this story and other national news in the Watch

MARK HESCHMEYER, EDITOR
AUGUST 5, 2010
WWW.COSTAR.COM
A WEEKLY COLUMN FOCUSING ON DISTRESSED MARKET CONDITIONS, COMMERCIAL REAL ESTATE PROPERTIES,
MORTGAGES AND CORPORATIONS PUBLISHED BY COSTAR NEWS
IN THIS WEEK'S ISSUE:
Tale of Two Investment Worlds, Merging Into One ........................................................................................................................... 1
Re-Priced Assets Key to Commercial Real Estate Rebound............................................................................................................. 5
Real Estate Returns Takes Bite Out of Calif. Employees', Teachers' Funds ..................................................................................... 6
CRE Transaction Activity Heating Up ................................................................................................................................................ 8
$1.7 Bil. Resource Real Estate Holdings May Be on the Block ......................................................................................................... 8
Commercial Office, Industrial Mortgage Volume Picking Up ............................................................................................................. 9
CMBS, CDO Loan Defaults Continue To Move Up ......................................................................................................................... 10
California Hotel Defaults Continue To Escalate............................................................................................................................... 11
Brookfield Properties Dumping Residential Sector for all Office ...................................................................................................... 11
LNR Property Completes Recap with Vornado's Help..................................................................................................................... 12
Group Vies for Control of Embattled Commercial Loan Fund.......................................................................................................... 12
PCAs and CRE Proving Effective Indicators of Bank Failures ......................................................................................................... 13
Barnes & Noble Board Outlining New Chapter, Which May Climax in a Sale ................................................................................. 14
Shopping Center Owner Centro Restructures $3.2 Billion in Debt .................................................................................................. 14
Maybe Films Aren't as Boring as Real Estate ................................................................................................................................. 15
Retail Leasing Strengthening, But Investment Activity Remains Sluggish ...................................................................................... 16
Hooters Growing Bigger .................................................................................................................................................................. 17
Jamba Juice Refranchises Restaurants in the Northwest ............................................................................................................... 17
Cole Pays $56.5M for Humble Shopping Center ............................................................................................................................. 18
Navistar Workers Await Decision on Consolidation ......................................................................................................................... 18
Washington Post, Harman Close Deal to Save Newsweek Jobs .................................................................................................... 18
Local Closures & Layoffs ................................................................................................................................................................. 19
Debt Service Erosion on CMBS Performing Loans ......................................................................................................................... 21
Watch List: Delinquent Loans Maturing in September ..................................................................................................................... 21
CoStar Commercial Repeat Sales Index:
Tale of Two Investment Worlds, Merging Into One
CoStar's July 2010 Commercial Repeat-Sales Index Indicates a Pause and Softening in Institutional
Grade Investing
The commercial real estate market’s pricing has been a tale of two worlds with the largest metro markets
attracting significant institutional capital and forcing prices upward over the first two quarters of 2010, while the
broader market has continued to soften, according to the first monthly CoStar Commercial Repeat-Sales Index
(CCRSI), produced by the CoStar Group Inc.
However, the index shows, this divergence of the two worlds may soon change as it is now indicating a pause
and softening even within the investment or institutional grade primary markets.
Over the past 10 months the overall CCRSI oscillated from positive to negative and back again, with preliminary
July figures very likely to be down for the investment grade property markets. From May to June, the overall
CCRSI was down 7.78% with the investment grade property declining by 4.83%, reversing previous positive
movement.
The pause in some of the positive price trends corresponds to renewed uncertainty in the U.S. economy,
persistent weakness in the housing market, as well as concerns surrounding the European economy. In addition,
financial reform has slowed commercial mortgage markets as lenders are now in the process of interpreting
capital requirements and ―skin-in-the-game‖ provisions.
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1
Many
of
the
opportunity
funds
continue to seek out
distressed
properties,
which
are affecting the
prices shown here,
but the expectation
of a tsunami of
opportunities have
not
materialized
and
overall
transaction volumes
remain
below
normal.
Distressed sales as
a
percent
of
transaction volume
are
highest
for
hospitality at 35%
followed
by
multifamily at 28%,
office at 22%, retail at just under 20% and industrial at about 17%. These volumes appear to be stabilizing and
the ―extend and pretend‖ behavior of some lenders is likely to continue for the next several months.
CoStar Group launched CCRSI as a measure that is intended to provide consistent and timely information to
help answer some of the fundamental economic questions regarding the commercial real estate (CRE) industry,
including, 'Are prices climbing or falling?' and 'On a month-to-month basis are property values going up or
down?'
"Currently, there are no effective, non-biased indices to measure commercial real estate price movements, and
even less comparative information by property type or geographies," said Andrew Florance, CEO of CoStar
Group. "In response to this void, we've developed the CoStar Commercial Repeat Sales Index to provide a
comprehensive set of benchmarks that investors and other market participants can use to better understand and
predict CRE price movements."
CoStar has identified more than 85,000 repeat sale pairs in its U.S. database, which it believes is the largest and
most comprehensive comparable sales database in the U.S. commercial real estate industry.
"An accurate measure of real estate price changes is a critical component to understanding investment or market
performance. With commonly used average, median price and price per square foot indices, there are no
controls for the ever-changing mix of properties sold during different time periods," added Florance. "Therefore,
we do not believe average or median price indices per square foot are useful for rigorous analysis of market
cycles. Appraisal-based indices are ineffective because they introduce lag and bias and minimum price cut
indices are a circular reference in that they use price to define price." By covering all levels and all types of CRE
transactions, and by using well-tested available methodologies, we believe that CoStar's indices will provide one
of the most comprehensive benchmarks for tracking and analyzing CRE price movements to date."
The development and release of the CCRSI is important for two significant reasons, said Dr. Norm Miller, vice
president, analytics for CoStar Group.
"First this will come out a month earlier than any other index out there, so when the market is in flux like right
now or going to turn, this information provides a leading indicator of how the other larger property indices will be
turning," Miller said. "Second, this is the only set of indices really reflective of the broader market. In terms of
sales volume, the existing indices ignore 70% to 80% of the property transactions. So this really is more
indicative of what the typical real estate owner is experiencing and a better index for this broader market."
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2
In addition to the overall index, CoStar has constructed more than two dozen sub indices using the unique
breadth of CoStar's property and comparable sales data.
OBSERVATION OF SUB-INDICES
When all commercial real estate transactions are considered, every major property type appeared to soften in
terms of prices in the last three months. However, the top-10 largest office markets posted a positive 6.2% price
change as did the top-10 industrial markets which rose 2%.
Retail prices suffered the most in the second quarter of 2010 with a drop of 12%, in part because the top 10 retail
markets had a -17% loss in prices.
By region, Northeast and West suffered more of a pullback than the South and Midwest, although both are
coming off much higher peaks than South and Midwest.
The only positive price trends out of 16 regional indices provided below were Midwest office at 5.7%, Northeast
apartments at 3.5%, West industrial at 1.8% and South apartments at 1%.
