Thomas Properties Has Yet to Feel the Crunch

LOS ANGELES-Thomas Properties Group has yet to feel any effect on its office leasing results from the changing economy and capital markets although the climate for acquisitions is a different story. The impact has been felt in the company’s ability to acquire value-add core-plus assets.

In the company’s recent earnings call, president and CEO Jim Thomas outlined a scenario in which leasing remains strong and long-term fundamentals look sound in markets like Los Angeles and Austin, but he reported that buying and selling buildings has become problematic in the new capital markets landscape. “The fundamentals of our business continue to be good,” Thomas said in his opening remarks. “Our occupancies and rental rates are strong, and while the economy may be slowing down, we are not yet feeling the effect on our occupancy and rental rates.” Thomas pointed out that most of its leases are long-term so the amount of roll-over in the next couple of years is minimal.

The major impact on the company’s business from the credit markets turmoil has been in the acquisition segment of its business, according to Thomas. “We are feeling the credit crunch,” the Thomas Properties’ chief said. “Our ability to execute our strategy of acquiring value-add core-plus assets has been seriously hampered by the unavailability of large financing.”