A Tall Order for Stock Investors

The Malkin family of New York, which currently controls the 102-story landmark, filed papers with the Securities and Exchange Commission Tuesday saying that it has "embarked on a course of action" that could result in the skyscraper being included in a newly formed real- estate investment trust.

The building was valued in the summer at $1.65 billion, when the Malkin family refinanced the property. The building's net annual income is $63 million, according to Commercial Mortgage Alert.

The Malkin family stake in the skyscraper dates back to the days when Harry Helmsley bought a controlling stake in the property in the early 1960s with Lawrence Wien, the father-in-law of Peter Malkin. Mr. Malkin has since taken control but only after years of battling with Ms. Helmsley, who inherited her husband's interest.

Developed in the early 1930s by group of investors led by tycoon John Raskob, the Empire State Building hit the market during the Depression and sat mostly empty for years. Gradually, though, the building filled up with hundreds of tenants and became a Hollywood darling featured in movies such as "King Kong" and "Sleepless in Seattle."

http://online.wsj.com

Toll Brothers to Buy Seattle Builder

Toll Brothers Inc. said Monday that it is acquiring Seattle builder CamWest Development LLC for an undisclosed cash price.

The deal, which moves the luxury developer into the Pacific Northwest, is a rare example of an acquisition in the hard-hit home-building sector, which continues limping through the worst housing downturn in decades.

But Toll, based in Horsham, Pa., has weathered the downturn better than its peers. So far this year, its shares have fallen less than 1%, making it the sector's strongest performer. Shares of Hovnanian Enterprises Inc., another public builder, have fallen nearly 70% year to date.

http://online.wsj.com/article/SB10001424052970204443404577051970416365942.html

Brookfield Asset Management Profit Doubles After Power-Generation Gains

Brookfield Asset Management Inc. (BAM/A), the Toronto-based investment firm that manages about $150 billion, said third-quarter profit more than doubled on gains in power generation and commercial-property leasing.

Net income attributable to shareholders rose to $253 million, or 36 cents a share, from $112 million, or 16 cents, a year earlier. Cash flow from operations fell 32 percent to $241 million, the company said today in a statement.

Brookfield, led by Chief Executive Officer Bruce Flatt, focuses on property, infrastructure and renewable power and has sought to buy assets from troubled European companies. The firm raised $6.1 billion in capital in the quarter.


ww.bloomberg.com/news/2011-11-11/brookfield-quarterly-profit-doubles-on-power-generation-gains.html

Carlyle Cuts Fees to Sell New Fund

Carlyle Group, the large private-equity firm that is preparing for a public share listing, has had to cut fees and offer other unusual incentives to lure investors to a new $2.3 billion real-estate fund.

The fund, which is about to close, is one of the largest since the property bubble burst in 2008. But Carlyle's aggressive sales tactics reflect the reluctance of big pension funds to put new money into higher-return, higher-risk real-estate funds after suffering sharp losses during the financial crisis.

Carlyle has been offering large investors annual management fees of as little as 0.75% of assets, half the 1.5% industry standard, say people familiar with the matter. Carlyle also has raised the bar that must be cleared before the firm can share in the fund's profits, known in the industry as a hurdle rate or preferred return.


http://online.wsj.com/article/SB10001424052970203733504577026282573603816.html

Andrew Farkas Keeping Brokers Happy

Investor Andrew Farkas, who made a bundle by buying one of the city's leading commercial real-estate brokerages in 1996, looks like he wants to repeat his success with the purchase of Grubb & Ellis, a national firm.

But he better move quickly. If the firm's New York office is any measure, the brokerage has been seeing top people depart.

Since 2010, when David Arena, the firm's tri-state chairman, made a high-profile departure for J.P. Morgan Chase, the New York ...


http://online.wsj.com/article/SB10001424052970203687504577003900799004604.html

Goodbye to Circuit Citys and Old Navys; Hello, Gun Ranges, Aquariums, Go-Carts

Sobered by store closings and the rise of online shopping, owners of U.S. shopping centers are filling space and drawing visitors by turning to unusual tenants like gun ranges and go-cart tracks.

Mall giant Simon Property Group Inc. opened an aquarium in July at its Grapevine Mills mall near Dallas. Real-estate brokerage Jones Lang LaSalle Inc. put a fencing academy in a former Old Navy store in Florida's Tallahassee Mall, and a community theater on the lower level of a former Boscov's store in Harrisburg, Pa.

Even top performing mall companies—like Simon, which reported a 19% rise in earnings Tuesday—are looking at restaurants, entertainment and other nonretail uses as a hedge against the drain from online shopping. Glimcher Realty Trust purposefully filled 25% of its upscale Scottsdale Quarter mall near Phoenix with restaurants such as Stingray Sushi and services like Drybar, a salon that specializes in blow drying women's hair. "She can't go out to lunch and have a salad and a glass of wine with her girlfriends online," Glimcher Chairman and CEO Michael Glimcher said, referring to the mall industry's coveted female shoppers.

The Arms Room gun range near Houston had a mixed reception. Mr. James's attorneys advised him to seek written statements from Target and Home Depot declaring that they didn't object to his business opening in their shopping center. Home Depot agreed, but Target declined, Mr. James said. (Target declined to comment). Later, representatives of PetSmart Inc. thanked him for boosting the center's customer traffic.

Net lease Market one of the Hottest Commercial Real Estate plays in the Country

With money to burn but still having a strong aversion to risk, investors have increasingly turned single-tenant properties into one of the hottest commercial real estate plays in the country.

The single-tenant, net lease investment sales market is expected to continue growing, according to Jones Lang LaSalle.

"The low interest rate environment and the lack of safe-haven investment alternatives are driving new sources in build-to-suit and sale-leaseback activity, and investors have incredibly healthy appetites for stable and dependable income streams that single-tenant assets provide," said Guy Ponticiello, managing director Jones Lang LaSalle's Corporate Finance & Net Lease division.

Fully leased core properties have been highly sought-after by investors, often from overseas, and prices for these properties have been strong, according to Jane L. Mendillo, president and CEO of Harvard Management Co. in her most recent Harvard University Endowment report.

"We were able to sell some of our portfolio properties in this category at excellent values," Mendillo said. And now Harvard is ready to invest in new round of such properties.


http://www.costar.com/News/Article/Single-Tenant-Property-Sales-Surge-To-Record-Numbers/132751

Default Swaps Penalize Westfield Group Most Since 2009: Australia Credit

Westfield Group is being penalized in credit markets more than global peers as the world’s biggest mall operator faces weaker sales growth in the U.S. and at home.
In Australia, data released yesterday showed consumer confidence has plunged 16.9 percent in the past year, while in the U.S. an unemployment rate over 9 percent for six months will limit retail sales growth during this year’s holiday season, the National Retail Federation said this week. For Westfield, the world’s biggest mall owner, that may increase vacancies and lower what it can charge tenants in its two biggest markets.


http://www.bloomberg.com/news

Net Lease Market: What will investors abandon next?

Net Lease Market: What will investors abandon next?: Reason to Pull REITs from the Wreckage What will investors abandon next? The first bout of jitters in July hit stocks. Then gold took its ...

What will investors abandon next?

Reason to Pull REITs from the Wreckage


What will investors abandon next? The first bout of jitters in July hit stocks. Then gold took its licks. The latest target: companies that own government-backed mortgages.

After holding up well through the summer, many mortgage real-estate investment trusts have fallen at least 15% in the last month. Such REITs tend to perform better when investors flee risky assets because they invest exclusively in government-agency-guaranteed mortgages. But Capstead Mortgage Corp. and CYS Investments now have valuations below 90% of book value, the lowest in over a year, ...

http://online.wsj.com/article/SB10001424052970203476804576613321006588828.html

New York Beats London as Top Spot for Real Estate Investment

New York overtook London as the No. 1 destination for real-estate investment for the first time since 2007 after improved access to financing spurred more U.S. deals, Cushman & Wakefield Inc. said in a report today.
Investments grew 166 percent to $29.7 billion in the New York area in the 12 months through August, compared with a year earlier. Investment in greater London increased 2.4 percent to $27.2 billion, according to the report based on data compiled by the New York-based broker and Real Capital Analytics Inc. Buyers are drawn to cities like New York and London because of a greater focus on the “biggest and best,” Cushman said in the report. The trend will continue in the next six months, it said.
Outside of the U.S. real estate lending tends to be tighter and is still “very focused on prime, leased assets only,” Cushman said in the report.


http://www.bloomberg.com/news/2011-10-05/new-york-beats-london-as-top-spot-for-real-estate-investment-on-financing.html

Vornado picks up Tribeca building in auction for $8.2M

Vornado Realty Trust bought a discounted five-story Tribeca building in an auction yesterday for $8.2 million, Crain's reported, outbidding at least five other interested parties. Bidding for the 14,545-square-foot property at 334 Canal Street, near Lispenard Street, started at $7 million, after lender CNBS Trust took control of the property from Mymom Realty, which purchased it for $11 million four years ago.


http://therealdeal.com/newyork

Big Lots at Half-Price Signals 50% Markup

For buyout firms looking for a deal, Big Lots Inc. (BIG) is now offering the biggest bargain among discount retailers in America.

