U.S. Industrial Market First Look: 2009-Q4

SANTA ANA, CA--Grubb & Ellis Co. presents highlights of its U.S. Industrial Market for fourth quarter, 2009:

· Vacancy increased for a ninth consecutive quarter to end the year at 10.6 percent. For a fourth consecutive quarter, the rate of increase declined. Vacancy increased sequentially by 70, 60, 30 and 20 basis points over the last four quarters.

Among the major markets, vacancy remained lowest in land-constrained Los Angeles County at 3.3 percent and was highest in economically depressed Detroit at 22.0 percent. Vacancy increased most sharply last year in San Diego, Las Vegas and Palm Beach County, Fla., all of which recorded gains of 400 to 500 basis points. Only the Oklahoma City industrial market saw vacancy tighten slightly in 2009.

· Absorption totaled a negative 140 million square feet last year – the amount of space given up by occupiers with move-ins and move-outs netted out. Fourth quarter absorption was a negative 16 million square feet, the shallowest decline of the year. Northern and Central New Jersey occupiers gave up 22 million square feet in 2009, well behind second-to-last place Atlanta where negative absorption totaled 11 million square feet.

· Space under construction plunged for a ninth consecutive quarter with a minimal 11.5 million square feet still under way at year-end. This represents a little over 0.1 percent of the standing inventory, the lowest ratio since Grubb & Ellis began tracking the U.S. industrial market in 1986. Dallas-Fort Worth led all markets with 1.6 million square feet still to be completed. Five other markets each had more than 1 million square feet remaining in the pipeline: Philadelphia, California’s Inland Empire, Oklahoma City, Phoenix and Houston.

· The average asking rental rate for all types of industrial space offered on the market at year-end was $5.21 per square foot per year triple net. This was a decline of 2.2 percent in the fourth quarter and 6.8 percent in 2009. Among the three major property subtypes, asking rates fell last year by 9.1 percent for R&D-flex space, 7.1 percent for warehouse-distribution space and 3.0 percent for general industrial space (primarily manufacturing).

Forecast

Industrial is likely to be one of the first, if not the first commercial property type to bottom out and embark on a recovery. The reason is that occupier demand for industrial space is less dependent on job creation, a lagging economic indicator, compared with the office, retail and apartment markets.

 Moreover, the drivers of demand for industrial space – production activity, freight shipments and global trade – have bottomed out and begun to grow again, at least tentatively. This is reflected in the steady moderation of vacancy increases and negative absorption in recent quarters.

The trend line suggests that industrial vacancy could peak as early as mid-2010 and embark on a gradual, multi-year recovery cycle late this year or early 2011. However, a return to equilibrium remains several years away.

Contact: Janice McDill, Vice President, Public & Investor Relations, Grubb & Ellis Company, 500 West Monroe Street, Suite 2700, Chicago, IL 60661. Direct: 312.698.6707• Fax: 312.698.5941, janice.mcdill@grubb-ellis.com,  http://www.grubb-ellis.com/

New Moves and Faces at Grubb & Ellis

Pete Bolton to Head Grubb & Ellis-Owned Office in Phoenix

SANTA ANA, CA – Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today announced that Pete Bolton, (top right photo)  one of the most successful and best known leaders in the Phoenix commercial real estate market, has rejoined the company as executive vice president, managing director.

Bolton’s hire follows Grubb & Ellis’ announcement earlier this month that it will open a company-owned office to serve the Phoenix market.

“Grubb & Ellis has been an integral part of the Phoenix commercial real estate market for four decades. We have significant client relationships, which we believe will be better served through a company-owned office,” said Jack Van Berkel, (top left photo)  chief operating officer of Grubb & Ellis Company and president, Real Estate Services.

“When we began searching for a Phoenix market leader, Pete was the first person to come to mind. He brings the leadership skills, relationships and local market knowledge that will allow us to get our office up and running quickly, and the commitment to client service that will help to make us the market leader.”

