Socal Multiunit Real Estate

U2 CAN BUY COMMERCIAL PROPERTIES @ AUCTION

U2 CAN BUY COMMERCIAL PROPERTIES @ AUCTION

By Jodi Summers

Going, going, gone…with the commercial loan market in such a pathetic state, auctions are the fastest way for banks to unload undesired commercial property assets.

“Sellers are coming to the realization that the price point they had in mind is not a reality. That’s where auctions are so useful in determining value — bringing people together through competitive bidding,“ observed National Auctioneer Association spokesman Chris Longly. “Our membership is seeing more energy and movement this year on the commercial real estate side.“

The National Association of Auctioneers estimates that $58.6 billion in real estate was sold in private live-auction bidding in the U.S. in 2008, up 38.5% from five years ago. Auctions in residential real estate have risen 47.7%, raw land (including agriculture) 36.8%. Commercial real estate is up 31.3%, to $15.5 billion in gross auction sales for 2008. Last year, banks were dealing with residential real estate issues, now, banks are confronting commercial property asset issues.

While the foreclosure moratorium was on in residential, banks were able to reassess their commercial assets. You’ll note that auction activity growing in the 2^nd half of 2009, with major online commercial auction events. In the second half of July, NAI Global offered 75 investment properties in 21 states valued at more than $250 million. The timed online auction will include 58 properties — including the historic State Theatre in South Bend, IN, which still bears bullet holes from the nearby shootout following John Dillinger’s final bank robbery on June 30, 1934 — and 14 other properties. In late July, Sperry Van Ness/Guardian held an auction at the Hyatt Regency in Los Angeles includes more than $100 million in real-estate owned (REO), bank-ordered and developer close-out assets in six Western states.

Among the high profile properties going up for sale is the historic Watergate Hotel made infamous during President Nixon’s wiretapping antics. (http://www.socalofficerealestateblog.com/?p=669). Other noteworthy pieces of real estate hitting the auction market include development sites in the metro Washington, DC area, retail sites in Highland Park, IL, and Spokane, WA, the historic theater redevelopment in South Bend, IN, and an infill site in Flint, MI; an upscale hotel/golf resort in Beecher, WI, and a fully entitled multifamily development tract in Navarre Beach, FL, plus lots of excess and partially developed inventory.

Even the government is getting into it. As you know, the state has been selling off their legacy assets - http://www.santamonicapropertyblog.com/?p=1188, and take a cursory glance @ what the U.S. government might be auctioning off in California, and we find industrial properties in Laguna Nigel, Morro Bay and Red Bluff.

“We’re probably seeing a 30 to 40% increase this year” in office, retail, industrial, multifamily and land auction inquiries, remarked Paul Rogers, senior vice president @ Inland Real Estate Auctions, Inc. “With bank activity in particular, we’re going to be busy for the rest of this year — and probably well into next year.”

This trend echoes the real estate slump of the 1990s and early 2000s, with commercial properties following residential foreclosure auctions after they have been mainstays in the downturn. Companies auctioning properties note that it is an opportunity to sell assets quickly, reduce holding costs, and secure true market value under unpredictable market conditions.

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Sources:

http://www.costar.com/News/Article.aspx?id=F9243DEB83153259F95525F184C9EEE8&ref=100&iid=140&cid=383F14EEE265B182474DA2442BACBBBF

http://fasrp.sc.egov.usda.gov/fasrp/mainAction.do;jsessionid=804CCE54F02BBCC115D4B0BA22A910FF?pageAction=GetCounties&state=CA&stateName=California

http://www.philly.com/inquirer/world_us/20090720_Watergate_auction_drawing_interest.html

http://www.socalofficerealestateblog.com/?p=669

http://media.commercialappeal.com/mca/content/img/photos/2009/04/16/b17auction.jpeg

http://ethicalforeclosurefortunes.com/wp-content/themes/thesis/rotator/govt_auctions_sm.jpg

http://i.ehow.com/images/GlobalPhoto/Articles/5117276/237446-main_Full.jpg

http://www.unitedcountry.com/picturesx/10086-10099-1576957.jpg

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/foreclosures-may-o9.png

http://www.mccallauctions.com/auctions/photos/1074/p12368596779029.jpg

Meruelo Maddux Closes $84M Construction Loan For Green Multiunits

Meruelo Maddux Closes $84M Construction Loan For Green Multiunits

Meruelo Maddux Properties has closed on an $84 million construction loan for the locally based development firm’s 35-story, 214-unit multifamily project at 717 W. Ninth St. The project, due to be completed in September 2009, is under way near the Staples Center and L.A. Live projects.

The project, which is seeking a Silver LEED designation, is located at the corner of Flower and Ninth Streets in downtown Los Angeles, across the street from Downtown’s only major supermarket, Ralph’s, adjacent to the financial district and near the new L.A. Live entertainment and dining complex and the Staples Center.

All the info @ http://www.globest.com/news/1213_1216/losangeles/172900-1.html

SOBRATO DEVELPMENT COS. EXCHANGES FOR CONDO PROJECT IN SEATTLE + REPOSITIONS EXPO62 AS LUXURY APARMENTS

A brief introduction…John Albert Sobrato is #131 on Forbes 2006 list of the 400 Richest Americans + #382 on the list of the world’s billionaires.

Now that we have your attention, the self made real estate developer + founder of Sobrato Development Companies, with a net worth $2.4 billion.    In a bold move, Sobrato Dev. Cos. has purchased Expo62, a 114-unit Seattle condominium development by Seattle-based Intracorp Real Estate LLC.

Repositioning the building in the marketplace, Sobrato Dev. Co. will market the former condo project as a luxury apartment complex.

Sobrato Dev. Co. adds Expo62 to their portfolio of 9.5 million square feet of commercial space, 8,000 residential units; another 340 acres ready for development. The recent strategy of the Cupertino, CA-based company has been to sell off San Jose properties, and reinvesting in apartments in Washington State, Oregon, other parts of California.

Expo62 was acquired in a 1031 exchange quietly in February from Seattle-based Intracorp Real Estate LLC for $48 million, which translates to $421,000 per unit and $475 per sf. As part of the deal, Intracorp will deliver the completed construction project to Sobrato by the end of July.

Brian Cox, a VP with Sobrato told GlobeSt.com that while Sobrato didn’t overpay for the asset it did pay a premium for a unique property. “This was an opportunity to buy a very high quality product with beautiful views that probably would never have been built as apartments. This was also an opportunity to invest in Seattle, where job creation has been very good and where we are looking very long term.”

 “You wouldn’t spend $48 million to build a 114-unit apartment complex in that location, it’s unique,” observes transaction broker Jeffrey Williams, of Moran & Co.

The marketing materials associated with the sale estimate that the property can achieve rents of $2.50 per sf. If the development had been stabilized at that rate, Williams says a $50-million purchase price would have translated to a capitalization rate somewhere in the mid 4% range.

Former Palo Alto residential broker developed Silicon Valley commercial real estate 1960s with partner Carl Berg (see). Later built up portfolio erecting campuses for tech titans Apple Computer and Yahoo. Having built an impressive real estate dynasty in the Northwest, Sobrato has become noted philanthropist in the Bay Area. Together with his family, he has created the Sobrato Family Foundation.

  Sources: http://www.globest.com/news/1184_1184/seattle/171755-1.html ; http://www.forbes.com/lists/2006/10/T3BG.html ; http://www.sobrato.com ; http://en.wikipedia.org/wiki/John_A._Sobrato;