Profit Down by 96% but Indian Hotels Co.’s Buying Spree Rolls On

MUMBAI, India—Indian Hotels Co. Ltd. (IDHCF-Bombay Stock Exchange) disclosed its consolidated profit after tax of Rs 124.6 million (US $2.6 million) was down by 96.48 percent in fiscal 2009 that ended March 31.

In fiscal 2008, the company reported a consolidated profit after tax of Rs 354.98 crore (US $74.8 million).
Consolidated total income decreased to Rs 27.82 billion in fiscal 2009 from Rs 30.59 billion in the previous year.

For the fiscal 2008-09, stand-alone profit after tax of the company dropped to Rs 2.34 billion from Rs 3.77 billion in the previous year.

Regardless of the bottom-line numbers, Indian Hotels Co., which runs the Taj Group of hotels, has acquired control of Hotel Sea Rock (top left photo) in north Mumbai for 6.8 billion rupees ($143 million), the company announced today.

In a prepared statement, the nation’s biggest operator of hotels says it will spend 5 billion rupees in the next two years to tear down a dormant building, unused since the 1993 serial bomb blasts in Mumbai, and convert it into a luxury hotel, says company vice chairman R.K. Krishna Kumar. (bottom left photo)

Mumbai-based Indian Hotels will meet the acquisition cost from the 14 billion rupees raised by selling stocks to shareholders last year, says chief financial officer Anil Goel.

The company plans to integrate the site with its existing property known as Taj Lands End. (top right photo)

The acquisition gives Indian Hotels room to expand in the northern suburb of Bandra, soon to be linked to the downtown area through a bridge over the Arabian Sea.

“Within days of the Bandra-Worli Sea Link being set to open, we are delighted to announce that we are able to propose a world-class convention and hospitality center,” Kumar says.

There are no pending lawsuits relating to the Sea Rock property, Kumar says. The hotel used to be a popular gathering location for film stars before it was closed following the bomb blasts in 1993.

“It will be the most luxurious Mumbai has seen,” Kumar says. “It will be a landmark in that part of town, as the Taj is in south Mumbai, or as the Opera House is to Sydney.”

Indian Hotels plans to spend another 3 billion rupees on other hotel projects during the year, he says. The company is “keen to increase its stake in Orient-Express Hotels Ltd. (middle left photo) and work with the group,” Kumar says.

Mumbai-based Indian Hotels owns 9.7 percent of Orient- Express and will “be happy” to raise its stake, he said. The two groups have had meetings “at the highest level,” he says.

“We hope to continue the dialogue that will give us the right kind of chemistry to work together,” Kumar says.

“I don’t think we should be talking about stakes alone. The problem in the beginning was the perception that we were moving in to make a hostile move on acquiring stakes and destroying the autonomy or independence of the company.”

The Tata Group, which runs Indian Hotels, doesn’t make “hostile moves,” Kumar says. Indian Hotels, which runs 97 hotels across the globe, gets about a third of its revenue from international operations.

The company expects to fully re-open the terrorist-hit, 106-year-old Taj Mahal Palace & Tower (middle right photo) in Mumbai by the end of the year or in January, 2010, says Kumar.

The hotel was damaged in the Nov. 26-29, 2008 attacks, along with another luxury hotel, the main railway terminal and sites elsewhere.

The attacks damaged a large part of the heritage wing and destroyed paintings, chandeliers, silk carpets and wooden furniture at the hotel located next to the landmark
The hotel re-opened its tower wing in December 2008.

“We are trying to restore it with love and devotion and don’t want to rush,” Kumar says. “We want to see it as the most beautiful hotel in the world.”

The Mumbai Taj contributes about a fifth of Indian Hotels’ revenue. The hotel is “more than adequately covered” by insurance, CFO Goel says. The hotel has 62 percent occupancy, compared with 75 percent a year earlier.

India’s economy, which grew 5.8 percent in the three months to March 31, may expand 7 percent in the fiscal that began April 1, the government has predicted.

The economy could rebound to its 9 percent growth path, Prime Minister Manmohan Singh (bottom right photo) told the Parliament on June 9.

Following last year’s attacks and amid the global recession, overseas travelers canceled trips to India, hurting the travel and tourism industry.

“The global community has seen the worst period over the past 18 months,” Kumar says. “The worst is over.”

SPECIAL REPORT: Medical Office Market Could Need 10M SF of New Space if New Health Program Enacted, Says Marcus & Millichap

ENCINO, CA—There is an unprecedented boom in new medical office space around the corner in almost every U.S. community, if President Barack Obama’s new healthcare insurance program is enacted this year.

