Archive for 'Real estate investment trust'

Investment conditions have improved modestly across all property sectors, while property values remain flat and transaction volumes have decreased. These results were released today by CCIM Institute (, one of the largest commercial real estate networks in the world, following a national third-quarter survey of CCIM members conducted by Real Estate Research Corp. (RERC).

Slow economic growth, high unemployment and anticipated federal tax increases are factors that continue to negatively impact the commercial investment environment, based on the report. The climate remains challenging for commercial real estate investors, who struggle to find viable opportunities in a slow-growth environment. A small silver lining – commercial real estate remains a reasonable and sturdy investment choice for investors seeking realistic returns and minimal volatility, according to CCIM members.

“Returns on investment income from commercial real estate can still be achieved over time for those with patience. There are plenty of investors seeking to avoid the volatility of the stock market, and who require higher yields than those offered by bonds and cash investments,” said Kenneth P. Riggs Jr., CCIM, CRE, MAI, chief real estate economist for the CCIM Institute and chairman and president of Real Estate Research Corp. “Commercial real estate is a good alternative for such investors, particularly those who are looking for income in a slow economy.”

Investment Conditions Improve
Investment condition ratings for all property types – office, industrial, retail, apartments and hotel – improved during third-quarter 2012, with the apartment sector receiving the highest score, at 7.6 on a scale of 1 to 10, with 10 being highest. The hotel and industrial sectors’ ratings rose to 5.9 and 5.6, respectively, followed by the 5.4 rating for the retail sector. The office sector investment rating rose to 4.8.

CCIM members said that the best investment strategies in this environment include buying low, keeping cash on hand for future opportunities and investing in foreclosed or distressed properties. Members also suggest looking long term and advise patience when investing.

Return vs. Risk and Value vs. Price Ratings Rise
CCIM members raised the return-versus-risk ratings and value-versus-price ratings for all property types and for commercial real estate overall during third-quarter 2012.

Specifically, the overall return-versus-risk rating for commercial real estate increased to 5.5 during third-quarter 2012, according to CCIM members. Likewise, the return-versus-risk ratings for all of the property types increased. At 7.2, the apartment sector earned the highest rating. The industrial sector rating, at 5.7, pulled away from the hotel sector rating of 5.6. The rating for the retail sector increased to 5.3, while the office sector rating remained the lowest, at 4.9, during third quarter.

CCIM members noted that the value-versus-price for commercial real estate increased during third-quarter 2012, with the overall value-versus-price rating increasing to 5.6. Although the overall value of commercial real estate improved only slightly, the value-versus-price ratings also increased for every property sector. The industrial sector rating increased to 5.6, and retained the highest rating among the property sectors. Similarly, while the retail sector’s rating rose to 5.3, the ratings for the office and apartment sectors each increased to 5.2. At 5.1, the hotel sector rating also increased, although the rating remained the lowest compared to the other property types.

Property Values Remain Flat
While commercial real estate seems to be holding its own with respect to income performance, property values remain flat and transaction volume declined in third-quarter 2012.

On a 12-month basis, transaction volume for all property types decreased with the exception of the industrial sector volume, which increased slightly. More specifically:

  • Hotel sector volume fell 25 percent.
  • Office and retail sectors volume declined approximately 15 percent and 10 percent, respectively.
  • Apartment sector volume decreased about 5 percent from the previous quarter.

“Get used to it, as this is the ‘new normal’ for the economy and we should expect this investment environment for the foreseeable future. The low-hanging fruit has been picked, and investors are adapting to the challenges we face. Risk-adjusted returns for commercial real estate are down from what we have seen, but fundamentals are steady and even improving slightly,” added Riggs. “With volume and prices for commercial properties flat or down on average (except for apartments) during third quarter, plus assurance from Bernanke that interest rates will be low until mid-2015, opportunities with reasonable prices may be found in increasing numbers of secondary and tertiary locations.”

Property Sector Highlights
Continuing a positive trend, the national vacancy rate for all property types continued to decline during third quarter 2012. Only the retail sector vacancy rate remained unchanged.

Other property sector highlights gleaned from the survey of CCIM members include:

  • The apartment sector remained the safest and best investment compared to the other property types during third-quarter 2012.
  • Compared to other property types, distressed and foreclosed office properties sold the best during third-quarter 2012.
  • Industrial properties are currently underpriced. Members suggest that investors should buy low, lease at market value and hold. There is not much demand for industrial properties in the East region due to oversupply.

