Major U.S. retailers closed nearly 7,000 stores while opening approximately 5,700 new locations in 2008 resulting in a net loss of more than 1,000 stores for the year, according to exclusive research compiled by CoStar Group Inc.'s news division. Although not unexpected, the extent of the net loss in store count is sobering as it follows several consecutive years of retail expansion and substantial net store growth. What's more, with industry experts predicting the country won't see the start of a retail recovery until late 2009 or early 2010, the net store result for 2009 could easily echo that of 2008. The approximately 250 major retail chains CoStar included in this study have reported plans to open nearly 4,000 and close nearly 3,600 stores in 2009. However, if signs of an economic recovery remain elusive, retailers could adjust their store opening guidance downward by mid-year, as they have the past two years. In addition, the store-closing guidance issued by these retailers of 3,600 stores for 2009 will almost certainly increase, as additional retailers fall victim to the economy in the form of store closings and liquidations. Also, most major retailers publicly share store opening guidance but many remain reluctant to provide store-closing guidance. The major retailers CoStar sampled for this study opened nearly 6,500 stores in 2007 and 5,700 stores in 2008. If the nearly 4,000 planned openings are carried out in 2009, store opening activity would be down a staggering 39% in comparison to 2007 levels. On a net basis, as a percentage of total store count, retailers in the pet supply, dollar store/ deep discount, warehouse club, drugstore, grocery, and big box discount categories are projecting the biggest gain in stores in 2009, while retailers in the electronics, discount department, jewelry, apparel and office supply categories are projecting the biggest loss in store counts for 2009. Among those included in this CoStar analysis, the specific retailers planning to open the most U.S. stores in 2009 include Walgreens (540), Dollar General (450), CVS (275), Gamestop (250), Dollar Tree (235), Family Dollar (200), Walmart Supercenter (125), Aldi (80), Target (75), and Tractor Supply Company (75). Conversely, the specific retailers credited with the highest level of 2009 closings include Circuit City (567), Ritz Camera (400), Goody's (287), Steve & Barry's (252), Jones Apparel (225 - note this is for 2009 and 2010 closings), Blockbuster (150), Office Depot (118), Rite Aid (117), Zales (115), Gap (100), and Charming Shoppes (100). In 2008, Linens 'n Things (589), Movie Gallery (530), Friedman's Jewelers (377), Whitehall Jewelers (373), Blockbuster (277), Ace Hardware (242), Rite Aid (200), Sharper Image (184), Mervyns (176), Charming Shoppes (156), Circuit City (155), Demo (153), Claire's (118), Value City (113), Waldenbooks (112), Transworld Entertainment (111), Zales (105), and CompUSA (103) are credited with closing the most stores -- this list is overwhelmingly comprised of retailers that liquidated in bankruptcy. The following results of CoStar's analysis of store openings and closings by major retailers provides total store activity by retailer category. The International Council of Shopping Centers (ICSC) also released results from its most recent store opening / closing study this week. ICSC takes a different approach, however, tracking the number of major store closing announcements retailers made on a monthly basis. However, it too reflected the grim economic realities facing the retail industry. "The number of announced store closings in 2008 spiked to the highest [level] since 2004. This clearly reflected the severity and rapidity of the deterioration in the economy and its impact on the retail sector," said ICSC. According to ICSC's data, 2,284 store closings have been announced so far in 2009, compared to 2,785 announcements during the same period in 2008; 2,411 announcements during the same period in 2007, and 2,255 announcements during the same period in 2006. Based on this comparison, ICSC said that the latest round of announcements appears "a bit more upbeat than the news during 2008," because it is more "consistent with the degree of reduction experienced in the 2006-07 period." For more information see: www.houstonrealtyadviosrs.com By COSTAR"S Mark Heschmeyer
April 29, 2009
Thursday, April 30, 2009
Wednesday, April 29, 2009
U.S. Green Building Council develops new energy-efficient standards
The U.S. Green Building Council has developed a new set of LEED regional credits as part of the latest version of the LEED Green Building Rating System.
This new category sets out a regional standard by which companies can design, build or operate energy efficient buildings.
LEED stands for Leadership in Energy and Environmental Design. It is a voluntary program designed to encourage building owners to invest in energy efficient properties.
“Because environmental priorities differ among various regions of the country — the challenges in the Southeast differ from those in the Northwest, for example — regionally specific credits give LEED a way to directly respond to diverse, regionally grounded issues,” says Brendan Owens, vice president of technical development for the U.S. Green Building Council. “The inclusion of these regional LEED credits is the council’s first step toward addressing regional environmental issues.”
The U.S. Green Building Council will launch the next version of its LEED green building certification program on April 27. Recent updates to LEED 2009 reflect updates in building science and technology. As part of the updated program, building owners will be able to earn additional “bonus points” on their LEED certifications for implementing green building strategies that specifically address issues in their region.The U.S. Green Building Council is also rolling out a faster, easier tool to manage the latest version of LEED Online. This online program will help streamline the LEED registration and certification process. The Washington, D.C.-based organization has 78 local affiliates, more than 20,000 member companies and organizations, and more than 100,000 LEED accredited professional. For more information see : Houston Business Journal www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
This new category sets out a regional standard by which companies can design, build or operate energy efficient buildings.
LEED stands for Leadership in Energy and Environmental Design. It is a voluntary program designed to encourage building owners to invest in energy efficient properties.
“Because environmental priorities differ among various regions of the country — the challenges in the Southeast differ from those in the Northwest, for example — regionally specific credits give LEED a way to directly respond to diverse, regionally grounded issues,” says Brendan Owens, vice president of technical development for the U.S. Green Building Council. “The inclusion of these regional LEED credits is the council’s first step toward addressing regional environmental issues.”
