Wednesday, May 16, 2012

Banks Finally Willing To Catch Up on CRE Borrowing Demand - CoStar Group

Banks Finally Willing To Catch Up on CRE Borrowing Demand - CoStar Group

Multiple Lending Sources Now Offering Programs for CRE Properties
May 16, 2012
Having experienced stronger demand over the past three months, banks have started easing their lending standards for commercial real estate

The move is another signal that banks are more willing to start growing their CRE loan portfolios as they have in other lending areas. 

The banking sector overall also has substantially improved its liquidity position over the past few years. Indeed, large banks in the aggregate have more than doubled their holdings of cash and securities since 2009, according to remarks last week by Ben S. Bernanke, chairman of the Federal Reserve System. The credit quality of large banks' assets is looking better as well, although the improvements have been uneven across types of 
In the aggregate, delinquency rates on loan portfolios at large banks have declined substantially from their peaks. However, while delinquencies on commercial and industrial (C&I) loans and consumer loans have fallen to the lower end of their historical ranges, delinquencies on loans backed by commercial or residential real estate have declined only moderately and remain elevated, Bernanke said. 

Notwithstanding the various headwinds, credit conditions in the United States have improved significantly in a number of areas. Many--though certainly not all--businesses and households are finding it easier to borrow than they did a few years ago, in part because of better conditions in financial markets more broadly. 

"In a market that has been in flux for the last few years, the lending environment continues to be the shining beacon of hope," said Gary Goss, senior vice president debt placement services at Cassidy Turley San Diego. "The abundance of competitive lending sources and very low interest rates, combined with an absence of significantly damaging global economic news over the past few months, has created an excellent environment to finance commercial real estate." 

"Twelve months ago, lenders (for the most part) were seeking permanent debt for multi-family, industrial, retail and office property types alone," Goss said. "In recent months, we have noticed a rise in multiple lending sources offering programs for construction, hospitality and special use properties and we expect them to continue to expand their lending types as a way to satisfy their huge appetite for accumulating loans. Mezzanine debt and Joint Venture Equity financing is also plentiful and is playing a major role in making up for the downward shift in lower leverage senior debt." 

Overall, at this point in time, the debt markets appear to be in a very good state as clients see this as an opportunity to capitalize on favorable financing conditions, Goss added. 

Signs of improvement notwithstanding, the boost in loan growth is not without a potential downside. 

While loan growth adds to a bank's earning assets, growing loans faster than deposits can also put pressure on banks' liquidity, according to Moody's Investors Service. 

"Despite our favorable view of recent loan growth, as the economy recovers, history suggests that underwriting standards will deteriorate," Moody's analyst wrote in their most recent weekly credit markets report. "Already, a number of banks mentioned in their recent quarterly earnings teleconferences that loan pricing competition has increased. Our experience has been that after affecting price, competition typically weakens loan structures and covenants. Once that occurs, it will translate into asset quality problems down the road. Therefore, a leading indicator for banks' asset quality will be the pace of their loan growth relative to overall economic growth." 

For now, though, Moody's said that is not a worry because U.S. banks' are in the enviable position of having more deposits than loans. 

The recent loan growth is also positive because it typically represents customer growth. An indication that this is particularly true now is the fact that most banks have not reported an increase in credit line utilization rates. 

