Tuesday, March 31, 2009

The New Year Didn’t Change the Downward Spiral of Residential Real Estate Prices

NEW YORK, NY--Mar. 31, 2009 – Data through January 2009, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20
metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008.

The middle left chart depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. Following the lead of the 14 metro areas described above, the 10-City and 20-City Composites also set new records, with annual declines of 19.4% and 19.0%, respectively.

“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, (top right photo) Chairman of the Index committee at Standard & Poor’s.
“There are very few bright spots that one can see in the data."

Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSA’s falling more than 20% in the last year.
Indeed, the two composites are very close to that rate and have been reporting consecutive annual record declines since October 2007.

The monthly data follows a similar trend, with the 10-City and 20-City Composite
showing thirty consecutive months of negative returns.”

The middle right chart shows the index levels for the 10-City Composite and 20-City Composite Home

Price Indices. As of January 2009, average home prices across the United States are at similar levels to what they were in late 2003.
From the peak in the second quarter of 2006, the 10-City Composite is down 30.2% and the 20-City Composite is down 29.1%.

All 20 metro areas are reporting negative monthly and annual rates of change in average home prices.

Seven metro areas and the 20-City Composite recorded a record monthly decline in January. In addition, seven metro areas (not always the same seven) reported declines in excess of 4% in the month of January alone.

Phoenix led with a report of -5.5%. Every MSA has had at least five consecutive months of decline, dating back to September 2008. On a marginally positive note Cleveland, Los Angeles and Las Vegas are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month’s values.

Furthermore, Las Vegas, along with five other metro areas, showed a marginal
improvement in monthly returns, albeit still negative.

The three worst performing cities, in terms of annual declines, continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.0%, Las Vegas declined 32.5% and San Francisco fell 32.4%.

Dallas, Denver and Cleveland faired the best in terms of annual declines down
4.9%, 5.1% and 5.2%, respectively.

Looking at the data from peak-thru-January 2009, Dallas is the least hurt, down 10.8% from its peak in June 2007, while Phoenix is down 48.5% from its peak in June of 2006.
The rates of decline from the individual heights of each market are evidence of how much each market has taken back in terms of the gains earned in the past 10-15 years.

All of the 20 metro areas are in double digit declines from their peaks, with nine of the MSA’s posting declines of greater than 30% and five of those (Las Vegas, Miami, Phoenix, San Francisco and San Diego) in excess of 40%.

For more information, please contact:
David Blitzer, Chairman of the Index Committee, Standard & Poor’s, 212 438 3907

David Guarino, Communications, Standard & Poor’s, 1 212 438 1471

Interstate Hotels & Resorts Receives Credit Facility Waiver

ARLINGTON, VA, Mar. 31, 2009—Interstate Hotels & Resorts (OTC: IHRI), a leading hotel real estate investor and the nation’s largest independent management company, today announced that the company had received a waiver through June 30 related to the requirement under its senior credit facility to maintain listing on the New York Stock Exchange.

The NYSE suspended trading of Interstate’s stock on March 12 after the company failed to meet the minimum $15 million market capitalization requirement.

Trading of the company’s stock has transitioned to the OTC market and the NYSE listing continues pending the appeal process.

“We appreciate the continued support from our bank group and have begun discussions regarding extending the facility’s March 2010 maturity,” said Bruce Riggins, chief financial officer. “Our goal is to have an amendment completed prior to June 30.”

As part of the waiver agreement, the interest rate on the credit facility was increased 75 basis points to LIBOR plus 350 basis points.

In addition, the company paid a 50 basis point fee to consenting lenders, and the facility size was permanently reduced to $173.3 million from $198.0 million.

The new facility size provides for $10 million of borrowing capacity, of which $6 million is available through June 30, in addition to cash on hand. The company does not expect to draw on the facility during the waiver period.

Contact: Bruce Riggins, Chief Financial Officer, (703) 387-3344

Palm Beach County Shopping Centers show positive absorption in 2008

MIAMI BEACH, FL, Mar. 31, 2009 – Palm Beach County shopping centers showed positive market absorption for the year ending in the third quarter of 2008, with 527,084 more shopping center square feet occupied in 2008 than a year before, according to statistics recently released by Terranova Corp.

Developers delivered nearly one million square feet of new retail space in those 12 months, increasing total inventory of shopping center space and contributing to increased market absorption.

While countywide vacancy increased to 7.5% in the third quarter of 2008, compared to 5.09% a year before, there still were more square feet occupied in 2008 than in 2007.

