Four month extension granted to General Growth…WSJ article.
March 4, 2010
October 22, 2009
Court rules Stuyvesant complex inappropriately charged market rents on thousands of units
NY supreme court has ruled today that the owners of the Stuyvesant apartment complex inappropriately began charging market rents on thousands of units and according to NYT may owe as much as $200 million in overcharges back to tenants. My previous post regarding the struggling deal done at the height of the market is here . The ruling may also affect many other owners throughout the city.
New York Observer headlines it as “Apocalypse Now at Stuytown” .
August 10, 2009
Is Maguire the canary in the coal mine for CRE?
While there has been plenty of talk about a replay of the early 90’s commercial real estate crash and its accompanying buying opportunities, the party (or funeral, depending on your perspective) has yet to begin and many CRE pros have been wondering whether this sequel will indeed be released. With Maguire about to hand over seven properties to its lenders, its stock trading below $1, and outright failure of the firm a distinct possibility, the sequel may have arrived.
Granted, Maguire bought a lot of property at the height of the market, with high leverage, and in what is now one of the worst office markets in the country, Orange County. Not all owners are in this situation. Still, occupancies are expected to continue rising and rents falling in most markets, so Orange County and Maguire may indeed be the preview of what is to come, so to speak.
WSJ article: http://online.wsj.com/article/SB124986079948018087.html
July 23, 2009
A few examples of how the recession is hammering golf courses and golf related devleopments
While my vocation is real estate, my avocation is golf, so I am always interested in the intersection of the two. As the National Golf Foundation has been reporting for years, participation in golf has been flat to declining and in recent years as many courses have been taken out of commission as have been built. Courses are expensive to construct, ranging generally from $3 – $8 million in total cost for most courses and competition across both private and public courses has been intense…too many courses, too few rounds. Below are a few recent examples of how the recession is affecting golf course properties:
Twin Eagles in Naples, FL closed in early July as ownership likely heads towards bankruptcy:
http://www.naplesnews.com/news/2009/jul/07/twineagles-golf-club-may-be-closed-financially-str/
Macatawa Legends in Holland, Michigan was foreclosed on by its construction lender:
http://www.hollandsentinel.com/news/x931230912/Legends-heads-to-18-million-foreclosure-sale-Thursday
St. Regis Monarch Beach Resort (site of the notorious AIG junket) foreclosed on by mezzanine lender Citigroup:
June 27, 2009
Herb Allison reports PPIP on track, plays down CRE loan maturity risk
Herb Allison, sounding a bit like W, says “we’ve been working very hard on PPIP” and it will launch soon. For those overwhelmed with all the bailout acronyms, this one stands for “Public-Private Investment Partnership”. It may involve private firms using 90% government leverage and guarantees to purchase “toxic” assets from banks and potentially others at deeply discounted prices to clean up their balance sheets and try to get the CMBS makret flowing again–likely with extraordinary returns the result for the investors. Banks are probably wondering why they should let other firms profit so much with such little risk. There has been a lot of doubt and confusion about the program, how it might work, and what it would accomplish, so much so that at this point it’s probably better for officials to keep a lid on the comments until they figure out what the plan really is and show us some action.
GlobeSt. link:
http://www.globest.com/news/1440_1440/washington/179484-1.html
Atlanta preserving its reputation for boom and bust real estate and banking
FDIC took over 5 more banks on Friday, bringing the total number of bank failures for 2009 to 45. Two of the five Friday failures were in Georgia, bringing Georgia’s total number of failures to 14 since the start of ‘08. This is the most failures of any state, and most of Georgia’s failures were in the Atlanta area. Too much land, too little restraint. Hasn’t anyone read “A Man in Full”?
http://www.chicagotribune.com/business/nationworld/wire/sns-ap-us-bank-closures,0,6104596.story
June 26, 2009
June 24, 2009
Extended Stay Bankruptcy adding to CMBS legal quandaries
On top of the General Growth bankruptcy filing (see post below) and its implications for CMBS, Extended Stay’s recent bankruptcy filing ratchets up the pressure being placed on the CMBS world with challenges to the rights of bondholders, an end run around special servicers, and potential invalidation of the “springing recourse” provision. Just adds to the challenges in figuring out how to reinvent/reignite the CMBS market which remains frozen.
June 4, 2009
Mortgage maturities likely to prolong CRE market distress
Foresight Analytics has compiled the chart below which shows historic and projected mortgage maturities. There has been a wide range of numbers floated on this topic, creating a lot of confusion about the level of maturities upcoming. Most of the discussion has centered on CMBS, but as CMBS was ramping down, the banks were picking up the slack over the last few years. In total, well over $1 trillion of commercial mortgage maturities are on the horizon for the next five years. This level of demand for refinancing is very unlikely to be met. Combine the lower origination volume with lower property values and tougher underwriting standards, and we will see a prolonged period of distressed sales of one form or another, including owners selling at a loss and bank foreclosures followed by sales at below outstanding loan balances. Sellers will be forced to move on, creating buying opportunities over the next several years.
