Monday, January 30, 2012
Friday, January 27, 2012
Timing and Strategy Factor Into Successful Relocations
Negotiating the best lease terms is important in commercial real estate. But Juan Alcácer, an associate professor at Harvard Business School’s Strategy unit, explains why businesses also need to understand the strategic implications of expansion in the article Location, Location, Location, which appeared in the Harvard Business School Working Knowledge forum.
Before committing to relocating, businesses need to evaluate the strength of their available resources, Alcácer says. A move will require management to shift its focus from current business activities, which could slow the growth of a successful company. Another common misstep is blindly following competitors. Alcácer cites the example of companies that now regret their move to China.
Businesses also need to be aware of the signals they could be sending to competitors. Through their location selection, businesses might give competitors information about their operations or an opportunity to poach their employees. Businesses can avoid this problem by choosing a niche location, an approach successfully employed by Pixar. Although most major studios are based in the Los Angeles area, Pixar stayed in its Northern California headquarters after being acquired by Disney.
Thursday, January 26, 2012
C-III Capital Partners Completes Acquisition of NAI Global
C-III Capital Partners LLC (C-III) announced today that it has completed its previously announced acquisition of NAI Global, the largest and premier network of independent commercial real estate firms worldwide.
C-III is led by CEO Andrew L. Farkas, who founded and was Chairman and CEO of Insignia Financial Group, Inc. (NYSE:IFS).
“The completion of this transaction represents a significant step forward in our strategy to build a fully diversified commercial real estate services company,” said Mr. Farkas. “With the NAI Global acquisition, we are gaining the world’s leading commercial real estate network and a tremendous foundation for future growth. As we begin a new year, we look forward to partnering with the NAI team to provide enhanced services to the commercial and institutional real estate markets they serve as well as continuing to take advantage of other opportunities to grow and expand our platform.”
“We are thrilled to be joining forces with C-III and excited about the opportunity to deliver an even broader range of services to our members and add greater value to our collective corporate and investment clients. We look forward to tapping into their great resources and expertise to help C-III clients strategically optimize their commercial real estate assets,” said Jeffrey M. Finn, President and CEO of NAI Global.
NAI Global will continue to operate as a separate company under its current management. NAI manages a network of commercial real estate firms comprising 5,000 professionals and 350 offices in the US and 55 countries throughout the world. NAI’s network members provide a full spectrum of corporate, financial, technology and project management services.
C-III commenced operations with the purchase of Centerline Capital Group’s institutional real estate debt fund management and commercial mortgage loan servicing businesses in March 2010. Since that time, C-III has successfully launched mortgage origination, investment sales and title insurance businesses, and expanded its principal investment, loan origination, fund management and primary and special loan servicing businesses, including acquiring the special servicing and CDO management businesses of JER Partners in August 2011. In November 2011, C-III acquired two affiliated multifamily property management businesses – U.S. Residential Group and Pacific West Management – which now operate on a combined basis under the U.S. Residential Group name.
Financial terms of the NAI Global acquisition were not disclosed.
About C-III Capital Partners
C-III Capital Partners LLC is a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, title services and multifamily property management. Our principal place of business is located in Irving, TX, and we have additional offices in New York, NY, Greenville, SC, McLean, VA, Chicago, IL, Dallas, TX and Nashville, TN.
About NAI Global
NAI Global (www.naiglobal.com) is the largest network of independent commercial real estate firms worldwide, comprised of over 5,000 professionals in 55 countries in more than 350 offices. NAI advisors work in tandem with our global management team to ensure our clients strategically optimize their real estate assets. NAI offices complete over $45 billion in combined transactions annually and manage 300+ million square feet of commercial space.
Monday, January 23, 2012
McAllen's leaders hold retreat, talk long-term economic development | mcallen, leaders, long - TheMonitor.com
Mike Blum, partner and managing broker at NAI Rio Grande Valley, a commercial real estate brokerage, met with the City Commission for nearly an hour Saturday morning to discuss a plan for the reservoir.
The State of the Investment Environment
Excerpts from December 2, 2011 article by David Lynn, Contributing Columnist for National Real Estate Investor. 
Rednews.com
Rednews.com
The U.S. economy grew in the third quarter at the fastest pace since 2010 with real GDP expanding at a 2.0 percent annual rate, up from 1.3 percent in the second quarter. Household purchases, the biggest part of the economy, increased by 2.4 percent, much stronger than forecast.
In addition, business investment remained robust. Corporate spending on equipment and software climbed 17.4 percent, the most in a year, contributing 1.2 percent to economic growth. This economic growth, along with hope for a possible resolution of the European debt crisis, has eased some concerns of a double-dip recession in the near term.
After a hiring slump in May and June, employers have since increased payrolls by an average of 132,000 workers per month, including 120,000 workers added in November. After little change in the unemployment rate since April, the jobless rate declined to 8.6 percent in November, its lowest point since March 2009, as a result of job gains and a decrease in the labor force.