The U.S. Green Building Council will launch the next version of its LEED green building certification program on April 27. Recent updates to LEED 2009 reflect updates in building science and technology. As part of the updated program, building owners will be able to earn additional “bonus points” on their LEED certifications for implementing green building strategies that specifically address issues in their region.The U.S. Green Building Council is also rolling out a faster, easier tool to manage the latest version of LEED Online. This online program will help streamline the LEED registration and certification process. The Washington, D.C.-based organization has 78 local affiliates, more than 20,000 member companies and organizations, and more than 100,000 LEED accredited professional. For more information see : Houston Business Journal www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Tuesday, April 28, 2009
Retail across USA in the dumps
The nation's retail market posted negative quarterly net absorption for the first time, along with the highest vacancy and availability rates, since CoStar Group began tracking retail trends in 2000, according to the Bethesda, MD-based company's first-quarter 2009 retail review and forecast. On the heels of the release of CoStar's First Quarter 2009 National Retail Report, Senior Director of Research and Analytics Jay Spivey conducted a webinar titled "The State of the Commercial Real Estate Industry: 1st Quarter 2009 Retail Review," on April 17. Spivey noted that quarterly retail leasing activity has dropped off about 9 million square feet over the last two quarters, leading to 24 million square feet of negative net absorption and a 7.2% total vacancy rate recorded during first quarter. Retail space listed as "available" for lease (which could be vacant or occupied) has been rising at an increasing rate. Since the start of the recession, 697 million square feet of available retail space has been added to the market, Spivey showed. This level of availability may be a more realistic indicator of the state of the market than vacancy, said Spivey. Specifically, retail space availability has increased a staggering 1,280 basis points to 19.4% since second-quarter 2006, while the vacancy rate has increased only 120 basis points over the same period. Supporting the build-up of available retail space, CoStar's research shows that the average days a retail space is listed on the market as "available for lease" has continued to rise -- from 174 days in first-quarter 2006 to 370 days in first-quarter 2009. Landlords have only recently showed a definitive response to the down market by lowering asking rental rates. The average rental rate has declined from $17.64 per square foot in second-quarter 2008 to $17.51 per square foot at the close of first quarter. To demonstrate the impact retailers closing large amounts of stores can have on retail real estate fundamentals, Spivey used Circuit City's closure of 567 stores as an example. As Circuit City was typically an anchor tenant at community or power shopping centers, CoStar found that the average vacancy rate at shopping centers where Circuit City occupied space has shot up to 22.2%, while average asking rental rates have lowered from a high of nearly $25 to a low of about $21 per square foot. If that's not enough pressure on those landlords, Spivey pointed out co-tenancy issues may arise, causing additional vacancy at these centers. For example, CoStar found that Verizon Wireless is a co-tenant in 192 of 388 Circuit City shopping centers. Aside from retailers closing stores and a lack of retailers opening new stores, Spivey showed that retail real estate is feeling more pain during this recession due to excess inventory. In the past 15 years, 510 million square feet of retail space has delivered, accounting for 7% of total retail square footage. The good news is that developers have backed off, showing a downward trend in deliveries since 2006, said Spivey. So far in 2009, Spivey said 895 retail buildings totaling 23.5 million square feet have delivered and this new space is about 67% leased. Developers have lowered the average asking lease rate on these new buildings from their peak by about 7% to try to keep leasing momentum going. Currently, there is about 82 million square feet of retail space under construction, but square footage scheduled to deliver this year will cause only about a 0.6% addition to the total retail market, Spivey said. These under-construction properties are currently 57% leased and to attract new tenants, developers have responded by lowering the average asking lease rate a hefty 29% from a peak of $37.74 per square foot, he added. The Westchester, Northern New Jersey, and Dallas markets were identified as having the most retail square footage under construction as a percentage of total inventory. Benchmarking new retail space deliveries against absorption levels, Spivey identified Los Angeles and Atlanta as having more excess retail inventory than any other markets. For more regional leasing trends, follow this link. To put the U.S. retail real estate market in perspective, Spivey said that average retail building was built in 1968 and is 15,568 square feet. Further supporting the role small retail centers play, Spivey said that only 3% of retail buildings in the U.S. are 100,000 square feet or larger, but these buildings account for 39% of total retail space. Spivey then broke down retail leasing trends by property type. For more on that, follow this link. Unfortunately, CoStar is forecasting that the retail vacancy rate will continue to climb, surpassing 9% sometime in the next year, said Spivey. Additionally, negative absorption nearing 100 million square feet is expected against a backdrop of about 125 million square feet of new retail space and continually declining rents. For more information see www.houstonrealtyadvisors.com
Retailers still love Houston
Golfsmith is set to unveil a golf and tennis store on May 1 that will be the largest in the Houston area.
The 40,000-square-foot store, located at 25415 North Interstate 45 in Spring, will also be the first Golfsmith Xtreme store in Texas. It will feature an indoor driving range that allows golfers to try out the latest golf gear and evaluate their swing on launch monitors and an indoor hitting area for tennis equipment.
Golf lessons with biofeedback will also be available from Professional Golf Association-certified professionals at the store’s GolfTEC Improvement Center.
The Austin-based retailer currently operates four stores in the Houston area. Houston Business Journal – by Allison Woolman Reporter , for more information see : www.houstonrealtyadvisors.com
The 40,000-square-foot store, located at 25415 North Interstate 45 in Spring, will also be the first Golfsmith Xtreme store in Texas. It will feature an indoor driving range that allows golfers to try out the latest golf gear and evaluate their swing on launch monitors and an indoor hitting area for tennis equipment.
Golf lessons with biofeedback will also be available from Professional Golf Association-certified professionals at the store’s GolfTEC Improvement Center.
The Austin-based retailer currently operates four stores in the Houston area. Houston Business Journal – by Allison Woolman Reporter , for more information see : www.houstonrealtyadvisors.com
Sandvik Inc. has leased new industrial space in northwest Houston that will allow the company to expand the local material technology tube products operation by 60 percent.
Sandvik leased an 80,000-square-foot building in Cole Creek Business Park where it will place the southeast regional sales office and warehouse for material technology tube products.
Blake Kendrick of Stream Realty Partners LP, the real estate broker who represented Sandvik in the transaction, says the new site will consolidate operations from two locations in the Houston area.
The new building will have 9,000 square feet of office space, whose employees are relocating from space at another Sandvik site in Stafford. The rest of the building will be warehouse space that will replace a warehouse Sandvik occupies at 5973 South Loop East.
“They turned the lights on this week,” said Kendrick, who works in Stream Realty’s Dallas office.
Cole Creek Business Park is a 90-acre project located at 8618 West Little York Road that has more than 1 million square feet of single-tenant and multitenant industrial buildings. Cole Creek, developed by a partnership of ING Clarion Partners and Trammell Crow Co., was represented in the lease deal by Faron Wiley of CB Richard Ellis Inc.
Sweden-based Sandvik is a high-tech engineering group operating in 130 countries with 50,000 employees. For more information see: www.houstonrealtyadvisors.com
Houston Business Journal - by Jennifer Dawson Reporter
Sandvik leased an 80,000-square-foot building in Cole Creek Business Park where it will place the southeast regional sales office and warehouse for material technology tube products.
Blake Kendrick of Stream Realty Partners LP, the real estate broker who represented Sandvik in the transaction, says the new site will consolidate operations from two locations in the Houston area.
The new building will have 9,000 square feet of office space, whose employees are relocating from space at another Sandvik site in Stafford. The rest of the building will be warehouse space that will replace a warehouse Sandvik occupies at 5973 South Loop East.
“They turned the lights on this week,” said Kendrick, who works in Stream Realty’s Dallas office.
Cole Creek Business Park is a 90-acre project located at 8618 West Little York Road that has more than 1 million square feet of single-tenant and multitenant industrial buildings. Cole Creek, developed by a partnership of ING Clarion Partners and Trammell Crow Co., was represented in the lease deal by Faron Wiley of CB Richard Ellis Inc.
Sweden-based Sandvik is a high-tech engineering group operating in 130 countries with 50,000 employees. For more information see: www.houstonrealtyadvisors.com
Houston Business Journal - by Jennifer Dawson Reporter
Friday, April 24, 2009
UPDATED: ON THE BRINK: 15 Real Estate Firms Going, Going...
Frozen Credit Markets Put Survival in Doubt for More Than a Dozen Property Holding Companies..................................Just how tough a year 2008 was on property investment companies is evident in the fact that accountants for at least 15 firms issued "going concern" doubts in their year-end annual reports filed with the U.S. Securities & Exchange Commission. The distressed companies' holdings include controlling or managing interests in at least 618 shopping centers with 230.5 million square feet of space, more than 800 hotels/resorts/casinos with more than 122,000 rooms, 36 office properties totaling 4.8 million square feet and 33 multifamily complexes with more than 2,280 units. CoStar Group, Inc. has reported widely on the problems of many of the firms, including Centro Properties Group and General Growth Properties (NYSE: GGP). Others, such as Prime Group Realty (NYSE: PGE-PB), Meruelo Maddox Properties, Lodgian Inc. (AMEX: LGN) and Interstate Hotels & Resorts, have not received widespread media coverage.
(EDITOR'S NOTE:We updated the section of this story pertaining to Prime Group Realty Trust. The previous version incorrectly reported that the going concern opinion related to Prime Group's office operations. This version contains the corrected text showing that the going concern opinion relates to Prime Group's investment in Extended Stay Inc.)
