]]> Thu, 14 Jul 2011 13:25:25 GMT http://www.rcanalytics.com/article/1335/Private-Equity-Firms-Pair-Off-and-Line-Up-for-Anglo-Irishs-US-Loan-Portfolio.aspx 1335 CBD and suburban offices that was recently revealed in the June analysis by Geltner & Associates of the Moody’s/REAL Commercial Property Price Index (CPPI), which is based on sales data collected by Real Capital Analytics.

Among the reasons CBD pricing is rebounding from the downturn so rapidly include investor demand for “safe-bet” CBD assets and urban renewal – driven by new downtown amenities and cheaper rents than during the boom year – which is growing lease rolls in downtown areas. The Journal also stated that the decline in suburban prices could be blamed on the lack of economic activity in most US suburbs, with many areas carrying the stigma that comes from being filled with vacant recently-built houses.

The increasing disparity between CBD and suburban pricing could also be a product of the index itself. The custom analysis that delves into the CBD vs suburban topic includes distressed sales (disproportionately occurring in suburban areas) and the phenomenon of investors heavily targeting the nation’s most visible, expensive markets such as New York and Washington, DC.]]> Thu, 14 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1338/Suburban-Office-Prices-Still-Waiting-for-a-Rebound.aspx 1338 distressed and non-distressed Detroit office buildings at a time when square footage in the market is near a 10-year low.

A recent Wall Street Journal article detailed the latest property being targeted by Mr Gilbert. The abysmally occupied 25-story First National Building is under contract to Mr Gilbert’s firm for $8 million, or just $10 per-square-foot. This unit pricing, the Journal said, would be only slightly higher than Detroit’s previous low of $9 per-square-foot, recorded in 2005 for the Labor Building on Woodward Avenue. The First National Building’s price likely reflects its distressed status, as, indeed, Mr Gilbert’s firm would be acquiring it through a debtor trustee sale after the former owners fell into trouble on its loans in 2009.

After purchasing nearly two million square feet of office space in downtown Detroit this year, Mr Gilbert’s endgame is to spur a technology hub in the city. He believes Detroit’s central business district needs some work, as do some of the properties themselves, but he describes the opportunities available as “outrageously cheap” and told the Journal that, “…there ain't no way in the world you're replicating [the buildings] for that price."]]> Wed, 13 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1334/Opportunities-Seen-in-the-Motor-City.aspx 1334 office revealed that Beijing’s Grade A office vacancy rate fell to a 20-year low during the second quarter of 2011, to just 8.3 percent. The rise in office demand in the nation’s most visible markets is prompting both domestic and foreign investors to take a hard look at China, according to Real Capital Analytics’ (RCA) Steve Williams, who recently stated at a Royal Institution of Chartered Surveyors forum in Beijing that, “Most capital (for property investment) now is circulating within the Asia-Pacific area, and China remains number one in terms of the source of the capital and the target for property investment.”

China Daily referred to cross-border investment data aggregated by RCA to reinforce this trend toward Asia: “Cross-border acquisitions of offices, hotels and retail properties rose by 30 percent to $4.8 billion in the first quarter…Among the top 25 real estate deals by value in the Asia-Pacific region, 15 were conducted in China.”

Domestic firms have been actively buying in China’s CBDs as well; major transactions during the second quarter included Bank of China’s acquisition of Xidanhui Plaza and PICC Insurance Group’s takeover at Chaoyang Plaza, both in Beijing.]]> Wed, 13 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1332/Asia-Pacific-Zone-Sees-Rise-in-Cross-Border-and-Domestic-Investment.aspx 1332 development may begin to pick up again this year, and is likely to include a more diverse mix of players, including a number of oversees firms. In order to fill a large municipal budget deficit this year, the City of Miami has recently engaged with Asia-based developers to construct two major projects that will generate millions in permit fees and property taxes, once built. The Mayor of Miami, Tomas Regalado, courted both Hong Kong-based Swire Pacific Ltd and Genting Malaysia Berhad to spur the city’s development activity.

Bloomberg recently suggested that development might reemerge during the coming year, as existing property sales have increased over the previous 12 month period and foreign buyers’ interest in US property has rapidly returned as well. Cross-border buyers have purchased nearly $450 million in US commercial real estate during the first six months of 2011, according to data aggregated by Real Capital Analytics (RCA). This preliminary total is remarkable in comparison to the just-$48 million in cross-border sales tallied during the same period last year.

Regarding the news of a new development cycle being kicked off in Miami, RCA’s Ben Carlos Thypin told Bloomberg that foreign buyers are being lured to the US by a comparably weak local currency and commercial property prices, and added that, “The large-scale projects indicate the interest to stay in the market a significant amount of time.”

For more information on this nascent spurt of activity that may be dependent on the health of the US’ macroeconomics, please see the full article on Bloomberg’s site.]]> Tue, 12 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1333/The-Start-of-a-New-Cycle-Shovels-Being-Sunk-in-Miami-by-Foreign-Developers.aspx 1333 Signature Capital’s acquisition of the 32,441-square-meter Neumarkt Galarie in Cologne, Germany, for €135 million out of insolvency was the third-largest trade in all of Europe during June, according to data recorded by Real Capital Analytics. Former owners – a group led by Quinlan Private, also of Ireland – paid €170 million for the property at the peak of the market in 2006.

Now, says Property Investor Europe (PIE), the private equity group based in Dublin is seeking to aggressively target retail properties in both the UK and Germany. Signature Managing Director Ciaran McNamara was quoted by PIE as stating that, “Signature Capital is looking to expand and expects to be active in the UK and Germany, subject to the availability of the right opportunities.”]]> Sun, 10 Jul 2011 11:34:40 GMT http://www.rcanalytics.com/article/1331/Irish-Private-Equity-Targeting-Attractive-UK-and-German-Retail-Assets.aspx 1331 apartment offerings are scant, the latest multifamily property to hit the market in Manhattan is a real gem that is likely to draw a flood of bids, according to a recent article on Crain’s New York Business. The 11-floor pre-war apartment building located steps from Central Park at 1 East 68th Street and Madison Avenue on the Upper East Side contains 44 units and 10,000 square feet of prime retail space. The property, once sold, is also ripe for a profitable condo conversion.

Of this recent offering, Real Capital Analytics Managing Director Dan Fasulo told Crain’s that, “There is a limited amount of properties on the market in general so investor interest should be through the roof for something like this.” He did remind readers, however, that deals of this nature have a history in New York of being foiled by rent-controlled apartments within the property. The one for-sure element of the sale seems to be the retail portion, which real estate experts foresee selling for between $30-60 million.]]> Thu, 07 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1330/Tantalizing-New-York-Apartment-Property-Offered---Condo-Converters-Lining-Up.aspx 1330
That debt is piling up on state-owned banks, with municipal debt totaling $2.2 trillion in 2010 alone – or one-third of China’s GDP – according to Beijing’s statistics. For the real estate sector’s prospects, the connection is clear: development projects such as infrastructure and extensive office complexes are being funded heavily with debt. Should either the debt or the value of the properties (or the land they sit on) collapse, it is nearly inevitable the other will too -- a situation that would inevitably reverberate around the world’s economies.

In divulging this information, Ocala.com relied on data aggregated by Real Capital Analytics (RCA) to speak about one city currently leading the explosion of development occurring in inland China. The city of Wuhan, which according to RCA data has seen nearly $25.0 billion in land trade hands over the past five years, is one of the worst offenders when it comes to taking on risky debt. The city has promised to develop over 200,000 apartment units and a brand new subway system over the next several years as the surrounding provincial areas urbanize.

For more on this interesting topic, please see the full article on Ocala.com.]]> Wed, 06 Jul 2011 13:30:25 GMT http://www.rcanalytics.com/article/1328/Chinese-Municipalities-Taking-on-Excessive-Debt-to-Fund-Development-Frenzy.aspx 1328
So stated Lee Murphy, contributing writing to National Real Estate Investor (NREI), in a recent article meant to detail how commercial brokerage firms have made their way successfully out of the downturn. Though they were competitive internationally before the crash, Mr Murphy evidenced Jones Lang LaSalle’s recent $319 million deal to purchase London-based King Sturge, while CB Richard Ellis Group has also acquired its share of smaller shops in Eastern Europe and Australia.

This aggressive M&A activity reflects brokerage firms’ newfound confidence, which is being garnered from the past year’s steep rise in transaction volume. Mr Murphy provided a graph of yearly US transaction volume based on data aggregated by Real Capital Analytics, stating alongside the clearly upward trend registered in 2010 that, “Commercial real estate brokerages are feeling more optimistic than they have in a while because the sale of properties and portfolios in the US soared from $54.7 billion in 2009 to $124.6 billion in 2010.”

With most observers expecting another sharp rise in sales to materialize by the end of this year, brokerage firms have regained their swagger, yet have clearly learned some valuable lessons from the downturn. For Mr Murphy’s complete take on brokerage firm’s recent M&A, please see the full article on NREI’s site.]]> Wed, 06 Jul 2011 08:09:40 GMT http://www.rcanalytics.com/article/1325/Leading-US-Brokerage-Firms-Back-on-Track-Expanding-Abroad.aspx 1325 apartments, particularly in cities with better-than-average employment prospects, is significantly improving fundamentals and encouraging investment in the apartment sector.

As transaction volume in the apartment sector has ramped back up, lenders active in multifamily lending have cautiously reengaged as well. Real Estate Weekly recently cited Real Capital Analytics to state that, “competition among lenders has increased and that new funding is coming not only from U.S. banks but also from foreign banks, insurance companies and investment funds, as well.”

For more positive signs from the apartment sector, please see the full article on Real Estate Weekly’s site.]]> Wed, 06 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1326/Apartment-Sector-Strength-Reflects-Macroeconomic-Trends.aspx 1326 office space rose to 12.8 million square feet during the second quarter of 2011. This was the fifth consecutive quarterly gain in net absorption -- causing vacancy in the US office sector to fall 10 basis points during the second quarter, to 16.4% -- and the strongest absolute demand in four years.

This rise in demand, PR Newswire points out, corresponds directly with the year-long rise in CBD and suburban office sales observed through data aggregated by Real Capital Analytics. Office sales tallied $17.9 billion in the first five months of 2011, which was more than double the volume of the same period last year. PR also cited the rise in pricing for office space as a result of the increasing demand for office footage: “Average price per square foot registered at$211 in May, up 25% from a year ago.”]]> Wed, 06 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1329/Investment-Sales-Rise-as-US-Office-Vacancy-Inches-Down.aspx 1329 distressed assets in the US rose to $181.0 billion in June. That level that falls below last October’s $191.5 billion high, but May’s monthly increase was disconcerting to market observers.

GlobeSt.com cited this data to speak to a recent comment made by Delta CEO Greg Leisch, who stated that he expects the more than $300 billion in loans coming due on commercial properties to meaningfully impact the level of outstanding distress in the coming year.

The rise in outstanding distress was driven by the office sector, which remained the highest of all property types at $43.4 billion, and the hotel sector posted a surprisingly significant increase in outstanding distress this spring as well.]]> Tue, 05 Jul 2011 13:27:25 GMT http://www.rcanalytics.com/article/1324/Outstanding-US-Distress-Still-Hovering-Around-180-Billion.aspx 1324
It was in 2004 that Mr Chetrit led a consortium to purchase Chicago’s Sears Tower (now Willis Tower), setting the stage for a mid-decade splurge on commercial properties during the peak of the market. Among his purchases included Manhattan’s Standard Oil Building and a series of mixed-use properties on Sixth Avenue. The Observer identified nearly $2.0 billion in deals to Mr Chetrit’s name during these most active years.

Of particular interest were Mr Chetrit’s acquisitions of the International Toy Center on Fifth Avenue and his more-recent deal for the Chelsea Hotel, both in Manhattan. His intention to convert the Toy Center to condos (and remove the existing toy companies in the process) earned him much bad press in the New York papers, which he likely hopes to make up for with a renovation of the historic Hotel Chelsea.

And though Mr Chetrit’s firm, the Chetrit Group, has weathered the downturn better than comparable companies, signs of distress have cropped up in recent months. The Observer cited RCA data to state that the Chetrit Group’s 123 Williams Street in Manhattan – a 27-story office property the firm purchased in 2005 – went into special servicing earlier this year, with nearly $80 million in outstanding debt. Chetrit’s Five Beekman Street has actually fallen into foreclosure.]]> Tue, 05 Jul 2011 00:00:40 GMT http://www.rcanalytics.com/article/1327/Chetrit-Groups-Holdings-Fairing-Surprisingly-Well-After-Downturn.aspx 1327 Blackstone and Global Logistic Properties (owned by Singapore's sovereign-wealth fund GIC) are looking to buy a commercial real estate portfolio in Japan rumored to be worth $1.7 billion (¥140 billion).

The portfolio of more than 20 industrial properties is being sold by Chicago-based LaSalle Investment Management.

This would be the largest Japanese property transaction since real-estate fund Secured Capital bought Tokyo's Pacific Century Place building from DaVinci Advisors for $1.5 billion in 2009.

According to data provider Real Capital Analytics, Tokyo's commercial property transaction volume exceeded $10 billion in the first half of 2010, and was the most active city worldwide. Assured that prices have hit bottom, cross-border investors and REITs have been active buyers in the market.]]> Fri, 01 Jul 2011 11:33:40 GMT http://www.rcanalytics.com/article/1323/SWF-and-PE-Firms-Compete-for-Japanese-Industrial-Portfolio.aspx 1323 CMBS issues have increased by more than ten times over 2010. This, the article stated, is both a sign of health and a cause for concern when considering the state of the CMBS market.

One the one hand, an increasingly robust CMBS sector is fueling trading activity, as buyers gain an additional source of debt to fund purchases. On the other hand, the rapid ramp-up in CMBS issuances has restarted the type of competition for business that allowed lending standards to slip drastically in the years leading up to the credit-freeze of 2007 and 2008.

Investment News quoted Joe Smith, founding partner of Glenmont Capital Management, who explained that, “Most investors complained about flaws and issues with CMBS, and most of those flaws and issues have not been resolved.” The article also noted a recent report put out by Standard & Poor’s that indicated underwriting standards are slipping faster than expected, especially in the nation's leading markets: “Lending is very competitive in these types of markets, where insurance companies, pension funds, foreign investors ... and [real estate investment trusts] could be bidding alongside CMBS issuers…The part that we believe should be most alarming to investors is that the appraisals appear to be building in upside in rents and occupancy.”

For more on this scrupulous look at the current state of CMBS, please see the full article on Investment News’ site.]]> Tue, 28 Jun 2011 13:27:25 GMT http://www.rcanalytics.com/article/1318/CMBS-Issues-Quickly-Rising-But-Are-Underwriting-Standards-Falling-Just-As-Fast.aspx 1318 real estate investment trusts (REITs) are the best-positioned class of commercial property buyers to purchase underperforming real estate portfolios or entire companies for discounted prices. Pensions & Investments recently cited data aggregated by Real Capital Analytics (RCA) to state that six of the top 20 buyers of commercial real estate globally during the first quarter of 2011 were REITs. The full list was presented in the first quarter edition of RCA’s Global Capital Trends report.

The REIT sector’s mergers over the past year have stolen headlines, and some of the largest deals since the downturn have involved REITs on the buy-side. RCA’s top 20 list included US-based Host Hotels & Resorts Inc, which has taken down San Diego’s Manchester Grand Hyatt for $570 million and the New York Helmsley Hotel for $314 million so far this year. Additionally, listed-REIT Equity One Inc made the top 20 for teaming with London-based Capital Shopping Centres to purchase Capital and Counties USA inc wholesale, an M&A deal that included 15 California retail properties.

For more on momentum among listed-REITs and an outlook on their long-term futures, please see the full article on Pensions & Investment’s site.]]> Mon, 27 Jun 2011 13:30:25 GMT http://www.rcanalytics.com/article/1317/Listed-REITs-Funding-Deals-and-Mergers-with-Uniquely-Easy-Access-to-Equity.aspx 1317 Macklowe Properties seeks to rebuild after a particularly rough patch served to it during the downturn, it was recently announced that the firm would purchase the 34-unit rental property at 150 East 72nd St on Manhattan’s Upper East Side and follow through with a plan to convert units to condominiums. Real Capital Analytics (RCA) has identified Strategic Resources Corp as the seller, which Macklowe paid $120 million in debt and equity for the deal to well-located apartment property. To secure financing for the acquisition, Macklowe has turned to the Brazil-based Safra Group, according to RCA data, for a $90 million loan that includes $30 million in equity.

The sale comes as Macklowe Properties has recently reengaged with the acquisition market, after a long, troubled hiatus. The firm is in contract for 737 Park Avenue for an asking price of $253 million, and has also green-lighted the long-awaited redevelopment at the former Drake Hotel site on Manhattan’s East 57th Street.]]> Fri, 24 Jun 2011 12:26:25 GMT http://www.rcanalytics.com/article/1322/Macklowe-Pays-21M-Per-Unit-for-Manhattan-Condo-Conversion-Opportunity.aspx 1322 hotel sector over the past year. RCA previously reported in its US Capital Trends reports that the average price-per-room paid by US hotel investors during the first quarter was $185,000, an prodigious relative peak well above the former high of $153,000, registered in 2006 at the peak of the market.

Yet Bloomberg points out that this spike has decoupled from hotel operators’ per-room revenue, which RCA’s Ben Carlos Thypin stated remain well below peaks last reached in 2008. “Daily room rates averaged $94.05 last year, and revenue per available room, an industry measure of occupancy and rate, was $42.40…That’s ‘well below’ the 2008 peaks of $106.65 and $54.42.”

Bloomberg attributed this disparity to two confounding factors. Part of the rise in valuations is driven by buyer selection bias: “This year’s jump is the result of a surge in luxury-hotel transactions and more purchases by real estate investment trusts, particularly in large cities,” stated Bloomberg. Values have also been pushed higher due to who has been purchasing hospitality properties over the past 24 months: Bloomberg cited additional data by RCA to state that, “Values have been driven up chiefly by demand from REITs, which purchased $1.6 billion of hotels in the first quarter. That’s 44 percent of those traded and five times the total of REIT purchases in all of 2007, the peak year for hotel sales.”

For additional information on the growing rift between valuations and fundamentals in the US hotel sector, as well as details on recent high-profile hotel trades, please see the full article on Bloomberg’s site.]]> Fri, 24 Jun 2011 11:34:40 GMT http://www.rcanalytics.com/article/1320/US-Hotel-Pricing-Out-of-Whack-With-Fundamentals.aspx 1320 Brookfield Office Properties Inc announced that it has sold Four Allen Center -- its 50-story tower at 1400 Smith Street -- to Chevron Corp for $340 million. Real Capital Analytics Managing Director Dan Fasulo described the sale as a “coup” for Brookfield, who originally paid $120 million for the office property in 2006 at the peak of the former investment cycle.

Bloomberg quotes Brookfield CEO Richard Clark as stating that, “This sale is reflective of our ongoing strategy of recycling capital from mature assets into more accretive opportunities.” The firm does not appear to be cutting bait on Houston, however, as late last year Brookfield purchased Heritage Plaza for $322 million.]]> Fri, 24 Jun 2011 11:26:40 GMT http://www.rcanalytics.com/article/1319/2006-Houston-Investment-Pays-Off-Big-for-Brookfield-Office-Properties.aspx 1319 office building has traded in Washington, DC, serving as a reminder that the Capitol office market’s recovery has not run out of steam. The latest deal to close was for the 12-story Liberty Place, which Beacon Capital Partners sold to Paramount Group Inc for $139 million, or $870 per-square-foot. The building is located just steps from Capitol Hill on the National Mall, at 325 Seventh St NW.

Of Beacon’s sale, Real Capital Analytics Managing Director Dan Fasulo told Reuters that, “It's been amazing how much cap rate compression we've seen for prime assets in D.C. and Manhattan…It's clear to me that the last several trades have come in at sub 5 cap rates, which is aggressive."]]> Thu, 23 Jun 2011 12:40:25 GMT http://www.rcanalytics.com/article/1321/Washington-DC-Still-Setting-Pace-for-US-Office-Sector.aspx 1321 Pebblebrook Hotel Trust announced it has taken a 49% stake in six boutique type hotels in Midtown Manhattan. The firm paid $152 million, and assumed nearly $300 million in debt, for non-operating stakes at five Affina hospitality properties in addition to the Benhamin hotel.

The Wall Street Journal recognized the sale as additional evidence that New York’s hotel market is quickly recovering from the downturn. After occupancy rose sharply over 2009 and 2010 in Manhattan, investors have been keenly looking to acquire Big Apple hotels. The sector’s return has recently slowed as legacy development projects come online, though most of those are located away from Pebblebrook's recent activity in other parts of the city.

The price paid by Pebblebrook would put the value of the six hotels at $910 million, or an impressive $526,000 per room. This, the Journal said, was much higher than the already-high average unit pricing tracked by Real Capital Analytics. The average price per unit for a Manhattan hotel was $462,931 in the first quarter, and fell only slightly thus far in the second quarter, to $447,487.]]> Wed, 22 Jun 2011 16:27:25 GMT http://www.rcanalytics.com/article/1316/At-526k-Per-Room-Pebblebrooks-Latest-Trade-Indicative-of-Hotel-Markets-Momentum.aspx 1316
The zombie bank’s most valuable assets are mainly located in Manhattan, where Lehman has already announced it is looking to sell some of its properties on Manhattan’s Fifth Avenue and Broadway. In addition, Lehman holds a signigicant number of mortgages backing commercial properties around the New York City metro. The Commercial Observer cited data collected by Real Capital Analytics (RCA) to state that Lehman originated over 60 major loans on commercial properties before its demise, including “100 Wall, the Chrysler Building, Twitter’s new H.Q. at 340 Madison and the Nobu Hotel.”

The former investment bank has agreed to wind down its entire New York portfolio by September 2013.]]> Wed, 22 Jun 2011 13:29:25 GMT http://www.rcanalytics.com/article/1314/Lehman-Brothers-Holdings-Looking-to-Turn-Profits-as-it-Finally-Exits-Manhattan-Market.aspx 1314 retail sector has continued to lag bullish opinions on the market as a whole. Retail Traffic quoted the survey report as stating that, “Consumers remain skittish as pessimistic reports continue to surface about the housing and labor markets. As a result, the bulk of the U.S. retail sector will be in recession through year-end 2012. Although the amount of U.S. retail stock in recession will greatly decline by year-end 2013, a significant recovery is not expected until year-end 2014.”

Retail Traffic pointed out that power centers fared worse than other types of retail properties during the downturn, though the niche has stabilized and more such assets have been trading recently. The magazine cited data aggregated by Real Capital Analytics to state that, “So far in 2011, nearly 70 power centers have sold for a combined average sale price of $180.00 per square foot...This asset total already surpasses the number of power centers sold for all of 2010 when 63 deals occurred, reflecting a combined average sale price of $135.00 per square foot.” Malls and strip centers have recovered even more strongly as the market enters a new cycle.]]> Wed, 22 Jun 2011 12:28:25 GMT http://www.rcanalytics.com/article/1315/Investors-Still-Cautious-on-Consumer-Dependent-Retail-Sector.aspx 1315 Dan Fasulo was recently asked by Retail Traffic to share his opinions on a developing situation in the retail mall sector. With valuations of mall properties rising in primary -- and even secondary markets -- across the US, retail REITs such as Australia’s Westfield Group and New York-based Kimco Realty Corp have brought a significant number of assets strategically to market. These REITs are hoping to reallocate their portfolios and boost their bottom lines as they search for their own acquisition opportunities, and other retail REITs, such as Simon Property Group and General Growth Properties are engaging in similar practices.

