Commercial Real Estate and Real Estate Investment Trusts [REITs]
Chesapeake Leases Downtown Office Space. “Chesapeake Energy Corp. (CHK) is taking additional office space in downtown Fort Worth to accommodate more than 400 employees of 60 service businesses that work for Chesapeake’s affiliate, Texas Midstream Gas Services, as well as employees of Chesapeake Energy Marketing. Chesapeake spokeswoman Jerri Robbins: The company has leased 70,000-sf of office space… The employees are being consolidated from offices throughout the Metroplex, including those who work from their homes. Many of the workers… are new to Chesapeake Energy Marketing.” (Star Telegram, June 18th)
Commercial Real Estate Deals Tumble. “PricewaterhouseCoopers Korpacz Q2’08 Real Estate Investor Survey: "Vacancy rates [are] climbing and property values dropping across much of the country, particularly in the office and mall sectors… Transactions involving significant office, apartment and retail properties plunged at least 79% in April compared with April 2007, while industrial sales fell the least, 67%... The office markets in San Francisco, Philadelphia and Fort Lauderdale, Fla., are in contraction… Miami, Tampa and Jacksonville, [Florida] are also declining, as are San Diego and Sacramento, Calif… Even Manhattan market is slowing down. The exceptions include Honolulu and Hartford and Stamford, Conn. New Jersey is faring better than many states.” (NJ Star Ledger, June 17th)
Source: Risk Reallocation, Cause for Tower Trade. “NY Post: The Freedom Tower is up for grabs, either partially or completely.. The Port Authority has reportedly had talks with the Related Cos. And… Brookfield Properties (BPO)… The Port Authority reportedly wants to find a developer to form a partnership of sorts and that the developer would complete the $3 billion tower as opposed to starting from scratch. Hugh Finnegan, an attorney in the real estate group at Sullivan & Worcester LLP, who is not involved in talks surrounding the Freedom Tower: “There are rising costs, which will result in cost over-runs. Leasing downtown is not easy, especially with the ongoing suffering of Wall Street.” (Globe St., June 17th)
Tysons Dulles Plaza Sells for $152M. “Vornado Realty Trust (VNO) [sold] Tysons Dulles Plaza, a three building office complex totaling 482,000-sf located… in Tysons Corner, Va. The buildings sold for approximately $152M. This class A office complex consists of three office towers directly on the Dulles Toll Road. Currently 92% leased, the location provides tenants with access to the Dulles Toll Road, I-495, I-66 and Route 7 via Spring Hill Road and Leesburg Pike.” (Commercial Property News, June 17th)
ProLogis Inks Deal for BTS Facility near Chicago. “Industrial property behemoth ProLogis (PLD) has inked a deal with Bay Valley Foods, a specialist in private label food products, to develop a 600,000-square-foot distribution center for the company in Rochelle, Ill. Bay Valley will use the building primarily as a warehouse and distribution center for its products, as well as for packaging and labeling canned soup products.” (Commercial Property News, June 17th)
Real-Estate Projects Boom Near Light Rail. Arizona: “Light rail is six months from operation, but the transit system's impact on the Valley's real-estate market has been in full swing with new condos, office buildings and mixed-use developments rising throughout metro Phoenix. Transit officials estimate that since 2004, developers have spent close to $6 billion on public and private projects on and around the future light-rail line… the future system has definitely been a catalyst prompting developers to pay higher prices for property adjacent to the line for condominiums, office buildings and retail centers.” (Arizona Republic, June 17th)
Jones Lang LaSalle to Buy Staubach for $613 Million. “Jones Lang LaSalle Inc. (JLL), the world's second-largest commercial real estate broker, agreed to buy the Staubach Co. for $613 million to expand its tenant representation business. Jones Lang will pay $123M in cash, $100M in stock and the balance over five years in cash. Dallas-based Staubach, founded by former National Football League star Roger Staubach, helps tenants find office, retail and industrial space. The purchase may help Jones Lang counter anticipated declines in commissions from commercial property sales. Global real estate investment is expected to fall 30% in 2008, Jones Lang estimated in March.” (Bloomberg, June 16th)
JBG, Scheer Partners Create $100M Real Estate Fund. “The JBG Cos. and Scheer Partners have created a $100 million equity fund to develop and acquire life sciences commercial real estate. The fund, called Greater Washington Life Sciences Fund, will pursue $300M in investments in the market. "Most projects are all in the Maryland Interstate-270 corridor," said Robert Scheer, president and founder of Rockville-based Scheer Partners, who will serve as the fund's managing member.” (Washington Business Journal, June 16th)
Maguire's Foundation Weakens Further. California: “Commercial real estate is in the dumps alongside it subprime-effected brethren. Now companies that made big business investing in commercial real estate are re-evaluating their company make-up. SoCal REIT Maguire Properties (MPG) said Monday that three executives are packing up their desks and that the firm is also looking to lighten up on some of its worrisome Orange County assets. The management and portfolio change-ups had investors nervous… Maguire is down 56.3% from the first of the year and down 63.9% from when it traded for $34.90 a year ago.” (Forbes, June 16th)
McGraw-Hill Construction Outlook. “McGraw-Hill via MarketWatch: 2008 Construction Starts Estimated at $558.5 Billion, Down 11%, McGraw-Hill Construction Reports. “[T]he slower economy and tighter lending conditions are now causing commercial real estate projects to be deferred, and the loss of momentum will take firmer hold as the year proceeds. For 2008, commercial building will retreat 8% in dollar volume and 16% in square feet. Stores and warehouses are the most vulnerable to decline in the near term, while lesser reductions are anticipated for hotels and office buildings. This is similar to the recent CRE forecast from Wachovia.” (Calculated Risk, June 16th)
Colonial Selling $500M of Retail, Multifamily. “As part of its asset recycling program, Colonial Properties Trust (CLP) is putting 18 multifamily assets with 4,000 units and three shopping centers totaling 700,000-sf on the market. The estimated value of the portfolio is $450M-$500 million.The multifamily properties are located in the Carolinas, Florida, Georgia, Texas and Virginia. All were acquired in the $650-million acquisition of New York City-based Cornerstone Realty Income Trust in 2004. Jerry Brewer, SVP and treasurer of the Birmingham, AL-based REIT, says the multifamily portfolio is about 21 years-old and 96% occupied.” (Globe St., June 16th)
NYC Multifamily Deal Tops $8M. “Heritage Realty LLC recently purchased an apartment complex in Manhattan's Washington Heights neighborhood for nearly $8.8 million. The deal comprised of four five-story residential buildings and totaling 87 units… The selling price represents a per-unit price of $100,575. Located at 575-587 W. 177th St., the 48,350-rentable-square-foot property is situated on a 148-foot-by-94-foot lot between St. Nicolas and Audubon avenues. The asset features a mix of 46 one-bedroom, 20 two-bedroom and 21 three-bedroom units.” (Inman News, June 14th)
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