Washington, D.C., Lease Market Remains Resilient

NNN Lease Market News

WASHINGTON, D.C.—Hotel markets are largely affected by both macro and micro economic factors. However, the Washington, D.C. hotel market is somewhat unique because it includes the nation’s capital, which lends itself to many benefits. Most importantly, this hotel market is more resistant to economic recession than other U.S. metropolitan markets. Its international status contributes significantly to both leisure and group demand. Washington, D.C. is home to the federal government, and the private sector is closely aligned with the business of the federal government, which is an economic anchor to the lease market. As a result, the hotel market enjoys a consistent base of demand.

Economy

The Washington metropolitan area is the fourth largest in the U.S. with a US$454 billion gross regional product. Its economy ranked fifth globally for gross domestic product per capita in 2008, which led all major U.S. metropolitan markets (World Knowledge Competitive Index).  Office Space: The metro’s office lease market realized modest positive absorption (630,000 square feet in 2009 as compared to 3.4 million in 2008), as government, health care, and contractors associated with the federal government leased office space. Although the overall vacancy increased 240 basis points in 2009, it remains lower than most large metro areas due to the stabilizing influence of the federal government. During 2009, vacancies rose; consequently, rents declined 6.9 percent. Construction levels have declined, but they remain elevated at this point in the cycle—particularly in the District. Despite weak conditions, the metro area remains one of the top performing markets in the nation, according to Delta Associates.

Washington-DC-market-remains-resilient

Sam Zell to Expand Real Estate Markets in Colombia and India

NNN Lease Market News

Colombia and India Real Estate Markets Target For Zam  Zell

Billionaire Sam Zell said he is entering the real estate markets in Colombia and India in the next two weeks as he continues to favor international investments over U.S. property deals.
Zell, through Equity International, which he co-founded with Gary Garrabrant in 1999, has invested in real estate- related companies around the world, including in Brazil, China and Mexico. His involvement in the U.S. property market is “minimal” amid low interest rates and inflation that he estimates to be as high as 6 percent, Zell said.
Zell, 69, sold his Equity Office Properties Trust in 2007 for $39 billion as the real estate market was peaking. U.S. commercial property prices fell as much as 49 percent from their October 2007 high after credit contracted and the economic slump boosted the unemployment rate to more than 9 percent, according to the Moody’s/REAL Commercial Property Price Index.
Commercial real estate prices climbed 0.9 percent in June, the third straight monthly gain, according to Moody’s. The increase represented a “firming up” of the market bottom as investors move beyond trophy properties and major coastal cities, the company said Aug. 22.


http://www.bloomberg.com/news

Net Lease Properties for a Passive Investment or a 1031 Exchange

NNN Lease Market

 Calkain Companies offers the best selection of Net Lease Properties as well as additional, alternative passive real estate investment opportunities.

Calkain tracks properties on a nationwide basis through relationships with real estate developers & Net lease property owners. This enables Calkain to deliver an inventory of both Net Lease Properties & similar passive investments unmatched in the net lease industry. Net lease investments (“Nil”) are one of the most passive forms of real estate investment.  Under an NLI arrangement, the investor purchases the real property subject to a “triple net” lease.  In such case, the tenant is responsible for paying all of the taxes, insurance, and most importantly, the maintenance of the real property.  By divesting of current real estate holdings and purchasing an NLI, the investor can ultimately simplify the investor’s real estate portfolio and have the ability to transfer assets to the investor’s beneficiaries with the comfort of understanding that little to no real estate experience will be required in order to manage the NLI.  Additionally, depending on the type of asset purchased, the investor can assist in providing the investor’s heirs with (a) an income stream that extends into the future; and (b) an appreciating capital asset.
Calkain net lease sales team can assist you buy or sell any type of net lease properties throughout the United States. Calkain Companies, Inc. is a national, commercial real estate firm, focusing on net lease investments, that provides brokerage and consulting services for both private and institutional clientele. We have utilized an extended network of solid relationships to successfully complete nearly $4 billion in sales and have consistently ranked as one of the Top National Net Lease Investment Brokerage Firms. Core values such as integrity, honesty and innovation have helped secure our position as a leader within the net lease industry. The general commitment to its clients has made Calkain the industry benchmark for service in the net lease industry.

www.calkain.com

Demand for Distressed Commercial Property Markets Across the Globe Soars

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 Distressed Commercial Property Markets on Demand Soars

Global demand for distressed commercial property increased dramatically in the second quarter of 2011 and is expected to outstrip supply in the next three months, according to the latest report from the Royal Institution of Chartered Surveyors.
The survey does, however, suggest that the supply of distressed property continues to outstrip demand in some countries, most noticeably in the Republic of Ireland, Italy and the UK.
The RICS Global Distressed Property Monitor is a quarterly report that reveals trends in 25 commercial property markets across the globe. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value.
 An increased rate of distressed properties entering a country's market can be seen as a negative economic indicator while a decrease may signal recovery. However, it needs to be borne in mind that the results are very country specific with generally negative numbers coming from those markets where the economic pain is most intense,’ he added.
Investor demand fell in Brazil this quarter, from a net balance of 0 to one of -23. Looking ahead, agents expect the supply of distressed property to fall dramatically in the coming quarter as well, in contrast to last quarter's expectations for increased listings. That said, the real estate market still remains firm with capital values generally thought likely to rise further over the coming months.
Levels of distressed property coming to market in China are still expected to decline in the third quarter, although somewhat less so than the previous quarter, with net balance scores moving from -34 to -20. Looking ahead demand for distressed property is still expected to far outstrip supply in this country which is consistent with the projection for further price gains in the commercial market.

