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EDITION MAIN PAGE | North America Commercial News Starwood Property Trust Looks Forward to Miami-based LNR Acquisition



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LNR headquarters, South Beach, Fl
Last week, Starwood Property Trust (STWD) and Starwood Capital Group announced that they would acquire, on behalf of Starwood Distressed Opportunity Fund IX, LNR Property, LLC for $1.05 billion. At the time, company executives said that it was "a transformative and highly strategic acquisition... (that) would diversify Starwood Property Trust's revenue sources (and) add significant scale to our operating platform and dramatically expands our proprietary origination capabilities."

LNR has the largest special servicer operation in the US with 129 deals representing unpaid balances of $131 billion and with nearly $20 billion in special servicing or REOs. It holds a 25.1% market share of all outstanding CMBS loans in the US.

In addition to the five LNR businesses that Starwood Property Trust is acquiring, including the special servicing part, Starwood Capital Group will pay $197 million for LNR's US Commercial Property Group and 50% of LNR's ownership interest in Auction.com.  Starwood Property Trust will pay $856 million for the rest of LNR's assets, including 50% of Auction.com.

LNR doesn't have direct exposure to loans in the CMBS trusts, said Barry Sternlicht, Starwood Property Trust's chairman and chief executive officer, at last week's conference call announcing the LNR acquisition. "As the loans go bad, we get compensated," he said.

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U.S. Home Prices Continue Upward Trend, Says Case-Shiller Index


Improving-Housing-Market-up-arrow.jpgAccording to the latest S&P/Case-Shiller Home Price Index, U.S. home prices rose 4.5% for the 10-City Composite and 5.5% for the 20-City Composite in the 12 months ending in November 2012.

In the 12 months ended in November, prices rose in 19 of the 20 cities and fell in New York. In 19 cities prices rose faster in the 12 months to November than in the 12 months to October; Cleveland prices rose at the same pace in both time periods. Phoenix led with the fastest price rise - up 22.8% in 12 months as it posted its seventh consecutive month of double-digit annual returns.

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The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. In November 2012, the 10- and 20-City Composites posted respective annual increases of 4.5% and 5.5%, and monthly declines of 0.2% and 0.1%.

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Real Office Centers Find Niche in Southern California Start-Up Space



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ROC building in Santa Monica
Real Office Centers (ROC), a Newport Beach, California-based real estate company, has taken the concept of executive suites to a new level. The company, which offers fully-furnished office space to small business start-ups, recently opened a new building in downtown Santa Monica that will house as many as 150 companies. The 44,260-square-foot building caters mostly to media, technology and entertainment companies that want to share ideas and equipment in an environment that is conducive to the creative process.

ROC isn't alone in capitalizing on the high rents to the North in the San Francisco/Silicon Valley area, that have left many small, creative, start-up companies without an affordable place to work. "Silicon Beach," as the Venice/Santa Monica area is now known, has become an alternative to Northern California, although even there, rents have been rising, according to a report by Bloomberg News on October 16, 2012. 

ROC, which owns two other buildings in Southern California, will have a host of amenities at its newest location in Santa Monica, including conference facilities, a kitchen, coffee bar and furniture. In addition, there is a screening room that seats 50, available bandwidth speeds up to 10 gigs up and 10 gigs down, and a state-of-the-art digital media lab, which includes a green screen (used to make movies), editing bays, and other production capabilities. 

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ROC building in Santa Monica Interior
ROC, as the owner of shared-office space, is not like conventional commercial real estate companies, says Ron McElroy, CEO and founder of ROC. The company doesn't just rent out space and equipment, it sponsors seminars three to five times a week on starting one's own company, and tenants at ROC facilities are put in contact with venture capitalists interested in investing in small, innovative companies such as theirs.

"We provide access to funding," although the building is not an incubator, says McElroy. "The open-source environment (in ROC facilities) allows... academics, investors and entrepreneurs to meet in a supportive environment where they can transform their brilliant ideas into capitalized companies," says McElroy.

