Posts tagged Investment/Capital Markets
Last week I had the opportunity to meet with senior members of Pennsylvania’s Department of Community and Economic Development (DCED) Center for Direct Investment to discuss potential foreign investment in Pennsylvania and specifically the Keystone Industrial Port Complex (KIPC). Although I have had these meetings routinely over the last few years it has only been twice that our meetings included Pennsylvania’s Global Investment Representatives, last week being one of those meetings.
What is Pennsylvania’s Foreign Investment Program?
The Pennsylvania DCED Office on International Business Development’s Center for Direct Investment and the Pennsylvania investment representatives in country attract national business operations to Pennsylvania proactively promoting Pennsylvania as a great location to establish a business in the US. More >
I attended the 11th Annual U.S. Real Estate Opportunity & Private Fund Investing Conference in New York this past week. Here are a few comments from some of the various panels and keynote speakers:
- The Economy – GDP grew at an annual rate of 3% last quarter. This growth is predominately based on the government’s various stimulus programs, many of which have or will soon end. The private sector is continuing to go through a deleveraging process and we need continuing monetary stimulus for support or there could be another bear market in 2012. Unemployment may not revert back to the 7% range until 2013-14, resulting in only modest growth over the next two years. The U.S will probably not experience significant inflation or deflation. With the Fed having printed some $1.3 trillion in new money, most of which was used to buy commercial mortgage bonds, that program ceased on 03/31/10. The Fed may come back to inject more liquidity, but at this time, its intent is unknown. A market bottom won’t be clear until the jobs picture stabilizes and lending in all sectors becomes more widespread. More >
The Joint Economic Committee of Congress has calculated that the average foreclosure costs for a single family home in the United States is $77,935. While there is no comparable national statistic for commercial assets the author is aware banks understand that the cost to carry an asset plus the cost of lawyers, brokers, appraisers, property managers, asset managers, security, landscapers, taxes, insurance and eventually the costs associated with selling a commercial property at the end of the day is very substantial.
The NAI Special Asset Solutions group has however reviewed in some detail the costs to take 15 commercial real estate assets, each with estimated cash market values of between $3 million and $5 million, from decision to foreclose to final disposition. The properties we reviewed were in a variety of asset classes (specifically – retail, office, multifamily and industrial assets). The general result was a range of between 25% and 30% of the estimated current (2Q – 2010) all cash value of the asset as of the date of foreclosure. A $4 million property can therefore cost between $1 million and $1.2 million to take ownership of the asset by foreclosure, operate it and sell it. More >
Most large corporations have a significant portion of their balance sheets tied up in illiquid real estate. The most common sources of funds available to these entities are through the bond market and conventional debt financing. A third and more effective source of financing is the sale-leaseback, in which the owner of a real estate asset sells the property for current market value and then instantly leases it back, usually on a long-term basis. More >
Across the globe, commercial real estate markets are showing signs of recovery and growth. In Europe, the dichotomy between Central/Eastern Europe and Western Europe shows a divergent commercial real estate market. Central and Eastern Europe started to boom right before the 2007 collapse, as investors drove pricing close to Western Europe levels. In the more than 24 months since the collapse began, some markets are beginning to show a resurgence of popularity. Poland and the Czech Republic truly standing out as countries with significant prime office and retail properties for investors and corporate users. Other real estate markets in the CEE region, like the Baltic States and Ukraine, remain mired in the recession and will take longer to recover.
London’s commercial property market was nearly decimated in the downturn, but investors are once again eyeing the city for high-end properties and advantageous pricing on prime office and retail space in the West End. Germany saw a similar rebound in late 2009 and continues to improve. Ireland is seeing foreign investor interest for the first time in years, creating a new market where properties compete between local buyers and foreign investors. A shortage of prime space in Paris has kept rental values from slipping too much in that market, and yields are on the decline. More >