"Last year, sales fell due to a disconnect between buyer and seller, and a general lack of available financing," says Andrew Merin, who heads the team with David Bernhaut, Gary Gabriel and Jose Cruz. "This year, the market has been hindered by a lack of property available for sale. We are seeing a significant amount of capital out there from many sources, including wealthy individuals, raised funds and foreign investors. It is frustrating--they have the money but no place to put it."
Merin notes that the limited trading taking place in 2009 in many instances included assumable financing. Sellers that transacted in 2009 have either accepted the reality of the market or have been faced with an absolute need to dispose of a particular property. "In many cases, properties are distressed," he tells GlobeSt.com. "In others, the sale stems from the end of a fund or the need for investors to rebalance their debt and equity ratios."
The Metropolitan Area Capital Markets Group's 2009 activity includes 4.9 million square feet of office, industrial, retail and multifamily sales, including the REO sale of 85 Challenger Rd. in Ridgefield Park, which represented the tri-state area's first post-Lehman, large vacant class A office building investor sale. KABR Real Estate Investment Partners, LLC purchased the 235,000-square-foot asset from AIG.
Shortly after the purchase, KABR appointed the Cushman & Wakefield leasing team to market the for multi-tenant use. Subsequently, Samsung Electronics America, Inc. signed a 193,000-square-foot office lease there, in which Cushman & Wakefield represented KABR.
The Capital Markets Group oversaw six retail trades as well. Among them, an undisclosed institutional client opted to sell the Marketplace at Rockaway--a stabilized, 241,000-square-foot shopping center with credit tenants such as Wal-Mart; Bed, Bath & Beyond; and a DSW Shoe Outlet. Friendwell Group of Cos. acquired the property for $29 million, assuming an existing seven-year loan.
On the multifamily front, the Group arranged one of New Jersey's largest multifamily rental property sales in 2009. A joint venture of Vantage Real Estate and Angelo, Gordon & Co. acquired the 776-unit Fox Run Apartments in Plainsboro from AIMCO. "More than two dozen tours for this offering testified to the appeal of quality multifamily product," Cruz says, adding, "This asset type has remained the most active sector nationally."
Looking ahead to 2010, Merin notes that the financing climate continues to improve. "Underwriting is conservative, at 50% to 60% loan-to-value, but lenders are active again," he says. "Life companies are back in the market, and there have even been a couple of non-TALF CMBS deals completed. That is a good sign."
Merin anticipates more sales volume in the coming months. "Certain banks and holders of assets will be able to sell more readily next year because they have built up enough reserves or written down their assets far enough to take the sale. Everyone seems to be getting more realistic on valuations.
"While this year has been strongest for private players, the public markets are opening up," he continues. "This will result in a balancing out to include more institutional money. This is more positive news for 2010."
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