The complete survey findings can be found at

About the Survey Methodology
The analysis provided in the RERC/CCIM Investment Trends Quarterly is conducted by Real Estate Research Corp. (RERC). The information is gathered in raw form from surveys sent to CCIM designees and candidates, and from sales transactions collected from various sources, including CCIM members, various key commercial information exchange organizations (CIEs), the media, assessors’ offices, RERC contacts in the marketplace, and other reliable public and private resources. All sales transactions are aggregated, analyzed, and reported on by RERC. The RERC/CCIM Investment Trends Quarterly report provides timely insight into transaction volume, pricing, and capitalization rates for the core income-producing properties.

About the CCIM Institute
Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM) designation to commercial real estate and allied professionals through an extensive curriculum of 200 classroom hours and professional experiential requirements. The core curriculum addresses financial analysis, market analysis, user decision analysis, investment analysis, and negotiation—the cornerstones of commercial investment real estate.

An affiliate of the National Association of Realtors®, the CCIM Institute also offers powerful technology tools such as the Site To Do Business, an online site analysis and demographics resource, and CCIMREDEX, a single-entry listing and data exchange. Currently, there are nearly 10,000 CCIMs in 1,000 markets in the U.S. and 31 additional countries, with another 6,000 practitioners pursuing the designation, making the institute the governing body of one of the largest commercial real estate networks in the world. Visit,, and for more information.

CONTACT: Amie DeLuca, +1-630-315-2962,

Phila. Law Firm Commits to 7 Year Lease

Penn Center, Philadelphia, Pennsylvania.

Phila. Law Firm Commits to 7 Year Lease-Image via Wikipedia

Morgan, Lewis & Bockius LLP (Morgan Lewis) and Lexington Realty Trust (NYSE: LXP) announced today that Morgan Lewis extended its lease for 289,432 square feet of Class A office space at Six Penn Center in Philadelphia, PA which is owned by a joint venture controlled by Lexington Realty Trust.  Morgan Lewis, one of the 15 largest law firms in the US according to The National Law Journal’s NLJ250, leases 100% of the office space at Six Penn Center consisting of floors six through 18.  The lease now expires on January 31, 2021.  The building also contains prime ground floor retail space and four levels of structured parking.

Morgan Lewis was represented by W. Whitney Hunter and Peter Talman of Jones Lang LaSalle.  Locally-based Pitcairn Properties Management Co. LLC will continue to be responsible for the management of the building.


With 22 offices in the United States, Europe, and Asia, Morgan Lewis provides comprehensive transactional, litigation, labor and employment, regulatory, and intellectual property legal services to clients of all sizes—from global Fortune 100 companies to just-conceived startups— across all major industries. Its international team of attorneys, patent agents, employee benefits advisors, regulatory scientists, and other specialists—nearly 3,000 professionals total—serves clients from locations in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harrisburg, Houston, Irvine, London, Los Angeles, Miami, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, Washington, D.C., and Wilmington. For further information about Morgan Lewis or its practices, please visit:


Lexington Realty Trust is a real estate investment trust that owns, invests in and manages single-tenant office, industrial and retail properties leased to major corporations throughout the United States.  Lexington also provides investment advisory and asset management services to investors in the single-tenant area. Lexington’s common shares are traded on the New York Stock Exchange under the symbol “LXP”. Additional information about Lexington is available on-line at or by contacting Lexington Realty Trust, Investor Relations, One Penn Plaza, Suite 4015, New York, New York 10119-4015.

This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under Lexington’s control which may cause actual results, performance or achievements of Lexington to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those factors and risks detailed in Lexington’s periodic filings with the Securities and Exchange Commission. Lexington undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the occurrence of unanticipated events. Accordingly, there is no assurance that Lexington’s expectations will be realized.