Liquidity and debt issues are primary issues raising the most doubt about the companies' survival. The companies either do not have enough cash on hand or don't have the ability to raise new money to meet their debt obligations. Or, the companies are having trouble refinancing maturing debt. Four of the companies have already sought respite from their most pressing problems through the U.S. bankruptcy courts: General Growth Properties, which filed just this past week, ILX Resorts, Meruelo Maddox Properties and Trump Entertainment Resorts. In the case of Trump Entertainment, the legendary and bombastic investor Donald Trump has even relinquished control over the Atlantic City casino operator. The following summaries of the 15 firms' property holdings were compiled from the firms' annual reports, identifying their most pressing problems and the primary steps they are taking to address the issues.
Centro NP LLCCentro NP, based in New York, NY, owns 203 retail properties in 28 states, and operates another 257 held through unconsolidated joint ventures. The 460 properties include 445 community and neighborhood shopping centers with 71.2 million square feet of space, and 15 related retail assets with approximately 1.3 million square feet. There is substantial doubt about the company's ability to continue as a going concern given its liquidity issues, which includes its ability to negotiate extensions of credit; current prohibition upon its ability to take on more debt and restrictions on operations that increase the risk of default. In addition, uncertainty also exists due to the liquidity issues currently experienced by the company's ultimate parent investors in Sydney, Australia, Centro Properties Ltd. and Centro Property Trust. The company recently received an extension of its major debt facilities to Dec. 31, 2010, which it said provides more time to consider a range of different plans. Still during 2009, Centro has $188.5 million of mortgage debt scheduled to mature, $19.3 million of scheduled mortgage amortization payments and a $9.4 million required loan paydown. If principal payments on debt due at maturity cannot be refinanced, extended or paid, it will be in default under its debt obligations and may be forced to dispose of properties on disadvantageous terms. Such defaults could in turn cause additional defaults. In addition, Centro NP is no longer permitted to make draws under its primary lending agreements and may not be able to repay or refinance its short-term debt obligations coming due. Management is working with its lenders to assess a number of options that address the company's ongoing liquidity issues. As of Dec. 31, 2008, Centro NP's breakdown of properties is as follows. State - # of Properties - SqFt Alabama - 8 - 1,623,436 Arizona - 5 - 804,791 Arkansas - 1 - 129,897 California - 14 - 2,256,369 Colorado - 6 - 1,484,159 Connecticut - 14 - 2,156,605 Florida - 40 - 6,742,800 Georgia - 36 - 5,024,416 Illinois - 14 - 2,592,789 Indiana - 12 - 1,885,624 Iowa - 2 - 510,173 Kansas - 2 - 267,486 Kentucky - 15 - 2,930,637 Louisiana - 4 - 624,850 Maine - 2 - 274,026 Maryland - 2 - 243,568 Massachusetts - 6 - 739,334 Michigan - 23 - 3,669,205 Minnesota - 7 - 1,021,806 Mississippi - 3 - 279,869 Missouri - 3 - 446,948 Nevada - 5 - 826,513 New Hampshire - 3 - 369,385 New Jersey - 8 - 928,624 New Mexico - 2 - 176,712 New York - 24 - 4,164,067 North Carolina - 17 - 2,744,833 Ohio - 34 - 6,326,568 Oklahoma - 2 - 481,464 Pennsylvania - 14 - 2,841,358 Rhode Island - 1 - 148,126 South Carolina - 7 - 1,215,471 Tennessee - 19 - 3,486,817 Texas - 82 - 10,470,648 Virginia - 14 - 1,806,953 Vermont - 1 - 224,514 West Virginia - 3 - 357,606 Wisconsin - 4 - 646,244 Wyoming - 1 - 155,022
Davidson Diversified Real Estate III LPDavidson Diversified Real Estate III is an affiliate of AIMCO Properties in Denver, CO. The partnership owns the Plainview Apartments, a 480-unit complex in Louisville, KY. The property is subject to a first mortgage of $15.34 million at a 9.33% interest rate. In addition, as of Dec. 31, the partnership was in the hole to AIMCO Properties for about $6.88 million in advances and interest payments. According to its accounting firm Ernst & Young, the partnership has recurring operating losses and an accumulated deficit. Management is evaluating its options relative to the payment demand by an affiliate of AIMCO. Options include refinancing its debt and/or selling the property prior to maturity in November 2010.
Excellency Investment Realty Trust Inc.Excellency Investment Realty Trust in New York City, owns eight residential real estate properties with 271 apartment units all in Hartford, CT. As of Dec. 31, the properties' occupancy rate was approximately 90.4%. The company has suffered recurring losses from operations. During 2008, it had a net loss of $.17 million and had a net accumulated deficit of $16.9 million. Management is hoping to raise capital through any combination of debt and equity financing. Its properties are as follows. Property Address - Mortgage Amount - Monthly P&I 154-160A Collins St. - $1,251,112 - $7,507 21 Evergreen Ave. - $675,447 - $4,053 243 & 255 Laurel St. - $1,082,250 - $6,493 252 Laurel St. - $560,314 - $3,362 270 Laurel St. - $1,918,883 - $11,513 360 Laurel St. - $567,989 - $3,408 117-145 S. Marshall St. - $1,373,920 - $8,243 56 Webster St. - $460,531 - $2,763 Total: - $7,890,446 - $47,342
FX Real Estate and Entertainment Inc.FX Real Estate and Entertainment owns Las Vegas property made up of six contiguous parcels aggregating 17.72 acres on the southeast corner of Las Vegas Boulevard (the Strip) and Harmon Avenue. The parcel is zoned to allow for casino gaming and can support a variety of development alternatives including hotels/resorts, entertainment venues, a casino, condominiums, hotel-condominiums, residences and retail establishments. The Las Vegas property is currently occupied by a motel and several commercial and retail tenants with a mix of short- and long-term leases. The Las Vegas property’s generated total revenue of $19.5 million in 2008. The company is in severe financial distress and its current cash flow and cash on hand as of March 27, were not sufficient to fund its past due obligations or short-term liquidity. It is currently in default under a $475 million mortgage loan and its lenders could foreclose at any time. The company has engaged in preliminary discussions with its first lien and second lien lenders regarding potential solutions. In the meantime, it continues its current commercial leasing activities for the properties.