Bolton brings extensive leadership experience to his new role, having spent nine years at CB Richard Ellis as senior managing director of the company’s Phoenix office during which time he significantly increased productivity and tripled the office’s revenue.

 Prior to joining CB Richard Ellis in 1999, he spent three years at Grubb & Ellis Company as senior vice president, district manager. Bolton began his real estate career in 1980 at Grubb & Ellis as an industrial broker.

Contacts: Janice McDill , Phone: 312.698.6707 , Email: janice.mcdill@grubb-ellis.com

Chuck Hunt Assumes Responsibility for Grubb & Ellis’s Southern California Region

SANTA ANA, CA– Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today announced that Chuck Hunt, (middle right photo) executive managing director, Los Angeles, has been promoted to oversee the company’s newly created Southern California region.

Hunt, a 31-year commercial real estate veteran, has served as executive managing director of the company’s Los Angeles operations since 2008. In addition to having responsibility for the day-to-day management of the Los Angeles area, he will have oversight of the company’s Ontario, Anaheim and Newport Beach offices. He will work closely with the individual market leaders to improve profitability, recruit professionals and expand client relationships.

Contacts: Janice McDill, Julia McCartney, Phone: 312.698.6707, 714.975.2230, Email: janice.mcdill@grubb-ellis.com,  julia.mccartney@grubb-ellis.com

3rd Land Deal In 30 Days Closes In Greater Downtown Miami

MIAMI, FL, Jan. 22, 2010--A South Florida private equity group has purchased a 1.2-acre condo highrise development site in Greater Downtown Miami's Brickell Avenue area for $159 per square foot, representing a 15 percent discount off the current assessed value, according to a new report from CondoVultures.com.

The buyer, South Miami Avenue LLC, paid $8.35 million for six lots totaling 52,584 square feet of developable land at 1300 S. Miami Ave. that was earmarked to accommodate the proposed Infinity II condominium, according to the CondoVultures.com report based on Miami-Dade County records.

After acquiring the land on Jan. 12, the buyer satisfied a $12 million land loan on Jan. 19 that had been taken out against the property by the seller, Infinity II At Brickell LLC. Terms of the land loan satisfaction are not known.

The first Infinity condominium, (top left photo)  a 56-story tower with 459-units, stands immediately west of the Infinity II developable site that was acquired. In fact, a two-story former bank branch with 4,927 square feet of office space that stands on the Infinity II site is used as the sales center for the first Infinity condo tower.

"This is the third land sale to occur in the Greater Downtown Miami market in the last 30 days," said Peter Zalewski, (middle  right photo)  a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC.

"The pricing has ranged from as little as $53 per square foot to as much as $159 per square foot for the dirt. Interestingly enough, all of the buyers own or have previously owned in South Florida."

For instance, South Miami Avenue LLC is a Delaware company controlled by Coral Gables developer Alex Vadia, according to the Miami Daily Business Review.

Another Coral Gables group, Benzol Properties Corp with principals Bernard Herskowitz and Jerome Herskowitz, paid $53 per square foot for three lots in a rectangular shape on the south bank of the Miami River at 99 SW 6th St., according to a recent report from CondoVultures.com.

The Miami River site closed on Jan. 5, 2010, at a 52 percent discount off of the current assessed value, according to government records.

On Dec. 30, 2009, the Related Group, South Florida's largest condominium developer, unloaded a Downtown Miami development site for the proposed Loft III high-rise condominium tower (middle left photo)  at $151 per square foot to a local landowner who immediate resold the land to Miami-Dade College.

The Related Group's sold the property at a discount of at least 33 percent below the original purchase price, according to a recent report from CondoVultures.com.

The recent development site acquisitions come at a time when individual and bulk buyers are purchasing new condos at a pace of nearly 200 per month in Greater Downtown Miami, according to a recent Condo Vultures® White Paper.

Greater Downtown Miami is defined as a 60-block stretch from the Rickenbacker Causeway north to the Julia Tuttle Causeway, Interstate 95 east to Biscayne Bay. Greater Downtown Miami is comprised of the Brickell Avenue Area, Downtown Miami, and the Biscayne Boulevard Corridor.