Ten million square feet of new space would be needed, estimates a special report prepared by Encino, CA-based Marcus & Millichap Real Estate Investment Services.

It’s the first time any major national brokerage has predicted how much new real estate might be needed in the fast-growing medical office industry.

The report was coordinated by John Chang, National Research Manager and Tom Hershey, Research Services.

Here is how they arrived at their 10-million-square-feet estimate:

“The medical office sector’s resilience can be attributed to a combination of variables, including technological advances and medical innovations that continue to extend life spans, as well as the aging baby boomer generation.

“At present, baby boomers account for 29 percent of the total uninsured yet represent almost one-third of all physician office visits.

“Proposed changes to the healthcare system will dramatically increase demand for medical services among this group.

“ Per person office visits for 45- to 64-year-olds have expanded by 7 percent over the past decade. Insuring 95 percent of this cohort could elevate physician office visits by 12 percent, or 34 million visits, annually.

“At the current average of 120 visits per week for primary care physicians, approximately 5,400 new general practitioners will be needed to handle the additional workload from this age group alone.

“The resulting demand for office space from these doctors would total nearly 10 million square feet.”

The report notes that despite the recession, medical office properties ‘have performed favorably, and demand is set to accelerate as medical reform is phased in over the next several years.

“Unlike other asset types, medical office properties continue to garner investors’ demand by exhibiting considerable resistance to the economic downturn.”

Medical office vacancy is currently 11.6 percent, up only 100 basis points from one year ago. traditional office vacancy, by comparison, is 15.2 percent, a 240 basis point increase over the same period.

Contact: Stacey Corso, Communications, stacey.corso@marcusmillichap.com

GVA Advantis Orlando Wins New Leasing and Management Assignments

ORLANDO, FL – (June 17, 2009) – GVA Advantis recently won new leasing and property management assignments, and was chosen to provide property management services to an exclusive leasing assignment it has held since 2006.

University Plaza, a 12,220± sf professional office complex located at 11500 University Boulevard in east Orlando, was built in 1992 and renovated in 2001. GVA Advantis began leasing and property management services on May 1. The office is currently 47% occupied.

Additionally, GVA Advantis began providing property management services on June 1 to 1707 Orlando Central Parkway, a 65,000± sf, class B office space on the north side of Orlando Central Park, for which it has provided leasing services since 2006. This five-story office was built in 1968 and completely renovated in 2001. It is currently 90% occupied.

Another property was recently added to GVA Advantis’ list of managed properties – site of the new 43,668± sf U.S. Citizens & Immigration Services office at 6680 Corporate Center Boulevard in Lee Vista Center near Orlando International Airport.

Roxanne Hargis, (top right photo) area manager for GVA Advantis’ property management services division, landed the management of all three accounts.

“This has been a great year so far for us, particularly in Orlando,” said Lisa Bailey, (middle left photo) senior director of office & industrial services of GVA Advantis’ Orlando office.

“We have won several new management assignments, thanks to Roxanne, as well as leasing assignments since the beginning of the year, and we just added two brokers to help manage the new business.”

Connie Snyder, (bottom right photo) Associate Director, and Don Rudolph, (bottom left photo) CCIM, Associate, joined the company in May.

Contact: Shelli Browning, 407.999.4775, sbrowning@gvaadvantis.com

Extended Stay’s $8B Buyout Triggers Record Bankruptcy Protection Filing

NEW YORK, NY—In April 2007, David Lichtenstein’s (top right photo) Lakewood, NJ-based Lightstone Group LLC borrowed $7.4 billion to buy the 680-hotel chain Extended Stay Inc. from New York City-based Blackstone Group LP.

Analysts at the time doubted the deal was a good one for debt-loaded Lightstone. Today they were proven right.

Lightstone filed for Chapter 11 bankruptcy court protection in the court’s Southern District in Manhattan.

Extended Stay listed $7.1 billion in assets and $7.6 billion in debts at the end of last year. The company has about 10,000 employees in 44 states and Canada.

The Wall Street Journal called it one of the largest bankruptcy filings by a U.S. commercial real-estate company.

The banking consortium that did the deal includes Bank Of America and its Merrill Lynch unit, Wells Fargo & Co.s Wachovia and Bear Stearns Cos., whose stake was taken over by the Federal Reserve after Bear collapsed in March 2008. BlackRock Inc. has been representing the Fed in the restructuring talks.

