|  | | | | | April 11, 2011 | | | | | |  | | | Leasing Leads to Sales |
| | Two days until our Chicago State of Leasing Summit. Join the 164 already heading to the Oak Room at the Metropolitan Club this Wednesday, April 13. Sign up today! |
| | | | Looking to invest? Now's the best time in three years, with a wider variety of buildings for sale (311 S Wacker and 541 N Fairbanks hit last week) and leasing on the rise in the CBD. Transwestern's Tom Gorman tells us we should see some of the pent-up capital coming back to market this year and next. | | |  | | Buildings with good-credit tenants will have the easiest time with finding financing this year. But some of the leasing terms being requested by tenants are getting harder to swallow for landlords looking to sell a building, Tom tells us—we may not see so many termination options if landlords want to sell their building in the near term, though. Want to learn more? Hear Tom at our Bisnow Leasing Summit this Wednesday at the Metropolitan Club. Sign up here! | |  | One of the tenant reps who might be asking for those concessions is UGL Service's Scott Goldman. Scott says while the market's starting to improve, there are still some great opportunities available for most tenants at very attractive prices. In fact, as gas prices continue to rise and more employees rely on public transportation, downtown's where companies will want to be. This will help the overall downtown market—especially the West Loop, given its proximity to the train stations. Want to hear more from Scott? He's also a speaker at our Bisnow Leasing Summit. Really, this may your last chance to sign up (sort of). | | | | NEW FOCUS FOR THE NEW ECONOMY | | |  | | Foresite Realty Partners sold all its assets in 2007 and has been doing receiverships for the last four years. But that's about to change. The company's now grown to 135 employees and we're told it will become a buyer again in the coming years. Foresite's Don Shapiro (here with colleagues Jamie Hadac and Gary Nieder) says the foreclosure cycle has finally hit bottom. While there will always be some level of distress, he says, receivers won't be working on dozens of cases at once anymore after 2012. | |  | | Foresite has done receiverships on buildings from retail (like Main Street Design Pointe in Naperville) to apartments and warehouses and will focus on buying similar properties but without a conflict of interest with their receiverships. | | | | BOLINGBROOK BUILDING SOLD | | | | | This building at 605 Territorial Dr in Bolingbrook was sold by BPG Properties to KTR Capital Partners for $7.4M last week. It's a big deal because it could mean new tenants coming in to a 182k SF long-vacant space in the I-55 corridor. The former Tellabs HQ, was originally acquired by BPG Investment Partnership VI in 2004 along with 100 Remington Blvd. The pair of buildings is now called Tallgrass Corporate Center and has had $13M in renovations in the last seven years. KTR was repped by Cawley Commercial Real Estate's Daniel Cawley and Terry Grapenthin. BPG was self-represented. Cawley Commerical will have the exclusive listing for the Territorial Dr building, which is 50% leased. | | | REITS IN VOGUE | | |  | | NYU Schack Institute’s 16th annual REIT symposium last week in NYC was like flipping through a September issue of Vogue—full of top names and the latest trends in the industry. Some Chicagoans (or REITs with heavy Chicago interests) made an appearance. For starters, Equity Residential CEO David Neithercut (center, with Host Hotels & Resorts CEO Edward Walter and Green Street Advisors chair Mike Kirby) says multifamily fundamentals couldn’t be better, but acquisitions are difficult; there’s still a lack of product on the market, and land sales don’t have sensible yields. Lodging saw a 45% decline in EBITDA from ’07 to ’09, and has only made back 3% to 4%, Edward says. Acquisitions are still at meaningful prices versus replacements, and there’s opportunity in redevelopment, particularly ‘80s-vintage hotels. | | |  | Every time there’s an event like Japan’s earthquake, cash trying to find a home comes in for the short-term, says UBS Investment Bank vice chair Jackson Hsieh (right, with Forest City Enterprises CEO Charles Ratner, ProLogis CEO Walt Rakowich, and Moody’s VP Merrie Frankel). Walt says that he doesn’t see REITs leveraging up in the near future (ProLogis’ acquisitions will be leveraging neutrally or positively). Debt capital is available for residential but not the LTVs you once saw, says Charles, who recently closed a deal at 80% LTV with a 5.5% interest rate through the FHA. For retail, you have to demonstrate significant pre-leasing, while office product requires a 70% to 80% lease-up. Overall, expect $5B to $7B in unsecured debt issuances this year, says Merrie.
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