Driven by both revenue growth and cost-containment, corporations reported a solid third quarter, with profit growth rising by 11.6 percent year-over-year.
Consumer spending has remained strong as households have dipped into their savings. The personal saving rate was 3.5 percent in October, up 20 basis points from September, but it remained at one of the lowest levels since December 2007.
The most recent monthly data suggest the economy is gradually improving, with incomes rising by the most in seven months during October. Retailers reported a strong start to the holiday shopping season over Thanksgiving weekend, with sales during the four-day weekend rising 8.7 percent from a year earlier, according to MasterCard Advisors’ SpendingPulse.
In November, consumer confidence rose to its highest point since July. While consumer confidence continues its monthly improvement, it remains vulnerable to outside political or economic setbacks, according to the Thomson Reuters/University of Michigan Survey of Consumers.
The cost of living in the United States has trended up throughout 2011, primarily due to rising food and gasoline costs. The Consumer Price Index (CPI) declined in October by 0.1 percent over the previous month as a result of lower energy prices.
The U.S. housing market continues to struggle, despite record low mortgage rates and historically high affordability.
Both single family starts and new and existing home sales remain at depressed levels. With an anemic job market and rising foreclosure sales, we do not expect a meaningful recovery in the housing market over the next 12 months.
The S&P downgrade of U.S. debt in August and a worsening European sovereign debt crisis in August and September initiated a drop in confidence globally. As a result, equity markets plummeted worldwide. Driven by a flight to safety, investors bought more U.S. Treasury Bills, and 10-year treasury yields plunged from 2.8 percent in early August to a record low of 1.7 percent in mid-September.
To provide additional monetary stimulus, the Federal Reserve launched “Operation Twist” – using maturing short-term treasuries ($400 billion) on its balance sheet to purchase longer-term treasuries through June 2012. Its intent is to thereby push down interest rates on everything from mortgages to business loans, giving consumers and companies an additional incentive to borrow and spend money.
In response to European debt crisis, six central banks, including the Federal Reserve, recently announced a coordinated effort to provide access to U.S. dollars for commercial banks through temporary U.S. dollar liquidity swap arrangements.
Negatively impacted by rising market volatility, investors became more risk averse, with risk spreads for non-treasury assets widening significantly during the third quarter. Spreads of AAA CMBS over swaps have increased by over 200 bps since mid-August, prompting investment banks to withdraw several large new issuances, at least temporarily, according to Commercial Mortgage Alert.
Commercial real estate fundamentals have generally continued their recovery path, although leasing activity slowed moderately during the third quarter of 2011.
National transaction volume across the five major property sectors totaled $45.4 billion in the third quarter of 2011, 15.3 percent lower than the second quarter but still 38.0 percent higher than the same period one year prior, according to Real Capital Analytics. The firm also reported the average transaction cap rate for all properties over $5.0 million remained unchanged at 7.1 percent during the third quarter of 2011, 10 basis points lower than the same period one year ago.
Looking forward, we think that U.S. economic fundamentals are improving although we are still vulnerable to exogenous shocks from overseas. GDP growth in the fourth quarter could accelerate to 2.5 percent, creating a healthy momentum into 2012.
David Lynn is a managing director, generalist portfolio manager and head of investment strategy for Clarion Partners in New York.
Friday, January 20, 2012
Thursday, January 19, 2012
Industry Pros Expect Stable Year for Retail Real Estate
By Elaine Misonzhnik, Senior Associate Editor - Retail Traffic
Even with the positive mood at this year’s ICSC New York Dealmaking conference, seasoned retail real estate professionals expect only moderate growth for the sector in 2012.
“There is so much focus on capital markets and the election, next year is going to be stable, but not exciting,” says Michael P. Glimcher, CEO and chairman of the board with Glimcher Realty Trust, a Columbus, Ohio-based regional mall REIT. “For us, it’s going to be about the balance sheet and strengthening the quality of our tenants. Next year is not going to be very dynamic.”
To be sure, both domestic and international retailers will continue to look for new stores, especially in well-established urban centers in the Northeast, including New York, Boston, Washington, D.C. and Philadelphia, according to leasing brokers including Peter Braus, managing principal with Lee & Associates NYC, and Jonathan Lapat, principal with Framingham, Mass.-based Strategic Retail Advisors.
For example, in the past year, Lapat has seen a high level of activity from quick service restaurants looking to open their first locations in Boston. Braus points to all the European chains that want to use New York as a branding opportunity.
At the same time though, malls and shopping centers in secondary and tertiary markets throughout the country will continue to experience historically high vacancies and stagnant rents in 2012 because of all the space that has been freed up by bankrupt retailers like Borders, Braus notes.