Big Lots at Half-Price Signals 50% Markup in Cheapest Retail LBO: Real M&A

Big Lots, which sells discontinued and overstocked brand name goods, trades at 13.9 times its so-called free cash flow, according to data compiled by Bloomberg. That’s the cheapest among its closest rivals and half the industry median. As private equity firms circle 99 Cents Only Stores (NDN) and Family Dollar Stores Inc. (FDO), a buyer could pay a 50 percent premium for Big Lots and still get the Columbus, Ohio-based retailer at a lower price than any of its competitors, the data show.

Selling Big Lots would help Chief Executive Officer Steve Fishman hand owners a billion-dollar windfall after retailers returned 10 times as much in the past three years. While Big Lots had hired Goldman Sachs Group Inc. to explore options, the stock plunged 26 percent since its April high as a sale failed to materialize. The slide has made Big Lots even more affordable now to private-equity buyers, Telsey Advisory Group LLC said.

http://www.bloomberg.com/news/2011-09-21/big-lots-at-half-price-signals-50-gain.html

City Resients Flock to Suburban Walmarts in Record Numbers

A Walmart store Despite political opposition to Walmart, many New Yorkers are growing more willing to welcome the store into their city. New figures reported by Crain's show local politicians may have 7.7 million reasons to follow suit. Sales to New York City residents in suburban stores are up 10 percent from a year ago, and city dwellers are on pace to spend $215 million at the area's stores this year. That would translate to at least $7.7 million in sales tax revenue alone, experts said.

http://therealdeal.com/newyork/articles

Simon Property Buys Most of Pennsylvania Mall

Mall giant Simon Property Group Inc. has bought out most of its partners to take majority ownership of Pennsylvania's King of Prussia Mall, one of the most lucrative shopping centers in the U.S.

In a series of deals finalized in recent weeks, Simon has boosted its ownership share in the 2.4 million-square-foot mall in King of Prussia, Pa., to 96% from 12.4%, according to a person familiar with the matter. The largest transaction involved Simon's purchase of a 50% stake that Australia's Lend Lease Corp.


http://online.wsj.com/article

Industrial Real Estate Booms

Industrial real estate booms in front of expected consumer spending hikes

The same signs of increasing consumer spending that are expected to boost the retail real estate market are already positively impacting the industrial real estate market. The New York Times cited Cushman & Wakefield data that shows the vacancy rate in industrial properties declined in the first half of the year to 9.7 percent, year-to-date leasing activity is up 27 percent from a year ago, and sales volume in the first half of the year grew nearly 160 percent compared to the same period a year ago. Several companies have been especially aggressive in acquiring industrial properties, including Clarion Partners, Terren Realty Corporation, Morgan Stanley, the Cabot Group and CenterPoint Properties.

http://therealdeal.com/newyork

Rush to Restaurant Real Estate Brings 53% Increase

The Cheapest restaurants in America are luring activist investors who are betting companies from Ruby Tuesday Inc. (RT) to Cracker Barrel Old Country Store Inc. (CBRL) can make more money selling their own real estate than food.

The 10 biggest U.S. restaurants that sell for less than the value of their property, plants and equipment trade at 70 cents on the dollar, according to data compiled by Bloomberg. With the restaurants slumping twice as much as the Standard & Poor’s 500 Index this year, firms from Biglari Holdings Inc. (BH) to Carlson Capital LP and Becker Drapkin Management LP are agitating for board seats at eateries with fixed assets that are worth an average of 53 percent more than the companies themselves. Ruby Tuesday has $1 billion of such assets, twice its market value.

The economy expanded 0.7 percent in the first half of this year, the weakest stretch since the recovery began in June 2009. As job growth stalled last month, a RBC Capital Markets survey showed one-third of Americans now plan to spend less dining out in the next 90 days, the largest proportion in almost a year.

Gyms Working Out for Landlords

Retail landlords focus more on nonretail tenants.

Vacancy-plagued shopping centers in the U.S. are getting a lift from tenants who deal in sweat rather than typical retail goods.

Health clubs and gyms accounted for 8.8% of new leases signed so far this year by retail chains in the U.S., compared with 7.9% at the same point last year, according to real-estate research company CoStar Inc. The rush into shopping centers has helped fuel a 57% increase in square footage occupied by U.S. health clubs since 2007, to more than 70 million square feet.

http://online.wsj.com/article/SB10001424053111903648204576554872299798998.html

Net Lease Cap Rates, Sector by Sector

By Winston Orzechowski,
Research Director, Calkain Cos.

Net lease cap rates averaged 7.75 percent for the first quarter of 2011, continuing the rate drop that began in the second half of 2010. The key driver in this trend has been an increased demand for high-quality net lease properties — assets which feature a strong credit tenant, good location and favorable lease terms – and the scarce supply of those high quality assets. Investors have clearly shown a lopsided preference for these triple-net-lease investment properties and, as 2011 progresses, demand will outpace supply.

http://www.cpexecutive.com/newsletters/capitalmarkets-newsletter/netleasecolumn/net-lease-cap-rates-sector-by-sector/

Brokers say Commercial Retail Market Stabilizing

Aspen, CO
by Dorothy M. Atkins,Aspen Daily News Staff Writer

The downtown commercial core is nearly full, with a vacancy rate reaching pre-recession percentages.

About 30 retail leases have commenced in the past year, which is more than the usual handful that occur annually, said commercial real estate broker Karen Setterfield.

With the increased level of activity, there is a consensus among commercial brokers that the retail vacancy rate is somewhere between 2 and 5 percent, which pales in comparison to last year around the same time when it hovered around 9 or 10 percent. (At the beginning of 2008, less than 1 percent of restaurant, retail and office spaces were empty in the downtown core.)

Blockbuster Deals Disappear in Office Market

The Manhattan office leasing market tightened last month even as the unpredictable stock market and stalled national economy unsettled landlords and tenants alike. Landlords, who have seen their leverage strengthen over the past year, lost a bit of confidence because of the new round of economic turmoil, some Manhattan brokers said. "The market was rising rather quickly, particularly in the better product and the better locations, [but] I think tenants' expectations [now] are that the deals should be improved and they should be more aggressive," David Hollander, a senior vice president at CB Richard Ellis, said. But that doesn't mean that most tenants are chomping at the bit to get deals done.

http://therealdeal.com/newyork

UDR closes on $325M purchase of 95 Wall

Colorado-based UDR has closed on its acquisition of the 507-unit rental building at 95 Wall Street for $325 million, the firm announced today. It bought the 22-story Financial District building, formerly known as Dwell95, from the Moinian Group, which converted it to luxury rentals after it previously served as JPMorgan's headquarters.



http://therealdeal.com/newyork

Drugstore Investments Low Risk Assets with a Steady Income Stream

By Elaine Misonzhnik, Retail Traffic Associate Editor
Net lease investors can’t seem to get enough of the drugstore sector with sales today being driven by a desire among both lenders and buyers for low risk assets with a steady income stream.

According to a report on the second-half outlook for net lease properties from Marcus & Millichap Real Estate Investment Services, drugstore sales were up 10 percent, supporting a 3 percent rise in the median price for the sector to $334 per square foot. Yields have fallen to the high-6 percent to mid-7 percent range.


http://retailtrafficmag.com

Zell to Limit U.S. Real Estate Investing as He Expands in Colombia, India

Billionaire Sam Zell said he is entering the real estate markets in Colombia and India in the next two weeks as he continues to favor international investments over U.S. property deals.

Zell, chairman of Chicago-based Equity International, will invest in real estate in Colombia and will eventually move on to residential projects, he said in an interview today on Bloomberg Television. In India, he plans to open hotels.

“Colombia is the next star of Latin America,” Zell said on “In the Loop” with Betty Liu. “In India, we’re doing a hotel/motel program like Residence Inn at Marriott and we hope to build a chain across the country.”

http://www.bloomberg.com/news

Global Demand for Distressed Commercial Property Soars

Global demand for distressed commercial property increased dramatically in the second quarter of 2011 and is expected to outstrip supply in the next three months, according to the latest report from the Royal Institution of Chartered Surveyors.

Over 80% of the countries surveyed in the RICS Global Distressed Property Monitor reported heightened levels of interest from specialist funds in the second quarter with three quarters of these reporting even greater levels of demand than last quarter.

Indeed, in over half of the countries covered, the net balance figure for second quarter demand for distressed property outstrips the comparative number for the third quarter expected supply, most noticeably in Japan, China, Singapore and Hong Kong.

