"A sign of improving commercial real estate market conditions around the globe, the industry's two largest global property services companies reported solid results for the last quarter of 2010.
One group reported a more modest 10% boost in revenue and FirstService Corp., saw total revenue jump about 18%, strengthened by a 30% boost in CRE transaction revenue.
Revenues reported by CBRE and JLL from sales, leasing and other business operations blew past Wall Street projections for the fourth quarter and for the full year. Stepped-up transaction activity across the CRE spectrum lent some octane to the all the publicly traded companies in the CRE services space.
Santa Ana, CA-based Grubb & Ellis reported a 10% rise in revenue in the fourth quarter to $163.5 million while swinging to a net loss of $10.7 million. However, the company narrowed its loss for the year from $78.8 million in 2009, or $1.27 per share, to $66.8 million, or $1.21 per share, in 2010.
Improving real estate conditions led to sales revenue growth of 96% and growth in leasing revenue of 36% over the year-ago period. GBE's Transaction Services business had a very strong year and strong quarter.
Jones Lang LaSalle swung from a loss of $4 million, or 11 cents, in 2009 to a net profit of $154 million, or $3.48 per share, driven by a record $2.9 billion in revenues for the year. More than half of JLL's profit came in the fourth quarter, with net income rising 62% to $84 million, or $1.91 per share. That compares to $52 million, or $1.19 per share, in the same quarter a year ago.
CB Richard Ellis (NYSE: CBG), meanwhile, enjoyed "undoubtedly one of the best years in CBRE's 100-plus year history." The Los Angeles based firm reported a 48% jump in the fourth quarter profit to $95.1 million, or 30 cents a share, while revenue rose 27% to a higher-than-expected $1.7 billion.
Virtually all the firm's regions posted double-digit growth in almost every business line. Only development services, which declined 20% off a low base during a record-low year for new supply, failed to achieve a quarterly boost.
CBRE's investment sales jumped up 40% while revenue from leasing rose 35%, fueled by a very strong 45% hike in the Americas. The strength of Class A property sales coupled with volume increases in other building classes resulted in accelerating fourth-quarter growth, the company said. Strong capital markets activity and improved lending conditions brought increases to the firm's appraisal and valuation, outsourcing and commercial mortgage segments.
"As dire as things appeared two years ago, they now seem equally positive and exciting. We’re at that point in the cycle when all fundamentals are positive and rapidly improving and when everything seems possible," White said during the company's fourth-quarter earnings call with analysts.
"Our strong performance in 2010, and the underlying momentum in the business, increases our confidence that we are in the early days of what ought to be a protracted and healthy recovery and expansion cycle in commercial real estate," White said. "This firm ... has never been better positioned to exploit a recovering marketplace."
Meaningful growth will continue in 2011, though not likely at last year's fast pace, and investment sales and leasing should continue to show year-over-year improvements, CBRE said.
The CBRE chief executive said the company strengthened its balance sheet in the fourth quarter, which "gave us enormous amount of capacity to make acquisitions and to take advantage of this marketplace."
The market cycle has brought "once in a lifetime" opportunities, especially the ING acquisition in the investment management space, White said. Other historic opportunities will come in the more traditional multi-service platforms in the commercial real estate services, he added, noting "this downturn wreaked a lot of havoc and a lot of pain on some of the smaller firms."
JLL revenues rose 17.3% to $956 million in the recent quarter from a year earlier. Leasing, which makes up the biggest slice of JLL's revenue, jumped 24% while property and facility management revenue increased 9.2%.
Mainly on the strength in its commercial real estate services segment, Canada-based FirstService Corp. narrowed its quarterly loss in the fourth quarter to $3.7 million, or 12 cents a share, from $9.3 million, or 40 cents a share, in the same period last year.
Overall revenue rose 18.5% to $552.1 million, while CRE Services revenues, constituting nearly half of all revenue, rose about 30% to $268 million. Colliers saw increased transaction activity in the Americas and Asia Pacific regions. "
Thursday, February 17, 2011
Wednesday, February 16, 2011
Jim Cramer Talks with Liberty Properties CEO Bill Hankowsky
Jim Cramer Talks with Liberty Properties CEO Bill Hankowsky (Video 8:22 min)
http://www.cnbc.com/id/41499818
Cramer on Commercial Real Estate (Video 3:26 min)
http://www.cnbc.com/id/15840232/?video=1797928637&play=1
http://www.cnbc.com/id/41499818
Cramer on Commercial Real Estate (Video 3:26 min)
http://www.cnbc.com/id/15840232/?video=1797928637&play=1
Thursday, February 10, 2011
NCC Automated Systems Buys Industrial Property
"NCC Automated Systems, which offers complete automation and packaging solutions for the pharmaceutical and manufacturing industries, acquired the industrial building at 255 Schoolhouse Rd. in Souderton, PA for $2,127,500, or $74 per square foot. "
According to Kevin Mauger, president of NCC Automated Systems, the company has experienced a time of growth in the past few years and the purchase of this 28,844-square-foot industrial building will allow the company to offer its customers "complete systems, fully integrated by a single supplier."