The WSJ reports the deal was highly leveraged, making Extended Stay especially vulnerable to a market downturn.

(David Lichtenstein on his boat in Manhattan, middle left photo)

The hotel chain has $4.1 billion in a senior first mortgage debt that was mostly sold to investors as commercial-mortgage-backed securities, or CMBS.

Behind those secured creditors is the $3.3 billion of mezzanine debt divided into 10 classes, ranked one through 10 in seniority.

Most of the holders of junior mezzanine debt bought at a discount, some around 60 cents on the dollar, but others as low as 10 to 15 cents, according to debt holders.

The paper reports the surprise bankruptcy filing today also triggered a new set of lawsuits.
In early June of this year, investors who bought debt that helped finance the 2007 Extended Stay deal, are suing banks that provided much of the financing.

The lawsuits accuse the banks of scheming to seize the properties and wipe out the mezzanine investors.

The hotel chain was served a notice of default in May. Both the senior and mezzanine loans matured on Friday, June 12, with extension options.

Wachovia, the servicer of the mezzanine and first mortgage debt as well as being a lender, declared a default in late May after Extended Stay failed to pay a $3.5 million late phone bill, according to the people familiar with the matter.

KFC Plans to Open 300 Outlets in China in 2009; McDonald’s About 150

DUBLIN, Ireland—Is there a Recession in China’s American-style, fast-food industry? You can’t prove it by the expansion plans of KFC and McDonald’s.

The Kentucky Colonel and the Golden Arches, long-established icons in China’s growing fast-food industry, plan to grow even more.

Research and Markets, a Dublin-based business information-gathering company, reports KFC plans to open 300 outlets in 2009; McDonald’s about 150.

KFC already has more than 2,000 stores in China; McDonald's over 1,000. The average price of a fast food item in China varies from 50 cents to $3.

“There is huge potential in the fast food industry in China,” the research group states. It is a $30 billion-a-year industry right now.
But if you are an independent entrepreneur planning to follow the big boys of the industry, do your homework carefully, advises Research and Markets.

“The fast food industry in China is imperfect in market environment, inadequate in laws and regulations, imperfect in the distribution systems, non-standard in the consumption environment and numerous in the food safety problems,” the Ireland-based company says.

“Therefore, investors should take the policies, places, the consumers’ incomes and cultural elements into consideration when investing into the fast food industry in China.

Despite the growth of American-style fast-food, the scale of Chinese-style fast food is still “all very small,” Research and Markets reports.

Still, the giant enterprises of Chinese style fast food, Kungfu Catering Management Co., Ltd. and Changzhou Lihua Fast-Food Ltd., also plan to speed up their expansions.

“As far as the fast food industry is concerned, the financial crisis turns down the costs for the labor forces and house rents in China and provides more development space,” the research group says.

“Under the circumstances of the financial crisis, many domestic and foreign enterprises are taking aim at the fast food industry in China, exclusive the possibility of new western style fast food entering China.”

Jollibee Foods Corp. for example, has already entered the Chinese market through its merger with Yonghe King.

At present, the major western style fast food brands are KFC, McDonald's and Dicos. Chinese style fast food mainly includes Lihua fast food, Kungfu, Malan noodle, Yonghe King and Daniang dumplings.

The fast food industry in China started late and only has a little more than 20 years of history.

KFC introduced American-style fast food to China in 1987, opening its first store in Beijing. Other American fast-food companies followed during the 1980s and 1990s. #

Margo Thomas of CB Richard Ellis Orlando Negotiates 10-Year Lease

ORLANDO, FL, June 16, 2009 – The Orlando office of CB Richard Ellis is pleased to announce Margo Thomas, (top right photo) Senior Retail Specialist, has negotiated a 10-year lease transaction on 13,455-sq.-ft. for the Orange County Library System.

Genny Spies and Christin Jones of The Shopping Center Group represented the landlord, Simon Property Group. The space is located in the Highland Lakes Shopping Center on West Colonial Drive in Orlando, Florida in a portion of the former Office Max.


Contact: Angelique Greven 407.839.3158 angelique.greven@cbre.com

Lawrence McCue Appointed Director of Group Sales for Westin Bonaventure, Los Angeles

LOS ANGELES, CA, June 16, 2009 – The Westin Bonaventure Hotel & Suites, (top right photo) Los Angeles announced today Lawrence McCue has been named director of group sales for the 1,354-room hotel, located in the heart of the business district in downtown Los Angeles.