Investor demand rose most dramatically in Japan and Hungary this quarter, where net balance scores moved from +6 to +68 and +3 to +64 quarter over quarter, respectively. In Italy, Poland and Russia agents reported noticeable shifts in sentiment with demand swinging from negative into positive territory.

http://www.propertywire.com/news/europe/global

Blackstone sues Sol Goldman estate over default notice at 1140 Sixth Avenue

Blackstone Group, which acquired the ground lease at 1140 Sixth Avenue in May, has filed a lawsuit against the landlord to block a default notice it received for five alleged violations issued by the New York Fire Department. Blackstone, in an Aug. 26 complaint filed in New York State Supreme Court, alleges that the estate of billionaire Sol Goldman, which owns the building, between 44th and 45th streets, sent it a default notice June 30, claiming it had 12 outstanding FDNY violations, nine Department of Buildings violations and two Environmental Control Board violations.

http://therealdeal.com/newyork

Wall Street Banks Plan $5 Billion in CMBS Sales

Wall Street banks are planning to sell as much as $5 billion of bonds tied to commercial mortgages as they offload loans agreed to before credit markets stumbled and amid growing concern that the economy is faltering.

The securities will be offered in September and October, bringing 2011 sales to about $25 billion, according to Julia Tcherkassova, a commercial-mortgage debt analyst at Barclays Capital in New York....

http://www.businessweek.com/news

Dollar General Store have Applied for a state License to Sell Beer

Arkansas' Alcoholic Control Board (ABC) is expected to vote today on whether Dollar General stores throughout the state can sell beer. Eighty-two locations have applied for permits, ABC officials said.

Being granted a beer license is not simple. If an objection for a permit has been filed for a particular location, the permit is often denied and an appeal hearing is set for a later date, The Baxter Bulletin reported. However, Walgreens and Walmart received similar approvals in 2010 and 2009, respectively.

Buyers Wary of Building Bubble

From WSJ.com
Some of the nation's largest pension funds are starting to back away from trophy properties in the most expensive real-estate markets over concerns a new bubble is inflating.

After property prices crashed during the financial crisis, pension funds—among the biggest investors in commercial real estate—turned their investment strategies away from risky speculative projects and toward properties considered "core," well-leased buildings that are seen as low risk due to their stable income, in cities such as New York, Washington and San Francisco.

Investors Have Been Moving Into Secondary Markets

Investors have been moving into secondary markets such as Dallas and Minneapolis amid growing confidence in the recovery and soaring prices that drove down yields on office buildings, shopping malls and apartments in prime cities including New York, San Francisco and Washington.

The trend may be cut short. Turmoil in financial markets over the past three weeks -- triggered by concern that Spain and Italy will struggle to pay off their debts, signs that the U.S. will remain mired in sluggish growth through next year and Standard & Poor’s downgrade of the U.S. credit rating -- may send buyers back to prime cities and push prices even higher, as long as the economy doesn’t deteriorate so much that trophy properties suffer.

Investors willing to Step Into Distressed Situations

Investors willing to step into distressed situations with fresh capital are seeing a surge in business now that lenders are showing a greater willingness to rework deals.

Take the case of Mesa West Capital. The Los Angeles-based private lender this year has originated about $600 million in loans, already topping its previous record year in 2007, when its volume hit $498 million. The firm is on pace to hit $1 billion by the end of December, according to Jeff Friedman, the company's co-founder and co-chief executive.

Part of the new business comes from rising sales volume in the commercial-real-estate market.

http://online.wsj.com

Market Turmoil Stings Commercial Sector

Tremors in the market for commercial-mortgage-backed securities are hindering the recovery of the commercial-property sector.
Over the past 18 months, values nationally have been rising, thanks in part to Wall Street's success in rekindling the business of pooling together commercial mortgages and selling them to investors as bonds. This has provided a critical source of deal financing for property buyers.
But the new-issue market for these securities has hit a speed bump amid turmoil in the capital markets, causing a key set of lenders to back off from making new loans. The result is that deal activity has fallen, putting the brakes on the rise in values.

"Lending has clearly slowed significantly," said Richard Parkus, an analyst at Morgan Stanley.

Real-estate companies have clearly noticed. Late last month, for example, Hotel chain Strategic Hotels & Resorts Inc. obtained a $145 million loan for its InterContinental Hotel in Chicago from J.P. Morgan Chase & Co. But the closing of the mortgage, which J.P. Morgan plans to securitize, was delayed for days because of uncertainty in the markets, said Laurence Geller, Strategic Hotels' chief executive. A representative for J.P. Morgan declined to comment


http://online.wsj.com/article

Chicago-based investment firm closes on mixed-use building at 862 Broadway

Chicago-based real estate investment firm L3 Capital has closed on the purchase of a mixed-use buidling at 862 Broadway in the Flatiron District, from shoe store David Z., for $11 million, according to a deed filed with the city this past Friday.

As The Real Deal previously reported, the four-story building was originally put on the market by David Z. for $12 million in 2010. Built in 1900 and completely renovated in 2004, the 5,100-square-foot walk-up building has 11,682 square feet of additional air rights, plus a basement. A store on the first floor is occupied by the GEOX footwear company. Retail space on the second floor is occupied by the Boston-based Prana yoga, and there are residential loft apartments on the third and fourth floors.


http://therealdeal.com

Tall Order in the Big Easy

A 25-year-old real-estate investment trust, which has sparked some criticism for its strong appetite for acquisitions, has agreed to buy New Orleans's tallest skyscraper for $107 million, according to people familiar with the property.

CommonWealth REIT, of Newton, Mass., is buying the 51-story office building named One Shell Square from MetLife Inc., the people said. CommonWealth and MetLife declined to comment on the deal.

The deal reflects the pressure many buyers are facing to push into new territories for buildings as competition has made major market bargains scarcer. "Things have been getting a little more challenging," John Popeo, CommonWealth's chief ...

http://online.wsj.com/article

Brookfield Office Beats Estimates After Commercial-Property Revenue Climbs

New York Commercial Property Revenue Climbs Up 30%

The company is seeing “steady demand and controlled supply within our primary markets,” Chief Executive Officer Ric Clark said in the statement. “We remain optimistic about our performance over the balance of the year and the next few years to come.”

Brookfield Office Properties Inc., owner of Manhattan’s World Financial Center, reported funds from operations that beat analyst estimates after increasing revenue and adding income from Australian properties acquired last year.
Revenue Up 30%
FFO, a gauge of a property company’s ability to generate cash, was $152 million, or 30 cents a share, in the second quarter, the New York-based landlord said today in a statement. Analysts expected 26 cents a share, the average of 14 estimates in a Bloomberg survey. FFO was $201 million, or 40 cents, a year earlier, when results included a $53 million gain from the repayment of a loaThe companywide occupancy rate was 93.3 percent, down from 95 percent at the end of last year and 94.8 percent a year earlier, according to the supplemental report.

http://www.bloomberg.com/news

U.S. Commercial Property Prices Increased

NNN Lease market news

U.S. commercial property prices increased in May for the first time in six months as a rebound in distressed real estate helped boost values, according to Moody’s Investors Service.

The Moody’s/REAL Commercial Property Price Index rose 6.3 percent from April, the largest gain since the measure began in 2000. It’s down 11 percent from a year earlier and 46 percent below the peak of October 2007, the company said today.

“A number of transactions that were recorded in May had their most recent prior sales in 2009 as the market was beginning to bottom and subsequently traded for substantial returns,” Tad Philipp, director of commercial real estate research at Moody’s, said in a separate statement. “We are likely to see a pickup in post-peak repeat sales and expect such transactions to play an important role in helping drive the CPPI higher.”

http://www.bloomberg.com/news

Tech Meets the Tenderloin

NNN Lease Market News


The growth in technology businesses that has boosted the San Francisco office market has spilled over into a blighted six-block stretch of Market Street that until now has missed out on most booms in the city's commercial-property valuations.

The "midmarket" office corridor on the southern edge of the Tenderloin district got its first boost in April when Twitter Inc. announced plans to relocate its headquarters to the gritty area better known for empty storefronts and government workers than Internet buzz.


http://online.wsj.com/article

U.S. Retailers Shop for Space in Europe

NNN Lease Market News

U.S. retailers expanding abroad include some of the biggest names in the business. Banana Republic, for example, is expected to open its first French store this year. In 2010, Apple opened its largest flagship store in the world in London's Covent Garden. Fashion retailers Tommy Hilfiger and Michael Kors have built flagship stores in Paris.

The outlook is better in some countries than others. According to CBRE, the development pipeline is still "considerably smaller" than in 2007 and 2008 —the most recent peak in shopping-center development. But construction starts are rising in markets such as Turkey, Russia, and Poland. There are 146 shopping centers under construction in Europe today, says CBRE, and the highest level of activity is in Europe's emerging markets.

"The shopping center development market in Turkey has sprung back to life," Neville Moss, CBRE's head of retail research in Europe, the Middle East and Africa, said in a statement.

Another thing in Europe's favor is that American retailers are finding it easier to experiment and try new strategies in new markets than to revamp worn models at home.

