American International Group Inc., whose spending is being monitored by the Federal Reserve, has cut or delayed payments to some AIG real-estate ventures, potentially leaving shopping centers and apartment complexes across the U.S. short on cash to pay lenders and fund repairs and renovations, according to court documents and people familiar with the matter.Related post:
Normandy Real Estate Partners and Five Mile Capital Partners won the auction today for Boston’s John Hancock Tower, the tallest skyscraper in New England.
The companies agreed to pay $20.1 million for the mezzanine debt on the 60-story building and assume the mortgage of $640.5 million, according to a statement today.
American International Group Inc. the insurer that received a $173 billion U.S. bailout, is considering a sale of its New York headquarters and another tower in lower Manhattan to help repay the government.
AIG is evaluating the sale of 70 Pine St. and 72 Wall St., spokesman Mark Herr said in an e-mail today. Two years ago the properties were likely worth about $315 million, said Dan Fasulo, managing director of Real Capital Analytics Inc., a New York-based firm that tracks commercial real estate sales.
Whilst the woes of the mainstream real estate market are very public, our first survey confirms that the data centre market can be quietly optimistic. Although not 'recession proof', its hybrid position somewhere between real estate and technology (with a degree of statutory compliance thrown in for good measure) goes some way towards insulating it from many of the factors which are dragging other sectors of the economy down.(via Property Week)
“The typical joint venture agreement already will provide the capital partner with significant approval rights over major decisions, Rubin notes. “One difference you would expect to see is that those approval rights may go from being sort of pro forma to something that the capital partners really drill down into.”
A court on Friday gave Stuy Town landlord Tishman Speyer a stay in having to take any actions after the decision last week, waiting until the results of an appeals process are borne out. Tishman Speyer has applied to appeal to the state’s top court, the Court of Appeals. A state appellate court dealt the powerful landlord, as well as the owners of tens of thousands of other apartments citywide, a major blow that could cost them hundreds of millions—if not billions—of dollars, ruling that many landlords had been improperly converting rent-stabilized apartments to market-rate units.Related posts:
Rather than immediately re-regulate the 4,000-plus apartments in Stuyvesant Town that have been converted to market rents since 1993, as the appellate court’s decision would require, the stay calls for Tishman to calculate how much money it would owe in back rent to market-rate tenants and put that money in an escrow account.
Given the inherent repositioning aspect of partial leaseback deals, traditional sale-leaseback investors are not typically attracted to these kinds of transactions, says Martinez. Rather, value-add players are the more likely bidders, but they are attracted to having a stabilized rental income stream component while repositioning efforts for the remainder of the space are undertaken.
Partial or whole, any number of market experts predict that sale-leasebacks will be an increasingly used corporate real estate strategy this year as companies look for ways to shave costs, raise capital and otherwise strengthen their balance sheets.
Jim Cramer exemplifies everything that's wrong with the advice -- and I put advice in quotation marks -- that is given to individual investors. Investing is a serious business. We're talking about retirement security of American citizens, and he turns it into a game. It's a game where his listeners lose. It's ridiculous. These high-turnover, rapid trading strategies enrich the brokers. If you look at Jim Cramer's approach on an after-fee, after-tax basis, the individual doesn't have a chance.
The timing is interesting. The seller BentleyForbes took it off the market last year when the bids didn't meet their expectation. From Bloomberg:The office, retail and parking garage likely would have sold for about $120 million last year, said Dan Fasulo, managing director of Real Capital Analytics Inc., a New York-based property-research firm. The property is likely to go for less than that now because of the global capital crunch, he said.
BentleyForbes bought the Watergate complex in 2005 from Trizec Properties Inc. for $86.5 million.
“They should’ve sold it last year. They should’ve taken the bid, whatever it was,” Fasulo said.
Warning that economy will remain in dismal shape for “a while,” Blackstone Group Chief Executive Stephen Schwarzman urged people against buying real estate—even at seemingly depressed prices.He also said people should stop watching CNBC:
“You should keep away from that for now; if it looks cheap it will be cheaper,” Mr. Schwarzman said in response to a question from a member of the audience Tuesday at the Japan Society.
