Monday, April 13, 2009

Prudential Mortgage Capital Arranges $756M FHA Loan for Trenton, NJ Area Hospital

(Rendering of new Capital Health System hospital in Hopewell, NJ, above)

Construction Loan Called Largest in FHA History

NEWARK, NJ.--(BUSINESS WIRE)--Prudential Mortgage Capital Company has arranged a $756 million construction loan for a new hospital in Hopewell Township, N.J., the largest in Federal Housing Administration history.

Prudential’s (NYSE: PRU) FHA-lending business Prudential Huntoon Paige, arranged the loan through the FHA’s Section 242 Hospital Mortgage Insurance program.

“We are proud of our participation in this historic loan which highlights the strength and depth of our agency platform," said David Durning, senior managing director, Prudential Mortgage Capital.

“With the addition of this loan, we anticipate reaching more than $1 billion of FHA originations in 2009, further demonstrating the confidence we have in our FHA program.”

The hospital, located in the Trenton N.J. area, is currently under construction by Capital Health System, Inc. TIAA-CREF provided the funding for the loan. The loan will also help fund a $45 million expansion of Capital Health’s hospital in Trenton.

“By working with our partners at the Federal Housing Administration and the Government National Mortgage Association, we were able to leverage our strength and expertise to identify the financing solution for Capital Health,” said Marie Head, (top left photo) managing director, Prudential Huntoon Paige.

“We are delighted to have been part of this very important transaction, which will provide the residents in the greater Mercer County region with vital medical services and create jobs for the community.”

Al Maghazehe, (middle right photo) CEO & President of Capital Health said, “With the financing now in hand, we are confident that we’ll deliver to this region in 2011, the finest healthcare facilities and most advanced medical care available.

" We are extremely proud that Capital Health met the high standards of the FHA, Prudential and TIAA-CREF and that they decided to support these projects that will bring state of the art healthcare to this part of the state.”

Ranked the second highest multifamily and healthcare originator by the FHA and the third largest national Ginnie Mae Issuer, Prudential Huntoon Paige arranged more than $306 million in multifamily and healthcare loans in 2008.

In addition, the company maintains a loan servicing portfolio of more than $5 billion, including $2.7 billion in hospital loans.

“Ginnie Mae is proud to participate in this important community-building construction project,” said Joseph J. Murin, (top right photo) president of Ginnie Mae.

“The U.S. government is working hard to help rebuild our struggling housing market, and since thriving homeownership depends on thriving communities, we are happy to provide a government-guaranteed security to ensure this project is a success.”

“Funding this loan is a win-win for all involved,” commented John Cerra, fixed-income portfolio manager at TIAA-CREF. “The high-quality, low-risk securities which we will purchase to fund this mortgage to Capital Health match our long-term investment needs as a retirement system.”*
Prudential Financial, Inc., Lisa Iurato, 973-802-5345.

Arbor Closes $16.5M Fannie Mae DUS® Loan for Harper Square Co-op in Chicago

UNIONDALE, NY, April 13, 2009 – Arbor Commercial Funding, LLC (“Arbor”), a wholly-owned subsidiary of Arbor Commercial Mortgage, LLC, announced the recent funding of a $16,500,000 loan under the Fannie Mae DUS® product line for the 591-unit complex known as Harper Square Coop (top right photo) in Chicago, IL.

The 30-year loan amortizes on a 30-year schedule and carries a note rate of 7.17 percent.

The loan was originated by Michael Jehle, (bottom left photo) Midwest Regional Director, in Arbor’s full-service Bloomfield Hills, MI lending office.

“The members of Harper Square Cooperative were looking for a lender that could decouple their existing HUD 236 mortgage and also provide substantial renovation funds for the upgrade of their property,” said Jehle. “Arbor was able to do both at a very attractive long-term interest rate.

Contact: Ingrid Principe,

Hotel Guests' Demand for Newspapers Down 25%, Says Marriott

BETHESDA, MD, April 13, 2009--Marriott International announced today that guest demand for newspaper delivery at more than 2,600 hotels in the United States has declined by about 25 percent.

Marriott will become the first major hotel company to shift to a free newspaper delivery system based on customer preference, reducing waste at the same time.

Beginning June 1, the company’s full-service hotels, including Marriott Hotels & Resorts, JW Marriott Hotels & Resorts and Renaissance Hotels & Resorts, will deliver newspapers to guest rooms based on customer preference.

The company’s 30 million Marriott Rewards members will be able to update their online profiles and receive their preferred newspaper automatically.
Guests who are not Rewards members will be asked for their preference at check-in. Guests will have a choice between USA TODAY, The Wall Street Journal, the local paper, or no paper.

Effective April 20, the company’s Courtyard, Fairfield Inn, SpringHill Suites, Residence Inn, and TownePlace Suites hotels will offer newspapers free-of-charge in their lobbies.

“We want to give guests the choice of whether they want a newspaper or not,” says Chairman and CEO J.W. Marriott, Jr. (top right photo)
“I visit more than 250 hotels a year, and more often than not, I’m stepping over unclaimed newspapers as I walk down the hallway. This new program is more guest-focused.”

Based on preliminary data, the company projects that newspaper distribution will be reduced by about 50,000 papers daily or 18 million papers annually, thereby avoiding 10,350 tons of carbon emissions (calculated by Conservation International assuming an estimate of .5 pounds per paper).

