UDR CEO Tom Toomey

Real Estate Investment Trusts are betting that Manhattan’s rental market will remain strong for years to come, Bloomberg News reported, and consequently are betting against a sales rebound.

REITs have been snapping up Manhattan rental apartments in recent months, with Colorado-based UDR making the biggest splash. It entered the Manhattan market in 2011 and has already made five big acquisitions, including most recently, a five tower complex on the Upper West Side for $630 million. [more]

Trevor Bond, CEO of W.P. Carey

New York-based investment management firm W.P. Carey & Co. is set to change its official status to a real estate investment trust, it announced today, and will acquire Corporate Property Associates 15, a non-traded REIT that it manages.

Following the acquisition, W. P. Carey is expected to have a total equity market capitalization of approximately $3 billion, total market capitalization of $5 billion and a portfolio of 43 million square feet of corporate real estate completely leased to 135 companies around the world, according to a statement from the company. [more]

From top left: Broadway Partners CEO Scott Lawlor, Invesco CEO Martin Flanagan, and 280 Park Avenue

The value of New York City’s 25 largest commercial property sales increased 23 percent in 2011 to $12.27 billion and the median price per square-foot of an office building rose 18 percent to $696, according to Crain’s, but troubling signs lurked behind the impressive outlay.

Many of the largest deals of the year, including the $1.1 billion SL Green Realty and Vornado Realty Trust paid for 99 percent of 280 Park Avenue, were recapitalizations which bailed out troubled landlords. [more]

From left: Equity Residential CEO David Neithercut and UDR CEO Thomas ToomeyAs nationwide residential rental vacancy rates near their five-year lows, multi-family real estate investment trusts are performing well and believe more profit is on the way. Reporting from the National Association of Real Estate Investment Trusts’ conference in Dallas the Wall Street Journal said generational factors and the weak economy are driving rental strength, and large landlords will hike rents in their portfolios as a result.

Young adults prefer to live close to city centers, UDR CEO Thomas Toomey said, and the firm’s 62,000-unit portfolio is more than 96 percent occupied. “We don’t have a problem finding customers. This is now a time when we’re just going to end up increasing rents.” [more]

Seeking the generally higher yields real estate investment trusts produce, investors have poured an additional $3.7 billion into U.S. REIT funds this year, Bloomberg News reported, bringing the total amount of assets in those funds — including exchange-traded funds — to $96 billion, shattering the previous record of $87 billion set in February 2007.

“REITs are attracting attention because of their income, the dividend yield, and the fact that REITs do own hard assets, which offer inflation protection,” said Philip Martin, REIT strategist at research firm Morningstar. The average annualized dividend growth rate of REITs over the last two decades is 5.75 percent, according to the firm, about twice the rate of inflation. [more]

The Financial Industry Regulatory Authority has filed a disciplinary action against brokerage David Lerner Associates for allegedly misleading investors in selling… [shares of Apple REIT Eight],” a real estate investment trust facing significant problems, according to the New York Times.

The REIT has failed to make mortgage payments on four of its hotels and may have to surrender them to lenders. It has made monthly payments to investors, but much of the money was borrowed. The last loan the company was granted was secured by the personal assets of the trust’s chief executive.

Yet, the investors have no idea, the New York Times said. Every month, David Lerner, who advertises heavily in New York and Florida, sends out statements showing the value of shares at $11 each, exactly what most of them sold for. [more]

A newly launched private real estate investment trust based in Scottsdale Ariz. reveals a major shift in the REIT world, according to the Wall Street Journal. Commercial real estate veterans Christoper Volk and Morton Fleishcher, who co-founded Spirit Finance, a REIT focused on single tenant retail buildings, in 2003, have raised $500 million in the private market to form a REIT that will invest in supermarkets, drug stores and restaurants.

Store Capital, the private REIT, is the result of a public market hostile to investments trusts, particularly blind-pool REITS, or companies that have zero concrete assets. These types of REITS have been almost entirely shut out of initial public offerings as a result of investors playing it safe. [more]

From left: Dan Fasulo, Jahn Brodwin, Simon Ziff and Daniel Alpert

From the April issue: While those in the industry have been relieved to see the New York City commercial real estate market bounce back over the past year, the resulting price increases have prompted many investors and developers to look elsewhere for deals.

Instead of searching for properties to buy in the Big Apple, they are, in many cases, turning to other markets — from prime locations like San Francisco and Los Angeles to secondary markets like Austin, Tex.

“People need to realize that the number of assets truly available for a sales price that makes sense is very few in New York City,” said Daniel Alpert, managing partner of Westwood Capital, a Manhattan-based real estate investment bank. [more]

Investors from around the world want to own commercial real estate assets in New York City. Equally important for ownership is the publicly traded and non-traded real estate investment trusts seeking opportunities in the Big Apple.

REITs like SL Green Realty, Vornado Realty Trust, Boston Properties and Brookfield Properties have significant ownership in the city’s best office buildings.

With regard to the prize asset class in New York City, the residential rental market, REITs who have dominated ownership in this market, especially in Manhattan, have included Equity Residential; Apartment Investment and Management Company, or AIMCO; AvalonBay Communities and Archstone-Smith (no longer a publicly traded REIT, although it could potentially go public again). [more]

U.S. commercial property deals may double this year as confidence builds among investors who believe those values will rebound, Bloomberg News reported. Blackstone Group’s planned $9.4 billion purchase of U.S. shopping centers and Ventas’ proposed $5.7 billion buyout of a healthcare real estate investment trust may be a sign that a wave of commercial real estate acquisitions is coming as buyers regain confidence in the market. “Both these deals are a great signal that liquidity has returned to the commercial real estate space,” Dan Fasulo, managing director of Real Capital Analytics, said. [more]