News
CAPITAL COMETH
November 9, 2010
| Yesterday's all-day ICSC/NAIOP Capital MarketPlace Conference at the Westin attracted more than 100 capital market pros. They heard that next year (sooner than you think) lots of capital is going to be ready to work, made easier by the narrowing bid/ask gap. |
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| The stabilized lending panel of Johnson Capital's Daniel Lisser, Wells Fargo's Joe Tufariello, Prudential's Melissa Farrell, NorthMarq's Deanna Polizzo, and Natixis' Scott Zucker. Wells Fargo has a $735M pool (with BofA and Basis Capital) particularly active in retail and office, looking for stabilized cashflow and mark-to-market rents. Prudential's also increasing retail investment, a sector in which Melissa says life companies can compete again. Regional banks are doing deals up to $10M, since it takes up lots of big lenders' resources to do those smaller deals, Deanna notes. Next year, there'll be plenty of capital that needs to be put to work, and more equilibrium between the buy/sell, Scott says, but he asks how we're going to deal with the broken assets. Trends for '11: investment priced on pound-to-pound basis, not cap rates; more competition for life companies; CMBS in growth mode; and opportunities for new loan products. |
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| This year was a game changer for many of the panelists on the JV equity panel, which included Ackman-Ziff's Pat Hanlon, Madison International Realty's Ronald Dickerman, AREA Property Partners'Steven Wolf, Morgan Stanley's Lauren Hochfelder Silverman, and Invesco's Todd Bassen. Todd says his firm's strategy has been to look at assets that were on the market two years to 18 months ago and withdrawn, which has made for successful off-market transactions. Lauren says Morgan Stanley has a $4.7B active pocket and a $7B core-value fund that's investing in multifamily, industrial, and has a pending office deal. On the fund side, Ron notes that many US endowments and foundations are hard hit, so it's important to expand your capital-raising base. Steve says Asian—particularly Chinese—and European capital is out there, while Lauren adds that sovereign wealth funds are further increasing real estate exposure. |
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| Numbers are showing improvement—we'll easily finish the year with over $100B in transactions, says Real Capital Analytics' Bob White(second from right), who moderated the institutional investment panel of Northwood Investors' Erwin Aulis, Kennedy Associates' Shobi Khan, and Torchlight Investors' Matt Jaffe. Erwin says it didn't make an investment between August '08 and March '10, but has since closed deals in Boston, DC, and Texas, and has $250M closing by year's end. Purchasing is more active again, after banks had no motivation to sell for a while, Matt says; many have been quiet, off-market deals. There's more competition out there, the panelists note. Shobi lost out on a deal to someone who waived due diligence; there's more of a frenzy and people want to differentiate themselves to win a bid. Erwin notes he's been out-bid by REITs, pension funds, fund advisors, and opportunity funds. |
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| Retail has come off of its devastating decline in '08 and slow crawl since then, noted Vornado CEO Mike Fascitelli in the after-lunch keynote. Consumers are saving more and rebuilding their balance sheet, but are spending a little more. The relationship between sales and rents is a good one, he says; retail rents have recovered far more than office. In NYC, Vornado did a deal on Madison Avenue, originally asking for $750-$800/SF, received $575/SF, but now it's up to $600/SF, whereas office has gone from $100/SF to $60/SF to only $65/SF (overall, DC rents have held up best in that regard). The conference also included an economic forecast and panels on structured finance, maturing debt, and the loan sales market. |