CONTACT: Investor or Media Inquiries for Lexington Realty Trust, Patrick Carroll, CFO, Lexington Realty Trust, +1-212-692-7200,, or Media Inquiries for Morgan, Lewis & Bockius LLP, Frances Marine Bravo, Director of Public & Media Relations, Morgan, Lewis & Bockius LLP, +1-215-963-5835,

Web Site:

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Mortgage Lenders vs The Scarecrow: If I Only Had a Brain

Are you kidding me? The Banks are just now paying homeowners to get out of a house they can’t afford anymore? They should have been doing this years ago instead of dragging out the short sale process and then delivering the big “No” months later. And then letting the house go through the foreclosure process, which eats up more time and costs them even more money in the process. Here’s one for you: “The banks have realized, ‘We are losing more on the foreclosures than the shorts,'” Augustyniak said. “And they are even willing to compensate the sellers, to give the sellers money to vacate the property.” Wow! What a revelation! Any half-assed Real Estate investor straight out of a short sale seminar in 2006 could have told them that. Guess it takes a while to sink in.

Chase Puts Their Money Where Their Mouth is With Large Short Sale Cash Incentive

McGeough Lamacchia Realty and Dorner Law negotiate a $35,000 payment to their short sale client at closing.

Quote startIt’s important for people who cannot pay their mortgage to be proactive with an alternative such as a short sale.Quote end

Chase Bank sent a homeowner (name withheld) a solicitation letter offering up to $35,000 to do a short sale. Back in August the homeowner called McGeough Lamacchia Realty right away and the home was listed for sale within two weeks.

Once an offer was obtained the staff at McGeough Lamacchia Realty and Dorner Law submitted a short sale package to Chase along with their solicitation letter to remind them that this $35,000 was offered. After five weeks of negotiating Chase not only offered a short sale approval and waived the entire deficiency balance but they agreed to pay this homeowner the entire $35,000.

Over the past year more major banks have realized that paying distressed homeowners a substantial sum is a great way to incentivize them to move out of the home they can no longer afford. Chase has been sending out these solicitation letters of up to $35,000 for about a year. Citi Mortgage has been paying up to $12,000 for about 6 months and Bank of America has most recently agreed to pay up to $20,000.

McGeough Lamacchia Realty and Dorner Law have negotiated large sums for its clients before, but this $35,000 is a new record that they are proud of. These programs are only offered on the loans where these banks actually own the mortgage. Most mortgages are being serviced by the large banks on behalf of one of the three GSE’s: Fannie Mae, Freddie Mac, and FHA (Federal Housing Administration). FHA does offer a $1,500 incentive to do a short sale under their Pre-Foreclosure Sale program. Fannie Mae and Freddie Mac do not currently offer any money unless the short sale is through the Treasury’s HAFA program.

Under the Treasury’s HAFA (Home Affordable Foreclosure Alternative) program which came out in April 2010, lenders are paying $3,000 to distressed homeowners who complete a short sale through the HAFA program.

“It is clear that the major banks have woken up and realized that a short sale is the best way to decrease losses and assist distressed homeowners in a graceful and dignified exit from their home. It’s unfortunate that Fannie Mae and Freddie Mac still haven’t seen the light,” says Anthony Lamacchia.

Short sales are increasing across the country for several reasons:

  •     They are becoming better known to distressed homeowners.
  •     Banks have realized that they save tremendous money through a short sale vs. a foreclosure
  •     Banks have finally hired more staff and are working hard to better their short sale processes
  •     All the major banks are now sending out letters offering short sales to homeowners who cannot qualify for a loan modification. Bank of America recently came out with a Home Transition Guide.
  •     Banks recognize that the sooner they get out of a non-performing loan the more money they save.

“I did my first short sale 20 years ago. They are a great alternative to foreclosure and it is nice to see more distressed homeowners are finally opting for them, especially now that these great incentives are being offered,” says Attorney Hillery Dorner.

Nationally short sales have increased 12% in 2011 and many believe they will increase by much more in 2012.

“One thing distressed homeowners need to know now is that banks will be foreclosing much faster in 2012 than they did in 2011 due to these robo-signing issues for the most part being worked out. Therefore it is important for people who cannot pay their mortgage to be proactive with an alternative such as a short sale,” says John McGeough.

For more on this story, visit the New England Short Sale Blog

About McGeough Lamacchia:

McGeough Lamacchia is the #1 Listing Agency in Massachusetts and named one of the Top 100 Real Estate Teams in the country by RealTrends and the Wall Street Journal. They are a full service real estate agency specializing in short sales in Massachusetts and New Hampshire.

So there you have it. All you seminar graduates, go out there and make some money.