According to Kevin Mauger, president of NCC Automated Systems, the company has experienced a time of growth in the past few years and the purchase of this 28,844-square-foot industrial building will allow the company to offer its customers "complete systems, fully integrated by a single supplier."
Commerce Corner Changes Hands for $9.1M
"A joint venture of Dermody Properties, Inc. and Great Point Investors LLC purchased Commerce Corner in the LogistiCenter at Logan, located at 1109 Commerce Blvd. in Logan Township, NJ from Lexington Realty Trust for $9,096,850, or $35 per square foot.
The 259,910-square-foot facility was built in 1998 and sits on over 14 acres in the Gloucester County Industrial submarket of Philadelphia. The property was vacant at the time of sale. "
The 259,910-square-foot facility was built in 1998 and sits on over 14 acres in the Gloucester County Industrial submarket of Philadelphia. The property was vacant at the time of sale. "
Tuesday, February 8, 2011
GlaxoSmithKline moving Phila. operations to Navy Yard
"GlaxoSmithKline is relocating its Center City operations to the Philadelphia Navy Yard. It will move about 1,300 downtown employees to the South Philadelphia site.
Liberty Property Trust will construct a 205,000-square-foot “state-of-the art workplace of the future” for the pharmaceutical company, said John Gattuso, senior vice president and regional director at Liberty, a Malvern, Pa., real estate investment Trust. Robert A.M. Stern Architects will design the $81 million, four-story building, which will be built to meet a LEED platinum designation.
“The reason it is at the Navy Yard is the company wanted a very specific environment that had a main street and that’s not a configuration that could be adapted in a current building or built in Center City,” Gattuso said. “That is the driver of the selection of the Navy Yard.”
GlaxoSmithKline (NYSE:GSK), in a statement, said the building will have an open plan design, which is consistent with other GSK facilities designed to bring employees together to foster better communication and idea sharing. The building will have a fitness center, restaurant, retail services, and free parking for employees and visitors.
Glaxo signed a 15.5-year lease with Liberty and anticipates moving to the Navy Yard between the fourth quarter of 2012 and the first quarter of 2013
The arrangement will keep the pharmaceutical company in Philadelphia. Glaxo has been evaluating its Center City presence for the last four years and has considered a range of options, including a move to the suburbs as well as proposed office buildings in the Central Business District, according to various real estate sources.
The pharmaceutical company has major operations in Center City, where it used to maintain its North American headquarters. It has a lease that expires in 2013 for about 650,000 square feet at One Franklin Plaza at 16th and Race streets from HRPT Properties Trust. It leases another 220,000 square feet at nearby Three Franklin Plaza from Liberty Property, and that lease runs out in 2014. That building overlooks the Vine Street Expressway.
Site work on the project will start this month and Liberty anticipates breaking ground this summer. "
Liberty Property Trust will construct a 205,000-square-foot “state-of-the art workplace of the future” for the pharmaceutical company, said John Gattuso, senior vice president and regional director at Liberty, a Malvern, Pa., real estate investment Trust. Robert A.M. Stern Architects will design the $81 million, four-story building, which will be built to meet a LEED platinum designation.
“The reason it is at the Navy Yard is the company wanted a very specific environment that had a main street and that’s not a configuration that could be adapted in a current building or built in Center City,” Gattuso said. “That is the driver of the selection of the Navy Yard.”
GlaxoSmithKline (NYSE:GSK), in a statement, said the building will have an open plan design, which is consistent with other GSK facilities designed to bring employees together to foster better communication and idea sharing. The building will have a fitness center, restaurant, retail services, and free parking for employees and visitors.
Glaxo signed a 15.5-year lease with Liberty and anticipates moving to the Navy Yard between the fourth quarter of 2012 and the first quarter of 2013
The arrangement will keep the pharmaceutical company in Philadelphia. Glaxo has been evaluating its Center City presence for the last four years and has considered a range of options, including a move to the suburbs as well as proposed office buildings in the Central Business District, according to various real estate sources.
