Commercial RE Players Go Residential? [Housing Tracker]

Commercial Real Estate and Real Estate Investment Trusts [REITs] 

Hedge Funds Help Fill Gap In Lending for Property. “As the credit crunch enters its second year, more investors seeking financing to acquire office towers, retail stores, hotels and the like are left with little choice but to turn to so-called hard-money lenders, lightly regulated businesses that charge high interest rates for short-term loans. Right now, among the biggest players in the hard-money arena are hedge funds, which view commercial-real-estate lending as a way to diversify their traditional trading operations while still commanding double-digit returns.” (WSJ, Aug. 27)

Tooele’s Commercial Real Estate Market Staying Hot. Utah: “Tooele’s commercial real estate market still seems to show few signs of slowing down, with tenants continuing to move into new spaces in the booming northern end of the city.” (Tooele Transcript Bulletin, Aug. 27) 

Kolter Group is Latest Commercial RE Player to Embrace Residential. “The Kolter Group is the second largely commercial real estate company in the past couple of weeks to announce a big financial commitment to the distressed residential market. Kolter and Och-Ziff Capital Management Group, announced the formation of a $1 billion joint venture that will target residential properties in the Southeast that are at any stage of development. Och-Ziff is a leading global institutional alternative asset management firm, with about $30B of assets under management as of late 2007… Brookwood Financial Partners… recently announced that one of its affiliates had made the first purchase under a new strategy of acquiring finished residential lots.” (Commercial Property News, Aug. 26) 

Second Retail Giant Buys Into Liberty. “Australian shopping centre giant Westfield has a 2.96% stake in UK shopping centre REIT Liberty International… Westfield had bought 10.7m shares in Liberty in June and July at an average price of 835p, a total of £91m… Liberty revealed Friday that US shopping centre REIT Simon Property Group (SPG) had built up a 3.4% stake in the company… JP Morgan: ‘Simon Property’s stake [may] not [be] a short-term trading transaction and may eventually result in a takeover bid.’ Simon has $782m (£425m) cash & anywhere from $450-$500m (£244-£272m) of free cash flow per year. Additionally, the company issued unsecured debt in May at very affordable rates.” (Property Week, Aug. 26) 

Zell: Is the Grave Dancer Finally in Grave Trouble? “Will selling off Tribune Co. assets, including… Newsday (already sold) and real estate such as the Tribune Tower and Wrigley Field in Chicago be enough to deal with its debt, given the company's downward spiral? Just last week, Tribune Co. reported a net loss of about $4.5 billion… Most of that loss was represented by a $3.8B writedown to reflect the decline in value of the newspapers still owned by the company… Office building sales are sluggish in both Chicago and Los Angeles, so assessing buyer interest, as well as how much either of the properties might fetch, is problematic.” (Commercial Property News, Aug. 25) 

Northland Wins Equity's 2,985-Unit Portfolio.  Austin, Texas: “Northland Investment Corp.'s Northland Fund III has been revealed as the buyer of Equity Residential Properties Trust's 2,985-unit apartment portfolio. The Newton, MA-based buyer has paid $270 million for the nine-asset portfolio. Northland [says] the transaction represents the largest multifamily acquisition in the capital city to date. It also says the transaction positions Northland Investment as the city's largest multifamily property owner. The portfolio's occupancy hovers 90%.” (Globe St., Aug. 25)

Bill Gates Takes 5.2% Stake In Strategic Hotels. “SEC filing: Microsoft Corp. founder Bill Gates has acquired a 5.2% stake in Strategic Hotels & Resorts Inc., the Chicago-based owner of the Fairmont Chicago and InterContinental on Michigan Avenue. Cascade Investment LLC, Mr. Gates’ investment firm, has bought 3.9 million shares in the REIT… The firm said in the filing that it bought the shares as a passive investment. Mr. Gates has taken an interest in the hotel market recently, teaming up with Saudi Prince Alwaleed bin Talal to take Four Seasons Hotels Inc. private in a $3.4-billion deal last year.” (Crain’s Chicago, Aug. 22)

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