Sunday, February 22, 2009
Wednesday, February 11, 2009
Tuesday, February 10, 2009
Saturday, February 7, 2009
Values appear to be rewinding across the country to 02-03. Of course they are not alone with the massive deflation of real estate prices:
From: NY Times
Few deals better exemplify the excesses of the commercial real estate boom than
the dismemberment of the Equity Office empire, and fewer still better underscore
their bitter consequences.
Buyers purchased buildings at what, in retrospect, were vastly inflated prices. Lenders provided lavish, even excessive, financing based on unrealistic expectations of rising rents. And now that values are tumbling, vacancy rates are rising and credit has become impossibly tight, many on both sides are struggling against default, foreclosure or bankruptcy.
The impact could ripple beyond the companies that bought Equity Office buildings and the investment banks that financed them. If the owners cannot make their loan
payments, it could create a financial crisis for the pension funds, hedge funds
and insurance companies that hold securities based on Equity Office
The list of Equity Office buyers reads like a Who’s Who in American real estate. In Stamford, Conn., RFR Properties, a partnership headed by Michael Fuchs and Aby Rosen, who owns Manhattan landmarks like Lever House and the Seagram Building, spent $850 million to buy seven Equity Office buildings that analysts say are now worth less than their mortgages.
In Los Angeles, the founder of Maguire Properties, one of the largest commercial
landlords in Southern California, was forced to step down last year as the
company struggled with crushing debt from buying 24 Equity Office buildings.
And in New York, the real estate mogul Harry B. Macklowe lost seven Equity Office towers he bought from Blackstone, along with much of his empire, after he was unable to refinance the $7 billion in short-term, high-interest debt he used to buy them.
“Those who bought from Blackstone have not fared well at all,” said Michael Knott, a real estate analyst at Green Street Advisors. “Blackstone was a huge winner at the time, although the value of what they still hold has fallen probably 20 percent.”