The pharmaceutical company has major operations in Center City, where it used to maintain its North American headquarters. It has a lease that expires in 2013 for about 650,000 square feet at One Franklin Plaza at 16th and Race streets from HRPT Properties Trust. It leases another 220,000 square feet at nearby Three Franklin Plaza from Liberty Property, and that lease runs out in 2014. That building overlooks the Vine Street Expressway.
Site work on the project will start this month and Liberty anticipates breaking ground this summer. "
Saturday, February 5, 2011
Loans totaling $96M on offices buildings are in default
"Falls Corporate Center in Conshohocken, once a crown jewel in the office submarket here, and two other suburban office properties owned by Thomas Properties Group, are in a state of limbo while the landlord and its lender try to work out a deal on $96.5 million in loans in default.
The loans are secured by the three office properties. The landlord is in discussions with the lender to renegotiate the debt or “facilitate a sale or other liquidation of these properties” to resolve the situation, according to a Securities and Exchange Commission filing by the company. A local company executive declined comment, referring to the SEC filings.
This is a fate met by other commercial property owners throughout the region, many of which have loans on properties whose values have fallen to the point where they are less than the amount borrowed. In fact, the “list of properties in special servicing and receivership continues to grow.”
The Thomas Properties loans came due last March and went unpaid, automatically forcing them into default. At the time, the company decided it would not make any payments on the loans to help repay them or refinance them, according to SEC documents. Thomas is accruing interest on the loans and a special servicer, LNR Partners Inc., is overseeing the situation. The two other properties involved are Walnut Hill Plaza and Oak Hill Plaza in King of Prussia.
Real estate observers and those familiar with this situation believe issues surrounding the loans will soon be settled and could have a range of outcomes. Some sort of “liquidation,” as referred to by Thomas in its filings, such as a foreclosure, is an option.
The biggest issue thwarting a solution is figuring out the value of the properties, according to one person involved in the local real estate scene. Appraisals of the three buildings have dramatically reduced the properties’ values from their original sale amounts.
“It’s been hard to peg values because values declined rapidly after the 2008 financial crisis and have been recovering since late 2009 and throughout 2010; values in some markets are snapping back and other markets, creeping back,” the observer said.
Like many commercial real estate investors, Thomas bought Four Falls, Walnut Hill and Oak Hill in 2005 as the market was getting over heated as part of a $170 million acquisition to buy a suburban portfolio owned by Equity Office Properties Trust. The transaction consisted of nearly 1 million square feet in 11 buildings. It was a joint venture with California State Teachers Retirement System.
It marked Thomas’ first foray into the Philadelphia suburban market after building up a strong presence in Center City with One and Two Commerce Square and 1835 Market St.
The gem in that portfolio was Four Falls, which was constructed in 1987. It set the stage for West Conshohocken and Conshohocken to become among the most desired local office addresses.
Four Falls consists of two six-story buildings totaling 254,000 square feet. It’s about 85 percent occupied. The Conshohocken office submarket has held its own during the recession. Its overall vacancy rate stands at 11.1 percent at year end. Average rents are at $29 a square foot.
King of Prussia, where the two other buildings are located, hasn’t fared as well. It has an overall vacancy rate of 18.2 percent, or more than 1.5 million square feet of empty space.
Walnut Hill is a four-story office complex of 150,572 square feet at 150 S. Warner Road in King of Prussia, and is half vacant. Oak Hill is four-story, 164,360-square-foot office property 200 N. Warner and is nearly fully occupied."
The loans are secured by the three office properties. The landlord is in discussions with the lender to renegotiate the debt or “facilitate a sale or other liquidation of these properties” to resolve the situation, according to a Securities and Exchange Commission filing by the company. A local company executive declined comment, referring to the SEC filings.
This is a fate met by other commercial property owners throughout the region, many of which have loans on properties whose values have fallen to the point where they are less than the amount borrowed. In fact, the “list of properties in special servicing and receivership continues to grow.”
The Thomas Properties loans came due last March and went unpaid, automatically forcing them into default. At the time, the company decided it would not make any payments on the loans to help repay them or refinance them, according to SEC documents. Thomas is accruing interest on the loans and a special servicer, LNR Partners Inc., is overseeing the situation. The two other properties involved are Walnut Hill Plaza and Oak Hill Plaza in King of Prussia.
Real estate observers and those familiar with this situation believe issues surrounding the loans will soon be settled and could have a range of outcomes. Some sort of “liquidation,” as referred to by Thomas in its filings, such as a foreclosure, is an option.