General Growth PropertiesThis past week, U.S. mall REIT General Growth Properties as well as 158 of its 200 malls filed for Chapter 11 bankruptcy protection. GGP's third-party management businesses, as well as its joint ventures, have not filed for protection. The REIT made the decision to file after its extensive efforts to refinance or extend its overwhelming debt burden proved futile. For more background on its debt predicament, click here. GGP said day-to-day operations of its shopping centers will continue as usual during the bankruptcy process. GGP signed a commitment letter for Pershing Square Capital Management to provide debtor-in-possession (DIP) financing of $375 million (at an interest rate of 12%+ LIBOR) that GGP will utilize to continue operations while in bankruptcy. During the bankruptcy process, GGP will continue to pursue "strategic alternatives and search the markets for available sources of capital." The REIT has been marketing several of its Class A mall properties for sale (in Las Vegas and the Northeast) for months now. No deal has yet to surface. GGP intends to execute a reorganization plan that extends its mortgage maturities and reduces its corporate debt and overall leverage. The company expects to "emerge from bankruptcy as quickly as possible" with its national business model in tact. GGP listed $29.6 billion in assets and $27.3 billion in debts in its filing. The company hired Weil, Gotshal & Manges LLP as attorneys handling its bankruptcy, while Kirkland & Ellis LLP was hired as co-counsel to certain subsidiary debtors. General Growth has published a list of its properties in bankruptcy at http://www.ggp.com/company/Default.aspx?id=101. (By: Sasha M Pardy)
ILX Resorts Inc.ILX Resorts in Phoenix, AZ, develops, markets and operates timeshare resorts in the western United States. The company’s current portfolio of resorts consists of seven resorts. The company also holds 2,241 weeks at the Carriage House in Las Vegas, 174 weeks at the Scottsdale Camelback Resort in Scottsdale and 194 weeks in the Roundhouse Resort in Pinetop, AZ. ILX Resorts and 15 of its subsidiaries filed voluntary petitions to reorganize in the U.S. Bankruptcy Court for the District of Arizona last month. During 2008, the company sold 1,342 annual and biennial vacation ownership interests, compared to 1,561 during 2007. The average sales price was $15,606 for an annual interest and $8,935 for a biennial interest. As of Dec. 31, the company had an existing inventory of 7,873 unsold interests. Resort - Location Los Abrigados Resort & Spa - Sedona, AZ The Inn at Los Abrigados - Sedona, AZ Kohl’s Ranch Lodge - Payson, AZ The Historic Crag’s Lodge at the Golden Eagle Resort - Estes Park, CO Sea of Cortez Premiere Vacation Club - San Carlos, Mexico Premiere Vacation Club at Bell Rock - Village of Oak Creek, AZ Rancho Mañana Resort - Cave Creek, AZ Premiere Vacation Club at the Roundhouse Resort - VCA-South Bend - South Bend, IN VCA-Tucson - Tucson, AZ Los Abrigados Lodge - Sedona, AZ As part of its Chapter 11 proceedings, IXL rejected its long-term lease of the Los Abrigados Lodge.
Interstate Hotels & Resorts Inc.Interstate Hotels & Resorts in Arlington, VA, manages 226 hotel properties with 46,448 rooms and six ancillary service centers (a convention center, a spa facility, two restaurants and two laundry centers), in 37 states and the District of Columbia in the U.S. and in Russia, Mexico, Canada, Belgium and Ireland. Of its managed properties, it owns even with 2,051 rooms and held non-controlling equity interests in 18 joint ventures, which owned or held ownership interests in 50 of its managed properties. Last month, Interstate Hotels was suspended from trading on the New York Stock Exchange and faces potential delisting. The company's senior secured credit facility includes a debt covenant requiring continued listing on the NYSE. If that happens, its lenders could demand immediate repayment of all outstanding debt. KPMG LLP, its accounting firm stated that uncertainty exists as to whether the company would have the ability to generate liquidity to meet that obligation. At year-end, Interstate Hotels had an outstanding debt balance of $244.28 million. The majority of that debt matures in March of next year. In addition to that complication, there is uncertainty as to whether it will meet one of the financial debt covenants regarding its total leverage ratio for its fourth quarter 2009 calculation period. Interstate has already begun discussions with its lenders to amend the terms of the Credit Facility Including extending the maturity date and adjusting the above-mentioned covenants The company said it believes it will have sufficient liquidity from cash on hand and cash from operations to fund its operating needs in 2009. Wholly-Owned Properties - Guest Rooms Hilton Concord, East Bay area near San Francisco, CA - 331 Hilton Durham, Durham, NC - 195 Hilton Garden Inn Baton Rouge, Baton Rouge, LA - 131 Hilton Arlington, Arlington, TX - 308 Hilton Houston Westchase, Houston, TX - 297 Westin Atlanta Airport, Atlanta, GA - 500 Sheraton Columbia, Columbia, MD - 289
Lodgian Inc.Atlanta-based hotel operator Lodgian owns and operates nearly 7,600 hotel rooms in 41 properties under management. The company lists 35 hotels as continuing operations and six as held for sale. Lodgian has $128 million of outstanding mortgage debt scheduled to mature in July 2009. The current severe economic recession has hurt the company’s operating results, which has affected its operating cash flows as well as its ability to refinance the maturing debt. Lodgian is negotiating with prospective lenders and has hired Jones Lang LaSalle to facilitate the refinancing process. It is also negotiating to extend the maturing mortgage debt. In addition to the July 2009 maturity, the company has three other 2009 debt maturities that in the aggregate total approximately $169.5 million of mortgage debt. Each of these debt facilities has extension options of one to three years, and the company expects to exercise those extension options. For the year 2008, Lodgian lost $12 million compared to losing $8.4 million in 2007. Last year, Lodgian sold five hotels for gross proceeds of $25 million. Location - Brand - Rooms Bentonville, AR - Courtyard by Marriott - 90 Little Rock, AR - Residence Inn by Marriott - 96 Phoenix, AZ - Crowne Plaza - 295 Phoenix, AZ - Radisson - 159 Palm Desert, CA - Holiday Inn Express - 129 Denver, CO - Marriott - 238 Melbourne, FL - Crowne Plaza - 270 West Palm Beach, FL - Crowne Plaza - 219 Atlanta, GA - Courtyard by Marriott - 181 Ft. Wayne, IN - Hilton - 244 Florence, KY - Courtyard by Marriott - 78 Paducah, KY - Courtyard by Marriott - 100 Kenner, LA - Radisson - 244 Lafayette, LA - Courtyard by Marriott - 90 Dedham, MA - Residence Inn by Marriott - 81 Worcester, MA - Crowne Plaza - 243 Baltimore (BWI Airport), MD - Holiday Inn - 260 Baltimore (Inner Harbor), MD - Holiday Inn - 375 Columbia, MD - Hilton - 152 Silver Spring, MD - Crowne Plaza - 231 Pinehurst, NC - Springhill Suites by Marriott - 107 Merrimack, NH - Fairfield Inn by Marriott - 115 Santa Fe, NM - Holiday Inn - 130 Albany, NY - Crowne Plaza - 384 Strongsville, OH - Holiday Inn - 303 Tulsa, OK - Courtyard by Marriott - 122 Monroeville, PA - Holiday Inn - 187 Philadelphia, PA - Four Points by Sheraton - 190 Pittsburgh - Washington, PA - Holiday Inn - 138 Pittsburgh, PA - Crowne Plaza - 193 Hilton Head, SC - Holiday Inn - 202 Myrtle Beach, SC - Holiday Inn - 133 Abilene, TX - Courtyard by Marriott - 99 Dallas (DFW Airport), TX - Wyndham - 282 Houston, TX - Crowne Plaza - 294 Lodgian's Hotel Assets Held for Sale Phoenix, AZ - Holiday Inn - 144 East Hartford, CT - Holiday Inn - 130 Towson, MD - Holiday Inn - 139 Troy, MI - Hilton - 191 Memphis, TN - Independent - 105 Windsor, Ontario, Canada - Holiday Inn Select - 214