In Greater Downtown Miami, there have been 15 bulk deals (two of the transactions were note sales with no deeds conveyed) since July 2008. Bulk buyers have paid $181 per square foot for more than 900 units and about 1.1 million square feet of livable space, according to the Condo Vultures® Bulk Deals Database™.

Less than 7,300 new condo units are still in the hands of developers of a pool of nearly 23,000 units constructed in Greater Downtown Miami since 2003. At the end of the 2008, developers were in possession of more than 9,300 new condo units, according to the Condo Vultures® Official Condo Buyers Guide To Miami™.

Contact:  Peter Zalewski, Principal, Condo Vultures® LLC, Office: 305-865-5629, Cell: 305-321-7383, eFax: 1-305-832-0311, Peter@CondoVultures.com,  http://www.condovultures.com/

CapStar Hotel Company Ramps Up Acquisition Activity, Promotes Gary Klett to VP Acquisitions

WASHINGTON, D.C.—CapStar Hotel Company, LLC, a hotel investment company, today announced that it will ramp up its acquisition program and has promoted Gary Klett (bottom left photo)  to VP of Development to head up the initiative.

“Gary has a strong background in finance, due diligence, deal analysis, negotiations and acquisitions,” said Paul Whetsell,  (top right photo) president of CapStar. “We have been concentrating on renovating, repositioning and asset managing our current three-hotel portfolio, waiting for the operating fundamentals to recover, the credit markets to open, and acquisition activity to pick up.

"We believe we are transitioning into that phase now, and while it is difficult to pinpoint timing we expect to see more attractive opportunities in the coming months."

In his new role, Klett will be responsible for sourcing, negotiating and closing transactions.

“We are focusing on upscale, branded and independent hotels with the potential to operate as a 3.5- to four-star asset, with a particular focus on life-style properties, ranging in size from 150 to 500 rooms,” Klett said. “We are looking primarily in the major urban markets in the U.S. and Canada, where barriers to new competition are high.”

CapStar Hotel Company is a hotel investment firm headquartered in Arlington, Va. The company was founded in 2006 by Paul Whetsell, who has more than 30 years of hospitality acquisition and operations expertise. The company currently owns three properties and is aggressively seeking to add to its portfolio.

More information about the company can be found on its website: www.capstar.com.
Media Contact: Jerry Daly or Chris Daly, (703) 435-6293

Hotel Asset Managers Emerge as the New Breed of Experienced Hotel Receivers

BEVERLY, MA—Capital Hotel Management (CHM), a leading hotel asset management and investment advisory firm,  reported it expects to see an exponential leap in demand for hotel asset management services from the lending community as they look for qualified hotel receivers.

“The lending community has reached the stage where they no longer can delay foreclosure issues,” said Chad Crandell,  (top right photo) President of CHM. “We certainly will see more foreclosures in 2010 than any year since the RTC days of the early nineties.

"We have taken on more receivership assignments in the fourth quarter of 2009 than we have in the past decade. This is just the beginning of a trend that we anticipate will last beyond 2010, and CHM is well prepared to meet the workout needs for lenders with hotels consistent with our historical asset management portfolio.”

“The good news for lenders is that there are an increasing number of hotel receivers in the market today. The bad news for lenders is that there are an increasing number of hotel receivers in the market today, making it often difficult to identify a truly qualified hotel advisor amidst a wide-range of disciplines touting services to attract the lending community,” said Ken Wilson,  (middle left photo) CEO of CHM.

 “We are encouraged by the response CHM has received from the lending community, suggesting that lenders are weighing their options carefully and understand the value of a qualified, independent asset management firm and the transferability of skills and services asset managers bring to the receivership role,” Wilson noted.

For more information on CHM, visit their website at http://www.chmhotel.com/  or contact Kristie Dickinson at (978) 522-7000.