For owners of large retail portfolios, “there won’t be a lot of natural momentum; it’s just going to be more and more hard work,” says Joe Dykstra, executive vice president with Westwood Financial Corp., a Los Angeles-based real estate investment firm that focuses on value-oriented and stabilized retail centers. “Rents are not going up very much, if at all. As leases expire, there continue to be rent rollbacks and to get anything done requires time and patience. It’s two steps forward and one step back. People are still just grinding it out, for lack of a better word, and it continues to be very, very choppy.”
As a result, don’t expect a substantial increase in new retail development in 2012. While people are starting to have conversations about centers that might break ground one or two years in the future, market fundamentals don’t yet warrant the creation of more retail space nationwide. The centers that are getting built tend to be those focusing on value, including outlet centers.
Steven Peterson, president of The Peterson Cos., a Fairfax, Va.-based real estate developer, says he considers himself fortunate because his firm has two centers under construction at the moment, including an outlet center undertaken through a joint venture with Tanger Factory Outlet Centers at National Harbor in Maryland and a hybrid lifestyle center in Virginia that will come with a movie theater and a BJ’s Wholesale Club. He knows The Peterson Cos. is one of only a handful of developers in the country with projects in progress right now.
“There is not a lot of development going on, but the answer isn’t, ‘We’ll get back to you in a year.’ It’s ‘Let’s talk,’” Peterson notes. “The numbers I am seeing at our centers are flat. In a recession, when I see flat numbers, I am okay. Am I worried? I am less worried than I was six months ago or a year ago. But I still think we have three or four years ahead of sluggish growth and it will take time to adjust.”
Investment Blues
When it comes to investment sales, there has been a pullback from the optimism experienced in the first half of 2011. At the beginning of the year, capital seemed to be flowing freely and many investors were beginning to look for acquisition opportunities outside primary markets and class-A properties in order to get higher yields.
When it comes to investment sales, there has been a pullback from the optimism experienced in the first half of 2011. At the beginning of the year, capital seemed to be flowing freely and many investors were beginning to look for acquisition opportunities outside primary markets and class-A properties in order to get higher yields.
But as the volume of CMBS issuance dwindled and traditional lenders have continued to focus on core product, investors looking for class-B and class-C assets have found that sellers have not adjusted their expectations. Many still expect to achieve cap rates for their properties in the 7 percent range, while a more realistic figure would be in the 8.5 percent to 9 percent range, says Dykstra.
Traditional lenders are still not at a point where they feel comfortable underwriting acquisitions of class-B and class-C centers, notes Glimcher. “That’s why most of the money out there is chasing core product. It’s gotten harder, to find acquisition opportunities that make sense since the beginning of the year, says Glimcher. “And there’s a big void between class-A and class-B.”
Traditional lenders are still not at a point where they feel comfortable underwriting acquisitions of class-B and class-C centers, notes Glimcher. “That’s why most of the money out there is chasing core product. It’s gotten harder, to find acquisition opportunities that make sense since the beginning of the year, says Glimcher. “And there’s a big void between class-A and class-B.”
In fact, even the market for class-A properties might be overheated, notes Thomas K. Engberg, CEO of Loja Real Estate LLC, a Walnut Creek, Calif.-based firm that invests in and operates grocery-anchored shopping centers.
“In the past six months we’ve had a much harder time competing in open bids, and I am not sure the pricing is properly reflecting risk,” Engberg says.
As the months go by, however, and lenders begin to deal with the mounting volume of distressed loans underwritten in 2007, he expects that the market might find more equilibrium and property valuations will come down to more realistic levels.
Wednesday, January 18, 2012
Mortgage rates hit record lows: Freddie Mac
Fixed-rate and adjustable-rate mortgages break records this week
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — Mortgage rates dropped to record lows this week, with 30-year fixed-rate mortgages falling to 3.89%, its sixth week below the 4% mark, according to Freddie Mac’s weekly survey of conforming mortgage rates.
The mortgage averaged 3.91% last week and 4.71% a year ago.
Rates on 15-year fixed-rate mortgages averaged 3.16% for the week ending Jan. 12, down from 3.23% last week and 4.08% a year ago.
Adjustable-rate mortgages also dropped, with 5-year Treasury-indexed hybrid ARMs averaging 2.82%, down from 2.86% last week and 3.72% a year ago, according to the survey. One-year Treasury-indexed ARMs averaged 2.76%, down from 2.8% last week and 3.23% a year ago.
To obtain the rates, 30-year mortgages and 5-year ARMs required payment of an average 0.7 point, 15-year fixed-rate mortgages required an average 0.8 point and 1-year ARMs required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
“Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” said Frank Nothaft, vice president and chief economist, Freddie Mac, in a news release.
“Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated. The 2009 to 2011 period had the highest three-year average unemployment rate since 1939 to 1941,” he said. The government’s official jobless rate for December was 8.5%.
Nothaft also pointed to the Federal Reserve’s regional economic review known as the Beige Book, released Wednesday. It indicated most industries “saw limited permanent hiring at the end of last year,” he said.
Amy Hoak is a MarketWatch reporter based in Chicago.
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