COMMENTARY ON DATA
The CCRSI July report is based on data through the end of June. In June, 665 sales pairs were recorded, up
significantly from May, during which 506 transactions occurred. Overall, there has been an upward trend in pair
volume going back to 2009. February 2009 appears to have been the low point in the downturn in terms of pair
volume, when 374 transactions were recorded. Since then pair volume has increased overall, and beginning in
November 2009, year-over-year changes in pair volume have been positive every single month.
In terms of the mix of pairs that have sold, June saw an increase in the proportion of repeat investment grade
properties trading hands. Investment grade sales amounted to 31% of the total number of sales in June, the
highest level it has been going back to January 2008. This indicates an increased mix of larger properties
changing hands, which had been at decreased levels since the beginning of the recession.
Prior to June, 24% of sales pairs in 2010 were considered investment grade. This compares to an average of
33% of sales pairs being investment grade in 2006 and 2007, before the start of the downturn.
Distress is also a factor in the mix of properties being traded. Since 2007, the ratio of distressed sales to overall
sales has gone from around 1% to above 23% currently. Hospitality properties are seeing the highest ratio, with
35% of all sales occurring being distressed. Multifamily properties are seeing the next highest level of distress at
28%, followed by office properties at 21%, retail properties at 18%, and industrial properties at 17%.
CoStar Group plans to provide CCRSO updates the first Wednesday of each month to serve as timely indicators
of the overall health of the commercial real estate industry.
Comparison Table
National All Property
Type Aggregate
National All Property
Type Investment Grade
National - Apartment
National - Industrial
National - Office
National - Retail
Regional - Northeast
Regional - West
Regional - Midwest
Regional - South
Top 10 MSAs - Apartment
Top 10 MSAs - Industrial
Top 10 MSAs - Office
Top 10 MSAs - Retail
THE WATCH LIST NEWSLETTER
1 Month
Earlier
1 Quarter
Earlier
1 Year
Earlier
2 Years
Earlier
-7.80%
-7.40%
-12.60%
-27.20%
-4.80%
-4.80%
-1.00%
-8.20%
-12.20%
-8.50%
-9.00%
-2.70%
-2.80%
-0.40%
2.00%
6.20%
-17.70%
5.70%
-8.60%
-11.10%
-13.70%
-16.00%
-5.70%
-13.60%
-12.30%
-10.40%
-1.50%
-8.80%
-19.70%
-17.60%
-12.00%
-22.70%
-24.10%
-32.00%
-27.20%
-19.40%
-34.80%
-25.10%
-25.50%
-14.90%
-24.90%
-32.80%
-29.20%
-31.70%
3
Comparison Table
Northeast - Apartment
Northeast - Industrial
Northeast - Office
Northeast - Retail
West - Apartment
West - Industrial
West - Office
West - Retail
Midwest - Apartment
Midwest - Industrial
Midwest - Office
Midwest - Retail
South - Apartment
South - Industrial
South - Office
South - Retail
1 Month
Earlier
3.50%
-7.80%
-5.80%
-14.90%
-8.90%
1.80%
-10.10%
-2.30%
-10.30%
-6.60%
5.70%
-11.00%
1.00%
-0.50%
-5.80%
-7.00%
1 Quarter
Earlier
7.80%
-5.60%
-15.70%
-12.30%
-12.70%
-10.20%
-20.30%
-16.70%
-25.10%
-19.50%
-3.50%
-10.30%
-8.50%
-11.40%
-5.30%
-19.70%
1 Year
Earlier
2 Years
Earlier
-8.60%
-14.70%
-30.30%
-21.20%
-26.00%
-31.00%
-38.70%
-35.00%
-38.50%
-26.70%
-24.90%
-26.60%
-30.90%
-24.30%
-25.70%
-27.30%
Advertisement
THE WATCH LIST NEWSLETTER
4
Re-Priced Assets Key to Commercial Real Estate Rebound
The commercial real estate recovery has become dependent on, and stands precariously linked to, the re-pricing
and deleveraging of property positions, according to the CCIM Institute and the Real Estate Research Corp.
(RERC). That is a change from being less contingent on access to capital, the groups said, given that liquidity
has returned to the commercial real estate markets, and in some cases, is scarily reminiscent of the pre-credit
crisis capital market environment.
"The money is there," said Richard Juge, CCIM, the 2010 president of the CCIM Institute and president of
RE/MAX Commercial Brokers in Metairie, LA. "It's a re-pricing and deleveraging issue versus a liquidity issue.
Capital is being invested in commercial real estate assets that have been re-priced to a level that makes sense
and with sufficient deleveraging, meaning there's not too much of a loan above the value of the asset. The large
institutions and other investors have been able to re-price their assets down by 40% to 50% while still
maintaining a positive equity position."
The CCIM Institute's chief real estate economist, Ken Riggs, CCIM, said he believes that given the amount of
liquidity in the market and the ability of lenders to re-price assets at a level that will clear the market, the process
of refinancing debt will be at a more measured pace than most predict and will serve as a guiding hand out of
this severe and Draconian commercial real estate recession.
"I don't see this huge onslaught where large volumes of distressed assets are placed in the market and the
supply of properties at distressed levels overwhelms the investment demand side," said Riggs, who is also
president and CEO of the Chicago-based Real Estate Research Corp. "There's equity sitting on the sidelines
now, waiting for this to play out."
"The process will be very selective," Riggs added, "with some banks and insurance companies taking back
properties and leaving them on the balance sheet. They will take them to the market when it's the right time and
when the pricing can be properly achieved. It will be a slow, arduous, and challenging process, but I don't see it
as being catastrophic or disrupting the current recovery."
CCIM and RERC said the industry is at a stabilization point with commercial property becoming attractive on a
relative basis and getting the attention of many diverse investors.
"We are starting to get traction. The recovery is becoming real," said Juge. "While it's still not as attractive as it
was in 2006 and 2007, commercial real estate came into this recession in better shape than it had in the past
with less building than in other downturns. If you put that in context, there is equity that wants to invest in the
market. It's a question of re-pricing."
According to Riggs, REITs have been able to recapitalize the quickest and are primarily leading the buying.
"It's the buyers that are well capitalized—the public and private REITs, institutional capital, and pension funds
that are out there buying" said Riggs. "On the sell side you see rebalancing and some stress situations, but it's
not to the level where banks are dumping large portfolios. Thus we like what we see from the buy/sell
perspective and hope that the dynamics continue along those lines. We're watching carefully to make sure it
doesn't become a market that's ruled by distressed sellers and distressed pricing.
"In the end, commercial real estate investments are linked and compared to investment alternatives of stocks,
bonds, and cash investments in a global financial environment that has been laced with risk and unquantifiable
uncertainty, and commercial real estate is offering a relatively predictable investment alternative, if re-pricing has
taken place," said Riggs. "Commercial real estate offers a tangible asset that has reasonable transparency and
information in which an informed investment decision can be made. Further, it offers risk-adjusted and absolute
returns that will likely outpace all alternatives over the next 10 years. Put it all together and commercial real
estate has gained the attention of local, regional, national, and international investors in search of a rational
place to put their money and meet investment returns requirements. They'll soon be able to sleep at night."
