The Billionaire Shorenstein Family purchased 188 Spear Street in downtown San Francisco for $170 psf, thats 56% less than the property was appraised at in 2007.
Another A building, in the heart of the financial district, 250 Montgomery, sold for $172 psf, which represents a 56% price drop from what the previous owner paid ($385)
Taiwanese real estate investor Steven Pan is in contract to buy 49 Stevenson Street, at $190 psf. Mr. Pan was quite active in the San Francisco market in the mid-1990's, at one point he amassed a 1,000,000 square foot portfolio.
Friday, January 8, 2010
Wednesday, January 6, 2010
Speaking Engagement in London, Distressed Asset Highlights
Speaker at London Conference
I am speaking at the Islamic Finance Forum conference in London January 20th. This is a great forum to discuss our Shariah compliant version of the real estate fund with numerous European and Middle Eastern investors. We will also be addressing leading financial organizations who understand Shariah law and can originate creative financing the fund.
Starting the decade with numerous distressed real estate deals:
David Lynn, head of US research and investment strategy for ING, said recovery will be "a gradual process, not a crescendo like the early 1990s." He believes that we will not see the domestic US economy improving and stronger fundamentals that lead to rising income and property values until 2012 and 2013. If this is the case then 2010 and 2011 should be ripe for acquiring distressed real estate.
Noting that the volume of distressed assets grew by 557% in the past 12 months, Lynn also charted the upward progress of commercial real estate loans maturing in the next few years. This year, $306 billion will come due; next year, it will be $320 billion. In 2011, that total to rise to $370 billion, and in 2012 $420 billion of loans will mature. Further giving rise to distress--and buying opportunities--will be more bank failures. This year, about 130 financial institutions have gone under, and while the body count will not reach the nearly 3,000 that amassed during the S&L crisis, Lynn says we’ll see failures "in the high hundreds" this time, mostly small and regional banks.
All of the above statements point to a great time to be buying commercial real estate in California. Let the games begin.
Mark Stevens
I am speaking at the Islamic Finance Forum conference in London January 20th. This is a great forum to discuss our Shariah compliant version of the real estate fund with numerous European and Middle Eastern investors. We will also be addressing leading financial organizations who understand Shariah law and can originate creative financing the fund.
Starting the decade with numerous distressed real estate deals:
David Lynn, head of US research and investment strategy for ING, said recovery will be "a gradual process, not a crescendo like the early 1990s." He believes that we will not see the domestic US economy improving and stronger fundamentals that lead to rising income and property values until 2012 and 2013. If this is the case then 2010 and 2011 should be ripe for acquiring distressed real estate.
Noting that the volume of distressed assets grew by 557% in the past 12 months, Lynn also charted the upward progress of commercial real estate loans maturing in the next few years. This year, $306 billion will come due; next year, it will be $320 billion. In 2011, that total to rise to $370 billion, and in 2012 $420 billion of loans will mature. Further giving rise to distress--and buying opportunities--will be more bank failures. This year, about 130 financial institutions have gone under, and while the body count will not reach the nearly 3,000 that amassed during the S&L crisis, Lynn says we’ll see failures "in the high hundreds" this time, mostly small and regional banks.
All of the above statements point to a great time to be buying commercial real estate in California. Let the games begin.
Mark Stevens
Monday, December 7, 2009
Green Jobs
The US Green Building Council just announced a report done by Booz Allen Hamilton that the green building industry could generate 7.9 million jobs in the next four years. The report also said the green industry could generate about $554 billion in gross domestic product between now and 2013 with about $396 billion of that coming in wages. That would be a big increase from the roughly 2 million people employed nationwide by the green building industry that currently pumps about $100 million into the GDP annually.
As many of you know, California leads the world in the green industry. We have numerous green based companies staying on the cutting edge of the green industry most of which are based in Silicon Valley. We have community colleges and universities that offer course work in the green industry. We also have labor union apprenticeship programs that teach skilled laborers how to install and maintain solar panels and other energy savings devises.
The green industry will be a major factor as the US starts to work its way out of this recession. The job growth created by the green industry will help occupy offices and industrial buildings currently vacant and greatly help real estate values in 2013-2015 when we will be selling our buildings.
As many of you know, California leads the world in the green industry. We have numerous green based companies staying on the cutting edge of the green industry most of which are based in Silicon Valley. We have community colleges and universities that offer course work in the green industry. We also have labor union apprenticeship programs that teach skilled laborers how to install and maintain solar panels and other energy savings devises.
