Southern California Industrial Real Estate Blog

REAL ESTATE ROUNDTABLE CONCLUDES THAT THE END IS IN SIGHT

REAL ESTATE ROUNDTABLE CONCLUDES THAT THE END IS IN SIGHT

 by Jodi Summers

Recently there was a recent real estate round table in downtown Los Angeles. Hosted by Marty and Barbara Stolzoff, only top real estate executives were invited. What everyone took away is we are in the dredges of that u-shaped recession our governmentalists talk about.

Christopher Thornberg, an economic adviser to the State Controller, and co-founder of Beacon Economics, noted, “The good news is, we’re about halfway through this. You’re looking at the bottom of the recession around the third or fourth quarter of this year.”

Thornberg’s investment takeaway: People with cash seeking distressed assets should start looking for commercial foreclosures somewhere around the end of 2010.

Randy Zisler, chairman and CEO of Zisler Capital Partners, said he sees real estate securities “bottoming in 2009,” and that the “middle of the year is a good time to start looking to buy.”

Jack Kyser, chief economist of the Los Angeles County Economic Development

Corp., agreed the third quarter is the likely bottom for the regional and national economies, pointed to some possible high notes, including the stabilization of the LA area’s aerospace manufacturing industry.

A very positive note is the renewed interest in C-17 Globemaster cargo aircraft, thanks to the Obama administration.

“Obama seems to like the C-17,” Kyser added.

This is brilliant for Boeing Co. who is on the verge of issuing a “stop work” order to its suppliers for the C-17 cargo aircraft, which is manufactured in Long Beach, with several subcontractors located throughout Southern California.

Get all the dirt @ http://www.globest.com/news/1328_1328/losangeles/176350-1.html

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

Several major East Coast Real Estate Developers have been named as victims in Bernard Madoff’s complex Ponzi scheme, which is rumored to have stripped investors of $50 billion in assets.

According to GlobeSt.com this list includes:

· Larry Silverstein, the World Trade Center developer;

· The Wilpons and Rechlers families;

· Brokers at Newmark Knight Frank and CB Richard Ellis–including Stephen Siegel, chairman of worldwide operations there,

· New Jersey developer Fred Daibes is rumored to have lost a significant amount of money;

· Mort Zuckerman, the chief executive of Boston Properties;

· Fred Wilpon, who owns the Mets and is head of Sterling Equities;

· Steven Simkin, a partner at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison and chairman of the firm’s real estate department;

· A number of limited real estate partnerships in DC are also among the supposed victims.

· Other recognizable names on the list include John Malkovich, Sandy Koufax and Tim Teufel, - if these are the actor and baseball players, respectively, is unconfirmed, as is Larry King, the talk-show host, Frank Lautenberg, the Democratic senator from New Jersey, and Mark Green, a former public advocate of New York City.

Madoff was known to have focused on the rich and famous, sometimes requesting as much as a $20 million minimum.

A large number of the developers who invested with Madoff are reported to have pledged securities held by him for development projects. It has yet to be determined whether the actions of one person, will again impact bank lending criteria.

The complete client list of Madoff has been provided by the Wall Street Journal:

http://online.wsj.com/public/resources/documents/madoffclientlist020409.pdf

Info courtesy of:

http://www.globest.com/news/1341_1341/newyork/176748-1.html

https://ecf.nyeb.uscourts.gov/

http://designdepartment.wordpress.com/2006/09/07/

http://marketplace.publicradio.org/display/web/2006/10/27/down_in_debt/

http://www.observer.com/term/25509

http://gothamist.com/2007/09/07/revised_vision.php

http://blog.lib.umn.edu/mcgin017/blog/fall_2008/honors_intro_to_philosophy_fall_08/

LIQUIDATING CORPORATE ASSETS – COMPANIES ARE LOOKING FOR SALE-LEASEBACK TRANSACTION

LIQUIDATING CORPORATE ASSETS – COMPANIES ARE LOOKING FOR SALE-LEASEBACK TRANSACTION

by Jodi Summers

Sale-leaseback transactions are back in vogue. With the tenuous economy, businesses of all types are interested in sale-leasebacks as an avenue to monetize their assets.

In the wake of the lending crisis, banks have sold off their retail branches and office buildings in response to declining capital positions. Locally, Countrywide Home Loans sold the office building at 5220 Las Virgenes Road in Calabasas, CA, to digital technology developer DTS, Inc. for $15.64 million or $182 per square foot. The sale is a partial sale-leaseback; with Countrywide continuing to occupy 59,457 square feet of the 85,948-square-foot building.

CoStar reports that sale-leasebacks were about 2.2% of all closed transactions by dollar volume in third-quarter 2007, totaling about $2.1 billion. During the same quarter last year, those transactions had doubled as a percentage of total sales volume to 4.4%. Notably, third-quarter 2008 was the strongest of the year for sale-leasebacks and among the strongest on record.

“Sale leasebacks are still a bright spot in the real estate market right now,” noted Bruce Westwood-Booth, managing director for Jones Lang LaSalle’s Corporate Capital Markets Group. “Volume was very strong last year and we had another record year in that area. Whether we’re just picking up market share or whether our clients are more interested, it’s hard to say….but pricing has been impacted, so we’re also seeing a rise in cap rates.”

