There were a record number, $13.3 billion worth, of national office recapitalizations last year, according to data from Real Capital Analytics cited by the Wall Street Journal, underscoring the huge debt piles accumulated by landlords during the pre-recession property boom.
“There were a lot of white knights coming to help recapitalize” buildings that had mortgage loans coming due last year, said Dan Fasulo, managing director at RCA. [more]
Commercial property buyers who had shifted their focus from prime coastal city properties such as in New York and San Francisco to secondary markets like Las Vegas, Dallas and Minneapolis, may be rethinking their strategies as a result of recent financial market volatility, Bloomberg News reported.
Investors had been showing interest in secondary markets amid growing confidence in the recovery and soaring prices in prime cities, Bloomberg said, with transactions increasing sixfold in Las Vegas in the first half of 2011 from the same period in 2010, by about 253 percent in Phoenix, 204 percent in Atlanta and 267 percent in Pittsburgh, according to data from Real Capital Analytics.
Concern, however, that the U.S. property market may only experience sluggish growth in the next few years could stymie this trend before it takes off, sources said. [more]
As demand for rental housing surges throughout the country, investors are venturing beyond Class A properties, or newer, well-leased buildings in centrally located neighborhoods of big cities, Bloomberg News reported. According to Real Capital Analytics, sales of apartment building rose 96 percent to $33.7 billion in 2010 from a year earlier. Class B properties and distressed acquisitions accounted for 33 percent of sales in the fourth quarter, compared with 25 percent a year earlier, said Sam Chandan, Real Capital’s chief economist. [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. “It certainly will have ripple effects on the entire industry.” Transactions surged over the past year as the economy began to recover and low interest rates made it cheaper for REITs and private equity buyers to acquire properties. Completed acquisitions by U.S. REITs more than tripled to $24 billion in the 12 months through the end of February compared with the previous year, according to data compiled by Bloomberg. Fasulo said he “wouldn’t be surprised” if U.S. commercial property purchases double in 2011 from almost $140 billion in 2010. [Bloomberg]
The U.S. commercial property market is on the upswing after a predicted collapse that never quite happened. According to Bloomberg News, commercial properties sold by institutional investors last year rose in price by 19 percent, which, according to the MIT Center for Real Estate, is the second-largest price gain ever for those types of sales. Meanwhile, Real Capital Analytics recorded investments in office properties last year at $41.6 billion, more than double what was invested in that sector in 2009, and the commercial mortgage-backed securities market is also beginning to rebound. Jones Lang LaSalle predicted that commercial real estate deals overall may rise 40 percent in 2011, to a volume of $135 billion. Buoyed by a rise in commercial property prices, lenders have finally begun to unload distressed assets from their balance sheets. “Give a little credit to the strategy put forward by the government: keeping interest rates low and giving lenders some flexibility to hold these troubled assets on their books for a while,” Dan Fasulo, RCA’s managing director, said. “Now that values are on the upswing, it’s given owners and lenders more wiggle room to work out these troubled situations.” [Bloomberg]
Two years after buying almost $6 billion in U.S. commercial real estate — more than Europe, Asia and the Americas combined — Middle East investors have almost disappeared from the American market, the International Property Journal reported.
In 2009, Middle East buyers accounted for only $100 million in deals, but so far in 2010, the Middle East isn’t even on the top 10 list of foreign investors, Real Capital Analytics reported. The drop-off is in sharp contrast to interest from other investors around the globe, who are buying U.S. commercial property with renewed vigor, Real Capital Analytics said. After investing $1.5 billion in the first quarter, foreign interests bought up $2.5 billion in commercial property in the second quarter, accounting for about 10 percent of deals. The number was closer to 20 percent in core markets like Manhattan, Los Angeles, Boston and San Francisco. [International Property Journal]
The sales volume of U.S. commercial properties in the first two quarters totaled just over one quarter of the average of the six years prior, according to preliminary figures from Real Capital Analytics. Through the end of June, $34.2 billion worth of deals had been completed, compared to the peak of $277.7 billion worth of commercial property sales during the same period in 2007, the data show. As Bloomberg News reported, the dismal figures are a reflection of owners keeping their properties off the market until values recover. That’s frustrating for private equity investors like Blackstone Real Estate Advisors and Goldman Sachs, who have record amounts of capital available for U.S. property deals and are chomping at the bit to get into the game. Still, the first two quarters’ numbers represent an improvement from the first half of 2009, in which commercial property sales volume was 58 percent lower. [Bloomberg]
When it comes to maintaining troubled assets, vulture
investors are circling South Florida properties.
And there are a number opportunities out there. The area is currently home to $12.4 billion in troubled commercial real estate assets, according to data analysis firm Real Capital Analytics, and more lenders are foreclosing with the goal of reselling the properties to willing buyers. That spells big business for distressed asset and receivership
specialists, workout pros and other commercial real estate experts who can navigate the troubled waters of these property types. [more]
CB Richard Ellis was ranked the number one firm in investment sales nationwide in 2009, according to recent rankings from real estate data analysis group Real Capital Analytics (see RCA chart here). While RCA said it could not release the dollar value or transaction numbers for the top firms, CBRE said today that it had 15.4 percent of the market share in 2009, with approximately $7.8 billion in transactions. Cushman & Wakefield was ranked second followed by Eastdil Secured, RCA determined. The RCA year-end analysis found that a total of $51.9 billion in commercial properties was sold nationwide last year. TRD [more]
Distressed commercial real estate properties nationwide now total a record $180 billion, a new report by real estate research firm Real Capital Analytics reveals. As of November, Las Vegas was by far the worst off, according to the report, with $17.7 billion worth of properties that could be classified as distressed, which includes those in default, or that are delinquent, bankrupt or foreclosed upon. Manhattan ranked second on the firm’s list of highest dollar value in distressed assets: $12.3 billion. Miami trailed with $7.6 billion. Nationwide, the retail sector had the greatest share of distressed properties, with $37.5 billion. Hotels fared second worst with $32 billion worth of properties in distress. Offices came in third at $28.2 billion and apartments fourth, at $27.9 billion. The industrial sector, which, according to Dan Fasulo, a managing director at RCA, was never over-leveraged in the way other property types were, is suffering least. Just $5 billion worth of industrial properties are classified as distressed, according to the firm. Fasulo said the trouble in commercial real estate began only after the Lehman Brothers collapse. “Before 2008 there was no material distress in commercial real estate — period. It was just a normal market. This isn’t something you can compare with other periods. This is new for everybody.”
