NAHB Trims $11.5M from Budget and Eliminates 51 Positions

tWASHINGTON, DC--Jerry M. Howard, (top right photo) President and CEO of the National Association of Home Builders (NAHB), has issued the following statement on staff and operating cutbacks that will result in the savings of $11.5 million for the association in 2009:

"With our builders and other members of the housing industry confronting the most serious recession in more than 50 years, we are announcing today that NAHB is cutting $11.5 million from its operating budget to ensure that NAHB remains the premier advocacy and service trade association for the residential construction industry.

"In my 20 years at NAHB, including the past eight years as President and CEO, this is by far my toughest and most difficult decision. The staff cutbacks touch on the careers of dedicated professionals who have been committed to the mission of our industry.

"They are good, talented and hard-working people. Nevertheless, the stark financial realities confronting our association and industry cannot be ignored.

"Projected income from NAHB's two principal sources -- membership and trade shows - will be down significantly in 2009. To balance NAHB's operating budget, we will be eliminating 52 positions of which half are currently vacant.

"The layoffs will take effect immediately. In addition, we will also be sharply reducing expenditures previously approved for 2009.

"By taking this action now, we help position the association to maintain its advocacy leadership and vital services for an industry struggling in the toughest economic environment seen in generations."

CONTACT: Paul Lopez, 202 266 8409. plopez@nahb.com and http://www.nahb.org/

RECI Asks: How Long Will Mortgage Gridlock Paralyze Commercial Realty Markets?

Funding Stalemate Stalls Markets

CHICAGO, IL--The Real Estate Capital Institute finds that as the year closes, the dramatic turn of recent events in the U.S. financial markets clearly redefines commercial mortgage metrics to conservative levels not seen in years.

Today, massive structural changes dictate mortgage underwriting based on highly conservative and transparent terms and conditions.

And in particular, with few exceptions lenders are unwilling to provide funds at acceptable leverage levels (e.g., 75%-80% loan-to-value) as compared to the any year within the past decade. Under such circumstances very few loans are funded, resulting in mortgage market gridlock.

Investors are looking for clues as to how long the gridlock will last. In other words, when will real estate capital markets return to a “normal” cycle?

According to discussions with advisory board members of the Real Estate Capital Institute, the general consensus regarding the overall direction of today’s realty capital cycle is outlined as follows:

The Peak: The overall upward trend started in about 2004 and rapidly accelerated in 2005-06. The real estate capital markets peaked by the end of 2006 and early 2007.

Current Cycle: Since interest rates and corresponding mortgage spreads continue rising, rate relief is not in site until domestic markets find more stability within the bond markets, in particular. The remainder of 2008 will be highly tumultuous as investors try to sort of the Wall Street Bailout and access “real” property value

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The Bottom: Many believe that the current market doldrums are at least one to two more years in the making with 2009 being a flat, or declining year.

The Future: Values will settle to more “normal” levels by about 2011. Market volatility remains a key concern, but supply and demand dynamics for most types of commercial properties are within general balance. Longer recoveries are expected in some of the costal markets which were severely overvalued.

Given this two-to-three-year outlook, the new real estate cycle slogan might sound like "Tow the line in 2009; If not then, try 2010."

(Wall Street, bottom right photo)

Regardless of exactly how long the current malaise continues, almost everyone agrees the realty capital markets are in for a wild ride the next few years.

The Real Estate Capital Institute®
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact: Nat Zvislo, Research Director
Toll Free 800-994-RECI (7324)
director@reci.com and http://www.reci.com/

MBA Says Credit Markets and Economy Add Pressure to Commercial Mortgage Performance

Washington, DC-- Delinquency rates continued to tick up in the third quarter for most commercial/multifamily mortgage investor groups, but remained at the lower end of their historical ranges, according the third quarter Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association (MBA).

"The frozen credit markets and deteriorating economic conditions are placing increased pressure on the performance of commercial and multifamily mortgages," said Jamie Woodwell, (top right photo) MBA's Vice President of Commercial Real Estate Research.

"Commercial/multifamily mortgages have not seen the same kind of deterioration in performance witnessed among other real estate loans, and at the end of the third quarter, delinquency rates for every investor group remained at the lower end of their historical ranges. That being said, delinquency rates for nearly every investor group did see increases during the third quarter, and economic and credit market stress is likely to continue that trend."

Between the second and third quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.10 percentage points to 0.63 percent (Corrected).

The 60+ day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.06 percent.

The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.05 percentage points to 0.16 percent.

The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac fell 0.02 percentage points to 0.01 percent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.20 percentage points to 1.38 percent (Corrected).

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the second quarter were as follows:

. CMBS: 0.63 percent (30+ days delinquent or in REO);
. Life company portfolios: 0.06 percent (60+days delinquent);
. Fannie Mae: 0.16 percent (60 or more days delinquent)
. Freddie Mac: 0.01 percent (60 or more days delinquent);
. Banks and thrifts: 1.38 percent (90 or more days delinquent or in non-accrual) (Corrected).