Innkeepers USA Trust Provides Business Update

PALM BEACH, FL– Innkeepers USA Trust (OTC: INKPP) announced that in its continuing effort to enhance profitability, it is renegotiating its nonrecourse debt on a limited number of hotels.

In this regard, the company discontinued debt service on its Hilton hotel (top left photo)  in Ontario, Calif. and is in the process of seeking loan amendments that would share the hotel’s cash flow and adjust the hotel’s loan-to-value ratio.

 During this process, the company expects it will stipulate to the appointment of a receiver for the Ontario Hilton. In the event the parties do not agree on the terms of any amendments, the company may transfer ownership of the hotel to the lender in satisfaction of its obligation to the lender.

Innkeepers USA Trust is a real-estate investment trust (REIT) and a leading owner of upscale and extended-stay hotel properties throughout the United States. The company currently owns interests in 73 hotels with approximately 10,000 rooms in 19 states and the District of Columbia.

Contact:  Dennis Craven, CFO, Innkeepers USA Trust, Telephone: (561) 227-1302

Lodgian to be Acquired by Lone Star Funds

ATLANTA, GA,  Jan.  22, 2010—Lodgian, Inc. (NYSE Alternext US:LGN), one of the nation’s largest independent hotel owners and operators, today announced it has entered into a definitive agreement to be acquired by an affiliate of Lone Star Funds (“Lone Star”), in a transaction valued at approximately $270 million, including assumed debt.

Under the terms of the agreement, Lone Star will acquire all of the outstanding common stock of Lodgian for $2.50 per share in an all-cash transaction.

The price represents a premium of approximately 67.2 percent over Lodgian’s average closing share price during the trading period of one calendar month prior to January 15, 2010 and 64.3 percent over Lodgian’s average closing share price during the trading period of six calendar months prior to January 15, 2010.

Lodgian’s Board of Directors has unanimously approved the merger agreement and has recommended approval of the transaction by Lodgian shareholders.

“After careful consideration, and with the assistance of our advisors, Lodgian’s Board of Directors determined that a transaction with Lone Star will provide meaningful value and liquidity to our shareholders,” said Daniel E. Ellis, (top right photo) Lodgian president and chief executive officer. “We believe that Lone Star brings considerable real estate experience and financial strength to our assets, and we look forward to working with Lone Star to transition the business as smoothly as possible.”

“We are pleased to welcome Lodgian to the Lone Star family and look forward to working with their talented team to integrate the business into our portfolio,” said Lone Star Funds’ Andre Collin, Senior Managing Director, Real Estate Americas. “This is a diverse and well-managed hotel business that will complement our existing real estate assets.”

This transaction is not subject to a financing condition, and the purchase price is fully committed. The transaction is expected to close during the second quarter of 2010, subject to approval of Lodgian shareholders at a special meeting and satisfaction of customary closing conditions.

Certain shareholders of Lodgian holding 26.8 percent of the total outstanding common shares have entered into voting agreements under which they have agreed to vote their shares in favor of the merger.

Genesis Capital LLC acted as a financial advisor to Lodgian, and Houlihan Lokey Howard & Zukin Financial Advisors, Inc. has provided a fairness opinion to the Board of Directors of Lodgian. King & Spalding LLP is acting as legal counsel to Lodgian, and Hunton & Williams LLP is acting as legal counsel to Lone Star. Dana Ciraldo, previously affiliated with Hodges Ward Elliott, is acting as financial advisor to Lone Star.

Contacts:

 Debi Neary Ethridge, Vice President, Finance & Investor Relations, dethridge@lodgian.com
(404) 365-2719

Ed Trissel / Jim Shaughnessy, Joele Frank, Wilkinson Brimmer Katcher, etrissel@joelefrank.com / jshaughnessy@joelefrank.com
(212) 335-4449

Cambridge Processes 298 Loan Origination Requests Totaling $4.03B in 2009

CHICAGO, ILL--Borrower enthusiasm as measured by loan origination requests clearly perked up in the second half of 2009, but not enough to offset the slower pace established earlier in the year, Cambridge Realty Capital Companies reports.

