California Commercial Real Estate Investor Panel: Office, Retail and Industrial Executives Discuss Today’s Climate

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Moderator: Fred B. Córdova, III, Senior Vice President / Investment
Services Group, West Regional Manager, COLLIERS ASSET RESOLUTIONS TEAM
Michael S. Adler, President – MAI, CPM, ADLER REALTY INVESTMENTS, INC.
Mark Laderman, Managing Director — Los Angeles, TISHMAN SPEYER
Matthew May, President, MAY REALTY ADVISORS
Richard J. Plummer, Executive Vice President / Institutional Capital
Markets, GRUBB & ELLIS COMPANY
Sam Rosenwald, Partner, BLACK EQUITIES GROUP, LTD.
Kevin Shannon, Vice Chairman, CB RICHARD ELLIS

Published in: Business, Economy & Finance
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  • (Corus = new normal)
  • California Commercial Real Estate Investor Panel: Office, Retail and Industrial Executives Discuss Today’s Climate

    1. 1. Timing Matters<br />CRE Value & the 4th Dimension <br />DISTRESSED REAL ESTATE SUMMIT: <br />CALIFORNIA<br />Fred Cordova<br />February 4, 2010<br />
    2. 2. 2009’s Wild Ride<br />Capital Markets<br /><ul><li> EPS – $49.51
    3. 3. S&P 500 - $932
    4. 4. Commodities – C: $1.45
    5. 5. Home Inventory – 11 Mo</li></ul>CRE GLA Office Market<br /><ul><li>Effective Rent - $29.29
    6. 6. Vacancies – 10.9%
    7. 7. Values - $180-$300
    8. 8. Sales Volume – 4Q08: $200m</li></ul>Capital Market<br />Institutional $<br />January 1, 2009<br />
    9. 9. 2009’s Wild Ride<br />Capital Markets<br /><ul><li> EPS - $56.21/ F: $74.98
    10. 10. S&P 500 - $1126 (15.25 X F)
    11. 11. Commodities – C: $3.40
    12. 12. Home Inventory - TBD</li></ul>CRE GLA Office Market<br /><ul><li>Effective rents - $26.41
    13. 13. Vacancies – 13.5%
    14. 14. Values - $180-$300 psf
    15. 15. Sales Volume – Q4 $200m</li></ul>Capital Market<br />Institutional $<br />Lender / Servicer<br />Foreign / Private $<br />January 1, 2010<br />
    16. 16. Where are we now?<br /><ul><li>Office: vacancy 55 msf (18%); some mkts > 20%
    17. 17. Industrial: availability 182 msf (12.43%); some mkts > 25%
    18. 18. Retail: rents in free fall; vacancies 20% to 50%
    19. 19. Multi-family: eff rents down > 25%; econ vacancy 40%
    20. 20. Development pipeline is dry across all
    21. 21. Unemployment >10%; Under Emp > 17%
    22. 22. Consumers => savers; deleveraging
    23. 23. EPS flattens without top line revenue growth
    24. 24. Federal, state, local deficits mounting</li></ul>S&P is up > 65% from 3/9/09 low<br />Commodity prices are surging<br />Feds proceeding with TALF<br />CMBS II is underway<br />REIT stocks have rebounded<br />$1.5 to $2.0 T CRE debt to be restructured<br />Fundamentals still deteriorating<br />Values still dropping <br />Cap rate spreads over T’s are 2 x norm<br />Transaction pipeline is dry<br />
    25. 25. 2010 CRE Values<br />Timing Trumps Modeling<br />
    26. 26. 2009’s Wild Ride<br />Office Values and Sales Volumes Plummeted in 2009<br />Source: RCA Q3 -09<br />
    27. 27. Recapitalizing CRE<br />2000 - 2010<br />With Values down <br />40%-50%, <br />most equity is GONE<br />Source: Emerging Trends in Real Estate (PWC/ULI)<br />
    28. 28. Debt Maturities<br />But is Manageable<br />Looks Ominous<br />$1.8T Bank debt is near term concern<br />$215B near term CMBS will “extend and mend”<br />Source: Emerging Trends in Real Estate (PWC/ULI)<br />
    29. 29. The Tsunami<br />Is a Myth<br />
    30. 30. Timing Matters<br />CRE Value & the 4th Dimension <br />

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