Mr Fasulo indicated to Retail Traffic that there is sufficient appetite for the influx in offerings to the retail market, and told the magazine that, “You are seeing a situation where private equity has capital to allocate, you have pension funds that are back buying properties, you have some foreign money…Westfield is not a distressed seller so they can choose not to sell if they don’t find the pricing that’s attractive. But I do think there is enough demand in the marketplace to buy these properties right now.”

Retail trades are being fostered by current market conditions, as according to Retail Traffic, “…competition for core assets has intensified so much that investors have turned their attentions to class-B centers or to centers in secondary and tertiary markets.” Sellers, including the largest public REITs, are looking to take advantage of this so-called “sweet spot” in the investment sales market’s new cycle.

To read more on this exciting situation in the retail sector, along with more insights from RCA’s Dan Fasulo, please see the full article on Retail Traffic’s site.]]> Wed, 22 Jun 2011 12:28:25 GMT http://www.rcanalytics.com/article/1313/Retail-REITs-Strategically-Shopping-Assets-to-Solicitous-Market.aspx 1313 REIT-driven activity in the seniors housing sector over the past year, with Real Capital Analytics tracking $22.6 billion since just the start of 2011 – much of it attributable to REITs. Senior Housing News recently provided an explanation: REITs have access to financing outside of Freddie Mac and Fannie Mae, which have much stricter lending requirements than their private counterparts.

With many of the sector’s biggest players skirting the government-sponsored entities (GSEs) for lending, Fannie and Freddie are presented with the problem of a competitive disadvantage in a sector that is growing rapidly. Senior Housing News even interviewed one person familiar with the seniors housing market who stated that the GSEs should consider loosening their credit standards when lending to the sector.]]> Tue, 21 Jun 2011 00:00:40 GMT http://www.rcanalytics.com/article/1312/REITs-Bypass-GSEs-for-Seniors-Housing-Debt.aspx 1312 Special Report put out by Real Capital Analytics (RCA) on the US commercial real estate market found that 81 of the entities ranked in the top 100 pre-recession buyers of real estate have purchased properties again since the start of 2010. GlobeSt.com recently featured RCA’s Special Report and contacted the firm’s Managing Director Dan Fasulo for his take on this encouraging set of results.

Mr Fasulo stated that, “The fact that many of these players are buying again displays how quickly capital has returned to the commercial real estate space…The fact that many of these players--even the ones stuck with distress on their balance sheets--have been able to raise new capital for new acquisitions is a healthy sign, especially at this early part of the recovery.”

Of the 19 firms who were top performers before the recent recession but have not returned to market, several have actually gone out of business.]]> Mon, 20 Jun 2011 16:43:25 GMT http://www.rcanalytics.com/article/1309/Getting-Back-in-the-Game-Buyers-of-Yore-Have-Returned-for-New-Cycle-of-CRE.aspx 1309 office market is seeing its first properties fall into distress. In a recent Sacramento Business Journal piece, Staff Writer Michael Shaw discussed the significance of three office properties in downtown Sacramento that Real Capital Analytics has registered as having fallen into distress this year. They include the Senator Office Building, One Capitol Mall, and the Sacramento Corporate Center.

The stratum of severity covered by the blanket term “distressed” is illustrated through the three properties. In the most severe case, the Senator’s owners have recently defaulted on a $38 million loan in May, and sources indicate the building is marked for transfer to the receiver. It is likely the owners defaulted when the property's vacancy rate spiked over the past two years, to 40%.

At One Capitol Mall, the property owners simply missed a large balloon payment in May on a maturing $25 million loan balance. Though that is cause for concern, and moved this property into the distressed category, it is still a ways from foreclosure. RCA’s data indicates that after missing the payment, owner AKT Development Corp’s loan was transferred to special servicing, which could lead to a refinancing.

The third property has also avoided default, though RCA’s Ben Carlos Thypin informed Mr Shaw that the Sacramento Corporate Center’s debt was similarly transferred to a special servicer after it was determined its owners face “imminent default due to unspecified cash-flow issues.”

For more on this developing situation in Sacramento’s office market, including causes and that market’s near-term outlook, please see Mr Shaw’s full piece on Sacramento Business Journal’s site.]]> Fri, 17 Jun 2011 12:22:25 GMT http://www.rcanalytics.com/article/1308/New-Distress-Bodes-Poorly-for-Future-Sacramento-Office-Market.aspx 1308 office market has seen some marked improvement over the past year as entities on the buy- and sell-sides alike have returned. Finance & Commerce cited data aggregated by Real Capital Analytics (RCA) to state that nearly $250 million of Minneapolis office sales valued above $2.5 million traded during the first quarter of 2011. During the same period in 2010, RCA tallied zero sales above the same threshold in the market.

Finance & Commerce attributed the return of activity to buyers becoming interested again in secondary markets, such as Minneapolis, and sellers responding in kind by eagerly placing more desirable properties on the market. Minneapolis is following the national office market’s upward trend, as RCA Managing Director Dan Fasulo told Finance & Commerce that, "We’ve not only seen a significant recovery in transaction activity for office properties, we’re starting to see a wave of new listings, which is going to be the fuel for the fire in the fall.” Mr Fasulo added that investors are looking for stabilized assets in less-pricy secondary markets: “…secondary markets, that’s where the appetite is right now today.”

Among the most prominent office assets to hit the market in Minneapolis this spring are:

Marquette Plaza (LEED-Platinum Certified; 85% Leased; assessed value of $44 million)

33 South Sixth/City Center (1.1 million-square-feet of office space, 371,000 square feet of retail space; mainly leased to Minnesota-based Target Corp; City Center assessed value of $108 million)

Riverview Office Tower (235,000 square feet; last sold for $20 million in 2005)]]> Thu, 16 Jun 2011 15:42:25 GMT http://www.rcanalytics.com/article/1307/Minneapolis-Office-Market-Defrosts.aspx 1307 Joe Sitt, CEO of Thor Equities, recently stated that “Some neighborhoods never go out of style, and you can’t get more ‘High Street’ than Fifth Avenue in Midtown.”

Mr Sitt’s statement perfectly describes his firm's recent objective to acquire trophy properties along the Fifth Avenue corridor. After purchasing the Takashimaya building at 693 Fifth Avevnue last year, taking a partnership position at 245 Fifth Avenue, and acquiring 3 East 48th Street most recently, Thor has entered into contract for the regal 12-story Scribner Building at 597 Fifth Avenue. The historic Midtown Manhattan property, located between 48th and 49th Streets, is said to have a sale price of slightly over $100 million. It contains 58,000 square feet of commercial space, 12,000 square feet of retail space currently occupied by Sephora, and, of course, rubs elbows with other Fifth Avenue landmarks such as Rockefeller Center and Saks Department Store.

If the rumored price becomes the closed sale price of the Scribner Building, it would be a boon for A&A Acquisitions, the Kuwaiti firm that GlobeSt.com cited Real Capital Analytics has as the previous buyer of the property in 2006 for just $79 million.]]> Thu, 16 Jun 2011 14:29:25 GMT http://www.rcanalytics.com/article/1306/Thor-Equities-Takes-Down-Another-Fifth-Avenue-Trophy-Scribner-Building-Under-Contract.aspx 1306 Macklowe Properties entered into contract for the operating partner stake in the 108-unit apartment tower at 737 Park Avenue and 71st Street on Manhattan’s desirable Upper East Side. It is suspected that Macklowe plans to convert the now-rental property into luxury condominiums over time, as the roughly 30% of tenants currently enjoying rent-regulation leases cycle out. In the meantime, Macklowe could gradually combine units directly above or below each other to expand the average condominium size of 737 Park Avenue and boost per-square-foot sale prices.

The rumored sale price of about $255 million would be, according to data recorded by Real Capital Analytics (RCA), the highest price paid for a single apartment building purchased for conversion since the well-heeled Apthorp traded on the opposite side of Central Park for $391 million in 2007. And if Macklowe decides to go ahead with the condo conversion scheme, it would be among the first to pursue such a strategy since the downturn began three years ago.

Of this significant Manhattan-based deal, RCA’s Ben Carlos Thypin told The Real Deal that, “This is a litmus test [for whether] a condo conversion is a viable strategy for the next few years . . . This is a pretty bold move for [Macklowe].” Mr Thypin also expressed that he perceives the move as risky, since the purchase price reflects a high basis.]]> Wed, 15 Jun 2011 14:30:25 GMT http://www.rcanalytics.com/article/1305/Macklowe-Properties-Has-Big-Plans-for-737-Park-Avenue.aspx 1305
Using that report as a basis for a larger conversation on the subject, RICS Asia will host the inaugural RICS Asia Valuation Conference 2011 on June 16, 2011 in Beijing. Former RICS President and Real Capital Analytics Global Advisor Steve Williams will be attending the event, and delivering a speech on the topic of “Tracking Cross-Border Real Estate Capital Flows into and out of Asia.”]]> Wed, 15 Jun 2011 13:30:25 GMT http://www.rcanalytics.com/article/1304/RCAs-Steve-Williams-To-Speak-at-Inaugural-RICS-Asia-Valuation-Conference-2011.aspx 1304 property pricing slowly reaches for its previous 2007-high, current office owners have begun deciding to place their properties on the market for some sizeable profit returns.

Most recently it was announced that the historic Chicago Board of Trade Building has been put on the market, but other current for-sale properties in Chi-town include the Willis Tower, among more than 10 others. This has already exceeded the 11 office towers that traded in Chicago over all of 2010.

Of the Willis Tower opportunity and the ramp-up in offerings in general, Real Capital Analytics Managing Director Dan Fasulo told the Chicago Tribune that, “Prices have not fully recovered to their pre-recession levels, but if Willis Tower sells this year it would probably be sold at a profit.” Additionally, Mr Fasulo pointed out that many office towers currently on offer were purchased years before the market peak of 2006-2007, meaning that even more investors may be waiting for prices to continue rising before offering their peak-purchased product sometime in the near future.]]> Tue, 14 Jun 2011 13:24:25 GMT http://www.rcanalytics.com/article/1303/Deluge-of-Trophy-Office-Towers-Coming-to-Market-in-Chicago.aspx 1303 CMBS debt market that, “Following the recession, only the best properties are getting loans, and buyers are looking to the CMBS market to provide the debt for less-than-perfect real estate. Competition is already stiff, which is forcing CMBS lenders to loosen the tougher, post-crisis requirements they adopted.”

The article pointed out that, despite being one of the largest harbingers of the most recent financial crisis that saw commercial real estate sales slow to almost a standstill, CMBS markets have undergone little to no reform over the past two years. Citing the recent report put out by Real Capital Analytics in conjunction with Deloitte and Real Estate Research Group entitled "Expectations & Market Realities in Real Estate 2011: Balancing Risk and Return in an Era of Uncertainty," Pensions & Investments Online reiterated that as more CMBS players reopen their shops, “Real Estate investment managers expect CMBS requirements to get even looser.” Already, 2010 CMBS issuance increased more than ten times the amount brought to market in 2009.

Another worry expressed about the newest issues of CMBS is that they are being treated fundamentally different by investors this time around. Pensions & Investments Online quoted John Dunlevy of PineBridge Investments who stated that, “…returns in the CMBS market are becoming more volatile. Traditionally, CMBS is correlated with the stock market, which dropped recently. And this time around, CMBS performance also is moving in lockstep with high-yield bonds.”]]> Mon, 13 Jun 2011 06:30:40 GMT http://www.rcanalytics.com/article/1301/CMBS-Getting-Back-to-its-Old-Tricks.aspx 1301 office offerings brought to market in April, which was the highest level for that sector in new for-sale properties since 2008. The International Business Times recently cited this figure to explain some of this year’s largest office offerings, which include the Willis Tower in Chicago, Manhattan’s Seagram Building, and several others in the nation’s leading cities. As prices for such trophy towers in the most desirable markets rise steadily towards their 2007 highs, current owners are looking to cash out before spurious economic factors erode their potential profit. Already in May, RCA has tracked $10 billion in new office offerings, which is the highest since the fourth quarter 2007.

The recent rise in offerings comes in contrast to just last year, when office owners were reluctant to sell their properties during the low valuation environment.]]> Sun, 12 Jun 2011 05:28:40 GMT http://www.rcanalytics.com/article/1302/With-Rising-Valuations-Trophy-Office-Owners-in-a-Selling-Mood.aspx 1302 industrial REITs begin to look elsewhere when seeking to invest in their target sector. Alternatives might include investing abroad, or even resuming speculative development, which would open up new frontiers for constrained US industrial players.

Grubb & Ellis cited data aggregated by Real Capital Analytics in evaluating current market conditions and making its recommendation. In the nation’s primary and secondary industrial markets, “private non-traded REITs are paying 6.5 percent to equity investors and less than 5 percent to debt holders. At 50 to 60 percent LTV, private REITs can buy 5.75 percent yields and still cover costs of capital, including fees.” The report added that primary and secondary markets account for nearly two-thirds of all US transactions, and cap rates for assets in those markets are hovering around their 2007 record, or in some cases, even beating them.]]> Fri, 10 Jun 2011 07:33:40 GMT http://www.rcanalytics.com/article/1300/Grubb--Ellis-Recommends-Listed-Industrial-REITs-Get-Creative-When-Searching-for-Yield.aspx 1300 hotel disposition by joint venture partners Walton Street Capital and Highgate Holdings has confirmed the strength of the Manhattan hospitality market. GlobeSt.com cited data by Real Capital Analytics to state that the 597-room Times Square Paramount Hotel, centrally located at 235 W 46th St, was purchased by the JV at the peak of the market in 2007 for $160 million. After four years and one $40 million renovation, the group has sold the hotel for an unconfirmed price of $275 million – an impressive 70% mark-up spanning the downturn.

The buyer was RFR Hotel Group.]]> Wed, 08 Jun 2011 07:29:40 GMT http://www.rcanalytics.com/article/1299/Manhattans-Paramount-Hotel-Trades-as-Summer-Tourist-Season-Begins.aspx 1299 Cornerstone Real Estate Advisors of Hartford, CT has purchased the posh, 174-room Algonquin Hotel in Midtown Manhattan. HEI Hotels & Reports announced the long-rumored sale without disclosing the sale price, but purchased the hotel in 2005 from Miller Global Properties for $64 million, according to Real Capital Analytics (RCA).

In covering the closed deal, GlobeSt.com cited data aggregated by RCA to state that, “The sale adds to an ever-growing volume of hotel transactions in New York, where volume for Q1 2011 hit $643 million.”]]> Mon, 06 Jun 2011 13:25:25 GMT http://www.rcanalytics.com/article/1298/Manhattans-Newly-Renovated-Algonquin-Hotel-Trades-Hands.aspx 1298 Trends & Trades interactive digital market reports, National Real Estate Investor (NREI) recently stated that, “…institutional investors have increased their appetite for commercial real estate, overtaking publicly traded real estate investment trusts (REITs) as the leading purchasers of retail and office properties in the first quarter of 2011…Institutions pumped nearly $14 billion into the retail sector from January through April of this year.”

Specifically, institutional buyers have craved acquiring single-tenant retail properties, and have accounted for one-quarter of all single-tenant retail sales in the US so far this year. RCA Founder and President Robert White explained to NREI that, “There have been more portfolios trading…But many of the recent REIT/institutional deals have been portfolio sales where there is much more activity this year. Those [deals] were pretty tough to finance a year ago…So some of the rise in institutional and REIT investment is just because portfolios are trading again.”

NREI also discovered using RCA’s Trends & Trades that office sales of $10.2 billion in the first quarter of 2011 were more than double the level of last year’s first quarter.]]> Mon, 06 Jun 2011 12:31:25 GMT http://www.rcanalytics.com/article/1297/Institutional-Investors-Ramp-Up-Retail-Spending-in-2011.aspx 1297 industrial commercial real estate sector have undergone significant changes over the past year. As stated in a recent Bloomberg article on the sector, "Industrial companies are the second best-performing group in the Bloomberg REIT index over the past 12 months, rising 32 percent as of yesterday. U.S. sales of warehouses and distribution centers rose 11 percent in the first quarter from a year earlier to $3.2 billion.’ Bloomberg also cited data aggregated by Real Capital Analytics’ (RCA) to stated that the sector currently has the smallest amount of distressed assets of any property type, with RCA’s Ben Carlos Thypin adding that, “Industrial is a steady performer and isn’t correlated to other sectors…It didn’t get hot during the boom, and didn’t drop much during the crash.”

Of course the largest story in the industrial sector over the past year came in early 2011 when Prologis and AMB Property Corp announced they would merge to form the world’s largest warehouse owner and the fourth largest public REIT in the US. Now Prologis, the post-merger firm approved by shareholders on June 1, is leading US REITs' charge into acquisition-mode; the firm recently announced it plans to double its holdings in Asia while pairing duplicative and underperforming properties in North America and Europe.

Hamid Moghadam, co-CEO of freshly-merged Prologis, stated to Bloomberg that, “If you think about growth rates, the emerging markets are where all the action is.” Mr Moghadam is also expecting his firm to expand in Japan, already Prologis’ largest Asian market, as the nation rebuilds after March’s natural disaster.

For more on industrial REITs and Prologis’ post-merger plans, please see the full article on Bloomberg’s site.]]> Fri, 03 Jun 2011 13:37:25 GMT http://www.rcanalytics.com/article/1296/With-Merger-Complete-Prologis-Plans-Aggressive-Expansion-in-Asia-Warehousing.aspx 1296 Moinian Group, the Chetrit Group, and American Landmark Properties – purchased Chicago’s infamous Sears Tower, in fact it was over six years ago during the previous investment cycle – back when “bailout” still referred strictly to boats. At that time, the partnership paid $841 million for America’s tallest building, according to Real Capital Analytics. The 110-story property’s name changes to the Willis Tower in 2009 after the space’s third largest leaseholder, Willis Group Holdings Inc.

It was recently announced that the partnership, even at this early point coming out of a downturn, is seeking either another partner to take an equity stake in the tower, or sell the property altogether. Though it is true that pricing and the pace of transactions for trophy office towers in the nation’s leading cities have improved markedly over the past year, assets such as the Willis Tower generally sit in a class of their own. Nonetheless, of the partnership’s announced intentions, RCA Managing Director Dan Fasulo told Bloomberg that, “This is a great sign of how liquidity is returning to the marketplace, that this ownership group thinks the market can digest an asset of this size…Usually you see an asset of this size come to market at the end of a cycle, not the beginning.”

Bloomberg cited the Moody’s/REAL Commercial Property Price Index to state that, “Prices for so-called trophy office buildings in six U.S. cities -- New York, Washington, Los Angeles, San Francisco, Boston and Chicago -- were up 23 percent in March from their July 2009 low.”]]> Thu, 02 Jun 2011 13:28:25 GMT http://www.rcanalytics.com/article/1295/Willis-Tower-Owners-Ask-Would-You-Like-to-Own-Part-or-All-of-Americas-Tallest-Building.aspx 1295 retail sales activity was largely constricted to high-quality properties in top markets. This year, the story has changed significantly, with Retail Traffic citing data aggregated by Real Capital Analytics (RCA) to state that, “The investment sales market for retail properties is heating up as buyers feel more confidence in the economy and financing has become easier to obtain.” In April alone, $1.6 billion in retail properties valued over $2.5 million traded, or nearly a 40% increase from last year. Year-to-date, $7.9 billion in retail deals have closed, while another $16.0 billion are currently in contract.

Further supporting Retail Traffic’s bullish outlook on its sector of focus, offerings over the first four months of 2011 reached $4.5 billion, which was up by 63% from one year ago, and, according to RCA’s historical data, the highest level of offering since the fall of 2008.

Retail Traffic identified two main reasons retail buyers are getting back into acquisition-mode: improving retail sales and record-low interest rates on loans used to acquire retail properties. The former has encouraged retailers to go from “…shutting down new opening plans in 2008 to mulling expansion in 2010 to actually signing leases this year” while the latter has “…given urgency to investors’ desire to get deals done before the Federal Reserve raises the benchmark.”

Finally, investors may be leaping back into retail acquisition before initial yields fall back to pre-recession lows. RCA has tracked a 20 basis point decline in retail cap rates since the start of 2011.]]> Wed, 01 Jun 2011 16:33:25 GMT http://www.rcanalytics.com/article/1294/Retail-Sector-Posting-Healthy-Improvements-as-Investors-Return.aspx 1294 industrial sector has recently shown marked improvements in sales and fundamentals. The sector’s return to life has prompted offerings in the sector to spike as current owners realize demand for warehouse and flex industrial space is rising.

After Blackstone closed on three large industrial portfolios late last year for $1.7 billion, and has made other significant moved so far this year, other industrial players are looking to resume buying in the sector. It is even attracting firms that have not previously been active in the industrial arena; Cole Real Estate – historically active in just the office and retail sectors – has announced it will use its non-traded REIT, Cole Credit Property Trust 3, to actively pursue industrial asset opportunities because they are currently offering significantly higher yields than office properties. Real Estate Alert relied on data collected by Real Capital Analytics to state that over the past year, Cole Real Estate has “…acquired $134 million of industrial properties" and "...continues to be among the most-aggressive bidders” for industrial sector product.]]> Wed, 01 Jun 2011 16:17:25 GMT http://www.rcanalytics.com/article/1293/Surprising-Players-Pursuing-Industrial-Sector-for-Higher-Yields.aspx 1293 Asia-Pacific have continued the upward trend that started in early 2009, although volumes declined 23% quarter-on-quarter to USD21.4 billion in the first quarter of this year, according to a report produced by the Asia Pacific Real Estate Association (APREA), which promotes and represents the real estate sector on a regional basis, and commercial property research firm Real Capital Analytics (RCA).

CEO of APREA Peter Mitchell says, “All major markets in Asia experienced this fall in transaction volumes in the last quarter, with the exception of Japan where the volume actually increased by 122%. The majority of the transactions are coming from Japan, China, Hong Kong and Singapore.”

“However, the overall clear trend over the last two years is the substantial increase in transaction volumes in Asia and the increasing activity amongst domestic players and the correspondingly diminishing level of cross-border activity”.

Global transaction volumes dropped in the first quarter of the year by 31%. However, the total transaction volume was the second highest since the third quarter of 2008. Asia-Pacific transaction volumes contributed to 22.4% of the global total, up from 15% recorded in the fourth quarter of 2010.

APREA also reports that market capitalization of the Asian REIT market (ex-Australia) has reached over $100 billion for the first time; REITs totaled USD101.1 billion as of April 29 this year.


All sectors in the region experienced a fall in transaction volume, except for residential apartments which saw an increase of 10%. According to the report, movements in Asia Pacific cap rates were mixed over the quarter with retail, office and apartment cap rates showing signs of easing. Both industrial and particularly hotel cap rates showed signs of tightening.]]> Wed, 01 Jun 2011 13:28:25 GMT http://www.rcanalytics.com/article/1290/Asia-Pacific-Property-Transaction-Volumes-up-Regional-REITs-Top-USD100-billion.aspx 1290 RLJ Development had become one of the largest US hotel owners, amassing a portfolio of 20,400 rooms spanning 19 states. And according to the Washington Post, remarkably the majority of those deals were closed through limited-bid or off-market transactions, likely through hand-made deals arranged by the firm’s two well-connected principals; Robert L Johnson and Thomas J Baltimore Jr.

After going public in 2010 and using the $495 million raised in its IPO to half its debt obligations, the firm – now called RLJ Lodging Trust – intends to gorge itself on more than $400 million in hospitality properties over the next 12 months. To fill out this goal, the firm will continue to use its tried-and-true strategy of pursuing limited-service hotels that often yield higher revenue per room, and operate under a leaner structure.