Leases at a ROC building run anywhere from one month to a year, says McElroy. Although he declined to quote a range of rental rates at his facilities, he said that they are higher than at traditional commercial real estate buildings, but are comparable to companies like Regus, which specializes in executive suites and/or virtual offices.

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Caribbean Hotels Enjoying Strong Revenue Rebound, Says STR


Caribbean-hotel.jpg According to a new report STR, the Caribbean hotel industry reported strong revenue-per-available-room increases year-to-date November 2012.

In year-over-year comparisons, the Caribbean rose 11.1 percent in RevPAR to US$113.24, average daily rate was up 3.8 percent to US$170.50 and occupancy increased 7.1 percent to 66.4 percent. Room revenue YTD 2012 rose 9.1 percent to US$8.4 billion.

Caribbean hotels reported the largest occupancy increase compared to Mexico (+3.1 percent), Hawaii (+5.3 percent), Florida (+3.1 percent) and Central America (-4.7 percent).

Demand in the region rose 5.1 percent through November; supply was down 1.9 percent.

According to STR's December 2012 pipeline report, there are 50 hotels with 9,495 rooms in the region's total active pipeline. In 2012, five hotels with 354 rooms opened in the region.

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Miami Enjoys Back-to-Back Years of Record Setting Sales Pace in 2012


South-Beach-luxury-condos-miami-2012.jpg (Miami, FL) - According to the Miami Association of Realtors, Miami home sales set a new record in 2012, exceeding the previous record set in 2011 and even the height of the real estate boom in 2005.

The Miami real estate market cemented a strong comeback in 2012, as prices posted double-digit appreciation and sales rose despite a housing inventory shortage.

Year-end sales of single-family homes in Miami-Dade County rose 7.9 percent to 11,463 in 2012 compared to 10,625 in 2011.  Sales of condominiums in 2012 increased 1.2 percent to 16,383 compared to 16,187 in 2011

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Life-Changing Social Media Marketing Tips Everyone Should Know

Social media sites allow for global communication that is innovative, fun, and instant. If you want to take advantage of this global marketplace, and use it to increase business, then you need an effective marketing campaign. In this article we will discuss some of the do's and don'ts of social media marketing.

In your social media marketing, give prizes to your milestone likers or followers. Give away gift certificates or interesting things related to your product to your hundredth, thousandth and millionth followers. Not only will this encourage people to subscribe to your content, the winner will rave for a lifetime about how great your particular widget is.

Learn the posting patterns on social sites. The peak traffic times for many of these sites are at 7 A.M., 5 P.M. and 10 P.M. and those are the times that you should be sure to post something new. If you post more than those three times, be sure that you are posting something unique and interesting, but limit the total number of times you post each day.

Right after you publish a new blog post, you should update your online social network page. Your social networking followers will be able to know that when your page is updated this means there is fresh new information out there for them to read. It will help retain constant traffic going through your site.

Having a blog is a great idea because it will help you connect with your users. Make sure that you fill it with fresh and unique content so users will not grow bored with it. It is also helpful to have a guest blogger write a post here and there to spice things up a bit.

Do not forget that your website is your main tool to generate sales. You need social medias to get your customers' attention and have them click on links to your website. Include links in your profile, but also in your updates, picture descriptions, and comments. Keep track of how many people clicked on each link to find out which strategies are the most efficient.

Keeping track of comments, reviews, and blogs related to your business is an important part of social media marketing. There are many tools that you can take advantage of to alert you when new content about your business is posted. Keeping track of what others, particularly past customers, are saying about you is a great way to identify areas where your business could use improvement. It is also a good way to see which parts of your business have been effective.

Respond with care to tweets that contain rude or hateful messages. Everything you tweet is a reflection of your business. It may be tempting to shoot back a sarcastic tweet but, that will harm you in the long run. Remain professional and calm when you respond. Remember, the whole world has access to what you tweet.

To make sure people keep coming back to your page, update it regularly! If you have a consistent update schedule, people will keep coming back to see what you'll post next. If you only update sporadically, people will lose interest, and they won't see your content when you do share it.