“We are delighted to welcome Larry to the Westin Bonaventure,” said Managing Director Michael Czarcinski (bottom left photo).

“With 13 years of director-level sales experience, Larry will be a great asset to the Westin Bonaventure team.”

McCue most recently served as director of sales and marketing for the Keystone Resort and Conference Center in Colorado since 2004.

Prior to that, he was vice president of sales for Pinehurst Resort in North Carolina for three years.

McCue’s extensive experience also includes national sales and marketing leadership for a collection of International Conference Resorts’ properties, and as director of sales and marketing for Cheyenne Mountain Resort in Colorado Springs.

Contact: Michael Czarcinski, Managing Director, The Westin Bonaventure Hotel & Suites, Phone: (213) 624-1000 Email: michael.czarcinski@westin.com

Construct Two Group completes Lakeland, FL community center renovation

ORLANDO, FL, June 16, 2009 — Construct Two Group recently completed its $1.8 million contract to renovate and build an addition to the Coleman-Bush Building, (top left photo) a community center located on Martin Luther King, Jr. Drive in Lakeland, Fla.

Under contract with the City of Lakeland, Fla., Construct Two Group provided general contracting for site preparation, the renovation of 20,328-square-feet of existing space and a 2,420-square-foot addition.

The facility now features larger meeting and community rooms, expanded restrooms and offices for the City’s Code Enforcement and Housing units.

The project was completed in seven months.

Swilley Curtis Mundy Hannicutt Associates Architects Inc., Lakeland, Fla. designed the project.

Major subcontractors under contract with Construct Two Group were Payne Air Conditioning & Heating Inc., Lakeland; Assured Excavating, Orlando; Advantage Roofing, Orlando; A Catapano Plumbing Inc., Orlando; and Beneficial Fire Protection, Thonotosassa.

Construct Two Group provides construction management, design-build, cost management and program management services to public and private sector clients.

Having completed more than $500 million in projects since its founding in 1990, Construct Two Group is the largest African-American-owned construction management company in Florida. The Company employs a professional and support staff of 31 from offices in Orlando, Tampa and Tallahassee, Fla.

Please visit http://www.constructtwo.com/ for additional information.

Contact: Elaine Ingra, PR WORKS!, PH: 407 384-1344,
elainei@pr-works.com,

http://www.pr-works.com/

Mark One Capital Arranges $1.5M Loan for Macaroni Grill Restaurant in Florida

ALTAMONTE SPRINGS, FL – Mark One Capital has arranged a $1.5 million loan for the acquisition of a 7179-square foot Macaroni Grill Restaurant (top right photo) located at 844 W. State Road 436 in Altamonte Springs.

Geoffrey Harris, (bottom left photo) a senior director in the firm’s Phoenix office, and Farhan Kabani, an associate director in the firm’s Dallas office, arranged the financing for the property.

“Debt financing for single-tenant net-leased restaurant properties is in short supply,” says Kabani.

“However, Mark One Capital was able to source an aggressive lender that closed the transaction with excellent partial recourse loan terms.”

Financing for the Macaroni Grill Restaurant was provided by a portfolio lender at a five-year fixed rate of 6.5 percent, 25-year amortization and 50 percent recourse. The loan-to-value was 65 percent.

Press Contact: Kathy Molitor, Mark One Capital , (925) 953-1704

JPMorgan Securities Arranges $200M Loan for FelCorp

IRVING, TX – In one of the largest deals of its kind this year, JPMorgan Chase Securities Inc. arranged a $200 million loan today for Irving, TX-based FelCor Lodging Trust.

The loan gives FelCor breathing room from the new debt until 2013.

The loan is non-recourse, meaning FelCor officials personally cannot be sued if the loan defaults. The lender or lenders can only take back the properties.

For collateral, FelCor put up nine hotels, representing 2,331 guest rooms. The loan bears interest at LIBOR plus 350 basis points; has a 65 percent LTV ratio and, including both extension options, matures in 2013.

JPMorgan Chase Bank, N.A., is the administrative agent and provided a portion of the loan.

Proceeds of the new loan will be used for general corporate purposes, including repayment of outstanding obligations totaling $128 million under FelCor’s line of credit, which was terminated by the Company.

“We are pleased to have closed this loan in a very challenging environment.,” says Andrew J. Welch, (top right photo) FelCor’s Executive Vice President and Chief Financial Officer.