Boston Net Lease Market

Boston Net LEASE News

Calkain Companies Inc., a national real estate investment brokerage firm, has recently opened a Boston-area office, located in Burlington, in order to better serve the New England and Northeast markets. The office will be staffed by three industry veterans: senior managing director Stan Wyrwicz, formerly the chief financial officer of General Investment and Development Cos. and also CFO with Cabot, Cabot and Forbes; managing director Rich Murphy, who has been part of the Calkain team for a year and who previously worked at the controller level for the Mills corporation Follow this company and Akridge Real Estate Services; and vice president Mike O’Mara, wo has been in commercial real estate for 20 years.

CB Richard Ellis/New England, based in Boston, has named Jason Levendusky, Taidgh McClory and Patrick Mulready partners of the firm. Levendusky, who joined CBRE/NE in 2001, is a senior member of the Massachusetts suburban brokerage team. McClory, who joined CBRE/NE in 2003, is senior vice president, director of marketing & client services. Mulready, who began his career at CBRE/NE in 1996 as an appraiser, specializing in the valuation of office properties throughout Greater Hartford, transferred to the Hartford brokerage staff in 1998 to focus on the sale of investment properties.

Individual investors will continue to be attracted to Net Lease deals because those transactions are viewed as safe, income-producing real estate investments, says CEO of Calkain Jonathan W Hipp “We think that Boston-area is going to stay very competitive net lease market.

Net Lease Market Report

Net Lease Market News


Calkain Net Lease Market Report provides in-depth analysis of the net lease market

A recent theme in the net lease mar­ket has been the success of primary markets compared to their tertiary counterparts. While primary markets have been resilient and recently showed remarkable success, tertiary markets con­tinue to struggle. The Washington DC area (D.C., Maryland and Virginia) is chief among the top tier markets and its rela­tive success is easily measurable.

Net lease cap rates for retail, market compressed in the first quarter of 2011, while investment sales remained strong in the single tenant market,according to data from Calkain. Calkain Research provides in-depth analysis of the net lease market. Our intimate knowledge and years of experience in the net lease industry gives us the unique opportunity to provide thought leadership and perspective.Through highly focused coverage over a diverse range of topics, we facilitate a culture of knowledge and enable intelligent investment strategies.

The net lease market continues to improve, but many of the factors driving this appear short term. As more properties come to market due to improved pricing fundamentals, many believe that the cap rate compression will plateau. The high demand and scarcity of high performance markets will continue drive their cap rates lower.
www.calkain.com/reports/research/calkain

National Retail Properties, Inc. Announces New and Expanded $450 Million Unsecured Credit Facility

Net Lease Market News

National Retail Properties announces new and expanded $450 million unsecured credit facility Co announces the closing of a new $450 million unsecured credit facility, replacing its existing $400 million credit facility. The new facility matures May 2015, with an option to extend maturity to May 2016. The facility is priced at LIBOR plus 150 basis points. The new facility also includes an accordion feature to increase the facility size to $650 million.

Calkain Research provides a variety of reports on all aspects of the net lease market. Our coverage includes: retail, industrial, urban, QSR, banks, pharmacy and more. We present a comprehensive and detailed picture of the market; providing investors with the information they need.
Briefing.com is the leading Internet provider of live market analysis for U.S. Stock, U.S. Bond, and world FX market participants.
National Retail Properties (NYSE: NNN), a real estate investment trust, invests in single-tenant retail properties generally subject to long-term, net leases.
As one of only 114 out of the more than 10,000 publicly-traded companies that have increased annual dividends for 21 or more consecutive years, we are a powerful partner for our retail customers and a proven investment for our shareholders. The average annual total return to shareholders has been 13.6% over the past 15 years.
http://money.msn.com/business

Property Buyers Expand

Minneapolis, Dallas and Denver are enticing U.S. commercial-property investors as a rebound in demand spreads from prime markets along the U.S. coasts.

The cities had three of the four biggest gains in sales by dollar volume among major metropolitan areas outside the coasts in the first quarter, according to CoStar Group Inc. (CSGP), a Washington-based property-research firm. Sales rose 127 percent from a year earlier in Minneapolis, 108 percent in Dallas and 89 percent in Denver. Nationally, the increase was 47 percent.

http://www.bloomberg.com

McDonald’s April Sales Rise 6%

McDonald’s Corp. (MCD), the world’s biggest restaurant chain, said sales at stores open at least 13 months rose 6 percent in April as smoothies and McCafe beverages drew customers in the U.S.

Analysts projected comparable-store sales would rise 4.1 percent, according to the average of seven estimates compiled by Bloomberg News. Sales in the U.S. climbed 4 percent, the Oak Brook, Illinois-based company said today in a statement.

http://www.bloomberg.com/news

US Commercial Real Estate Markets Steady, Slightly Better In 4Q

U.S. commercial real estate markets continued to exhibit stability or mild improvement in the fourth quarter, Moody's Investors Service said Wednesday.

The overall composite score rose a point to 65 compared with the prior quarter, based on a range of 1 at the weakest end and 100 at the strongest. That puts it within two points of the highest scoring bloc, which Moody's calls "green."

Across all sectors, measures of market strength either improved slightly or stayed the same, the agency reported. The multifamily composite sector remains the only one with a green score, which held steady at 88. Retail also held steady at 64 during the fourth quarter.

http://online.wsj

Trophy Office Building For Sale In Northern Virginia

A 356,370-square-foot, Class A office building in the Rosslyn-Ballston Corridor is on the market. Cushman & Wakefield said Tuesday today that it has been selected by MetLife to market the property at 1320 North Courthouse in Arlington for sale or joint venture investment.
“Given the current market conditions and the building’s premier location, we believe this property will be well received by investors and developers looking to acquire high quality real estate in the D.C. area,” Senior Managing Director Susan Carras said in a statement. She and Senior Managing Director Brian Dawson are leading the assignment.

http://www.virginiabusiness.com/

CVS $25 Billion Benefit Looms With Caremark Breakup

CVS Caremark Corp. (CVS), created in a takeover four years ago that has left investors with underperforming stock, could be worth $25 billion more if the company split itself up.

Shareholders SunAmerica Asset Management Corp. and Cambiar Investors LLC say Chief Executive Officer Larry Merlo, 55, may have to separate CVS Caremark’s drugstore and pharmacy-benefits units if the largest U.S. provider of prescription drugs doesn’t lift profit growth. Merlo last month replaced Thomas Ryan, 58, who orchestrated the purchase of Caremark RX Inc. in March 2007. Since then, the stock gained just 3.4 percent through yesterday, trailing a 14 percent advance for companies in the Standard & Poor’s 500 Index that sell consumer staples.

http://www.bloomberg.com

Victoria’s Secret, Costco Beat Analyst Estimates

Victoria’s Secret, Costco Wholesale Corp. (COST) and other retailers posted a surprise gain in sales last month as improving U.S. employment encouraged some consumers to shop.

Same-store sales at Victoria’s Secret, owned by Limited Brands Inc., rose 19 percent, more than 10 times the rate predicted by estimates compiled by Retail Metrics Inc. Industrywide, retailers posted an increase of 2.2 percent, compared with the average projection for a 0.5 percent drop.

Consumers, whose purchases account for about 70 percent of the U.S. economy, withstood a 7.2 percent surge in gasoline prices as they bought up clothes and luxury goods. Some have more to spend after the jobless rate fell to a two-year low last month, helped by employment in business services and health care.

http://www.bloomberg.com

$1.5 billion in commercial real estate transactions during the first quarter In suburban Maryland

D.C.'s office vacancy rate rose in the first quarter, as new construction became available, according to a quarterly report from CB Richard Ellis.

The vacancy rate rose to just over 10 percent, after falling into single digits at the end of 2010. Class A office space saw tenant gains, offset by tenants leaving Class B properties. CBRE said.

On the sales side, $1.5 billion in commercial real estate transactions during the first quarter was equal to almost half of total sales in 2010.



http://www.bizjournals.com

Yuan REIT Aims for $1.8 Billion in Hong Kong IPO .

HONG KONG—Hui Xian REIT, the Beijing-focused real estate investment trust controlled by Hong Kong tycoon Li Ka-Shing, plans to raise between 10 billion yuan and 12 billion yuan ($1.5 billion and $1.8 billion) from a Hong Kong listing on April 29, in what is set to be the first yuan-denominated initial public offering outside mainland China.

The news of the listing of the REIT, part of Mr. Li's flagship Cheung Kong Holdings Ltd., comes less than three weeks after he raised $5.4 billion from the listing in Singapore of Hutchison Port Holdings Trust, which owns deep-water ports in Hong Kong and China.

http://online.wsj.com

Family Dollar's Profit Rises 23%

Family Dollar Stores Inc., which posted a 23% rise in fiscal fourth-quarter profit Wednesday, said low-income shoppers are being joined by middle-class consumers in the discount chain's aisles.

