Housing Market Tracker - MBA Says CMBS is Safe

by: Judy Weil

Quote of the Day

"If it's not green, in the near future it won't be considered Class A space." - Doug Gatlin, VP of market development at the U.S. Green Building Council, on the trend to build environmentally friendly commercial space. (Forbes, Mar. 11th)

Commercial Real Estate and Real Estate Investment Trusts (REITs)

Construction To Begin on $80M-Plus Power Center. Pennsylvania: "A joint venture between Tristate Ventures LP and Cedar Shopping Centers Inc. (NYSE:CDR) expect to soon begin construction on the 680,000-sf Upland Square power center... at the intersection of Route 100 and State Street, here. John Fasciano, a principal of Tristate Ventures: The estimated cost of the project is between $80M-$90 million... The area “is underserved by retail development at this time,” he says. The power center will be anchored by Target, Giant Foods and Best Buy." (Globe St., Mar. 12th)

'Green' Reits Could Get Long-Term Gains. "REITs at the forefront of the so-called 'green' movement could reap long-term rewards. An earlier adopter of eco-sensitive development and redevelopment, industrial REIT AMB Property (NYSE:AMB) on Tuesday unveiled a 3 million-square-foot green distribution facility in Savannah, Ga. [powered] with renewable solar electricity... Green-conscious REITs like AMB and ProLogis, office owner Thomas Properties Group Inc. (NYSE:TPGI) and retail owners Regency Centers Corp. (NYSE:REG) and Simon Property Group Inc. (NYSE:SPG) are well-positioned to benefit from the movement... During their fourth-quarter investor days, Forest City Enterprises Inc. (NYSE:FCE.A), Duke Realty Corp. (NYSE:DRE) and SL Green Realty Corp. (NYSE:SLG) discussed their green construction programs for the first time." (Forbes, Mar. 11th)

AMB, Portview Complete 144,000-SF Phase. "New Jersey: Partners AMB Property Corp. and Portview Properties LLC have completed first-phase construction at their AMB Portview Commerce Center here. The 144,000-sf building is the first of three that will build out to a total of 358,000-sf of industrial. AMB Portview Commerce Center is rising on 19 acres along Dowd Avenue with access to this city’s port facilities. The subsequent phase includes W/D buildings of 152,000 sf and 62,000 sf. The site... is located within an urban enterprise zone." (Globe St., Mar. 11th)

As Cowboys Depart, Retail Planned for Dallas Stadium Site. "Retail REIT Tanger Factory Outlet Centers Inc. (NYSE:SKT) announced plans today for an upscale outlet shopping center at the site of the old Texas Stadium [near] Dallas [which has] 400 acres of land available for redevelopment. Tanger's announcement makes it the first major project planned for the Texas Stadium Redevelopment Area... The plan for the overall stadium site--being overseen by Forest City Enterprises, the City of Irving, Southwest Premiere Properties and the University of Dallas--calls for an urban mixed-use lifestyle center." (Commercial Property News, Mar. 11th)

BMW Pencils 1M-SF, $750M Plant Expansion. South Carolina: "BMW Group is planning a $750-million expansion of its factory, a project which will add 1.5 million-sf to the facility. The three-year construction project will include a new 1.2-million-sf assembly facility north of the existing factory to accommodate the next generation BMW X3 Sports Activity Vehicle. The company also plans to expand the existing paint shop by 300,000-sf and renovate the existing body shops. The project is expected to be completed in 2012. With the expansion, the company will be able to increase production capacity from 160,000-240,000 units." (Globe St., Mar. 11th)

Mr. Market Trips on Mark to Market, Gives REITs Away. "While Thornburg may yet make it (Larry Goldstone is clearly very talented and well-regarded), there are a number of well run, slightly less risky mREITs in the REIT wreckage universe... on sale. Companies like Northstar Realty (NRF) have funded nearly all of their assets on a long-term, non-recourse basis and are not subject to margin calls. They have cash available to reinvest in a vastly improved (less competitive) lending environment... Yields [are] in the high teens and low twenties. Other attractive REIT stocks include Anthracite Capital (AHR), Newcastle Investment (NCT) and RAIT Financial Trust (RAS)." (REIT Wrecks in Seeking Alpha, Mar. 10th)

Trade Group Says Commercial Loans Safe. "Mortgage Bankers Association: Delinquencies on commercial real estate loans packaged into commercial mortgage-backed securities have dropped from 1.7% [in late] 2003 to 0.4% at the end of 2007... Among major commercial real estate investors, only banks and thrifts saw delinquency rates increase last year, growing to 0.8% from 0.56% in late 2006... Fannie Mae saw its delinquency rates for apartment buildings and other multifamily properties remain even at 0.08%. Freddie Mac's dropped to 0.02%. [However,] Real Capital Analytics [says] sales of office buildings worth more than $5 million fell to $4.3 billion in February, down 76% from $20.1M in February 2007 [and] the market for commercial mortgage securities "remains frozen." (Yahoo! Finance, Mar. 10th)

Sale-Leaseback Staying Steady. "Real Capital Analytics: Total sale-leasebacks worldwide [are] about $56 billion, out of corporate property sales of $88B globally and total real estate investment sales of $1.04 trillion [or] 5% of all investment sales... Both sellers and buyers now have even stronger incentives to pursue them. For sellers: monetizing real estate assets can be an effective way to pump up [currently weak] revenues. [Also,] selling real estate would be a way to pay some of the pre-crunch easy-money acquisitions debt... For buyers, sale-leasebacks can represent a solid investment precisely when purveyors of both equity and debt are demanding solidity." (Slatin Report, Mar. 10th)

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