Saturday, March 13, 2010
Monday, March 8, 2010
A Plan to Save Commerical Real Estate
A Plan to Save Commerical Real Estate: "Economists have long been predicting commercial real estate could be the next day of reckoning for the financial markets, with a wave of defaults looming as billions of dollars in troubled loans come due in the coming months.
But a little-noticed bill introduced in January could help bring a new source of desperately-needed liquidity to the sector: foreign investment.
Introduced by Joseph Crowley, a six-term Democratic congressman representing parts of New York City's Queens and Bronx boroughs, the Real Estate Revitalization Act of 2010 would eliminate certain taxes that were part of the Foreign Investment Real Estate Property Tax of 1980, or FIRPTA -- which requires foreign investors to pay as much as a 55% tax on capital gains from the sale of U.S. real estate or shares in real estate investment trusts and real estate operating companies.
Repealing the tax, Crowley and the bill's supporters say, would get rid of a major impediment to foreign investment in the sector -- and could open the floodgates to new liquidity at a time when CRE loan defaults pose a serious risk to the nation's fragile economic recovery.
Currently, foreign investors make up only about 10% of the acquisitions of U.S. commercial real estate, says Dan Fasulo, managing director of Real Capital Analytics. In the UK, it represents over half of overall capital flows. 'Could [removing the tax] double the amount of investment activity in the U.S.?' he says. 'Sure.'"
But a little-noticed bill introduced in January could help bring a new source of desperately-needed liquidity to the sector: foreign investment.
Introduced by Joseph Crowley, a six-term Democratic congressman representing parts of New York City's Queens and Bronx boroughs, the Real Estate Revitalization Act of 2010 would eliminate certain taxes that were part of the Foreign Investment Real Estate Property Tax of 1980, or FIRPTA -- which requires foreign investors to pay as much as a 55% tax on capital gains from the sale of U.S. real estate or shares in real estate investment trusts and real estate operating companies.
Repealing the tax, Crowley and the bill's supporters say, would get rid of a major impediment to foreign investment in the sector -- and could open the floodgates to new liquidity at a time when CRE loan defaults pose a serious risk to the nation's fragile economic recovery.
Currently, foreign investors make up only about 10% of the acquisitions of U.S. commercial real estate, says Dan Fasulo, managing director of Real Capital Analytics. In the UK, it represents over half of overall capital flows. 'Could [removing the tax] double the amount of investment activity in the U.S.?' he says. 'Sure.'"
Wednesday, December 30, 2009
Sunday, November 29, 2009
Impact of Dubai World on US Commercial RE
In the United States, Dubai World's portfolio includes several well-known properties through its Nakheel subsidiary. The fallout could have a larger impact on the entire real estate market.
Perhaps best known as the developer of Dubai's palm-shaped islands, Nakheel, also carries the Mandarin Oriental and W hotels in New York in its portfolio, and has a 50 percent stake in the Fontainebleau Miami Beach resort.
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Monday, August 3, 2009
Sunday, July 5, 2009
Friday, August 22, 2008
Deal Watch:
Banco Itaú has renewed their lease at Wachovia Financial Center in Downtown Miami. Wachovia Financial Center is a true Class A office building of approximately 1M square feet and is located at 200 South Biscayne Blvd.
Earlier this year, Banco Itau acquired ABN Amro as part of the acquisition group led by Royal Bank of Scottland. ABN Amro's existing lease was for 35,000 sf and was to run through 2012. As part of the transaction, Banco Itau also added approximatelY 3,000 sf.
Representatives of Wachovia Financial Center herald the renewal as a show of support for the 1984 built office building, even with three new Class A office buildings being built in the Miami CBD. However, the real key to the key to the deal may have been the building's ability to provide a new tenant improvement allowance now as part of the early renewal. Rather than simply wait until the end of its existing lease term, Banco Itau reportedly was eager to change its image from the ABN Amro standards to its own corporate image.
That decision may have been an expensive one. According to GlobeSt.com, the Banco Itau lease was valued at approximately $25M for the 10 year deal. That number seems very high. But if it is correct, that works out to an average of $65.50 per square foot.
When compared to recent deals done at the new Class A buildings with sub $40 psf starting rates and three percent annual escalations, the decision may have added a premium of $15 per square foot or more to Banco Itau's rent. That's about $570,000 a year or about $5.7M total.
But that is what happens when companies represent themselves in lease transactions. The landlord has professionals with many years of experience and great market knowledge. Even the most sophisticated companies are at a disadvantage when they do not have the same.
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Earlier this year, Banco Itau acquired ABN Amro as part of the acquisition group led by Royal Bank of Scottland. ABN Amro's existing lease was for 35,000 sf and was to run through 2012. As part of the transaction, Banco Itau also added approximatelY 3,000 sf.
Representatives of Wachovia Financial Center herald the renewal as a show of support for the 1984 built office building, even with three new Class A office buildings being built in the Miami CBD. However, the real key to the key to the deal may have been the building's ability to provide a new tenant improvement allowance now as part of the early renewal. Rather than simply wait until the end of its existing lease term, Banco Itau reportedly was eager to change its image from the ABN Amro standards to its own corporate image.
That decision may have been an expensive one. According to GlobeSt.com, the Banco Itau lease was valued at approximately $25M for the 10 year deal. That number seems very high. But if it is correct, that works out to an average of $65.50 per square foot.
When compared to recent deals done at the new Class A buildings with sub $40 psf starting rates and three percent annual escalations, the decision may have added a premium of $15 per square foot or more to Banco Itau's rent. That's about $570,000 a year or about $5.7M total.
But that is what happens when companies represent themselves in lease transactions. The landlord has professionals with many years of experience and great market knowledge. Even the most sophisticated companies are at a disadvantage when they do not have the same.
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