According to Real Capital Analytics’ Ben Carlos Thypin, however, the firm’s plan may run up against some current market realities. RCA tracked just $372 million in limited-service hotel sales during the first quarter of 2011, down by 14% from one year ago, and Mr Thypin added that, “Pricing hasn’t dropped enough to make some of these deals attractive. . . There are some lingering risks in the niche. Supply is mostly located in second-tier markets and demand is heavily reliant on the health of the business travel market.”]]> Sun, 29 May 2011 14:37:25 GMT http://www.rcanalytics.com/article/1291/RLJ-Lodging-Trust-Hungry-for-Food-less-Limited-Service-Hotels.aspx 1291 195 Broadway in downtown Manhattan, has sold a majority stake in the 29-story office tower to Boston-based Beacon Capital Partners. According to Crain’s New York Business, the property is valued at $285 million, which means Beacon could be taking a stake worth over $200 million.

The current owners, a partnership between L&L Acquisition Corporation and GE Pension Trust, have announced plans to refurbish the building’s lobby to include retail space, among other improvements. This, in addition to the positively changing dynamics of the downtown/Financial District submarket, has caused some to question the strategy behind the equity stake sale. Real Capital Analytics’ Managing Director Dan Fasulo told Crain’s that he was surprised to hear the property’s owners would chose to sell at this point, stating that, “Once the World Trade Center takes shape it is going to be a different ball game down there…They would get more money.”]]> Fri, 27 May 2011 16:24:25 GMT http://www.rcanalytics.com/article/1289/Beacon-Capital-Takes-Majority-Stake-in-Manhattans-Historic-ATT-Tower.aspx 1289 Moody’s/REAL Commercial Property Price Index, which is generated using repeat-sales data from Real Capital Analytics, displayed an important paradox emerging in the commercial real estate sector. Though property pricing fell to a new cyclical low in March (the latest reporting period of the index) and is down by 47% from its peak in October 2007, Moody’s indicated in the index’s accompanying report that this month’s results are actually a sign of the market’s improving health.

The reasoning behind that proclamation has to do with the increasing share of distressed sales counted as part of the headline index results. As National Real Estate Investor summarized, as the immense overhang of distressed assets begin to enter the market and are sold, it means that “…investors and lenders are realizing losses on their distressed assets on a massive scale. Experts say that process is painful, but those price corrections must occur in order for the nation’s commercial real estate market to regain its footing and for overstretched property owners to de-lever and bring cash flows into positive territory.” Put another way, the current volume of depressed-value troubled assets trading hands right now means that the broader pricing of non-distressed markets may not necessarily be falling as dramatically, if at all. In fact, this type of activity is an encouraging signal.

Juxtaposed to the drop in the headline index, pricing for trophy properties in the largest six US cities has been steadily increasing over the past several quarters as investors turn to those types of assets and markets for secure, albeit shrinking, yields. Moody’s/REAL also tracks pricing for individual property types, with office, apartment, retail, and industrial indices all down from the previous reporting period. Importantly, the apartment sector has remained the furthest above its third quarter of 2009-cyclical low.]]> Wed, 25 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1287/Latest-Indicator-of-CRE-Markets-Health-Moodys-Pricing-Index-Hits-New-Low.aspx 1287 office building investments in New York for $900 million, the largest Chinese investment last year was the $90 million purchase of the Sheraton Universal Hotel in North Hollywood, Calif., by the Shenzhen New World Group.”

Though not topping this hospitality purchase last year, a Chinese pair of private investors have recently announced they have collaborated with the City of Toledo, OH to purchase a significant chuck of riverfront property called the Docks, for $2.2 million. The deal also included five acres of parking nearby, and the two are eyeing a large, nearby development site that was formerly the location of a power plant.

The two investors, Yuan Xiaohona and Wu Kin Hung, originally reached out to Toledo Mayor Michael P Bell to establish themselves as players within the secondary Midwest market. The property, a city-owned combination dining/entertainment complex, struggled during the recent downturn. Now Ms Yuan and Mr Wu plan to infuse up to $300 million to redevelop the property, which could also include the “Marina District” parcel directly adjacent to it, into a international business center for foreign firms looking for a Midwestern US hub.]]> Tue, 24 May 2011 16:17:25 GMT http://www.rcanalytics.com/article/1288/Chinese-Investors-Cutting-Deals-in-Toledo-OH.aspx 1288
The 2011 outlook report, released in May 2011, predicted that commercial real estate investment is likely to continue to be favored in comparison to other investment vehicles for the foreseeable future, due to its transparent and stable nature. Yet the sector also faces headwinds from a steep refinancing mountain coming in the next few years, as well as a sluggish US economy and low job growth.

Risk aversion was a main topic of the report, with contributors discussing what risks are currently present for the commercial real estate sector, and how best to avoid them.

For a more extensive summary of the collaborative report, please see the full article on PR Web. For the complete report, RCA subscribers can download the PDF here. Non-subscribers may purchase the report at www.RERC.com.]]> Tue, 24 May 2011 13:29:25 GMT http://www.rcanalytics.com/article/1285/RCA-Deloitte-RERC-Collaborate-on-2011-Outlook-Report-for-Commercial-Real-Estate-Sector.aspx 1285 Savanna has gone on a shopping spree in Manhattan, buying up several offices over the past few months. The firm has even executed successfully on a few bargain distressed opportunities, most recently scooping up 100 Wall Street in Manhattan’s Financial District through a debt-grab that poised them to win the tower at a Uniform Commercial Code foreclosure auction.

Savanna purchased the mezzanine loan on the office building at 100 Wall Street, previously owned by Broadway Partners, with a “loan-to-own” strategy it had employed recently on other Manhattan distressed opportunities. The firm is now working with Jones Lang LaSalle to reduce the property’s 23% vacancy rate.

When speaking of Savanna’s recent acquisition splurge, GlobeSt.com quoted data aggregated by Real Capital Analytics to stated that, “Savanna is currently in contract on another Downtown office property, 80 Broad St., which it’s acquiring for $66 million from ownership led by Swig Equities in a debtor-controlled sale.” Additionally, Savanna has acquired 386 Park Avenue, 104 West 40th Street, 5 Hanover Square, and 1375 Broadway over the past year as they comb Manhattan for deals.]]> Tue, 24 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1286/Savanna-Extends-Buying-Tear-to-Include-Assets-Out-of-Foreclosure.aspx 1286 New York Palace Hotel in Manhattan is said to be under contract to Northwood Investors LLC for around $400 million, according to a recent press release by the New York-based Northwood. Since its development 30 years ago, it has traded hands just twice, and Bloomberg cited Real Capital Analytics data to state that it is currently owned by “…an entity associated with the royal family of Brunei.”

In the press release, Northwood President John Kukral stated that, “We are investing in the Palace brand and property both to grow the business and to further enhance its stature as a world-renowned luxury hotel.” At $400 million, the transaction would have a price-per-unit of $445,000, which is relatively low for a luxury hotel in Manhattan, but does reflect the property owners’ leasehold agreement with the Archdiocese of New York that owns the land it is constructed on.]]> Wed, 18 May 2011 12:29:25 GMT http://www.rcanalytics.com/article/1284/Manhattans-Palace-Hotel-In-Contract-to-Northwood.aspx 1284 office tower located between Manhattan’s 48th and 49th Streets, known as 280 Park Avenue. Under a recently announce recapitalization plan, SL Green Realty Group and Vornado Realty Trust have merged their equity stakes in the property to take a majority position, allowing the partnership to commence a $150 million repositioning and re-tenanting program on the building. This is the first time the two office-REIT titans have entered into a joint venture with each other.

The remaining equity stakes will continue to be held by Broadway Partners, which, according to Real Capital Analytics data, purchased the building in November 2007 for $1.3 billion, and Murray Hill Properties. Murray Hill will continue managing and leasing the property.

SL Green Realty CEO Marc Holliday stated in the release announcing the capitalization changes that, “Many great office properties were impacted adversely by the most recent market downturn, but now offer great upside potential to investors who have the resources to take advantage…We see 280 Park as one of those opportunities and we look forward to working with our partners to realize the property’s great potential.”]]> Tue, 17 May 2011 15:14:25 GMT http://www.rcanalytics.com/article/1283/Vornado-and-SL-Green-Come-Together-for-Majority-Stake-at-280-Park-Ave.aspx 1283 Dan Fasulo told the Commercial Observer, “The whole distressed cycle is not playing out as many had originally thought,” in reference to Murray Hill Properties’ recent tie-up with a Chinese investor that helped the firm save its prized 1180 Sixth Avenue office tower from near-certain foreclosure.

The property, which Murray Hill bought at the peak of the market in 2006, was almost foreclosed on by the Shorenstein Group that bought the B-note mezzanine loan. Murray Hill was able to engage an undisclosed Chinese investor willing to sink $265 million in equity and debt into the property, allowing the firm to maintain its operating partner status of the building. According to the Commercial Observer, Murray Hill and the Chinese partner are already looking for more opportunities in Manhattan.

The situation of a mainstay US real estate firm partnering with an undisclosed investor from the Middle East or Asia is becoming more common, as those foreign entities wish to get into US real estate and/or away from instability in their home markets. The cheapest route for most to take is to partner with an established local US firm and scoop up distressed properties in solid markets. Though, as Mr Fasulo pointed out, this is easier said than done this cycle. He added that, “There are not distressed assets for sale through Cushman & Wakefield. You have to be a little more creative and team up with distressed owners in some sort of recapitalization; try to pursue the loan-to-own."]]> Tue, 17 May 2011 13:28:25 GMT http://www.rcanalytics.com/article/1282/Undisclosed-Chinese-Investor-Finds-Murray-Hill-Partnership-but-Many-Others-Abroad-Looking-Too.aspx 1282 cross-border investment into the US originally provided by Real Capital Analytics’ (RCA) US Capital Trends report. Citing RCA, Crain’s stated that cross-border investment has been particularly high in the New York City metro, with $3.3 billion in foreign buyer sales over the 12 months ending March 31 accounting for 18% of all transaction volume during the same period. This compared to the just 7% cross-border investors accounted for on a national basis.

Top foreign buyers into the US included Safra Group (Brazil), China Investment Corp (China), and Fosterlane Management Corp (Kuwait), according to RCA. And so far in 2011, foreign buyers have already closed on six deals in the New York City metro. RCA Managing Director Dan Fasulo told Crain’s that, “It’s definitely picking up…Many foreign investors have been bidding.”]]> Sat, 14 May 2011 11:30:40 GMT http://www.rcanalytics.com/article/1280/Foreign-Investment-into-US-Cities-Cautiously-Rises.aspx 1280
The supply-side may take years to reestablish, as Real Capital Analytics’ Managing Director Dan Fasulo explained to the Herald, “This lack of supply of apartments in Boston during the past five years has been constrained by high building costs and a lack of buildable sites.” He did not see much improvement in the situation over the next couple of years.]]> Fri, 13 May 2011 14:36:25 GMT http://www.rcanalytics.com/article/1279/Lack-of-New-Development-in-Boston-Good-for-Multifamily-Investors-Bad-for-Renters.aspx 1279
In other words, for most commercial properties in the US, which lie outside of the highly-visible, primary markets, property values remain significantly depressed after the most recent downturn. They await the type of macro-economic and employment growth currently returning to the nation’s leading metros to begin posting improvements themselves. According to the Moody’s/REAL Commercial Property Price Index, which is based on repeat—sales data from Real Capital Analytics, pricing for commercial properties in Manhattan and Washington, DC are just 17 percent and 18.5 percent off their historical highs, respectively.

What is even more concerning, Reuters pointed out, is that, “If property values in weaker markets, such as Cincinnati or Indianapolis, don't improve before the loans come due, many borrowers will be forced to default. Community banks tend to have the biggest commercial property holdings as a percentage of overall assets, so mass defaults could cause scores of those lenders to fail.”

Regarding whether these secondary and tertiary cities will be able to pull it out before its too late, Reuters quotes RCA’s Ben Carlos Thypin as stating emphatically that, “There's no chance that property values will rise enough.”]]> Fri, 13 May 2011 11:30:40 GMT http://www.rcanalytics.com/article/1281/Dont-Celebrate-Yet-Hundreds-of-Markets-Beyond-New-York-Still-in-Trouble.aspx 1281 multifamily sector quickly becomes investors’ preferred property type, Bloomberg’s Businessweek recently detailed the growing activity being reported in one of Los Angeles’ most important submarkets: Beverly Hills. Though properties seldom come to market in Beverly Hills and other affluent Los Angeles suburbs, several owners are taking this unique period in the cycle to lure wealthy individuals to buy within the desirable market.

And investors are definitely expressing their interest, even accepting lower yields to get in to the Beverly Hills multifamily market at this early point in the new cycle. On a recent 24-unit multifamily trade, located near the Beverly Hills Four Seasons Hotel, a high net-worth investor accepted a 4.5% initial annual cap rate, while, according to data aggregated by Real Capital Analytics, the national average cap rate for multifamily properties slipped to 6.6% in the second half of 2010. With activity ramping up over the first quarter, the national cap rate has dipped even lower since.

Businessweek went on to chronicle other properties that have traded recently in Beverly Hills with cap rates below the national average, and described some of the factors that are driving demand in the exclusive Los Angeles submarket. Weaker single-family demand and a lack of new development of multifamily properties have pushed up rental occupancy over the past year, especially in desirable locations such as Beverly Hills.]]> Fri, 13 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1278/Multifamily-Investors-Having-Feeding-Frenzy-in-90210.aspx 1278
The article quotes data aggregated by Real Capital Analytics to state that yields in secondary markets have become relatively attractive over the past year as competition pushed cap rates down on the nation’s coastal markets: “Office-property cap rates were 7.8 percent in Dallas, 8.2 percent in Minneapolis and 8.4 percent in Denver as of March.”

Intuitively, the article pointed out that investors who cannot afford New York or Washington, DC are hunting for cities where job and population growth suggest property acquisitions are a smart investment. Each of Dallas, Denver, and Minneapolis display positive growth on both metrics, while cities such as Seattle and Boston show even more promise and are attracting competition as well.

For more information on this developing investment trend, please see the full article on Bloomberg.]]> Thu, 12 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1277/Yield-Hungry-Investors-Scoping-Secondary-Markets.aspx 1277 development of Xanadu, the 2.4 million square foot mixed-retail complex in Meadowlands, NJ. Triple Five, the firm started by the Ghermezian brothers, is considered “wildly successful” on the high performance of both the Mall of America and West Edmonton Mall. But can their previous accomplishments ensure a successful turnaround at Xanadu?

The New York Times outlined some of the details of the duo’s plan for Xanadu, which has been years in development and already cost nearly $2.0 billion to complete. Triple Five has proposed expanding the mall to 3.0 million square feet, adding a water park and ice rink, and changing the name of the property, which has garnered negative connotations over the course of its development, to American Dream@Meadowlands.

Whether Triple Five will be successful in their bid to turn around the troubled mall development remains to be seen. The firm has had its share of problems as well: Triple Five became over-extended in Las Vegas during the real estate boom. Now, according to data recorded by Real Capital Analytics, Triple Five has faced lenders foreclosing on five of its loans to date, with another four loans in distress. The largest loss Triple Five has incurred so far has been on the development loans taken out for 60 acres to build the “Great Mall of Las Vegas,” which fell into trouble and the site was surrendered to the lender in 2009 when that market collapsed.]]> Wed, 11 May 2011 14:40:25 GMT http://www.rcanalytics.com/article/1275/With-a-New-Plan-and-Name-Can-Xanadu-Become-the-Next-Mall-of-America.aspx 1275 Real Capital Analytics and National Investment Center Announce Collaborative Initiative to Track Seniors Housing Property Sales

Real Capital Analytics (RCA), a leading global research firm, and the National Investment Center for the Seniors Housing and Care Industry (NIC), a leading industry resource for seniors housing, announced during a jointly sponsored NIC Investor Briefing last week an agreement to provide the seniors housing industry with improved transaction data and analytical reports to facilitate investment decisions within this rapidly growing property sector.

“We are very pleased about our new relationship with NIC, which has the largest database on seniors housing and is the ‘go to’ organization for investors interested in the industry,” said Bob White, RCA’s Founder and President. “Senior housing properties are currently attracting tremendous amounts of capital. So far in 2011, we have recorded $15 billion of property sales with another $7.5 billion pending, a huge amount of transactions that surpasses volume in the office sector.”

As part of the agreement, NIC will provide RCA with its leading US database of seniors housing information, and RCA will enhance this transaction data to provide jointly produced industry trend reports and analytics. The transaction database and analytical reports will be offered to both NIC MAP subscribers and RCA clients later this year. In addition, a NIC-RCA quarterly transactions report will be produced and be available through each organization.

“With the unprecedented number of transactions in the seniors housing industry, it’s the perfect time to bring together RCA’s commercial real estate expertise and NIC’s industry-specific research and data,” said Bob Kramer, NIC’s President. “I’m excited about the collaboration and look forward to enhancing investor knowledge and understanding of the seniors housing industry and its potential.”

About the National Investment Center for the Seniors Housing and Care Industry
For 20 years, the National Investment Center for the Seniors Housing & Care Industry (NIC) has been committed to advancing the quality of seniors housing and care by facilitating informed investment decisions for investors, lenders, owners, operators and developers through groundbreaking research, actionable data and dealmaking events. NIC is the leading provider of historical and trend data on the industry through its NIC MAP® Data and Analysis Service that tracks more than 12,000 properties on a quarterly basis in the 100 largest metropolitan markets. Proceeds from its annual conference and other events are used to fund data and research on issues of importance to lenders, investors, developers, operators, and others interested in meeting the housing and care needs of America's seniors. For more information, visit www.NIC.org or call (410) 267-0504.

About Real Capital Analytics, Inc.
Real Capital Analytics, Inc. is a global research firm based in New York City. The firm's proprietary research is focused exclusively on the investment market for commercial real estate. Within that arena, Real Capital Analytics offers the most in-depth, comprehensive and current information of activity in the industry. In addition to collecting transactional information for property sales and financings, RCA interprets data such as capitalization rates, market trends, pricing and sales volume. RCA also quantifies the market forces and identifies the trends that affect the pricing and liquidity of commercial real estate around the world. The firm publishes a series of Capital Trend reports and offers an online service that provides current transaction and troubled asset information for all markets globally.]]> Wed, 11 May 2011 12:31:25 GMT http://www.rcanalytics.com/article/1276/NIC-and-RCA-Join-Forces-to-Improve-Seniors-Housing-Property-Transaction-Data.aspx 1276 multifamily sector over the past two quarters as fundamentals improved and activity – spurred by increased lending activity – climbed swiftly. Now it would seem that the multifamily sector, particularly mid/high-rise properties in the nation’s top-tier markets, may be challenging the office sector in terms of which is the best investment.

In a recent Wall Street Journal article, it was stated that Hartz Mountain Industries’ April disposition of two well-situated office properties in Jersey City, NJ were purchased by CB Richard Ellis Realty Trust for an initial yield of 7.0%. Hartz then went out to Chicago to purchase an 809-unit multifamily asset – One Superior Place – for an initial yield of just 5.0%. Hartz President Emanuel Stern confirmed the office cap rate was lower than his firm’s acquisition yield in the multifamily sector.

The Journal reminded readers, using data aggregated by Real Capital Analytics (RCA), that the multifamily market has improved markedly over the past year, with transaction volume more than doubling from 2009 to reach $39.0 billion during 2010. The rise in activity is attributable to growing rental demand, rising rents, and relatively easier-to-obtain debt from government-controlled Fannie Mae and Freddie Mac. RCA Managing Director Dan Fasulo chimed in to tell the Journal that, “Apartment properties are less risky and you get super-cheap debt for acquisitions, courtesy of the U.S. taxpayer.” Hartz’ deal for One Superior Place is the largest apartment sale in the US yet during 2011, according to RCA data.]]> Wed, 11 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1274/Multifamily-Boom-Pushing-Some-Apartment-Yields-Below-Office-Sector.aspx 1274 REIT Vornado Realty Trust purchased the site, then home to Filene’s Basement department store, in 2006 for $100 million at the peak of the market. The firm lined up its partners and financing to redevelop the site into a mixed-use behemoth composed of retail, multifamily, and hospitality properties. Vornado suspended the project in 2008 as the financial crisis set in, and has yet to restart construction despite the improvements posted throughout 2010 in the commercial property sector.

Yet Vornado held on to the development site for the past five years, with the knowledge that being extremely well-located, any future improvements built on the land would surely become a trophy asset. However, it was recently reported that Vornado has enlisted brokerage firm Cushman & Wakefield to sell the development site and shed the related outstanding debt on its balance sheet.

Of the sudden and unexpected move on Vornado’s part, Real Capital Analytics’ Managing Director Dan Fasulo told Retail Traffic that, “…given the economics of the deal, selling the property doesn’t quite make sense. Vornado would have trouble recouping its losses on the land today, but if it builds the project at a later date it will likely reap hefty returns...I think they’ll wind up sitting with this, or maybe they can find a cheaper source of capital to partner up with — maybe an institutional or foreign investor. Basically, what Vornado is saying is they don’t want to build now. They are going to wait until a new development on that site is a home run.”
For additional information on the development site at One Franklin Street in Boston as well as Vornado’s recent activity, please see the full article on Retail Traffic’s site.]]> Tue, 10 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1273/Vornado-Considering-Sale-of-Long-Stalled-Downtown-Crossing-Development.aspx 1273 Global Capital Trends First Quarter in Review, the Mortgage Bankers Association’s (MBA) NewsLink reported on global investment trends in the commercial real estate sector. Globally, investment sales increased by 23% year-over-year in the first quarter, to reach $180.6 billion. The headline increase was driven by substantial rises in the US, Brazil, Germany, and Singapore. China, which became the world’s largest commercial property investment market last year according to RCA data, accounted for $78.2 billion in first quarter volume.

The MBA, also citing RCA data, reported on cross-border capital trends. By the end of the first quarter of 2011, reflecting data over the prior 12 months, Germany, Singapore and Brazil joined the premier US, UK, and France markets as top cross-border destination targets. At the same time, Hong Kong, Australia, Canada, and Spain all fell out of favor with investors willing to traverse borders to make deals.

The MBA related the rise and fall of cross-border targets over the past year to nations’ respective debt-funding gaps, which represent the imbalance between debt and capital valuations in a certain commercial property market. Nations with the greatest debt-funding gaps currently include Japan, the UK, as well as Spain and Ireland.]]> Mon, 09 May 2011 16:17:25 GMT http://www.rcanalytics.com/article/1272/Encouraging-Q1-Numbers-Signal-Solid-Start-to-2011.aspx 1272 cross-border acquisition activity is heating up in the commercial real estate sector. With many predicting the return of the cross-border deal in 2011, GlobeSt.com writer Paul Bunby cites Real Capital Analytics (RCA) as unearthing the first quarter of data that actually bares that forecast out. According to RCA, cross-border acquisitions rose to $10.1 billion over the 12 months prior to March 2011, up by 138% over the previous 12 month period during the depths of the financial crisis.

The composition of sources and destinations for cross-border capital flowing around the globe have shifted slightly from where they stood during the peak in 2007. Leading metros, such as New York in the case of the Americas, have become top target destinations, after foreign buyers pulled out of secondary and tertiary markets during the downturn. At the same time, Canadian buyers have edged out formerly-aggressive German and Australian firms in the US to become the leading source of cross-border capital.

Additionally, a large number of first-time buyers from Asian countries in the US have been tracked by RCA over the past year. These include buyers in South Korea and China, though Chinese capital may be undercounted due to the difficult nature of obtaining deal information.]]> Mon, 09 May 2011 12:28:25 GMT http://www.rcanalytics.com/article/1269/Cross-Border-Buyers-Flocking-Back-to-Attractive-US-Property-Market.aspx 1269 Gramercy Capital Corp are threatening to take back about 195 properties in response, according to a recent article on Bloomberg’s Businessweek. Gramercy’s lenders include Citigroup, Goldman Sachs, SL Green Realty and KBS Debt Holdings.

