If you don't see images, click here to view
Story Ideas  .  Events 
 
To ensure delivery, please add newsletter@bisnow.com to your address book, learn how
Real Estate Bisnow Real Estate BisnowSent Using iContactReal Estate BisnowSent Using iContact
Washington | New York | Chicago | Dallas-Fort Worth | Houston | Boston | Atlanta | Los Angeles
   
July 30, 2010 
 
 
 

ALL EYES ON HANCOCK


The summer heat hasn't dampened the desire of our readers to get out and network. Yesterday more than 1,650 of you packed CRE events in DC and Dallas. Coming up: a Schmoozarama in Chicago, a Sustainability Summit in NYC, and a capital markets update in ATL. Check out our Events Page for details.

 

Global investors trying to figure out where Class A US office values have landed can learn from the expected sale of a stake in New England's iconic Hancock Tower. For those with $900M to $1B to spend, get your offers in by Thursday.

 

That's the date set by landlord Normandy Real Estate Partners and Five Mile Capital, which purchased the region's tallest skyscraper at foreclosure last year for $650M when it was 20% vacant. The seller, Broadway Partners, paid $1.3B in '07. The landlords are likely to realize a stupendous profit on the Back Bay building, now nearly full with top-tier tenants. (And to think they almost returned it for store credit.) Yesterday, Bisnow Boston reporter Susan Diesenhouse spoke with Real Capital Analytics managing director Dan Fasulo, who says the sale price will markedly advance price discovery for the US premier office properties. "As a trophy property in the Northeast, this will be a great data point for the market to see how much values have gone up over the past year," he tells us. "When it sells, everyone looking for Class A assets in other cities will take notice."

 

SYNCHRONIZED SCHMOOZING?

 
Cantor Fitzgerald’s Jon Trauben Speaks at Bisnow Breakfast & Schmooze

We take you to Dallas, where yesterday we hosted a standing-room only 550 for a Capital Markets Breakfast & Schmooze at the Westin City Center. Teasing the crowd, Cantor Fitzgerald's Jon Trauben hinted at the start of a new business designed to originate senior loans for CMBS. "It's been a stalemate, but the market seems to be thawing and volume will progress," he says, adding that NY-based Cantor expects to ramp up volume soon to several billion a year.

 

When it comes to CMBS, Jon says the current wave of loans look similar to those in the early 2000s in terms of leverage, underwriting, and loan covenants. The biggest change is the amount of disclosure the borrower might have to provide to a CMBS lender, he says. "The push and pull" is whether borrowers will have to reveal their tenants and more, which is not yet resolved. As a pendulum, it was way to the right in '07, and now in '10 and '11, it's way to the left. "It's the nature of capitalism to have these kinds of swings," he adds. With a big smile, he wrapped by inviting the crowd to "call Cantor" when they need a loan.

 
Meanwhile, back at the ranch-that is, Washington, DC-1,100 turned out to our Breakfast & Schmooze at the Tysons Ritz to learn about the future of Northern Virginia (call it NoVa and people will think you're a local). Conclusions: Tysons will be transformed in coming decades, from car-centric to urban and walkable. Mass transit will lead to denser development, entice the Feds to take more space, and bring in many more residents to complement office denizens. And the growth won't just occur in Tysons, but out to Dulles, featuring a lot more residential and mixed-use.
 

MULTIFAMILY VALUES STABILIZE

 

With the completion of Integra's Q2 2010 CPI survey just released today (exclusively to Bisnow), the big news is that multifamily, on average, has completely stabilized. Integra CPI is a relatively new quarterly property index that shows current values based on 35,000 property valuations nationwide. This fresh data also suggests that multifamily properties will increase in value over the next six months, Integra's researchers inform us. This is exceptionally encouraging news given the continuing troubles in the world capital markets and the US unemployment. There were also noticeable improvements in other major property types, but they have still not fully stabilized.