Riding the Dollar Store Wave in a Perfect Storm

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by http://seekingalpha.com/author/brad-thomas

With over 20,677 stores, the top three U.S.-based dollar chains are among the most visible retailers in the U.S. There highly-visible retailers stock a variety of merchandise ranging from consumables, household chemicals, paper products, candy and snack products, health and beauty aids, hardware, pet foods, house-wares, giftware and home décor products. The “everything for $1 or less” business model has been around for decades; however, the concept has evolved into a highly competitive retail category. These bargain discounters are benefiting from increasingly cost-conscious consumers focused on buying everyday necessities and seeking out lower-priced goods.
As explained by Andrew Fallon, Investment Advisor at Calkain Companies (www.calkain.com) , “The discount retail or “dollar store” segment remains a bright spot of the retail industry. Dollar store retailers, including Family Dollar and Dollar General, continue to open new stores and add jobs in this uncertain and stagnant economy. Many experts and articles published post-recession, have offered the idea that there will be a generational impact on individual’s saving habits, and consumer spending and shopping choices. Positioned to take advantage of the generational impact, the dollar stores have been attracting new shoppers and capturing market share.”

Dollar General Hopes to Sell Beer

NNN Lease Market News

(NNN) Dollar General Hopes to Sell Beer in Arkansas

LITTLE ROCK, Ark. -- Arkansas' Alcoholic Control Board (ABC) is expected to vote today on whether (NNN) Dollar General stores throughout the state can sell beer. Eighty-two locations have applied for permits, ABC officials said.
Being granted a beer license is not simple. If an objection for a permit has been filed for a particular location, the permit is often denied and an appeal hearing is set for a later date, The Baxter Bulletin reported. However,(NNN) Walgreens and (NNN) Walmart received similar approvals in 2010 and 2009, respectively.
(NNN) Dollar General's beer license request is part of a national plan.

 CSNews Online

Blackstone Group LP Agreed to Buy Centro Properties Group’s

NNN Lease Market News

Blackstone will purchase Centro's U.S. Malls spending 9.4 billion dollars

The largest private-equity firm in the world, Blackstone Group LP, agreed to buy Centro Properties Group’s selection of U. S. shopping centers for an amount of $9.4 billion, two people aware of the matter said.

The purchase of five hundred and eighty eight malls, at the market price they were valued at as of Dec. 31, may enable Centro’s Australian operations to run as an independent company, said one of the people, who declined to be named before an official statement. The deal may get announced as early as today, the person said.

The 5 Secondary Market for Real Estate Investor That Will Thrive in 2012

Dallas and Minneapolis Named Best Secondary Market for Real Estate Investors


Investors have been moving into secondary markets such as Dallas and Minneapolis amid growing confidence in the recovery and soaring prices that drove down yields on office buildings, shopping malls and apartments in prime cities including New York, San Francisco and Washington. Purchases of commercial properties in secondary markets had been increasing this year, extending a rebound that started in the big coastal areas.
Purchases of commercial properties in secondary markets had been increasing this year, extending a rebound that started in the big coastal areas. Building values and rental rates don’t appreciate as fast in secondary markets compared with land-constrained coastal markets because it is easier to construct new buildings.
The Federal Reserve said on Aug. 9 that it will maintain record-low interest rates at least through mid-2013 to boost growth that has been “considerably slower” than it forecast.
If the Fed is successful, prime and secondary commercial real estate markets should benefit.

http://www.blommbeg.com/

As of 2009, it was estimated that there are dozens of dedicated firms and institutional investors that engage in the purchase of private equity interests in the secondary market with upwards of $30 billion of capital available for such transactions.The market for secondary interests is still highly fragmented. Leading secondary investment firms with current dedicated secondary capital in excess of circa $3 billion include: AlpInvest Partners, AXA Private Equity, Coller Capital, HarbourVest Partners, Lexington Partners, Pantheon Ventures, Partners Group, Neuberger Berman, and Paul Capital.

Office Sublease Market Trends

NNN LEASE MARKET NEWS

Affordable Prices Push Active SubLease Market In Manhattan ...


