Nice money if you can get it. Of course, these numbers may not keep Harry on the next Forbes 400 list (as the story says), but it means he gets to pay off his nasty bridge/mezz loan and refi the balance. (Macklowe paid $1.4B for this building in 2003.)The real story here is not that Boston Properties bought this puppy at 2 AM today. They are also buying another three other Midtown buildings for a billion or so. They apparently put down $165 MM is earnest money with a closing in the next few months (meaning -- OMG get this -- due diligence?!?!). The $2.9 for the GM Building is a record for...
My sources from ICSC say
No links here; just passing along what clients are saying. Confidence is high, attendance perhaps a little less busy than last year but still robust, perhaps more so than one would expect. I think some developers are pushing hard to start deals that won't go until some deals get signed.Whether you are making deals is dependent on one thing, and one thing only: location. If you have dirt in a prime space you are busier than ever or at least business as usual. If you are in an exurb or a less prime area, then your deal making is way down.As I said earlier, I am seeing the signs of breaks in...
The corner of State and Madison
Boy, talk about memories. The world's busiest street corner. Caron Pirie Scott & Co. Shopping, shopping, shopping.Now it's one out of three. We'll still have (some) shopping, thanks to Joseph Freed & Associates, at the masterpiece landmark building. The first three tenants? Fox & Obel, Flat Top Grill and Billabong.Pretty darn good job of leasing, and a nice tenant mi...
Anecdotal evidence from the front
The phone's ringing more than it has been. (Hopefully this does not mess up my golf plans for this week.)Financing is finally starting to get done. River West just got its largest order of that type in its three months of existence.A lawyer friend advises that his/her business is up for the first time in months, and mostly because of financings and refinancings. (Yeah, bringing down that interest rate can't hurt when you compare it to LIBOR plus x basis points.)I know, it is all anecdotal, but the signs keep pointing in the direction I want to see. I also know that maybe I just want to see...
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trends
Chicago retail leasing down...what does it mean?
Eddie Baeb has a good story in this week's Crain's about demand for retail leasing going down by 22%, led by discount grocers and discount stores. As the story said:“Stores like Target, Wal-Mart and Home Depot really drive growth,” says Jeff Kuchman, a principal with Oakbrook Terrace-based Mid-America. “When they pull back even marginally you feel that in a big way.”As the story says, though, there are some good "buts." Developers are listening and building less. If you are in the city, you are probably way worse off than in Kendall or McHenry (and probably Kankakee, too) counties. And...
Thanks for stopping by, but now go...
...take a look at this month's Retail Traffic magazine. Normally I breeze through a magazine in a few minutes, but this is the second month in a row that I was compelled to read every page of this publication.The May issue is just chock full of good information, including David Bodamer's take on retail downturns and the current market David also mentions but also writing near the end that in this slowdown some developments have wisely slowed down. This means, as Neil Bluhm was quoted elsewhere in the magazine, there won't be a crazy 1980s-style glut, particularly as there is not a cash flow...
Like I was sayin' -- mixed signals, but...
...I see more positive signs than negative. See this CoStar review for a nice wrap-up.The big negative? Jamie Dimon thinks the credit crunch is ending (and so do I, based on what my clients are telling me about their summer pipeline) but that we may have an extended, long-term economic challenge.The positives?CBRE Investors (a former client) just finished raising $2.2 billion for its US Fund 5.GE Cap is giving out big interest-only portfolio loans. (Those guys at HFF, who brokered the loan, are simply phenomenal.)Cantor Fitzgerald (yes, you read that right) is jumping into opportunistic real...
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trends
Yes, I read this op-ed correctly.The theory?Although it is will be painful, the only long-term solution to the credit crisis at hand and the America's economy in general is to allow much higher interest rates, which will begin to redirect capital away from leveraged speculation and consumer borrowing and toward more productive activities such as saving to invest in manufacturing, infrastructure and research and development of new technologies. There will surely be short-term pain during this transition to higher interest rates, but the long-term result will be a healthier economy with a more...
Wow - an honest assessment
It takes guts to say, "I don't know." As a lawyer I have to do that sometimes. Yes, the answer to a question is just not always in my head or at my fingertips and I may have to look in a book to make sure my gut instinct (if I have one) is right. I'd rather be right than shoot from the hip and be wrong.That's probably why this story made me chuckle, as a net real estate fund said this in a report: "The market," it asserts in the first paragraph, "is difficult to make sense of at the moment." Why? According to Boulder Net Lease Funds, you have pressure on one side from tough debt markets,...
