WORLD PROPERTY CHANNEL ®

• Avison Young's Earl Webb Forecasts Sluggish U.S. Investment Scene This Year
• RECI's John Oharenko Sees Commercial Property Values Continuing to Slide in 2010
• ING Provides $65M Refinancing to 1.3-Million SF Downtown Dallas Office Tower
• Medical Office Campus near Tacoma, WA Gets Highly Leveraged $12.75M Loan
• Raleigh, NC Apartments Locks in $11.2M Fannie Mae Loan at 5.75%

Earl Webb

(CHICAGO, IL) -- Earl Webb, president, U.S. operations, Avison Young, doesn't foresee a vibrant investment scene this year.

"The U.S. (investment) market continues to be in a falling-value state where asset values have dropped from their peaks in 2007 by between 35% and 50%, depending on the type of property and the market," he notes in his company's annual outlook.

"It appears 2009 may very well mark the trough for real estate investment volume in the U.S."

He says sales transaction volume "has continued to decline, down approximately 70% from 2008 which, in itself, was down almost 80% from 2007.

"Financing continues to be scarce for office, industrial, retail and hotel properties, especially when seeking loans in excess of $50 million."

However, Webb notes, "Multi-family assets continue to attract significant industry attention due to the available financing through U.S. government-sponsored enterprises" like Fannie Mae and Freddie Mac.

Rents, "while remaining well below their peaks in 2006-2007, appear to have settled out at cyclical lows in most markets and asset classes."

Still, Webb has some "good news" as well. "Construction of new supply was relatively contained in the prior up-cycle and there will not be a significant overhang of new deliveries in the next several years as (it is hoped) absorption picks up."

Webb is the former CEO of Jones Lang LaSalle's Capital Market Group.

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John Oharenko

(HORSHAM, PA) -- John Oharenko, vice president, GMAC Commercial Mortgage, is another industry watcher who doesn't see big gains for the real capital markets this year.

Still, he tells CoStar Group, "some of the greatest investment opportunities lie ahead, especially for those buyers willing to sacrifice current return and rely upon overall market momentum to improve during the next three to five years."

Oharenko, who is also an advisory board member at the non-profit Real Estate Capital Institute in Chicago, says "senior debt purchases are preferred by many investors who prefer to avoid untangling equity positions often plagued by multiple capital tiers, including preferred and mezzanine funds."

Like Earl Webb of Avison Young (see above item), Oharenko says multifamily "continues to be the 'darling' of the income-property capital markets, as the (federally sponsored) agencies Fannie Mae and Freddie Mac provide ample liquidity into this sector.

"Otherwise, commercial real estate property fundings are mostly focused on refinancing and workouts."

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1700 Pacific office building

(DALLAS, TX) -- New York City-based ING Investment Management is providing a $65 million refinancing loan to Boston-based Berkeley Investments for its 49-story, 1.34 million-SF 1700 Pacific office tower in Downtown Dallas.

Brokers Whitaker Johnson and Steve Heldenfels in the Dallas office of Holliday Fenoglio Fowler LP placed the five-year, fixed-rate loan with ING for Joe Hamilton and the Hamilton family which own Berkeley Investments.

"1700 Pacific is a world-class, trophy office tower in Dallas's central business district that has earned a reputation as the market leader for small tenant leases," says Heldenfels.

The property has a 297-space underground parking garage.  Outside, the tower is attached by a sky bridge to the Elm Street Garage which has 1,439 spaces.

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(PUYALLUP, WA) -- Sunrise Medical Campus, located near Tacoma, WA, has obtained a $12.75 million, 7% fixed-rate refinancing loan at a loan-to-value ratio of 75%.

Glenn Gioseffi

Glenn Gioseffi, a director in the Seattle office of Marcus & Millichap Capital Corp., arranged the loan which is amortized over 30 years.

"According to our records, this was the highest-leveraged $10 million-plus loan in the area for a non-multifamily product," Gioseffi notes.  "Currently, most office transactions have LTVs of between 50% and 60%."

He says the transaction was also out of the ordinary because "most banks in this market have been reluctant to provide financing for office buildings."

He adds, "The (2006 construction) age of the property and the tenant mix helped push this one over the top."

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(RALEIGH, NC) -- The New York City office of Arbor Commercial Funding locked in a 5.75% interest rate on an $11.2 million Fannie Mae DUS loan for Blackwolf Run, a 168-unit apartment complex in Raleigh, NC.

Alexander Kaushansky

"Due to the borrower's prepayment penalty on the original loan, the borrower requested an early rate lock," says Alexander Kaushansky, director in Arbor's full-service New York office.

"Our capital markets team was able to lock the loan 60 days in advance, allowing the borrower to meet his timeline and also take advantage of the low interest rate environment," says Kaushansky.

The 10-year loan amortizes on a 30-year schedule.

 

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