Meruelo Maddux PropertiesMeruelo Maddux Properties is one of Los Angeles' largest owner/developers of commercial properties. It owns 28 properties totaling 3.7 million square feet. It also has a development pipeline underway that includes seven multifamily projects totaling 995,000 square feet. The company has suspended construction of an additional 12 projects totaling 774,000 square feet. Meruelo Maddux has been experiencing significant, recurring cash shortfalls and last month it and numerous of its subsidiaries filed for relief under Chapter 11 in an effort to restructure its debt last month. Excluded from the filing is the company's 35-story 717 W. Ninth Street residential tower project currently under construction. Meruelo Maddux recorded a net loss in the fourth quarter of $85.8 million. This result was derived in large part from the decision to take $117.4 million of non-cash impairment charges in the fourth quarter. The company also stopped making interest and principal payments and therefore was in default on 26 of its 30 loans totaling $266 million. It has been seeking loan workout agreements with four lenders on loans that total approximately $177.8 million. Projects - Square Feet Commercial Projects 788 S Alameda - 33,984 Washington Cold Storage - 59,000 500 Mateo Street - 12,938 Meruelo Wall Street - 98,245 Washington at Central - 5,479 Southern California Institute of Architects - 81,741 Washington Produce Market - 31,876 905 E 8th Street - 28,200 3rd and Omar Street - 23,297 1919 Vineburn Ave. - 122,345 1500 Griffith Ave. - 50,058 4th Street Center - 14,472 Seventh Street Produce Market - 122,120 Alameda Square - 1,463,696 620 Gladys Ave. - 57,354 1000 E. Cesar Chavez - 50,373 306 North Avenue 21 - 80,712 Crown Commerce Center - 301,491 420 Boyd St. - 47,806 230 W. Ave. 26th - 67,671 5707 S. Alameda - 55,729 Santa Fe Plaza - 16,000 Barstow Produce Center - 261,750 1211 E. Washington Blvd. - 108,000 Residential Projects American Apartments - 13,550 Union Lofts - 81,609 Southpark Tower - Phase 2 - J Restaurant - 11,829 Center Village - 176,628 Pomona West - - 242,042
NNN 2003 Value Fund LLCNNN 2003 Value Fund based in Santa Ana, CA, holds interests in eight commercial office properties. Three of the properties are classified as held for sale and efforts are actively underway to market and sell these properties. Grubb & Ellis Realty Investors LLC manages the fund. As of year-end, the fund had guaranteed the payment of approximately $2.5 million of mortgage loans payable that mature in May 2009 related to one of its properties. Based on cash flow projections it currently does not have the ability to satisfy this guaranty if it becomes due and is actively marketing the property for sale. It anticipates the property will be sold this year but maybe not prior to maturity or that if it is sold, it will raise enough money to pay off the debt. The fund has initiated discussions with the lender regarding amending or extending the mortgage loan. Property - Property Location - (Sq Ft) Consolidated Properties: - - Executive Center I - Dallas, TX - 205,000 901 Civic Center - Santa Ana, CA - 99,000 Tiffany Square - Colorado Springs, CO - 184,000 Four Resource Square - Charlotte, NC - 152,000 The Sevens Building - St. Louis, MO - 197,000 Unconsolidated Properties: - - Executive Center II & III - Dallas, TX - 381,000 Enterprise Technology Center - Scotts Valley, CA - 369,000 Chase Tower - Austin, TX - 386,000 Totals - - 1,136,000
Extended Stay Inc. / Prime Group Realty TrustPrime Group Realty is a Chicago-based REIT that owns, manages, leases, develops and redevelops office and industrial real estate primarily in the Chicago metro area. Its portfolio consists of nine office properties, containing an aggregate of 3.5 million net rentable square feet. In 2005, an affiliate of The Lightstone Group LLC bought the basically all of the outstanding common shares of the company and its Operating Partnership. In its annual report Prime Group Realty reported receiving a "going concern" opinion from its auditors for BHAC Capital IV LLC, an entity that owns 100% of Extended Stay Inc. and in which Prime Group had invested $120 million in 2007. During fiscal year 2008, Prime Group recognized aggregate losses of $66 million (including a $5.6 million provision for asset impairment) related to that investment in Extended Stay, Extended Stay owns 552 extended-stay hotel properties in 43 U.S. states consisting of approximately 59,000 rooms and three hotels in operation in Canada consisting of 500 rooms. BHAC Capital's auditors issued a going concern opinion for BHAC due to recurring losses from Extended Stay operations, net working capital deficiency, members’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations. Prime Group's auditors have not questioned Prime's ability to continue as a going concern and have not issued a going concern opinion as a result of their 2008 audit. Prime Group purchased the Extended Stay interest through a wholly owned subsidiary and financed the purchase with a non-recourse loan. Because of that the fact that Extended Stay auditors issued a going concern for that company does not affect the cash position of Prime Group. In addition, the aggregate losses of $66 million during 2008 did not affect the cash position of Prime Group.
Real Estate Associates Ltd.Real Estate Associates holds limited partnership interests in six multifamily entities controlled by AIMCO Properties in Denver, CO. The partnership continues to generate recurring operating losses. In addition, liabilities exceeded available cash at year-end. Available cash at year-end totaled just about $110,000. The partnership said it may seek operating advances from AIMCO or its affiliates but AIMCO is not obligated to fund such advances. Property - Location - Units Belleville Manor - Marion, KY - 32 Bethel Towers - - Detroit, MI - 146 Clinton Apts. - Clinton, KY - 24 Northwood Village - Emporia, VA - 72 W. Lafeyette Apts. - W. Lafeyette, OH - 49 Williamson Towers - Williamson, WV - 76
Real Estate Associates Ltd. VIIReal Estate Associates VII holds limited partnership interests in 11 multifamily entities controlled by AIMCO Properties in Denver, CO. The partnership is obligated for non-recourse notes of $6.32 million due to the sellers of some of its partnership interests, bearing interest at 9.5% to 10%. Total outstanding accrued interest at year-end was $14.13 million. Unpaid interest was due at maturity of the notes and the partnership has not repaid the notes and is in default. Management is attempting to negotiate extensions of the maturity dates on the three notes payable and not subject to a forbearance agreement. If the negotiations are unsuccessful, the Partnership could lose its investment in the Local Limited Partnerships to foreclosure. Property - Location - Units Aristocrat Manor - Hot Springs, AR - 101 Arkansas City Apts. - Arkansas City, AR - 16 Bellair Manor Apts. - Niles, OH - 68 Birch Manor Apts. I - Medina, OH - 60 Birch Manor Apts. II - Medina, OH - 60 Bluewater Apts. - Port Huron, MI - 116 Clarkwood Apts. I - Elyria, OH - 72 Clarkwood Apts. II - Elyria, OH - 120 Hampshire House - Warren, OH - 150 Ivywood Apts. - Columbus, OH - 124 Jasper County Prop. - Heidelberg, MS - 24 Nantucket Apts. - Alliance, OH - 60 Newton Apts. - Newton, MS - 36 Oak Hill Apts. - Franklin, PA - 120
Riviera Holdings Corp.Riviera Holdings owns and operates the Riviera Hotel & Casino on the Las Vegas Boulevard (the Strip) in Las Vegas, NV, and Riviera Black Hawk Casino, a limited-stakes casino in Black Hawk, CO. Riviera Las Vegas’ hotel is comprised of five towers with 2,075 guest rooms Including 177 suites. Its current debt consists of a 7-year, $225 million term loan that matures on June 8, 2014, and a $20 million 5-year revolving credit facility. In February, the company received a notice of default on its New Credit Facility from Wachovia Bank. In March, the company decided not to pay the accrued interest of approximately $4 million that was due March 30. It has entered into discussions with Wachovia to negotiate a waiver or forbearance regarding the debt and the anticipated payment default and an anticipated going concern default.
Trump Entertainment ResortsTrump Entertainment owns and operates three casino hotels in Atlantic City, NJ. In February, Trump Entertainment Resorts and some subsidiaries filed voluntary petitions for Chapter 11 restructuring in the U.S. Bankruptcy Court for the District of New Jersey. The filing constituted an event of default on $1.25 billion 8.5% senior secured notes and on $493 million on a senior secured term loan agreement. As a result, all of the debt became automatically due and payable. The company was also was delisted from the Nasdaq Stock Market Donald J. Trump and his daughter Ivanka M. Trump resigned as members of the company's board of which Donald Trump was chairman. Mr. Trump also abandoned any and all of his 23.5% direct limited partnership interest in Trump Entertainment Resorts. Property - # of Rooms Trump Taj Mahal - 2,027 Trump Plaza - 900 Trump Marina - 728 Total - 3,655 As of May 2008, Trump Entertainment Resorts had a deal to sell Trump Marina to , Coastal Development LLC. That deal still needs approvals from New Jersey governmental authorities.