Private investors acquired the industrial buildings at 2255-2267 Agate Court in Simi Valley, CA, from Turbonetics for $5.35 million, or $153 per square foot. The seller, a turbo systems manufacturer, will continue to fully occupy both buildings. The industrial facilities total 34,875 square feet and were constructed in 1985 in the Moorpark/Simi Valley Industrial submarket.

Jay Koster, managing director of Jones Lang LaSalle’s Corporate Capital Markets practice, predicts a significant sharpening of the corporate appetite for sale-leasebacks in 2009. He notes that inquiries from the firm’s corporate clients are up by 300% versus 18 months ago.

“Corporations are looking for capital capacity to operate their businesses and position themselves to take advantage of opportunities that will arise through this market cycle,” Koster noted. We expect that appetite will be matched by heightened demand from investors that recognize inherent value in real estate leased to strong-credit corporations.”

JLL predicted an increase in corporate sale-leasebacks last year — “and that trend will absolutely continue [in 2009] as corporations remain challenged in securing new sources of capital,” added Kenneth Rudy, Jones Lang LaSalle’s president /COO. “Investors are more willing to commit capital to acquire companies’ owned assets tied to long-term, credit leases. We also expect to see more corporate dispositions to come from downsizing in 2009 as corporations mark-to-market the value of surplus real estate inherited in acquisitions at market clearing prices.”

All the dirt @

http://www.costar.com/News/Article.aspx?id=8BF2590E41B392530B05DF90ACC7A547&ref=100&iid=116&cid=383F14EEE265B182474DA2442BACBBBF

http://blog.faircosthousing.com/images/en/260746.jpg

http://firstdtsstudio.hit.bg/images/dts_digitalsurround.jpg

http://my.countrywide.com/

http://www.tcopenhouse.turbonetics-pearco.com/images/TURBONETICS%20TURBOCHARGERS%20copy.jpg

http://content.answers.com/main/content/img/barrons/realestate/landsale-leaseback.gif

http://www.ireporter.tv/Upload/saleleaseback.ireporter.tv/salesleaseback.bmp

http://www.contractpharma.com/articles/2007/06/images/sitelines.jpg

http://www.joneslanglasalle.com/PublishingImages/FlashFiles/html_jll_noflash.png

INDUSTRIALS PREDICTED TO REMAIN A STRONG REAL ESTATE INVESTMENT

INDUSTRIALS PREDICTED TO REMAIN A STRONG REAL ESTATE INVESTMENT

Industrial properties continue to be one of the bright spots (along with multiunits) in the current real estate market. The long-term outlook is extremely positive, according to a new report from Torto Wheaton reasearch. While acknowledging that weak demand has temporarily damaged the market, the report observes that the benefits of globalization and a more open economy will bring sustained growth over time.

“The US economy is becoming more open and globally integrated,” observes report author Laura Stone Mortimer, a Torto Wheaton vice president and managing economist. “As a consequence, trade-measured by the sum of imports and exports of goods-will continue to account for an increasing share of GDP.”

The theory asserted is that over the next 10 years many emerging markets in Asia, Europe and Latin America will contribute to increases in global trade as their economies and currencies gain strength, much as China has done in the current decade. In addition, she says, the US is regaining ground as a major exporter.

“With the dollar’s recent weakening, our exports have become more attractive worldwide, creating greater demand for American-made goods,” the economist remarks. “Historically, the US consumer has demanded more foreign-made goods than foreign consumers have demanded American-made. This, however, is currently reversed, resulting in a more open economy. Over the long-term, export demand for US goods and services is anticipated to continue to grow.”

The report speculates that growth in warehouse demand may well outpace growth in domestic economic output due to increased globalization and a long-term trend in which trade will represent a growing share of the GDP.

“As such, our demand forecasts are slightly more optimistic over the longer term once the economy enters its recovery phase,” she says, noting that trade, which until 2004 represented less than 20% of the GDP, has grown to represent about 30% of GDP today. “…Trade as a share of GDP could continue to grow to as much as 40% over the next decade,” she ventures.

The change, she continues, will have a significant impact on the nation’s industrial markets, particularly those coastal cities that serve as transshipment centers and those hubs that are well-positioned, in terms of minimizing transportation costs and serving large areas of the population. “The role the US plays in world trade and the distribution of goods will be increasingly important,” she concludes.

http://www.globest.com/news/1321_1321/insider/176161-1.html?sector=industria

INDUSTRIAL PROPERTIES WILL SUSTAIN IN 2009

INDUSTRIAL PROPERTIES WILL SUSTAIN IN 2009

 by Jodi Summers

Industrial. The most recent report from Grubb & Ellis noted that quest for cost-saving efficiencies should sustain demand for industrial nationally space in 2009, despite the weak economy, according to the report. Nevertheless, the vacancy rate will rise slightly to end 2009 at 9.4 percent.

