Archive for the ‘Investment’ Category

Blackstone Pays Back Former Fund Investors (Monday’s News & Notes)

by Elaine Misonzhnik August 30th, 2010

Investors in commercial real estate funds that lost money in the current downturn can take heart: their fund managers might be forced to recoup at least some of their losses. Bloomberg reports that private equity firm the Blackstone Group has returned $3 million to investors in its Blackstone Real Estate Partners International LP, as a result of so-called “clawback” provisions. Next quarter, Blackstone might end up paying more than $15 million to investors in another real estate fund. For this and other stories about retail and retail real estate, follow the links below:

No Comments Related Topics: Finance, Investment, News, Quirky, Retail, Retail Real Estate |

Thoughts on Strategic Defaults (Friday’s News & Notes)

by David Bodamer August 27th, 2010

This Wall Street Journal piece about commercial property owners opting for strategic defaults is a couple days old, but it’s triggered some interesting responses.

The story recounts how some commercial real estate owners have opted to just stop making mortgage payments on some properties and turn them over to lenders and draws parallels with the trend of “jingle mail” on the residential side.

These companies all have piles of cash to make the payments. They are simply opting to default because they believe it makes good business sense.

“We don’t do this lightly,” said Robert Taubman, chief executive of Taubman Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly Center in Los Angeles, decided earlier this year to stop covering interest payments on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.

Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder.

“Where it’s fairly obvious that the gap is large, as it was with the Pier Shops, individual owners are making very tough decisions,” he said.

Yves Smith at the Naked Capitalism blog suggests that the tone of the article seems to give commercial real estate owners more of a pass on making these decisions than on individual homeowners who also may be walking away from mortgages.

She writes:

“The rich are different than you and me.” And the fact that they have more money means their defaults are couched as pure business decisions. But mere homeowners, told to view their house as an investment, are now castigated if they act as any professional would and cut their losses.

So is there a double standard in place? Are commercial owners being given a pass while homeowners are being lambasted for passing the buck on bad decisions?

It does appeal to my sensibilities to say that all property owners should be held to the same standards. Either we say it’s OK for everyone to employ strategic defaults or its not. I don’t think homeowners should be judged differently than commercial property owners when it comes to this. And if banks are willing to restructure loans for commercial owners, they should be willing to work with homeowners as well.

Just my two cents.

Here are some other news and notes from the past couple of days.

No Comments Related Topics: Commentary, Finance, Investment, News, Quirky, REITs, Retail, Retail Real Estate, Trends |

CMBS Market Continues Revival (Friday’s News & Notes)

by David Bodamer August 20th, 2010

On back-to-back days we’ve now gotten word of big CMBS offerings by JP Morgan

On Thursday, Bloomberg reported that JPMorgan Chase & Co. plans to sell $1 billion of commercial mortgage-backed bonds in what would be the biggest offer of 2010.

JPMorgan’s sale, the largest this year of the debt, would grant hedge fund H/2 Capital Partners LLC, the buyer of the bottom $50 million slice, primary authority over troubled loans, according to people familiar with the transaction who declined to be identified because negotiations are private. Goldman Sachs Group Inc. and Citigroup Inc. gave those rights to investors of the highest-rated portions in a $788.5 million offering on Aug. 4.

Today, news of another offering emerged.

JPMorgan Chase & Co. is marketing $484.6 million of bonds backed by a loan to Centro Properties Group, the Australian shopping center owner seeking to refinance $2.7 billion of debt from its U.S. business.

The loan is secured by 72 retail properties owned by the Glen Waverley, Australia-based company, according to people familiar with offering who declined to be identified because terms are private. Shopping centers in Texas account for 39 percent of the pool, while properties in New York and New Jersey represent 21 percent.

Things are slowly improving.

Here are a few other headlines from the past couple days worth checking out.

