Lehman's $30B CRE Portfolio To Hit The Market [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Lehman Creditors Lose as Real Estate Offered in Falling Market. “Lehman Brothers’ bankruptcy filing may delay the sale of about $30 billion of commercial real estate assets at a time when property values are eroding, leaving less on the table for creditors. Jeffrey Baker, executive managing director of real estate broker Savills LLC: “[Lehman’s] assets are going to be liquidated… at market pricing.” Lehman was scrambling until just before it sought bankruptcy protection on Sept. 15 to sell the real estate assets, ranging from a loan to California land developer SunCal Cos. to a golf course overlooking St. Tropez and the Coeur Defense office complex in Paris.” (Bloomberg Sept. 22)

Latest DLA Piper Survey Finds Record Level of Pessimism.  “[Post Lehman Bankruptcy/Fannie/Freddie Bailout] State of the Market Survey from DLA Piper shows “a new record level of bearish sentiment,” 90%, among the survey’s 424 respondents, all C-level and other senior executives in commercial real estate… The majority of respondents, 60%, said this near meltdown of the capital markets has surpassed the 1989-to-early-1990s S&L debacle as… having the greatest impact on commercial real estate in the past 20 years… Nearly 85% expect to see the real estate market stabilize no sooner than 2010. The main factors cited by (71%) was… unfavorable financing terms and a lack of available debt. Nearly another quarter named “Sluggish economic/job growth.” (Commercial Property News, Sept. 22)

Commercial Real Estate Booming In Anchorage. Anchorage, Alaska: “While times are tough in the residential housing market, Anchorage's commercial real estate is thriving. New office buildings and businesses have been sprouting up all over town.” (KTUU TV, Sept. 22)

Hines Sells Interest in Pair of Boston Trophy Buildings to Equity Office. “Equity Office Properties now has full ownership of two trophy buildings in Boston’s Back Bay area after buying out the minority interest in both properties from ownership partner Hines. Terms of the deal for Two Twenty Two Berkeley and Five Hundred Boylston were not released. Hines, which developed both buildings, will continue in its role as property manager.” (Commercial Property News, Sept. 19) 

$30M Loan Closes Portland M-F. “Monterey Springs Holdings L.L.C. [got] acquisition financing for Monterey Springs Apartments, a 390-unit garden-style apartment complex in Happy Valley, Oregon, [near] Portland… Red Mortgage Capital Inc. facilitated the Fannie Mae DUS DMBS mortgage loan, which carries with a 7-year--3-year interest-only--term amortized over a 30-year period… Monterey Springs underwent a renovation encompassing 192 of the residences three months ago. Monterey Springs Holdings, owned by affiliates of Maxim Real Estate Investments L.L.C. and Blue Vista Capital Management L.L.C., plans to use a portion of the financing to upgrade the remaining 198 residences and reposition the property as a high-quality asset.” (CPN, Sept. 19) 

CoreNet Update: New York in Mild Recession, But Real Estate Stays Afloat. “Marisa Di Natale, a senior economist for Moody's|Economy.com: “NYC has seen a delayed recession compared to the U.S. overall... However, since the recession is much milder than those in the past, the market should see less an effect on vacancy rates. Office-occupier job losses in past recessions have caused as much as a 6% increase in vacancy, but more information technology and legal jobs will stay put this time around.” (Commercial Property News, Sept. 19)

Mortgage REIT Insider: Sell ‘em All! No, Wait, Buy ‘em All! “Shares of nearly every mortgage REIT tanked [last] Wednesday in response to fears that the investment bank meltdown could ratchet up counterparty risk and reduce vital access to liquidity. Another angle to the meltdown was the concern that consolidation of the investment banks would lead to a glut of available commercial real estate in the NYC area. As a result, commercial mREITs with a concentration of business in NYC, like iStar Financial (SFI) and Gramercy Capital (GKK) were hit the hardest. Both companies notched new 52-week lows this week, although they regained most of their losses in early morning trading on Friday.” (Housing Wire, Sept. 19)

Meltdown Ripples Across Hudson.  “Ken McCarthy, financial-services firm Cushman & Wakefield’s director of research: The average cost of first-class office space on Jersey City’s waterfront is $33.13/sf, while in Manhattan, it is $84.18/sf. For residential real estate, the difference is roughly the same. Some market experts guessed that the cost differential would narrow in the future, with Manhattan prices coming down more than New Jersey waterfront prices do, while others said that history suggests it always remains around 50%— no matter what calamities and changes occur.” (NY Times, Sept. 19)

Pain Spreads as Credit Vise Grows Tighter. “Lenders of all types had already been raising the bar for borrowers, turning away all but the best customers… Borrowers are finding that the nation’s lenders are tightening up in numerous ways… A commercial real estate agent, trying to raise $4 million by refinancing an apartment building, got only half that amount from the Bank of Smithtown on Long Island, even though the building was appraised for $10M.” (NY Times, Sept. 18)

Builders Bet Big On Huge Downtown Miami Project, Florida: “Two developers are seeking government approval for Miami Worldcenter -- a nine-block, 25-acre mixed-use project that would be Miami's biggest urban development in years. The multibillion-dollar project between the Adrienne Arsht Center for the Performing Arts and the central business district calls for a mix of high-rise offices, hotels, shops, restaurants, entertainment and conference venues, schools, and eventually residences -- all built around public plazas and broad sidewalks.” (Miami Herald, Sept. 18) 

After Lehman, Banks Jettison Commercial-Property Debt.  “The bankruptcy of Lehman Brothers Holdings Inc. is adding pressure on banks and other financial institutions to sell off their holdings of commercial real-estate debt, as they try to stay out ahead of Lehman's expected liquidation of its $30 billion portfolio. The likely rush to sell is driving down the already battered market, forcing financial firms to take additional losses on the estimated $150B worth of commercial real-estate debt on their books… Goldman Sachs Group (GS) said it had reduced its portfolio of commercial mortgages and securities by about $2 billion to $14.7B as of the end of its Q3, which ended Aug. 29, taking a $325 million loss.” (WSJ, Sept. 17)

                                                                

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