Although vacancy rates went up in all of the county’s six submarkets, three submarkets showed increases in average asking rent: Boynton Beach/Delray Beach submarket went up 2.49% to $25.95; Wellington/Royal Palm Beach went up 0.79% to $29.40 per square foot; and Lake Worth went up 0.36% to $19.63.

The biggest decrease was in the Jupiter/Tequesta submarket, where average asking rent declined 6.04% to $24.11. Countywide, the average asking rent for inline space was $25.67 per square foot, slightly lower than $25.78 a year before.

Please visit http://www.terranovacorp.com/ to purchase your copy of the 2008 Palm Beach Market Report.

Orlando's Industrial Vacancy Rises to 12% in 1st Quarter

CBRE Orlando First Quarter Industrial Mkt Report 2009

ORLANDO, FL-Asking Lease Rates:

The overall weighted average asking lease rate for all industrial product types was $6.87 NNN per sq. ft. at the end of first quarter of 2009.

This is a slight decrease from the average rate of $6.93 NNN in the fourth quarter of 2008.

To entice tenants, more rental concessions are being offered, including free rent and unprecedented first year rates.

(Ashley Furniture Distribution Center at Airport International Park of Orlando, middle left photo)

Vacancy Rates

The industrial vacancy rate was 12.0 percent at the end of the first quarter 2009, a slight increase from the 11.5 percent reported in the fourth quarter of 2008. The vacancy rate one year ago was reported as 8.8 percent.

Net Absorption

The first quarter of 2009 industrial absorption was a negative 460,111 sq. ft. That compares to a negative 434,475 sq. ft. in the fourth quarter of 2008.

(Kraft Foods Nabisco Division distribution Center at Airport International Park of Orlando, bottom right photo)

Industrial Market

Availability rates for warehouse/distribution buildings continue to rise, largely due to falling retail sales, especially in markets that were most affected by the housing crisis, such as Florida and many coastal California markets.
Furthermore, the global manufacturing slump has broadened.
With the auto industry on the precipice of an historic re-organization, Chrysler and General Motors announced shutdowns in January 2009 to curb production and preserve cash flow.
This move will affect parts manufacturers and distributors as well. With the pervasive economic slowdown, the auto sector is expected to continue adding to the labor market's losses.

(33rd Street Industrial Park, bottom left photo)

The Institute for Supply Management's manufacturing index fell to 32.4 in December 2008 – its lowest level since the early 1980s.

New orders were down and most capital expenditures have been deferred.

The industrial availability rate is expected to continue to rise, with rents softening.

Manufacturing job losses continue to mount, totaling close to half a million for the year.

Office Tenants in Driver's Seat, Reports CBRE Orlando

CBRE Orlando Office Market Report First Quarter 2009

ORLANDO,FL--Opportunities are abundant for tenants in Orlando.

Slowing job growth, high vacancies, and falling lease rates has increased leverage to tenants actively negotiating with landlords, who are eager to fill vacancies for a reasonable rate and term.

The increase in sublease activity over the past year has contributed to the downward pressure on landlords to make it cheaper for tenants entering the market.

This is the third consecutive quarter of declining overall lease rates from its peak of $22.33 per sq. ft. in the second quarter of 2008.

(CNL Center II, middle right photo)

When compared to the previous quarter, the overall lease rate for Metro Orlando decreased by $0.17 to $21.35.

Lease rates have not been this low since two years ago at $21.26.

Class A space in the Downtown submarket continues to command the highest lease rate of $28.39, an increase of $0.18 from the previous quarter. In the suburban market, the East Orlando submarket experienced the highest class A lease rate of $25.31.

Compared to the previous quarter, the total vacancy rate for Metro Orlando increased by 207 basis points to 16.2 percent.

The vacancy rate for Metro Orlando has not been this high since the fourth quarter of 1992 when it stood at 16.9 percent.

The Lake Mary and East Orlando submarkets experienced the lowest vacancies of 10.5 percent and 15.3 percent, respectively. South Orlando and North Orlando submarkets experienced the highest vacancies of 18.5 percent and 21.4 percent, respectively.

(The Plaza complex, Downtown Orlando, bottom right photo)

Net absorption decreased from negative 578,321 sq. ft. in the fourth quarter to negative 539,995 sq. ft.

The South Orlando submarket experienced positive 29,589 sq. ft. of sublease absorption, the only positive sublease absorption in Orlando. Maitland Center experienced negative 189,714 sq. ft. or 35.1 percent of net absorption experienced in Orlando. South Orlando experienced the highest net absorption of negative 5,815 sq. ft.