THE WATCH LIST NEWSLETTER
5
Advertisement
Real Estate Returns Takes Bite Out of Calif. Employees', Teachers' Funds
The California Public Employees' Retirement System (CalPERS) reported an 11.4% return in preliminary
estimates for the one-year period that ended June 30, 2010. The upturn for the 2008-09 fiscal year exceeded the
long-term annualized earnings target of 7.75%, which CalPERS has attained during the past 20 years.
As of June 30, 2010, the market value of assets stood at $200 billion.
"The positive returns over the last year are due to many factors, including the stabilization in the financial
industry and the increase in market liquidity," said Joe Dear, CalPERS chief investment officer. "Many asset
classes have exhibited strength amid signs of stabilization and recovery in the economy."
"With the exception of real estate, all of the asset classes had positive returns for the year," Dear said. "We're
definitely in the recovery mode with the opportunity to capture future returns because of our long-term
investment horizon. We're making good progress as we apply the hard lessons of the financial crisis to improving
our investment policies, processes and strategies."
CalPERS' market value of asset changes were as follows.
Global fixed income, up 19.5%;
Private equity, up 30.9%;
Public stocks, up 14.4%;
Commodities, infrastructure, forestland and inflation-linked bonds up a combined 2.7%; and
THE WATCH LIST NEWSLETTER
6
Real estate, down by 37.1%. The real estate dollar loss was equivalent to 1.3% of the total CalPERS
market value.
"Real estate declines reflect write-offs and deleveraging a portfolio that relied too heavily on borrowing at the
peak of the bubble in 2005 and 2006," Dear said. "Our new real estate team has been completely restructuring
24 separate accounts. We're moving back into core properties and accepting managers in whom we have
confidence. We're letting go underperforming managers and looking for the best possible deals as they become
available in a still
sluggish market."
Returns for real estate,
private equity and
some components of
the inflation- linked
class reflect market
values through March
31, 2010 (not June 30,
2010), and are subject
to change pending
appraisals in the real
estate portfolio.
The California State
Teachers' Retirement
System
(CalSTRS)
investment
portfolio
posted a solid 12.3%
return at the end of the
2009-10 fiscal year.
The
CalSTRS
investment portfolio's
market value at fiscal
year's
end
was
$129.77 billion. The
12.3% return rate beat
the actuarial rate of
8% and brought in
more than $10 billion
as the 2009-10 fiscal
year ended on June
30.
However,
because
CalSTRS bases its
investment
portfolio
performance on a
three-year
rolling
average, the last two
years' losses of 25%
and 3%, still have an
effect.
"We've taken steps to
position the portfolio
for long-term growth,
but we're not out of the
woods
yet,"
said
THE WATCH LIST NEWSLETTER
7
Christopher J. Ailman, CalSTRS chief investment officer. "The American economy suffered a near-death
experience in 2008, and it's going to take some time to fully recuperate from that. This year's performance is a
solid start along that road to recovery."
Returns by asset class were as follows.
14.5% for global equities (U.S. equities posted 15.7%, non-U.S. 12.1%),
12.3% for fixed income,
21.7% for private equity, and
Real estate was down 12.4%.
The California State Teachers' Retirement System is the second largest public pension fund in the United States.
CRE Transaction Activity Heating Up
By: Aaron Jodka, Senior Real
Estate Economist
June was a big month for
commercial real estate: It
marked the first time since the
Lehman implosion that sales
topped $10 billion. For deals of
at least $1 million, total sales
hit $11.3 billion - $4.9 billion of
which were office deals (see
Exhibit 1). The flurry of core
office deals in markets like
New York and Washington,
D.C., propelled the strong
monthly volume. To be sure,
sales have not returned to precrisis levels (around $20 billion
monthly), but they are well off
the lows ($4 billion) of early
2009.
Psychological
price
and
volume barriers aren't as
talked about in commercial
real estate as they are in the stock market. But nonetheless, crossing a volume threshold that has eluded the
market for 21 straight months is certainly a good sign.
$1.7 Bil. Resource Real Estate Holdings May Be on the Block
Resource America Inc. in Philadelphia has formed a special committee to identify and evaluate strategic
alternatives including simplification of the company's businesses; monetizing non-core assets in order to facilitate
the repurchase of stock and/or repayment of debt; privatization of the company; and/or sale of the company.
Resource America's subsidiary Resource Real Estate Holdings Inc. has an ownership interest in and manages a
real estate portfolio valued at $1.7 billion, which includes more than 14,000 apartment units and 1.1 million
square feet of office, retail, industrial and hotel space throughout the United States. Resource Real Estate has
400 employees across the United States with primary offices in Philadelphia, New York, Los Angeles, Denver
and Omaha.
The special committee has retained FBR Capital Markets to advise it in the identification and review of options.
THE WATCH LIST NEWSLETTER
8
"We have built some terrific businesses and see tremendous opportunity ahead," said Jonathan Cohen, CEO
and president of Resource America. "We remain committed to realizing the highest value for our shareholders,
but we question whether we can best succeed in doing so as a public company in our current size and structure."
The company has not set a definitive timetable for completion of its evaluation and there can be no assurances
that the process will result in any transaction being announced or completed. The company does not intend to
provide updates or make any further comment until the outcome of the process is determined or until there are
significant developments.
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Commercial Office, Industrial Mortgage Volume Picking Up
Second quarter 2010 commercial and multifamily mortgage loan originations were 1% higher than during the
same period last year and 35% higher than during the first quarter, according to the Mortgage Bankers
Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by
increases in originations for office and industrial properties. When compared to the second quarter of 2009, the
increase included a 183% increase in loans for industrial properties, a 180% increase in loans for office
properties, an 18% increase in loans for hotel properties, a 76% decrease in loans for health care properties, a
25% decrease in multifamily property loans, and a 9% decrease in retail property loans.
Among investor types, loans for conduits for CMBS saw an increase of 173% compared to last year's second
quarter. There was also a 148% increase in loans for life insurance companies, a 12% decrease in loans for
THE WATCH LIST NEWSLETTER
9
commercial bank portfolios, and the dollar volume of loans for Government Sponsored Enterprises (or GSEs –
Fannie Mae and Freddie Mac) saw a decrease of 55%.
"Borrowing remains light as few commercial property owners are selling or refinancing their properties unless
they have to," said Jamie Woodwell, MBA's vice president of commercial real estate research. "Life insurers,
CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels.
However, low volumes of property sales, depressed property values, stressed cash flows and modest loan
maturities are all keeping borrowing to a minimum."
CMBS, CDO Loan Defaults Continue To Move Up
Fitch Ratings' U.S. CMBS cumulative default rate for its fixed-rate conduit universe stood at 9.48% as of the end
of the second quarter, a 133 basis point (bp) movement from the first quarter and 289 bps from its year end 2009
study.
