Housing Market Tracker - Commercial Real Estate Review

Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.

Commercial Real Estate and Real Estate Investment Trusts (REITs)

• US Commercial Real Estate Value Falls (Boston Globe, Nov. 14th): "The value of US commercial real estate owned by big pension funds fell 2.5% in Q3, the first quarterly downturn since Q3'03, according to an index produced by the MIT Center for Real Estate. The drop may not only spell the end of a five-year rally during which commercial real estate prices effectively doubled, but it also may signal that weakness in the housing market is spilling over into commercial real estate... which added that the last time that prices fell more than 2.5% was in Q4'01, when prices fell 3.9% following the terrorist attacks of 9/11."

• KBS REIT to Purchase $53.5M Flex Portfolio in Nashville (CoStar Group, Nov. 14th): "KBS REIT is planning to purchase a portfolio of six distribution and flex properties in Nashville for $53.5 million, or about $97/sf, according to a SEC filing. The seller is FirstCal Industrial 2 Acquisition LLC, an affiliate of First Industrial RealtyTrust of Chicago. The portfolio totals 551,184 square feet and averages 97% leased, KBS said in the filing, with anchor tenants CVS Caremark and Mercantile Properties occupying a combined 39% of the leased space. Other tenants include Southwestern Telecom, GSA, Caterpillar, Quest Diagnostics and the Metropolitan Government of Nashville."

• AMB Buys Brisbane Facility for $6.4M (CoStar Group, Nov. 14th): "AMB Property LP (AMB) has purchased the industrial facility at 150 W. Hill Place in Brisbane, CA, for $6.45 million, or $180 per square foot. Prior to the closing of the deal, AMB negotiated a seven-year lease with Kuehne & Nagel to fully occupy the 35,800-square-foot building. The property was constructed in 1970 and last sold in 2003. AMB is an industrial REIT that operates throughout North America, Europe and Asia with a portfolio totaling 140.8 million-sf."

• UDR Eyes Early '08 Start for $453M MXD Project (Globe St., Nov. 13th) Texas: "United Dominion Realty Trust (UDR) is poised to break ground in early 2008 on the first phase of a $453-million redevelopment of a 100-acre tract that it amassed in the past year through the acquisition of nine multifamily properties. There will be 5,949 residential units, roughly 500,000-sf of office space and an equal amount of retail space... In the REIT's Q3, it reported the first phase represented $352M of the $453M plan. Larry Thede, investor relations director for the Highlands Ranch, CO-based UDR: Addison's drawing power for the steep investment is the daytime population of 100,000, with only 16,000 living inside the city line."

• Blackstone Group Soft Shoes Real Estate (George Gutowski in Seeking Alpha, Nov. 13th): "During Blackstone's (BX) [recent financials] weakness in the sub-prime residential lending area spread to general commercial real estate lending. Although there was no evidence that these credit problems have significantly affected the underlying operating fundamentals of the investment portfolio, valuation multiples have declined modestly... The investor is being prepared for bad news. The future press release may now read "As Previously Disclosed". Investors need to watch how blips show up on the radar."

• Altria Sheds 120 Park Ave. HQ for $525M (Globe St., Nov. 13th): "Altria Group Inc. [will] sell its headquarters building at 120 Park Ave. here for approximately $525 million. The purchaser is a subsidiary of Global Holdings Inc., a private, US-based real estate investment company, which is part of Eyal Ofer family interests. The 643,000-sf building has served as Altria's corporate headquarters since it opened in 1982... Altria plans to close the sale no later than April 1, 2008. Altria said in a prepared statement that it will record a pre-tax gain of approximately $440M upon closing the transaction."

• Balazs To Sell Assets (Crain's NY Business, Nov. 10th): "Andre Balazs is [selling] half of his hotel portfolio... [including] Hotel QT of New York, and the three Standard Hotels in Los Angeles, Hollywood and Miami. Balazs says he is close to concluding a deal with a buyer: "We want to take the equity out of these properties and reinvest it in additional hotels." As a condition of the sale, Andre Balazs Properties would continue to manage and operate the hotels... In recent years, many major hotel companies, including Starwood Hotel & Resorts and Hilton Hotels, have been selling their real estate while negotiating lucrative property management contracts to continue operating the hotels."

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