This type of aggressive takeover of collateral is a growing trend in troubled and distressed loans, according to Real Capital Analytics (RCA). Based on data aggregated by RCA, Businessweek stated that, “Lenders that offered to extend troubled real estate debt after the 2008 financial crisis have turned increasingly to liquidating loans and selling the underlying assets…In the first quarter, 57 percent of workouts were permanently resolved, mostly through liquidations or sales, up from 49 percent a year earlier.”

According to persons interviewed by Businessweek, should Gramercy lose the portfolio of loans to creditors, the firm may sustain a substantial loss resulting in negative earnings in future quarters. Gramercy Capital Corp is formerly the financing unit of SL Green Realty Corp, a massive publicly-traded REIT and currently the largest office landlord in New York City.]]> Sun, 08 May 2011 00:00:40 GMT http://www.rcanalytics.com/article/1271/Gramercy-Capital-Facing-Financial-Loss-as-Lenders-Stop-Extending-Troubled-Debt.aspx 1271
Additionally, RCA data revealed that Germany emerged as the leading target for cross-border buyers, both intra- and inter-continental, within Europe. Overall, cross-border acquisition volume into Europe during the 12 months ending March 31 jumped 50% year-over-year over the previous 12 month period, to €45.8bn. Disaggregating this total, German entities were the most prolific cross-border buyers within Europe,while Canadian firms were the largest net-acquirers of European property from outside the Continent.]]> Fri, 06 May 2011 14:04:25 GMT http://www.rcanalytics.com/article/1268/Cross-Border-Acquisitions-Spill-into-Germany---UK-and-France-Remain-Top-Targets.aspx 1268
Apartment properties were in high demand, with over 20 deals totaling $542 million trading during the one year period. Sales of office and hotel properties, of which the Tampa market has plenty (including many in various states of distress), were also impressive.]]> Thu, 05 May 2011 13:27:25 GMT http://www.rcanalytics.com/article/1270/Troubled-Tampa-Market-Posts-Solid-One-Year-Growth-through-First-Quarter.aspx 1270 cross-border buyers have bolstered local demand for properties. According to Real Capital Analytics’ (RCA) First Quarter in Review edition of Europe Capital Trends, transaction volume across Europe grew by 40% year-over-year in the first quarter to reach $47.3 billion.

Of the first quarter results, Joseph Kelly, director of market analysis based in RCA’s London office, remarked that, “A renewed focus of continental and global cross-border capital on German and key central European markets should continue to develop, though recent investment trends in Europe clearly identify robust core and struggling peripheral markets. The responsible economic divide is likely to act as a drag on the wider European economy for some time to come and further challenge monetary policy within the Euro zone.”]]> Thu, 05 May 2011 12:23:25 GMT http://www.rcanalytics.com/article/1267/Germany-and-Secondary-Markets-Drive-Strong-Q1-Growth-in-European-CRE-Activity.aspx 1267 office property in Washington, DC? According to a recent article in the Wall Street Journal, that may not be true yet, but momentum in the capital’s office market will likely not sustain the strong results posted in recent quarters.

One of the leading causes of Washington, DC’s pending slowdown will be increased federal government dispositions as executive agencies eliminate any unneeded properties to reduce the oversized national deficit. Additionally, congressional leaders have made clear they will be slashing the federal budget by selling real estate and reducing leased space in the capital. Government-related activity has driven momentum for Washington, DC’s office market through the downturn, but government contraction may stifle activity and depress pricing metrics in the future.

Regarding this possible reversal of fortunes for the capital's office market, Real Capital Anlaytics’ Dan Fasulo remained confident that it could weather a reduction in government-occupied space. Recently, one of Washington, DC’s largest office buildings – David Nassif Associates’ 1.4 million-square-foot Constitution Center, located in Southwest DC near L’Enfant Plaza – was placed on the market. Mr Fasulo evidenced this offering in support of Washington, DC’s strength, remarking that, “Recent sales of prime property have fetched as much as $905 a square foot…If investor appetite for Washington property stays strong…the Constitution Center could fetch as much as $640 a square foot, for a total of about $900 million” He added that he expects …”some heavy action” in terms of competition for the property’s sale.]]> Wed, 04 May 2011 15:31:25 GMT http://www.rcanalytics.com/article/1265/DC-Office-Market-May-Sag-as-Federal-Government-Contracts.aspx 1265 multifamily/rental sector continues to build, with a recent article in the Wall Street Journal detailing the property type’s attractiveness and elevated prospects versus other property types. A confluence of expanding demographics, limited product coming on line, and a recovery in the nation’s economy have spurred the multifamily sector’s rapid turnaround. In fact, pricing and other metrics for apartment properties have become so robust over the past two quarters that sales and demand for rental properties is closing in on boom-era levels.

Of this encouraging trend, Real Capital Analytics' Managing Director Dan Fasulo warned the Journal that, “The days of buying and flipping a property for quick profit are long gone. But investors who purchase apartment buildings, perhaps as part of a retirement portfolio or estate plan, are seeing better deals now than at any time in the past decade…On the cost side, housing prices are low and falling in many areas, while mortgage rates are near historic lows. On the income side, apartment rents are near all-time highs.”

The Journal provided additional reasons for the multifamily sector’s current bull market: single-family home foreclosures have accelerated over the past two years, with five million more expected to occur by the end of 2012 according to RealtyTrac.com. Families pushed out of those homes by lenders will provide ample demand for an increasingly well-occupied multifamily market.

With so much upside for apartment owners in terms of rent and revenue, the market’s largest players – including REITs and institutional buyers – are acutely pursuing multifamily opportunities before pricing brings down initial cap rates.]]> Sat, 30 Apr 2011 13:23:25 GMT http://www.rcanalytics.com/article/1266/Stars-Align-for-Multifamily-Markets-Rise.aspx 1266 multifamily housing faces fewer challenges and may mount a quicker recovery in the coming years.

This more optimistic forecast is manifesting in some important metrics being tracked in the multifamily market by Real Capital Analytics (RCA). Mr Tasman cites RCA in stating that “recovery rates on defaulted commercial and multifamily mortgages improved throughout the nation, rising to 67 percent in the first quarter.” In addition, “For the first quarter of 2011, commercial backed mortgage securities activity nearly surpassed all activity for 2010. Commercial back mortgage securities, when executed responsibly, function to bring more liquidity to commercial real estate.” Both figures are indicative of the multifamily sector’s momentum going into the new cycle."

There remain significant challenges from the previous cycle, however, that remain to be solved. One of those is the mountain of debt buyers took on to acquire and refinance properties during the boom, when values were near their peak. Mr Tasman stated that, “Real Capital Analytics reports that assumed debt remains to be the key source of distress financing. More than 25 percent of distressed sales in 2010 were financed through assumed debt - accounting for a larger share of that market than any other traditional lending source.”]]> Sat, 30 Apr 2011 12:23:25 GMT http://www.rcanalytics.com/article/1264/The-Uncoupling-of-Southwestern-Floridas-Residential-and-Commercial-Housing-Markets.aspx 1264 Moody’s/REAL Commercial Property Price index (CPPI), which is generated using repeat sales of commercial properties logged by Real Capital Analytics, to discuss the latest drop in pricing. And in fact, the CPPI has fallen by 4.9% over the 12 months, with only slight gains measured early last fall. The index now sits just 0.8% above its August 2010 low.

The Times rightly points out that the headline index results do mask important underlying trends. One of the largest drivers of the fall in the pricing metric for commercial properties was the share of sales associated with distressed assets, which are often sold for much less relative to their previous transaction amounts. Moody’s Director of Commercial Real Estate Research remarked of February’s high percentage of transactions involving distressed assets, “Only when the share of distressed sales meaningfully drops off will we be able to enter the recovery phase.” The CPPI breaks down the national trends on a regional and property type basis.

Parallel to the trend of distressed sales weighing on commercial pricing, the sales of trophy and top-tier assets have buoyed the index over the past few months as investors clamor for the best of the best. Competition in that segment has pushed up pricing on those high-quality properties to boom-era levels or higher.]]> Fri, 29 Apr 2011 00:00:40 GMT http://www.rcanalytics.com/article/1262/Commercial-Property-Pricing-Slides-in-February-Nears-Cycles-Relative-Low.aspx 1262 SL Green Realty Group recently bought out the remaining stake in 1515 Broadway, which houses the Viacom Inc headquarters and sits in Manhattan’s Times Square, from SITQ (a real estate investment unit of Canada pension fund manager Caisse de Depot et Placement du Quebec) for a price that would value the entire property at $1.2 billion. The 1.75 million square-foot building was originally purchased by SITQ and SL Green for $484 million in 2002, with SITQ holding a roughly 31.5% stake. It is currently 97% occupied and recently went through an extensive renovation.

Of the sale, Real Capital Analytics’ Managing Director Dan Fasulo chimed in that the buyout represented “…another example of how the market has improved over the last 18 months. We’re within maybe 10 percent of record levels.” Bloomberg added that “SL Green, Manhattan’s biggest office landlord, has been benefiting from climbing New York office values as vacancies decline and rents rise. The real estate investment trust yesterday said first-quarter funds from operations jumped 68 percent, beating analyst estimates, as rent revenue increased and it received income from the sale of debt on 280 Park Ave.”]]> Thu, 28 Apr 2011 13:26:25 GMT http://www.rcanalytics.com/article/1263/SL-Green-Buys-Out-Partners-Stake-at-1515-Broadway.aspx 1263 office market is closing in on its boom-era levels against several different metrics. The Journal stated that rents are rising, leasing activity is up, and vacancy rates have tumbled as technology firms have gobbled up space to expand their operations and accommodate expanding global demand.

All of these improvements have resulted in a material impact on the investment transaction market for offices in the Valley as well. The Journal cited transaction data recorded by Real Capital Analytics in stating that, “A downtown Palo Alto office building, once home to engineers developing the AltaVista search engine and the Java programming language, was sold this month to RREEF, Deutsche Bank's real-estate investment division, for $65 million, or more than $900 a square foot. That deal is in a tie with a sale in downtown Washington as this year's most expensive sale of a U.S. office building over 15,000 square feet.”

As is the case with the technology sector itself, the markets that technology firms occupy en masse can fluctuate drastically over shorter periods than more diversely occupied markets. Google and Facebook’s fortunes are rising among technology firms, and so those two in particular have been eager to expand their payrolls and take more space. However, expansion in both smaller start-ups and industry leading companies has benefited landlords across the Valley over the past quarter, even tempting some to envision development plans getting underway in the near future.]]> Wed, 27 Apr 2011 00:00:40 GMT http://www.rcanalytics.com/article/1261/Silicon-Valley-Emerges-as-Significant-Secondary-Market.aspx 1261 office buildings it currently owns and occupies in one of the hottest office markets in the world. It was recently announced that the MTA would look to market 341, 345, and 347 Madison Avenue, a move the Authority has previously passed up in favor of holding on to the space that sits adjacent to Grand Central Terminal and its Metro-North commuter rail operations.

The MTA is seeking $150 million for the three buildings, though the New York Times pointed out that the trio could easily sell for more given their location and value-add potential. “A buyer could demolish the three existing outdated buildings to erect a modern skyscraper, with even more potential if the new owners purchase air rights over Grand Central, which would allow them to build a tower much taller than might otherwise be allowed.

Of the remarkable Midtown Manhattan offering, Real Capital Analytics’ Dan Fasulo commented that the timing was right for such a sale, given that the real estate market has begun to show signs of life. He added that “Tenants today are asking for all the bells and whistles in new buildings,” suggesting that a new, modern office tower would be a profitable addition to the Midtown market.]]> Mon, 25 Apr 2011 15:30:25 GMT http://www.rcanalytics.com/article/1255/MTAs-Pain-is-Midtown-Investors-Gain-with-Madison-Avenue-Trio-Up-For-Sale.aspx 1255
In the same article, New York Building Congress President Richard T Anderson joined Mr White in stating that, “I tend to feel that there is a lot of distaste and disgust with the whole governmental process these days…You don’t tend to pay as much attention to the details when you’re just fed up with everything.”]]> Mon, 25 Apr 2011 13:26:25 GMT http://www.rcanalytics.com/article/1260/Industry-Analysts-Opine-on-Congress-Performance.aspx 1260 multifamily investment market seems to be stirring in Charlotte, NC, with the recent announcement that The Catalyst uptown apartment complex sold for $103 million, or $223,500 per-unit. The sale comes as Charlotte’s economy positions itself for growth, and employment rebounds on the city’s banking and education sectors. In a recent article in the local Charlotte Observer, the case for Charlotte was made.

Real Data, a firm that researches the apartment market, found that more than 7,000 units were rented in the Charlotte market between February 2009 and February 2010. Real Data President Charles Dalton stated that, "The apartment market is entering a cycle where everything is in their favor: development is minimal, demand for rentals versus for-sale is growing, and employment is improving... It is also good for Charlotte, as other investors see this kind of transaction in Charlotte, it will make them want to look at Charlotte as a potential investment area."

This comports with findings on the Charlotte market tracked by Real Capital Analytics, which recorded $207 million in apartment sales in Charlotte during 2010, more than three times the amount tracked in 2009. As vacancy rates in the market continue to fall, renters will wait for development to recommence for relief from higher rents.]]> Mon, 25 Apr 2011 00:00:40 GMT http://www.rcanalytics.com/article/1256/Multifamily-Market-Heating-Up-in-Charlotte-NC.aspx 1256 US Capital Trends reports, First Quarter in Review edition released on April 21, 2011, GlobeSt.com columnist Paul Bubny recently reviewed commercial real estate trends in the US. Commercial property sales totaled $3.1 billion in the first quarter, up by 69% year-over-year. The increase was led by significant gains for CBD office and full-service hotel sales during the quarter. Another positive trend continued into the first quarter: properties falling into distress amounted to just $14.9 billion, the lowest quarterly total since the third quarter of 2008.

Major markets disproportionately contributed to the first quarter’s rise in sales, with large year-over-year volume gains in San Francisco and Washington, DC benefiting core office sales among other property types. Other less visible markets posted slight declines, including Baltimore, MD and Tampa, FL.

The large bump in national sales paradoxically coincided with a decline in repeat sales pricing, as tracked by the Moody’s/REAL Commercial Property Price Index, which is fueled by repeat sales data from RCA’s database. The latest release by the index indicated that pricing fell by 3.3% between January and February 2011, and is now just 0.8% above its last relative low set in August 2010. Sales out of distress continued to weigh heavily on the index in February.]]> Sun, 24 Apr 2011 14:33:25 GMT http://www.rcanalytics.com/article/1257/US-Commercial-Property-Sales-Post-YOY-Growth-on-Strong-Office-Hotel-Sales.aspx 1257 distress on their loans, third-party “workout companies” have sprung up to work with lenders and owners to renegotiate terms and reduce debt loads so that both sides of an agreement can avoid legal proceedings such as bankruptcy and foreclosure.

Regarding the rise of these types of financial service companies, Real Capital Analytics’ (RCA) Ben Carlos Thypin told the San Francisco Chronicle that they can “…definitely play a useful role in the services they provide and also by being a third party…Banks have to demonstrate to shareholders and regulators that they're getting market value (for soured real estate investments). Having a third party involved lends credibility to whatever amounts they're able to recover." Demand for these firm’s services will likely continue to grow, as RCA has tracked over $180.0 billion in commercial loans classified as “in default” during the first quarter of 2011.

The article used a local Bay Area example to discuss the role these workout companies are playing in the resolution or restructuring of distressed commercial properties in the US. Loans backing Peacock Gap, a country club just north of San Francisco in San Rafael, teetered on the edge of default when the owners were unable to continue servicing their loans with existing revenue. After making no headway with their lender, they turned to Breakwater Equity to negotiate with the bank directly and workout a new agreement.]]> Sat, 23 Apr 2011 11:25:40 GMT http://www.rcanalytics.com/article/1258/Underwater-Owners-Engage-Third-Party-Firms--to-Hold-on-to-Properties.aspx 1258 Thor Equities has teamed up with The Moinian Group to acquire 245 Fifth Avenue in Manhattan. Moinian actually already has a stake in the property through a joint venture with Goldman Sachs's Whitehall Real Estate Fund, which purchased the property near the height of the market for $190 million. That pair had planned to raise the property’s rents in exchange for the higher sale price, but the downturn quickly scuttled their plans.

Thor will now join Moinian in acquiring the building, located at 28th Street, for $162 million. Real Capital Analytics’ Ben Carlos Thypin helped explain Thor’s reasoning to Real Deal readers: “Thor gets a good quality property that is well leased for the decent price of a little more than $500 a square foot without having to put up much cash, since they assumed the $140 million loan as part of the deal."]]> Thu, 21 Apr 2011 13:36:25 GMT http://www.rcanalytics.com/article/1259/Moinian-Group-to-Acquire-245-Fifth-Avenue-Through-JV-with-Thor-Equities.aspx 1259 mall owners have seemingly simultaneously determined that now is as good a time as any to place their under-performing and lower-quality properties on the market. The Wall Street Journal reported that in recent weeks, “Mall giants Westfield Group, Simon Property Group and General Growth Properties are marketing 40 malls across the country, an unusually large number for any one time.” By way of comparison, the Journal cited Real Capital Analytics (RCA) in stating that just 57 mall deals were closed for all of last year, for a total of $2.6 billion in transactions.

The Journal attributes part of the acceleration in mall offerings to the sector-wide improvement in availability of financing for trades. Particularly, the CMBS market has expanded its presence in the first quarter, allowing many sellers to feel assured that a buyer will be able to acquire their property with financing. However, pricing for malls has been poor since the downturn. Cap rates for malls averaged 8.8% in 2010, up from as low as 6.4% during the market peak. This means that it is still a buyer’s market for mall space as sellers return this spring.]]> Wed, 20 Apr 2011 13:09:25 GMT http://www.rcanalytics.com/article/1254/Buyers-Can-Be-Choosers-As-Westfield-Simon-General-Growth-Shed-Underperforming-Malls.aspx 1254 Moody’s/REAL Commercial Property Price Index (CPPI) for January, released on March 22, commercial property pricing improved 4.2% over the five months prior to January from an eight year low last year. Values for apartment complexes, office buildings, hotels and, especially trophy properties in the nation’s leading markets, are improving very rapidly after touching bottom.

Of this movement, Dan Fasulo, managing director of Real Capital Analytics (RCA), which provides the repeat-sales data underlying the CPPI, remarked to Businessweek that “We’re well into the recovery in the prime markets in the U.S. and that recovery has started to expand into secondary markets around the country…Real estate is looking good versus other asset classes.”

The optimism in the commercial real estate sector has prompted some of the world’s leading investment shops to expand their exposure to property and commercial debt. One of these includes New York-based Blackstone Group LP, which has returned to purchasing properties and debt backing commercial space in a big way since the recession subsided. In addition to the billions of dollars the firm spent in 2010 on large portfolios of properties, Blackstone recently announced it would raise an additional $10.0 billion fund later this year to target the commercial property sector. Carlyle Property Group, a competing private-equity shop, would also raise a multi-billion dollar fund to get in on the sector before this unique window of opportunity closes.

All that being said, the commercial real estate sector continues to feel the weight of distressed properties and a tremendous amount of debt taken on by property traders during the boom years that will be difficult to refinance. Businessweek’s article acknowledges, however, that depending on which side of the equation an entity is on, distress can be an opportunity or a burden.

For a complete look at the opportunities and difficulties that currently exist in the commercial real estate sector, please see the full article on Businessweek’s site.]]> Wed, 20 Apr 2011 00:00:40 GMT http://www.rcanalytics.com/article/1253/Commercial-Real-Estate-Looking-Good-Versus-Other-Investment-Vehicles.aspx 1253 US Steel Tower, Pittsburgh’s tallest building, has been in contract for several months, according to Real Capital Analytics (RCA, as its pending buyers line up acquisition financing. Now the buyer group, led by Mark Karasick, has secured a UBS-originated $220 million conduit loan from New York-based Meridian Capital to purchase the property. According to GlobeSt.com, the 10-year, fixed-rate loan has “favorable” terms and will cover more than three-quarters of the tower’s pending contract price, which RCA has listed at $250 million.

The property transaction, with the sellers including a partnership between AREA Property Partners and Winthrop Realty Partners, has been a bit of a saga over the past several months. The current partnership team sought to market the property after having difficulty refinancing existing debt in September 2010. Last December, Five Mile Capital, the junior lender to AREA and Winthrop, began foreclosure proceedings but suspended those plans once it became clear the owners were serious about selling the property. Mr Karasick’s group entered into contract for the 2.3 million-square office tower in February, but have held up the deal to pursue financing options.]]> Mon, 18 Apr 2011 14:20:25 GMT http://www.rcanalytics.com/article/1252/Pieces-Fall-into-Place-for-US-Steel-Tower-Sale.aspx 1252 troubled loans from the boom years would inhibit a return to growth. According to a recent report by Real Capital Analytics (RCA), default rates for commercial property loans fell for the first time since 2005 in the first quarter, from 4.36% to 4.28%. The absolute total of outstanding distressed loans also fell over the course of the quarter, from $188.0 billion last September to just $181.0 billion in February.

Of this turn of events, RCA’s Global Chief Economist Dr Sam Chandan told USA Today that, “Worst-case scenarios have been avoided.” The reasons for this include stabilization in occupancy and vacancy rates, as well as a rise in pricing for properties in the nation’s leading markets and, particularly, the most sought-after trophy properties. As lenders expand and additional sources of credit, such as CMBS, come to market, one can expect the commercial real estate sector to continue its return to normalcy.]]> Mon, 18 Apr 2011 13:29:25 GMT http://www.rcanalytics.com/article/1251/Commercial-Property-Sector-Defies-Expectations-with-First-Quarter-Growth.aspx 1251 Blackstone Group, in its quest for world domination, has recently acquired approximately $600 million of debt that currently backs 23 million-square-feet of industrial properties, commonly referred to as the CalWest portfolio. The move positions the world’s largest private equity group to take control of the properties, which are concentrated in major centers of trade, for relatively cheap prices, to build a portfolio of industrial space that would rival the size of some US public industrial REITs.

With the decline in values that has occurred for industrial space since 2007, analysts believe the CalWest portfolio’s senior debt may be difficult to refinance. According to Real Capital Analytics’ data, current owner Walton Street made the second-largest industrial sector purchase of the last decade when it acquired the CalWest portfolio in April 2007, at the very height of market valuations. Should Blackstone be able to leverage their position to take control of CalWest, they would be able to add the properties to the 180 industrial sites it recently acquired from ProLogis for $1.02 billion in a deal that also included interests in three real estate funds.]]> Thu, 14 Apr 2011 15:33:25 GMT http://www.rcanalytics.com/article/1250/Blackstone-Maneuvers-to-Commandeer-CalWest-Portfolio-with-600M-Debt-Grab.aspx 1250 Hartz Mountain Industries Inc. this week sold twin 12-story office buildings in Jersey City's Colgate Center in a deal that values them at about $310 million.” Citing data provided by Real Capital Analytics (RCA), this sale translated into a record-setting $375 per square foot.

The buyer, non-listed REIT CB Richard Ellis Realty Trust, purchased 70 and 90 Hudson Street for just $70 million, after agreeing to assume $240 million in existing debt. A significant sale for sure, as the property is 100% leased and supremely located with Hudson River views. However, initial yields on the properties are expected to be around 7.0%, compared to cap rates tracked by RCA in the 5.0%-range for Manhattan properties. These most recent sales demonstrate that, while commercial sales in New Jersey have clearly returned in force over the past quarter, Manhattan is maintaining its historically secure lead.]]> Wed, 13 Apr 2011 17:26:25 GMT http://www.rcanalytics.com/article/1249/New-Jersey-Office-Sellers-Aspire-to-Manhattan-Pricing.aspx 1249 CMBS market stood at the end of a volatile first quarter, the Richmond, VA-based Times-Dispatch recently provided an analysis of statistics on CMBS issuance and pricing for the three-month period. Though global and domestic events caused much uncertainty over the market's outlook, CMBS issuance in the first quarter reached $8.7 billion, which the Times remarked was essentially on par with the pace of offerings in 2000-2002. At the current rate, market analysts are expecting $40.0 billion in new CMBS this year, which despite being more than four times as last year’s anemic volume, would be only a fraction of the $228.5 billion tracked by Commercial Mortgage Alert in 2007 at the peak of the market.

