From left: Matthew McCall of Penn Financial Group and Appel Asset Management CEO Marvin Appel

The landlords of Manhattan’s office buildings may look at darkened cubicles and worry that a full recovery is a long ways off.

But the ones who are public companies could still take comfort from the performance of their stock, especially if those shares are bought and sold in exchange-traded funds, or ETFs.

Those types of funds, which are made up of real estate investment trusts, or REITs, have been gangbusters.
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Among last year’s major deals involving insurance companies were refinancings are (from left) 345 Park Avenue, 125 West 55th St.

From the February issue: With their recession-proof premiums still rolling in, traditionally conservative insurance companies are ramping up their investments in New York City commercial real estate. “REITs and insurance companies have the perfect storm to acquire properties,” said Jahn Brodwin, senior managing director at Manhattan consulting firm FTI Schonbraun McCann Group. “Both are looking for the same criteria. They want low-leveraged transactions with conservative underwriting and longer terms — 10-year deals as opposed to the three, five years that banks want. They are looking for stable, core properties.” [more]

While few analysts can tell the future, investment management firm
Pimco believes it can foretell the nation’s commercial market
performance — and it isn’t pretty. Through a ground-level survey of
more than 100 industry experts, Pimco said it believes that many
commercial investment opportunities currently available belie the
market’s shaky foundation. “Certain sectors have made many observers
and participants optimistic,” the firm said in a recent report,
referring to underpriced investments and trophy properties, “but this
has provided a false sense of clarity on the real level of property
values.” While real estate investment trusts have been able to drum up
cash, driving REIT prices up more than 96 percent between the first
quarters of 2009 and 2010,
the report said, investors have turned much of their attention to
lower-risk trophy properties — and aren’t jumping on the broader
market. Ultimately, even cautious optimism may be premature, Pimco
said. “Capital is clearly returning to commercial real estate, helping
to stem the value decline in the sector,” the firm reported. “[But]
national price indices are misleading when transactions are limited and
fail to reflect the significant uncertainty around property
valuations.” TRD

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Despite the all-time high delinquency rates seen among commercial mortgages, more lenders are showing optimism toward the commercial mortgage-backed securities market, and are gingerly buying up shares in the real estate investment trusts that own those loans, according to the Wall Street Journal. And their positive outlook might be justified — overall, REITs are up about 16.7 percent so far this year and some commercial-mortgage REITs, like iStar Financial and Arbor Realty Trust have made strides as well, up 140 percent and 113 percent so far this year, respectively, according to the Wall Street Journal. But Jason Yablon, a vice president with investment firm Cohen & Steers, said that the positive momentum needs to be taken with a grain of salt. “Because the stock has been beaten down, any incremental good news [about] the financing environment is going to make the stock move a lot,” Yablon said.

From the February issue: When all else fails, there’s always the stock market. That seems to be
the mantra of many real estate companies that, faced with few options
for raising cash, are turning to the equity markets and issuing initial
public offerings.
Real estate investment trusts, or REITs, sold nearly $3 billion
worth of IPOs last year. Nine REITs went public, making REITs the
second most popular type of IPO after tech firms.
The list included some big names, such as Starwood Property Trust,
New York City-based Apollo Commercial Real Estate Finance, Colony
Financial and, most recently, Pebblebrook Hotel Trust.
Sources say these REITs are coming to market with IPOs for several key reasons. [more]

Real estate investment trusts are becoming more popular among investors
as a market rebound nears. REITs were particularly popular in the first
half of the decade as the real estate market boomed, but many REITs
crashed in 2006 and 2007, following the market. Now, as investors wait
expectantly for the market to trend upward again, many are putting
their money back into REITs, which they expect will hold up long-term. [more]