Foreclosed Self Storage Facility Goes for $10.5 Million

Foreclosed Self Storage Facility Goes for $10.5 Million

Bancap Self Storage Group, Inc., the “#1 Self Storage Broker in California,” recently announced that the firm has successfully brokered the sale of the Casino Self Storage property located in the city of  Moorpark in Ventura County, California.  Dean Keller, the firm’s president, was the exclusive listing agent and sole broker in the transaction.  The sale was facilitated by special servicing company LNR Partners, LLC on behalf of a CMBS fund that had foreclosed on the property earlier this year.  The buyer was Public Storage, a publicly traded REIT, which will re-brand the property with its name.

“This is a classic example of a very desirable first class property that was just over-leveraged in a very difficult economic climate,” Keller said “It is the nicest storage facility in the city and it should perform very well in the long run.”

The property sold for $10.5 million on an “all cash” basis. This was much less that the property’s outstanding debt at the time of foreclosure.  Although physical occupancy was over 85%, economic occupancy was approximately 66%, offering further upside potential to the buyer.  The facility’s gross potential income at the time of closing was approximately $1,078,000 per year.

Casino Self Storage contains nearly 85,430 net square feet of self storage space divided into 822 units, including 91 climate controlled units.  The attractive two-story project was built in 2005 and is located on Los Angeles Avenue (also known as State Highway 118) on a highly visible corner in retail and commercial oriented location.  The buildings are constructed of concrete block and stucco with metal partitions, roofs and doors.

“There have only been a handful of foreclosed storage properties listed for sale in Southern California in the past few years and we have been the exclusive listing broker for most of them,” Keller said.  “There are plenty of buyers looking to “steal” lender owned properties, but we have been able to obtain very good and fair prices for the sellers – usually millions of dollars more than the “direct offers” received from potential buyers and other brokers before our listing and marketing of the property.  Self storage is such a unique property type and it takes a specialist with proven expertise and experience to maximize value for sellers in this unique property niche.”

Bancap Self Storage Group is the “#1 Self Storage Broker in California” with over $900 million in completed self storage sales, including many lender-owned “REO” properties, numerous portfolio sales, and a record setting single property sale at over $31 million.  For more information contact Bancap Self Storage Group at (949) 888-5355 or visit the company web site at

Contact: Dean Keller

Phone (949) 888-5355

Fax (949) 203-6105


General Growth Properties, Inc. (NYSE: GGP) (“GGP”) today announced the refinancing of four shopping malls representing $966 million of new mortgages. These four new fixed-rate mortgages have a weighted average term of 9.1 years and a weighted average interest rate of 4.63%, as compared to the 5.66% rate on the prior maturing loans. After adjusting for GGP’s ownership interest, the Company’s pro-rata share of the new four non-recourse mortgages totals $483 million.

The four newly refinanced malls have the following terms:

Natick Mall (Natick, MA—Boston): $450 million at 4.60% due 2019
Galleria at Tyler (Riverside, CA—Los Angeles): $200 million at 5.05% due 2023
First Colony Mall (Sugar Land, TX—Houston): $185 million at 4.50% due 2019
Northbrook Court (Northbrook, IL—Chicago): $131 million at 4.25% due 2021

Year-to-date, GGP has completed nearly $3.9 billion ($3.1 billion at GGP’s pro-rata share) of new property level non-recourse financings with a weighted average term of 9.9 years and an interest rate of 5.1%. These mortgages successfully conclude GGP’s 2011 financing plan and replace $3.2 billion ($2.5 billion at GGP’s pro-rata share) that had a weighted average term of 2.4 years and an interest rate of 5.81%.

“At the start of 2011, one of GGP’s stated goals was to strengthen the Company’s balance sheet and liquidity while also reducing interest rates and extending the average debt maturity profile,” said Sandeep Mathrani, chief executive officer of General Growth Properties. “We have accomplished our 2011 goals and are now focused on 2012 financing opportunities.”


This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, our ability to refinance, extend, restructure or repay our remaining debt (including that of our Unconsolidated Real Estate Affiliates) with maturities in the short to intermediate term, our ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, our liquidity demands and retail and economic conditions. Readers are referred to the documents filed by General Growth Properties, Inc. with the Securities and Exchange Commission, which further identify the important risk factors that could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements.


General Growth Properties has ownership and management interest in 166 regional and super regional shopping malls in 43 states. The Company portfolio totals 169 million square feet of space.  A publicly-traded real estate investment trust (REIT), GGP is listed on the New York Stock Exchange under the symbol GGP.