The biggest issue thwarting a solution is figuring out the value of the properties, according to one person involved in the local real estate scene. Appraisals of the three buildings have dramatically reduced the properties’ values from their original sale amounts.
“It’s been hard to peg values because values declined rapidly after the 2008 financial crisis and have been recovering since late 2009 and throughout 2010; values in some markets are snapping back and other markets, creeping back,” the observer said.
Like many commercial real estate investors, Thomas bought Four Falls, Walnut Hill and Oak Hill in 2005 as the market was getting over heated as part of a $170 million acquisition to buy a suburban portfolio owned by Equity Office Properties Trust. The transaction consisted of nearly 1 million square feet in 11 buildings. It was a joint venture with California State Teachers Retirement System.
It marked Thomas’ first foray into the Philadelphia suburban market after building up a strong presence in Center City with One and Two Commerce Square and 1835 Market St.
The gem in that portfolio was Four Falls, which was constructed in 1987. It set the stage for West Conshohocken and Conshohocken to become among the most desired local office addresses.
Four Falls consists of two six-story buildings totaling 254,000 square feet. It’s about 85 percent occupied. The Conshohocken office submarket has held its own during the recession. Its overall vacancy rate stands at 11.1 percent at year end. Average rents are at $29 a square foot.
King of Prussia, where the two other buildings are located, hasn’t fared as well. It has an overall vacancy rate of 18.2 percent, or more than 1.5 million square feet of empty space.
Walnut Hill is a four-story office complex of 150,572 square feet at 150 S. Warner Road in King of Prussia, and is half vacant. Oak Hill is four-story, 164,360-square-foot office property 200 N. Warner and is nearly fully occupied."
Developer buys 2040 Market St.
"PMC Property Group has put under agreement the former AAA Mid-Atlantic headquarters at 2040 Market St. in Center City and is drawing up plans for a residential complex at the property.
PMC is buying the five-story, 150,000-square-foot building from NorthStar Realty Finance Corp., which foreclosed on it last year, for an undisclosed sum, although it is expected to close at a little above $8 million, according to market sources.
PMC, which is headed up by Ron Caplan, a developer who has established a sizable presence in the Center City apartment market, will finalize the deal next month.
Though plans for the property are still being worked out, PMC plans an adaptive reuse project similar to one it did last year at 1830 Lombard St., said Jonathan Stavin, executive vice president at PMC. On Lombard, the company bought an 11-story office building that had once been used by Graduate Hospital and converted it into 185 apartments and constructed a 12-story addition with 24 rental units.
Stephen Varenhorst Architects is designing the AAA project, Stavin said.
“We haven’t decided exactly what we will do,” he said, noting it will also include a retail component.
Much can be done to the building, which has room to have an addition constructed atop it.
“We have found demand for new product in Center City is strong,” Stavin said, noting that 1830 Lombard leased up all of its apartments in just a year. “With this site, there is great proximity to downtown offices, it’s several blocks off Rittenhouse Square, and the access to University City and West Philadelphia is fantastic.”
Though it has taken some time, far West Market Street has gradually made the transition from an all-office corridor to one with a mix of residential projects. It began with the conversion in 2002 of the old After Six tuxedo factory by Thomas Properties Group and PMC into 168 apartments.
Later, Thomas Properties constructed with P&A Associates the Murano, a $165 million, 42-story condominium tower, and Orens Brothers converted the former Daily News building at 2200 Arch St. into condos. Other residential projects tried to follow, such as Opus East’s proposed development at 1919 Market that was killed because of a softening residential market. Brandywine Realty just bought the site and plans a mixed-use tower there.
There is room for additional rental housing in Center City. The vacancy rate in Center City dropped to 1.9 percent, and rents have risen, according to Delta Associates, a research firm. Monthly rents zoomed upward by 7.4 percent to an average of $1,918, or $1.88 a square foot.
Demand for rental housing continues, according to a Center City District report released in November. There are 39,000 apartments and other rental units downtown.
“While demand has softened slightly since 2007 levels, students, medical technicians, nurses, hotel and restaurant employees, as well as young professionals and new-to-the region employees continue to fill nearly all available units,” the report said.
The biggest challenge to the rental market is a “shadow market” of condo owners and investors who are trying to rent out their units, the report said.
The project at the AAA building will be a welcomed change for the neighborhood. It has been vacant since 2005 when the auto club completed moving its headquarters to Delaware.