The overall cumulative default rate is on track with Fitch Ratings' expectation of 11% by year end 2010.
Large highly leveraged loans in later vintages are continuing to add to the increased pace of defaults. So far in
2010, 14 of more than $100 million defaulted. The largest newly defaulted loans in Q2 2010 were as follows.
Columbia Center, Office, WA, $380 million, 2007 vintage
Four Seasons Resort Maui, Hotel, HI $250 million, 2007 vintage
World Market Center, Other, NV, $225 million, 2005 vintage.
Hotel and multifamily loans lead the overall cumulative default rate by property type and saw a 409 and 498
basis point change from year end respectively. Newly added hotel defaults make up 12% of the year to date
defaults, with three loans of more than $100 million defaulting. The remaining loans of more than $100 million
that defaulted in 2010 are four office and four retail loans. These property types did not see as large of an
increase in their overall cumulative default rate due to their large contribution to overall CMBS at 29% and 31%,
respectively.
The following is a breakdown of year-to-date June 2010 and cumulative defaults by property type.
Property Type, $ (bil.), Default Rate
Hotel, $45.40, 17.98%
Multifamily, $99.48, 14.13%
Office, $158.57, 6.42%
Other, $33.91, 4.46%
Retail, $164.92, 8.25%
Industrial, $31.28, 7.37%
Health Care, $5.79, 22.37%
Total, $539.34, 9.48%.
Delinquencies for U.S. CREL CDOs also rose last month due to $136.9 million in asset manager repurchases of
troubled assets, according to Fitch's latest U.S. CREL CDO delinquency index. The June 2010 delinquency rate
increased to 12.2% from 11.6% in May.
Asset managers continued to actively repurchase defaulted and credit impaired assets from CDOs. In June,
seven whole loans, 58 basis points (bps), were repurchased from three different CDOs, compared to 7 bps for
May and 25 bps for April. Aside from these repurchases, new delinquent assets include four term defaults, six
matured balloons, and 11 credit-impaired rated securities. There were 35 loan extensions reported in June,
including two former matured balloon loans.
Realized losses of approximately $39.4 million were reported in June from the disposal or resolution of other
troubled assets. The highest asset loss to a CDO was $15 million, reflecting the impact on a real estate bank
THE WATCH LIST NEWSLETTER
10
loan of a bankruptcy reorganization plan. Another high realized loss was related to the discounted payoff at
approximately 50% of par of a mezzanine loan interest on a mall located in Hawaii.
Losses were also incurred on the sale of junior mezzanine and B-notes. Anecdotally, managers have noted an
increased interest from prospective loan purchasers with loan-to-own strategies. Acquisition of junior portions of
the capital stack of a loan can provide a purchaser with an opportunity to gain control over a collateral asset.
Of the 35 CREL CDOs rated by Fitch Ratings, 34 reported delinquencies in June, ranging from 1.2% to 39.8%.
Additionally, 15 Fitch rated CREL CDOs were failing at least one OC test, which is one less than last month's
total. One CDO manager cured its failure of an overcollateralization (OC) test through its repurchase of defaulted
assets; the CDO now has a slight cushion to its lowest OC test. Failure of OC tests leads to the cutoff of interest
payments to subordinate classes, including preferred shares, which are typically held by the CDO asset
managers.
California Hotel Defaults Continue To Escalate
The number of California hotels in default or foreclosed on continued to escalate through the second quarter,
according to Atlas Hospitality Group's latest survey.
A lot of recent industry news has spotlighted the turnaround in occupancy and average daily rate and there is
certainly a much more positive attitude in the minds of investors, the group said. However, there is still a lot of
pain in the market.
Second quarter 2010 highlights from the Atlas Hospital survey were as follows.
478 California hotels are in default or have been foreclosed on, an 18% increase from the 1st quarter
2010 and 132% over the 2nd quarter of 2009. Atlas Hospitality estimates that the true number of
distressed California hotels is much larger, with more than 1,000 properties operating under some form
of forbearance agreement.
The number of foreclosed hotels increased 27% from the 1st quarter, from 79 to 100.
The total number of hotel rooms foreclosed on was at 7,560, up 255% from the same period in 2009.
The largest hotel to be foreclosed on was the 512-room Holiday Inn in San Jose.
78% of the hotels foreclosed on were independent properties, down from 90% in the first quarter 2010.
Riverside County led in the number of foreclosed hotels with 11, 11% of the total. San Bernardino
County followed with nine and Los Angeles County had eight.
Of the 100 hotels that had been foreclosed on, only 12 (12%) had been resold to new investors.
Brookfield Properties Dumping Residential Sector for all Office
Brookfield Properties Corp. in New York is undertaking a strategic repositioning to transform itself into a global
pure-play office property company. The plan includes the acquisition of an interest in a significant portfolio of
office properties in Australia from Brookfield Asset Management as well as the divestment of Brookfield
Properties' residential land and housing business.
"Expanding internationally to dynamic gateway cities such as Sydney, Melbourne and Perth, Australia, with
similar characteristics to our current North American markets, provides great operational synergies," said Ric
Clark, president and CEO of Brookfield Properties Corp.
Following the transaction, Brookfield Properties will have leading office portfolios in each of the United States,
Canada and Australia, as well as a modest but growing interest in the United Kingdom.
Brookfield Properties also intends to commence discussions with Brookfield Homes Corp. regarding the possible
merger of these operations with Brookfield Homes. Should the merger proceed, Brookfield Properties' equity
interest in the residential business would be converted into a listed security in the merged entity which Brookfield
Properties would then dispose of through an offering to its shareholders.
THE WATCH LIST NEWSLETTER
11
Brookfield Asset Management would commit to acquire any shares of the merged entity that are not otherwise
subscribed for in the offering, thereby ensuring that Brookfield Properties will successfully dispose of its
residential interests and receive full proceeds.
The above transaction would complete Brookfield Properties' process of divesting of its primarily Canadian
residential land and housing business. Brookfield Homes is a land developer and homebuilder focused primarily
in California and the Washington, DC area markets.
LNR Property Completes Recap with Vornado's Help
LNR Property Corp. in Miami Beach completed a comprehensive recapitalization in which it raised $417 million in
cash through a new equity issuance.
The proceeds of the new issuance, along with cash on hand, were used to repay $426 million of the company's
existing $851 million term loan. In addition, Riley Holdco Corp., LNR's parent company, extinguished all of the
outstanding $450 million of senior notes due 2015 issued by HoldCo in exchange for stock of LNR.
The investors in the equity raise included an affiliate of Vornado Realty Trust, an affiliate of iStar Financial,
certain affiliated funds and/or managed accounts of Cerberus Capital Management and certain funds managed
by Oaktree Capital Management.
In the recapitalization, Vornado Realty Trust affiliates acquired a 26.2% equity interest in LNR for a new
investment of $116 million in cash and conversion into equity of its $15 million mezzanine loan (current carrying
amount) made to LNR's parent. The recapitalization involved an infusion of a total of $417 million in new cash
equity and the reduction of LNR's total debt to $425 million from $1.3 billion.