A Family Dollar shopper in Charlotte, N.C. The chain plans to renovate at least 600 stores.
.The company said customers are still struggling financially and continue to seek bargains in apparel, pantry staples and other items. Family Dollar also said it plans to accelerate new-store growth and begin a store-renovation program.

"More middle-ish income consumers are starting to shop with us," Howard Levine, the company's chairman and chief executive, said during a conference call. "We think that we have a great opportunity here to try to get some stickiness to that customer."

Shares in Family Dollar rose 1.6% to $44.05 at 4 p.m. Wednesday in composite trading on the New York Stock Exchange. The company's stock is up 60% so far this year.

online.wsj.com

U.S. commercial Rents Will Reach Their Former Peak Levels By 2015

U.S. commercial rents will reach their former peak levels by 2015, with growth in office and warehouse rates surpassing the apartment sector in two years, according to a forecast by RREEF.

Buildings in New York, San Francisco, Boston, San Diego and San Jose, California, will have some of the strongest growth after office rents fell 4.9 percent nationally last year, Alan Billingsley, head of research for RREEF, an investment unit of Deutsche Bank AG (DB), said yesterday at a conference in San Francisco.

“Net operating income is still moving downward, but when rent growth starts, it really takes off,” Billingsley said.

U.S. commercial property prices fell 4.3 percent from a year earlier in January, the second straight monthly decline, as distressed sales in all sectors held back values, the Moody’s/REAL Commercial Property Price Index showed March 22. The delinquency rate on loans packaged as commercial mortgage- backed securities rose to a record 9.2 percent in February, Moody’s said March 15.

www.bloomberg.com/news

The European commercial property market is finally hauling itself out of recession

The European commercial property market is finally hauling itself out of recession. Investors are finding pockets of opportunity across the continent, and as banks shed their non-performing property portfolios and liquidity becomes more freely available, many are whiffing the rich scent of good value. But the specter of bad loans still haunts the sector and every opportunity is shrouded in a heavy mist of risk.

http://online.wsj.com

Subway Passes McDonald's

Subway now has more units worldwide than McDonald's.

Read Full Story

Zara's Parent Buys Fifth Avenue Store for $324 Million

Spanish retailer Inditex SA (ITX) said it bought the former NBA Store at 666 Fifth Ave. in Manhattan for $324 million and will make it into a flagship store for its Zara clothing chain.
Inditex acquired the 39,000-square-foot (3,600-square- meter) storefront between West 52nd and 53rd streets, the Arteixo, Spain-based company said today in a statement posted on its website. The site was the home of the National Basketball Association’s flagship shop, where it sold team jerseys and other memorabilia.
That deal helped the tower’s owner, Kushner Cos., cover some of the debt incurred after purchasing the building the year before for $1.8 billion, then the most ever paid for a single NNN Lease Investment U.S. building.
Inditex is one of the worlds largest fashion distributors, with eight sales formats -Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe - boasting 4.430 stores in 73 countries.
The Inditex Group is comprised of over one hundred companies associated with the business of textile design, manufacturing and distribution.

www.bloomberg.com

Realty Income to Acquire up to $544 Million of Net Lease Properties

The properties to be acquired are located in 17 different states and consist of approximately 3.8 million square feet of leasable space. The majority of the lease revenue from these single-tenant properties is generated from investment grade tenants, or their operating subsidiaries, in 11 different industries. The single-tenant distribution properties representing 34% of the lease revenue include; Aviall Services, Caterpillar, FedEx Corporation, and International Paper. The single-tenant retail properties representing 33% of the lease revenue include; AMC Theaters, Cinemark Theaters, Regal Cinemas, and Walgreens. The single-tenant office properties representing 25% of the lease revenue include; Fiserv, Inc., Novus International, Solae and T-Mobile USA. The single-tenant manufacturing properties representing 8% of the lease revenue include; Coca-Cola and MeadWestvaco Corporation. The average remaining lease term of the properties is over 11 years, which is consistent with the average remaining lease term of Realty Income’s existing portfolio of approximately 2,500 net leased properties.

retailtrafficmag.com

$7 Billion Bid for Family Dollar

In 2005, an offer of $5.1 billion was made - illustrating the increased demand for the chain.

Read the Full Globe Street Article

Investors Look to Expand Retail Portfolios

Big institutional investors stepping back into property markets since the financial crisis largely have sought the security of income-generating assets such as shopping centers. Office buildings still account for the largest share of commercial-property investment, but many investors have reduced their exposure to these properties, which have suffered from vacancies during the recession.

Allianz Real Estate, a unit of German insurer Allianz SE, is telling investors in roadshows that it plans to invest about €11 billion ($15 billion) in European property, aiming to take its portfolio to €30 billion. Allianz Real Estate, which is looking for yields of between 5% and 6%, wants to have about 45% of its portfolio in offices, 25% in retail and 15% in residential. Offices account for 63% of Allianz's portfolio, residential is 20%, and retail is about 17%, according to Allianz Real Estate.

http://online.wsj.com

Stewart's Shops Sales Topple $1 Billion for Sixth Straight Year

SARATOGA SPRINGS, N.Y. -- Stewart's Shops sales grew by $100 million last year -- up 4 percent from $1.3 billion in 2009 to $1.4 billion in 2010. It marked the sixth straight year the convenience retailer's sales topped $1 billion, The Saratogian reported, citing a company announcement.

Blackstone Said to Buy Centro's U.S. Malls for $9.4 Billion

Blackstone Group LP, the world’s largest private-equity firm, agreed to buy Centro Properties Group’s U.S. shopping centers for $9.4 billion, two people familiar with the matter said.

The purchase of 588 malls, at the price they were valued at as of Dec. 31, may allow Centro’s Australian operations to continue as an independent company, said one of the people, who declined to be identified before an official statement. The deal may be announced as early as today, the person said.

www.bloomberg.com

Broadstone REIT Acquires Five Net-Leased Medical Office Properties for $18.4MM

Broadstone Real Estate, LLC today announced that Broadstone Net Lease, Inc. (BNL) recently completed the acquisition of five triple net-leased medical office properties for a combined purchase price of $18.4MM.

Read Full Article

Houston's Piecemeal Deal

As recently as one year ago, many owners would have hesitated to put a property up for sale under such conditions. But lately investors have been bidding up prices of trophy properties.

"We feel this is an opportune time to test the market given the abundance of capital looking for core assets in top markets like Houston," Robert Merck, head of MetLife's real-estate investments, wrote in an e-mail. He confirmed that MetLife was selling a stake in the building, but he wouldn't say what size.

Partial sales are attractive strategies to landlords, partly because there is a lot of investor interest in trophy properties. Some office buildings in top markets are up over 40% in value by some measures since the market hit bottom in 2009.

http://online.wsj.com

Google Grows In Ireland With EUR99.9M Building Buy

Google Inc.is expanding its operations in Dublin by agreeing Thursday to pay EUR99.9 million for the city's tallest office building, in one of Ireland's largest property deals since the financial crisis.

The 67-meter Montevetro building in Dublin's Grand Canal Dock district, has 15 stories, 210,000 square feet of office space and can house about 2,000 staff.

Google Ireland head John Herlihy said the new building will give it extra space to relocate some teams at other Dublin sites, including its European headquarters on Barrow Street, and "have the space and flexibility to support our future operations.


http://online.wsj.com

Calkain Releases 4Q Net Lease Cap Report

The story of cap rate movement in 2010 is a tale of two trends. Beginning with promise and an increase in NNN deal making, the year quickly faded in the wake of poor global economic news – only to rebound and rally around mid-year in select markets (headlined by New York and Washington D.C.). Overall, cap rates in the second half of the year were lower than the first. In fact, sellers of credit rated NNN properties in core markets closed at cap rates rivaling the 2007 peak of the market. Numerous reasons have been offered as the cause but chief among these were a lack of quality supply, a more positive lending environment and improving market fundamentals.

Read the Full Article at Net Lease Insider

CB Richard Ellis to Buy Majority of ING Real Estate Unit for $940 Million

CB Richard Ellis Group Inc., the world’s biggest commercial property broker, agreed to buy the majority of ING Groep NV’s global real estate investment management unit for about $940 million as the Dutch bank and insurer seeks to reduce property-related risk.

CB Richard Ellis will purchase businesses from ING Real Estate Investment Management, or REIM, with 44.7 billion euros ($60.5 billion) in assets, Amsterdam-based ING said in a statement today. ING also agreed to sell $100 million in equity stakes in REIM funds and the real estate investment management firm Clarion Partners. The U.S. company will be bought by Clarion management and Lightyear Capital.


http://www.bloomberg.com

Retail REO Expert Provides Tips for Dealing with Distress

Robert Carson, Executive Vice President of Levin Management Corp., discusses strategies that Receivers are using to increase the value of REO properties in the Retail sector.

Read the Full Story from Retail Traffic

Trump Entertainment Agress to Sell Atlantic City Marina Casino to Landry's

Trump Entertainment Resorts Inc., the casino company taken over by bondholders through bankruptcy last year, agreed to sell the Trump Marina Hotel Casino to Golden Nugget owner Landry’s Inc. for $38 million.

