LWR Commercial
Archive for February, 2009
Commercial Real Estate Investment Down – Creates Opportunity
Feb 18th
As banks are writing down their portfolios and appraisers are throwing darts to value properties, the CRE market is in a freefall. Lease rates are falling, businesses are failing and defaulting on loans while new developments are housing crickets. Investment in commercial real estate across the globe plummeted 59 percent, going from just over $1 billion in 2007 to just $435 billion, according to real estate services firm Cushman & Wakefield Inc.
North America topped the list with a 73 percent decline in investment, followed by Europe, where investment plunged 52 percent, and then Asia, where numbers fell 45 percent. While investment activity slumped pretty much across the board, the numbers weren’t so drastic everywhere; in Latin America, investment dropped by a relatively low 9 percent.
But full recovery of the real estate market hinges on the economy. “Looking at the Blue Chip economic forecast, recovery will happen in the second half of 2009, but in any economy GDP recovers before jobs recover, and in real estate, we really care about jobs,” Stanton said. More jobs will spur demand for more office space, and will prompt increased spending at retail locations, and additional leisure and business travel. However, the anticipated economic turnaround will not have an immediate impact on the real estate industry. “Real estate recovery will lag a minimum of six months.”
The next 12 to 18 months will present the biggest buying opportunity in decades because a lot of leveraged assets have to be de-leveraged and will be sold at big discount. As borrowers are forced to write down their investments and are forced to slash values, or lenders are renegotiating the debt on their current loans, smart investors will have a chance to snap up some very well priced assets.
When the economy does recuperate and there’s more debt, real estate will likely recover quickly. “It should snap back,” Stanton said. “We actually had a controlled supply and demand situation; we just got hammered by the credit crisis and the recession. Presuming the stimulus package works, we’ll have a snap back because the real estate market did not overbuild. I have hope that we will get an Obama bounce.”
FOR LEASE: 1549 Ringling Boulevard
Feb 17th
Click the Image Above For Complete Listing Information
The RBC Bank Complex stands at one of the busiest corners in the Central Business District of downtown Sarasota. A commanding presence at the corner of Orange Ave. and Ringling Blvd this 6-story, 60,684-square-foot office building welcomes tenants and visitors into a recently updated main lobby.
Recent renovations include new elevator interiors, roof, paint and parking lot.
With excellent visibility, plenty of parking and walking distance to a variety of eateries and Main St., the RBC Bank building is ideally located.
<iframe width=”425″ height=”350″ frameborder=”0″ scrolling=”no” marginheight=”0″ marginwidth=”0″ src=”http://maps.google.com/maps?t=h&q=1549+Ringling+Blvd+Sarasota+FL&ie=UTF8&z=14&ll=27.346154,-82.535391&output=embed&s=AARTsJq7_srJmyDZt00KY1lS9TZtyXGA1w”></iframe><br /><small><a href=”http://maps.google.com/maps?t=h&q=1549+Ringling+Blvd+Sarasota+FL&ie=UTF8&z=14&ll=27.346154,-82.535391&source=embed” style=”color:#0000FF;text-align:left”>View Larger Map</a></small>
REO To Play a Large Role in Commercial Market in 2009
Feb 17th
As the housing market goes, so goes the commercial market. With retailers sluggish and small business closing up shop across the country, what role is the commercial real estate broker playing? The following is an excerpt from Commercial Property News and really shows the trend that I think we’ll be seeing more of.
The commercial real estate mortgage loan and REO portfolio has an outstanding balance of $221.3 million. The sale includes assets in bankruptcy and sub- and non-performing assets secured by a variety of collateral types including hospitality, industrial warehouse, retail, office, multi-family, residential condominiums, retail condominiums, townhomes, and commercial and residential development land throughout Arizona, Florida, Nevada, Texas, Georgia, Alabama and Louisiana.
On Jan 29, CPN reported that Sperry Van Ness–acting on behalf of Stillwater Capital and partners–closed the sale of the 131,900-square-foot Voice Road Plaza in Carle Place, N.Y., to a 1031 multi-family investor for about $36.2 million, including the assumption of a $23 million mortgage.
Occupying 8.3 acres on Long Island, Voice Road Plaza was developed in 1951 and renovated in 1996. In December 2006, Stillwater, along with two operating partners, snapped up the property from First Allied Corp. for nearly $35.4 million, with plans for a short-term hold. Vacancy at the property–anchored by Staples, Big Lots, Party City, Dress Barn and Bass–reached its current level of 98.8 percent. Then the tide turned. The seller had put the community shopping center up for sale through another broker before turning to Sperry Van Ness, which originally marketed the asset with a price tag of $41 million, before lowering it to $39 million.
After 10 months and 175 sale packages, Sperry Van Ness found a buyer represented by Double-Click Realty. Considering that Stillwater purchased Voice Road Plaza in 2006, and sold during one of the lowest points in the real estate market in quite some time, the fact that the company walked away with a nearly $1 million profit is somewhat significant.
Deals like this may become more common in the coming year. On Dec. 22, Robert Brunswick, founder, president & CEO of real estate investment management firm Buchanan Street Partners, told CPN that he anticipates sales volumes to probably rebound somewhat over the next 12 to 24 months, but noted that this will probably be primarily the result of distressed selling to avoid foreclosure and salvage some equity and/or REO sales.
Mission Capital is seeking the bids on behalf of a regional bank that was not named. Acquisitions could be made on individual loan pools, any combination of loan pools, or the entire portfolio. Overall, there are 50 loans or REOs within eight available pools, including 35 loans in Florida, four REOs in Florida, four loans in Georgia, three loans in Texas, and single loans in Alabama, Arizona, Louisiana and Nevada.
“In addition to many of the assets providing cash flow to offset operating expenses, the portfolio is divided into several single asset pools, allowing investors to target specific assets by performance, collateral type or geography based on their individual acquisition criteria,” Will Sledge, managing director at Mission Capital Advisors, said in a prepared statement.
Founded in 2002 by William David Tobin and Joseph A. Runk, Jr., Mission Capital is a boutique investment banking firm specializing in structuring the sale of performing, sub-performing, non-performing and charged-off residential, commercial, C&I, and consumer loan portfolios.
Creative Commercial Lending
Feb 17th
With banks tightening standards andn looking for 30% down to get a loan, many buyers are getting creative with sellers to get the transaction done. As the Business Journal puts it, these are old methods that are getting more popular:
The methods, which are used in lieu of applying for a new loan with a lender, aren’t new to the commercial real estate industry. Seller financing is used when the seller acts like a bank to lend some or all of the purchase price to the buyer. Sale-leasebacks are used when the owner of the property sells to an investor but stays in the building as a tenant, and assumable financing is used when the buyer assumes an existing loan from the seller.
“Before 2008, you didn’t see a lot of it because it wasn’t necessary,” said John Richardson, president of Grubb & Ellis/Phoenix Realty Group Inc. But as the credit crisis intensified during the second half of 2008, so did the volume of alternative forms of financing.
Among those deals was an industrial property on the Westside. Brian Bartlett, vice president of Grubb & Ellis/Phoenix Realty Group, represented the seller in the deal, which required both seller financing and the sale-leaseback of the facility.
