Blackstone Group is set to buy the U.S. shopping mall assets of Australian landlord Centro Properties Group for $9.4 billion after beating out bids from a Morgan Stanley-Starwood Capital partnership and a joint venture of NRDC Equity Partners and Area Property Partners, the Wall Street Journal reported. The deal, which includes 588 shopping centers, would be Blackstone’s largest since its acquisition of Hilton Worldwide in October 2007 and indicates an optimistic bet on U.S. retail, according to Bloomberg News. Among the properties Blackstone is slated to take over is Yonkers’ Highbridge Plaza, as well as several malls in Westchester and Long Island. [more]

The year was 2008 and the nation was in a serious financial crisis. Very few financial institutions were interested in providing financing for any real estate class. If the subject was financing for a hotel, the lender might have made the following remark: “Do not pass go, do not collect $200 and make certain never to talk to me about financing a hotel.” At the beginning of the year, I wrote an article entitled “Good riddance to 2009 for the U.S. hotel industry.” In it I quoted Mark Lomanno, the president of Smith Travel Research, when he said, “Good riddance to 2009, a year which we believe will go down as the worst in the modern hotel industry. The combination of a distressed economy in conjunction with panic pricing drove [revenue per available room, or revpar,] down to levels that were virtually incomprehensible just a year and a half ago.”

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From left: James Stuckey, dean of the NYU Schack Institute of Real Estate and Michael Fascitelli, CEO of Vornado Realty Trust; Panelists from left: Larry Silverstein, Michael Fascitelli, Willliam Mack, Marc Holliday and Bill Rudin

“Sometimes being a REIT felt like being between a dog and a fire hydrant,” Vornado Realty Trust CEO Michael Fascitelli said this afternoon, reflecting on the past couple of years in the industry before a packed ballroom at the Waldorf-Astoria hotel, and pausing for effect.

But no longer.

While public real estate investment trusts suffered significant losses in the immediate aftermath of the real estate crash, they’ve bounced back with impressive vigor, Fascitelli said. Plus, he offered as proof, there were very few bankruptcies.

Speaking on a panel at NYU Schack Institute of Real Estate’s annual conference on capital markets, Fascitelli was joined by Marc Holliday, who said that life is pretty good over at SL Green right now, too. [more]

From left: Laurence Gluck of Stellar Management, Neil Rubler of Vantage Properties, Kevin Davis of Area Property Partners and Ofer Yardeni of Stonehenge Partners

Ofer Yardeni of Stonehenge Partners gave the most optimistic assessment among a four-person panel today speaking about residential investment in real estate, saying his company w [more]

Yair Levy and Park Columbus

Two bidders, Ofer Yardeni’s Stonehenge Partners and the Fisher Bros., are competing to pony up around $50 million and walk away from bankruptcy court with Yair Levy’s Park Columbus, the troubled condominium conversion at 101 West 87th Street, according to the Post. The 95-unit building is being sold in bankruptcy court by Eastdil Secured’s Douglas Harmon and Adam Spies after Levy filed for Chapter 11 bankruptcy in a last-minute attempt to avert foreclosure last year. Other bidders had included Area Property Parnters, Rockpoint Group and Brack Capital before the list was whittled down to the final two. Levy bought the former Related Companies rental building, then called Columbus Green, for $42.5 million as part of a $165 deal that included 225 Rector Street but fell short on cash amid his plan to empty out the rental apartments and add 40,000 square feet for luxury condos. [Post, 3rd item]

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Like Tishman Speyer before it, the Savoy Park group, a conglomerate that had hoped to transform a rent-regulated complex into a market-rate residential development, is facing some major debt problems, according to the Wall Street Journal. The group, which includes Area Property Partners and Vantage Properties, bought the 1,802-unit Savoy Park complex in Harlem at the height of the market for $175 million in 2006. But, after refinancing the property and putting $367.5 million worth of debt on the complex, the investment group found itself in hot water. Savoy Park group is now seeking to restructure $210 million worth of the debt, and while the loan won’t run out till 2014, industry experts say the property owners must act fast to hang onto their investment. Luckily, according to James Simmons, a partner with Area, payment on the group’s loan remain current and he doesn’t expect a default. [WSJ]

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When it comes to commercial real estate investments, Lee Neibart, Area Property Partners chief executive, said it’s too early to be gung-ho about office space. While multi-family buildings and hotels are good opportunities to pursue with caution, Neibart told the Observer that office investments are still too shaky for his taste. “The office market, as far as we’re concerned, continues to have declining rents and increasing expenses, and we’re still concerned with retail,” Neibart said, adding that those segments of the market “would have to stabilize” before Neibart would consider reinvesting.

From left: Area Property Partners chairman William Mack and Vantage president Neil Rubler

As pressure mounts on underperforming commercial real estate in New York City, partnerships are likely to rely more heavily on legal minutiae to battle amongst themselves, legal experts said.

An expected lawsuit by state Attorney General Andrew Cuomo against Vantage Properties could give ammunition to an equity partner of the major city landlord to restructure ownership or remove the landlord from its position in the partnership, legal experts speculated. [more]

From left: Kevin Davis, partner at Area Property Partners; Mason Sleeper, principal with the real estate investment firm Praedium Group; Tim Wang, vice president at ING Clarion

The percent of residential apartment dwellers in the city who are not paying their rent has as much as quadrupled since the market weakened last year, industry leaders on a panel discussing multi-family properties said today.

“Collections, especially in New York City, have become more of an issue,” said Mark Stern, senior vice president at Waterton Residential, a Chicago-based building owner and operator. His firm is planning on making acquisitions in New York City.

“[They are] going from the 5 percent range to now 10 or 20 percent in collections, which makes a difference on the bottom line,” he said.

Mason Sleeper, a principal with the real estate investment firm Praedium Group, said he has seen a similar distress in the market.

“You have your collection issue which is increasingly creeping up to becoming a little bit of a problem,” he said.

They were speaking on a panel that also included Kevin Davis, partner of Area Property Partners; Tim Wang, vice president at ING Clarion and Max Herzog, senior vice president at CB Richard Ellis. The panel, moderated by Mike Kelly, president of Caldera Asset Management, was part of a day-long forum covering multi-family real estate organized by GreenPearl. [more]

From the October issue: New York City is at a peculiar crossroads. For months, investors have
marshaled unprecedented amounts of capital, salivating at the prospect
of snapping up distressed properties. “We’re fortunate this cycle to
have the most dry powder in our
history,” Blackstone Group president Tony James said last month at the
Barclays Capital Global Financial Services Conference, which was held
in Manhattan. The firm has about $28 billion in unspent capital, he
said. About $12 billion of that is earmarked for real estate. “We’re
just beginning what will be the best period in decades for private
investing,” he said. Dan Fasulo, a managing director at Real Capital
Analytics, estimated
that $50 billion has been raised and is ready to be deployed into
distressed real estate. Paradoxically, investors have found very little
worth buying so far, in large part because banks continue to hold
troubled loans on their books, hoping conditions will improve. [more]