LNR is a servicer and special servicer of commercial mortgage loans and CMBS and a diversified real estate,
investment, finance and management company.
Group Vies for Control of Embattled Commercial Loan Fund
Sovereign Capital Management Inc. in San Diego is appealing to shareholders in Lakeside Mortgage Fund, a
lender on real estate primarily in California, to abandon its current founding management company, Lakeside
Financial Group Inc. in Redding, CA.
Lakeside Mortgage has made commercial property and construction loans, residential construction loans to
home and multifamily builders and loans secured by unimproved land. According to its most recent quarterly
(which are now more than 2 years old), Lakeside Mortgage reported assets of $21.3 million with the bulk of those
assets in the form of notes receivable and real estate owned property.
Lakeside Mortgage reported a year ago that it would be unable to continue to filing quarterly and annual reports.
"Given the downturn in the economy, especially in the mortgage lending market, we expect to have an increased
number of loans in default in our portfolio and also an increase in our real estate owned (REO) property," the
fund reported. "This will be reflected in our results of operations as a significant change in the loan loss and REO
reserves and also a decrease in interest income."
Sovereign Capital through a group called the Committee to Protect Lakeside Mortgage Fund issued an open
letter urging members of the Lakeside Mortgage Fund to consider the removal of the current manager. The
committee is comprised of Willard McCune and Sovereign Capital, which is wholly owned by Todd A. Mikles.
According to the letter, the committee said it was of the opinion, "based on its review of documents on file with
the SEC, as well as information gathered from various sources, that the current manager has mismanaged the
fund, managed it for its own interest, mislead investors, failed to provide required information in a timely manner,
and generally failed to provide competent management or direction. The end result being the fund is on the brink
of financial ruin."
THE WATCH LIST NEWSLETTER
12
According to the letter, in May 2009, three of the fund's manager's officers, directors, and owners were arrested
and charged with securities fraud, grand theft by embezzlement and residential burglary in a felony complaint
filed on behalf of the People of the State of California by the Attorney General of California.
If fund holders approve Sovereign Capital's plan, the committee said it would perform an asset-by-asset analysis
of the fund's holdings including: real estate owned site visits, market analysis, and forensic accounting to
determine the best course of action as to each asset in the fund's portfolio in order to preserve equity and
achieve the fund's stated purpose of providing a return on invested equity and growth.
PCAs and CRE Proving Effective Indicators of Bank Failures
Federal banking regulatory enforcements known as Prompt Corrective Actions (PCA) are proving to be a strong
indicator of impending bank failures.
Eight of the 22 banks that failed last month had PCAs enforcements issued against them this year. In addition,
28 of the 42 banks that had PCAs enforcements issued against them this year have failed.
In this column, we've commonly referred to PCAs as "30 day or else notices." Prompt corrective actions are
generally given to banks that are deemed severely undercapitalized. The banks are typically given 30 days to
come up with new capital, find a partner or buyer or face takeover action by federal regulators. The PCAs most
often are issued either by the Federal Reserve Board or the Federal Deposit Insurance Corp.
In total this year, 108 banks have failed and the FDIC is on track to close nearly 200 banks this year, according
Christopher Moyer, an associate at Cushman & Wakefield Sonnenblick-Goldman in New York in the firm's
August issue of its Capital Markets Update.
More interestingly, Moyer said: "Among the closed banks, real estate loans represented 94% of their nonperforming loans, with commercial real estate constituting a whopping 80% of non-performing loans."
The following is a list of banks and their levels of commercial real estate distress that are still operating but that
have also had PCAs issued against them this year.
PCA Action
Date
7/20/2010
6/24/2010
Total CRE
Distress
(as of
3/31/2010)
$55,083
$56,008
% CRE
Distress
to
Assets
17%
17%
6/10/2010
$9,495
4%
5/28/2010
$19,605
9%
Horizon Bank, Bradenton, FL
Shoreline Bank, Shoreline, WA
Legacy Bank, Scottsdale, AZ
Ravenswood Bank, Chicago, IL
Badger State Bank, Cassville, WI
Butte Community Bank, Chico, CA
First Sound Bank, Seattle, WA
5/27/2010
5/27/2010
5/24/2010
5/6/2010
5/5/2010
5/3/2010
4/28/2010
$17,135
$13,328
$22,672
$92,156
$4,627
$89,753
$29,661
9%
12%
13%
31%
5%
17%
16%
Sonoma Valley Bank, Sonoma, CA
4/13/2010
$53,886
15%
Americanwest Bank, Spokane, WA
2/24/2010
$134,726
9%
Bank, City, State
Pacific State Bank, Stockton, CA
North County Bank, Arlington, WA
Pierce Commercial Bank, Tacoma,
WA
Blue Ridge Savings Bank, Inc.,
Asheville, NC
THE WATCH LIST NEWSLETTER
Comment
Has engaged financial advisors for a
recapitalization since PCA
Has raised new capital since PCA
Entered into Written Agreement with
banking regulators and reported 2Q
profit since PCA
Has cut losses, nonperforming loans
and provisions for loan losses since
PCA
13
Bank, City, State
Ventura County Business Bank,
Oxnard, CA
PCA Action
Date
2/5/2010
Total CRE
Distress
(as of
3/31/2010)
% CRE
Distress
to
Assets
$5,779
7%
Comment
Barnes & Noble Board Outlining New Chapter, Which May Climax in a Sale
Barnes & Noble Inc., the world’s largest bookseller, intends to evaluate strategic alternatives, including a
possible sale of the company, in order to increase stockholder value. Barnes & Noble's board came to this
decision based on the price of Barnes & Noble shares in the marketplace, which the board said it believes are
now significantly undervalued.
The process of evaluating strategic alternatives will be overseen by a special committee of four independent
directors: George Campbell Jr., William Dillard, II, Margaret Monaco and Patricia Higgins, who will serve as chair
of the special committee. The special committee will consider all alternatives. The special committee has
selected Lazard to serve as its financial advisor and Morris, Nichols, Arsht & Tunnell LLP to serve as its legal
advisor.
"The board is confident in Barnes & Noble’s strategy and fully supportive of the senior management team, which
is delivering explosive growth in our fast-developing digital business. The board has concluded that a review of
strategic alternatives is the appropriate next step to take full advantage of our compelling digital opportunities
and to create value for shareholders, customers, and employees,‖ the board said in a prepared statement.
Leonard Riggio, the company’s founder and largest stockholder, has informed the board that, in light of its
decision to explore strategic alternatives, he intends to consider the possibility of participating in an investor
group to acquire the company.
Barnes & Noble operates 720 bookstores in 50 states. plus an additional 637 college bookstores.
Total sales for the full year ended June 30 were $5.8 billion with consolidated net earnings of $36.7 million.
Shopping Center Owner Centro Restructures $3.2 Billion in Debt
Centro NP LLC and its parent company Super LLC and its joint venture Centro NP Residual Holding LLC
completed a series of financing transactions that improves the debt maturity profiles across all three entities. The
transactions address the bulk of the $3.2 billion of debt scheduled to mature by year-end.
