Some REITs Actually Profiting From Downturn - Housing Tracker

Quote of the Day

“Commercial loans just aren’t going to get done without due diligence. There are always going to be more third-party eyes on any loan. It’s very difficult to commit fraud in that situation. It’s also very difficult to find a lender who would make a [commercial-scale] loan to people who had no money.” - Sean O’Connell and James Ziegler of Advantus Capital Management, on why ultimately commercial real estate and loans will fare better than the residential real estate and mortgage markets have. (Finance and Commerce, Apr. 30th)

Clemente Creates $200,000,000 Real Estate Distressed Asset Fund. “C. Daniel Clemente, Chairman and CEO of Clemente Development Co., Inc. announced the formation of the CDC Real Estate Opportunity Fund I, a private equity fund established to take advantage of extraordinary investment opportunities in income producing commercial real estate... Clemente reports that with $200,000,000 in committed funds he is in serious negotiations to leverage the new fund to $2 Billion. Clemente: "With mortgage underwriting standards for commercial real estate tightening and capital availability becoming constrained, defaults are sure to occur upon maturity of loans closed between 2002-2007… Capital will not be readily available to bail out syndicators that overpaid for buildings.” (Press Release, Apr. 30th)

REITs: Still Some Bargains Out There. “Greg Sukenik, Zacks.com REIT analyst: “In the apartment sector, I like UDR (UDR) and Mid-America (MAA), two companies that have low comparative valuations, steady performance, and above average yields. I still like Public Storage (PSA), the dominant self-storage operator that continues to perform well. The company has a strong balance sheet and is in a sector that should hold up reasonably well this year… Stay away from mortgage REITs, including RAIT Financial (RAS). The company's financing sources have dried up, the dividend will be cut dramatically, and the environment for mortgage companies will not improve in the next six months.” (Zacks.com in Seeking Alpha, Apr. 30th)

Cedar, Fameco Tap Emerging Grocery Store Trends. “As gas prices rise, people are driving shorter distances… to the local grocery store, which today offers a host of services, including dry-cleaning and banking… The supermarket industry is attempting to tap into the trends spawned by… the slowing economy… Leo Ullman, CEO Cedar Shopping Centers: “We work with a dozen or so grocers, and almost every one of them is asking us for additional sites right now.” Cedar and Tristate Ventures L.P… have formed a joint venture to develop a 137,000-square-foot grocery [in a] neighborhood shopping center in Stroudsburg, Pennsylvania. The $37 million venture has a fully executed lease with a major supermarket.” (Commercial Property News, Apr. 30th)

AMB Expands Presence in Port of Hamburg. “AMB Property Corp. (AMB) has acquired an industrial complex near the Port of Hamburg, Germany, totaling more than 930,000-sf of existing buildings and 16 acres of land. Kuehne + Nagel, a Swiss logistics company and AMB customer in other parts of the world, has leased about 402,000-sf of the park in connection with this purchase. AMB intends to build out the site through a phased development plan. The undeveloped land can hold about 414,000-sf of additional industrial development.” (CPN, Apr. 30th)

Westcore Pays $93M for 490,000-SF Office Portfolio. “Westcore Properties of San Diego has acquired a 487,500-square-foot office portfolio from Gramercy Capital Corp. for $93 million, or a little less than $200/sf. The five-property, four-state portfolio is comprised of One Colonial Place and the Charter One Building, both located in the Colonial Place at Virginia building park in Glen Allen, VA; 1 Montgomery St. in San Francisco; the Bank of America Westcliff building in Las Vegas; and the National City Bank Building in Cleveland.” (CoStar Group, Apr. 30th)

NAI Horizon Shutters Office. Nevada: “NAI Horizon, the valley's third-largest commercial real estate brokerage, recently closed its 35-person, 14,000-square-foot office in Las Vegas… The company has operated in Las Vegas since 1996... NAI Horizon handled $524 million in local real estate transactions in 2006... The company specializes in brokerage and property management in the retail, office, industrial, multifamily and investment markets… Several recent mergers by commercial real estate brokerage firms include Burnham Real Estate's 20-person local office becoming a part of Commerce CRG in January; and last year's Prudential acquisition of Las Vegas-based IPG Commercial Real Estate Services.” (Las Vegas Business Press, Apr. 30th)

Shorenstein Properties Buys Five Post Oak. Texas: Shorenstein Properties LLC has added the class A Five Post Oak Park to its portfolio. The 567,396-sf office building in the Galleria submarket is the San Francisco-based company's second acquisition in Greater Houston. The 28-story building and 1,673-space parking garage at 4400 Post Oak Pkwy. were put on the market at the beginning of the year by the joint venture owners, Crescent Real Estate Equities Ltd. and General Electric Pension Trust. The high rise's occupancy stands at roughly 91%.” (Globe St., Apr. 30th)

MXD Proposed for Former Landfill. “The front-runner proposal for a 112-acre former New Jersey landfill… Pulte Homes (PHM), AvalonBay Communities and Rockefeller Group Development would team up to build nearly 1,200 residential units and 195,000-sf of commercial space... The site bordered by Route 206 and NJ Transit’s Raritan Valley rail line has been unused since the mid-80s when the landfill was closed… Pulte will be the lead developer and will specifically handle the project’s condo housing. AvalonBay (AVB) will do the rental residential, and Rockefeller will handle the commercial space.” (Globe St., Apr. 29th)

How The Airline Industry’s Recent Financial Problems Affect Vegas. Las Vegas: “The two newest Strip resorts, Palazzo and Wynn Las Vegas, and resorts under construction, including Encore, CityCenter, Fontainebleau and Echelon, are… likely to attract… upscale customers [who] are much more likely to fly. Las Vegas Convention and Visitors Authority: The portion of city visitors making $100,000 or more per year has jumped from 10% in 2003 to 24% in 2007. Resort operators expect that upward trend to continue… But just as the city is in the process of adding more than 20,000 luxury rooms and suites, it’s looking more as if cutting jet capacity is Wall Street’s preferred solution to the airline industry’s problems.” (Las Vegas Sun, Apr. 27th)

Dear Readers: Read anything you liked on this subject and didn't see it here? Why not post a link or a quote from the article in our comments section. Share the wealth! - Ed.

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