No Comments Related Topics: Commentary, Finance, Investment, Management & Leasing, News, REITs, Research, Retail, Retail Real Estate, Trends |

Malls Form Partnerships with Churches (Tuesday’s News & Notes)

by Elaine Misonzhnik August 10th, 2010

With the shortage of expanding retailers in the marketplace, mall owners have turned to courting unconventional tenants. Among these tenants are schools, government buildings and, increasingly, churches. It turns out houses of worship can be a boon for retail property owners. Not only are they willing to take second-rate spaces, they bring in a sizable number of shoppers on weekends.

For this and other stories about retail and retail real estate, follow the links below:

No Comments Related Topics: Commentary, Development, Finance, Investment, Management & Leasing, News, Quirky, REITs, Retail, Retail Real Estate, Trends |

Growing Rift Appears Between Mayor and Developers in Boston’s Downtown Crossing Project (Friday’s News & Notes)

by Elaine Misonzhnik August 6th, 2010

We’ve reported before how the relationship between Boston Mayor Thomas M. Menino and the developers of the Downtown Crossing project might have been compromised by some ill-advised remarks by Vornado head Stephen Roth.

It now seems Menino is determined to be the one calling the shots on the project. According to newly emerged reports, the Mayor refused to go along with Vornado and Gale International’s proposal to build the project in phases, starting with new digs for Filene’s Basement and a parking garage. The plan would allow the developers to finally start construction on the project rather than waiting for market conditions to correct enough to allow the construction of the planned residential component.

The Mayor, however, reportedly saw this as another ploy to make the project benefit the developers at the expense of the city.

For this and other stories about retail and retail real estate, follow the links below:

No Comments Related Topics: Commentary, Development, Finance, Investment, Management & Leasing, Mixed-Use, News, Quirky, Retail, Retail Real Estate, Trends |

FTC Concerns Force Simon to Cut Back on Prime Outlets Deal (Monday’s News & Notes)

by David Bodamer August 2nd, 2010

The Wall Street Journal wrote a story on an interesting nugget that came up during the company’s second quarter earnings call. The firm has had to modify its pending acquisition of Prime Outlets reportedly to ease antitrust concerns from the Federal Trade Commission. It has removed three properties and $700 million from the deal.

Mr. Simon declined to give the specifics of why the three properties noware being excluded or how the details of the deal have changed due to the reduced number of centers.
However, a person familiar with the talks said the omissions are being made to mollify the FTC.
Adding Prime’s 21 centers, less the three now excluded, would cement Simon’s dominance of the outlet-center market, giving it a total of 63 outlet properties. That is twice as many as No. 2 outlet-center operator Tanger Factory Outlet Centers Inc.
The three properties that now will remain with Lightstone rather than going to Simon are the Prime Outlets in St. Augustine, Fla., and two development sites in Grand Prairie, Texas, and Livermore Valley, Calif. Lightstone will retain and develop the properties.
“U.S. antitrust authorities have consistently recognized that the retail industry is highly competitive and fragmented,” Simon said Friday.

Aside from that, here’s a host of other news stories and blog entries from late last week and over the weekend.

No Comments Related Topics: Commentary, Development, International, Investment, Management & Leasing, News, REITs, Research, Retail, Retail Real Estate, Trends |