PAPERLESS DIGITAL NOMADS

 
JLL corporate solutions guru Peter Miscovich

A Manhattan digital media firm that employs 1k people recently brought its real estate footprint down to 50k SF, with hot desks and a conference center. This week, Bisnow New York reporter Amanda Marsh caught up with client advisor and JLL corporate solutions guru Peter Miscovich, who tells us many "analog" organizations allocate between 250-400 SF per person. He suggests that workplace mobility is becoming the new norm and that we're all going to become much more like true digital nomads by '15. (Peter has been paperless for five years, conducting business from his smart phone and wireless netbook. We're lucky he remembered where his office was.) Although tech companies like IBM and Accenture were early adopters of the mobility trend, real estate firms have begun to discover the benefits, he says. By going digital, companies reduce energy per person an average of 30%, enjoy increased employee productivity, and smaller real estate and carbon footprints. Corporations must go digital to remain relevant to younger talent, Peter warns. While Baby Boomers hope it's just a fad, it's not.


Boon for Small Business Lending?

 

This week our Chicago reporter Maureen Wilkey chatted with Capital Insight Partner managing director Eliot Stark, who says it's hard to say if a proposed $30B Small Business Lending Program in Congress will affect commercial real estate lending. (The credit would enhance the ability of community banks to lend to small businesses.) If the act does actually create jobs, it could lead to an increased demand for office space, which could contribute to asset values, he tells us. But the bigger problem for real estate right now is the inability for even strong borrowers to refinance their loans, and that won't be affected, Eliot says. Devaluation and lack of new equity will make it hard to refinance the $1.3T in CMBS coming due 2012-2014.


Q&A with Jamestown's Matt Bronfman
 
Jamestown’s Matt Bronfman

Atlanta-based Jamestown Properties has raised $450M for its 31st fund, but is having a hard time deploying it due to a dearth of distressed assets coming to market, COO Matt Bronfman tells us. The opportunity fund was raised from German retail investors (think a dentist in Dusseldorf). "That's somebody who goes to their financial planner and decides that they should diversify out of the euro, or that American real estate is a good investment and they end up investing, say, $60k with Jamestown," he tells us. Our National Real Estate editor Sibley Fleming just spoke with Matt, who leaves tomorrow on a family vacation to Montreal, then down to the coast of Maine. The star attraction? Cooler weather.

Bisnow: Why US investments?

Matt: For us, there's some desire to diversify currency-wise, to have some money in dollars. Long term, there's a belief that holding American real estate in dollar denominations is a good thing.

Bisnow: Have you found anything?

Matt: We've bought some assets. Our most recent acquisition was a not widely marketed apartment deal on Miami Beach on Sunny Isles. We also did a re-capitalization with a public REIT, investing in several of their grocery-anchored centers. We're working very feverishly on deals in New York and DC, and here in Atlanta, we're working on City Hall East as well.

Bisnow: What kind of a discount did you get on the apartment deal?

Matt: We think a 50% discount (or $30M, down from roughly $60M) of what the other owner had in the project. We were able to negotiate a deal with the lender and the borrower and then take title to the property.

Bisnow: How are you making your money more attractive than other money?

Matt: You can't wait for brokers to call you and for brokers to market deals. You have to be very entrepreneurial. You have to find off-market deals, call banks and see what they have that's interesting. You also have to spend time talking to borrowers because a borrower is often the key to finding a good deal. Find a borrower that is overleveraged but that is able to negotiate with his or her bank because in certain jurisdictions it's not easy to foreclose, so the borrower has some leverage.

Bisnow: Expectations for the rest of the year?

Matt: There's going to be some better opportunities, but I still think you're going to have to be very nimble because there's so much capital out there and not much supply.

 
 
 
 
Reznick (We know) #2 - mi
 
 
JLL (Soar)
 
 
Reznick (Building) #2
 
 
Microsoft (Share)
 
 
US Energy #2
 
 
HITT DCRE
 
 
Cardinal (RE) #2
 
 
Red Coats (non-DC)
 
 
Nemacolin Climb DCRE
 
Advertise
 
 
CONTACT EDITORIAL                             CONTACT ADVERTISING                              CONTACT GENERAL INFO

This newsletter is a journalistic news source which accepts no payment for featured interviews. It is supported by conventional advertisers clearly identified in the right hand column. You have been selected to receive it either through prior contact or professional association. If you have received it in error, please accept our apologies and unsubscribe at bottom of the newsletter. 2010, Bisnow on Business, Inc., 1323 Connecticut Avenue, NW Washington, DC 20036. All rights reserved.