The green industry will be a major factor as the US starts to work its way out of this recession. The job growth created by the green industry will help occupy offices and industrial buildings currently vacant and greatly help real estate values in 2013-2015 when we will be selling our buildings.
Tuesday, November 3, 2009
Candidiates for California Governor: Thoughts on the Future
I attended a breakfast meeting the other day in San Francisco that included most of the major candidates for Governor of California, as well as Governor Schwarzenegger.
Here are my notes:
Gov. Schwarzenegger just meet with President Obama at the White House and the main focus of their meeting was the implementation of the $50 billion USD that the state is receiving from the economic stimulus plan. The Governor reported that 110,000 jobs were created as a direct result of this. The state has only received a portion of the allocated money from Washington. Future funding will go well to create jobs predominately by spending directed towards infrastructure projects.
The major theme shared by all candidates: JOBS!!! Creating jobs and retaining California's "State of Imagination" culture intact. That's the key.
Obviously, the critical component of our strategy, is the ability to "bounce back" as quickly as possible. Monies committed from Washington, along with every single candidate focusing on the state economy should assist the recovery with a much greater impact than most other states.
Seth Chandler
Here are my notes:
Gov. Schwarzenegger just meet with President Obama at the White House and the main focus of their meeting was the implementation of the $50 billion USD that the state is receiving from the economic stimulus plan. The Governor reported that 110,000 jobs were created as a direct result of this. The state has only received a portion of the allocated money from Washington. Future funding will go well to create jobs predominately by spending directed towards infrastructure projects.
The major theme shared by all candidates: JOBS!!! Creating jobs and retaining California's "State of Imagination" culture intact. That's the key.
Obviously, the critical component of our strategy, is the ability to "bounce back" as quickly as possible. Monies committed from Washington, along with every single candidate focusing on the state economy should assist the recovery with a much greater impact than most other states.
Seth Chandler
Monday, November 2, 2009
Great cover story in Time Magazine, "Why California Is Still America's Future"
As the majority of our target markets are in the state of California, I found this cover article (dated November 2, 2009) really hits the nail on head as to why California has a history of being the leader of all American States, on many different levels.
Here are selected quotes:
In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically. It's the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech. In 2008, California's wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live.
When it comes to energy, California is not just ahead of the game; it's playing a different game. Its carbon emissions per capita are less than half the U.S. average. And from 2006 to '08, it attracted $3 of every $5 invested in U.S. clean tech — five times as much as the No. 2 state. It's by far the national leader in green jobs, green patents, supply from renewables and savings from efficiency
Today, it's still the home of the new new thing. It is electric-vehicle start-ups like Tesla, Fisker and Better Place taking on the Big Three, or the local-organic foodies behind California cuisine going after Big Ag. It's Kaiser Permanente, the HMO whose model of salaried doctors in group practice may be the future of health care, or the University of California at Irvine's law school, which opened this semester with free tuition and was instantly more selective than Harvard or Yale. It's SpaceX, the private rocket-launching company, or Kogi, the Korean taco truck that announces its location over Twitter to flash mobs of Angelenos. "The beauty of California is the idea that you can reinvent yourself and do something totally creative," says Kogi's Roy Choi, a former chef at the Beverly Hilton. "It's still the Wild West that way."
Read the full article on TIME.com
Here are selected quotes:
In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically. It's the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech. In 2008, California's wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live.
When it comes to energy, California is not just ahead of the game; it's playing a different game. Its carbon emissions per capita are less than half the U.S. average. And from 2006 to '08, it attracted $3 of every $5 invested in U.S. clean tech — five times as much as the No. 2 state. It's by far the national leader in green jobs, green patents, supply from renewables and savings from efficiency
Today, it's still the home of the new new thing. It is electric-vehicle start-ups like Tesla, Fisker and Better Place taking on the Big Three, or the local-organic foodies behind California cuisine going after Big Ag. It's Kaiser Permanente, the HMO whose model of salaried doctors in group practice may be the future of health care, or the University of California at Irvine's law school, which opened this semester with free tuition and was instantly more selective than Harvard or Yale. It's SpaceX, the private rocket-launching company, or Kogi, the Korean taco truck that announces its location over Twitter to flash mobs of Angelenos. "The beauty of California is the idea that you can reinvent yourself and do something totally creative," says Kogi's Roy Choi, a former chef at the Beverly Hilton. "It's still the Wild West that way."