Chicago-based Cambridge is one of the nation’s leading senior housing/healthcare lenders. Chairman Jeffrey A. Davis (top right photo) said the company processed 298 loan origination requests totaling $4.03 billion in 2009, compared with 333 requests totaling $4.77 billion a year earlier.

“Given all the challenging economic news they had to deal with, borrowers were out in surprisingly large numbers. But availability of capital from traditional lending sources remained problematic throughout the year,” Davis said.
He points out that lenders close a relatively small percentage of the loanrequests received, but believes it’s useful to track this information as anindication of market direction.

“We saw a definite bounce in borrower interest during the third quarter of the year, and fourth quarter numbers were only slightly behind 2008 totals for the final three months of the year,” he noted.

In the fourth quarter of 2009, Cambridge processed 94 origination requests totaling $1.0 billion, compared with 97 loans totaling $1.2 billion for the same period in 2008.

Davis said the significantly lower dollar volume for 2009 origination requests suggests fewer new construction loans were in the mix than was the case in 2008.

Contact:  Evan Washington, Phone: (312) 521-7603, Fax: (312) 357-1611, E-Mail: mailto:ew@cambridgecap.com, 
Twitter: http://twitter.com/CambridgeCap

Marcus & Millichap Sells $20.5M Senior Manufactured Housing Community in Florida

HUDSON, FL– Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has brokered the sale of Club Wildwood MHP (top left photo) , a 478-space senior manufactured housing community in Hudson.

The sales price of $20.5 million represents $42,887 per space.

Dan Mulkey, a vice president investments in the firm’s Tampa office, represented the buyer, Arizona-based National Home Communities (NHC) LLC.

“Club Wildwood’s 478 sites place it in the top 5 percent of Florida’s largest manufactured seniors housing communities,” says Mulkey. “Due to its size and high quality, the property was highly sought after by investors. Charles Ellis of NHC’s keen eye for opportunity gave him the edge when it came time to negotiate the transaction,” adds Mulkey.

The property is located on Florida’s west coast just north of Clearwater/St. Petersburg in Hudson at 770 Parkway Blvd.

Club Wildwood was developed between 1974 and 1979. The park features 474 doublewide and four singlewide coaches. Community amenities include a large clubhouse, swimming pool, bocce ball and shuffleboard courts.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716

Marcus & Millichap Capital Corp. Forms Debt Advisory Services Division

NEWPORT BEACH, CA – Marcus & Millichap Capital Corporation (MMCC), has launched a new division to serve the needs of borrowers nationwide.

 The Debt Advisory Services (DAS) division will assist borrowers on loan modifications and restructurings, loan maturity extensions, loan assumptions, discounted pay-offs and note purchases, according to William E. Hughes, (top right photo) senior vice president and managing director of MMCC.

“The DAS can assist borrowers with portfolio and securitized commercial mortgage loans to better understand, manage and negotiate the lender and servicer approval process, particularly for commercial mortgage-backed securities (CMBS) loans,” explains Hughes.

“The division has expertise in credit analysis, underwriting, loan closing, securitization, servicing and asset management. By leveraging our relationship with Marcus & Millichap Real Estate Investment Services and its national network of investment professionals, the DAS division will provide private and institutional clients with superior loan services,” adds Hughes.

“The DAS understands the assumption process for structured commercial real estate financing,” adds Gunderson, a director of the DAS division. “As a borrower’s representative, we act as a single point of contact between a buyer and seller in working with the loan servicer and other approval parties.”

Eric Gunderson, Deborah Schiavo and Brian Sullivan, formerly of Highland Advisory Partners – with offices in Los Angeles and New York City – will serve as directors of the DAS.

Press Contact: Stacey Corso, Marcus & Millichap Capital Corporation, (925) 953-1716www.twitter.com/mmreis, www.twitter.com/mmcapitalcorp