GLG News by Senior Housing Real Estate Experts

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Foreclosures Set to Add More Years of Supply to Downtown Miami Condo Market

July 22, 2009

Analysis of:Downtown Miami condos pass 60% occupancy | www.frej.net

The article describes a recent study that takes comfort in the fact that "62% of units in new downtown Miami condo buildings are occupied..., defying the perception that the majority of high rises built in recent years are empty." But this ignores the fact that there is still a 10 year supply of unsold inventory at today's absorption rates and pricing , and ignores the fact that foreclosures of previously sold units increased 500% last year in Miami Dade, which will only add to the glut.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Banks and Special Servicers Continue to Postpone the Inevitable

July 22, 2009

Analysis of:Pru Sees Debt as Best Investment Bet | www.globest.com

The article notes that distressed debt provides the best near term opportunities for r investors. And, in a perfect world, it should be; banks and conduits learned in the last downturn that they were not good at owning foreclosed properties, so their instincts this time are to just sell the paper. But, to do this they must mark it to market, and that, ironically, prevents many of them from selling it. But, they will face reality sooner rather than later, and the market will be better for it.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Value, Like Beauty, is in the Eye of the Lender

March 31, 2009

Analysis of:Soros Says Commercial Property Values Will Fall 30% | www.bloomberg.com

Commercial real estate values have dropped to a point where owners generally aren't sellers, so realized transaction pricing has not followed the value drop. But lenders will force transactions on overleveraged or defaulting assets in due course.  But, depending on the product type and geography, the pricing and value implications of this will vary dramatically.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Disconnect Between Public and Private Commercial Real Estate Markets

March 3, 2009

Analysis of:Commercial Property Activity Falls to 12-Year Low | www.cnbc.com

The slow down in commercial real estate transactions is a function of two things; the relative scarcity of acquisition financing and the large bid-ask spread between buyers and sellers. The recent drops in public REIT values are a harbinger of things to come in the private markets, and point to a more liquid market, dramatically reduced sales prices, and a higher volume of transactions towards the back half of this year.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Is Anybody Home?

January 7, 2009

Analysis of:As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com

The article correctly forecasts increases in vacancy and decreases in operating cash flow for office space across the country, and the resulting increases in loan defaults that will occur because of it.  But, the scenario is even worse than the current numbers show because of the large amount of sublease space that is not captured in the numbers. The essential question, however, is how lenders will react to this problem, or, in the case of CBMS, whether there is even somebody "home" to talk to. As active participants in the real estate equity and debt markets, we are encouraged by the creativity we are seeing from lenders in dealing with this problem.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Its All About the Fundamentals

January 6, 2009

Analysis of:REIT Rebound Hinges on Credit Thaw, Recession's Depth | online.wsj.com

The public markets have traditionally been a leading indicator of trends in the private real estate markets, and with the continuing deterioration in property fundamentals across most property types, it is hard to conceive of a broad based REIT rebound this year. Longer term, it is important to remember that the REIT model of the first part of this decade was predicated less on property and market fundamentals and more on creating attractive dividends through cheap debt. That era is over, and the successful companies will be those who can create dividends and stock price increases through back to basics value creation at the property level.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

Tip of the Iceberg

January 2, 2009

Analysis of:Real estate write downs plague Morgan Stanley results | www.privateequityrealestate.net

The recent write-downs by Morgan Stanley's real estate funds are a harbinger of broader value impairment to come in both public and private real estate markets. Although a good deal of the current write-downs  are related to refinancing issues, a second, and equally significant loss of value is coming.  This will occur when the current economic downturn starts to show up in deteriorating operating fundamentals and increased property vacancies.

Gavin CampbellFounder, Managing PrincipalSteelbridge Capital LLC

US Commercial Office Market Finally Hits the Wall

May 27, 2008

Analysis of:Shopping Centers Feast On Acquisitions | nreionline.com

The combination of a slowing economy and turbulent debt markets has finally hit the US commercial office market. Although a great deal of equity capital remains ready to invest, between the meltdown and risk-adjustment in the financing markets, deteriorating operating fundamentals and herd mentality withdrawal from the market, office investment transaction values are down 70% from last year as reported in the May 21, 2008 edition of National Real Estate Investor. Moreover, what deals that are getting done are being transacted at cap rates 50-100 basis points above where they were a year ago, to an average of approximately 7% nationally. If every commercial property in the US were appraised today at these higher metrics, the implication would be a loss in value of nearly $200 billion.  

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