CONTACT: David Keating, vice president of corporate communications, +1-312-960-6325,

Zocalo Community Development has agreed to sell Solera, its high-rise downtown Denver apartment project to The Connell Company of Berkeley Heights, New Jersey for $37 million. The building features 120 units and 5,200-square feet of commercial space. The sale, which was finalized October 13, 2011, represents a record price per unit and record price per square foot for the state of Colorado.

Downtown Denver’s first LEED Gold certified apartment building received its Certificate of Occupancy in October 2010. The 11-story luxury apartment project offers one-to two-bedroom units ranging from $1,185 to $3,090 per month.

“We’ve experienced high demand for our units since we opened our doors thanks to the upscale, environmentally-friendly lifestyle we offer,” said Zocalo Principal David Zucker. “This sale shows that Solera has built a very attractive and valuable niche in the marketplace.”

With loft-style ceilings, large windows, open kitchen layouts, and incredible mountain and city views, Solera’s units fetch some of the highest rents in downtown Denver.  The property is also one of only a few dozen LEED Gold certified apartment projects in the country – a big selling point for The Connell Company, a privately-held firm with interests in real estate, mining, equipment leasing  and rice distribution.

Built to rigorous U.S. Green Building Council standards, Solera boasts a number of earth-friendly finishes and amenities, including high-performance windows, Energy Star-rated appliances, high-efficiency lighting and occupant sensors, dual flush toilets and programmable thermostats. Each unit also comes with a Personal Energy Monitor, a real time power usage display that tracks day-to-day and monthly energy usage, allowing residents to make more informed decisions about their energy choices.

By living in a sustainable apartment, Solera residents save more than 50 percent on their energy bills compared to similar buildings, which may equate to $700 worth of savings each year for the average resident. Solera’s walkable location adds to the savings, allowing residents to spend less on gas.  According to the popular website, Solera’s proximity to shops, restaurants and entertainment make it a virtual “Walker’s Paradise,” with a score of 92 out of 100. Solera also offers a free bike parking space for every apartment as well a complete bike maintenance facility, the only one its kind in any downtown apartment building.

Solera’s green features are a big lure for residents, with two-thirds of the building’s residents citing sustainable attributes as the reason for leasing at the site.

About Zocalo Community Development

Zocalo Community Development is an award-winning, Denver-based development and construction services company focused on creating sustainable communities that deliver for investors and neighborhoods alike.  Locally produced and contextually sensitive are descriptors of Zocalo’s commitment to community development. Zocalo seeks to reduce the impact residential and mixed-use buildings have on the earth and the environment by substantially reducing greenhouse gases generated both by the building itself and by the means and patterns of resident commuting.

For more information, visit

Leisure Group of Companies is a One-Stop Resource with a 20-Year Track Record of Stabilizing and Operating Troubled Assets

Leisure Hotel Corporation and Leisure Real Estate Advisors, part of the Leisure Group of Companies, has most recently doubled the number of Distressed Hotel Assets within their portfolio. Leisure’s unique one-stop hotel receivership, management and brokerage services – established with a 26-year proven track record of managing and brokering distressed hotels, resorts and condos – stabilizes troubled assets and operates them in a smooth and cost-effective manner, especially during the critical receivership/transition phase. Many hotel owners have unfortunately become over-leveraged with debt and are now faced with declining revenues and repayment due dates. Leisure’s experience and expertise assists hotel owners, lenders and legal representatives during these difficult times.

“It is unfortunate that our recent growth comes on the heels of others misfortune, commented Leisure’s CEO and President Steve Olson. The lodging industry continues to be faced with a crisis unseen since the late 80’s when what was then the RTC (Resolution Trust Corporation) was formed to take control of the large numbers of nonperforming real estate loans that the banks were unable to support. The difference this time is rather then the RTC managing the assets and liquidating them; the insolvent banks are being closed and immediately resold to more stable banks with government guarantees. Unfortunately most lending institutions are not prepared to take over a business as complex as a hotel or resort, especially when it involves franchise relations as well as capital improvement requirements by the franchise. In some cases if the franchise is not maintained it can result in the loss of as much as half the value of the property due to the loss in business associated with the franchise. Our job is to tell the bank what they have, its value, the capital needs, any franchise issues, develop a business plan as well as an ultimate liquidation plan that preserves as much value as possible”.

