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By AZ Advisory Team, December 11, 2009 1:17 pm

Commercial Real Estate Investment: The latest results of the Moody’s REAL Commercial Property Index continue to indicate that our country’s commercial real estate markets are definitely experiencing a tremendous downturn, with prices plummeting at a whopping 42.70% since the peak set in October 2007.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, December 10, 2009 7:48 pm

The 2010 Emerging Trends in Real Estate, released by PricewaterhouseCoopers and the Urban Land Institute, forecasts that commercial real estate values will bottom in 2010 and that values will decline an average of 40 percent from their peak in 2007. The survey called this fall the worst commercial decline since the Great Depression and said it would overshadow the 1990s savings-and-loan crisis.

This is a great opportunity for cash investors to go for quality assets and realize returns as the economy bounces back.

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By Alex Zylberglait, December 7, 2009 4:17 pm

Got news today that a real estate giant in Qatar, called Barwa is exploring investment opportunities in US commercial real estate and is encouraging other investors to join him as he made a presentation at a one-day business seminar “Entering the US Market“.

Barwa Real Estate Company deputy chief executive officer and Group Strategy & Investment executive director Mohamed Abdul Aziz al-Saad said in a report that the company’s investment exploration will be focused on commercial properties.

The company with over QR25bn (USD6.8bn) in assets value, has previously invested in Sudan, UAE, Bahrain, Egypt, Switzerland, France, Turkey, among other countries, as part of its international portfolio.

“It’s not going to be centered on coastal areas in the US only…” al-Saad added.

More and more foreigners are seeing opportunities opening up for commercial real estate investments. Howabout you, what do you see? From wherever part of the globe you are, opportunities are opening up here in the U.S for foreign investors. Contact me for a free consultation.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, November 30, 2009 1:38 pm

OK, so here are some good news in terms of the desired movement in the commercial real estate sector. Thirty five (35) percent of global investors plan to increase their property allocation in their portfolios over the next two years.  This is double the seventeen (17) percent who plan to reduce it over the same period according to the Barclays Wealth and Economist Intelligence Unit (BARC.L) survey. This is because they foresee better long-term returns in real estate than from stocks and bonds.

The U.S. was rated at the top as the most popular nation for investment, with 16 percent of the global investors saying they are expecting to see the best returns here. Sixty eight (68) percent of these investors said that the opportunities are in the commercial properties. Belief that properties are now undervalued was the second most common reason cited for increasing investment.

Barclay’s survey has 2,000 respondents. Forty percent were worth 500,000 pounds to 1 million pounds. An additional 40 percent were worth between 1 million pounds and 10 million pounds. Ten percent had assets of as much as 30 million pounds and the rest were wealthier.

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By AZ Advisory Team, November 19, 2009 4:09 pm

U.S. commercial real estate transactions rose in the third quarter for the first time since around 2007 but is still way down from a year earlier, said the National Association of Realtors. This organizatio, which hosted the 2009 REALTORS® Conference & Expo in San Diego which ended last Monday, said in its report that Commercial Leading Indicator for brokerage activity index rose 0.9 percent from the prior quarter’s fifteen-year low to 102.4, the first rise since the second quarter of 2007. Still, the index is 11.1 percent below the 115.3 reading in the third quarter of last year.

But NAR’s chief economist, Lawrence Yun, stressed that the lack of financing for commercial real estate transactions is slowing down our economic recovery. Yun addressed the government to take action to relieve some of the lending pressure as banks become troubled with the increase of toxic loan portfolios over-leveraged by commercial properties that are losing value now.  Banks then become shy about lending money which create a challenging environment for commercial transactions.

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By Alex Zylberglait, November 16, 2009 9:32 am

As we continue to track the amount of debt in distress across all product types and geographies, it is evident that it’s a matter of time until lenders begin to divest these assets. Even though they currently do not have as much pressure to realize losses immediately they will eventually have to do something about it. Considering they are not generally lending money at this time, the increased defaults will only make their balance sheets that much more unattractive. Having said that, I do not believe that we are likely to see an RTC 2 of some sort but rather the divestiture of troubled or toxic assets will likely come in the form of waves; that is as bank’s balance sheets gradually improve they will likely divest of certain assets over time. The wildcard in all of this, of course, is any kind of government intervention that would act to accelerate or decelerate this probable scenario.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, October 22, 2009 2:30 pm

In many cases commercial real estate assets will be generating a steady cash flow or be candidates for a turnaround.  Other assets will just need an experienced management team to come in and stabilize the property.