Employing social media marketing strategies can be a great way to keep in contact with your customer base, and develop relationships. Customers that friend you on Facebook, or follow you on Twitter do so willingly. They want to hear from you. You can therefore notify them of new upcoming products, sales and discounts, or even just information concerning your business and industry without the fear of being too intrusive.

When it comes to social media marketing, you're going to want to get involved in all areas that you can get your hands on. You're going to want to get yourself involved in YouTube, Facebook, Twitter, blogs, and other media outlets that can help your business reach all possible people. When you reach out to more people, your potential exposure is limitless.

To help a new business get accustomed to social media marketing, you should start out small. Starting out small will give you the opportunity to target the customers that are looking to purchase the products you sell. You don't want to promote your site in too many places at first because you need to know what works and what does not.

Create more than one profile on a same site. You could for instance have a page on a social networking site for your business as well as a profile page for a fictional character you use as a mascot. You might be able to reach out to a slightly different target audience with each page.

Consider opening an account on the growing business oriented site LinkedIn. This site is designed for business professionals to communicate with one another and their customers. It has incredible features that include ways for satisfied customers to recommend you to others, increasing your reputation and credibility. You can also join conversations relevant to your business interests.

To make a social media based giveaway more interesting, come up with prizes that people can't buy on their own. Create a unique t-shirt, or offer tickets to a sold out event. When you're the only means people have of obtaining something, they'll be sure to enter your contest and encourage their friends to do so as well.

You should it possible for users to leave comments on your blogs. Not allowing reader comments will make them feel as if they do not have a voice. Make sure that you closely moderate the comments though because you do not want any negative or inflammatory information to be available for all to see.

The world of social media has increased global marketing opportunities for many businesses. In this article, we have discussed some effective business marketing strategies, and some things to avoid too, when considering a social media campaign. Use these tips wisely and your business will soon see the benefits.

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CMBS Delinquency Rates in U.S. Unchanged in December


CMBS-Loans.jpg According to Trepp, CMBS delinquency rate in December was unchanged from the previous month at 9.71%. After months of continued volatility, the delinquency rate for US commercial real estate loans in CMBS has regained some stability. From early 2012 through the end of the summer, the CMBS delinquency rate bounced around considerably.

Large movements in the delinquency rate during the first six months of the year were caused primarily by the high number of five-year loans securitized in 2007. As these loans reached their maturity dates and were unable to refinance, the rate was pushed to record highs. With these troubled loans now behind the market and the next wave not coming due until 2014, rate movements should be modest in the near future.

Forward-looking data suggests the rate will see further improvement in the coming months. Special servicers are continuing to resolve non-performing loans and new CMBS deals are being added to the index, diluting the pool of non-performers.

The number of newly delinquent loans decreased from November to December, totaling around $3.2 billion last month. While there were fewer new delinquencies, the number of delinquent loans resolved with losses also decreased, with just over $1.1 billion resolved.

Among the major property types, office was the only segment to see a higher delinquency percentage in December. Loans backed by offices saw their rate jump 29 basis points last month. This weakness was enough to offset gains in other major property types.

"Despite the fact that the delinquency rate has leveled off once again, it's been a spectacular run for the CMBS industry over the last six months," said Manus Clancy, senior managing director of Trepp. "Not only did the world not end on December 21, but spreads have plummeted since June, it's become easier for borrowers to refinance, research groups are lifting their estimates for 2013 issuance, and delinquency rates are well below their all-time highs."

While Trepp anticipates the delinquency rate will be steady over the next few months, refinancings are expected to increase as a result of borrowing rates and CMBS spreads being at record lows. Additional refinancing activity will lead to the removal of some performing loans.


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Annualized Construction Spend Rate in U.S. at $866 Billion in November


New-Construction.jpg According to the U.S. Census Bureau of the Department of Commerce, construction spending during November 2012 was estimated at a seasonally adjusted annual rate of $866.0 billion, 0.3 percent (±1.6%) below the revised October estimate of $868.2 billion. The November figure is 7.7 percent (±2.0%) above the November 2011 estimate of $804.0 billion.