Download this story and all of the stories in the Watch List Newsletter here. The Adobe pdf version also includes all of this week’s leads of distressed properties and loans of concern, lease cancellations applied for in bankruptcy proceedings, all of the local and national facility closures & layoffs, banks with distressed real estate portfolios and lists of loans approaching their maturity date. Plus the pdf version contains bonus news items not found in these columns or the CoStar Group web news pages.
More US National Commercial Real Estate News Stories:
Macklowe Defaults, Loses Another New York Office Tower
CoStar's People of Note for Friday (Apr. 12 - 18)
Opus South Corp. Files Bankruptcy
Retail Space Availability Reaches All-Time High
Updates to GGP's Bankruptcy Filing: More Malls Put into Chapter 11
Talking TALF: CRE Industry Urges Quick Fed Action to Extend Loan Lengths
Building Energy Label Proposed in Climate Change Bill
Closures & Layoffs (Apr. 19-25): GM Fires 1,800 This Week
Lease Cancellations (Apr. 19-25): Luxury Los Angeles Lofts File for Bankruptcy
Expansions, Relocations & Extensions (Apr. 19-25): Target, IDS Sign Major Leases
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(EDITOR'S NOTE:We updated the section of this story pertaining to Prime Group Realty Trust. The previous version incorrectly reported that the going concern opinion related to Prime Group's office operations. This version contains the corrected text showing that the going concern opinion relates to Prime Group's investment in Extended Stay Inc.)
Liquidity and debt issues are primary issues raising the most doubt about the companies' survival. The companies either do not have enough cash on hand or don't have the ability to raise new money to meet their debt obligations. Or, the companies are having trouble refinancing maturing debt. Four of the companies have already sought respite from their most pressing problems through the U.S. bankruptcy courts: General Growth Properties, which filed just this past week, ILX Resorts, Meruelo Maddox Properties and Trump Entertainment Resorts. In the case of Trump Entertainment, the legendary and bombastic investor Donald Trump has even relinquished control over the Atlantic City casino operator. The following summaries of the 15 firms' property holdings were compiled from the firms' annual reports, identifying their most pressing problems and the primary steps they are taking to address the issues.
Centro NP LLCCentro NP, based in New York, NY, owns 203 retail properties in 28 states, and operates another 257 held through unconsolidated joint ventures. The 460 properties include 445 community and neighborhood shopping centers with 71.2 million square feet of space, and 15 related retail assets with approximately 1.3 million square feet. There is substantial doubt about the company's ability to continue as a going concern given its liquidity issues, which includes its ability to negotiate extensions of credit; current prohibition upon its ability to take on more debt and restrictions on operations that increase the risk of default. In addition, uncertainty also exists due to the liquidity issues currently experienced by the company's ultimate parent investors in Sydney, Australia, Centro Properties Ltd. and Centro Property Trust. The company recently received an extension of its major debt facilities to Dec. 31, 2010, which it said provides more time to consider a range of different plans. Still during 2009, Centro has $188.5 million of mortgage debt scheduled to mature, $19.3 million of scheduled mortgage amortization payments and a $9.4 million required loan paydown. If principal payments on debt due at maturity cannot be refinanced, extended or paid, it will be in default under its debt obligations and may be forced to dispose of properties on disadvantageous terms. Such defaults could in turn cause additional defaults. In addition, Centro NP is no longer permitted to make draws under its primary lending agreements and may not be able to repay or refinance its short-term debt obligations coming due. Management is working with its lenders to assess a number of options that address the company's ongoing liquidity issues. As of Dec. 31, 2008, Centro NP's breakdown of properties is as follows. State - # of Properties - SqFt Alabama - 8 - 1,623,436 Arizona - 5 - 804,791 Arkansas - 1 - 129,897 California - 14 - 2,256,369 Colorado - 6 - 1,484,159 Connecticut - 14 - 2,156,605 Florida - 40 - 6,742,800 Georgia - 36 - 5,024,416 Illinois - 14 - 2,592,789 Indiana - 12 - 1,885,624 Iowa - 2 - 510,173 Kansas - 2 - 267,486 Kentucky - 15 - 2,930,637 Louisiana - 4 - 624,850 Maine - 2 - 274,026 Maryland - 2 - 243,568 Massachusetts - 6 - 739,334 Michigan - 23 - 3,669,205 Minnesota - 7 - 1,021,806 Mississippi - 3 - 279,869 Missouri - 3 - 446,948 Nevada - 5 - 826,513 New Hampshire - 3 - 369,385 New Jersey - 8 - 928,624 New Mexico - 2 - 176,712 New York - 24 - 4,164,067 North Carolina - 17 - 2,744,833 Ohio - 34 - 6,326,568 Oklahoma - 2 - 481,464 Pennsylvania - 14 - 2,841,358 Rhode Island - 1 - 148,126 South Carolina - 7 - 1,215,471 Tennessee - 19 - 3,486,817 Texas - 82 - 10,470,648 Virginia - 14 - 1,806,953 Vermont - 1 - 224,514 West Virginia - 3 - 357,606 Wisconsin - 4 - 646,244 Wyoming - 1 - 155,022
Davidson Diversified Real Estate III LPDavidson Diversified Real Estate III is an affiliate of AIMCO Properties in Denver, CO. The partnership owns the Plainview Apartments, a 480-unit complex in Louisville, KY. The property is subject to a first mortgage of $15.34 million at a 9.33% interest rate. In addition, as of Dec. 31, the partnership was in the hole to AIMCO Properties for about $6.88 million in advances and interest payments. According to its accounting firm Ernst & Young, the partnership has recurring operating losses and an accumulated deficit. Management is evaluating its options relative to the payment demand by an affiliate of AIMCO. Options include refinancing its debt and/or selling the property prior to maturity in November 2010.
Excellency Investment Realty Trust Inc.Excellency Investment Realty Trust in New York City, owns eight residential real estate properties with 271 apartment units all in Hartford, CT. As of Dec. 31, the properties' occupancy rate was approximately 90.4%. The company has suffered recurring losses from operations. During 2008, it had a net loss of $.17 million and had a net accumulated deficit of $16.9 million. Management is hoping to raise capital through any combination of debt and equity financing. Its properties are as follows. Property Address - Mortgage Amount - Monthly P&I 154-160A Collins St. - $1,251,112 - $7,507 21 Evergreen Ave. - $675,447 - $4,053 243 & 255 Laurel St. - $1,082,250 - $6,493 252 Laurel St. - $560,314 - $3,362 270 Laurel St. - $1,918,883 - $11,513 360 Laurel St. - $567,989 - $3,408 117-145 S. Marshall St. - $1,373,920 - $8,243 56 Webster St. - $460,531 - $2,763 Total: - $7,890,446 - $47,342
FX Real Estate and Entertainment Inc.FX Real Estate and Entertainment owns Las Vegas property made up of six contiguous parcels aggregating 17.72 acres on the southeast corner of Las Vegas Boulevard (the Strip) and Harmon Avenue. The parcel is zoned to allow for casino gaming and can support a variety of development alternatives including hotels/resorts, entertainment venues, a casino, condominiums, hotel-condominiums, residences and retail establishments. The Las Vegas property is currently occupied by a motel and several commercial and retail tenants with a mix of short- and long-term leases. The Las Vegas property’s generated total revenue of $19.5 million in 2008. The company is in severe financial distress and its current cash flow and cash on hand as of March 27, were not sufficient to fund its past due obligations or short-term liquidity. It is currently in default under a $475 million mortgage loan and its lenders could foreclose at any time. The company has engaged in preliminary discussions with its first lien and second lien lenders regarding potential solutions. In the meantime, it continues its current commercial leasing activities for the properties.