The whole story @ http://www.realtor.org/RMODaily.nsf/pages/News2009010602?OpenDocument 

BRAVO! LEED v3.0 LOOKS AT THE BIG PICTURE IN GREEN BUILDINGS + LETS YOU LOOK TOO

BRAVO! LEED v3.0 LOOKS AT THE BIG PICTURE IN GREEN BUILDINGS + LETS YOU LOOK TOO

By Jodi Summers

LEED v3.0 – the U.S. Green Building Council’s latest green buildings rating system, has a brave new focus – saving energy on the long term.

“This version reflects the rapid advancements in building science and technology and provides incentives for strategies that have greater positive impacts on energy efficiency and CO2 emissions reductions, among other priorities,” notes treehugger.com.

Known around town as LEED 2009, what’s piquing the interest of the saving-money-thru-green-minded is a new requirement that focuses on facility maintenance during the life span of the building. The new rules mandate that energy and water usage for buildings seeking LEED certification now has to be reported for at least five years.

“One of the major differences with the new rating system is that sharing and reporting this energy use data is now required, as it was optional in the previous rating system,” observed property manager Michael Martz.

USGBC will allow projects to comply with the requirement in any of three ways:

1. To renew LEED certification every two years using LEED for Existing Buildings: Operation and Maintenance.

2. Provide energy and water usage data for the building on an ongoing basis annually.

3. The owner of the property authorizes USGBC to access the building’s energy and water usage data directly from the building’s utility provider.

With LEED v3.0, the USGBC offers a more savvy point rating system. The LEED rating system is increasing from a total of 69 points to 100 points – with an emphasis on what matters most from an environmental standpoint – energy efficiency and CO2 reductions. It the early days, a building could earn the same number of points for installing a commuter bike rack as optimizing energy by 10% or reducing water usage by 20%. Now credits are weighed based on how the course of action improves environmental and sapient health.

The LEED v3.0 vision also does a superior job of calculating the value of refurbishing the value of existing buildings. LEED v3.0 looks at the BIG picture.

Part of USGBC’s goal is to help owners and operators optimize building performance over the building’s lifetime. LEED v3.0 goes with the theory that collecting data is the best way to identify and help correct the common gap between energy modeling during the design phase and the building’s actual energy usage.

For those already constructing or managing LEED-certified buildings, the new requirements won’t be much of a change. Add-ons to current building systems will increase front-end costs a bit, but the big upside is that owners can now micromonitor energy usage. This investment will offer a significant savings in energy usage over the life of the building.

“They can see when the energy use has peaked, when it’s at the low, when it’s at the mean, and then they can adjust their programs or their overall systems,” explains Martz.

With LEED v3.Going forward, small businesses will be able to monitor their energy usage with the sophistication of institutions that consume a lot of energy, such as universities, skyscrapers and industrial manufacturers.

**

http://www.treehugger.com/files/2009/05/leed-30-is-launched.php

http://blogs.nationaltrust.org/preservationnation/?p=525

http://www.socalindustrialrealestateblog.com/?p=407

http://www.usgbc.org/News/USGBCInTheNewsDetails.aspx?ID=2628

http://www.mlive.com/business/west-michigan/index.ssf/2009/08/leed_reporting_requirement_goo.html

http://www.constructionweekonline.com/pictures/gallery/Stock/green.buildings.jpg

http://www.eco-structure.com/Images/FBI1_tcm26-123089.jpg

http://www.ischool.washington.edu/lewis-hall/greenbuilding.aspx

http://www.fullscalearchitecture.com/press/wp-content/gallery/trevvett-images/trevvett_02.jpg

http://www.dennislawgroup.com/Green_Building_Laws_LEED.html

http://twgi.com/images/picIAMUenergyChartLarge.jpg

http://movetolakenorman.wordpress.com/2008/10/17/lake-norman-real-estate-leed-certification-may-add-value-to-your-home/

BARKER PACIFIC GROUP IS READY TO BUY AS VALUES READJUST

BARKER PACIFIC GROUP IS READY TO BUY AS VALUES READJUST

Barker Pacific Group has a new strategy. The LA-based investment and development firm has two new principals and plans to raise $300 million of new equity to acquire distressed and value-added commercial real estate notes and properties.

The company is targeting leverage ratios in the range of 50% and is looking for both performing and nonperforming properties and notes. It has already acquired a note that is performing but is going to be coming due, and it is considering another that is performing that it would acquire at a discount.

Although Barker expects that commercial real estate foreclosures will increase, he anticipates that most of the opportunities to acquire distressed assets will arise from the financing problems that borrowers will face when their loans mature. Borrowers who financed properties two or three years ago may find that those assets have declined in value, so they won’t be able to refinance them at the same loan-to-value ratios and may well face huge capital requirements, he points out.Barker says that other opportunities for value-add acquisitions may arise in a variety of situations, such as when a lease rolls over and a major tenant vacates a building. Value-add is a loosely defined term, he observes, but most people think of the phrase in terms of properties that require some work to be done, such as finding tenants for empty space or investing in capital improvements.

Get the whole story @

http://www.cityfeet.com/News/NewsArticle.aspx?Id=31664

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http://www.barkerpacific.com/media/images/headers/header_management.jpg

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