And your survival plan is?
NetGain Real Estate has an interesting article out about getting through the next twelve months in CRE. It says the turnaround may take longet than we think because of the consumer part of the economy (I'm not so sure about that), and also "believes that we have seen the worst of the slide and that any further declines in stock and real estate values will not be significant."I like some of the tidbits on investing, which I think bode people well to read. Rather than repeat them here, go take a look. Some of them seem a little obvious e.g., "Strong lessees have a positive affect on real estate...
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trends
Ground leases...oh joy, oh rapture
I've done a ground lease deal or two in my time. They are fun. But if you are buying a building subject to a ground lease you have to make sure you comply with the lease terms or you may have to face the consequences.Such is the case at the Drake Hotel, where the ground lessor is suing the ground lessee, alleging a default under the lease for, among other things, failing to provide the lessor with copies of financing and hotel management documents. All I can say is good grief. One thing I've always liked about being the ground lessor is the ability to just sit down, be quiet and collect...
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Chicago
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hotels
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leases
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Trump
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walton street capital
What do you mean, the landlord can make me move?
Michael Mandel hits another home run, this time with an excellent analysis of the relocation clause typically found in leases and suggestions for tenants in negotiating the clause. This clause gives the landlord the right to move a tenant within the building (or sometimes even to another comparable building, which I would fight hard if presented to me) if the landlord gives adequate notice, pays expenses, etc.Scary? Well, it does not happen very often, usually only to accommodate a major tenant in the building. I agree 100% with Michael, especially when it comes to floor and light and that...
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leases
Maguire to go private?
Maguire's name came up at lunch with a friend a few weeks ago in connection with the direction of the market and the failed attempt to sell the company. Now I am reading that Robert Maguire is trying to take the eponymous company private by dumping its non-OC assets, distributing the proceeds to shareholders and then going private with the remaining OC assets.The independent directors are apparently saying no dice to the initial proposal because it is too iffy. My question: is this a sign of desperation or need for liquidity or loan issues, or a sign that the company, whose shares are down...
Denial = not just a river in Egypt
According to this report from CoStar, lenders are saying that while they don't expect a collapse, they are not eager to jump back to the 2004-2007 days, are selling CMBS portfolios, and have instituted thorough vetting processes.And here is more anecdotal evidence about the credit crisis holding up deals from Robert Manor at the Tribune, including one unidentified developer using the word "meltdown" and reports, "even the strongest institutional borrowers are having difficulty getting money." (Exception: Self-storage, which may be why I have not seen Kenny Pratt post in forever.)Good! I'll...
Linens & Things finally pulls the Chapter 11 trigger
It was really a matter of when, not if, right? 20% of the stores are closing, they have DIP financing and may even be able to pay some creditors.Four stores are closing in Chicago: three in the north/northwest 'burbs (Palatine, Schaumburg and Skokie) and the Michigan Avenue store at 600 N., a location that commands high rents. What typically happens in a Chapter 11 is that the leases get rejected by the debtor, leaving the landlord out of luck.This probably won't be the last BK, even if the economy picks up. The question now is who is nex...
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bankruptcy
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leases
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Michigan Avenue
And what are Warren and Charlie going to say?
I'm kicking myself for not being in Omaha this weekend to catch the Warren and Charlie Show live tomorrow. Oh, well. Maybe next year.Will they have any thoughts about dirt? Usually no. But if you think I would not bet against Sam Zell, what about betting against Buffett? Go ahead, at your peril. (Of course he's had a misstep or two; if he hadn't he would not be as good as he is.) I will be curious to hear his thoughts about taking a chunk of AmEx and the Wrigley dea...
Treasuries are low? Then CMBS makes sense, or so says Sam
Think about it. We had lenders jumping all over each other in pricing while Treasuries, about the safest investment there is, were at higher rates.Now interest rates are back down. And CMBS is not exactly at record-high default levels, is it? (Granted, the market lags, but get real.)So the ever-quotable Sam Zell is saying that it only makes sense for institutions to return to the CMBS market, and that he is seeing the first steps of an easing in the market. This is especially true if lenders hold to the 6% floor we've been hearing about, as those are the kinds of numbers that allow money...