General Growth PropertiesThis past week, U.S. mall REIT General Growth Properties as well as 158 of its 200 malls filed for Chapter 11 bankruptcy protection. GGP's third-party management businesses, as well as its joint ventures, have not filed for protection. The REIT made the decision to file after its extensive efforts to refinance or extend its overwhelming debt burden proved futile. For more background on its debt predicament, click here. GGP said day-to-day operations of its shopping centers will continue as usual during the bankruptcy process. GGP signed a commitment letter for Pershing Square Capital Management to provide debtor-in-possession (DIP) financing of $375 million (at an interest rate of 12%+ LIBOR) that GGP will utilize to continue operations while in bankruptcy. During the bankruptcy process, GGP will continue to pursue "strategic alternatives and search the markets for available sources of capital." The REIT has been marketing several of its Class A mall properties for sale (in Las Vegas and the Northeast) for months now. No deal has yet to surface. GGP intends to execute a reorganization plan that extends its mortgage maturities and reduces its corporate debt and overall leverage. The company expects to "emerge from bankruptcy as quickly as possible" with its national business model in tact. GGP listed $29.6 billion in assets and $27.3 billion in debts in its filing. The company hired Weil, Gotshal & Manges LLP as attorneys handling its bankruptcy, while Kirkland & Ellis LLP was hired as co-counsel to certain subsidiary debtors. General Growth has published a list of its properties in bankruptcy at http://www.ggp.com/company/Default.aspx?id=101. (By: Sasha M Pardy)
ILX Resorts Inc.ILX Resorts in Phoenix, AZ, develops, markets and operates timeshare resorts in the western United States. The company’s current portfolio of resorts consists of seven resorts. The company also holds 2,241 weeks at the Carriage House in Las Vegas, 174 weeks at the Scottsdale Camelback Resort in Scottsdale and 194 weeks in the Roundhouse Resort in Pinetop, AZ. ILX Resorts and 15 of its subsidiaries filed voluntary petitions to reorganize in the U.S. Bankruptcy Court for the District of Arizona last month. During 2008, the company sold 1,342 annual and biennial vacation ownership interests, compared to 1,561 during 2007. The average sales price was $15,606 for an annual interest and $8,935 for a biennial interest. As of Dec. 31, the company had an existing inventory of 7,873 unsold interests. Resort - Location Los Abrigados Resort & Spa - Sedona, AZ The Inn at Los Abrigados - Sedona, AZ Kohl’s Ranch Lodge - Payson, AZ The Historic Crag’s Lodge at the Golden Eagle Resort - Estes Park, CO Sea of Cortez Premiere Vacation Club - San Carlos, Mexico Premiere Vacation Club at Bell Rock - Village of Oak Creek, AZ Rancho Mañana Resort - Cave Creek, AZ Premiere Vacation Club at the Roundhouse Resort - VCA-South Bend - South Bend, IN VCA-Tucson - Tucson, AZ Los Abrigados Lodge - Sedona, AZ As part of its Chapter 11 proceedings, IXL rejected its long-term lease of the Los Abrigados Lodge.
Interstate Hotels & Resorts Inc.Interstate Hotels & Resorts in Arlington, VA, manages 226 hotel properties with 46,448 rooms and six ancillary service centers (a convention center, a spa facility, two restaurants and two laundry centers), in 37 states and the District of Columbia in the U.S. and in Russia, Mexico, Canada, Belgium and Ireland. Of its managed properties, it owns even with 2,051 rooms and held non-controlling equity interests in 18 joint ventures, which owned or held ownership interests in 50 of its managed properties. Last month, Interstate Hotels was suspended from trading on the New York Stock Exchange and faces potential delisting. The company's senior secured credit facility includes a debt covenant requiring continued listing on the NYSE. If that happens, its lenders could demand immediate repayment of all outstanding debt. KPMG LLP, its accounting firm stated that uncertainty exists as to whether the company would have the ability to generate liquidity to meet that obligation. At year-end, Interstate Hotels had an outstanding debt balance of $244.28 million. The majority of that debt matures in March of next year. In addition to that complication, there is uncertainty as to whether it will meet one of the financial debt covenants regarding its total leverage ratio for its fourth quarter 2009 calculation period. Interstate has already begun discussions with its lenders to amend the terms of the Credit Facility Including extending the maturity date and adjusting the above-mentioned covenants The company said it believes it will have sufficient liquidity from cash on hand and cash from operations to fund its operating needs in 2009. Wholly-Owned Properties - Guest Rooms Hilton Concord, East Bay area near San Francisco, CA - 331 Hilton Durham, Durham, NC - 195 Hilton Garden Inn Baton Rouge, Baton Rouge, LA - 131 Hilton Arlington, Arlington, TX - 308 Hilton Houston Westchase, Houston, TX - 297 Westin Atlanta Airport, Atlanta, GA - 500 Sheraton Columbia, Columbia, MD - 289
Lodgian Inc.Atlanta-based hotel operator Lodgian owns and operates nearly 7,600 hotel rooms in 41 properties under management. The company lists 35 hotels as continuing operations and six as held for sale. Lodgian has $128 million of outstanding mortgage debt scheduled to mature in July 2009. The current severe economic recession has hurt the company’s operating results, which has affected its operating cash flows as well as its ability to refinance the maturing debt. Lodgian is negotiating with prospective lenders and has hired Jones Lang LaSalle to facilitate the refinancing process. It is also negotiating to extend the maturing mortgage debt. In addition to the July 2009 maturity, the company has three other 2009 debt maturities that in the aggregate total approximately $169.5 million of mortgage debt. Each of these debt facilities has extension options of one to three years, and the company expects to exercise those extension options. For the year 2008, Lodgian lost $12 million compared to losing $8.4 million in 2007. Last year, Lodgian sold five hotels for gross proceeds of $25 million. Location - Brand - Rooms Bentonville, AR - Courtyard by Marriott - 90 Little Rock, AR - Residence Inn by Marriott - 96 Phoenix, AZ - Crowne Plaza - 295 Phoenix, AZ - Radisson - 159 Palm Desert, CA - Holiday Inn Express - 129 Denver, CO - Marriott - 238 Melbourne, FL - Crowne Plaza - 270 West Palm Beach, FL - Crowne Plaza - 219 Atlanta, GA - Courtyard by Marriott - 181 Ft. Wayne, IN - Hilton - 244 Florence, KY - Courtyard by Marriott - 78 Paducah, KY - Courtyard by Marriott - 100 Kenner, LA - Radisson - 244 Lafayette, LA - Courtyard by Marriott - 90 Dedham, MA - Residence Inn by Marriott - 81 Worcester, MA - Crowne Plaza - 243 Baltimore (BWI Airport), MD - Holiday Inn - 260 Baltimore (Inner Harbor), MD - Holiday Inn - 375 Columbia, MD - Hilton - 152 Silver Spring, MD - Crowne Plaza - 231 Pinehurst, NC - Springhill Suites by Marriott - 107 Merrimack, NH - Fairfield Inn by Marriott - 115 Santa Fe, NM - Holiday Inn - 130 Albany, NY - Crowne Plaza - 384 Strongsville, OH - Holiday Inn - 303 Tulsa, OK - Courtyard by Marriott - 122 Monroeville, PA - Holiday Inn - 187 Philadelphia, PA - Four Points by Sheraton - 190 Pittsburgh - Washington, PA - Holiday Inn - 138 Pittsburgh, PA - Crowne Plaza - 193 Hilton Head, SC - Holiday Inn - 202 Myrtle Beach, SC - Holiday Inn - 133 Abilene, TX - Courtyard by Marriott - 99 Dallas (DFW Airport), TX - Wyndham - 282 Houston, TX - Crowne Plaza - 294 Lodgian's Hotel Assets Held for Sale Phoenix, AZ - Holiday Inn - 144 East Hartford, CT - Holiday Inn - 130 Towson, MD - Holiday Inn - 139 Troy, MI - Hilton - 191 Memphis, TN - Independent - 105 Windsor, Ontario, Canada - Holiday Inn Select - 214