In the meantime, he suggested people turn off their televisions and pull the plug on their computers, saying that media and the Internet have made the crisis worse by giving everyone the same bad news and gossip simultaneously. “The business stories went on to the front page,” he said. “That is never a good thing. Business stories should always be on the business pages.”
In an apparent reference to CNBC, he observed that there isn’t enough news in the day to fill “14 hours of programming,” leading TV personalities to “beat the drum.”
Alternative investment managers are turning to Washington for some of their best portfolio opportunities.
The potential investments range from downtrodden commercial mortgage-backed securities to bank loans to venture capital. Those able to take advantage of some of those options — most of which still are in the planning stages — include hedge funds, private equity firms and real estate investment managers.
The decision, issued by the Appellate Division of State Supreme Court in Manhattan, could ultimately cost the landlord, Tishman Speyer Properties, $200 million if it is required to repay residents of more than 3,000 apartments for improper rent increases over the past four years, said a lawyer for the tenants.
Landlords say the decision could also affect hundreds of other apartment house owners who, like Tishman Speyer, obtained tax breaks under the city’s J-51 tax program for property renovations and then raised rents beyond certain set levels. The Appellate Division ruled that apartments must remain rent-regulated as long as the building owners enjoy J-51 tax benefits.
Residential real estate markets remained in the doldrums in most areas, with only scattered, very tentative signs of stabilization reported. The pace of sales remained very low in most areas and declined further in some; most Districts reported small declines, but New York cited a sales drop of 60 to 65 percent in Manhattan compared with twelve months earlier. By contrast, Cleveland, Richmond, Dallas, and San Francisco each reported a rising or better-than expected sales pace for existing or new homes in some areas, attributed largely to falling prices and improved financing terms for some types of home mortgages. House prices continued to decline, reportedly at double-digit paces in some areas, with little or no signs of a deceleration evident. Builders in various Districts generally remain pessimistic regarding recovery prospects this year, and consequently the pace of new home construction declined further in most areas.
Demand for commercial, industrial, and retail space fell further during the reporting period, with some evidence of more rapid deterioration than in preceding periods. Vacancy rates rose and lease rates declined on a widespread basis; New York noted that commercial real estate markets “weakened noticeably,” while Atlanta described reports on commercial real estate that were “decidedly more negative” than in previous periods. Construction activity has declined commensurately, and assorted reports suggest that market participants expect this weakness to continue at least through the end of 2009. Cleveland noted that public works projects have shown stability of late, although they declined in the San Francisco District as a result of the budgetary struggles of some state and local governments there. Credit constraints and uncertainty were reported to be a drag on commercial construction and leasing activity in the Philadelphia, Chicago, Dallas, and San Francisco Districts.
In commercial real estate, renewals of existing accounts increased significantly, while new commitments decreased. The median percent change in renewals of existing accounts was an increase of 55 percent, and the median percent change in new commitments was a decrease of 19 percent.And the largest commercial real estate lenders are Bank of America ($7.3B new commitments) and Wells Fargo ($4.4B new commitments):
Bank of America extended about $49 billion in commercial non‐real estate lending credit and nearly $7 billion in real estate lending during the fourth quarter to middle market and large corporate clients as well as not‐for‐profit organizations and governments. In 2008, the company also invested $1 billion in affordable housing development financing by using Low Income Housing Tax Credits.See also:
Commercial loan growth at Wells Fargo increased 11% in Q4 2008 from a year ago and 10% annualized linked quarter, reflecting the Company’s commitment to extend credit to all of its creditworthy customers at a time when many of Wells Fargo’s competitors have retracted from commercial lending. Commercial loan growth at Wells Fargo in Q4 2008 continued to be broad‐based by geography and by product type with growth for example in small business lending (up 8%), asset based lending, middle market commercial lending, commercial real estate (largely owner‐occupied financing) and selected niches in large corporate lending.
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