The transaction is expected to be completed in the second quarter and is subject to a working capital adjustment, Atlantic City, New Jersey-based Trump Entertainment said today in a statement. Landry’s, a restaurant group taken private by its management last year, operates Golden Nugget casinos in downtown Las Vegas and Laughlin, Nevada.

www.bloomberg.com

NNN Properties Experince Cap Rate Compression

The recent trade of five ground-leased pad cites provides an apt illustration of where cap rates are now in the Mid-Atlantic for triple net leased properties.

Read the Full Globe St. Story

Deal Signals Market Recovery

In 2007, before the financial world turned upside down, a condominium developer signed a contract to pay more than $33 million for a former assisted living facility in the heart of the West Village.

More than three years later, the developer, FLAnk, has closed on the purchase of the building on Hudson and West 12th streets. But, unlike scores of investors who walked from deals or renegotiated drastically lower prices with sellers after the crunch hit, FLAnk paid just a few million dollars short the full pre-crash price: $33.3 million.


After three years, a developer has closed on the purchase of a building at Hudson and West 12th streets.
.The deal is the latest sign that the city's residential development engine is beginning to crank up again. FLAnk was able to secure construction financing from Quinlan Development Group and M&T Bank to convert the property into 10 condos ranging from 3,300 to 9,000 square feet, according to Jon Kully, a principal at FLAnk.
online.wsj.com

Bank of America to Close Some Branches

Bank of America Corp., the biggest U.S. lender by assets, will close some retail branches this year and try to boost revenue from remaining locations by offering investment advice by videoconference, a company manager said.

The bank typically closes underperforming branches and will be “more conservative” about opening new ones, Walter Elcock, the executive responsible for the firm’s branches, said last week in an interview. He declined to say how many will be closed. The Charlotte, North Carolina-based firm plans trials this month of video conference rooms where Merrill Lynch associates dispense advice to customers from afar, Elcock said.

www.bloomberg.com

Net Lease Fundamentals Improve, Increase in Transactions

Favorable conditions for investment in net lease properties led to a surge in transactions at the end of 2010.

Read Full CCIM Story

Whole Foods Rises After Boosting Annual Profit, Sales Goals

Whole Foods Market Inc., the largest U.S. natural-goods grocer, surged the most in more than three months after raising its annual forecasts, buoyed by freer- spending consumers prepared to pay for healthy food.

Earnings will be as much as $1.80 a share in 2011, the company said yesterday after markets closed. That compared with a previous target of as much as $1.71. The Austin, Texas-based grocer also raised its sales growth forecasts for the year, citing increasing consumer confidence.

www.bloomberg.com

Three Suitors Left for Centro's U.S. Properties

Morgan Stanley’s global real estate fund is teaming with Barry Sternlicht’s Starwood Capital Group LLC to bid for U.S. shopping centers being sold by Australia’s Centro Properties Group, a person briefed on the plans said.

Centro said on Dec. 22 it had received several expressions of interest. Blackstone Group LP made a preliminary bid for some assets, a person with knowledge of the offer said in December. Centro, based in Melbourne, ceded control to its bankers at the end of 2008 and put its assets up for sale after an acquisition spree in the U.S. backfired as the credit markets seized up.

The person briefed on Morgan Stanley and Starwood’s plans asked not to be identified because the information is private.

Mark Lake, a spokesman for Morgan Stanley in New York, and Tom Johnson, a spokesman for Greenwich, Connecticut-based Starwood Capital, declined to comment. Stacy Slater, a New York- based spokeswoman for Centro, also declined to comment.

www.bloomberg.com

Best Buy May Switch to Wal-Mart-Style Everyday Store Pricing

Best Buy Co., the world’s largest consumer electronics retailer, may curtail three decades of tactical discounting and move instead to its own version of the everyday prices pioneered by Wal-Mart Stores Inc.

With Americans increasingly using smartphones to comparison shop, consumers are unwilling to wait for sales if they find better deals elsewhere, said Mike Vitelli, executive vice president and co-head of the North America division.

St. Joe Declines After Florida Developer Announces Plans to Explore Sale

St. Joe Co., the Florida developer criticized by hedge-fund manager David Einhorn, fell as much as 6.5 percent in New York trading after the company said it hired Morgan Stanley to explore a possible merger or sale.

St. Joe will consider a new business plan, partnerships, joint ventures, alliances, asset sales and acquisitions, the Watersound, Florida-based developer said yesterday in a statement. The announcement came a month after Bruce Berkowitz and Charles M. Fernandez of Fairholme Capital Management LLC, the company’s biggest shareholder, were named to the board.

“This is a prudent time to step to the sidelines,” Buck Horne, an analyst with Raymond James & Associates Inc., wrote in a note to clients today in which he cut the stock to “market perform” from “strong buy.” “A neutral investment position is appropriate until more details are revealed.”

www.blommberg.com

Wall Street Boosts Borrowers as Real Estate Bond Market Returns

Randy Waesche was running out of time to retire debt he took on to build a Marriott hotel in downtown New Orleans. Then Citigroup Inc. showed up.

Waesche had spent six months seeking a more affordable alternative to terms being offered by his lender, a unit of Capmark Financial Group Inc. Citigroup was able to offer a better rate as the market for bonds tied to commercial mortgages revives following its 2008 collapse. The loan was completed in November, and was part of an $876 million securitized debt sale by Citigroup and Goldman Sachs Group Inc. in December.
www.bloomberg.com

North Valley Bancorp posts 4Q profit

REDDING, Calif. (AP) — Bank holding company North Valley Bancorp said Tuesday it posted a fourth-quarter profit because it did not have to set aside millions for loan losses and impairment charges.

The company reported net income of $2.3 million, or 33 cents per share, compared with a loss of $19.3 million, or $12.90 per share a year ago.

Analysts surveyed by FactSet expected a loss of 20 cents per share.

The Redding-based parent company for North Valley Bank did not record a provision for loan and lease losses in the fourth quarter ended Dec. 31. A year ago, the provision was $9 million.

It also had a $15.2 million impairment of goodwill charge in the year-ago quarter, but none in the current quarter.

www.bloomberg.com

Calgary's downtown office market experienced record leasing activity in 2010

CALGARY - Record leasing activity in the downtown office market in 2010 means job growth isn't far behind, says a commercial real estate expert.
Calgary's downtown office vacancy rate dipped to a low of 0.5 per cent in 2006 but then climbed to 15.7 per cent in 2009, said Savard. It ended 2010 at 14.4 per cent.
CITI is projecting the downtown vacancy rate to be 14 per cent this year and 12 per cent in 2012 despite the addition of the massive Bow tower project, and its 1.7 million square feet, and Eighth Avenue Place, and its one million square feet, to the office inventory.

Read more: http://www.calgaryherald.com

Colliers International Brokers Sale of 12 Hemenway Street in Boston

BOSTON– Colliers International has brokered the sale of 12 Hemenway Street in Boston for $4,750,000. Senior Vice President Leigh Freudenheim represented both the seller, Hostelling International Boston (HI-Boston), and the buyer, Hemenway Realty Ventures LLC.

HI-Boston, a non-profit organization that operates seven youth hostels throughout New England, will lease back the entire 22,000-square-foot building for approximately 18 months and continue to operate its hostel at the site. Hemenway Realty Ventures is currently in the process of determining the future use of the building for the period subsequent to HI-Boston’s occupancy.

Retail Development Remains Slow

The timing is perfect for anyone who wishes to sell NNN investment real estate. The lack of product and the 18 -24 month horizon for new product to enter the market means that even non credit NNN properties will draw the attention of investors.

Read the Full Story from Retail Traffic

"There are Massive Pools of Capital Out There"

With NNN inventory at its lowest point in the past five years will investors eager to enter the market begin to consider properties tenanted by local and noncredit national brands?

Full Story

Calpers Shifting Focus to Stable Properties

Calpers, the California Public Employees’ Retirement System, is looking to shift the focus of its $15 billion real estate portfolio to more stable, income producing properties. Could this include a new interest in the net lease market?

Full Story

50 to 100 Municpal Bond Defaults?

Meredith Whitney has predicted “50 to 100 sizable defaults” of U.S. municipal bonds totaling “hundreds of billions of dollars”.

Full Story

DC Market Offers Stability

The appeal of DC as a global tourist destination continues to drive the local economy. The data on hotel bookings as quoted in HotelNewsNow.com offers a testament to the strength of the DC metropolitan region. It provides yet another indicator of why investors seeking stable NNN assets are eager to acquire property in this market.

Full Story

Broadstone REIT Acquires Three Net-Leased Properties for $36M

Broadstone Net Lease (BNL) acquired three net lease properties totaling $36.1M:

• The Unity at Ridgeway medical office property in Rochester, N.Y., a Class-A property master leased to Unity Health System for 20 years (four-story, 120,000 sq ft).
• The 20,473 sq. ft. Guardian Urgent Care Center in Westminster, Colo. (initial lease term of 15 years).
• A distribution center in St. Louis, Mo. (81,000 sq. ft) leased to Jeffco Trucking for an initial term of 20 years.