In terms of pricing, commercial mortgage rates have fallen about 25 basis points since the beginning of the year, almost in spite of the volatility in risk-free rates. Origination of loans at LTVs of 80% or higher have resumed, pricing more aggressively once bundled and securitized at their higher interest rates. Good news in the commercial real estate lending sector continued into the first quarter, as Real Capital Analytics’ (RCA) analysis of commercial and multifamily bank mortgages found that the default rate on such loans fell for the first time in 17 consecutive quarters. The drop in the default rate was not experienced by all lenders, however, with the nation’s largest banks continuing to have the highest rate.

The Times also pointed out that smaller banks, which have registered the lowest default rate so far this cycle, are probably more prone to postponing defaults as their balance sheets cannot absorb the losses. They may even be waiting for property values to rise. However, in secondary and tertiary markets–where smaller regional banks often originate a larger share of loans—the Moody’s/REAL Commercial Property Price Index, which is based on repeat sales data in RCA’s database, has displayed little upward movement over the past several months. As pricing and overall investor interest has remained low for opportunities and troubled assets in secondary and tertiary markets, the Times remarked that RCA has tracked significantly lower recovery rates on loans purchased out of distress in those less-visible markets.]]> Mon, 11 Apr 2011 12:26:25 GMT http://www.rcanalytics.com/article/1246/After-Bumpy-First-Quarter-CMBS-Continues-Upward-March.aspx 1246 Dr Sam Chandan described those current market dynamics in stating that, “Tenants moving into higher-quality space have propelled leasing activity in many markets,” however, “…investors are chasing yield in a broader range of properties and wider selection of cities despite the fragile recovery, while core buyers bid up prices in major markets.”

Buyers of vacant space describe their line of reasoning as such: “They’re purchasing buildings at a low enough basis to withstand slow growth while positioning themselves for handsome profits when better times return. If need be, they’re in a financial position to absorb lower rents as existing leases roll over in order to maintain occupancy.” A recent article on National Real Estate Investor Online described several recent deals where buyers have leapt at the chance to own in primary markets, even accepting vacant space to do so.

The same article, discussing this nascent trend among investors who are refining their core strategies, cited data aggregated by RCA in stating that, “The willingness to buy risk in select assets and markets follows a robust rebound in office sales last year. Roughly $41.6 billion in office assets in the U.S. traded hands in 2010.” Of this total, about 24% of all transactions occurred in Manhattan and Washington, DC, while cap rates for office space in the latter plunged from 7.7% in 2009 to 6.3% in 2010 and the former’s touched 5.5%. Speaking to those statistics, as well as the terrific recovery in primary markets in general over the past year, RCA Managing Director Dan Fasulo commented that, “If we’re not there already, we’re rapidly approaching a situation in which there’s just too much money again and not enough assets to go around…It’s remarkable that it has happened so quickly.”]]> Thu, 07 Apr 2011 15:41:25 GMT http://www.rcanalytics.com/article/1247/Alternative-Strategies-for-Shopping-in-Primary-Markets.aspx 1247
Of the closed deal, Mr Messina stated that, “The Docks deal is part of a burgeoning trend across America in which Chinese with high net worth — and the Chinese government through the China Investment Corp, a $300 billion sovereign wealth fund — are spending billions to invest in American businesses and buy U.S. real estate.”

This statement was affirmed by Real Capital Analytics’ Ben Carlos Thypin, who told the Blade that Chinese investors, who had previously focused almost-exclusively on top markets such as New York and Chicago, are now looking beyond to secondary and tertiary destinations. Said Mr Thypin, “In the past year we saw one in Milwaukee. What’s happening in Toledo is a continuation of that trend. They can buy a lot of land and build a lot more for their money as long as they are comfortable with the place. It will serve as some kind of base for a long period rather than a financial investment… I imagine they are doing their homework and that is why they are going to Toledo, because it is so cheap and they can afford for this to take a long time.”

Despite the rise in investment from China, individual transactions such as Mr Guo’s trade for the Docks in Toldeo, are very hard to track. This is because, as Mr Thypin remarked, “There is a problem dealing with Chinese companies here or there. You do not know who is the guy behind the guy, behind the guy,” He also stated, however, that, “As their investments spread to places that are less used to foreign investments, perhaps there will be more scrutiny to these firms, who they are, and whether they are coming from the government or the private [sector].” Indeed, RCA has tracked reported Chinese investment for more than a decade, as it grew from $448 million in 2003 to more than $2.3 billion in 2009.

For more details on the happenings in Toledo, Ohio's investment market, please see the full article on the Blade's site.]]> Thu, 07 Apr 2011 13:27:25 GMT http://www.rcanalytics.com/article/1245/Chinese-Investment-Popping-Up-in-Secondary-US-Markets.aspx 1245 AvalonBay Communities Inc and UDR Inc, the second- and third-largest publicly traded apartment REITs in the US, recently announced a mutual exchange of $237 million in properties--a move that will result in a significant rebalancing of both firms’ portfolios, better positioning them within a shifting marketplace. The deal will see Virginia-based AvalonBay hand over two apartment complexes and a parcel of land in the Boston metro, as well as one complex in San Francisco. In return, Colorado-based UDR will transfer multiple apartment properties in southern California and a check for $26 million to Avalon, which described the move as “…reallocating capital…into a current under-allocated region…”

In posting the news to its website, Bloomberg’s Businessweek magazine pointed out that the trade comes as the apartment sector mounts a full recovery. Citing data aggregated by Real Capital Analytics, “Demand for apartments in the U.S. is rising as the economy grows and the homeownership rate slumps. Sales of multifamily buildings climbed 96 percent to $33.7 billion in 2010 from a year earlier.”]]> Wed, 06 Apr 2011 15:39:25 GMT http://www.rcanalytics.com/article/1244/AvalonBay-and-UDR-Announce-Strategic-Trade-of-Assets.aspx 1244
Though this is a spectacular first investment, according to the Authority more deals will come. The National’s article aptly reiterated that “…US property is starting to attract more attention from international investors.” Citing data aggregated by Real Capital Analytics, cross-border investment into US property reached $9.7 billion in 2010, which was more than double the 2009 total.]]> Tue, 05 Apr 2011 20:27:25 GMT http://www.rcanalytics.com/article/1242/Qatar-Investment-Authority-Eying-US-Commercial-Property.aspx 1242 office sales by market to provide an understanding of the sector’s dynamics and outlook for 2011. The resulting report stated that though the office sector's “…demand recovery in 2010 was primarily concentrated in Washington, DC, New York, and Dallas…” it is now spreading outward to secondary markets. Of 82 markets analyzed in Cassidy’s report, 52 posted increases in net absorption, or the ratio of demand and supply for space currently on offer in a market.

“This is the first report in over two years that shows all of the metrics used to measure the health of the U.S. office sector are strengthening,” stated Cassidy Chief Economist Kevin Thorpe. Also citing data aggregated by RCA, Cassidy recognized that office sales volume has nearly tripled between the first quarters of 2010 and 2011, as cap rates have fallen by 150 basis points from their 2009 peak. Though risks remain, Mr Thorpe stated he believes that, “Increasing momentum in the labor markets – and specifically the rise in permanent payroll hiring – signals that demand will continue to strengthen and vacancy will continue to erode.”

To download the full report from Cassidy Turley's website, please visit the link below.]]> Tue, 05 Apr 2011 16:17:25 GMT http://www.rcanalytics.com/article/1243/RCA-Data-Illustrates-Office-Sectors-Recovery-in-Cassidy-Turley-Q1-Report.aspx 1243 occupancy rates—as well as by improved credit availability over the past year, apartment sales are being driven higher across the board, even including the smallest properties. Apartment buildings with up to four units appeal to a distinct class of buyers, often local private investors, and compete with an oddly diverse pool of asset types, such as multifamily residential homes among others.

Yet small apartment buildings may be joining other, larger and institutional-grade multifamily properties in leading the commercial real estate sector’s recovery. Market analysts interviewed by Investor’s Business Daily cited that as homeownership rates fall, rents will increase by 5-6% this year on increase rental demand. This has prompted many investors to become active in the apartment sector. Real Capital Analytics (RCA) recorded $2.0 billion in apartment portfolio sales in February 2011 alone, a total that was up by 50% year-over-year. Demand for apartment properties is strongest in the nation’s top investment markets, including Washington, DC, Boston, Orange County, and several markets in Florida.

Not coincidently, rental demand is highest in markets where job creation has resumed after the downturn. For those interested in the smallest multifamily assets, these markets have the greatest potential for a rise in value over near-term future.]]> Mon, 04 Apr 2011 13:26:25 GMT http://www.rcanalytics.com/article/1241/Small-Apartment-Buildings-Keeping-Pace-with-Rise-in-Broader-Multifamily-Market.aspx 1241 retailers will do anything for a piece of Manhattan’s high-street retail corridors, even settling for a condo space. The most recent condo space to change hands was Spanish retailer Inditex’s record-setting acquisition of the space formerly occupied by the NBA Store at 666 Fifth Avenue. Inditex, which operates the trendy Zara brand of clothing, paid over $8,300 per-square-foot for the prime location.

Recently, Crain’s New York Business profiled other recent retail condo trades. The niche's outlook is decidedly positive, suggesting that prices in the nation’s leading cities will continue to march upwards as retailers clamor for high-quality space with supreme access to consumers. Other recent condo trades included a $4,000 per-square-foot space on Manhattan’s Union Square and two other $7,000 per-square-foot stores on Bleeker Street in Manhattan’s Greenwich Village.

The Crain’s article cited data aggregated by Real Capital Analytics (RCA) in stating that, “A dozen $2.5 million-plus deals were done through February, double the number in the year-earlier period. The total value of transactions in the first two months was $790 million, more than 11 times that of a year earlier.” It became clear late last year that momentum was building for such properties when RCA recorded 14 retail condo transactions in December alone, or about one-quarter of 2010’s total volume for the niche.]]> Mon, 04 Apr 2011 12:33:25 GMT http://www.rcanalytics.com/article/1240/666-Fifth-Ave-Sale-Illustrates-Current-Retail-Condo-Appeal.aspx 1240 foreign buyers—particularly pension and sovereign wealth funds—have been investing heavily in US commercial real estate, but have also been doing so under the radar via equity investments. Ms Jacobius profiled a number of recent reported equity deals done by foreign entities in partnership with US funds such as TIAA-CREF and AREA Property Partners. The article also made note of the recent Association of Foreign Investors in Real Estate survey, which found that foreign investors are extremely keen to get into the US market before it recovers strongly in the next few years.

On the other hand, the article’s other main point focused on the lackluster level of direct investment by foreign buyers into the US. According to data aggregated by Real Estate Analytics, cross-border buyers have accounted for only around 10% of total transaction volume annually over the past decade. RCA Managing Director Dan Fasulo added that, “Most investments by foreign institutions are made through REITs and commingled funds, which are not tracked.” Current federal US laws have provided a barrier to foreign investors seeking to purchase US assets outright, though many Canadian and European buyers have overcome these obstacles to become the top buyers of US property in recent years. And the article pointed out that, unlike the previous two years in which foreign buyers have only sought properties in the US’ leading markets, cross-border buyers are expected to be increasingly shopping in less-visible markets this year. Including Boston, Houston, Atlanta, San Diego, and Seattle, these extra purchases should raise their share of acquisition volume.]]> Mon, 04 Apr 2011 12:32:25 GMT http://www.rcanalytics.com/article/1239/Will-2011-See-the-Return-of-Foreign-Buyers-into-US-Property.aspx 1239 Dr Sam Chandan discussed the broad-reaching and exciting implications for the return of CMBS originations. Though the primary lending market has been growing steadily for several quarters, nearly in lockstep with rapidly expanding volume of commercial real estate acquisitions, CMBS in the secondary market has been slower to resume after the downturn. Dr Chandan cautions, however, that, “While CMBS can play an important role in leveling the credit landscape, its continued growth faces challenges from cautious investors, policy makers and its own structural inertia.”

For all of Dr Chandan’s thoughts and predictions on CMBS in the coming quarters, please see his full column on the Commercial Observer’s website.]]> Thu, 31 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1238/Dr-Chandans-Lead-Indicator-The-Return-of-the-Rise-of-CMBS.aspx 1238 REITs may halt commercial property sales and postpone fundraising plans in the short term as the nation's strongest earthquake, tsunami and nuclear crisis dampen buyers' appetite for assets.

Four days after the March 11 earthquake, Tokyo-based REIT United Urban Investment canceled a plan to raise as much as 64.9 billion yen ($783 million). Their peer Invincible Investment dropped a 4.8 billion yen share sale to a Fortress Investment Group unit on March 23.

"Deals under agreement may be scrapped because buyers may get cold feet," said Dan Fasulo, managing director at Real Capital Analytics, a New York-based research firm that reports on commercial property sales. "You will see a bunch of previously agreed-upon transactions being canceled due to the fact that confidence has fallen apart in the short term."

The delay in sales may hurt the recovery of the world's second-most active real estate market. Credit Suisse Securities (Japan) halved its 2011 estimate for investments by Japan's REITs (also known as J-REITs) from 1 trillion yen to 500 billion yen.

According to Real Capital Analytics totals, Tokyo saw $18.9 billion of property sales last year, trailing only London's $23.9 billion.]]> Wed, 30 Mar 2011 14:34:25 GMT http://www.rcanalytics.com/article/1237/Property-Sales-and-Fundraising-Stall-for-Japans-REITs.aspx 1237 Dan Fasulo recent told The Real Deal that, “At certain points in the cycle bringing in more equity is more attractive than debt for a lot of reasons…They make a lot of money just off business activities not related to owning."

Mr Fasulo was responding to Madison International Realty’s recent announcement that, for $172 million in cash, it would take a 49% stake in a 15–property portfolio of New York City retail and entertainment assets. Current-owners Forest City Enterprises will retain a 51% stake, which entitles them to continue managing and controlling leasing of the properties. The holdings include a chunk of retail space on Manhattan’s 42nd Street near Times Square as well as the recently-built Atlantic Center mall in Brooklyn. A 49% stake for $172 million values the entire portfolio at $851.5 million, including nearly $500 million in debt, for a cap rate of 6.9%.]]> Wed, 30 Mar 2011 13:29:25 GMT http://www.rcanalytics.com/article/1236/Equity-Sale-to-Help-Forest-City-Pay-Off-Debt-on-NYC-Retail-Portfolio.aspx 1236 troubled properties accumulate.”

This has slashed investments made into these funds by entities such as pension funds and wealthy private investors at the peak of the market. As commercial property pricing values have been slow to rise outside of trophy properties in major markets, investors into real estate funds have avoided selling their stakes, “holing that values will increase enough to wipe out some of all of the possible losses they are facing.”

Remarking on commercial property pricing trends and cited in the Journal’s article, Real Capital Analytics’ Dan Fasulo stated that, “Where we've seen values recover recently has been the primary markets, and certainly many of those secondary cities they invested in have not seen that type of recovery.” Unfortunately for investors of funds such as Sterling’s V fund, a drive to diversify during the market’s rise last decade meant purchasing partial or full stakes in whole buildings located in “…midsize cities and suburbs…markets that have generally been slow to see values rebound.”

Though a Sterling spokeswoman told the Journal that its V fund has sufficient funds to cover losses due to troubled loans on its balance sheet, that does not mitigate losses experienced by individual investors.]]> Wed, 30 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1235/Diminished-CRE-Values-Plaguing-Fund-Shops.aspx 1235 Dr Sam Chandan speaks to the issue of a rising risk-free interest rate, and its potential effects on commercial real estate. He immediately points out that recent events have mitigated a previous rise in long-term Treasury rates. After months of turmoil in the Middle East, the largest earthquake on record devastated the world’s third-largest economy, and now a third European euro-club member on the brink of asking for a bailout, the world’s investors have taken shelter in stable US Treasuries.

This flight to safety has pushed the 10-year rate down by nearly 50 basis points since the start of February. However, Dr Chandan states that, “…investors should be careful to avoid falling into complacency. While an abrupt and unexpected confluence of globally significant events has bridled the rise in long-term treasuries, an environment of rising interest rates may quickly reassert itself once macro conditions normalize.”

For why a sudden change in risk-free rates is possible in the near-term, and what effects such an increase may precipitate on commercial real estate markets, please see Dr Chandan’s full article on the Commercial Observer's site.]]> Thu, 24 Mar 2011 16:32:25 GMT http://www.rcanalytics.com/article/1234/Dr-Chandans-Lead-Indicator--Rising-Interest-Rates-The-Threat-Hasnt-Gone-Away.aspx 1234 Moody’s/REAL Commercial Property Price Index (CPPI), now available on Moody’s and Real Capital Analytics’ (RCA) websites, it has become clear that the bifurcation in pricing denoted clearly by the index over the course of 2010 has continued into the New Year. A recent article on GlobeSt.com regarding recent property pricing stated it plainly: “The topline result of the latest CPPI, released Tuesday, shows that the index declined by 1.2% overall in January, continuing a recent trend toward modest declines. Yet some markets, notably office in New York City and Washington, DC, have shown steady gains over the past several months, while prices for distressed properties help to pull down the average.”

Overall, the CPPI is down by 42.8% from its October 2007 peak, while the six-city trophy sub-index, based on repeat sales comparisons in New York City, Washington, DC, Los Angeles, San Francisco and Boston, is down by just 18.9% over the same period. Weighing on the index are sales out of distress, the sub-index for which is down by 53.9% from its peak back in 2007. According to RCA, there is no shortage of properties waiting to be factored into this sub-index in coming months, as the pool of outstanding distressed properties stood at $178.9 billion as of January 2010. While the flow of new distress is starting to ebb, outflows into the market are starting to rise as well.]]> Wed, 23 Mar 2011 16:09:25 GMT http://www.rcanalytics.com/article/1232/Latest-CPPI-Displays-Continuity-in-Pricing-Trends-into-First-Quarter.aspx 1232 REITs gorged themselves on hotel properties in 2010, with companies such as Host Hotels & Resorts, Pebblebrook Hotel Trust, and Sunstone Hotel Investors all scooping up high-quality trophies and distressed bargains over the course of the year. These firms’ ability to raise capital from secured and unsecured debt markets is allowing them to expand their search in 2011, according to the Wall Street Journal, to include luxury hotels. The Journal sites data aggregated by Real Capital Analytics (RCA) in stating that, “This year, public hotel REITs have accounted for 47% of U.S. hotel acquisitions by dollar volume, up from 20% last year.” Market players of all capital group types are anticipating a steady rise in hotel occupancy, and thus revenue, in the coming quarters, yet REITs remain the best positioned among all buyers to seize opportunities and make the highest bids.

Indicating the growing share of top-shelf properties in the pool of hotel acquisitions, the Journal stated that according to RCA’s data, the average price-per-room for hotel properties rose from $97,610 in 2009 to $158,570 in 2011 year-to-date. That is even above the previous per-room high of $153,463, set in 2006 as the market neared its apex. The Journal attributes this year’s spike to the large number of trophy hotel properties that have traded. These include acquisitions such as LaSalle Hotel Properties' $80 million purchase of the Viceroy Santa Monica, a posh seaside hotel outside of Los Angeles.]]> Tue, 22 Mar 2011 16:17:25 GMT http://www.rcanalytics.com/article/1231/Hotel-REITs-Hungry-for-More.aspx 1231 banks and consumers.

Regarding the commercial sector of the asset of real estate, Real Capital Analytics’ Dan Fasulo remarked that the largest result of the most recent recession has been a bifurcation of the market. Some segments of the market, such as the multifamily sector, have been quick to return to “normal,” while others have lagged the broader market or bounced around from month to month at the bottom. He also emphasized the geographic disparities of the recovery, stating that, “In Phoenix, institutional investors are buying class A apartments…There’s still a significant number of people moving to the Sunbelt every year, and nothing has been built in these markets since 2007. The supply side will tighten up.”]]> Tue, 22 Mar 2011 13:36:25 GMT http://www.rcanalytics.com/article/1230/Recessionary-Effects-and-the-New-Normal-for-CRE.aspx 1230
Responding to the Treasury’s announcement, Real Capital Analytics Global Chief Economist Dr Sam Chandan stated to GlobeSt.com that the move may lead to “…an even more uncertain housing finance market…while conditions have improved, it remains unclear if the market can absorb the full extent of Treasury’s dispositions absent moderately higher returns.” One result of billions in mortgage-backed securities being flooded into a fragile market could be a sharp rise in residential mortgage rates, however Dr Chandan is confident the Treasury will recognize this effect in time and alter its course of action.]]> Mon, 21 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1233/Treasury-Set-to-Dump-Billions-in-Agency-Bonds.aspx 1233 private real estate investment firm Asia Pacific Land will sell The Center, a 40-story high-quality office building in Shanghai, CHN, for ?4.4 billion yuan ($670 million) – the largest sale in mainland China yet this year. After having trouble refinancing a portion of the debt, Asia Pacific has been forced to market the building. However, while this sale price would represent a ?500 million yuan loss on an absolute basis from the ?4.9 billion yuan Asia Pacific paid for the property it paid in 2008, the firm will still realize a profit on the sale. The transaction will be completed offshore in Hong Kong in dollars, and thus the Chinese currency’s modest appreciation against the dollar over the past three years will allow for Asia Pacific to turn a small profit. The Wall Street Journal stated that, “…the yuan's appreciation certainly is good news for foreign investors who need to cash out their investments in China.”

The buyer is China Pacific Insurance Group, the largest insurance firm in the China. According to the Journal, “The deal also marks one of the first property purchases by a Chinese insurer since Beijing granted greater leeway last year for the country's insurance companies to invest in real estate.” The rise of insurance investors is in stark contrast with the rest of the Chinese market, which regulators have tried to suppress over the past year to preempt a pricing bubble. Citing data aggregated by Real Capital Analytics, the Journal stated that, “Total sales volume in Shanghai...totaled $3.9 billion last year, a 22% drop from 2009.”]]> Thu, 17 Mar 2011 00:01:40 GMT http://www.rcanalytics.com/article/1228/Currency-Conversions-Boost-Holding-Periods-Return-in-Shanghai.aspx 1228 cross-border commercial real estate investors may choose – or be forced to – reduce their international holdings to focus on plans to rebuild domestically.

This will be particularly problematic for the UK market, where Japan-based investors have purchased nearly $1.0 billion in property since 2000 according to data aggregated by Real Capital Analytics (RCA) and quoted by Bloomberg. At that level of volume, Japan ranked as the 19th-largest direct foreign investor in the UK over the past decade. Japanese investors also have significant equity and debt holdings in the UK’s two largest REITs, Land Securities Group Plc and British Land Co, as well as insurance firms based both in the UK and Japan that lend to UK players.

Japanese investors have made direct property acquisitions outside their country totaling $11.8 billion since 2007, according to RCA data. Since that year, the UK has ranked as the fourth-most popular national destination for Japanese capital. Spain was the fifth-most targeted, capturing $5.0 billion in Japanese cross-border capital.]]> Wed, 16 Mar 2011 12:28:25 GMT http://www.rcanalytics.com/article/1229/Quake-May-Reduce-Japanese-Cross-Border-Activity.aspx 1229
Remarking on the recent return of capital that is fueling these yields, Real Capital Analytics Founder and President Robert M White Jr stated that rising capital is occurring in “…pockets of strength…” for the office sector and more uniformly for multifamily investors. Mr White also drove home the importance of listed and non-listed REITs over the past year, and remarked he thought they would be chasing yields into secondary markets in 2011.