Pontius Now Overseeing Marcus & Millichap’s National Retail Group

by David Bodamer July 30th, 2010

Marcus & Millichap Real Estate Investment Services continues to shake up its executive ranks.
Last month the firm promoted John Kerin to the positions of president and CEO to replace Harvey Green, who retired. Kerin officially took over those posts on July 1.
Today the firm has announced a second big move with the the promotion of Alan N. Pontius to the new position of national director of commercial leased investment properties. Pontius was previously the national director of the firm’s National Office and Industrial Properties Group and the promotion means he will now also oversee the National Retail Group. Pontius replaces Bernie Haddigan, who also oversaw the firm’s Special Assets Services division. According to Marcus & Millichap’s release, Haddigan retired from the firm.
It’s a big change given Haddigan’s prominence in the retail real estate sector. Haddigan has been a fixture at industry events for years and often spoke on panels representing the firm. And he was a key part of the company’s annual Retail Trends event in Las Vegas at ICSC’s RECon–a meeting he hosted and moderated for 12 years. In all, Haddigan had been with Marcus & Millichap for nearly 30 years in various ranks. He began his career as an associate in the Encino, Calif., office. He was appointed regional manager of the Encino office in 1986, then elected as a managing director and a member of the firm’s board of directors in 1994. In 1995 he relocated to Atlanta as a division manager to lead the firm’s East Coast expansion.
For his part, Pontius has been with Marcus & Millichap since 1985. Pontius began his career with Marcus & Millichap as a sales associate, and in this capacity he consistently ranked among the firm’s top 25 investment specialists. In 1993, he was appointed regional manager of the Palo Alto office, where he led that office to consistently rank among the top offices company-wide. Pontius was promoted to first vice president in 2000 and to senior vice president in 2002. Also in 2002, he was promoted to national director of the NOIPG. He was elected to managing director in 2007.
Kerin, meanwhile, has been with the firm since 1981. In 1987, he was promoted to regional manager of the Los Angeles office. He was elected first vice president in 1994 and managing director in 1996.

No Comments Related Topics: Commentary, Investment, News, Retail Real Estate |

Now CRE is Doomed Again

by David Bodamer July 29th, 2010

Two weeks ago, I posted when Time, MSNBC and Fortune almost simultaneously looked at aspects of commercial real estate and proclaimed signs of recovery.
In the latest dispatches, however, we’re back to commercial real estate being doomed again–at least according to this segment on CNBC.
The lesson, again, is that commercial real estate is a complex business with lots of moving parts. We’re going to have crisis alongside recovery. There’s no simple narrative to be had here. We’re not going to see a clear commercial real estate recovery nor are we going to come upon a moment where all is collapsing. So let’s stop looking for the one-line takeaways about commercial real estate.

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New CMBS Deal in the Works (Wednesday’s News & Notes)

by Elaine Misonzhnik July 28th, 2010

Good news for commercial real estate borrowers: there is another CMBS issue in the works. Put together by Goldman Sachs and Citigroup, the new issue will mark the third multi-borrower CMBS deal this year after the industry saw zero multi-borrower deals in 2009. Industry sources have told Retail Traffic, however, that the banks are being extremely careful about these new issues. Rather than putting them together and then selling the bonds, the banks secure the bond buyers ahead of time. So while things are improving on the CMBS front, the market is still very, very shaky. For this and other stories on retail and retail real estate, follow the links below:

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Consumer Confidence Fades (Tuesday’s News & Notes)

by David Bodamer July 27th, 2010

I wonder if retailers are going to regret the fact that they have gotten more aggressive about opening new stores. After a tough few years, the healthy same-store sales numbers in the early parts of 2010 brought retailers out of hibernation and ready to talk to landlords about expansion plans.
But now the consumer picture is getting increasingly bleak. The latest consumer confidence figures show continued deterioration. And every day we hear “double-dip recession” mentioned more.

The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index slipped to 50.4 in July, down from the revised 54.3 in June. Economists surveyed by Thomson Reuters expected a reading of 51.0. The decline follows last month’s nearly 10-point drop, from 62.7 in May, which marked the biggest since February, when the measure also fell 10 points.
The survey was taken July 1-21, beginning just as the Standard & Poor’s 500 index was falling to a nine-month low of 1,022.58 on July 2. It had risen 4.5 percent by July 21 and has since climbed an additional 4 percent.
The second straight month of declining confidence follows three months of increases.
“It’s all about jobs. That’s still the primary source of income,” said Lynn Frnaco, director of The Conference Board Consumer Research Center. “Until we see the pace of job growth pick up and consumers are confident that this is sustainable, we are not likely to see a significant pickup in confidence.”

I feel like I’m beginning to beat a dead horse here, but I can’t see how we have a real recovery in retail and retail real estate until a job recovery occurs. And on that front, there’s not much to be happy about either.
Ugh.
Aside from that, here are some other news and notes from the retail real estate world.

No Comments Related Topics: Commentary, Investment, News, Retail, Retail Real Estate, Trends |