Full Story

SunTrust Outparcel Sells for $4.4M

"PALM BEACH-In a move to cash in on a distressed redevelopment deal, Ram has sold the SunTrust Bank outparcel at its West Boynton Professional Center for $4.4 million."

Full Story

Borders' Shares Have Tumbled

Bloomberg News, reported late Tuesday afternoon that Borders could file for bankruptcy protection as early as next week and close as many as 150 stores.
Borders' shares have tumbled 47 percent this week to close at a new 52-week low of 39 cents.

Borders, the nation's second-largest bookstore retailer, said on Sunday that it was postponing its payments to vendors, landlords and other parties this month in order to refinance or restructure its debts.

New REIT to Exclusively Purchase NNN Properties

Free and Clear Equity, Inc. (FACE) – A new REIT plans to raise $306M in an IPO and purchase nothing but NNN properties.

http://nreionline.com/news/new_reit_nnn_properties_0104/

CoStar Agrees to $101MM Sale Leaseback

CoStar agreed to sale of their bldg in DC. They purchased it for $41MM last year and sold to a German fund for $101MM. Not a bad return for one year holding period. That IRR should be through the roof. CoStar signed a 15 year lease.

http://www.bizjournals.com/washington/blog/2011/02/costar-agrees-to-sell-its-new-hq.html

Yum Brands Has Big Growth Plans For 2011

Yum Brands — The world's largest restaurant company: KFC, Pizza and Taco Bell

The parent company of Taco Bell, KFC and Pizza Hut has big growth plans for 2011, especially in China and other emerging markets, but executives said during a conference call that they expect hurdles, such as commodities inflation and the effect of lapping a particularly successful 2010, to keep them on their toes.

Yum is coming off a strong year, with fourth-quarter profit up 27% over the prior year. Chief Financial Officer Richard Carucci said Yum estimates its 2011 commodities costs will be up 4% in the U.S., 5% in China, and 3% in its international division, YRI.

While Yum's commodities contracts have it fairly locked in for the year, Carucci said, if food costs don't come down, the company has about $40 million of further exposure: $25 million in China and $15 million in the U.S.

Yum recently raised prices in China, to offset both commodities and wage inflation in the country, and said sales remain strong. Other companies, such as McDonald's Corp. (MCD), Yum's biggest fast-food competitor, have also been forced to increase their prices in China.Thanks to strong sales in China, the restaurant operator's fourth-quarter earnings climbed 26% to 63 cents a share, beating views for 60 cents. Total sales grew 6% to $3.56 billion, also above expectations.

In the U.S., Yum said it plans to grow its Taco Bell locations to 8,000 from 5,000.Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of system restaurants with more than 37,000 restaurants in over 110 countries and territories and more than 1 million associates. Yum! is ranked #216 on the Fortune 500 List, with nearly $11 billion in revenue in 2009. Four of our restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver's – are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories.


Article published by the Wall st Journal.-By Annie Gasparro, Dow Jones Newswires; 212-416-2244; annie.gasparro@dowjones.com

Mr. Slim says he is to invest $8.3bn in Latin America

Net lease Market News

Mexican tycoon Carlos Slim Helú says he is to invest $8.3bn in 19 countries, mainly in Latin America.


The bulk of the money, some $3.6bn, is destined for his businesses in Mexico, including telecommunications, mining and road-building.

Drug-related violence affecting some regions of Mexico was no reason to stop investing in the country, Mr Slim said.

Last year he knocked Bill Gates off the top of Forbes magazine's billionaire's list with a fortune put at $53.5bn.

The planned $3.6bn for Mexico, a 13% rise on last year, would go to a range of sectors, with the bulk going to telecommunications, Mr Slim told a news conference in Mexico City.

"Whoever doesn't invest, be it out of fear or caution, will be left behind," he said.

Mr Slim said he believed the Mexican economy would continue to grow in 2011 and 2012.

Carlos Slim Helú (Spanish pronunciation: [ˈkarlos eˈslim eˈlu]; born January 28, 1940) is a Lebanese-Mexican business magnate, philanthropist and the chairman and CEO of Telmex, América Móvil. His extensive holdings in a considerable number of Mexican companies through his conglomerate, Grupo Carso, SA de CV, Carso represented about 18 percent of Slim’s $65 billion in public holdings, according to data compiled by Bloomberg. About two-thirds of that wealth comes from Slim’s stake in America Movil SAB, Latin America’s largest mobile-phone carrier increased 26 percent in 2010. His net worth is now estimated at 74.5 billion dollars — 15.5 billion more than last year,Slim’s best earners were his stock in Latin American telephone behemoth America Movil, up 15 percent, and his 42-percent increase in holdings of financial giant Grupo Financiero Inbursa and Construction company IDEAL, up by 31 percent. Sentido Comun director Eduardo Garcia said that Slim probably has more investment in private companies that is not revealed so easily, and that the 74.5-billion-dollar figure was only a minimum guess at his riches, amassed interests in the fields of communications, technology, retailing, and finance.[2] As of April 2010, he is the wealthiest person in the world with a net worth of around US$53.5 billion. sourcers www.wikipedia.com

Invest in Commercial Real Estate For Retirement Income

Any Time Is the Right Time to Get Into Net Lease Market For Retirement Income

2008 marks the first year when 78 million baby-boomers born between 1946 to 1964 start retiring. This is the first time in the US history that there is so many people who will be eligible for American Association of Retired Persons membership. So how will this affect you when it’s your turn to retire? And what should you do now? Since it has never happened before, you don’t have the benefits of learning from history. Let’s look at the big picture from 30,000 feet:

Uncle Sam is currently about $ 1.30 for every dollar they collect taxes. Since March 2008, the U.S. national debt to over $ 9,380,000,000,000 dollars, or about $ 30,894 per head exploded. The borrowing rate also increased, as he 2380000000000 $ Dollar has more debts are less than 4 years and the budget deficit for 2008 may be expanded to more than $ 500B. The government Accountability Office (GAO) warned of this type of fiscal policy is simply unacceptable!


Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, net leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today. Here's what you need to know about single-tenant, net leased properties: What is a single-tenant, net lease investment? A single-tenant, net-leased investment is typically a freestanding office, retail, or industrial building that is leased and occupied by one user or one company. Typically the tenant has committed to a long-term lease - usually longer than 10 years, and as long as 25 years with increasing rent over the lease term. What is a net lease? There are different types of leases for commercial property in the U.S. The two most common leases are full-service leases and net leases. A full-service lease means that the tenant is paying one base amount to the landlord/owner to occupy the space and the owner pays all the expenses related to the building including insurance and property taxes. With a full-service lease, the landlord/owner also is responsible for all maintenance related to the building. For example, if a thunderstorm damages the roof, the landlord/owner must pay for the repairs. In comparison, a tenant with a net lease is responsible for paying rent plus some or all of the operating expenses of the building such as taxes, insurance premiums, repairs, and utilities. Depending on how the leases are structured, they can be net-net leases or triple-net-leases. Specifically, in the case of a triple net lease, also known as NNN leases, the tenant agrees to pay all of the building's operating expenses, real estate taxes and insurance.

Square Footage: 3,119
Property Type: Restaurant, Retail
Lease Term: 15 yrs
Lease Structure: NNN
NOI: $159,178
Contact Broker: Rick Fernandez
Regarding Property: Arbys - Wake Forest, NC

The Wawa Net Lease Market

As a relative newcomer to the net lease market, Wawa convenient store gas stations are one of the hottest sought after triple net lease investment properties in the net lease market today. With an implied credit rating of BBB- / outlook Stable, most investors understand the credit-worthiness of
this privately owned company, which is considered one of the strongest convenient store operators in the country. In 2009, Wawa was ranked No. 55 in Forbes’ America’s Largest Private Companies list. Wawa currently operates more than 570 convenient stores throughout the mid-Atlantic, 270+ of which include gasMost Wawa net leases properties offer an investor long-term security and absolutely no management responsibilities in the form of a 20-year primary term nnn ground lease. These ground leases provide additional investment security given the nature of the real estate investment made by Wawa’s real estate team, including the Wawa Engineering and Construction Department which is responsible for the design, engineering and construction of all new stores and remodels. As with any ground lease investment, a landlord should be comforted by the fact that the tenant, in this case Wawa, has made a significant capital investment in the construction of the building, which at the end of the lease will become property of the ground lease owner.
Also driving the demand and value of Wawa net lease properties is the strong real estate fundamentals of the property sites. Wawa’s real estate team has specific site select criteria, which focus on key trade area location characteristics. Wawa net lease properties are typically located at signalized corners and out-parcel/pads of shopping centers with good visibility and ingress/egress. Ideal trade area characteristics include adequate population and minimum traffic counts of at least 25,000 vehicles per day. Sites should be located on high-volume intersections near other commercial traffic generators.