Centro has secured $659 million of term loans that mature in 10 years and carry a fixed interest rate of 6.75%.
These loans are secured by 76 properties owned by the company. Proceeds from these loans will be used to
repay $469.3 million of Centro NP LLC debt that had been scheduled to mature by the end of the year.
In addition, Super has secured a one-year extension to Dec. 31, 2011, for $2.3 billion of debt within Super,
including its $1.7 billion bridge-term loan and $580 million of additional outstanding indebtedness within
Residual.
Melbourne, Australia-based Centro NP's U.S. retail portfolio contains 600 community and neighborhood
shopping centers with total assets of $3.3 billion as of March 31, 2010. Centro NP operates a national portfolio of
shopping centers across the U.S. and its tenant base has historically been characterized by a high concentration
of needs-based retailers, such as supermarkets, as well as national discount chains.
THE WATCH LIST NEWSLETTER
14
Advertisement
Maybe Films Aren't as Boring as Real Estate
After taking steps this past to month to clarify his comments that real estate has become "tiring and boring," Tom
Barrack, the founder of Colony Capital LLC, has now cut a deal to buy Miramax Films from The Walt Disney Co.
for more than $600 million.
The purchase will be made through Filmyard Holdings LLC whose partners include Barrack and Colony Capital,
Ron Tutor and other individuals.
The sale of Miramax Films includes rights to more than 700 film titles, including Academy Award winners such as
Chicago, Shakespeare in Love and No Country for Old Men. Also included are non-film assets, such as certain
books, development projects and the "Miramax" name.
"Although we are very proud of Miramax's many accomplishments, our current strategy for Walt Disney Studios
is to focus on the development of great motion pictures under the Disney, Pixar and Marvel brands," said Robert
A. Iger, Disney's president and CEO.
The transaction is subject to regulatory approvals and is expected to close between Sept. 10 and the end of the
calendar year.
Last month, Barrack was widely quoted as saying real estate was boring because "the fast guys looking for fast
money" are now a thing of the past.
THE WATCH LIST NEWSLETTER
15
Barrack later told private equity news publisher PERE that his commitment to real estate has never been
stronger. "99% of our assets are in real estate, and 100% of my life has been real estate," he was quoted as
saying.
Retail Leasing Strengthening, But Investment Activity Remains Sluggish
By: Randyl Drummer
Retailers, consumers and the general economy are clearly better off than they were a year ago -- and that's
translating into an increase in leasing activity and overall occupancy together with a deceleration in rent declines
for retail property owners.
However, the picture remains very mixed for real estate investors focused on the retail sector with dollar volume
in investment sales transactions still well below the long-term average. However, compressing capitalization
rates and other positive investment signs are emerging which should help break the stalemate between buyers
and sellers and halt the long slide in shopping center prices.
The positive indicators in the retail leasing market over the first half of this year follow similar recovery stories in
the nation's office and industrial markets, as CoStar Group reported in its State of the Commercial Real Estate
Industry Mid-Year 2010 Retail Review and Outlook.
With shoppers beginning to spend again, most retailers are seeing year-over-year growth in same-store sales, a
precursor to growth in real estate demand that is now showing up in improved leasing numbers, said CoStar
Group Real Estate Strategist Suzanne Mulvee, who delivered the update and forecast recently to CoStar clients
along with Jay Spivey, CoStar director of analytics, and Norm Miller, vice president of analytics.
While far below 2007's hyper-inflated peak of 64 million square feet, the 12.8 million square feet of absorption in
the second quarter of 2010 continued a positive trend that began a year ago in third-quarter 2009. While 12 of
the top 20 retail markets posted negative absorption in 2009, 16 of 20 markets recorded positive absorption in
the second quarter, led by fairly strong growth in Houston, New York, Northern New Jersey, Boston and Denver.
South Florida, which experienced some of the worst space losses last year, is also seeing positive growth in
2010. Dallas, Tampa, Phoenix and Chicago continue to suffer absorption losses, but at a far lower rate than last
year. CoStar forecasts continued overall growth in national absorption figures for retail space in coming quarters.
The growing influence of services in the U.S. retail market, and improving conditions in the overall economy are
helping to drive retail leasing numbers. Of the roughly 35,000 retail leases signed in 2010, Subway led the way
with 65 new locations, while financial services firms such as Edward Jones, State Farm Insurance, Liberty Tax
Service and Allstate have also added multiple locations.
Other strong tenant growth occurred among value-play retailers such as the "dollar" stores -- Dollar Tree, Dollar
General, and Family Dollar. Mulvee also noted that seven of the top 25 most active retail tenants were mobile
carriers, which sell phone service as well as devices.
The first-half 2010 retail investment sales market saw properties sitting on the market longer. Moreover, more
discouraged sellers were pulling their unsold properties from the marketplace.
However, "we're seeing a little bit of a leveling in the spread between asking and actual sales price, and that's a
good sign that things are starting to come together in terms of the buyer-seller demand curve," Spivey said.
Overall sales volume dropped sharply between 2007 and 2009, and although quarterly sales volume remains
below the long-term average, volumes should trend upward over the next few quarters, Spivey said. Some
markets such as Houston are seeing a large year-over-year percentage increases in volume, albeit from 2009's
low transaction base.
About 20% of retail properties being traded during the second quarter were distressed sales, with pricing on
average at around 54 cents on the dollar compared with non-distressed assets, Mulvee said. As a percentage of
total transactions, distressed retail deals are running well below rates for multifamily, hospitality and office
assets, and somewhat higher than industrial.
THE WATCH LIST NEWSLETTER
16
About 45% of retail properties that traded in Atlanta were distressed, with Orlando, Jacksonville and Colorado
Springs also showing high levels of distressed sales. On the other end, distress hasn't really affected highergrowth markets with supply overhang such as Austin and Houston, where the rate of distress is around 10%,
Mulvee said.
However, "If you look at mortgages coming due and the opportunity funds that are out there, the volume of
distressed properties is still a fraction of what the market expected," Miller noted.
Hooters Growing Bigger
By: Andrew Deichler
Hooters of America Inc. revealed an aggressive global expansion, with the intent of enhancing its restaurant
count by 15% to 20% over the next several years. The chain currently has more than 455 locations worldwide in
29 countries.
Hooters appointed Colliers International as its preferred real estate provider to aid in this endeavor. Scott Thiell,
managing director, and Patrick Duffy, chairman, are heading up the assignment. Colliers' primary function is to
identify new locations (pad sites and in-line spaces) and negotiate lease terms for Hooters.
"Hooters is one of the most distinctive and recognizable casual dining restaurant chains in the world, with a
tremendous platform for growth," said Thiell.
Thiell explained that the expansion is primarily taking place in locations where franchises already exist, both
nationally and internationally. Stateside, franchisees in the Gulf Coast, Alabama, North Florida and Southern
Georgia are actively looking to grow, as well as some locations in New York and New England. Globally, Hooters
intends to expand in all 29 countries where it already operates, as well as a few new ones. "They just recently
entered Turkey, India and the South of England," Thiell noted.
