Funding For Commercial Real Estate Down

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Overview                                         

• California developers obtain funding for multi-million dollar projects.
• NY infrastructure projects are dependent on credit markets for funding and will see declines/delays now.
• GM struggling to refinance its Detroit HQ, just six months after paying off the debt on it.
• A $225 billion drop in CRE debt available nationally.

Retail Project, Storage Site Land $42M. Indio, California: “Developer Northgate Crossing LLC has obtained a $26.5 million land development loan for its Northgate Crossing retail project here, and Carson Self Storage has lined up $15.5 million in joint venture equity in two recent transactions demonstrating that financing deals are still being closed despite the disarray in the capital markets. The two were separate, unreleated deals: The Northgate financing was arranged by Los Angeles-based Highland Realty Capital on behalf of Northgate Crossing LLC; the joint venture funding in Carson was arranged by NorthMarq Capital.” (Globe St., Oct. 14)

Credit Markets See More Gradual Improvements. “New York Building Congress said New York City will see its construction boom peak this year and construction jobs plunge. Metropolitan Transportation Authority spokesman Jeremy Soffin said capital projects like the Second Avenue subway line are highly dependent on access to the credit markets, while Steven Spinola, president of the Real Estate Board of New York, said fewer projects will be financed because it will be harder for developers to get funding.” (Yahoo! Finance, Oct. 14)

GM Seeking $500M Bond Investment or Sale-Leaseback of Detroit HQ. “Less than six months after it paid off its debt on its Detroit headquarters, struggling automaker General Motors (GM) is trying to refinance the Renaissance Center or arrange a sale-leaseback to raise about $500 billion. GM officials recently appeared before the Detroit Police & Fire Retirement System Pension Fund board [trying] to get the board to agree to a $250 million collateralized revenue bond investment… If that pension board agrees, GM would seek another $250M from another city pension fund… Several pension board trustees told news groups that they considered it too big of a risk.” (CPN, Oct. 14)

Financial Upheaval Keeping Real Estate Deals in Check. “Nationally, there's been a $225 billion drop in the amount of debt available for commercial real estate investments, according to Tom Sherlock, senior managing director for Newport Beach-based real estate investor and advisory firm Buchanan Street Partners, which arranges financing for developers and invests equity in projects for itself.” (Orange County Business Journal, Oct. 13)

                                                         

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