Commercial real estate bargains don’t materialize

Several high-powered Atlanta investment funds have hundreds of millions of dollars waiting to buy prime commercial real estate at bargain prices.

But there’s almost nothing to buy.

Investors expected a tidal wave of opportunities with potentially giant returns. But, as banks continue holding onto distressed real estate loans longer than expected, the wave hasn’t come.

Some investors aren’t sure it ever will.

This is what many investors who have been marching to the “commercial meltdown” drum are finding. That they’ve gathered these war chests for a water fight.

Read more: Commercial real estate bargains don’t materialize – Atlanta Business Chronicle

Read More: Barry Sternlicht, the Real Estate Bargain Hunter

His highest-profile deal has been the acquisition of the $4.5 billion real estate loan portfolio of Corus Bankshares, the nation’s largest condominium construction lender until it failed last September because it had financed too many projects like Paramount Bay. The following month, Mr. Sternlicht and a group of investors — including TPG Capital, WLR LeFrak and Perry Capital — won the loans in an auction run by the Federal Deposit Insurance Corporation, paying $554 million for 40 percent of the package, valuing the debt at 60 cents on the dollar. The F.D.I.C. holds the remaining 60 percent.

Mr. Sternlicht hopes to foreclose on many of Corus’s errant borrowers, restyle their buildings and sell units for a significant profit once the real estate market recovers. He says he and his investors can afford to wait until then because the F.D.I.C. has provided them with $1.4 billion in zero-coupon financing and an additional $1 billion in low-cost loans that can be used to complete unfinished projects.

There’s an upside for the F.D.I.C. too, Mr. Sternlicht says: it will recover the full value of the Corus portfolio by working with him. “They are going to make a couple of billion,” he says. “If they sold it outright, they would have lost money.”

If all goes as planned, Mr. Sternlicht says, he and his investors are also positioned to do rather well themselves.

Best and Worst States for Business 2010

In Chief Executive’s annual survey of best and worst states for business, conducted in late January of this year, 651 CEOs across the U.S. again gave Texas top honors for being pro-business. Florida was #6 on the list. Click here to see the whole story.

DebtX preps for $500m CRE loan sale – Boston Business Journal.

Boston-based DebtX said Monday it plans to sell about $500 million in commercial real estate loans for three financial institutions, including an unnamed Northeastern regional bank.

DebtX CEO Kingsley Greenland said lenders are moving aggressively to dispose of loans to bolster the strength of their balance sheets. Over the past two years, commercial real estate loan delinquencies have surged as rents and occupancy rates have fallen.

DebtX said next month it will auction $364 million in performing and nonperforming loans for an unidentified Northeastern regional bank.

In addition, DebtX will auction a combined $136 million in commercial real estate loans for a bank and a financial services company in the South.

“Investors have an opportunity to buy a wide range of both performing and non-performing loans from these sales,” Greenland said in a press release.

Venice apartment complex sells for $1 million less than in 2003 | Real Estate | HeraldTribune.com.

Venice apartment complex sells for $1 million less than in 2003

By Michael Braga (email)

Lakewood Ranch South could make room for a builder stimulus

Talks have started with some of the 17 builders at Lakewood Ranch about opportunities at Villages of Lakewood Ranch South while developer Schroeder-Manatee Ranch remains open to outside companies.

Plans for the Villages of Lakewood Ranch South, a 5,500-acre extension of Lakewood Ranch in Sarasota County, call for at least 5,000 homes.

“We’re willing to talk to any builder that wants to be in Lakewood Ranch, but the most important things we look for in the selection process are who are good stewards of the community, and good stewards of the environment,” spokeswoman Candice McElyea said. “We want builders with a solid reputation, with a longstanding track record in the community.”

Ground is expected to break at Villages of Lakewood Ranch South in 2012.

The plans to build neighborhoods attractive to buyers looking to spend less than $200,000 will help diversify the market, said John Cannon Homes owner John Cannon.

“Lakewood Ranch kind of has that country club lifestyle, and your not-so-typical subdivision,” said Cannon, who has built some 400 homes in Lakewood Ranch. “This new area is going to have clustered housing, a live-work environment, so I don’t think it’s going to force the two to cannibalize each other. Instead, I think it’s going to complement it.”

Many of the Village of Lakewood Ranch South communities will be situated around mile-long man-made lakes. Infrastructure costs will total at least $130 million.

The homebuilding is projected to be done “around 2022 or 2027,” McElyea said. “We’re not in a rush, and we plan on doing it right.”

Read more: Lakewood Ranch South could make room for a builder stimulus – Austin Business Journal

Yes, The Housing Market Recovery Is for Real

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It is now abundantly clear that the U.S. housing market is recovering. From the all-time lows registered in April of last year, starts have now risen 40%. To be sure, the level of activity is still dismally low, but that a recovery is underway is virtually certain. The Bloomberg index of home builders’ stocks has been saying the same thing for some time now, with the average stock up 125% from last year’s low.

Recovery skeptics have been telling me for many months that a true recovery can’t happen without a recovery in housing; if they are right, then this is pretty good news indeed. Regardless, I view this as just one more of many signs that the economy is in recovery mode.

The only item of debate at this point is how fast the economy will recover, not if. I see no reason to change my long-held expectation of 3-4% growth, which amounts to a moderate recovery, albeit one in which a lot of V-shaped sector recoveries, like this, can be found.

CBRE: Retailers Back in Expansion Mode « Counter Culture.

Instead of hearing about massive store closures this year, we could get more news about chains opening their doors, according to a just-released retail report by CB Richard Ellis. The report surveyed executives at just over 100 retail companies — most of them national — and found that more than 90% of the respondents planned to boost store counts.

Which is all great news for commercial real estate, as retailers are pulling out of their nose dive and shoppers continue to post strong numbers at value oriented chains. Shopping centers are back on less shaky ground and are beginning to recover some of those vacancies. The commercial real estate market locally is showing even more signs of life, especially in the Class “A” retail centers.

From: John Harshman | Real Estate | HeraldTribune.com

Despite foreclosures, commercial sky is not falling

Monday, May 17th, 2010