For more responses to this yearly IPD index, please see the full article on GlobeSt.com.]]> Tue, 15 Mar 2011 13:27:25 GMT http://www.rcanalytics.com/article/1227/Rising-Capital-Tide-Boosting-CRE-Yields-into-2011.aspx 1227
Bloomberg Professional users can gain access to RCA’s global commercial property market information. RCA’s proprietary property database is unique to the industry and offers the most current and comprehensive information available for commercial real estate investors.

“Real Capital Analytics was established to bring to commercial property the transparency and analytics available in other financial markets,” said Robert M. White, Jr., RCA’s founder and president. “It is especially gratifying that with this agreement with Bloomberg, RCA’s trend information will be made available to the entire financial community.”

RCA is the first and only independent property research firm to comprehensively track commercial property investment transactions, and analyze capital flows, investment trends, and real estate prices in more than 120 countries. RCA’s subscribers access a proprietary property transaction database with details on each deal and the parties involved for the office, retail, industrial, multifamily, hotel and developable land sectors.

Bloomberg users can access RCA’s database of current market-level pricing, cap rates and volume for all commercial property types, by searching for RCA [Go].]]> Tue, 15 Mar 2011 11:29:40 GMT http://www.rcanalytics.com/article/1226/RCA-Commercial-Property-Trend-Data-Available-on-Bloomberg.aspx 1226 developable land sites, not buildings.”

“Investors are ready and willing to buy property in the UAE...There is cash available and investor interest but transactions are not happening,” stated Jesse Downs, director of JLL's Middle East hub. The reason for this continued stagnation, says JLL, is the “shortage of investment-grade stock offered to the market at realistic prices.” In other words, sellers’ and buyers’ pricing expectations remain out of sync after several years of turbulent market conditions. Making this disparity all the more remarkable, JLL estimates that the UAE office vacancy rate will surpass 45% in 2011.]]> Mon, 14 Mar 2011 07:26:40 GMT http://www.rcanalytics.com/article/1224/Despite-Interest-UAE-Property-Sales-Stuck-in-Neutral.aspx 1224 Dr Sam Chandan discussed how the natural disaster may affect the world’s third largest economy.

"Japan is clearly mobilizing politically and on the public level to address this crisis, the greater concern from a real estate investor perspective is there may be calls for the government to support a new round of spending to support the economy and to ensure the unexpected shock to the economy does not push Japan back into a recession," stated Dr Chandan. Japan’s economy has faced weak growth and several recessionary periods over the past two decades. And while recently, Japan’s government has been seeking solutions to the nation’s tremendous pool of public debt and struggling economy, Dr Chandan indicated that its likely “…those sensibilities for the time being will be lost in an understandable desire to support local economic activity and assure that the Japanese economy doesn't fall back into a recession."]]> Fri, 11 Mar 2011 10:30:40 GMT http://www.rcanalytics.com/article/1225/Dr-Chandan-on-Japans-Economy-After-the-Disaster.aspx 1225
Though SWFs universally recoiled back to their home markets over the course of the downturn, they still continued to make sizable purchases totaling €17.0 billion since 2008, according to data aggregated by RCA. The panel expected the pace of SWF acquisitions to increase in coming quarters, as all buyers seek to gain access to secure, relatively high yields and bargain-basement priced deals offered currently by commercial property.

For a complete summary of the panel’s discussion on SWFs at this year’s MIPIM, please see the full article on GlobeSt’s site.

]]> Fri, 11 Mar 2011 07:23:40 GMT http://www.rcanalytics.com/article/1222/Sovereign-Wealth-to-Return-to-Commercial-Property-Video.aspx 1222 High-net-worth individuals invested $2.1 billion in commercial real estate last year, up from $579 million in 2009.” Demand has been particularly high for apartment properties, which can be smaller and less expensive than retail or office assets.

Explaining this trend is not difficult as, while according to the Moody’s/REAL Commercial Property Price Index “Prices for commercial properties have dropped 42 percent since their peak in October 2007 through December,” commercial property yields have rarely been higher relative to other investment vehicles. Remarking on the current investment climate, RCA Managing Director Dan Fasulo confirmed to Bloomberg that wealthy investors are running to commercial property in a number of ways because “Everyone’s looking for some form of inflation protection. They’re buying gold, they’re buying oil, or you can buy property. It has inflation protection characteristics, plus it gives you a check every month.”

Using data aggregated by RCA, Bloomberg stated that the average cap rate on commercial properties (including office, retail, and industrial assets) was 7.2 percent in the fourth quarter of 2010, while yields on many other more traditional investments have been tracking closer to the historically-low US Treasury rates.

To read more on this exciting trends and see if owning commercial property may be for you, please read the complete article on Bloomberg’s site.]]> Thu, 10 Mar 2011 11:23:40 GMT http://www.rcanalytics.com/article/1221/Wealthy-Individuals-Using-Under-Mattress-Cash-to-Invest-in-Commercial-Property.aspx 1221 Robert M White discussed the emergence of Turkey as a powerful commercial real estate market in Europe. Though the acronym “BRICs” has become popular in economics, for commercial property the attention of investors and market analysts has turned more specifically on what Mr White termed the “...CBTPs, namely China, Brazil, Turkey and Poland.”

Russia and India both have internal issues that have deterred outside investment, he said to the Daily News. On the other hand, the recent aggressive investment of REITs in Turkey has pushed transaction volume for the country up to $12.0 billion since the start of 2007. Mr White added that Turkey was among the most frequently queried destinations on RCA’s website, with the retail sector being the most targeted property type.

Increasingly, global investor are citing Turkey as one of their top destinations for acquiring commercial property, as yields have compressed in many of the traditional cross-border targets. “…as London and Paris are ‘priced to perfection,’ investors will have to broaden their horizons. When London is so expensive and one can double the yield elsewhere, emerging markets will be compelling.”]]> Thu, 10 Mar 2011 05:21:40 GMT http://www.rcanalytics.com/article/1220/Turkey-Shines-for-Cross-Border-Commercial-Property-Investors.aspx 1220
In his most recent Lead Indicator column for the Commercial Observer, Dr Chandan covers in which sectors of the economy jobs were added (192,000 in February), and why, though that figure is the highest in several months, the report has mixed implications for commercial real estate. Job creation in sectors that utilize large amounts of commercial real estate, such as financial and retail services, have lagged other sectors such as health care and education.

For Dr Chandan’s full analysis on the most recent jobs report, including where the most jobs are being created, please see his full column this week on the Commercial Observer’s site.]]> Thu, 10 Mar 2011 04:24:40 GMT http://www.rcanalytics.com/article/1223/Dr-Chandans-Lead-Indicator-Why-the-Rosier-Employment-Report-Still-Falls-Short.aspx 1223 AREA Property Partners as the US firm pursues funding to increase its global property investments. National Australia, the country’s fourth-largest lender, had been seeking “a top-tier global real estate investment manager,” according to their CEO, Garry Mulcahy.

AREA, a real estate fund manager which has invested in New York’s Time Warner Center, the Pascal Tower in Paris, and the St Katherine Dock complex in London, is seeking to increase its real estate holdings in the early stages of an improving market. A recovery is “...well under way in most dominant global real estate markets” and global direct investment in commercial real estate may surge up by 20 to 25% this year according to broker Jones Lang LaSalle (JLL). “We think that there will be opportunities to acquire some smaller REITs,” AREA’s CEO Lee Neibart said. “There’ll be an opportunity to acquire larger distressed assets.”

According to Peter Slatin, editorial director at Real Capital Analytics, the deal is a sign that non-US investors are seeing recovery in the US commercial property market. It may also be the start of a spate of international partnerships, he said. “You have a company that now has global capital seeking global opportunities. That’s what’s most exciting,” Slatin said. “We will see more cross-border capital partnerships along with cross-border acquisitions.”]]> Wed, 09 Mar 2011 05:19:40 GMT http://www.rcanalytics.com/article/1219/AREA-Property-Sells-35-Stake-to-National-Australia-Bank.aspx 1219 mall shopping, mall owners and operators are turning to grocery chains and other food selling companies to fill their vacant square footage and lure customers into spending more at non-food stores.

Exemplifying this trend, Bloomberg cites that Westfield Group will be opening an Aldi supermarket in one of its Chicago-area shopping malls, and Macerich Co and General Growth Properties Inc also have plans to add food stores to their malls. This, some believe, is like solving two problems at once, as grocery stores bring customers to the location nine times per month on average, while traditional non-food mall stores only are visited three times in the same period. Grocery stores also require large amounts of space, and therefore will go a long way towards filling vacant stores left by other retailers who have recently gone out of business.

Of this strategy, Real Capital Analytics’ Managing Director Dan Fasulo stated, “The idea is that if people come to the mall to buy food they’ll buy other merchandise, as well.” He agreed that food “…definitely has the ability to drive more traffic and make a mall more profitable.”]]> Tue, 08 Mar 2011 13:25:25 GMT http://www.rcanalytics.com/article/1217/Build-It-Put-Food-in-It-and-They-Will-Come.aspx 1217
Of Barcelona, Mr Espinoza stated that the city retained its top ranking in quality-of-life surveys and has several characteristics such as good infrastructure and weather on its side. Quoting data aggregated by Real Capital Analytics (RCA), “…there were £1.7 billion worth of retail transactions in Barcelona between 2007 and 2010…an indicator of a highly active market.”

Berlin has pushed to the head of the line in terms of doing business globally, ranking highly in terms of qualified, available staff and ease of access to markets. The city also has a vibrant, fashionable social environment, which encouraged RCA Managing Director Dan Fasulo to proclaim, “All the stars are aligned for Berlin to see some tremendous retail growth.” This is especially because Berlin’s commercial real estate prices remain lower than its European equivalents.

Mr Fasulo also had an opinion on Rome, where good weather is in contrast with the poor growth potential for its commercial real estate market. “Rome has the same supply constrain characteristics of other mature European markets: It’s impossible to build anything in it and there are not many willing sellers.”]]> Tue, 08 Mar 2011 12:24:25 GMT http://www.rcanalytics.com/article/1216/Juxtaposing-Five-European-CRE-Markets-Which-Ones-For-You.aspx 1216 retailer that operates the popular Zara chain, will purchase an open storefront on Manhattan’s Fifth Avenue for $324 million. Located between 52nd and 53rd Streets, 666 Fifth Avenue most recently housed the National Basketball Association shop.

More significantly, the transaction set a new record for the price paid for retail space in the US. With 39,00-square-feet, Inditex paid $8,300 per-square-foot according to data collected by Real Capital Analytics (RCA). This was higher than the last record unit-price, which was set by the $8,000 per-square-foot sale of 713 Madison Avenue, also in Manhattan during 2008.

Of the most recent record-setting sale, RCA Managing Director Dan Fasulo explained that, “Demand from global retailers is pushing values for irreplaceable locations to new heights in city centers all around the world.” Another example of this neighbors the new Zara space in the same building: Last year, Japan-based Uniqlo leased space in 666 Fifth Avenue for $300 million – the most expensive lease ever for a New York retail store.]]> Tue, 08 Mar 2011 04:23:40 GMT http://www.rcanalytics.com/article/1218/Record-Setting-Price-Lands-Spanish-Retailer-a-Fifth-Avenue-Flagship.aspx 1218 multifamily sector. Citing data aggregated by Real Capital Analytics (RCA), apartment sales spiked in 2010 by 96 percent, to $33.7 billion, as competition among investors has grown very heated. And as confidence in the apartment sector's fundamentals and future grows, investors are seeking yields and branching out from the nation’s leading markets, where most of the activity remained in 2010.

As last year unfolded, smaller investors and those looking for riskier but higher-yielding opportunities began to seek lower-quality properties outside of primary markets. Stated RCA’s Global Chief Economist Dr Sam Chandan, “Value-add” apartments -- class B properties, distressed acquisitions, real estate that requires renovation and buildings where cash flow can be increased -- accounted for 33 percent of sales in the fourth quarter, compared with 25 percent a year earlier. Those improving fundamentals are driving the willingness of investors to explore value-add opportunities as opposed to paying premium prices for core properties…That is a feature of the multifamily market that we do not see to the same degree in other sectors.”

Still, investors have by no means abandoned core properties and quality, visible markets. Well-leased properties and trophy assets have been a huge draw for investors over the past year to markets such as New York, where cap rates have fallen as low as 5.1 percent in the fourth quarter, and Washington, DC, where cap rates averaged 4.8 percent during the same period. This compared with a 6.6 percent national cap rate average and 7.7 percent in the secondary market of Atlanta.]]> Fri, 04 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1213/Multifamily-Investors-Venturing-Beyond-Core-Assets-Primary-Markets.aspx 1213 office towers are being marketed for at least £300 million. They include Peterborough Court and Daniel House.

The recent moves by Chinese Estates are the latest examples of a cross-border investor trading in the UK. Bloomberg quotes Real Capital Analytics in stating, “London was one of the first real estate markets to see a pickup in deals and prices after the financial crisis. Sales of existing commercial property in the UK capital generated more money than any other city last year.”]]> Fri, 04 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1210/Hong-Kong-Based-Chinese-Estates-Has-Insatiable-Appetite-for-London-Office.aspx 1210 delinquent and mortgages in non-accrual status-fell to 4.28 percent in the fourth quarter 2010 (Q410), down from 4.36 percent in the third quarter,” stated Dr Chandan.

The default rate for multifamily loans also fell. However, while the balance of defaulted commercial loans fell by nearly $1.0 billion in Q4’10, it still stands at $45.8 billion. Therefore, Dr Chandan made it clear that “while the new results can be greeted with cautious optimism, it is clear that legacy challenges have yet to abate for many institutions.”

For his full review of defaulted commercial and multifamily mortgage trends through the fourth quarter of 2010, as well as continued implications for credit availability, please see Dr Chandan’s full article on the Commercial Observer’s site.]]> Thu, 03 Mar 2011 12:28:25 GMT http://www.rcanalytics.com/article/1215/Dr-Chandans-Lead-Indicator-Banks-Commercial-Mortgage-Default-Rates-Fell--Now-What.aspx 1215 Dan Fasulo spoke of the deluge of recent commercial real estate megadeals that have occurred in the past few months. These include both mergers, including Ventas’ $7.4 billion takeover of Nationwide Health Properties and AMB Property Corp’s merger with Prologis, as well as property megadeals such as Blackstone Group’s recent $9.4 billion offer for 588 of Centro Properties Group’s US malls.

Of these aggressive deals, Mr Fasulo stated that, “It’s pretty rare to see these types of deals this early in the cycle. We’re only at the beginning of a recovery. Usually, you see the $10-billion deals at the end of an up cycle.” He made clear that they are “…a great signal of how much liquidity exists on both the equity and debt sides to allow these transactions to take place.”

For more on Mr Fasulo’s thoughts regarding the importance and future of these market-changing megadeals, please see his full interview on Globe St’s site.]]> Thu, 03 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1212/Megadeals-Early-to-the-Recovery-Party-This-Cycle.aspx 1212 hotel assets for its 30-property portfolio. Completing what Real Capital Analytics determined was the highest price paid for a hotel in New Orleans since 2003, Sunstone acquired the 494-unit JW Marriott New Orleans in February for $52 million, in addition to assuming $42 million in existing debt. This closely followed the firm’s January move to buy out its partners at the Doubletree Guest Suites Times Square in Manhattan.

Sunstone President Kenneth Cruse suggested to the Wall Street Journal that the two recent trades were evidence of the hospitality REIT’s new approach to acquisitions since Mr Buser left the company. While Sunstone’s new approach includes moving more quickly on opportunities, it remains unclear whether its most recent acquisitions will pay off. For the JW Marriott New Orleans, Sunstone paid $26 million more than was last paid when the property traded in 2008. With hotel occupancy across the nation rising, however, Sunstone could also make out pretty well in the long-term.]]> Wed, 02 Mar 2011 13:29:25 GMT http://www.rcanalytics.com/article/1208/After-Shedding-CEO-Sunstone-Moves-Swiftly-in-Acquiring-Hotels.aspx 1208
These include AMB Property Corp’s merger with Prologis, Blackstone’s recent megadeals, and even the return of multi-loan CMBS issuances. Mr Caton stated, “For its part, the commercial mortgage-backed securities (CMBS) marketplace also is attracting investors as optimism grow.” He relied on a forecast issued by Real Capital Analytics to predict that, “…global CMBS issuance in 2011 likely will reach the $40 billion level.” As debt becomes easier to obtain, investor competition will only grow more heated.]]> Wed, 02 Mar 2011 12:31:25 GMT http://www.rcanalytics.com/article/1211/Are-CRE-Markets-Growing-Too-Much-Too-Soon.aspx 1211 Robert White addressed the continuing trend of investors' voracious appetite for core commercial real estate assets. With pricing increasing rapidly and cap rates approaching 2007-lows for these prime assets, particularly in the nation’s leading markets, market hawks have begun to wonder if a bubble is beginning to emerge as too much capital chases too few assets.

Leveraging RCA data aggregation and analysis, Mr White spoke to the drivers of this trend over the past year, and what can be expected as 2011 unfolds. Over the past several quarters, capital has been looking for yields, “and real estate is offering pretty attractive returns compared with money market funds or the stock market…There’s definitely a concentration of capital looking for core office.” Now two months into 2011, however, Mr White stated that RCA is already seeing “…the gap in the market in core pricing between first- and second-tier cities is already beginning to close…The loosening of the credit crunch and the revival of the CMBS market should also support investment in smaller cities.”

For more on Mr White’s thoughts regarding the role core assets are playing in commercial real estate markets, please see his full interview on REALTOR Magazine’s site.

(March 2011 REALTOR® Magazine article written by Mariwyn Evans, commercial real estate editor.)]]> Wed, 02 Mar 2011 00:00:40 GMT http://www.rcanalytics.com/article/1209/RCAs-Robert-White-Speaks-on-Where-Core-Assets-Fit-in-CRE-Marketplace.aspx 1209 hotel properties in Manhattan have slowed to a trickle in recent months, as current owners have been convinced a rebound in their industry is afoot. According to data aggregated by Real Capital Analytics, just two hotels have sold in the Big Apple so far this year, after 15 hotels totaling $1.6 billion were traded in 2010. As one interviewee recently told the Wall Street Journal, “If your objective is absolute dollar return, and it’s not part of a bigger strategy [to divest], then you’re probably not a seller today.”

One company with a larger restructuring strategy is France-based Accor SA. The firm recently announced it would divest itself of the 480-unit Hotel Novotel, located at 226 W 52nd St in Manhattan just above Times Square, in pursuing its strategy to focus the firm on managing and branding hotels instead.]]> Tue, 01 Mar 2011 16:28:25 GMT http://www.rcanalytics.com/article/1206/Divestment-Strategies-Supply-NYC-Hotel-Market-as-Others-Maintain-Holding-Pattern.aspx 1206 multifamily trade of the year, Denver-based UDR Inc has announced it will purchase 10 Hanover Square in the Financial District for $261 million. That would be $484,000 for each of the property's 493 units. UDR will be assuming a $192 million loan from current owner Witkoff Group to make its first entry into the New York City market. The property was originally built as an office tower, and at one time housed Goldman Sachs' headquarters.

The two recent oversized apartment trades by LaSalle and UDR come nearly one year after a bout of similar-priced trades occurred in Manhattan involving Equity Residential. According to Real Capital Analytics, Equity went on a buying spree early in 2010, taking RiverTower on East 54th Street for $182 million, 777 Sixth Avenue for $151 million, and the Longacre House on West 50th Street for $143 million. With the Manhattan market – and the apartment sector – being on seemingly every investor’s shopping list, more activity is likely in the wake of these two deals.]]> Tue, 01 Mar 2011 13:29:25 GMT http://www.rcanalytics.com/article/1207/UDR-Unseats-LaSalle-for-Largest-Manhattan-Multifamily-Trade-in-2011.aspx 1207 M&A activity have boosted market confidence and solidified sentiment regarding the sector’s momentum. Today, on March 1, 2011, Blackstone Group’s rumored $9.4 billion purchase of Centro Properties Group’s US mall portfolio was formally announced. This came just one day after two multi-billion-dollar healthcare REIT mergers were announced. Ventas Inc will acquire Nationwide Health Properties Inc for $5.7 billion to create the world’s largest healthcare REIT, while Health Care REIT nearly-simultaneously agreed to purchase Genesis HealthCare’s property assets for $2.4 billion. Both deals are pending.

Of all three deals, Real Capital Analytics’ (RCA) managing director Dan Fasulo remarked that they were “…a great signal that liquidity has returned to the commercial real estate space…It will certainly have ripple effects on the entire industry.” Earlier in the year, public warehouse-REITs Prologis and AMB Property Corp announced a mutual merger, which will create a firm worth approximately $46.0 billion in managed or owned assets. Of these recent megadeals, Mr Fasulo admitted he would not be surprised to see 2011 US property acquisitions double the $140.0 billion totaled in 2010.

Deals of the size announced recently, including others such as Google Inc’s acquisition of its Manhattan headquarters for nearly $2.0 billion, are the result of increased confidence among investors and the long-prevailing low interest rate environment. With both elements in place, RCA data indicated that sales of significant office properties more than doubled in 2010, to $42.8 billion.]]> Tue, 01 Mar 2011 09:25:40 GMT http://www.rcanalytics.com/article/1205/Flurry-of-Early-M--A-Deals-Points-to-Formidable-Year-for-CRE.aspx 1205 malls across the country, as the firm was betting that values would continue to rise. By the winter of 2009, the firm found itself with billions in outstanding loans on properties that were under-performing, as US consumers recoiled from discretionary spending. It was at that point Centro decided to put a significant portion of its US portfolio on the market, and nearly two years later, it seems they found a buyer.

Blackstone Group, who most recently led a consortium of firms in purchasing the troubled Extended Stay portfolio of hotels for $3.9 billion, will reportedly purchase a 588-pproperty portfolio of Centro’s mall holdings for $9.4 billion. It would be Blackstone’s largest purchase since it acquired Hilton Hotels in 2007. The deal comes just as commercial real estate values have begun to rise off their cyclical lows, and defaults on commercial real estate-backed mortgages reaches a relative plateau. According to Real Capital Analytics, “defaults on U.S. commercial real estate mortgages held by U.S. banks fell in the fourth quarter from the previous three months, the first decline in almost five years.”

Bloomberg reported in the same article that Centro had A$16.0 billion of debt on its balance sheet as of December 31, 2010. The firm projected at that time that A$3.1 billion of its debt would be coming due over the course of 2011. The sale to Blackstone will likely be announced before the end of this week, February 28, 2011.]]> Mon, 28 Feb 2011 16:35:25 GMT http://www.rcanalytics.com/article/1204/Centro-to-Sell-US-Portfolio-to-Blackstone-for-94-Billion.aspx 1204 apartment properties specifically, is continuing to improve markedly into the first quarter of 2011, Bloomberg recently reported that Related Cos has found a buyer for its Sagamore luxury property on Manhattan’s Upper West Side. Reportedly, the sale of the 265-unit property received a number of bids and was highly pursued by a diverse group of bidders, demonstrating that investors of many stripes agree that the multifamily sector has a solid future.

Ultimately, the winning bidder – which according to Bloomberg sources, is a unit of LaSalle Investment Management, a private-equity firm based in Chicago – paid $140 million for Sagamore. That is the highest price paid for a multifamily property in Manhattan in nearly one year, according to Real Capital Analytics (RCA), since Equity Residential purchased the Longacre House in Midtown West for $143 million.

On rising demand for rentals across the nation, especially in the largest 24-hour cities, investors are turning to the multifamily market for solid, performing properties for their portfolios. Bloomberg quotes data aggregated by RCA in stating that, “The dollar volume of Manhattan apartment sales more than doubled in 2010 from a year earlier to $2.13 billion.”]]> Fri, 25 Feb 2011 13:31:25 GMT http://www.rcanalytics.com/article/1203/Related-Investing-in-Multifamily-Markets-Momentum.aspx 1203
The default rate on loans for US office buildings, malls and other commercial properties dropped to 4.28% of loan balances from 4.36% in the third quarter, according to the real estate research firm. It was the first such decline since the first quarter of 2006.