“This transaction allows us to terminate our line of credit, thereby eliminating restrictive financial covenants and increasing our flexibility to encumber other hotels.

“Equally important, this new loan extends our maturity profile and provides additional liquidity in the form of cash on hand. We are now focused on refinancing debt maturing in 2010 and 2011,” said

FelCor, a real estate investment trust, is the nation’s largest owner of upper upscale, all-suite hotels. FelCor owns interests in 87 hotels and resorts, located in 23 states and Canada.

FelCor’s portfolio consists mostly of upper upscale hotels, which are flagged under global brands such as Embassy Suites Hotels®, Doubletree®, Hilton®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday Inn®.

Hyatt Debuts Billion-Dollar Resort in Saudi Arabia

CHICAGO, IL—Chicago arrived in Saudi Arabia today via the estimated billion-dollar, 142-room Park Hyatt Jeddah—Marina Club and Spa at the Corniche of Jeddah, 30 minutes from the King Abdullaziz International Airport.

This is Chicago-based Hyatt Hotels & Resorts’ first leisure project in Saudi Arabia. Other Hyatt properties in the Mideast include the recently opened Grand Hyatt Doha in Qatar and existing Hyatt hotels in Egypt, Jordan, Oman, and the United Arab Emirates.

The marina on the 35-acre complex can hold 140 luxury yachts. Adjacent to Park Hyatt Jeddah. the Lazurde Meetings & Events Centre, opening shortly, will feature 26,000 square feet (2,500 square meters) of meeting and banquet facilities.

The 34.5-acre (140,000 square meter) complex overlooks sweeping views of the sea and the world-famous King Fahd fountain with its more than 1,000-foot-high (312 meters) plume of water.

Hyatt officials say Park Hyatt Jeddah is an intimate and residential-style hotel where French interior designer Gilles Quiffet and architect Patrice Hart fashioned rooms that “fuse a sleek European style” with Arab-Andalusian architecture.

The surrounding resort complex will feature a built-up 2.5-acres (10,000 square meters) of spa and wellness facilities and a variety of innovative restaurants and stylish lounges.

The 142 spacious guestrooms measure 430 square feet (40 square meters). The suites range from 860 square feet to more than 2,100 square feet (80 to 200 square meters).

The 8,100-square-foot (756 square-meter) ballroom can be divided into three separate spaces. The exclusive Palm Courtyard can accommodate up to 900 guests for outdoor events by the Red Sea.

Hyatt officials say Park Hyatt Jeddah – Marina, Club and Spa is the ideal base for Hajj or Umrah pilgrimages to Mecca or Medina.

Because the King Abdullaziz International Airport is only a 30-minute drive from the resort, Park Hyatt Jeddah is “a well-situated stopover upon entering or leaving the region,” according to Hyatt officials. Mecca is a 45-minute drive from the hotel.

Hyatt, however, is not the exclusive developer in this part of Saudi Arabia. Non-Hyatt managed facilities to open soon will include a Commercial Gallery with a host of high-fashion boutiques and a marina that can berth 140 yachts of 26 to 82 feet (8 to 25 meters) in length.

Sikon Wins Walgreen's Construction Job in Boynton Beach, FL

BOYNTON BEACH, FL – Deerfield Beach-based SIKON Construction Corporation was awarded a contract for the new 15,000-square-foot Walgreen’s at Canyon Town Center (top left photo) retail center located at Boynton Beach Boulevard and Lyons Road in Boynton Beach, FL.

Developed by RAM Development, West Palm Beach, and designed by FWH Architects, Holiday, FL, the project will break ground in April 2009 and is located across from the Publix at Canyon Town Center recently constructed by SIKON.

Led by Steve Goraczkowski, CEO, SIKON Construction Corporation is a full-service general contractor and construction manager specializing in mixed-use, office buildings, retail, restaurant and other commercial projects.

Contact: Kenneth H. Cristol, 407-774-2515

Keene Nears Completion of Boynton Beach, FL Buildings

ORLANDO, FL – Keene Construction Company, Maitland, is nearing completion on the new multimillion-dollar, 27,000-square-foot Buildings A and F at Shoppes at Woolbright (top left photo) located on the northwest corner of Jog Road and Woolbright Road in Boynton Beach, FL.

Keene recently wrapped up work on the center’s new 46,031-square-foot Publix Super Market plus 75,756 square feet of additional retail space contained in Buildings G, J, K1 and K2.

