Wednesday, August 31, 2011

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.

Tuesday, August 30, 2011

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.”

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.

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.

Wednesday, August 24, 2011

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....

Wednesday, August 17, 2011

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

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.

Monday, August 15, 2011

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.

Thursday, August 11, 2011

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.

Wednesday, August 10, 2011

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

Monday, August 8, 2011

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.

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 ...

Friday, August 5, 2011

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.