Olson pointed to Leisure’s nationally ranked hotel brokerage service, Leisure Real Estate Advisors, a full service brokerage company with extensive experience selling specific assets such as these. It was featured in the 2008 Hotel Business 10th Anniversary Green Book as one of the nation’s top hotel brokerage firms. In the same report, the company garnered additional recognition when Leisure Hotels was ranked 64th in the nation among independent, third-party hotel management companies.

“Our bank received 36 hours notice that our collateral (hotel) was to be abandoned. Leisure assembled a complete property management team, assumed control of the property, addressed significant deferred maintenance, stabilized earnings, and now is brokering the property. I could not be more pleased with the work done by the Leisure Hotel team”, David Hodge, Chief Credit Officer for First State Bank in Kansas City stated.

Leisure’s Hotel Receivership Services offer a complete platform of hotel management solutions under the umbrella of a leading multi-faceted, full service hotel company. For example, Leisure Hotels operates numerous well-known franchise branded hotels and has solid relationships with Intercontinental Hotels Group (IHG), Hilton, Hyatt and Choice Hotels, and a number of independent hotels and resorts.

For additional information regarding Hotel Receivership Services, contact Steve Olson at 913-905-1460, ext. 107.

About Leisure Hotels
Leisure Hotels is a third-party hotel management company that operates as a division of Kansas-based Leisure Group of Companies, which specializes in hotel and convention center development, construction management, brokerage services and hotel management in the resort, extended stay and full service markets. With corporate offices in the Kansas City metro area and employing more than 800 people, Leisure is one of the industry’s leading multi-faceted full service hotel companies. Using the latest in technological developments, Leisure provides hotels with complete operational and financial services, as well as extensive human resource training and development.

Publicly Traded REITs Show 9.3% Return

Analysis argues that pension funds and other institutional investors would benefit from larger allocations to REITs than they typically have today.

NAREIT, the National Association of Real Estate Investment Trusts®, announced the findings of a new Morningstar research study that shows publicly traded REITs have provided a significant investment return premium compared to private equity real estate funds over a range of holding periods, including over the last full real estate cycle.

According to the analysis, which is based on 20+ years of actual performance data, publicly traded REITs have outperformed core, value-added, and opportunistic private equity real estate funds over the long term, have experienced stronger bull markets, and have recovered faster from downturns. In addition to the noteworthy performance comparison, the research also highlights the public market attributes of REITs which benefit an investment portfolio – increased liquidity, transparency, and lower fees and expenses on average.

For the 20+ year period 1989-2009, REITs delivered compound annual net total returns of 9.3 percent compared to 4.4 percent for private equity core funds, 3.7 percent for value-added funds and 6.1 percent for opportunistic funds; during the same period, publicly traded REIT fees and expenses averaged one-half to one-fourth of the fees and expenses charged by private equity real estate funds. And over the course of the last full real estate cycle, REITs produced a cumulative net total return of 801 percent, or 13.4 percent on an annualized basis, higher than the performance of core funds (272 percent, or 7.6 percent annualized), value added funds (320 percent, or 8.5 percent annualized) and opportunistic funds (617 percent, or 12.0 percent annualized).

As of September 30, 2010, REITs also operated with less leverage than value-added and opportunistic funds. As the Morningstar report noted, higher leverage can mean more volatility that isn’t compensated by higher returns. Core funds had the lowest leverage, but also the lowest returns over the full real estate cycle.

These findings, as the Morningstar study noted, support the case for pension funds and other institutional investors having larger allocations to publicly traded equity REITs in their real estate portfolios than they typically do today. According to the IREI / Kingsley Associates “Tax-Exempt Real Estate Investment 2011” survey of public pension funds and other institutions, these investors plan to commit 92.6 percent of their real estate allocations this year to private forms of debt and equity, including 72.67 percent to private equity real estate funds, but only 7.4 percent to publicly traded REITs.

The full Morningstar research report, entitled “Commercial Real Estate Investment: REITs and Private Equity Real Estate Funds,” along with a corresponding media fact sheet can be found at:

Steven A. Wechsler, president and CEO of NAREIT, said, “The Morningstar research underscores the strength of the REIT business model in delivering sustainable returns and the need to have a well balanced allocation between REITs and private equity in real estate portfolios. This is increasingly important as public pension funds and other institutional investors seek to both increase portfolio returns and reduce portfolio risk.”

