Housing Market Tracker - Commercial Real Estate Review

by: Judy Weil

Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.

Quote of the Day

"If people aren't buying houses then they aren't buying sofas, and if they aren't buying sofas then they don't need warehouses to store sofas. Housing affects everything." - Chuck Belden, senior director with Cushman & Wakefield. Belden expects a slowdown in commercial/warehouse construction in California this year. (Trading Markets, Dec. 31st)

Commercial Real Estate and Real Estate Investment Trusts (REITs)

  • Grubb & Ellis Apartment REIT Acquires The Myrtles at Olde Towne in Portsmouth, Virginia (Fox Business, Dec. 31st): "Grubb & Ellis (GBE) (GAV) Apartment REIT, Inc. has acquired The Myrtles at Olde Towne in Portsmouth, Virginia. The acquisition closed on December 21, 2007. The Myrtles at Olde Towne is a 246-unit multifamily property totaling more than 221,000 rentable square feet on approximately 10 acres... Grubb & Ellis Apartment REIT offers a monthly distribution of 7% per annum... Financing was primarily provided by Freddie Mac (FRE)."

  • Feldman REIT Closes Phoenix Office, Exec Leaving Company (Phoenix Business Journal, Dec. 31st): "New Jersey REIT Feldman Mall Properties (FMP), once based in Arizona, said COO James Bourg will leave the company in H2'08 [with a] one-time severance pay of $1.3 million, and its Phoenix office will close in the wake of bigger third-quarter financial losses. FMP suffered a net loss of $3.1M, or $0.26/share, in Q3, compared with a net loss of $1.8M, or $0.14/share, in Q3'06. For the nine-month period that ended Sept. 30, the net loss was $8.9M, or $0.73/share, compared with net income of $21.2M, or $1.62/share, during the same period in 2006."

  • Modest Commercial Real Estate Gains Seen (Trading Markets, Dec. 31st) California: " Chuck Belden, senior director with Cushman & Wakefield Inc. in Ontario: Construction of "big-box" warehouse-distribution projects, a staple in the two-county region for the past 10 years, is expected to slow during the next 12 months. About 20 million sf of industrial space was built in the two-county region during 2007... Belden brokers large warehouse-distribution projects... Belden called the housing market... the "bellwether" of the Inland economy... Vindar Batoosingh, senior VP with CB Richard Ellis Ontario: Inland office vacancy rates were 11.2% for the first 11 months of 2007, and more than 830,000-sf of office space was built in both counties last year."

  • What is Plum Creek? (Bangor Daily News, Dec. 29th): "Steven Chercover, D.A. Davidson & Co. analyst: A traditional timber company, such as Weyerhaeuser, pays 30-some percent in taxes for every dollar it generates by turning a tree into pulp or board feet. Plum Creek REIT (NYSE:PCL) pays 0%. [After] a merger in 2001 with Georgia-Pacific's lands subsidiary... Plum Creek’s land holdings more than doubled from 3.2 million acres to 7.8 million acres... Today, Plum Creek owns approximately 8.2 million acres nationwide... 1.7 million [of which is] conservation land, valuable recreation land or real estate. In 2001, Plum Creek's real estate segment... funneled roughly $100 million in revenue into the company. By last year [it] was more than $300M, or about 19% of the company's $1.6 billion in total revenue."

  • Dubai World Ups Stake in MGM Mirage (Globe St., Dec. 28th): "Casino-resort operator MGM Mirage (NYSE:MGM) said Friday that its controlling investor, Kirk Kerkorian, sold 5 million common shares of MGM to Dubai World on Christmas Eve at $84.80/share or $424 million. Dubai World acquired the shares from Kerkorian’s charity, the Lincy Foundation. Including the 14.2 million shares it acquired directly from MGM Mirage in October and the 350,000 it took in from its tender offer one month earlier, the Dubai government's investment arm now owns a 6.5% stake in the company. Kerkorian, for his part, continues to control more than 50% of MGM Mirage’s 299.4 million outstanding common shares through his Tracinda Corp."

  • BofA Buys $457M in Bonds for CCRC (Globe St., Dec. 28th): "A multi-faceted senior living complex being constructed in Dedham [near Boston] has received the necessary funding thanks to the sale of $457 million in tax-exempt bonds. The issuance is said to be the largest in US history to be deployed for development of a nonprofit continuing care retirement community. “This financing will help us bring to reality a unique new community and healthcare facility that will expand our ability to serve older adults in the Boston area,” says Len Fishman, president and CEO of Hebrew SeniorLife, the elder services organization sponsoring NewBridge on the Charles."

  • Brookfield, Rreef in Talks for $600M Sale (Globe St., Dec. 28th): "In a major turn of events for two of the city’s most prominent office towers, Brookfield Asset Management Inc. (NYSE:BAM) has reportedly agreed to buy out its minority partner, Rreef Real Estate, after the latter group offered its share of 53 and 75 State St. to the investment sales market. One estimate puts the deal in the $600 million range. Collectively, the Financial District towers encompass 1.9 million sf of class A office space."

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