According to Dr. Sam Chandan, Real Capital’s global chief economist, the drop “suggests that the sector’s contribution to bank distress may have reached a plateau. As market conditions improve, particularly in larger metros, banks are slowly working to charge off more bad loans.”

The rate of defaults is declining as commercial property values start to rise. US commercial real estate prices gained 5.5% in the four months ending December 2010 from an eight-year low in August 2010, according to the Moody's/REAL Commercial Property Price Indices. New York, Washington and other big metropolitan areas are leading the recovery as well-leased properties attract investors.]]> Thu, 24 Feb 2011 13:26:25 GMT http://www.rcanalytics.com/article/1202/Prices-Recover-for-US-Commercial-Property-as-Mortgage-Defaults-Fall.aspx 1202 portfolio sales rose nearly threefold from 2009…Average deal size increased to $18 million vs. $11 million in 2009…Strong gains in deal counts and sizes were seen in the office, hotel and apartment sectors.”

Of these noteworthy improvements, RCA Director of Research Ben Carlos Thypin stated that, “Things are getting better. Pricing has not really increased on the same scale. And a lot of the deals we see now are taking place in primary markets, with high quality properties.”]]> Thu, 24 Feb 2011 04:23:40 GMT http://www.rcanalytics.com/article/1214/A-Tempered-View-of-CRE-as-Recovery-Gains-Traction.aspx 1214 apartment property fell into distress over one year ago and was purchased by ST out of foreclosure.

Since then, the firm has brought on Dallas-based Premier Communities Management Co to manage the property, and poured $3 million into renovating the interior, which now includes a 24-hour gym and a renovated pool area, among other amenities. On the ground floor, ST has also had greater luck in leasing the retail space to help build confidence in the property among renters and buyers. Their efforts are paying off, as since taking over the property, occupancy for the rental units has increased from 30% to 71%.

Of the property’s turnaround, Real Capital Analytics’ managing director Dan Fasulo commented that, “A company such as ST Residential can take over a foreclosed project for a discounted price, recover as much value as possible for the lender, sell the units at market price and make a nice return…The Mosaic is a gorgeous property…This one looks like it could turn out to be a home run.”

As pricing firms and demand rises for multifamily units around the country, more rescue projects such as ST’s Mosaic will appear. Please see the full article on this story at the Houston Chronicle’s site.]]> Wed, 23 Feb 2011 16:03:25 GMT http://www.rcanalytics.com/article/1199/Firm-Rescues-Value-Add-Apartment-Complex-in-Houston.aspx 1199 multifamily sector, are being manifest in different ways all across the industry. The latest effect was observed by the Wall Street Journal, which announced recently that Archstone, a company that came to epitomize the downturn in commercial real estate, may be taken public again by its current owners (including Lehman Brothers Holdings, Bank of America, and Barclays).

In fact, the Journal stated the rehabilitated real estate giant’s initial public offering may reach as high as $5.0 billion, which would put the value of the company at approximately $18.0 billion with debt included. With Archstone having sold a significant portion of its portfolio (more than $2.0 billion, according to Real Capital Analytics) since being taken private in 2007, and markedly improved pricing on its remaining holdings, would mean all told, the company has lost just around $2.0 billion of its value since being bought-out at the height of the market.

Some market analysts, however, are skeptical of the decidedly bullish valuation of the company. The Journal quoted Craid Leupold of Green Street Advisors as stating that, “You still have what would be a pretty substantial IPO to get down to a reasonably sound balance sheet…A deal beyond that size isn’t impossible, but it would be a tall order.”

As the pendulum swings back for a second time at Archstone, please see the full article on the Wall Street Journal’s site.]]> Wed, 23 Feb 2011 15:25:25 GMT http://www.rcanalytics.com/article/1200/Second-Times-the-Charm-Archstone-Eyeing-IPO-as-Market-Improves.aspx 1200 insurance firm back into funding commercial real estate, as the asset class becomes more attractive to both equity and debt investors. This comes as an about-face, after Mr McGreevey cut his company’s commercial property portfolio by 36% over the past two years. Today, he believes that, “The real estate market in total has likely bottomed in terms of its price declines…Properties, we think, are in better shape today than they were.”

Indeed, Bloomberg reiterated after quoting the Hartford chief that the Moody’s/REAL Commercial Property Price Index, based on repeat-sales data from Real Capital Analytics, rose in three of the last four months of 2010. For the entire year through December 31, the index fell by just 2.1%, as compared to 29% in 2008 and 15% in 2009.

As Hartford Financial Services Group prepares to launch itself back into debt markets related to commercial real estate, please see the full article related to the move on Bloomberg’s site.]]> Wed, 23 Feb 2011 13:32:25 GMT http://www.rcanalytics.com/article/1198/Off-the-Bench-Insurance-Firm-Looking-to-Get-Back-into-CRE-Game.aspx 1198 central business district (CBD). According to data aggregated by Real Capital Analytics (RCA), Real Estate Alert recently stated that, “While trades in [CBDs] nationwide have soared by 239% last year, they plunged by 75% in Dallas, to a paltry $9 million.” That office market has posted lackluster fundamentals and been slow to return to growth, despite being a culturally-vibrant and demographically-growing Texas city. Importantly, the entire Dallas metropolitan area placed 13th in RCA's annual 2010 ranking of markets by sales volume.

As 2011 begins, however, Dallas’ CBD may be showing signs of life as two major office deals come to market with heavily-competitive pricing. The first is the 1.2 millon-square-foot Plaza of Americas, currently owned by a Blackstone-led partnership, which is marketing the property for more than $120 million. That would be $97 per-square-foot, at a 7.5% cap rate. The second is the 509,000-square-foot One Arts Plaza, which developer Lucy Billingsley is hoping to sell for as much as $150 million. That would mean nearly $300 per-square-foot and a cap rate of 6.5%. Both sales would be significant outliers in comparison to the average Dallas office trade along multiple dimensions.

Though there are plenty of naysayers doubting the achievability of those sales prices, both sellers are optimistic given the market’s recent momentum, improvement in pricing, and competition in the nation’s most popular metros that many believe will soon force buyers to secondary markets. In addition to being well located, both complexes are also standouts within the Dallas CBD, each featuring unique amenities and appealing long-term tenants. Whether the sellers chose the right time to sell these showcase properties will be told in time.]]> Wed, 23 Feb 2011 00:00:40 GMT http://www.rcanalytics.com/article/1201/Sellers-Testing-Waters-in-Dallas-with-Two-Major-Office-Offerings.aspx 1201 multifamily development in and around Beantown. The demand for quality rentals in the area has risen so much, in fact, that developers are reverting planned condominium projects – which typically yield higher returns, but have been unmarketable during the downturn – into monthly and long-term rental units.

For developers, the strategy and location have combined to make financial sense. The Times indicated that analysts expect asking rents to rise 3.5% in 2011, with the potential for even higher returns in the better-off City of Boston, which ranked as the third-strongest rental market in the Institutional Property Advisors’ most recent National Apartment Index. Additionally, the index predicts that Boston’s multifamily vacancy rate will fall to just 4.5%.

Though multifamily projects have been restarting all over the country at some fortitude over the past year, the pipeline of new developments has remained severely constrained after the downturn. Real Capital Analytics managing director Dan Fasulo remarked to the Times that, “That’s almost unheard of in the post-World War II economy.” He was also not surprised to hear that given the barren playing field, “there’s a race among developers to deliver more product.”

For more on the state of the multifamily development market, please see the full article on the New York Times’ website.]]> Tue, 22 Feb 2011 16:25:25 GMT http://www.rcanalytics.com/article/1197/Developers-Ramping-Up-Multifamily-Projects.aspx 1197 Global Capital Trends report, The Asset magazine recently reiterated that the pace of commercial real estate sales in the Asia-Pacific region continued to march upwards in the fourth quarter, furthering a trend that began at the start of 2009. “Despite the decline in transaction volumes for the region in the fourth quarter, the general upward trend, which started in the first quarter of 2009 has remained intact,” stated Asia Pacific Real Estate Association (APREA) chief executive officer Peter Mitchell.

The APREA report also detailed that cross-border investment into the Asia-Pacific region was up in the fourth quarter, as the composition of active buyers shifted away from public entities. Institutional investors also took a larger slice of the acquisition pie. Among the largest transactions in the Asia-Pacific region during 2010 included Center One in Seoul, the DBS Towers in Singapore, and the PCCW Tower in Hong Kong.

For more on Asia-Pacific commercial real estate trends, please see the full report on APREA’s site.]]> Tue, 22 Feb 2011 16:02:25 GMT http://www.rcanalytics.com/article/1196/Optimism-Persists-for-Asia-Pacific-CRE-Despite-Lackluster-Q4.aspx 1196 Dr Sam Chandan provided his outlook for the commercial real estate market in coming months. His main take-way was that, “For the US economy, the recovery has been stronger than expected…But the question now is whether it can be sustained. A lot now depends on the pace of the labor market recovery, both for the broader economy, and the prospects for commercial real estate.”

On current real estate trends, Dr Chandan referred to findings in RCA’s latest US Capital Trends report that revealed lenders were among the largest buyers of commercial properties in 2010 on account of taking back distressed assets. On the other hand, workouts of distressed inventory exceeded new additions to distress during the fourth quarter of 2010, signaling an inflexion point in the distress cycle. He also commented on the apartment sector’s durable recovery, where improved pricing and demand have encouraged heavy investment activity over the past two quarters.

For more of Dr Chandan’s comments on the commercial real estate markets and broader economy from the IPD Seminar, please see the full recap article on Commercial Property Executive’s site.]]> Wed, 16 Feb 2011 16:17:25 GMT http://www.rcanalytics.com/article/1194/Dr-Chandan-at-IPD-Briefing-CRE-Recovery-Depends-on-Jobs.aspx 1194
The Journal postulated that AREA had postponed selling its debt-laden asset until the market's pricing had improved to the point where a sale made sense. It also added that Mr Karasick’s consortium had held off on the purchase until it was able to secure 70 percent or more of the property’s sale price in financing. Said the Journal of these stipulations, “The tentative deal speaks to the availability of capital in the commercial-real-estate sector, as owners are finding it far easier to sell at palatable prices than just six months ago. With lending markets loosening, commercial-property sales nationally rose to about $50 billion in the last three months of 2010, up 60% from the prior quarter, according to research firm Real Capital Analytics.”]]> Wed, 16 Feb 2011 13:31:25 GMT http://www.rcanalytics.com/article/1193/Buyer-Seller-Divide-Bridged-in-Pittsburgh-with-Financing-Improved-Pricing.aspx 1193
According to a statement issued by ING as reported by Bloomberg, “CB Richard Ellis will purchase businesses from ING Real Estate Investment Management, or REIM, with 44.7 billion euros ($60.5 billion) in assets…ING also agreed to sell $100 million in equity stakes in REIM funds and the real estate investment management firm Clarion Partners.”

In response to the news, Real Capital Analytics’ Ben Carlos Thypin remarked that the acquisition gives CB Richard Ellis “a much more consistent stream of income…They become the largest property fund manager in the world.”]]> Tue, 15 Feb 2011 14:21:25 GMT http://www.rcanalytics.com/article/1191/CB-Richard-Ellis-Acquires-INGs-Real-Estate-Investment-Management-Unit.aspx 1191 Dr Sam Chandan. The quarterly report revealed the final three-month period of 2010 furthered several unique trends regarding lenders' recovery rates of original first loan amounts originated on a properties that had subsequently been defaulted on. The article paraphrased RCA’s report in stating, “Despite the fact that special servicers are liquidating bad loans at much greater volume these days, recovery rates have held the line, averaging 65% in the fourth quarter of 2010 compared to 64% in Q3.”

Dr Chandan remarked that the volume of very poor-quality loans have been offset by a large share of loans being recovered at- or above-origination value, especially those backing properties in the nation’s leading markets such as New York, Los Angeles, Chicago, and San Francisco. He also commented on the variation in relationships between lender types and recovery rates. For instance, insurance companies have been most successful in recovering original loan amounts, at 82%, while domestic banks have posted an average recovery rate of 63%.

For more on recovery rate trends as reported by RCA, please see the full article on GlobeSt.com.]]> Mon, 14 Feb 2011 16:17:25 GMT http://www.rcanalytics.com/article/1195/Disparate-Trends-for-Recovery-Rates-Persist-into-Fourth-Quarter.aspx 1195 US Capital Trends, the Wall Street Journal recently reported that RCA’s top three sellers had something in common. Taconic Investment Partners, Jamestown, and New York State Common Retirement Fund (NYSCRF) each held a portion of 111 Eighth Avenue, which Google recently purchased in December as its east coast headquarters for $1.8 billion. Amazingly, Jamestown and the NYSCRF placed second and third on the list of top sellers with only the Google sale under their belts in 2010, while Taconic ranked number one with two dispositions during the year.

The Journal also acknowledged that this year’s top sellers were in contrast to RCA’s 2009 list, which was populated mainly by companies disposing of distressed, underwater assets. RCA managing director Dan Fasulo clarified that, “Owners have recovered so much value especially on some of these troubled assets” that landlords, owners, and lenders “have much more wiggle room to negotiate out of…difficult positions.”

The following are the top 10 commercial real estate sellers in 2010, as ranked by RCA in US Capital Trends:

Taconic Investment Partners
Jamestown
New York State Common Retirement Fund
JP Morgan
Hines Interests LP
Normandy Real Estate Partners
Five Mile Capital
Shorenstein Properties
Prudential RE Investors
Beacon Capital Partners]]> Fri, 11 Feb 2011 13:29:25 GMT http://www.rcanalytics.com/article/1190/Improved-Pricing-Knocks-Distressed-Owners-Off-Top-2010-Sellers-List.aspx 1190 distressed properties rather than hang on to them. Investors, convinced the worst is over, have pushed prices on bonds backed by commercial mortgages to the highest level in two years.”

On this last point, Real Capital Analytics managing director Dan Fasulo remarked to Businessweek that, “Now that values are on the upswing, it’s given owners and lenders more wiggle room to work out these troubled situations.”

The distressed properties banks are spinning off their books have not been marketed at the rock-bottom prices that investors have spent the past two years hoping for. However, bargains relative to the unrealistic pricing of the market-peak are easier to find. Citing a recent transaction recorded by RCA, Businessweek mentioned USAA Real Estate’s recent acquisition of Las Olas Centre in Fort Lauderdale, FL, which the firm recently purchased out of distress for $170 million. That was $61 million less than the former owner paid for it in 2007.

Additionally, distressed workouts being tracked in the commercial real estate market have been reflected to different degrees by individual property sectors. For instance, Businessweek points out, “Of the $52 billion of retail properties to fall into default [this cycle], just over half have completed workouts, ‘giving the retail sector the distinction as the first property type to pass the halfway point in resolving its distress.”]]> Thu, 10 Feb 2011 15:39:25 GMT http://www.rcanalytics.com/article/1189/Improvements-in-CRE-Markets-Driving-Banks-to-Work-Out-Legacy-Distress.aspx 1189 refinancing easier for commercial property owners that have been passed over by institutions that usually hold real estate debt on their books, aiding a recovery in commercial property values.

This rebound in CMBS is benefiting borrowers with smaller properties and in tertiary markets. CMBS issuers fare better in these markets outside the biggest cities because they can get the higher rates they need to cover the costs of packaging and selling loans. Institutions that keep mortgages on their balance sheets, like non-US banks and insurance companies, focus on top-tier buildings in large metropolitan areas.

“Loans from CMBS lenders are more often on smaller assets or Class B office properties,” said Ben Thypin, Director of Market Analysis at global commercial property research firm Real Capital Analytics. “They haven’t been able to compete that well with insurance companies and international lenders in the office market on the highest-quality buildings.”

According to Real Capital Analytics, about 71% of commercial-property lending by insurance companies was done in primary markets in 2010, compared with 67% for foreign banks and 47% for CMBS lenders. Their investment data shows that about one-third of loans from CMBS firms were in tertiary markets, compared with 6.6 percent for insurance companies and 12 percent for non-U.S. banks.]]> Wed, 09 Feb 2011 15:31:25 GMT http://www.rcanalytics.com/article/1187/The-Return-of-CMBS--A-CRE-Bond-Market-Revival.aspx 1187
These sales were among those behind the $5.5 billion in land and development site transaction volume aggregated by Real Capital Analytics in the US during 2010. In citing this statistic, the Journal acknowledged that though this was nearly double 2009’s volume of $2.8 billion, it was a whisper compared to the $40.8 billion of development and land sales tallied at the height of the market in 2007.

For more information on this exciting new activity in commercial real estate, please see the full article on the Wall Street Journal’s site.]]> Wed, 09 Feb 2011 13:26:25 GMT http://www.rcanalytics.com/article/1188/Land-Sales-in-This-Environment-WSJ-Says-Believe-It.aspx 1188 yields are beginning to drive activity outwards to secondary markets. In a recent Wall Street Journal article, this emerging trend was documented in the European arena, where investors have begun to branch out from reliable top-tier markets such as London, Paris, and Berlin to less-obvious locations.

The article in the Journal relied on data aggregated by Real Capital Analytics and presented in its latest European Capital Trends report. “Still, there is a clear trend toward investment in secondary markets. In its annual ranking of the top 25 European property markets…It’s no surprise that London and Paris top the list. But then it gets interesting: Stockholm jumped to third place last year from No. 8 in 2009, overtaking Moscow, which slipped to fourth place. Glasgow rose to the No. 10 spot from 19, while investment in commercial property in Manchester increased 136% to €1.3 billion euros, boosting the city’s position in the rankings to 12th from 21st.”

For more on this emerging trend that is unfolding with investor preferences in both Europe and the rest of the globe, please see the full article on the Wall Street Journal’s site.]]> Tue, 08 Feb 2011 13:04:25 GMT http://www.rcanalytics.com/article/1185/Investment-Capital-Fanning-Out-Across-Europes-Secondary-Markets.aspx 1185 joint venture between the Rockpoint Group, Jefferson Apartment Group, and Perseus Realty with a $53 million construction loan to build a mixed-use development called 14W, which will be located on the former-YMCA site on 14th Street in Washington, DC. Erika Morphy of GlobeSt.com stated of the origination that, “The financing, of course, is yet another indication of the growing confidence lenders have in the DC area construction market. It also highlights, at least anecdotally, a growing role that Wells Fargo has been taking in local deals.”

Ms Morphy was quick to acknowledge, however, that according to Ari Firoozabadi, director of Marcus & Millichap’s National Multi-Housing Group, “…national banks only accounted for approximately 8% of total multifamily originations in 2010, one of which is Wells Fargo.” Mr Firoozabadi was citing data aggregated by Real Capital Analytics, and also reiterated that government-backed Fannie Mae and Freddie Mac together dominated multifamily lending in 2010, with a 70% market share.]]> Sun, 06 Feb 2011 00:00:40 GMT http://www.rcanalytics.com/article/1184/Do-Wells-Fargos-Recent-DC-Loans-Mark-the-Return-of-National-Banks-to-the-Commercial-Lending-Scene.aspx 1184 office towers to apartments in Florida to retail properties in Washington, commercial real estate values are rising, defying predictions of a collapse that would drag the U.S. economy back into recession,” read the opening paragraph.

Relying on data aggregated by Real Capital Analytics (RCA), Businessweek cited that office property sales in the US more than doubled between 2009 and 2010, to $41.6 billion. In its most recent US Capital Trends 2010 Year in Review edition, RCA reported sizable year-over-year increased for each of the main commercial property types in the US. RCA’s Dan Fasulo remarked that these large increases are partially attributable to “…the strategy put forward by the government: keeping interest rates low and giving lenders some flexibility to hold these troubled assets on their books for a while…Now that values are on the upswing, it’s given owners and lenders more wiggle room to work out these troubled situations.”

Among other contributors to the commercial property sector’s recovery include “a resurgent debt-securitization market” and “an expanding economy” although both remain well below peak-year levels. Businessweek also stipulated that the nation’s leading metros have seen the largest advances in sales and fundamentals over the past year, while other markets have lagged, just as the office and apartment sectors have seen the biggest improvements so far this cycle, while retail and industrial properties are still finding their strides.

For a complete and in-depth analysis of the commercial property recovery thus far, please see the full article on Businessweek’s site.]]> Fri, 04 Feb 2011 19:27:25 GMT http://www.rcanalytics.com/article/1182/CRE-Recovery-Reassures-of-Stability-in-Broader-Economy.aspx 1182 Apartment REITs Equity Residential and AvalonBay Communities reported Wednesday that their funds from operations climbed significantly during 2010 on higher rents and rental demand.

The article on Reuters quotes Real Capital Analytics as stating that, along with a falling vacancy rates in multifamily properties across the nation, “Rising occupancy and rent and financing available from Fannie Mae and Freddie Mac has fueled a surge in prices for apartment buildings by units, to new pre-downturn levels.”]]> Thu, 03 Feb 2011 18:40:25 GMT http://www.rcanalytics.com/article/1178/Two-US-REITs-Cash-In-on-Profitable-Multifamily-Trends.aspx 1178 foreclosure litigation on the high-quality Manhattan asset. The inability of the firm to service the property's debt comes as no surprise to Dan Fasulo, managing director at Real Capital Analytics, who remarked of the news that, “They paid a lot for this asset at the top of the market.”

To be exact, Silverstein paid $400 million for the property in 2006, with the help of two $162 million loans from Bank of America. The Real Deal reported that, “By April 2010, he informed lenders that he has $1.9 million in unpaid bills and began talks to restructure.” Silverstein officially defaulted on the loan in November 2010 and was filed suit against by LNR Property of Miami Beach in January.]]> Thu, 03 Feb 2011 13:29:25 GMT http://www.rcanalytics.com/article/1177/Litigation-Pending-on-Silversteins-575-Lex-in-Manhattan.aspx 1177 Dr Sam Chandan discusses the concerns presented by the possible decoupling of commercial real estate and the broader economy, which is particularly apparent in New York City and other major markets.

In this week’s article, Dr Chandan states that on one hand, “New York City's commercial real estate investment market has rebounded strongly over the course of the past year. Sales volumes and pricing metrics have both climbed from their lows, outpacing improvements in other major markets.” On the other hand, however, he reminds that, “the observable improvements in investment activity have not yet been matched by gains in jobs or in the broadest measures of property fundamentals.” This divergence in trends could lead to some short-term gains, as well as some long-term troubles.

For his full analysis, please read Dr Chandan’s article on the Commercial Observer’s site.]]> Thu, 03 Feb 2011 12:28:25 GMT http://www.rcanalytics.com/article/1181/Dr-Chandans-Lead-Indicator-Dangers-of-Decoupling-Dont-Call-It-a-Bubble-But-Investment-Outpacing-Cash-Flow.aspx 1181
According to Real Capital Analytics’ data, LNR has taken back ten properties over the past two months, totaling $65 million or more. Other properties placed under LNR’s special serving include two properties in the Bronx as well as Silverstein Properties’ 575 Lexington Avenue, also in Manhattan.]]> Thu, 03 Feb 2011 11:23:40 GMT http://www.rcanalytics.com/article/1179/Special-Servicer-Moves-to-Clean-Up-Distress-in-New-York.aspx 1179 Watch RCA's Global Chief Economist, Dr Sam Chandan, commenting on the rebound in commercial real estate investment activity during his interview with CNBC on February 2, 2011.]]> Thu, 03 Feb 2011 00:00:40 GMT http://www.rcanalytics.com/article/1180/Missed-Dr-Chandan-on-CNBC-Watch-Him-Describe-the-Rebound-in-CRE-Here.aspx 1180 Global Capital Trends, the 2010 Year in Review edition, Real Capital Analytics provided a global ranking by market for investment into existing commercial real estate. London topped the list with $23.9 billion in sales during 2010, followed by Tokyo and New York City as distant runners-up. London’s position reflected the UK’s declining currency and encouraging fundamentals outlook, which encouraged both domestic and cross-border investors to target the market.