NAREIT’s Real Estate Portfolio Optimizer, which can be found at, enables investors to compare the returns, volatility and Sharpe ratios (risk-adjusted returns) of real estate portfolios with various combinations of REITs and private equity core, value-added and opportunity funds. It calculates the actual portfolio performance on the basis of more than 176,000 possible combinations of these portfolio allocations.


Multi-Family Property Report Card Just Released

RED CAPITAL GROUP Research Team shares latest multifamily market review and outlook online on its website, including rental rate and occupancy trends and outlooks and metro area conditions.

Daniel J. Hogan, Director of Research, RED CAPITAL GROUP, LLC

RED CAPITAL GROUP, LLC has posted on its website its Research Team’s most recent multifamily housing industry report entitled “Multifamily Housing Industry 2011 Mid-Year Review and Second Half Outlook Report”.

To access the report, log on to and scroll down to the “Recent Multifamily Housing Market Analysis” section to register for the download.

Researched and written by Daniel J. Hogan and Joseph M. Mandeville, both of RED’s in-house Research Team, the report is highlighted by the introduction of a fully-integrated occupancy, rent and cap rate forecasting model. The report provides a full set of 2011 to 2013 annual payroll projections and annual five-year rent growth and occupancy rate forecasts for 46 metropolitan markets across the country (the “RED 46”) as well as five-year total return and risk-adjusted return estimates and probability distributions of total return for each market. The study also engages in some “What If” modeling to help probe key questions confronting the multifamily housing space, such as the relative impact of accelerating inflation on asset performance and returns in different metropolitan markets.

In addition, the report contains a summary of the performance of metro markets during the first half of 2011, including:

  •     Apartment Demand & Occupancy Trends
  •     Apartment Rent Trends
  •     Metro Area Economic Conditions
  •     Macro-economic Outlook

Highlights of key points summarized in the report include:

  •     Abundant employment growth among Americans aged 20- to 29-years in the period May 2010 to May 2011 triggered the strongest apartment demand observed in a generation.
  •     Export-driven manufacturing revivals fueled stronger than expected hiring in corners of the Heartland, such as Nashville, Pittsburgh, Columbus, Louisville and Saint Louis.
  •     High tech hubs (Seattle, San Jose) and Texas metro areas (Dallas, Fort Worth, Houston, Austin) posted the strongest job growth in the spring, while Milwaukee surprised many by leading the nation in year-over-year job growth.
  •     With the exceptions of Seattle, San Jose, San Diego and Portland, Western Region economies continued to struggle with negative or flat results in the second quarter.

Operating nationwide since its inception in 1990, comprehensive debt and equity capital provider RED CAPITAL GROUP, LLC is recognized for its industry expertise, innovative and comprehensive structures, and consistently high lender rankings, including having closed more FHA Multifamily & Healthcare loans during HUD FY-2010 than any other lender and remaining active as a top Fannie Mae DUS® lender for both multifamily and seniors. Red Mortgage Capital, LLC’s nationwide agency platform includes Fannie Mae DUS, Freddie Mac Seller/Servicer for Seniors, and FHA MAP and FHA LEAN lending for multifamily, seniors housing and health care properties. RED’s Research Team supports the firm’s underwriting and lending functions, and provides unique intelligence and perspective.

RED CAPITAL GROUP, LLC is committed to being the nation’s premier provider of capital across the spectrum of asset classes.

RED CAPITAL GROUP, through three operating companies, provides integrated debt and equity capital to the multifamily, student and seniors housing, and health care industries. Red Mortgage Capital, LLC is: a leading Fannie Mae DUS® lender for both Multifamily and Seniors Housing; the nation’s most active FHA Multifamily/Seniors lender (MAP- and LEAN-Approved); a national Freddie Mac Seniors Housing Seller/Servicer; an active financier of Critical Access, community and rural hospitals; and services more than $14 billion of income property mortgage loans. Red Capital Markets, LLC (MEMBER FINRA/SIPC) is a leader in: the trading and distribution of Fannie Mae and GNMA Project MBS; the underwriting of developer-driven multifamily housing bonds; and also is remarketing agent for $1.5 billion in variable rate demand tax-exempt and taxable housing and health care bonds. Red Capital Partners, LLC delivers proprietary debt and equity to the multifamily and health care industries and provides asset management services for RED’s proprietary debt and equity investments.

