A Florida investor recently acquired one of Miami's best-known office addresses for $262.5 million, the biggest office deal in the city since 2008 and a gutsy bet that the city's commercial real-estate market is on the road to recovery.
Crocker Partners acquired the marble-clad Miami Center from Sumitomo Corp. of America, a unit of Sumitomo Corp., a Japanese global trading firm. Designed by Italian born architect Pietro Belluschi, the 34-story tower bearing CitigroupInc.'s logo includes the bank among its biggest tenants. The now-defunct Stanford Financial Group also occupied several floors before its collapse in 2009.
The deal last month comes as a trickle of buyers are prowling for bargains in second-tier markets, like Miami, where office rents and vacancies have yet to recover from the recession. Analysts say they are watching if large institutional investors will follow locally based Crocker's lead and help push up values and volume. "The market's healing, but it's certainly not all the way back," said Ben Carlos Thypin, director of market analysis for Real Capital Analytics, which tracks office deals.
Read More: http://online.wsj.com/article/SB10000872396390443295404577545401645668054.html?mod=WSJ_RealEstate_MIDDLETopNews
The curtain has been partially pulled back on the group of the Virginia Tech alums who bought the troubled First & Main shopping center in Blacksburg.
The group, operating as a new Florida limited liability company called Blacksburg APF Partners, paid nearly $11.8million for the 24-acre shopping center June 29, according to real estate papers filed in Montgomery County Circuit Court.
As conditions looked uncertain, Wells Fargo, which lent money to the project developer, took ownership of the property in a transaction normally associated with a type of foreclosure-like event. Before the Tech alums bought it, it had been bank-owned for the prior year and a half.
Wells Fargo was not alone in deciding to take legal hold of a struggling shopping center to which it lent money. The number of lender-repossessed shopping centers exceeds 500 across the country and is growing, though at a substantially slower pace than in 2011, said Ben Thypin, director of market analysis at Real Capital Analytics.
Read More: http://www.roanoke.com/news/roanoke/wb/311604
MetLife Inc. has agreed to pay $112 million for a West Loop office tower, a rare recent case of an insurance company buying a local office property instead of financing someone else's deal.
New York-based MetLife is paying roughly $301 a square foot for the 372,000-square-foot building at 550 W. Washington Blvd., according to a source. The insurer is buying the 16-story tower from Boston-based Beacon Capital Partners LLC, which has owned the property since 2006.
The 12-year-old building is more than 93 percent leased. With financial exchange CME Group Inc. leasing 244,455 square feet through 2024, the property is a relatively low-risk investment to insurance companies, which have been quiet on the equity side in Chicago so far in 2012.
Midway through 2012, insurance companies had invested just $102.6 million in Chicago-area office buildings, compared to $305 million for all of 2011, according to Ben Thypin, director of market analysis at New York-based research firm Real Capital Analytics Inc.
“One of the reasons insurance companies are doing more lending than buying is, during the crash they got burned by some of their purchases,” Mr. Thypin says. “When they're acquiring, it's very high-quality properties. To the extent that they're ramping up their acquisition activity, it's only for the highest-quality properties.
Read more: http://www.chicagorealestatedaily.com/article/20120709/CRED03/120709878?template=printart
Vornado Realty Trust (VNO) said it agreed to buy retail space on New York’s Fifth Avenue, the world’s priciest shopping corridor, for about $707 million, and plans to sell $428 million of properties across the U.S. and Canada.
The purchase at 666 Fifth Ave. in Manhattan will be funded with debt along with proceeds from asset sales, New York-based Vornado said yesterday in a statement. The company will get net proceeds of about $144 million from the sale of assets including the Washington Design Center, the Boston Design Center and the L.A. Mart, and a further $186 million from an agreement to sell an office building in Washington, it said separately.
The Fifth Avenue purchase should exceed the record of $10,755 a square foot for New York store space, set by SL Green Realty Corp. (SLG) and Jeffrey Sutton when they bought a 12,700- square-foot (1,180-square-meter) Times Square building last year, said Ben Thypin, director of market analysis at Real Capital Analytics Inc.
Vornado’s 114,000-square-foot purchase also includes about 75,000 square feet that are part of the office portion of the building, which it’s acquiring under a long-term lease, according to the company’s statement. The company didn’t disclose the price breakdown for the retail and office portions.
Read More: http://www.bloomberg.com/news/2012-07-05/vornado-to-buy-retail-stores-at-666-fifth-ave-for-710-million.html
Just five years ago, the commercial real estate market was thriving. The delinquency rate on mortgage loans was at a record low, and the volume of new mortgages being sold to investors was at a record high.
Now the first of the mortgages that were securitized in 2007 have started to come due, and it is becoming clear just how bad many of the loans were. The time when investors were most eager to buy turns out to have been the worst time to do so.
Commercial mortgages — unlike residential ones — are seldom issued for periods of longer than 10 years, and often for as little as five. Many require no principal repayments during that period but call for the entire amount to be repaid in a balloon payment at the end of the loan. So it can be at maturity when the bad news arrives.
“Only 28 percent of the loans from 2007 due to mature in 2012 managed to pay off in full,” said Manus Clancy, the senior managing director at Trepp L.L.C., which monitors the commercial mortgage market.
Other loans in those securitizations were for seven or 10 years, so new waves of losses may arrive in 2014 and again in 2017.
Perhaps no loan that was securitized in 2007 illustrates the craziness of the market at the time better than one for a group of apartment buildings in Manhattan. The owner of the buildings was already under investigation for the tactics he had been using to raise rents, but that fact was not mentioned in the prospectus for the securitization. What was disclosed was the supreme optimism involved in underwriting the loan. The 36 apartment houses, owned by a group run by Joel S. Wiener, had produced cash flow of $5.4 million in 2006, but they secured a loan of $204 million, on which annual interest payments of $12.7 million would be required.
The loan went into default in early 2009, but Pinnacle continued to run the apartments. In November, the securitization sold the loan for $116.7 million. Ben Carlos Thypin, the director of market analysis at Real Capital Analytics, calculates that after all fees are considered, “the net loss to bondholders was 49 percent of the original loan balance.”
Read More: http://www.nytimes.com/2012/07/06/business/bad-mortgage-loans-burn-investors-and-tenants-high-and-low-finance.html?ref=business
After years of financial turmoil at Savoy Park, an 1,800-unit Harlem apartment complex, Vantage Properties and Area Property Partners finally unloaded the troubled development for more than $210 million last month.
The sale allows the two firms to pay off the outstanding balance on the senior mortgage that’s been looming over them for years.
While Vantage and Area are still fighting foreclosure suits on several properties in New York City, the mega-sale came just three weeks after the partnership managed to sell off a portfolio of eight distressed Harlem and Washington Heights buildings for $65 million, far less than the original purchase price of $87.7 million.
Analysts say the sale of Savoy Park to the New York Affordable Housing Preservation fund — created by Citigroup and L+M Development — is likely to help Vantage CEO Neil Rubler overcome his firm’s considerable struggles and reposition the company in a market where multifamily properties are showing strong investor interest.
“In general, people in this industry have very short memories,” said Ben Thypin, director of market analysis at research firm Real Capital Analytics.
Read More: http://therealdeal.com/issues_articles/a-new-vantage-point/
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.