Cost-savings, if any, will vary based on consumption at individual hotels.

More than 25 years ago, through a pioneering partnership with the Gannett Co., and USA TODAY, Marriott was the first major hotel company to feature broad newspaper delivery to its hotel rooms in the U.S.

The two companies will continue to work together to offer guests innovative online news, including products such as the GoBoard™ available around-the-clock in Courtyard hotel lobbies.

“USA TODAY was founded on the idea that one newspaper could reflect the shared interests of Americans across the country.

" Our ability to connect readers with what is important to them makes us the most-read newspaper in the country and the number one choice of travelers,” said Susan Lavington, (bottom rightt photo) senior vice president of marketing, USA TODAY.

“As the needs of news consumers continue to shift, USA TODAY has innovated to provide valued content in any platform consumers choose. We look forward to extending that choice to Marriott’s valued guests through print, online, mobile devices or on a GoBoard™ in their hotel lobby.”

“More individuals choose to buy the Wall Street Journal than any other newspaper in America. We applaud Marriott for now extending this choice to their guests." said Paul Bascobert, (middle left photo) chief marketing officer for the Dow Jones Consumer Media Group.
"At a time when others are scaling back, The Wall Street Journal’s expanded coverage of national news, health, leisure and sports will be a welcome benefit to Marriott guests.”

Fed's Balance Sheet Balloons but News May be Good for Commercial Real Estate Market

SANTA ANA, CA, April 13, 2009--Bob Bach, (top right photo) senior vice president and chief economist at Grubb & Ellis Co. reports today the Federal Reserve's balance sheet (top left chart) has ballooned since last September because it has implemented several programs to combat the credit crisis.

With the target federal funds rate as low as it can go – in a range of zero to one-quarter percent – the Fed has turned to "quantitative easing" including enhanced levels of liquidity for financial firms, direct lending to borrowers and investors, purchases of high-quality assets such as Treasury securities, and support for troubled institutions such as Bear Stearns and AIG.

These programs intersect with commercial real estate at a couple of levels.

The Term Asset-Backed Securities Loan Facility (TALF), although off to a slow start, may be extended to cover commercial mortgage-backed securities if it can be modified to accommodate the longer terms typical of CMBS loans.

The rapid expansion of the Fed’s balance sheet raises the specter of inflation; this could work to the advantage of commercial real estate, which traditionally has been viewed as a hedge against inflation.

However, inflation may not become a problem unless the economy bounces back quickly, which doesn't seem likely.

A gradual recovery would, in theory, give the Fed a window to sell off its assets at an orderly pace, thereby removing excess liquidity from the economy before inflation has a chance to accelerate.

Source: Federal Reserve, Grubb & Ellis

Orlando Industrial Market Vacancy of 23.46% Lowest Since 1989

Vacancy at the end of 2008 was 16.75%, already the highest rate since 1993.

WINTER PARK, FL--Orlando’s bulk warehouse leasing market plunged during the first quarter of 2009 to its lowest occupancy rate since Rebman Properties began its survey of the bulk market in 1989, reports Rebman vice president Greg Rebman (top right photo).

In its first quarter 2009 bulk warehouse survey, the Winter Park, FL-based industrial real estate firm found:


The vacancy rate in the 139 buildings surveyed – comprised of institutionally-owned warehouses held for lease to industrial tenants – is now at an astounding 23.46%.

There was 623,051 square feet of negative absorption in the surveyed buildings, making it one of the worst quarters in the past 20 years and the worst since the early 90’s.

Downsizings, bankruptcies and other exits from the market continue as the unemployment rate and other economic variables continue to flounder or worsen.

The only significant lease in the first quarter was the lease of 40,100 square feet by Customized Delivery Services at Crossroads 2.


There were three buildings added to the survey in the period, which exacerbated the otherwise dismal first quarter.

This is similar to the fourth quarter of 2008, when three buildings were added in a quarter with negative absorption.

The following buildings were added to the survey: Beltway Commerce Center #100, a 141,810 s.f., rear-load facility; Beltway Commerce Center #200, a 145,540 s.f., rear-load facility; and Beltway Commerce Center #400, a 378,601 s.f., cross-dock facility.

These three distribution facilities are located at the intersection of Lee Vista Boulevard and the Greeneway, SR 417.

Rental Rate

The average quoted rental rate for the 139 buildings surveyed is $4.57 psf triple net, down from $4.62 psf at the end of the third quarter.


Most of the construction which had been put in motion prior to the economic downturn in the third quarter of 2008 has been completed now.

Two new warehouses are slated for completion in July: Lee Vista Business Center, Building D, a 106,500 s.f., rear-load facility; and Lee Vista Business Center, Building E, a 226,800 s.f., rear-load facility.


Orlando industrial brokers polled for this survey expressed that market activity has been sparse but were of the opinion that the exits from the market may have peaked over the past two quarters.

Nevertheless, it is expected that the remainder of 2009 will be slow as tenants and prospective purchasers await the “bottom.”

However, it is expected that when the public broadly perceives that we are at or near the bottom, that industrial companies will look to lock in bargains with warehouse purchases and leases of warehouse space.


Lynn G. Bailey, Office Manager, Rebman Properties, Inc. 1014 W. Fairbanks Ave., Winter Park, FL 32789 USA. Tel: 407.875.8001. Fax: 407.875.8004.