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.

Quote of the Day

"We're able to get some very good transactions to put on our balance sheet that weren't available before this whole situation came to pass." - Tim Zietara, managing director at CIT Commercial Real Estate. Zietara said that after the commercial mortgage-backed securities market froze up in the summer, CIT has recently been increasing the volume of securitized assets from Wall Street firms because the spreads and quality of loans are better than they were six months ago. (CNN Money, Nov. 27th)

Commercial Real Estate and Real Estate Investment Trusts (REITs)

• UBS Financial Services To Relocate (Globe St., Nov. 27th) New York: "In an intracity move, the private client group of UBS Financial Services Inc. will be relocating across town early next year. The firm, which currently occupies a little more than 20,000 sf at the Gateway building at One North Lexington Ave. in Downtown White Plains, has signed a lease for 29,028 sf of space at RexCorp Realty LLC’s 709 Westchester Ave."

• Hines Buys 350,000 SF for $230M (Globe St., Nov. 27th) Los Angeles: "The Hines US Office Value Added Fund II has acquired the 350,000-sf 12100 Wilshire Blvd. office tower from Rreef. The sales price was undisclosed, but sources peg it at $230 million. The 19-story office tower is situated at the corner of Wilshire Boulevard and Bundy Drive in the Brentwood submarket of West Los Angeles... The 12100 Wilshire building was... about 92% occupied at the time of the sale. Hines will manage and lease the property."

• Energy Plaza Buildings Sold To Houston Real Estate Company (San Antonio Business Journal, Nov. 26th) Texas: "Cameron Management has purchased Energy Plaza I and II in North San Antonio, which together comprise 179,775 square feet of rentable space. Cameron bought the buildings from the State of Wisconsin Investment Board. The Bristol Group arranged the transaction and Cameron Management financed it in conjunction with Citibank N.A. Financial terms of the acquisition were not disclosed."

• Commercial Real Estate: 'More Light In The Tunnel Right Now' (Crain's Detroit Business, Nov. 26th): "The sale of commercial real estate to out-of-town investors was hot in 2007 and is expected to continue, as the Detroit area has some of the best deals in the country for investors willing to accept risk. Driving the new investment is optimism in the market. Investors who are buying are expecting that a turnaround will occur and property will be worth more money. The pace even kept up in late August when the cost of borrowing money went up dramatically on the heels of the subprime-lending debacle that stalled transactions around the country."

• Is a Crisis Looming at Maguire Properties? (Eric Wolff in Seeking Alpha, Nov. 25th): "Maguire Properties (MPG) is a highly-levered commercial real estate REIT with properties concentrated in Southern California... It is looking increasingly likely that MPG will either be forced to cut their dividend, to continue to liquidate existing properties, issue a dilutitive equity offering (if they can get anyone to buy it), or sell the company. The company needs a friendly debt market to continue operating as it... At these prices, I think the downside of a short is limited at NAV, and the upside could be 30-80% depending on how quickly and how much the MPG's assets erode in value."

• Now May Be Good Time To Get Into A REIT (LA Times, Nov. 25th): "Although REITs have outperformed stocks over the last decade, they have been slammed this year. One reason is that investors expect the market values of the underlying properties to go down. Morningstar equity analyst Jeremy Glaser: Recently, REITs on average have been selling for about 20% less than their net asset values. That would suggest investors believe commercial real estate prices are likely to fall sharply. Because such a decline is "already baked into the cake." Adding REITs to your portfolio can reduce the risk of a big decline in its value in any given year -- without hurting long-term returns."

Tracking the Housing Market and Homebuilder Stocks You can track developments in the housing market, homebuilder/housing stocks and review subprime news by bookmarking our Housing coverage or subscribing to our free email service. If you have a blog or website of your own, you can track developments in the sector and provide great content for your readers with our Housing Market widget (left). It's simple to add -- just select "Housing Market" from the drop-down menu here.

Comments

[RadioCeleb99]

Everyday more Economist’s like Robert J. Shiller are expressing concern that the threat of a recession is coming, but there are plenty of other clues that we are facing unprecedented risks. Consider publicly traded Real Estate Investment Trusts ( REIT). Over the last few years most REIT’s performed extremely well. But the fundamentals are deteriorating and the trading values that took years to build could potentially be wiped out in as many months by the those nasty stock market vultures and fast buck artists commonly known as short sellers. Take Equity One (ticker: EQY) as an example of the perfect storm. Equity One is traded on the New York Stock Exchange. While Equity One’s exposure is nationwide it is based in Florida and so is a huge chunk of its portfolio. The double whammy facing Equity One is that unlike a diversified REIT it primarily invests in “retail” real estate. Equity One disclosed in the latest supplement to it’s quarterly report that its overall vacancy rate is already over 6%, but the shocker is the fact that the rate almost doubles (to a little over 12% vacancy) when the tenants shop is less 10,000 sq ft. The real danger for Equity One is that this group of tenants represents over 70% of Equity One’s shopping center revenue. When you consider that less than 30% of Equity One’s current shopping center tenants are Anchor’s (defined as having over 10,000 sq ft.) you really get goose bumps because at least the bigger retailers have the capital reserves to weather the storm. …And you thought only Realtors and builders had it bad. 