Housing Market Tracker - War, Elections Slow Down D.C. Office Market

Commercial Real Estate and Real Estate Investment Trusts (REITs):

GE Real Estate Loans $25M To RM Crowe For Office Refinance. "RM Crowe, which owns [an] office building... in Dallas, is set to take out a $25.3 million loan to refinance the property. Its lender is GE Real Estate, a longtime financing partner of the firm. The 13-story building with 162,112-sf of commercial space, was acquired by the firm in 2005. RM Crowe plans to renovate several floors and upgrade common areas. It plans to bring below-market rents to the marketplace. GE Real Estate... is owned by the General Electric (GE). Together with RM Crowe, the two have collaborated on approximately $150M in loans." (Dallas Business Journal, Feb. 27th)

Phoenix Realty Closes $96M Low-Income Buy. "New York: Phoenix Realty Group has closed on its acquisition and renovation of 362 low-income apartments for a total cost of $96 million. All of the apartments will be preserved as affordable housing, and 95% of the apartments will be subsidized with long-term Section 8 contracts from the US Department of Housing and Urban Development. The property’s seller [is] Bedford Stuyvesant Restoration Corp." (Globe St., Feb. 27th)

Mcsam Buys West Side Property For $24 Million. NY: "Sam Chang's McSam Hotel Group has purchased a property at 431 West 33rd Street for $24 million, according to city records. The property, a 74,000-sf parking lot, is between Ninth and Tenth avenues. The seller was Saxa, Inc. of Scottsdale, Az. [Also, McSam sold] a Sheraton Hotel being built at 370 Canal Street... to Magna Hospitality Group for $83.5M." (The Real Deal, Feb. 27th)

Spaces And Places: Valley Is Bright Spot In Gloomy Commercial Real Estate Market. California: "Silicon Valley commercial real estate market: The National Society of Industrial and Office Realtors [SIOR] year-end survey of 600 brokers... index of the fell below 100, the point at which SIOR considers supply and demand for buildings to be in balance. The decline to 95 - attributed to the subprime crisis - was the biggest drop since the organization began its survey in 2005... The commercial market [is heading] "downward," say 60% of [respondents.] The office market declined in Q4 to 96 - a 21-point drop from its high in spring 2006 of 117... Industry experts scored the industrial market 95, down from 107, in Q3." (Mercury News, Feb. 26th)

Singapore GIC Buys Tokyo Hotel From Morgan Stanley, Starwood. "GIC Real Estate, the property investment arm of the Government of Singapore Investment Corp, said on Tuesday it has bought the Westin Tokyo hotel from funds managed by Starwood Capital and Morgan Stanley (MS). The 438-room, five-star hotel will continue to be operated by Starwood Hotels and Resorts (HOT) under the Westin brand name." (Reuters, Feb. 26th)

Washington REIT Buys Building for $11.2M. "Real-estate developer Washington REIT (WRE) said Monday it has acquired an industrial warehouse in Landover, Md., for $11.2 million. The building has 78% of its property leased by two tenants. Washington REIT said the nearby industrial market has a "strong tenant base" because of its proximity to Washington. Washington REIT funded the acquisition with cash and borrowings. Its stock rose $0.68, or 2.1%, to $32.93 on Tuesday." (CNN Money, Feb. 26th)

Will Post Toast Or Roast Bid? "The board of directors of Post Properties REIT (PPS) has [been] mulling a $2 billiion buyout offer... Their stark choice: either enrich their shareholders or thumb their collective nose at a lucrative offer from the company's founder and former chairman, now a bitter management rival... Post owns more than 22,000 apartments and is building a few hundred for-sale condos... Hedge funds and other investors that own significant chunks of PPS are eager to see the offer accepted... why spurn a good offer that has every expectation of being consummated in a market where that is the exception because of some old bad blood?" (Slatin Report, Feb. 25th)

Sector Snap: Lodging REITs. "Shares of some lodging REITs dropped Monday as an analyst downgraded several companies on growing economic worries. Like many sectors, lodging REITs are struggling as consumers tighten spending due to the ongoing housing downturn, eroding credit, escalating gas prices and fears of a recession... Rod Petrik of Stifel Nicolaus & Co. lowered his ratings on San Clemente, Calif.-based Sunstone Hotel Investors Inc. and LaSalle Hotel Properties to "Hold" from "Buy," while analyst Gabriel Buerkle cut his rating on New Cumberland, Pa.-based Hersha Hospitality Trust to "Hold" from "Buy." (CNN Money, Feb. 25th)

Behind the Grim Faces Of Real Estate Pros. "The velocity of leasing transactions... and prospective tenants is not what it was 15 months ago.. Preparation for a change of administration and a continued focus on war spending mean that we should not expect an increase in leasing activity... [by] the federal government -- the largest office user and biggest spender in our region... for the next year and a half or so... The requirement for square footage [for the] top 100 law firms in the Washington area is significantly below [its] 1 million-sf annual average... That said... rents in Class A office space in Washington continue to climb as vacancy rates remain the lowest in the country." (Washington Post, Feb. 25th)

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Comments

[SeriousBull]

Thanks. Good collection of what's evolving in the commercial RE market. I was however suprised that office demand in DC was weak as the lawsuits to fly related to sub-prime will be a bonanza for attorneys.

[Deal Junkie]

demand is slowing, but office vacancy is 6.5% in DC. is that weak? guess its all relative