RED CAPITAL GROUP is headquartered in Columbus, Ohio, employs more than 200 and maintains eight offices nationwide. Since 1990, the bankers of RED CAPITAL GROUP have provided over $52 billion in taxable and tax-exempt first mortgage debt, mezzanine level capital and equity to multifamily, seniors housing, health care, and other real estate properties nationwide. RED CAPITAL GROUP is a subsidiary of ORIX USA Corporation.

About Our Parent ORIX USA Corporation
ORIX USA Corporation ( is the U.S. subsidiary of ORIX Corporation, a publicly-owned Tokyo-based international financial services company established in 1964. ORIX Corporation is listed on the Tokyo (8591) and New York (NYSE:IX) stock exchanges. ORIX USA Corporation is a diversified corporate lender, finance company, and advisory service provider with more than $6 billion in assets and an extensive portfolio of credit products and advisory services. ORIX USA is headquartered in Dallas, Texas and has approximately 1,400 employees worldwide.

Red Mortgage Capital, LLC is a licensed FHA MAP and FHA LEAN lender.
DUS® is a registered trademark of Fannie Mae.

DDR Corp. (NYSE: DDR) today announced that it has acquired three prime shopping centers for $110 million and disposed of $59 million of non-prime assets in the third quarter. DDR continues to successfully recycle capital from asset sales into the acquisition of prime shopping centers, and has completed $150 million of acquisitions and $166 million of dispositions year to date. Consistent with previously announced acquisitions, all three third quarter additions have a demographic profile and projected compounded annual growth rate that will enhance the existing DDR prime portfolio metrics and continue to improve overall company asset quality.

Third quarter acquisition activity:

DDR acquired two prime assets in Charlotte, North Carolina, Cotswold Village and The Terraces at SouthPark, for $85 million and one prime asset, Chapel Hills East, in Colorado Springs, Colorado for $25 million. The assets total 500,000 square feet of gross leasable area and range between 96% and 100% leased. In addition, the assets are occupied by many high quality retailers typically found in DDR shopping centers including Whole Foods, Marshalls, PetSmart, Best Buy, Harris Teeter, ULTA, Old Navy, and DSW. With the inclusion of the recently acquired assets, DDR expanded its presence in the Charlotte trade area to nine prime assets representing 2.2 million square feet and the Denver trade area to nine prime assets representing 2.8 million square feet.

In connection with these acquisitions, DDR assumed three existing mortgage loans as follows:

Cotswold Village – $50.8 million at 5.83%, maturing in 2016
The Terraces at SouthPark – $6.6 million at 5.72%, maturing in 2012
Chapel Hills East – $9.6 million at 5.24%, maturing 2021

As previously announced in the third quarter, and further enhancing the Company’s portfolio, DDR is also under contract to acquire Polaris Towne Center in Columbus, Ohio, for $80 million. Polaris is a 700,000 square foot prime asset anchored by Target, Lowe’s, Kroger, Best Buy, and TJ Maxx. It is anticipated that this transaction will close in the fourth quarter of 2011.

Third quarter disposition activity:

The Company disposed of ten non-prime assets and seven land parcels during the quarter for aggregate proceeds of approximately $59 million, all of which was the Company’s share. An additional $209 million of assets are currently under contract for sale, of which the Company’s share is $196 million. Year to date, the Company has generated gross proceeds of $214 million from asset sales, of which the Company’s share is $166 million. Since 2007, DDR has completed $2.3 billion of dispositions of primarily non-prime assets.

Daniel B. Hurwitz, president and chief executive officer of DDR, commented, “We are pleased with the continued execution of our capital recycling strategy and are very confident that these prime acquisitions will enhance our compounded annual growth rate and net asset value. Our successful strategy of funding acquisitions with disposition proceeds will continue and obviates the need to access common equity to support portfolio enhancement initiatives.”

Safe Harbor

DDR considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as oversupply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant; constructing properties or expansions that produce a desired yield on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements and the success of our capital recycling strategy. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company’s Form 10-K for the year ended December 31, 2010. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

About DDR

DDR is an owner and manager of 546 value-oriented shopping centers representing 126 million square feet in 41 states, Puerto Rico and Brazil. The company’s assets are concentrated in high barrier-to-entry markets with stable populations and high growth potential and its portfolio is actively managed to create long-term shareholder value. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol DDR. Additional information about the company is available at

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