Developed by Woolbright Development, Boca Raton, FL, the project was designed by Marc Wiener Associates, Boca Raton. Notably, Keene has constructed over 140 Publix stores for the Lakeland, FL-based grocery giant.


Contact: Kenneth H. Cristol, 407-774-2515

Recession Weighs on Washington, DC Retail Investment Activity

WASHINGTON, DC— Despite the Washington, D.C., metro’s high concentration of jobs and affluent households, the recession continues to weigh on the local retail market, according to a second-quarter Retail Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Fortunately for local property owners, President Obama’s inauguration provided a temporary reprieve from economic headwinds.

“The recession has hampered retail investment activity in the metro, though demand for single-tenant assets was resilient through the end of last year,” says Ramon Kochavi, (middle left photo) regional manager of the Washington, D.C. office of Marcus & Millichap.

“A shift in sales trends has occurred, however; in the first quarter, as fears of further reductions in consumer spending limited transactions to a small number of fast-food properties.”

Following are some of the most significant aspects of the Washington, D.C. Retail Research Report:

· Employment levels in the metro are expected to recede by 0.6 percent, or 18,400 jobs, in 2009. Last year, 12,100 workers were let go.

· Retail construction will slow to 4.1 million square feet this year, after builders completed 5.4 million square feet in 2008. Approximately 2.2 million square feet is expected to come online in suburban Maryland, and 1.9 million square feet is projected in northern Virginia.

· Easing retail demand and persistent inventory expansion will boost vacancy 200 basis points to 7.3 percent in 2009. Vacancy increased 170 basis point last year.

· This year, asking rents are projected to decline 3.3 percent to $26.65 per square foot, while effective rents will recede 4.1 percent to $23.94 per square foot. Asking rents rose 0.8 percent in 2008, and effective rents retreated 0.4 percent.

For a copy of the complete Washington, D.C. Retail Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey CorsoCommunications Department(925) 953-1716

Spanish Bank Hires Marcus & Millichap to Arrange Public Sale of SoHo Buildings for $4.9M

NEW YORK, NY– Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has arranged the public sale of 100 percent of the membership interests in Mediterranean Sun Property LLC and Sohomar Property LLC, which were pledged as collateral for a defaulted loan.

The LLCs are single-purpose entities organized to own and operate 448 Broome St. and 450-52 Broome St. (top left photo) , two mixed use buildings in SoHo (bottom right photo).

The final auction price was $4.9 million.

Peter Von Der Ahe,(top right photo) a vice president investments, and Scott Edelstein, a senior associate in the Manhattan office of Marcus & Millichap, arranged the sale on behalf of the buyer, Caixa de Aforros de Vigo Ourense e Pontevedra, a Spanish bank.

Marcus & Millichap was hired by Caixa de Aforros to perform the auction, which was the entity’s preferred method of foreclosing on the LLCs that owned the property. After several rounds of bidding, Caixa de Aforros emerged as the highest bidder. The auction took place on May 8 at the Manhattan office of Marcus & Millichap.

“The membership interests of these LLCs were pledged as collateral for a loan on a development project in South Florida by three Spanish developers,” explains Von Der Ahe.

“In February 2008, the borrowers defaulted on the construction loan in South Florida. Upon default, the bank asserted its rights to the collateral by offering a public sale of the membership interests in the LLCs that were formed to operate the Manhattan property,” he adds.

“The SoHo buildings were performing well,” says Von Der Ahe, “but the developers were enmeshed in troubled investments in Florida, thus prompting them to put the New York assets up as collateral.”

The two buildings, located at the corner of Broome and Mercer streets, encompass a total of 27,174 square feet. Both properties have residential and commercial space.

“More than 100 people responded to the auction, evidence that there is an incredible amount of equity on the sidelines waiting for opportunities,” says Von Der Ahe.

“Despite the near-term challenges facing the local economy and real estate market, the long-term outlook for New York City investment real estate remains strong.”

According to Edward Jordan, (middle left photo) Northeast regional director of the firm’s Special Assets Services division and regional manager of the Manhattan office, additional properties are expected to come under duress as economic conditions continue to soften in New York and throughout the region.

“To date, Marcus & Millichap has completed more than 1,500 special asset assignments for financial institutions, asset managers and large owners, including valuations, advisory work and dispositions,” says Jordan.

“Distressed properties and portfolios are being well received by our private investors, and we expect to market a large volume of these properties during the coming months and years.

"This is driven by our lender clients’ need to clear their balance sheets and our fund clients actively working to free up capital,” he adds.

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