Read the full article on TIME.com
FDIC Pressure On Commercial Banks = Opportunity
The next shoe to fall in the United States are the commercial banks that will be brought down due to their bad commercial real estate loans. The big news these days is that over 100 banks have failed this year in the United States, primarily due to bad real estate loans. The FDIC (Federal Deposit Insurance Company) claims to have another 400 banks on their “problem list” and some experts say that many of those banks will fail over the next couple of years.
What does this mean for Stella Capital Real Estate Opportunity Fund? We have focused our buying opportunities around distressed situations and the commercial banks with numerous real estate loans is a great source of properties in our targets markets. We have long standing relationships with many commercial banks that are now showing us properties that they have foreclosed upon. We also work with investment sales brokers who have formed a niche business working with banks that are marketing their properties. Banks has told us how desirable we are to work with primarily for the reasons:
1) We are an all cash buyer.
2) The Fund is NOT a large institution that has rounds of committee meetings to purchase a property.....we are decision makers that after thorough due diligence, are capable of acting quickly.
Either way we are just starting to see many real estate deals that are heavily discounted and this trend will pick up as bank regulators continue to press the banks to clean up their balance sheets, or, be taken over by the FDIC. Essentially the FDIC is saying......Dump your real estate now or we are going to shut you down.
What does this mean for Stella Capital Real Estate Opportunity Fund? We have focused our buying opportunities around distressed situations and the commercial banks with numerous real estate loans is a great source of properties in our targets markets. We have long standing relationships with many commercial banks that are now showing us properties that they have foreclosed upon. We also work with investment sales brokers who have formed a niche business working with banks that are marketing their properties. Banks has told us how desirable we are to work with primarily for the reasons:
1) We are an all cash buyer.
2) The Fund is NOT a large institution that has rounds of committee meetings to purchase a property.....we are decision makers that after thorough due diligence, are capable of acting quickly.
Either way we are just starting to see many real estate deals that are heavily discounted and this trend will pick up as bank regulators continue to press the banks to clean up their balance sheets, or, be taken over by the FDIC. Essentially the FDIC is saying......Dump your real estate now or we are going to shut you down.
Friday, October 2, 2009
Bloomberg Survey:Commercial Real Estate Recovery Unlikely Anytime Soon
Bloomberg recently completed a survey of 115 commercial real estate firms across the United States. The survey found that the U.S. commercial real estate markets are unlikely to recover before 2011-2012 . This is what we have been saying all along at Stella Capital and as this survey shows we will continue to see excellent buying opportunities up until the recovery starts and through the initial phase of the recovery.
The survey showed many US companies are continuing to look for ways to cut costs and reduce their work forces which means office and industrial space will still continue to contract and rents most likely will continue to fall. This trend means we will see vacancy rates increase into 2010 but that trend should reverse in the later part of 2010. This senerio will force many owners to sell their properties at distressed levels as cash flow decreases and they can no longer cover debt payments.
Along with falling rents and increased vacancy the commercial lending industry has a large pipeline of commercial loans that they have foreclosed upon or have filed a notice of default upon and therefore will typically own in 90-120 days. This pipeline of loans that will be converted to real estate owned by the banks will also present a great buying opportunity for Stella Capital. We have already started to see some of these real estate properties being marketed but there is a surplus of properties that the banks are just starting to get their arms around and will be selling through out 2010 and 2011.
All of the above events have formed the perfect storm for commercial real estate here in the US. Stella Capital is ready to take advantageof these great buying opportunities and we are very excited about 2010 and 2011.
The survey showed many US companies are continuing to look for ways to cut costs and reduce their work forces which means office and industrial space will still continue to contract and rents most likely will continue to fall. This trend means we will see vacancy rates increase into 2010 but that trend should reverse in the later part of 2010. This senerio will force many owners to sell their properties at distressed levels as cash flow decreases and they can no longer cover debt payments.
Along with falling rents and increased vacancy the commercial lending industry has a large pipeline of commercial loans that they have foreclosed upon or have filed a notice of default upon and therefore will typically own in 90-120 days. This pipeline of loans that will be converted to real estate owned by the banks will also present a great buying opportunity for Stella Capital. We have already started to see some of these real estate properties being marketed but there is a surplus of properties that the banks are just starting to get their arms around and will be selling through out 2010 and 2011.
All of the above events have formed the perfect storm for commercial real estate here in the US. Stella Capital is ready to take advantageof these great buying opportunities and we are very excited about 2010 and 2011.
Subscribe to:
Posts (Atom)
Posts