Wawa's namesake is a Native American word for the Canada Goose in flight, which is also incorporated into the company's logo. Wawa owns and operates convenience stores and gasoline stations in Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. These stores offer a fresh food selection under the Wawa brand including deli products, wraps, breakfast sandwiches, bakery products, fresh produce, and dairy products. The first Wawa store opened in April 1964 in Folsom, Pennsylvania.

Net Lease Investment Medical/Retail Center Offered for Sale

Reston, VA - Calkain Companies, a national single tenant net lease investment brokerage firm, has been named the exclusive advisor for the sale of Cedar Creek Station, a retail strip center in Strasburg, Virginia.

The investment sales team will be led by Betty Friant of the Calkain Realty Advisors. The property is listed for sale with an asking price of $2.85M, which provides an initial cap rate of 8.88%, with predominantly medical tenants.

The property is located in a gateway entrance to Strasburg, at an interstate intersection and near Virginia's Inland Port. Newly constructed in 2009, this modern brick professional complex includes 15,000+ sq ft of space. The property currently offers a well-located and highly visible home to numerous retailers and various medical practices.

Strasburg is situated in the top of Virginia, approximately one hour west of the urban concentration of Northern Virginia and Washington DC. The area is the Mid-Atlantic crossroads for Interstates 81 and 66. Interstate 66 provides easy access to points east including Washington, D.C. and Baltimore. Interstate 81 travels north-south the entire length of Shenandoah County, with nine interchanges including one at I-66, north of Strasburg.

Cedar Creek Station is strategically located along Old Valley Pike near the intersection of Interstate 81 and Route 11, just sound of Interstate 66. There are over 100,000 residents living within a 15 mile radius. The surrounding area includes lodging, industrial complexes and a retirement community.
Investors interested in net lease investment NN’s are more likely to have a passion about their business. They want to inform clients, grow their customer base and put their name on the Net lease market, while investors interested in NNN’s are more likely to be concerned purely with the profitability of the buildings.

For More Information Please Contact
www.bfriant@calkain.com

Triple-Net-Lease Properties Returns are More Favorable

Triple-net-lease properties' returns are more favorable and more secure than some traditional investment vehicles

By: David Sobelman, Executive Vice President, Calkain Cos.

As published in Scotsman Guide's Commercial Edition.

Despite the economic downturn and the fact that many aspects of the commercial real estate industry still need time to season before true recovery takes place, some niche segments of the market are actually performing extremely well. In fact, some are at the same level they reached at the height of the market.

Triple-net-lease investment properties, in particular, may be a true bright spot on the commercial investment horizon. Here's why.



Triple net lease properties are probably some of the most commonly noticed commercial real estate in the market. Most of the assets are drugstores, bank branches, restaurants, home-improvement centers and the like. These are core assets that have daily users and requirements. Typically, they are single-tenant buildings where, through the lease structure, the tenant is responsible for the taxes, insurance, and maintenance and management of the building - the three "nets."

Investors have a strong appetite for passive income in today's market, as there are few alternatives for them to receive a return that is equal to or better than what net lease assets provide. Additionally, it seems that lenders are becoming more comfortable with the asset type - many transactions in today's market are using some sort of lender-provided leverage.

Mortgage brokers are an integral part of the lending process for net lease investments, especially because one lender won't provide the best rate and terms for a particular investor every time. Brokers who want to increase their business in this asset class should understand what goes into funding triple net lease properties and be aware of the market's emerging trends.

Underwriting the tenant

Like in any underwriting process, lenders consider the real estate's value first. With net lease investments, however, the current tenant's credit also is weighed heavily.

Because tenants occupying single-tenant buildings typically sign long leases - sometimes for as many as 25 years or more - lenders want to know who is actually paying the rent to support the property for that long. Therefore, the underwriting of the tenant's credit becomes a key factor for lenders considering net leased assets.

There is some standardization for rating tenants, which comes primarily from credit-rating agencies such as Standard & Poor's (S&P), Moody's Investor Service, Fitch Ratings, etc. These agencies each have their own alphanumeric system to report how a particular company is performing from a credit perspective. S&P, for instance, has ratings that begin at AAA as the best-possible credit and incrementally go down to D.

In today's lending environment, net lease tenants with an S&P credit rating of BBB or greater have a better chance of getting a lender's attention because they are seen to be less risky. Tenants with credit ratings less than BBB are perceived to be more likely to default over the term of the lease.

In fact, a Moody's study quantified this phenomenon, stating that companies with a BBB- credit rating have a 4-percent chance of defaulting on their lease within any five-year period. Conversely, a company that has rating of B- has a 43-percent chance of defaulting on its lease within the same period. As a matter of comparison, companies with AAA ratings have a 0.15-percent chance of defaulting. It is pretty clear why lenders focus their underwriting on the potential tenant's credit.

Funding net leases

Although mortgage brokers unfamiliar with this asset class may think this type of debt comes from sophisticated sources housed in a class-A skyscraper on Wall Street, the vast majority of loans for net lease investments come from banks.

Real Capital Analytics, a market-research company, recently reported that 51 percent of single-tenant acquisition transactions completed to-date in 2010 came from a traditional bank. It also reported, however, that 40 percent came from a national bank and 11 percent was from a regional or local bank.

It seems that when a recession hits, the lending environment changes to a point that sophisticated financing instruments are no longer needed to drive the market. Instead, individual relationships between borrowers, lenders and their conduits (i.e., mortgage brokers) are the primary source of transaction volume.

In addition, Real Capital Analytics reported that 30 percent of the transactions completed this past year used existing financing that was assumed by a new buyer. Anecdotally, investors active in the market at the beginning of this year did not have as many sources of capital. Those who made purchases that required financing were given financing quotes that were outrageous and did not allow the transaction to make sense to the investor. Therefore, they assumed the debt from the previous owner because the terms and interest rates were more favorable than the market at that time. Sourcing debt for net lease investments is becoming easier, however.

Gaining market share

Single-tenant properties have become so popular this past year that they comprised roughly 35 percent of all commercial real estate transactions completed in the first two quarters of the year, according to data from Real Capital Analytics. By comparison, when the market was at its peak in 2007, only 20 percent of all transactions included the asset class.

With more than $425 billion in total commercial sales in 2007 - which included $85 billion in single-tenant sales - compared to $35 billion in total sales for these past first two quarters - which included $12.25 billion in single-tenant sales - it is apparent that with fewer transactions, more people are steering toward stabilized and lower-risk properties.

Capitalization rates - or cap rates - are a quick snapshot of an investor's return. In today's market, cap rates are roughly 6 percent to 8 percent for creditworthy properties. When a basic comparison is made using other passive investments, it is fairly clear why investors are seeking to put their capital to work in the property type.

Most investors who have cash available to make passive, nonspeculative investments are using basic money-market or savings accounts to hold the cash. When returns for those investment vehicles hover around 1 percent, the investor is motivated to find alternative investments for that capital while also maintaining a steady and safe cash flow over a period of time. Net lease properties are filling that void.

Tracking trends

There are different periods where lenders will have a strong appetite for a particular tenant and less so for other tenants, and this changes over time. Brokers who stay on top of these kinds of trends in their markets and leverage their relationships with lenders can help clients find the best rates and terms at any particular moment.

As an example, Walgreen Co. drugstores - a common triple net lease tenant - have an S&P credit rating of A+. As such, lenders are comfortable with these stores' credit and viability as a longstanding tenant. At the beginning of this year, however, there were more than 450 Walgreens stores available for purchase as net lease investments.

Because most investors need financing to purchase a single store and the average sale price for a Walgreens store is about $5 million, mortgage brokers were engaged to find the best debt. Lenders, however, found that they had too many Walgreens loans on their balance sheets and started to slow down the distribution of debt for that tenant. Brokers show their value in these scenarios by finding other lending sources that aren't as saturated with one particular tenant.

Supply and demand dictates the rate and terms of a particular tenanted-occupied building. Because of their popularity, Walgreens investments typically garner a higher interest rate. Other companies that have S&P credit ratings of A+ and similar lease terms, but higher price tags and therefore fewer buyers may have substantially lower interest rates.

Lenders, therefore, dictate rates and terms based not only on the tenant's credit, but also on subjective factors that move markets in different directions at different times. Mortgage brokers should be cognizant of these trends and have their arsenal of lending sources available for their clients as market indicators change.


Net lease properties have proven to be a strong asset class in this recovery -driven market. Lenders are seeking assets for their portfolios to maintain strong balance sheets. It's always better to have a stabilized net lease investment earning income for the lender and the investor on the books as opposed to vacant, speculative land that likely has an undetermined value for future development.

Mortgage brokers who focus on this asset class can take advantage of the new demand for these properties, as they are some of the only properties getting funded with rates and terms last seen at the height of the market.


www.calkain.com