At a time when many sports bar/restaurants such as Damon's and ESPN Zone have been forced to cut back and
close locations, Hooters is unique in that it has not only been able to survive, but thrive in the current economy.
The restaurant chain is doing so well that it could actually double its footprint over the next five years, Thiell said.
Jamba Juice Refranchises Restaurants in the Northwest
Jamba Inc. in Emeryville, CA, completed another sale of restaurants, this time: 25 restaurants in Washington to
existing franchisee, Prudence Swann, principal of PB Swann LLC. The agreement includes a commitment to
further expand the Jamba Juice brand by developing two additional stores in the Seattle market.
"The completion of the sale of 81 restaurants is a huge accomplishment for our company. Our team has been
working hard on this initiative and it's clearly paying off. We fully expect to have the refranchising initiative
completed by the close of 2010," said James D. White, chairman, president and CEO of Jamba Inc.
Jamba Juice expects to add up to 50 new domestic franchise locations in 2010.
This recent franchise development activity reflects the accelerated growth of the company and supplements the
287 currently operating franchise stores.
The company is committed to growing the Jamba brand and refranchising is one component of a broader plan
for achieving that goal.
THE WATCH LIST NEWSLETTER
17
Cole Pays $56.5M for Humble Shopping Center
By: Liz Wilkinson
Cole Real Estate Investments, an Arizona-based real estate investment firm, acquired the Atascocita Commons
shopping center in Humble, TX, from Trammell Crow Co. for $56.5 million, or approximately $184 per square
foot.
The shopping center was constructed in 2006 and is in Humble's key retail area serving the upscale communities
of Kingwood, Atascocita and Eagle Springs. The complex totals 306,890 square feet and boasts national and
regional retail tenants including Kohl's and TJ Maxx/Home Goods.
William Kent, Ryan West and Gary Lawrence of CB Richard Ellis represented the seller, while Clint Marchuk,
director of acquisitions, represented Cole.
Navistar Workers Await Decision on Consolidation
By: Andrew Deichler
Employees of Navistar International Corp. in Indiana and Ohio are anxiously awaiting news on whether or not the
commercial trucking company is moving their jobs to Illinois.
Navistar has been in negotiations to purchase the 1.2 million-square-foot former Alcatel-Lucent campus at 26012701 Lucent Lane in Lisle, IL. The company's goal is to consolidate all operations into one massive location.
A negative reaction from some members of the Lisle community in May caused Navistar to contemplate
relocating elsewhere. But after some local government officials intervened, Navistar was again looking at Lisle.
Indiana's News Center reported last week that the Lucent Lane campus is now off the market and Navistar is
planning to bus certain employees to Illinois for a relocation trip. However, no official announcement has been
made.
Navistar's contracts in Fort Wayne, IN, and Springfield, OH are set to expire in the fall. The company is soon to
begin negotiations with representatives for the United Auto Workers (UAW).
The Fort Wayne site, at 2911 Meyer Road, totals 334,616 square feet and employs about 1,100 people.
Navistar's Springfield location at 6125 Urbana Road totals 225,000 square feet and has about 700 workers.
Navistar said that its decision on whether or not it will retain these facilities relies heavily on union contracts. But
union leaders have expressed frustration with Navistar, alleging that they have been kept in the dark on the
company's plans.
Navistar issued a WARN notice on Monday stating that about 370 jobs at the Springfield facility could be
eliminated by October. However, the company maintains that it only issued the notice to comply with federal law
in the event that it might need to lay off workers in two months time.
Washington Post, Harman Close Deal to Save Newsweek Jobs
By: Andrew Deichler
The Washington Post Co. entered into a contract to sell Newsweek to audio equipment pioneer and
philanthropist Sidney Harman. While the purchase is unlikely solve all of troubled magazine's problems, it at
least gives Newsweek's 300-plus staff a reason to rest easy for a while.
Financial terms were not disclosed, but multiple sources are reporting that Harman paid $1 for the troubled
publication. The Post was Newsweek's owner for nearly 50 years.
THE WATCH LIST NEWSLETTER
18
Faced with fierce competition from online media and rapidly falling sales, Newsweek was put up for sale earlier
this year. According to the Post's first quarter earnings report, the news magazine's revenue totaled $29.4
million, down 36% from the previous year. The Post cited several reasons for the disappointing figures, including
a 38% drop in advertising revenue, one less issue of the domestic edition in the first quarter and the December
2009 sale of Newsweek Budget Travel.
Newsweek's operating losses were actually lower in the first quarter than they were a year before, but that is
largely because the magazine scaled back on staff by 33% and reduced the circulation of its domestic edition
from 2.6 million to 1.5 million throughout 2009.
Despite its problems, multiple bidders were interested in taking on the 77-year-old magazine, including Fred
Dasner, formerly with New York Daily News; Open Gate Capital, which owns TV Guide; and Avenue Capital
Group, which has a stake in American Media Inc.
But it was the 91-year-old Harman that won out, largely because of his promise to keep most or all of
Newsweek's staff intact. The magazine will be Harman's own personal project and will not be affiliated with
Harman International, his audio equipment company.
"In seeking a buyer for Newsweek, we wanted someone who feels as strongly as we do about the importance of
quality journalism. We found that person in Sidney Harman," said Donald E. Graham, chairman and CEO of The
Washington Post Co. "He has pledged not only to continue to produce a lively, compelling and first-rate news
magazine, but also an equally dynamic Newsweek.com - and he intends to keep a majority of Newsweek's very
talented staff."
Allen & Co. advised the Post in the transaction, while Guggenheim Securities LLC provided advisory services to
Harman. Covington & Burling LLP acted as lead counsel for the Post. Williams & Connolly LLP represented
Harman.
Newsweek editor Jon Meacham is reportedly stepping down once the sale to Harman is finalized.
Local Closures & Layoffs
Company
Navistar
Jerr Dan
Paris Accessories
Insurance.com
Sodexo
Automated Health Systems
Automated Health Systems
International Automotive
Components
Bering Straits Aki
Gladstone Honda & Nissan
Berry Plastics Co.
Floyd & Beasley Transfer Co.