Wednesday, May 9, 2012

No. 3: McAllen-Edinburg-Mission, Texas - Joel Kotkin - Forbes

No. 3: McAllen-Edinburg-Mission, Texas - Joel Kotkin - Forbes

By Joel Kotkin and Michael Shires

Throughout the brutal recession, one metropolitan area floated serenely above the carnage: Washington, D.C.  Buoyed by government spending, the local economy expanded 17% from 2007 to 2012. But for the first time in four years, the capital region has fallen out of the top 15 big cities in our annual survey of the best places for jobs, dropping to 16th place from fifth last year.
It’s a symptom of a significant and welcome shift in the weak U.S. economic recovery:  employment growth has moved away from the public sector to private businesses. In 2011, for the first time since before the recession, growth in private-sector employment outstripped the public sector. More than half (231) of the 398 metro areas we surveyed for our annual study of employment trends registered declines in government jobs, with public-sector employment dropping 0.9 percent overall. Meanwhile, private-sector employment expanded 1.4 percent.
Instead of government, the big drivers of growth now appear to be three basic sectors: energy, technology and, most welcome all, manufacturing. Energy-rich Texas cities dominate our list — the state has added some 200,000 generally high-paying oil and gas jobs over the past decade — but Texas is also leading in industrial job growth, technology and services. In first place in our ranking of the 65 largest metropolitan areas is Austin, which has logged strong growth in manufacturing,  technology-related employment and business services. Houston places second, Fort Worth fourth, and Dallas-Plano-Irving sixth. Another energy capital, Oklahoma City, ranks 10th, while resurgent New Orleans-Metairie places 13th among the largest metro areas.
To determine the best cities for jobs, we ranked all 398 current metropolitan statistical areas based on employment data from the Bureau of Labor Statistics covering November 2000 through January 2012. Rankings are based on recent growth trends, mid-term growth, long-term growth and the region’s momentum. (Click here for a detailed description of our methodology.) We also broke down rankings by size — small, medium and large — since regional economies differ markedly due to their scale.

The Best Big Cities For Jobs

The Best Mid-Size Cities For Jobs

The Best Small Cities For Jobs

The strong growth of the energy sector, and Texas, is even more evident in our overall ranking, which includes many small and medium-sized metropolitan areas. The top 10 fastest growers overall include such energy-centric places as No. 1 Odessa, Texas; second-place Midland, Texas;  Lafayette, La. (fourth place); Corpus Christi, Texas (sixth), San Angelo, Texas (seventh); and Casper, Wyo. (10th).
The shift from public to private can be seen in the falling rankings of many of the most government-dependent economies. Outside of Washington, D.C. (where federal employment actually has continued to grow), Bethesda-Rockville-Frederick, Md., took an even more dramatic tumble in our big city table,  dropping 34 places to No. 46.There were sizable relative declines in the rankings of many state capitals such as Springfield, Ill. and Madison, Wisc. College towns, which had previously done well in the face of the recession, have also moved sharply lower in our rankings, due to a combination of state budget cuts and better performance elsewhere. College Station, Texas, plummeted from fourth last year on our overall list to 167th; Fairbanks, Alaska, slid from 15th place to 165th, Corvallis, Ore., tumbled from 40th place to 203rd place; and Cedar Rapids, Iowa, dropped from 81st to 246th.
Budget ...
Click here to read the full article

Tuesday, May 8, 2012

Simon Property CEO: Malls are alive and kicking

 @CNNMoneyInvest May 3, 2012: 8:14 AM ET

LOS ANGELES (CNNMoney) -- People have been hyping the death of the mall for the last two decades, but it's not happening anytime soon, said Simon Property Group CEO David Simon.
"Time Magazine 20 years ago had that exact headline," Simon, who has been at the helm of the world's largest mall operator since 1995, told CNNMoney at the Milken Institute Global Conference in Los Angeles. "If you look at our business and our profitability, it's never been better."
Investors appear to agree. Simon Property Group's (SPG) shares are up 22% in 2012, compared to an 11.7% increase in the S&P 500 (SPX).
Simon admits growth in the United States is limited, even going so far as to say some lower-end malls around the U.S. could close. Most of Simon Property Group's malls serve higher-end consumers.
He thinks most of Simon Property Group's growth will come from driving sales into its existing malls by refurbishing them and adding new stores.
Simon points to Roosevelt Field mall on Long Island in New York as one example. After years of battling local community boards for approval, Simon Property Group recently landed luxury retailer Neiman Marcus as a tenant. Simon hopes such retailers will ...
Click here for full article

Thursday, May 3, 2012

CoStar Closes LoopNet Acquisition To Begin New Chapter in CRE Technology Industry's Leading Information Service Combines With Leading Online CRE Marketplace

By Tim Trainor April 30, 2012
CoStar Group

CoStar Group, Inc. (NASDAQ:CSGP) this week completed its previously announced acquisition of LoopNet, Inc., bringing together commercial real estate's leading provider of information and analytic services with the leading online commercial real estate marketplace. The closing occurred Monday April 30, after the combination cleared regulatory review last week. 

CoStar Group's founder and CEO Andrew C. Florance said work would begin immediately on integrating the two leading firms to create the premier information, marketing and analytics company in commercial real estate. 

"We are very pleased that we can begin integrating these two successful companies that have been at the forefront of innovation in the commercial real estate industry," said Florance. "We believe that the combined company will be the premier resource for researching, analyzing, and marketing commercial real estate properties online and will be positioned to provide more widespread market coverage for customers ranging from large, national brokerage firms, property owners and institutional players to small, local brokers, owners and investors." 