Conventional wisdom holds that subleasing in which tenants vacate their offices before the end of their lease and rent it to another tenant at a discount has a negative impact on the market. The amount of sublease space available has declined, the research shows, as 21 percent of all office space on the market in the first half of 2011 was available for sublease, compared to 30 percent in 2009. The most coveted office space, in city towers above the 25th floor, is on the market for an average of 8.5 months, 3 months less than  space at the 10th floor and below.
Yet despite these positive signs for those seeking sub-tenants, subleases are actually getting snapped up so quickly because of weaker price points compared to the direct-lease market. Many tenants that have recently converted sublease space into direct leases, a trend that is being driven by the tightening commercial real estate market.  The disparity sat at 25 percent for the first half of this year, thanks to the improving commercial office leasing market,
But the industry perspective is now shifting.Tenants are embracing subleases as a means of locking in below-market rents, while landlords, who are facing fewer vacancies, are using it to attract tenants and then converting the leases into direct deals when the subleases expire.
During this downturn, however, sublease space may have proved to be somewhat less of a drag on the market
http://therealdeal.com/

 What is sublease? when a tenant let out the whole or part of the property rented by him a to a third person it is called 'sublease'. Even though it is rented out fully, the first tenant will be responsible for payment of rent and all charges to the landlord and he is also responsible for all loss caused by the sub lessee to the property. There is no agreement with the landlord and the sub-tenant. The landlords generally discourage such sub-leasing by banning it in the lease agreement.

  

Brookfield Asset Management Reports Positive Earnings

Brookfield Asset Management Says Earnings Increased Nine-Fold on Holdings

Brookfield Asset Management Inc. (BAM/A), the Toronto-based investment firm that manages about $150 billion, said second-quarter profit rose nine-fold as the value of its holdings surged.
Net income attributable to shareholders rose to $838 million, or $1.26 a share, from $89 million, or 12 cents, a year earlier. Cash flow from operations increased 29 percent to $829 million, the company said today in statement.
Brookfield, which focuses on property, renewable power and infrastructure assets, booked $1.09 billion in fair value changes as the financial market recovery lifted the value of holding. The company raised $4.7 billion in the second quarter and will seek another $4 billion for seven funds as it expands investments globally.


http://www.bloomberg.com/news

The Market Swings Made it Harder for Wall Street Firms to Sell New Issues

 Tremors in the market for commercial-mortgage-backed securities

Tremors in the market for commercial-mortgage-backed securities are hindering the recovery of the commercial-property sector. But the new-issue market for these securities has hit a speed bump amid turmoil in the capital markets, causing a key set of lenders to back off from making new loans. The result is that deal activity has fallen, putting the brakes on the rise in values.
Earlier this year, some analysts were predicting banks would issue as much as $50 billion in new commercial-mortgage securities this year. Now, they are saying volume may be as low as $30 billion to $35 billion.
A test for the sector is slated for later this week, when Deutsche Bank AG and UBS AG intend to sell a pool of $1.4 billion in commercial mortgages. In response to the skittish market, the deal will offer investors 30% in so-called credit protection, nearly double the levels they offered in their last issuance in June. The market swings made it harder for Wall Street firms to sell new issues. It also posed risks for the underwriters who were having a harder time hedging against price declines as they made and accumulated commercial mortgages to prepare them for securitizations. But the changes in the market have caused some smaller firms to back out of the commercial-mortgage-security sector entirely, including hedge fund Citadel LLC, which is pulling out of issuing loans intended for securitization given the drop in demand, according to people familiar with the matter.

http://online.wsj.com/article

No Downturn in the Rental Market

LIC apartment sales reach 86 percent: report

Long Island City's rental market in the first half of 2011 is flat compared with the end of 2010, with 94 percent of 2,084 rentals leased, according to Modern Spaces' mid-year residential report based on neighborhood-wide data. The for-sale market was up almost 10 percent compared to the end of 2010, with 86 percent of 2,359 units on the market snapped up compared to 77 percent at the end of last year. Monthly rents in the first six months of the year averaged $1,475 to $5,323, depending on whether the buildings had doormen or elevators. Sales prices ranged from $319,725 for studios to $1.27 million for three-bedroom apartments.

Long-Island-City-Orange-Report-2011-Mid-Year-1

New York Commercial Real Estate Market Revenue Up 30%

New York Commercial Property Revenue Climbs Up 30%

The company is seeing “steady demand and controlled supply within our primary markets,” Chief Executive Officer Ric Clark said in the statement. “We remain optimistic about our performance over the balance of the year and the next few years to come.”

Brookfield Office Properties Inc., owner of Manhattan’s World Financial Center, reported funds from operations that beat analyst estimates after increasing revenue and adding income from Australian properties acquired last year.
Revenue Up 30%
FFO, a gauge of a property company’s ability to generate cash, was $152 million, or 30 cents a share, in the second quarter, the New York-based landlord said today in a statement. Analysts expected 26 cents a share, the average of 14 estimates in a Bloomberg survey. FFO was $201 million, or 40 cents, a year earlier, when results included a $53 million gain from the repayment of a loaThe companywide occupancy rate was 93.3 percent, down from 95 percent at the end of last year and 94.8 percent a year earlier, according to the supplemental report.

http://www.bloomberg.com/news