BreconRidge Manufacturing
Solutions
Hypo Real Estate Capital
New Process Gear
McNeil Consumer Healthcare
(J&J)
THE WATCH LIST NEWSLETTER
Address
6125 Urbana Rd, Springfield, OH
1080 Hyke Rd & 15276 Molly Pitcher
Hwy, Greencastle, PA
2645 Mitchell Ave, Allentown, PA
29000 Aurora Rd, Solon, OH
3400 Vine St, Cincinnati, OH
6091 N Teutonia Ave, Milwaukee, WI
4602 S Biltmore Ln & 1 W Wilson St,
Madison, WI
2821 Muth Ct, Sheboygan, WI
2171 S 8th Ave, Fort McCoy, WI
19400 & 19505 SE McLoughlin Blvd,
Gladstone, OR
127 Textile Ave, Albertville, AL
18060 Alabama Hwy 21, Sycamore,
AL
120 Chimney Point Dr, Ogdensburg,
NY
622 3rd Ave, New York, NY
6600 New Venture Gear Dr, East
Syracuse, NY
7050 Camp Hill Rd, Fort Washington,
PA
Closure or
Layoff
potential layoff
#
Affected
370
Impact Date
10/4/2010
closure
closure
closure
closure
closure
250
66
144
94
122
9/30/2010
11/12/2010
9/26/2010
9/30/2010
9/30/2010
closure
38
9/30/2010
closure
layoff
167
70
12/17/2010
9/1/2010
closure
closure
94
93
9/15/2010
12/31/2010
closure
118
9/15/2010
82
45
10/26/2010
9/30/2010
closure
100
10/18/2010
layoff
300
9/17/2010
closure
potential closure
19
Company
Herff Jones
Highland Forest Resources,
Inc.
Kirk and Blum
Burger Boat Co.
Courtland Gardens Health
Center
Skookum Fleet Management
Flextronics Americas, LLC
Lockheed Martin
Kehe Distributors
Bank of America
Grand Street Settlement, Inc.
Acme Architectural Products
Empire Vision Centers
MTA New York City Transit
American Steamship Co.
Address
90 Discovery Dr, Scott Township, PA
Closure or
Layoff
closure
#
Affected
160
Impact Date
9/7/2010
237 Highland Dr, Marienville, PA
3120 Forrer St, Cincinnati, OH
1118 Spring St, Manitowoc, WI
layoff
Closure
layoff
107
68
70
9/10/2010
9/20/2010
9/8/2010
53 Courtland Ave, Stamford, CT
Fort Lewis, WA
847 Gibraltar Dr, Milpitas, FL
7115 S Boundary Blvd, MacDill AFB,
FL
4055 Deer Park Blvd, Elkton, FL
5301 Idlewild Ave, Tampa, FL
783 Knickerbocker Ave, Brooklyn, NY
251 Lombardy St, Brooklyn, NY
2921 Erie Blvd, East Syracuse, NY
180 Livingston St, Brooklyn, NY
500 Essay Rd, Williamsville, NY
closure
layoff
layoff
157
176
42
9/7/2010
immediately
immediately
layoff
layoff
layoff
closure
closure
layoff
layoff
conditional layoff
245
183
50
44
270
27
164
305
8/29/2010
9/25/2010
8/31/2010
8/31/2010
immediately
10/13/2010
9/17/2010
10/12/2010
Advertisement
THE WATCH LIST NEWSLETTER
20
Advertisement
Debt Service Erosion on CMBS Performing Loans
Investcap Advisors LLC has completed an analysis of CMBS loans that indicates 75% of the loans with debt
service coverage ratios less than 1.0 are still performing loans. Of the 4,804 such loans, 3,610 (or 75.1%) have a
performing payment status. Further scrutiny of the data indicates that the cash flows on many of these properties
are insufficient to service the debt and on the surface would suggest borrowers are reaching into their own
pockets to make up the difference.
Watch List: Delinquent Loans Maturing in September
The following is a weekly feature from CoStar Group and is a valuable source of leads on potential refinancing or property
sale or servicing opportunities. The information for these listings was provided by Investcap Advisors LLC, an industry leader
in providing surveillance data on loan and commercial real estate performance underlying the CMBS market.
Proper
ty
Type
$13,495,360
Pymt
Status
60-89
Days
Delinquent
Office
$5,037,284
60-89
Days
Delinquent
Office
$7,086,125
Office
$1,793,915
90+ Days
Delinquent
90+ Days
Delinquent
Office
$110,000,000
90+ Days
Delinquent
Office
$16,451,061
Office
$38,160,000
Retail
$1,121,744
Retail
$10,260,295
90+ Days
Delinquent
90+ Days
Delinquent
1085 Market St., Warren,
PA
Retail
$1,782,007
90+ Days
Delinquent
Mars Plaza
6302 - 6386 E. 82nd St.,
Indianapolis, IN
Retail
$8,699,644
90+ Days
Delinquent
Colleyville Town
Square
5600 Colleyville Blvd.,
Colleyville, TX
Retail
$5,727,326
90+ Days
Delinquent
Shops at Westwood
16255 W. 64th Ave.,
Arvada, CO
Retail
$2,789,915
90+ Days
Delinquent
Property Name
Prairie Stone
Commons
Address
5401 & 5407 Trillium
Blvd., Hoffman Estates,
IL
Valley High
Business Center
3535 - 3625 40th Ave.
NW, Rochester, MN
40 Main Street
John Goodman &
Associates
40 Main St., Hempstead,
NY
8668 Spring Mountain
Road, Las Vegas, NV
Gateway at Lake
Success
1981 & 1983 Marcus
Ave., Lake Success, NY
Maryland Trade
Center III
Tri - County
Business Park
7501 Greenway Center
Drive, Greenbelt, MD
13300 McCormick Drive,
Tampa, FL
Gunbarrel Commons
Northcrest Village
Shopping
2265 Gunbarrel Road,
Chattanooga, TN
3044 Old Denton Road,
Carrollton, TX
Quality Market Plaza
THE WATCH LIST NEWSLETTER
Office
Curr Bal
90+ Days
Delinquent
90+ Days
Delinquent
CMBS; Master Servicer;
Special Servicer
BACM 2005-4; Bank of
America; ORIX Capital
Markets
GMACC 2000-C3; Berkadia
Commercial Mortgage ;
Berkadia Commercial
Mortgage
FUBOA 2001-C1; Wachovia
Bank; C-III Asset
Management
FUNBC 2000-C2; Wachovia
Bank; LNR Partners
GCCFC 2005-GG5;
Wachovia Bank; LNR
Partners
GMACC 2000-C3; Berkadia
Commercial Mortgage ;
Berkadia Commercial
Mortgage
LBUBS 2005-C7; Wachovia
Bank; Midland Loan Services
BSCMS 2005-TOP20; Wells
Fargo Bank; C-III Asset
Management
KEY 2000-C1; KeyBank Real
Estate Capital; LNR Partners
LBUBS 2000-C5; Wachovia
Capital Markets; LNR
Partners
LBUBS 2000-C5; Wachovia
Capital Markets; LNR
Partners
MSCI 2005-IQ10; Berkadia
Commercial Mortgage ; J.E.
Robert Co.
WBCMT 2004-C10;
Wachovia Bank; LNR
Partners
21
Property Name
Address
Space Plus Storage
Center
2951 SW 14th St. Place,
Boynton Beach, FL
Proper
ty
Type
Self
Storag
e
Curr Bal
$3,500,759
Pymt
Status
90+ Days
Delinquent
CMBS; Master Servicer;
Special Servicer
BSCMS 2000-WF2; Wells
Fargo Bank; Berkadia
Commercial Mortgage
Advertisement
THE WATCH LIST NEWSLETTER
22