Commercial Property News - October 2008 - (Page 6)

BUZZWORTHY NEWS TREND REITs Approach Downturn from Strong Position As much of the commercial real estate industry reels from the ripple effects of financial-sector troubles and the credit crunch, REITs are suffering much less than other real estate firms. In fact, they are still making deals—even very large ones. REITs are insulated from the credit crunch and market struggles for several reasons. First, they are typically well-capitalized, lowleverage buyers that require less outside financing than smaller investors.They are also much more transparent and have higher levels of liquidity than other firms, and both characteristics make for higher lender confidence when REITs are looking for financing. Furthermore, in cases in which credit is still not readily available, a REIT can simply issue more stock to raise equity funding. Given these advantages and their relatively healthy balance sheets, many REITs view the rest of the industry’s troubles as opportunity, taking advantage of limited competition to acquire assets at attractive prices. Health Care REIT Inc. has been one of the most active players on the investment scene lately. In late August, it shelled out $100 million for four wellness centers operated by Life Time Fitness Inc.That deal was dwarfed just days later by the REIT’s ON THE RADAR $643 million acquisition from an affiliate of Arcapita Inc. of a 90 percent interest in a portfolio of 29 seniors housing properties. Additionally, Winthrop Realty Trust paid $47 million for a 460,000-square-foot office-flex campus in Atlanta in late August, Washington Real Estate Investment Trust bought a Washington, D.C., apartment complex for $58 million in early September and Health Care REIT Inc. acquired Sunrise of Naperville North, near Chicago, and 28 other seniors housing properties for $643 million this summer. Canadian Real Estate Investment Trust acquired a portfolio of eight retail properties from Canadian Japanese REITs Win U.S. Value Hunters’ Favor While U.S. REITs remain in good standing, those in Japan have lost value in the past months. Private equity firms are now trying to scoop them up, along with their still-valuable holdings, on the cheap. In September, Oaktree Capital Management L.P. launched the first tender offer for a Japanese REIT, aiming to increase its stake in replus residential investment inc. from 37 to 48 percent. Another American firm, Dalton Investments L.L.C., hired a new managing director, Yoshisuke Kiguchi, to increase the firm’s focus on Japanese REITs. In Japan, which has been stung badly by the credit crunch, REITs are having a particularly hard time obtaining funding from banks, which are shying away from real estate. Share prices of REITs there have plunged as a result, even though the underlying fundamentals of their real assets are in many cases quite strong. This disconnect has prompted United States-based firms to view Japanese REITs as low-hanging fruit and a good way to pick up valuable property at a discount. —Adam Perrotta $ 66,100,000 $ 27,900,000 Direct Equity Multifamily – Houston, TX Whole Loan Acquisition Industrial – Grand Rapids, MI $ 25,000,000 $ 15,100,000 B-Note Acquisition Residential – Bellevue, WA Whole Loan Acquisition Multifamily – Reno, NV $ 19,000,000 $ 29,500,000 Whole Loan Acquisition Multifamily– Houston, TX Direct Equity Medical Office – Gilbert, AZ Spencer Garfield • sgarfield@hudsoncap.com Tel. 212-532-3553, ext. 263 • Fax 212-532-7901 250 Park Avenue South, Third Floor • New York, NY 10003 www.hudsonrealtycapital.com 6 COMMERCIAL PROPERTY NEWS • October 2008 • www.cpnonline.com http://www.hudsonrealtycapital.com http://www.hudsonrealtycapital.com http://www.cpnonline.com

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CPN - October 2008 Contents Starting Line Industrial Data/Analysis Conferences Chicago Market Profile Finance International Title Insurance Brokerage Corporate Report

Commercial Property News - October 2008

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