Acknowledging this ranking, a recent article on Bloomberg aired findings from another year-end ranking by market done by PricewaterhouseCoopers (PwC) in cooperation with the Urban Land Institute. In that report, PwC found that Istanbul has become the “best place in Europe to buy of develop property as Turkey’s economic growth contrasts with declines across much of the region,” according to the survey’s 600 respondents.

In the PwC report, London and Munich were also highly rated by the respondent real estate professionals, while Athens and Dublin fell at the bottom of the list on account of their respective nations’ poor economies and prospects for growth.]]> Thu, 03 Feb 2011 00:00:40 GMT http://www.rcanalytics.com/article/1183/Istanbul-Ranks-Highly-in-PwCs-Capital-Destination-Survey.aspx 1183 distress in the island state’s hotel market. Hawaii has one of the highest totals in the nation, with 12 properties representing over $2.0 billion in outstanding hotel distress. This is behind only Nevada, which has $8.4 billion in hotel distress, and ahead of both New York and New Jersey. RCA’s Ben Carlos Thypin remarked of this remarkable load of distress that, “Hawaii’s status is a function of the value and size hotels here, not because of the number of properties involved.” He added that he believes, “It will take years for the situation to resolve as owners, lenders, special servicing agents, receivers and lawyers huddle.”

A unique feature of Hawaiian hotels, of course, is that the majority of those in distress are luxurious resorts purchased at high loan-to-value ratios when pricing was at its peak in 2007. Hawaii Business stated that those buying these sprawling locations were anticipating high occupancy and being able to charge $300 per night for a rooms for the foreseeable future, thereby maintaining a steady operating revenue to service their debt load. When the recession hit in 2008 and unemployment rose, luxurious vacations to Hawaii fell off most people’s list of priorities. After a few months of reduced revenues, owners became delinquent on their debts.

The following is a list of significant hotel properties currently tagged as distressed in RCA’s record.

Grand Wailea Resort & Spa
Ritz Carlton Kapalua
Four Seasons Resort Maui
Fairmont Orchid
Turtle Bay Resort
Sheraton Keauhou Bay Resort
Ilikai Hotel
Aloha Beach Resort Kauai
Diamond Hawaii Resort & Spa
Hawaiiana Hotel
Queen Kapiolani Hotel
Kapalua Bay Renaissance Resort

For more information on distress in Hawaii, please see the full article on Hawaii Business’ site.]]> Wed, 02 Feb 2011 19:26:25 GMT http://www.rcanalytics.com/article/1176/Hawaiian-Hotels-Languish-in-Distress.aspx 1176 JP Morgan Chase & Co has acquired the Liberty Towers luxury rental complex in Jersey City, NJ for $300 million. Originally completed in 2004 for around $100 million, the recent sale represents a near-tripling in value despite the falloff in broader property pricing. The 650-unit complex has Hudson River views and is well-located for Manhattan access.

Of the sale, Real Capital Analytics’ managing director Dan Fasulo commented that he was surprised that co-owner/developers Fisher Development Associates and Northwestern Mutual Life chose to sell the property. With few new multifamily projects coming online in recent years, current owners of apartment properties in the nation’s leading markets are set to several strong years of rental demand, and thus, income as well.]]> Wed, 02 Feb 2011 13:24:25 GMT http://www.rcanalytics.com/article/1175/Current-Multifamily-Owners-Encouraged-to-Hold-Assets-on-Future-Rental-Demand.aspx 1175 real estate investment trusts (REITs) accounted for one-quarter of all investment into US commercial real estate in 2010, The Real Deal recently took a close look at this capital group’s biggest players. With access to capital through their stockholders and less legacy distress on their books than other capital groups, these companies have broken away from the pack to take advantage of some of the current market’s significant opportunities.

For a detailed look at any of the 10 REIT firms below, RCA subscribers can click through to our commercial property investor profiles for each, including complete transaction histories. See the full article on The Real Deal’s site.

Boston Properties
SL Green Realty Corp
Vornado Realty Trust
AvalonBay Communities
Equity Residential
Brookfield Office Properties
General Growth Properties
iStar Financial
Apollo Commercial Real Estate Finance
Gramercy Capital Corp]]> Tue, 01 Feb 2011 16:32:25 GMT http://www.rcanalytics.com/article/1192/Ten-Leading-REITs-To-Invest-In-Now.aspx 1192 vacancy rates for commercial real estate approaching historically-high levels and lease expirations marching on as ever, Russ Banham of Chief Financial Officer (CFO) Magazine recently described the implications – both benefits and downsides – for both owners and occupiers of commercial space. The largest take away was that, “the weak commercial real estate market presents opportunities for significant savings” for occupants who are looking either for a cheaper lease on their current space or to upgrade to a better or more visible space. However, to dispel some uncertainty around their revenues, commercial space owners and operators have begun asking tenants to sign longer leases in exchange for the lower price-per-pound they offer.

In that same vein, another growing trend that Mr Banham detailed in his article was a surge in sale-leaseback, or triple-net sale-leaseback arrangements. These occur when “a company sells the building it owns and occupies to an investor, then leases it back on a long-term basis,” thereby freeing up the structural capital to for reinvestment or payment of existing debts. With debt capital tight and a potential shift in applicative accounting rules pending, this is a smart move for many companies that currently own their brick-and-mortar spaces. According to Real Capital Analytics’ founder and president Bob White, “Generally, the yield on triple-net properties is 50 basis points or more above the equivalent unsecured debt of a company. This makes the scenario an effective form of financing. As for sellers, the can often get more proceeds via a sale-leaseback as opposed to issuing other debt.”

The potential accounting changes proposed by the Financial Accounting Standards Board and the International Accounting Standards Board would affect how companies report their lease expenses: both professional entities recommend that tenants “be required to place the obligation to pay rent over the entire lease term on their balance sheets as a liability.” Of this shift, Mr White stated that, “…the longer the lease, the greater the liability, so companies may want shorter leases than the typical 10-to-20-year term that makes sale-leasebacks work. It comes down to a financial decision: if you can borrow unsecured debt cheaper than what a real estate investor is offering, you may pass."]]> Tue, 01 Feb 2011 13:37:25 GMT http://www.rcanalytics.com/article/1186/After-the-Downturn-New-Realities-and-Opportunities-for-Commercial-Property-Tenants.aspx 1186 multifamily property sales investment market is heating up and has nearly reached its previous 2007-peak along many parameters. This is good news for sellers and current owners of multifamily properties, according to the Wall Street Journal, as well as developers of such properties. However, it is less so for those hoping to take advantage of the sector as investors.

The Journal indicated that due to the elevated number of foreclosures pushing former-homeowners into the rental market, and a depressed number of new units coming online from development, renter demand is approaching a record high. Investors have taken notice of the potential secure revenue offered by the multifamily sector, and paired with record-low interest rates “that have made borrowing less expensive,” competition for purchasing multifamily properties is intensifying and branching out beyond the US’ primary markets.

The Journal provided one stark example of just how far pricing has rebounded for multifamily properties in numerous markets. According to Real Capital Analytics’ transaction data, “TIAA-CREF paid $62 million for the 261-unit Newbury Commons in Stamford, Conn. The purchase price was 65% above what Seaboard Properties paid in February 2009,” the previous owner's purchase price.

For more on this exciting trend in the multifamily sector, please see the full article on the Wall Street Journal’s site.]]> Mon, 31 Jan 2011 15:41:25 GMT http://www.rcanalytics.com/article/1171/Multifamily-Sector-Carries-Momentum-into-New-Year.aspx 1171
However, job creation remains a major drag on not only commercial real estate, but the broader economy that drives trends in that sector. Panelists has suggestions for policy-makers on how to spur job growth, including important reforms to tax law. However, Real Capital Analytics’ global chief economist Dr Sam Chandan expressed as a panelist speaker that those efforts may be hard to achieve in a timely manner. Dr Chandan described the conference keynote speaker Alice Rivlin’s bipartisan plan for tax reform as “extraordinarily far-reaching” and instead opined for other ways to boost job creation in the near-term.

For more on the panelists’ thoughts on tax reform, policy direction in Washington, DC, and how it may affect the job creation necessary to ensure solid positive trends in the commercial property sector, please see the entire article on GlobeSt’s site.]]> Mon, 31 Jan 2011 07:21:40 GMT http://www.rcanalytics.com/article/1173/Job-Creation-Hampers-Outright-Optimism-for-Commercial-Property-Market.aspx 1173 Americas zone, which included North, South, and Latin America.

The findings cited in the Finance & Commerce’s article were originally published in RCA’s Global Capital Trends 2010 in Review, published on January 26, 2011.]]> Mon, 31 Jan 2011 00:01:40 GMT http://www.rcanalytics.com/article/1174/Commercial-Property-Sales-Triple-in-Twin-Cities-Metro-during-2010.aspx 1174
The answer varies on a case-by-case basis, but a particularly hairy dispute is unfolding in Reston, VA, a Washington, DC suburb over four office buildings originally purchased by Penzance Cos in 2007 for $203 million. The firm defaulted on its loan obligations last year, and now New York-based Garrison Investment Group, one of Penzance’s original lenders, is challenging other firms with debt tied to those properties for control of the 750,000 square feet of distressed space.

Real Capital Analytics’ (RCA) Ben Carlos Thypin remarked of the legal arguments currently being heard in the New York State Supreme Court that Garrison “took over the properties with the intention of holding them,” despite not being one of the asset’s main lender.

With RCA tracking $191.5 billion of distressed properties still outstanding in the US by year-end in 2010, the Washington Post indicated in conclusion that the “Battles between lenders over distressed properties are likely to continue.”]]> Mon, 31 Jan 2011 00:01:40 GMT http://www.rcanalytics.com/article/1172/Expect-Lender-Tussles-Over-Distressed-Assets-to-Rise-with-Number-of-Workouts.aspx 1172 Global Capital Trends 2010 in Review publication. In that year-end synopsis of commercial real estate, RCA ranked the world’s largest office sales in 2010. Based on this report, the Times stated that the eighth largest deal in the Western Hemisphere (what RCA terms “the Americas”) and the 24th largest in the entire world during 2010 was no other than Bellevue, WA’s Bravern Towers One & Two.

The two towers, along with the underground parking garage they share as a part of the Bravern mixed-use development project, sold for $410 million. The Times rightfully indicated that, “They fetched top dollar because both towers are leased long term to Microsoft.” The Bravern sale joined Cole Real Estate Investors’ $310 million trade for City Center Plaza, also located in Bellevue, on the Americas’ top deal list of 2010.

Including these two oversized transactions, Seattle ranked as the 26th-most active market in the world during 2010.]]> Mon, 31 Jan 2011 00:00:40 GMT http://www.rcanalytics.com/article/1170/Single-Tenant-Office-Trades-Push-Seattle-Metro-onto-the-Global-Stage-in-2010.aspx 1170 Global Capital Trends, total commercial property and land sales totaled $197.1 billion in 2010. This was up by 23% from 2009 and was by far the highest transaction volume of any country. In a recent article on Bloomberg, it was acknowledged that these numbers were despite the Chinese government’s repeated attempts over the course of last year to cool property markets through restrictions on acquisitions and development.

With these seemingly untamable growth trends in mind, Chinese Premier Wen Jiabao released a statement on January 18th that, “…the government will ‘resolutely’ implement controls on the real-estate market in the first quarter, including curbing speculation and increasing supplies of affordable housing.”

For a complete outline of the new restrictions on commercial and residential real estate that the Chinese government is planning to institute in the coming weeks, please see the full article on Bloomberg.]]> Fri, 28 Jan 2011 00:00:40 GMT http://www.rcanalytics.com/article/1168/China-Introduces-Additional-Curbs-on-Domestic-Property-Market.aspx 1168 public and non-traded REITs to private buyers, pension funds, life insurance companies and foreign investors, have amassed significant war chests since the market crashed in late 2008,” Retail Traffic recently outlined in detail how retail commercial property investors would place their cash in the New Year. According to Real Capital Analytics’ (RCA) US Capital Trends 2010 Year in Review, these well-capitalized players had already begun their investment show-of-force that Retail Traffic anticipated by the end of last year.

In his article, Ben Mattson-Teig stated that according to RCA data, “In 2009, investment sales volume ground to a halt, but volume slowly build up throughout 2010. In the fourth quarter, nearly $8 billion in retail properties changed hands – the highest level recorded since the market crashed. Overall, retail sales during 2010 totaled $22.6 billion.”

For more evidence of the pending retail investment deluge, as well as retail pricing trends and investor preferences revealed, please see the full Retail Traffic article.]]> Fri, 28 Jan 2011 00:00:40 GMT http://www.rcanalytics.com/article/1169/Retail-Sectors-Year-End-Momentum-Indicative-of-Boffo-2011.aspx 1169 Global Capital Trends 2010 Year in Review, Bloomberg’s BusinessWeek stated that sales of commercial property and development sites in China totaled $197.1 billion during 2010. This was the largest yearly volume of any country and accounted for a remarkable 44% of the $582.0 billion total in global commercial real estate sales last year.

Year-over-year, Chinese sales were up by 23% from 2009 despite the Chinese government’s attempts to cool domestic property markets. According to the latest Global Capital Trends report, investment into Chinese commercial property during the fourth quarter reached its highest level in over four years.

The US came in second by volume on a global basis, with $112.5 billion in sales. Nearly $24.0 billion of sales in London during 2010 pushed that market above all others, including New York and Hong Kong, to the number one position for individual markets.]]> Thu, 27 Jan 2011 16:28:25 GMT http://www.rcanalytics.com/article/1163/China-Property-Sales-Top-US-for-Second-Year-in-2010-Global-Recap.aspx 1163 US Capital Trends 2010 Year in Review, the fourth-quarter surge in commercial properties helped push total US sales to over $110.0 billion for the year. This was more than double 2009’s total, and with momentum building late in the year, the year-end results point toward an interesting year for commercial real estate in 2011.]]> Thu, 27 Jan 2011 15:41:25 GMT http://www.rcanalytics.com/article/1167/Strong-Year-End-Sales-Set-Stage-for-Commercial-Property-Markets-in-2011.aspx 1167 SL Green Realty Corp has hung a for sale sign on its 400,000-square-foot office tower at 28 W 44th St between Fifth and Sixth Avenues. This offering comes after the recent closing of 19 W 44th St. The decision to sell both properties is part of Sl Green’s latest strategy to focus the firm’s capital on quality assets in highly-visible locations of the US’ major markets.

On the flip side of this restructuring, SL Green has recently purchased 600 Lexington Ave and 125 Park Ave in Manhattan, as both are well-tenanted, top-shelf properties. Real Capital Analytics’ managing director Dan Fasulo remarked of the firm’s latest offering that, “SL Green has been a prolific recycler of capital-selling ‘B’ buildings and buying ‘A’ buildings.”

For other buildings SL Green is considering for “recycling,” please see the full article on Crain’s New York’s website.]]> Thu, 27 Jan 2011 13:31:25 GMT http://www.rcanalytics.com/article/1165/SL-Green-Trades-In-to-Trade-Up.aspx 1165 Tishman Speyer recently completed their purchase of the trio of 25-year old buildings that formerly held the Hilton Hotel Corp’s headquarters until that company was purchased by Blackstone Group and moved to McLean, VA. In addition to the purchase price, which was upwards of $55 million according to real estate experts familiar with the sale, Tishman Speyer will spend $23 million to upgrade the supremely-located Beverly Hills property. The buildings themselves have posh amenities and well-fitted interiors already, however, and were certainly attractive features to Tishman Speyer and its competitors for the contract of sale.

Real Capital Analytics’ Peter Slatin remarked of the sale that, as US commercial property sales have doubled between 2009 and 2010, “The two property categories trading more are ‘trophies and trash.’” By trophies, he was clearly referring to the Hilton campus sale.]]> Thu, 27 Jan 2011 08:41:40 GMT http://www.rcanalytics.com/article/1166/Former-Hilton-Headquarters-Sells-in-Beverly-Hills.aspx 1166 Moody’s/REAL Commercial Property Pricing Index (CPPI) for the November 2010 period, as well its US and Global Capital Trends 2010 Year in Review reports. Positive indicators for US commercial property markets are embedded in each of these releases.

Mr Bubny reiterated that, according to November’s CPPI, pricing for commercial property in the US increased by 0.6% - the third consecutive monthly increase in that index. There are some reservations, however. The recent rises in the series is in contrast with the sharp drops over the summer months, which led Moody’s managing director Nick Levidy to remark of the index that, “We expect the choppiness of the CPPI to continue in the months ahead…A fragile recovery, uncertainty about the forward-looking interest rate environment and pressure from developments in the European sovereign bond market all conspired to depress index returns.”

Even more positive are the trends displayed in RCA’s US Capital Trends, which revealed that, “the fourth quarter of ’10 represented the strongest three-month period for US commercial property sales since ’07, with $55.3 billion worth of transactions.” Whether this momentum will continue into 2011 is dependent on growth in the US’ broader economy and availability of credit, among other conditions unforeseen.]]> Thu, 27 Jan 2011 00:00:40 GMT http://www.rcanalytics.com/article/1164/Year-End-Reporting-Confirms-Resurgent-US-Property-Market.aspx 1164
For the past two years, the UK was the top choice in Europe for commercial property investors as the weaker pound brought in overseas buyers. The market that attracted the most investment globally in 2010 was London. Property sales totaled 13.3 billion pounds ($21 billion), 16% more than in 2009, Cushman & Wakefield Inc. estimated, citing Real Capital Analytics Inc. data. The city beat Tokyo and Paris.]]> Mon, 24 Jan 2011 15:41:25 GMT http://www.rcanalytics.com/article/1162/Property-Funds-Pick-Germany-Over-UK-as-Top-European-Investment-Choice.aspx 1162
The firm has employed a strategy many other players are having limited success with: purchasing troubled assets or underwater debt backing property in Manhattan. By buying in at a discount, the firm stands to make a handsome profit at a future date when property pricing returns to growth. Real Capital Analytics’ managing director Dan Fasulo remarked of CIM’s latest trade that, “They are savvy investors making a big bet on Manhattan…They’ve acquired stakes in premiere assets.”]]> Thu, 20 Jan 2011 14:18:25 GMT http://www.rcanalytics.com/article/1161/West-Coast-Firm-Picking-Up-Distressed-Manhattan-Assets.aspx 1161 According to Real Capital Analytics’ (RCA) recently released US Capital Trends 2010 Year-in-Review, the value of the 25 largest commercial property deals last year totaled $9.8 billion. This was nearly four times the volume totaled by equivalent deals in 2009, signaling that “…commercial real estate sales in New York City snapped back with a vengeance from the disastrous depths plumbed in the recession,” according to Crain’s reporter Marine Cole.

Remarkably, Ms Cole points out that commercial broker CB Richard Ellis Inc was involved with either the buyer or the seller of nine of the top 10 deals listed in RCA’s ranking. RCA managing director Dan Fasulo commented that, “[CBRE’s] growth in the marketplace has been amazing,” especially considering the firm was only a minor player in the New York City metro as recently as ten years ago.

Using RCA data, Crain’s identified some of the major deals CBRE was involved with during 2010. Their largest deal came when they helped Google Inc purchase their New York headquarters at 111 Eighth Avenue for $1.8 billion. CBRE also represented Fisher Brothers in their disposition of 55 E 52nd Street to Rockpoint Group for $700 million and UBS Bank in selling their minority share of 299 Park Ave.]]> Wed, 19 Jan 2011 14:28:25 GMT http://www.rcanalytics.com/article/1160/CB-Richard-Ellis-Leads-2010s-Surge-in-CRE-Activity.aspx 1160 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.]]> Wed, 19 Jan 2011 12:51:25 GMT http://www.rcanalytics.com/article/1159/iStar-Looks-to-Dig-Out-as-CRE-Values-Increase.aspx 1159 Doubletree Metropolitan Hotel is the third hotel Robert L Johnson's RLJ Development has bought in Manhattan since 2008. He also purchased the Hilton Garden Inn at 63 W. 35th St. and the Fashion 26 Hotel at 152 W 26th St for more than $100 million each. Mr Johnson is founder of the BET network.

The transaction closed in late December, and amounts to a sizable gain for the hotel's sellers, Highgate Holdings, Goldman Sachs Group's Whitehall Real Estate Funds and Rockwood Capital. The Whitehall-led group bought the 755-room hotel in 2003 for $110.5 million, according to Real Capital Analytics (RCA), and spent $35 million renovating it.

The hotel, established in 1961, drew widespread attention for architect Morris Lapidus' design with its undulating glass facade evoking a vertical wave. New York's Tisch family of Loews Hotels renamed the building in 1991 as the Loews New York Hotel.

The price that RLJ paid fits within the range of recent hotel deals in Manhattan. The per-room-price of $443,700 tops Manhattan's average price - $424,150 - for the 12 months ended in September, according to RCA.]]> Wed, 19 Jan 2011 10:32:40 GMT http://www.rcanalytics.com/article/1157/RLJ-Development-Buys-NYC-Doubletree-Metropolitan-Hotel.aspx 1157 Dr Sam Chandan is Global Chief Economist for Real Capital Analytics (RCA), a Manhattan-based firm that tracks commercial property sales and trends worldwide. He joined the market research firm one year ago, after his company, Real Estate Econometrics was acquired by RCA. In the New York Times' Square Feet column, Vivian Marino interviews Dr Chandan about his first year at RCA, the largest property transaction of the year, and the outlook for commercial real estate.]]> Sat, 15 Jan 2011 15:33:25 GMT http://www.rcanalytics.com/article/1158/NYTimes-Interview-with-Dr-Sam-Chandan-at-RCA.aspx 1158 Dr Sam Chandan, one of the largest reasons for the US commercial property market’s recent rise off its 2009 low is the historically-low interest rates available to willing investors. But riding a wave of positive economic indicators and growth in commercial real estate sales into the New Year, many are rightfully questioning how long these enticing rates may last?

In his latest Lead Indicator column in the Commercial Observer, Dr Chandan discusses the possibilities for short- and long-term rates, policy biases at the Federal Reserve, and the potential for shifts in interest rates to affect commercial real estate.]]> Fri, 14 Jan 2011 12:32:25 GMT http://www.rcanalytics.com/article/1155/Dr-Chandans-Lead-Indicator-Investors-and-Lenders-Should-Expect-More-Historically-Low-Interest-RatesBut-for-How-Long.aspx 1155 cross-border over the past two years targeting destination cities such as Paris, London, and New York City as commercial property investors look for solidly-performing assets to hedge against uncertainty and risk.

The latest example of this came with the $444 million (£280 million) sale of a portion of River Court, the large complex of office space currently housing Goldman Sachs’ London headquarters, to Chinese Estates Holdings Ltd. The space is supremely located on the City of London’s Fleet Street, and was most recently purchased by Warren & Partners in 2001 for £247 million.]]> Fri, 14 Jan 2011 10:32:40 GMT http://www.rcanalytics.com/article/1156/Chinese-Investors-Join-Cross-Border-Buyers-to-Rush-London-Property-Market.aspx 1156 office sale of 2010, and the second-largest acquisition by a foreign buyer during the year. According to Bloomberg News sources, an affiliate of Brazilian-billionaire Joseph Safra purchased the property in a private deal late in the year from 660 Madison Owner Realty Corp, which is actually an affiliate Safra entity as well.

Milan-based Risanamento SpA previously had shelled out $375 million to acquire the trophy property in 2007. The sale included just the 255,000 square-foot office portion of the building. Barneys New York, the storied top-end department store, occupies the balance of the property’s space that i