During the first 11 months of this year, construction spending amounted to $781.4 billion, 9.2 percent (±1.3%) above the $715.4 billion for the same period in 2011.

Private Construction

Spending on private construction was at a seasonally adjusted annual rate of $589.8 billion, 0.2 percent (±1.3%) below the revised October estimate of $590.8 billion. Residential construction was at a seasonally adjusted annual rate of $295.3 billion in November, 0.4 percent (±1.3%) above the revised October estimate of $294.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $294.5 billion in November, 0.7 percent (±1.3%) below the revised October estimate of $296.5 billion.

Public Construction

In November, the estimated seasonally adjusted annual rate of public construction spending was $276.2 billion, 0.4 percent (±2.3%) below the revised October estimate of $277.4 billion. Educational construction was at a seasonally adjusted annual rate of $66.8 billion, nearly the same as (±3.5%) the revised October estimate of $66.8 billion. Highway construction was at a seasonally adjusted annual rate of $77.8 billion, 0.5 percent (±5.3%) above the revised October estimate of $77.4 billion.

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Miami Pending Home Sales Explode in November, Up 52% Over Last Year


Vizcayne-Condos-Downtown-Miami.jpg (Miami, FL) - According to the Miami Association of Realtors and the local Miami Multiple Listing Service (MLS) system, the total number of listings, including single-family homes and condominiums, that pended in Miami-Dade County during the month of November increased 52 percent, from 2,226 to 3,374, year-over-year even though it was 19.1 percent less than the previous month. The number of single-family and condominium listings that pended in November increased 73.8 percent and 37.4 percent respectively compared to November 2011

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Macquarie Launches $1.2 Billion IPO as REITs Line Up in Mexico to Sell Stock


Stock-Tracking-Index.jpg Macquarie Group Ltd. (MQG), Australia's biggest investment bank. Macquarie has beaten the real estate investment herd by launching a record initial public offering in Mexico totaling 16.1 billion pesos ($1.2 billion USD).

More than $370 million has been sold in Mexico and more than $775 million has been sold internationally, according to Fox Business News.

Known in Mexico as Fibra, the REIT expects to realize net proceeds of more than $1 billion if its over-allotments are exercised.

The trust is selling shares for 25 pesos to 29 pesos each, according to a prospectus filed Nov. 26 with the Mexican stock exchange. The deal would raise a maximum of 14 billion pesos before the so-called greenshoe option for underwriters to buy additional shares. One peso equals eight cents U.S.

With Mexico's economy growing about twice as fast as the United States and Brazil, companies have been raising money in the nation's equity markets, where the benchmark IPC index closed at a record on Oct. 18. Latin America's second-biggest economy will expand 3.8 percent this year, according to the median of 27 forecasts compiled by Bloomberg.

With similar trusts lining up to sell shares in Mexico, Macquarie says it plans to use the funds to acquire industrial properties, including assets from a unit of General Electric Co., known as GE Capital Real Estate Mexico.

Bloomberg reports the trust's initial portfolio was appraised at $1.41 billion to $1.51 billion by Colliers International UK Plc, according to a separate presentation also posted on the bourse's website.

Bank of America Corp., Banco Bilbao Vizcaya Argentaria SA, JPMorgan Chase & Co. and Morgan Stanley helped manage the IPO.

Fibra Uno Administracion SA (FUNO11), Mexico's first real estate investment trust, has soared 72 percent since selling shares in its March 2011 IPO.

In another newly planned IPO, Concentradora Fibra Hotelera Mexicana SA, which would be Mexico's second such publicly-listed real-estate trust, hopes to raise up to 4.36 billion pesos.

Trustee Asesor de Activos Prisma SAPI has also filed to carry out an IPO of its real-estate investment trust known as Fibra Inn, according to a preliminary prospectus

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