CoStar operates the largest and most robust commercial real estate information database with 81.8 billion square feet of office, retail and industrial inventory, 1.5 million listings and 12.7 million images. is the industry’s largest and most heavily trafficked online marketplace with 5.8 million registered members and 3.6 million unique monthly visitors, according to Google Analytics. LoopNet is also the leading website for marketing commercial property listings. 

The combined company will retain the name CoStar Group, Inc. and will continue to trade on the NASDAQ Global Select Market under the ticker symbol CSGP. CoStar plans to continue to operate LoopNet as a separate brand. 

"With 5.8 million registered users and 3.6 million monthly unique users on LoopNet, it is clear the Internet has become an essential tool for effectively marketing commercial real estate with hundreds of thousands of brokers seeking investors and tenants for over a million commercial real estate listings across the U.S.," Florance said. "We believe that and its strong group of vertical platforms is the number one solution meeting this growing demand. 

"As commercial real estate brokers and owners continue to move property listings to online channels, we fully anticipate LoopNet’s marketplace will become increasingly important to those marketing or searching for properties," he added. "Our strategy is to build upon LoopNet’s position as the premier online marketplace for commercial real estate and strengthen its products and services." 

Florance also said he sees the combination and resulting integrated technology platform bringing new innovation and services for commercial real estate professionals serving the $11 trillion U.S. commercial real estate asset class. He said numerous analysts and observers have for years under-estimated the size of the commercial real estate market, which he believes has more than a million participants. 

"The commercial real estate market is vast, and information is constantly changing. It requires high quality research, advanced analytics and more efficient marketing solutions," Florance said in a follow up conference call with investors Wednesday, adding he expects the combination will also result in tremendous growth opportunities. 

"CoStar's research department of 900 individuals captures details on over a million listings which we believe can result in over a hundred thousand new leads to LoopNet's sales team," said Florance. "In addition, there are hundreds of thousands of industry participants searching LoopNet who do not yet subscribe to CoStar and access to the leads represents a significant cross selling opportunity for CoStar. CoStar's clients can benefit from even more comprehensive coverage of the commercial real estate market since we believe that LoopNet contains hundreds of thousands of listings not yet found in CoStar. We plan to identify these properties, then validate and add them to the CoStar database." 

Also on the follow-up call, CoStar CFO Brian Radecki provided a financial outlook for the combined companies, noting the transaction is expected to be accretive to non-GAAP net income per diluted share in 2012 and beyond on a combined basis. Consolidated annual revenue in 2012 for CoStar to be approximately $343 million to $349 million. 

"We believe that the combination of these two companies will create a business with outstanding revenue growth potential, as well as a strong earnings profile with the ability to generate high margins and cash flow," said Radecki. 

Editor's Note: This news report was updated since its original publication date to add new information and details released by the company in a conference call on Wednesday, May 2, 2012. 

"Shale of the Century: Small Towns Dazed by Eagle Ford Influx"

Hunt No. 1996, Tierra Grande reprint, 4pp (4/20/2012)
Increased oil and gas activity in the Eagle Ford Shale has dramatically boosted the economies of many small South Texas towns. However, the influx of oilfield workers has caused severe housing 
shortages and is straining local infrastructures.

Click here to read full article 

Wednesday, May 2, 2012

CoStar Group completes LoopNet deal

Date: Monday, April 30, 2012, 2:19pm EDT
District-based CoStar Group Inc. has completed its $860 million acquisition of rival commercial real estate data firmLoopNet Inc. after clearing a key regulatory obstacle late last week.
The acquisition’s completion, which CoStar announced Monday, comes more than a year after CoStar said it planned to buy San Francisco-based LoopNet in a merger of the nation’s two largest, publicly traded real estate information firms.
“We are very pleased that we can begin integrating these two successful companies that have been at the forefront of innovation in the commercial real estate industry,” CoStar CEO Andrew Florance said in a statement. “We believe our products and services, diversified client base, comprehensive geographic footprint and economies of scale will drive significant synergies, which we believe can lead to increased stockholder value and a stronger, integrated platform for our customers.”
The companies will continue to operate as separate brands operating under CoStar ticker symbol CSGP. But LoopNet has asked that its own ticker symbol be suspended from trading before trading opens May 1.
CoStar is an online real estate database that provides...
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