Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Below are links to five stories that caught our eyes in recent days.
• Fall of REITs Puts Their Rhythms in Doubt by Robbie Whelan of The Wall Street Journal.
“The downturn in REIT stocks began when Fed Chairman Ben Bernanke raised the possibility of tapering the central bank's $85 billion-a-month bond-purchase program. The purpose of the bond-buying program was to keep interest rates low and help buoy the economy. But once the tapering talk began, interest rates shot up and REIT stocks started to fall.
The plunge lasted all summer, even as the rest of the stock market climbed steadily on news of the slow but steady economic recovery. By the end of the year, the S&P 500 index had posted an annual total return of 32.4 percent, while REITs had returned a puny 2.7 percent.”
• U.S. Property Markets Post Strongest Sales Volume Since 2007 by Randyl Drummer of CoStar.
“According to CoStar COMPs data based on property transactions of all sizes that closed by Dec. 31 and were recorded as of Jan. 15, sales of office, industrial, retail, multifamily, hospitality and land totaled $366 billion in 2013 – 17 percent higher than the $312.4 billion in property that changed hands in 2012. CoStar continues to track down and tabulate additional 2013 property transaction activity, which is expected to boost total sales for 2013 to nearly $370 billion when all deals are counted.
In any case, the preliminary figures clearly reflect the strongest year for CRE investment since 2007, when $489.6 billion in total transactions were recorded.”
• Foreign Investors Buying Up U.S. Commercial Real Estate by Brian Booker of ValueWalk.
“Traditional players, such as Singapore and Abu Dhabi, are among those leading the charge to invest in U.S. real estate, but they aren’t the only ones. The Norwegian government is also using its extensive wealth fund to partner on U.S. real estate projects, such as the 7 Times Square office towers. Canada remains the single largest investor, with Canadian entities investing some $14 billion dollars last year.
China is also starting to ramp up its investments. After a decade of largely sitting on the sidelines, Chinese investments jumped to $4.3 billion dollars, more than the previous ten years combined. The Chinese government is believed be sitting on wealth north of a trillion dollars in its various sovereign wealth funds. Now, at least some of that money might find itself parked in American real estate investments.”
• Report: Troubles Ahead for Commercial Real Estate Loan Refinancing by Damian Ghigliotty of Commercial Observer.
“With an estimated $1.4 trillion in commercial mortgages due to mature between 2014 and 2017, lenders and investors may be in for a flood of refinancing that could present new challenges for the market, according to a December 2013 year-end Trepp report.
Northeast states, including New York, New Jersey and Connecticut, contain the greatest volume of loans due to mature between 2014 and 2017 at a total near $100 billion. The Northeast region represents 30 percent of all maturing loans, followed by the Pacific and Southeast regions, each with close to 20 percent. The Midwest, Southwest and Mountain regions each represent less than 15 percent of maturing loans, according to the Trepp report.”
• Leasing Season Preview: 2014 is a Battlefield by Lindsay Machak of Multifamily Executive Magazine.
“Terry Danner knows this leasing season is going to be a fight. But Danner, CEO of Riverstone Residential Group, is prepared to win.
Danner hopes his properties will stand out from the competition in this upcoming leasing season, and to help that effort, the company will be armed with some very recent data. Riverstone surveys many of its site-level employees to get their opinions on trends and challenges in the industry, which helps to shape the Dallas-based company's strategy.
One key finding: About 55 percent of the 569 site-level employees responding to the Riverstone survey say prospective renters are visiting between three and four properties before actually signing a lease.”