Suburbs Suffer More Commercial RE Decline Than Cities - Housing Tracker

by: Judy Weil

Quote of the Day

"At this time last year, we couldn't see much quality. People were selling B and C projects, but not letting go of A. They're starting to let go." - H. Kerr Taylor, AmREIT's chairman, CEO and president, says sellers are starting to “loosen up” and put higher quality assets out on the market. Taylor sees this as an opportunity for AmREIT. (Globe St., May 8th)

Commercial Real Estate and Real Estate Investment Trusts [REITs]

CIT Scales Down Commercial Real Estate Division. “CIT Group Inc. (NYSE:CIT) has scaled back its commercial real estate finance division, [including] a number of staff reductions, [like] former managing director Tim Zietara who was let go in February. The division had been stepping in as a balance-sheet lender for commercial real estate developers who couldn't drum up financing from Wall Street banks amid a credit crunch… CIT has been reeling [from] its investments in subprime mortgages and trying to sell assets to alleviate its debt burden… In March, CIT… tapped a $7.3 billion line of credit in order to continue day-to-day operations through the end of the year.” (Dow Jones via CNN, May 8th)

Wachovia Revamps Real Estate Leadership. “Wachovia Corp. (NASDAQ:WB) is reorganizing the leadership of real estate businesses within its corporate and investment bank, an area that has suffered in the global credit crunch… In March Wachovia named… Bob Reid head of real estate-related businesses. Now he's setting up a team of top lieutenants that expands to eight from five. The group handles the making of commercial real estate loans and their packaging into securities for investors, known as commercial mortgage-backed securities… One top executive in the unit, Robert Verrone, was leaving. He was offered a job in the unit but decided to leave by mutual agreement.” (Charlotte Observer, May 8th)

Hermansen, Rosewood JV on $50M Boutique Center. Texas: “Hermansen Land Development, with equity backing from Rosewood Property Co., has started the permitting process for the Plaza of the Oaks, a $50-million boutique mix of retail and office. In perhaps its first retail-weighted investment, the JV partner has just come on board in the past week after six months of negotiations. Dallas-based Rosewood's traditional playing field has been hotels, resorts and office buildings.” (Globe St., May 8th)

AmREIT On Track to Buy $2B Within Three Years. “AmREIT's first-quarter figures are bucking the trend of many retail owners… The REIT's senior executives are confident they can reach at least $2 billion in acquisitions and development within two to three years. H. Kerr Taylor, AmREIT's chairman, CEO and president: “This year will be a launching pad for us" although many competitors are boxed in with current capital market conditions. Taylor says one reason for the optimism is sellers are starting to loosen up on putting their assets on the market… The company's team is in negotiation for several class A projects… AmREIT is seeing little competition in the field.” (Globe St., May 8th)

Commercial Real Estate Slump More Apparent In Suburbs. Chicago, Illinois: “MB Real Estate, a diversified real estate firm, said its analysis shows that the overall vacancy rate for downtown increased from about 11.7% in Q4’07 to 12.3% in Q1’08. Those numbers, while not exhilarating, are certainly better than Chicago saw in the early 1990s when vacancies soared. But in the suburbs, MB Real Estate found, the vacancy rate rose from 16.1% in Q4’07 to 17.3% in Q1’08.” (Chicago Tribune, May 7th)

Schilling Farms Land Sells for $2.4M. Memphis, Tennessee: “A group of investors related to Belz Enterprises Inc. and Makowsky Ringel Greenberg LLC has bought 18.31 acres of land in Collierville's Schilling Farms Planned Development for $2.4 million from Colonial Properties LLC. The buying entities and their percentage of ownership are Belz Investco GP (50%); LMR LP (31.22%); LMR V LP (17.78%); and MRG LLC (1%). The sale closed May 1. The property, which is on the north side of Winchester Road near West Schilling Blvd., eventually will be developed into multifamily housing, said Michael Greenberg, CEO of Makowsky Ringel Greenberg.” (Memphis Daily News, May 7th)

Tropicana Makes Bankruptcy Filing As Casino Glitz Takes Economic Hits. “Casino operator Tropicana Entertainment LLC sought Chapter 11 protection Monday in the largest corporate filing of the year... Tropicana -- with a small casino kingdom that includes the famed Tropicana Resort & Casino in Las Vegas and a host of small regional casinos -- missed an interest payment Friday on a $1.32 billion loan with lender Credit Suisse Group... Missing the payment terminated a forbearance agreement the company had with bondholders, putting further pressure on the gambling company…Las Vegas has seen major casino projects canceled or delayed and gambling revenue decline as the economy stumbles.” (Wall St. Journal, May 6th)

Dear Readers: Read anything you liked on this subject and didn't see it here? Why not post a link or a quote from the article in our comments section. Share the wealth! - Ed.

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.