Built in 1967 for AAA Mid-Atlantic, the property in its unoccupied state has taken on an untended appearance on the edge of the city’s Central Business District.
NorthStar Realty of New York foreclosed on its borrower, World Acquisition Partners Corp., last April and took control and title. World Acquisition, a commercial real estate investor and developer that had been based in Huntingdon Valley and amassed a portfolio of industrial properties in Northeast Philadelphia, bought the building in 2006. At the time, World Acquisition had become an active real estate player amid the real estate boom.
In 2007, the firm unveiled a set of grand plans for 2040 Market. One proposal entailed constructing a 53-story residential tower on top of the building and another scenario had a 35-story office addition atop it.
At one point, World Acquisition considered tearing the building down and starting anew but none of its plans ever came about.
The real estate company did obtain approval to expand the building and current zoning could permit as much as 750,000 square feet to be constructed on the site though it’s unlikely PMC will build something on that scale. Approvals are also in place for an underground garage to be built out and PMC does intend to construct the parking component."
PMC is buying the five-story, 150,000-square-foot building from NorthStar Realty Finance Corp., which foreclosed on it last year, for an undisclosed sum, although it is expected to close at a little above $8 million, according to market sources.
PMC, which is headed up by Ron Caplan, a developer who has established a sizable presence in the Center City apartment market, will finalize the deal next month.
Though plans for the property are still being worked out, PMC plans an adaptive reuse project similar to one it did last year at 1830 Lombard St., said Jonathan Stavin, executive vice president at PMC. On Lombard, the company bought an 11-story office building that had once been used by Graduate Hospital and converted it into 185 apartments and constructed a 12-story addition with 24 rental units.
Stephen Varenhorst Architects is designing the AAA project, Stavin said.
“We haven’t decided exactly what we will do,” he said, noting it will also include a retail component.
Much can be done to the building, which has room to have an addition constructed atop it.
“We have found demand for new product in Center City is strong,” Stavin said, noting that 1830 Lombard leased up all of its apartments in just a year. “With this site, there is great proximity to downtown offices, it’s several blocks off Rittenhouse Square, and the access to University City and West Philadelphia is fantastic.”
Though it has taken some time, far West Market Street has gradually made the transition from an all-office corridor to one with a mix of residential projects. It began with the conversion in 2002 of the old After Six tuxedo factory by Thomas Properties Group and PMC into 168 apartments.
Later, Thomas Properties constructed with P&A Associates the Murano, a $165 million, 42-story condominium tower, and Orens Brothers converted the former Daily News building at 2200 Arch St. into condos. Other residential projects tried to follow, such as Opus East’s proposed development at 1919 Market that was killed because of a softening residential market. Brandywine Realty just bought the site and plans a mixed-use tower there.
There is room for additional rental housing in Center City. The vacancy rate in Center City dropped to 1.9 percent, and rents have risen, according to Delta Associates, a research firm. Monthly rents zoomed upward by 7.4 percent to an average of $1,918, or $1.88 a square foot.
Demand for rental housing continues, according to a Center City District report released in November. There are 39,000 apartments and other rental units downtown.
“While demand has softened slightly since 2007 levels, students, medical technicians, nurses, hotel and restaurant employees, as well as young professionals and new-to-the region employees continue to fill nearly all available units,” the report said.
The biggest challenge to the rental market is a “shadow market” of condo owners and investors who are trying to rent out their units, the report said.
The project at the AAA building will be a welcomed change for the neighborhood. It has been vacant since 2005 when the auto club completed moving its headquarters to Delaware.
Built in 1967 for AAA Mid-Atlantic, the property in its unoccupied state has taken on an untended appearance on the edge of the city’s Central Business District.
NorthStar Realty of New York foreclosed on its borrower, World Acquisition Partners Corp., last April and took control and title. World Acquisition, a commercial real estate investor and developer that had been based in Huntingdon Valley and amassed a portfolio of industrial properties in Northeast Philadelphia, bought the building in 2006. At the time, World Acquisition had become an active real estate player amid the real estate boom.
In 2007, the firm unveiled a set of grand plans for 2040 Market. One proposal entailed constructing a 53-story residential tower on top of the building and another scenario had a 35-story office addition atop it.
At one point, World Acquisition considered tearing the building down and starting anew but none of its plans ever came about.
The real estate company did obtain approval to expand the building and current zoning could permit as much as 750,000 square feet to be constructed on the site though it’s unlikely PMC will build something on that scale. Approvals are also in place for an underground garage to be built out and PMC does intend to construct the parking component."
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