To put these numbers in context, of 35,135 commercial/multifamily loans in life company portfolios, with a total unpaid principal balance of $253 billion, only 36 loans with an aggregate UPB of less than $144 million were 60+ days delinquent at the end of the quarter.

Of $1.2 trillion of commercial/multifamily mortgages at FDIC-insured banks and thrifts, only $18 billion was 90+ days delinquent.

CONTACT: Jason Vasquez, (202) 557-2950, jvasquez@mortgagebankers.org

Grubb & Ellis Facilitates Sale of Tucson Technology and Industrial Portfolio for $46.3M

TUCSON, AZ – Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, has facilitated the sale of a 606,027-square-foot industrial/R&D portfolio in Tucson.

Intercontinental Real Estate Corporation, a Boston-based real estate investment company, purchased the portfolio from a joint venture of the Muller Company and GE Real Estate for $46.3 million, or $73.40 per square foot. It is the largest investment sale completed in Tucson so far this year.

Ryan Gallagher, (top right photo) senior vice president, and Kelly Rohfeld, (top left photo) vice president, with Grubb & Ellis’ Institutional Investment Group represented the buyer and the seller in the transaction along with local market brokers Russ Hall and Steve Cohen of Picor Commercial.

The six-building portfolio, which consists of Tucson Technology and Commerce Center I, II, III, IV (bottom right photo) and Medina Business Center I & II, is situated on 50.92 acres immediately adjacent to Tucson International Airport.

Also included in the sale was an adjacent four-acre site for future development. The portfolio was 95 percent leased at the time of sale. Major tenants include: Ferguson Enterprises, UPS, Solon AG and United Collections Bureau.

“The new owner will benefit from the below market rents that are in place, the adjacent four-acre development site and existing tenants that want to expand in the future,” said Gallagher.

“The Airport Area submarket is currently 93 to 95 percent occupied and remains a highly sought after, strategic corporate location due to its proximity to the airport, climate, affordable labor pool, and the redundant power grid provided by the Airport Authority.”

This is the second significant transaction that Gallagher has completed in the Tucson market this year. In February, he represented the sale of a 136,000-square-foot office building in Tucson that was 100 percent leased to Intuit Inc. for $21.6 million.

Contacts:

Sharon Abar, 714.975.2185, sharon.abar@grubb-ellis.com

Damon Elder, 714.975.2659, damon.elder@grubb-ellis.com

Tourism in UAE affected by recession

LONDON--Analysis presented by Deloitte to hospitality leaders in the Middle East this week reports that despite tourist arrival and hotel performance growth to September, tourism volume in the United Arab Emirates (UAE) will slow due to the current economic conditions facing the important European outbound market.

(Dubai skyline, top left photo)

The analysis was shared during the Deloitte Global Tourism, Hospitality and Leisure industry meeting and lunch, the first to be held in the Middle East.

Europeans have seen a decline in the value of their investments and real estate. Combined with the unfavourable exchange rates between European currencies and the dirham, which has increased the cost of visiting the emirates by at least 25%, the UAE faces a challenging time in maintaining the growth enjoyed over the past three years.

Commenting, Alex Kyriakidis, (middle right photo) Global Managing Partner of Tourism, Hospitality & Leisure at Deloitte said:

“The long-term development vision of the UAE must continue and current conditions should not cause panic. No one is immune from the global economic crisis.

" The key is in broadening the UAE tourism offering to meet the needs of today’s tourists.

" There will be increased emphasis on value for money and the UAE will be competing for the European visitors – who account for over 40% of tourists – with Egypt,

"Turkey and the Far East as destinations which have not been affected by the strengthening of the dollar. The mid and limited service market is currently an underdeveloped sector in the UAE’s hotel supply and should be addressed promptly. Hoteliers should also look to different sales channels such as tour operators to broaden the distribution base.”

He added: “Another way of introducing more tourists to the emirates is to continue developing a diverse range of attractions such as theme parks, cultural attractions, museums and nature reserves to widen the appeal to different types of tourists such as families.”

(Abu Dhabi skyline, bottom left photo)

Commenting, Rob O’Hanlon, Tourism, Hotel and Leisure partner at Deloitte Middle East said: “Hotel performance remains very strong in Abu Dhabi with revenue per available room (revPAR) up 45% while Dubai’s revPAR grew 6.7% year-to-October 2008 according to STR Global.

To ensure that hotel performance remains solid, an increased marketing effort for the UAE as a whole is important.

"The other part of the puzzle is to align this strategy with the route expansion plans of Emirates and Etihad airlines, key drivers of the UAE’s tourism traffic.”

CONTACT: Sian Mannakee, Deloitte UK Public Relations, Phone: +44 20 7303 7883