As the economy improves, by which the improving manufacturing sector shows us, real estate fundamentals should improve with it putting a halt to dropping values, rents and occupancies.

There will be opportunities to buy assets from indebted owners at very good values.  Some properties that will be foreclosed may be dead malls and offices, but many others will not be. There’s a big difference between distressed assets and distressed owners. Both may trigger foreclosures, but the latter will be big opportunities for select astute players in the sector to come in.

It’s just a matter of finding the right commercial real estate investment advisor, to help you find the right fit and the right investment strategy based on your objectives.  Contact Alex Zylberglait.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, October 22, 2009 1:29 pm

Will the defaults on commercial real estate loans  be enough damage to thrust the financial system back into chaos or hurt the broader economy?

What do you think?

Experts think it would contribute to more bank failures, but overall they won’t threaten the banking industry as a whole.

“The magnitude of the deterioration seems consistent with past recessions. It looks like a manageable problem,” Jeffrey M. Lacker said, president of the Federal Reserve Bank of Richmond.

For one thing, the $3.4 trillion figure is only about one-third the amount of residential real estate debt outstanding. Moreover, a healthy percentage of the $1.4 trillion in debt will be refinanced.

“As far as the impact of commercial real estate on the overall economy, I don’t think it’s going to be the next shoe to drop,” says Robert Bach, senior vice president and chief economist with Grubb & Ellis, a global commercial real estate services firm. “These problems are focused in regional banks and the Federal Deposit Insurance Corp. (FDIC) has a tested method of shutting those down on Friday and opening them on a Monday under the auspices of a bigger bank. These are not too big to fail banks. I don’t see [commercial real estate] as an unmitigated disaster—I see it as a repeat of what happened in the 1990s, but the economy can handle it.”

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By Alex Zylberglait, October 19, 2009 4:57 pm

As we begin the last quarter of the year, we are beginning to see an increased amount of activity in the market by both sellers and buyers. You may have heard of the term “deal fatigue” before but I think what we are seeing now is a case of “deal anxiety”. With the realization that values have declined and may continue to decline for some time, sellers are coming to grip more and more to true market values. At the same time, buyers are realizing there are some very good deals out there that will allow them to lock in good values and low cost financing (if they can get it) and to position themselves strongly for a future rebound. Having said that, the majority of the deals that are getting done are what’s been termed as “trophy or trauma” deals. That is, deals that either are very good pieces of real estate or those that are truly distressed and the value opportunity is too good to pass. The increased in transaction activity has not come with significant increase in capital liquidity though. Most deals are still involving seller financing, assumptions, or all cash transactions.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, October 16, 2009 4:42 pm

A report today says that Federal bank regulators are close to issuing guidelines aimed at encouraging lenders to work out distressed commercial real estate loans. Many financial institutions face the risk of incurring losses and bankruptcies as distressed borrowers fail to refinance or pay off their loans. Deutsche Bank AG has projected that commercial-real-estate losses for banks could end up being as high as $300 billion.

The guidelines come as regulators are bracing for many more bank failures, particularly at small banks with high exposures to commercial real estate loans. Commercial real estate loans are the second-largest loan type after home mortgages. More than half of the $3.4 trillion in outstanding commercial real estate debt is held by banks.

“Banks are vulnerable to significant further deterioration in their CRE loans,” said Federal Reserve Governor Daniel K. Tarullo. Regulators said high levels of these loans are concentrated in smaller banks, although regional and large banks also have exposure to problems in these areas.

Sheila Bair, Chairman of the Federal Deposit Insurance Corp.  told a Senate subcommittee that reworking the terms of these loans could help banks avoid larger losses. She likened it to the push regulators made last year for banks to rework troubled residential mortgages. Reworked commercial real estate loans “should be encouraged, not criticized. We are encouraging banks to restructure these loans,” she said. ”

Mr. Tarullo said the types of loans causing the most problems are construction and development loans, not investments on existing properties. One reason is that Construction and development loans are likely not bringing any income or revenue for the borrower, making it much easier to fall behind.

Do you welcome this development? What do you think should be done? Let us know.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.