Meruelo Maddux PropertiesMeruelo Maddux Properties is one of Los Angeles' largest owner/developers of commercial properties. It owns 28 properties totaling 3.7 million square feet. It also has a development pipeline underway that includes seven multifamily projects totaling 995,000 square feet. The company has suspended construction of an additional 12 projects totaling 774,000 square feet. Meruelo Maddux has been experiencing significant, recurring cash shortfalls and last month it and numerous of its subsidiaries filed for relief under Chapter 11 in an effort to restructure its debt last month. Excluded from the filing is the company's 35-story 717 W. Ninth Street residential tower project currently under construction. Meruelo Maddux recorded a net loss in the fourth quarter of $85.8 million. This result was derived in large part from the decision to take $117.4 million of non-cash impairment charges in the fourth quarter. The company also stopped making interest and principal payments and therefore was in default on 26 of its 30 loans totaling $266 million. It has been seeking loan workout agreements with four lenders on loans that total approximately $177.8 million. Projects - Square Feet Commercial Projects 788 S Alameda - 33,984 Washington Cold Storage - 59,000 500 Mateo Street - 12,938 Meruelo Wall Street - 98,245 Washington at Central - 5,479 Southern California Institute of Architects - 81,741 Washington Produce Market - 31,876 905 E 8th Street - 28,200 3rd and Omar Street - 23,297 1919 Vineburn Ave. - 122,345 1500 Griffith Ave. - 50,058 4th Street Center - 14,472 Seventh Street Produce Market - 122,120 Alameda Square - 1,463,696 620 Gladys Ave. - 57,354 1000 E. Cesar Chavez - 50,373 306 North Avenue 21 - 80,712 Crown Commerce Center - 301,491 420 Boyd St. - 47,806 230 W. Ave. 26th - 67,671 5707 S. Alameda - 55,729 Santa Fe Plaza - 16,000 Barstow Produce Center - 261,750 1211 E. Washington Blvd. - 108,000 Residential Projects American Apartments - 13,550 Union Lofts - 81,609 Southpark Tower - Phase 2 - J Restaurant - 11,829 Center Village - 176,628 Pomona West - - 242,042
NNN 2003 Value Fund LLCNNN 2003 Value Fund based in Santa Ana, CA, holds interests in eight commercial office properties. Three of the properties are classified as held for sale and efforts are actively underway to market and sell these properties. Grubb & Ellis Realty Investors LLC manages the fund. As of year-end, the fund had guaranteed the payment of approximately $2.5 million of mortgage loans payable that mature in May 2009 related to one of its properties. Based on cash flow projections it currently does not have the ability to satisfy this guaranty if it becomes due and is actively marketing the property for sale. It anticipates the property will be sold this year but maybe not prior to maturity or that if it is sold, it will raise enough money to pay off the debt. The fund has initiated discussions with the lender regarding amending or extending the mortgage loan. Property - Property Location - (Sq Ft) Consolidated Properties: - - Executive Center I - Dallas, TX - 205,000 901 Civic Center - Santa Ana, CA - 99,000 Tiffany Square - Colorado Springs, CO - 184,000 Four Resource Square - Charlotte, NC - 152,000 The Sevens Building - St. Louis, MO - 197,000 Unconsolidated Properties: - - Executive Center II & III - Dallas, TX - 381,000 Enterprise Technology Center - Scotts Valley, CA - 369,000 Chase Tower - Austin, TX - 386,000 Totals - - 1,136,000
Extended Stay Inc. / Prime Group Realty TrustPrime Group Realty is a Chicago-based REIT that owns, manages, leases, develops and redevelops office and industrial real estate primarily in the Chicago metro area. Its portfolio consists of nine office properties, containing an aggregate of 3.5 million net rentable square feet. In 2005, an affiliate of The Lightstone Group LLC bought the basically all of the outstanding common shares of the company and its Operating Partnership. In its annual report Prime Group Realty reported receiving a "going concern" opinion from its auditors for BHAC Capital IV LLC, an entity that owns 100% of Extended Stay Inc. and in which Prime Group had invested $120 million in 2007. During fiscal year 2008, Prime Group recognized aggregate losses of $66 million (including a $5.6 million provision for asset impairment) related to that investment in Extended Stay, Extended Stay owns 552 extended-stay hotel properties in 43 U.S. states consisting of approximately 59,000 rooms and three hotels in operation in Canada consisting of 500 rooms. BHAC Capital's auditors issued a going concern opinion for BHAC due to recurring losses from Extended Stay operations, net working capital deficiency, members’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations. Prime Group's auditors have not questioned Prime's ability to continue as a going concern and have not issued a going concern opinion as a result of their 2008 audit. Prime Group purchased the Extended Stay interest through a wholly owned subsidiary and financed the purchase with a non-recourse loan. Because of that the fact that Extended Stay auditors issued a going concern for that company does not affect the cash position of Prime Group. In addition, the aggregate losses of $66 million during 2008 did not affect the cash position of Prime Group.
Real Estate Associates Ltd.Real Estate Associates holds limited partnership interests in six multifamily entities controlled by AIMCO Properties in Denver, CO. The partnership continues to generate recurring operating losses. In addition, liabilities exceeded available cash at year-end. Available cash at year-end totaled just about $110,000. The partnership said it may seek operating advances from AIMCO or its affiliates but AIMCO is not obligated to fund such advances. Property - Location - Units Belleville Manor - Marion, KY - 32 Bethel Towers - - Detroit, MI - 146 Clinton Apts. - Clinton, KY - 24 Northwood Village - Emporia, VA - 72 W. Lafeyette Apts. - W. Lafeyette, OH - 49 Williamson Towers - Williamson, WV - 76
Real Estate Associates Ltd. VIIReal Estate Associates VII holds limited partnership interests in 11 multifamily entities controlled by AIMCO Properties in Denver, CO. The partnership is obligated for non-recourse notes of $6.32 million due to the sellers of some of its partnership interests, bearing interest at 9.5% to 10%. Total outstanding accrued interest at year-end was $14.13 million. Unpaid interest was due at maturity of the notes and the partnership has not repaid the notes and is in default. Management is attempting to negotiate extensions of the maturity dates on the three notes payable and not subject to a forbearance agreement. If the negotiations are unsuccessful, the Partnership could lose its investment in the Local Limited Partnerships to foreclosure. Property - Location - Units Aristocrat Manor - Hot Springs, AR - 101 Arkansas City Apts. - Arkansas City, AR - 16 Bellair Manor Apts. - Niles, OH - 68 Birch Manor Apts. I - Medina, OH - 60 Birch Manor Apts. II - Medina, OH - 60 Bluewater Apts. - Port Huron, MI - 116 Clarkwood Apts. I - Elyria, OH - 72 Clarkwood Apts. II - Elyria, OH - 120 Hampshire House - Warren, OH - 150 Ivywood Apts. - Columbus, OH - 124 Jasper County Prop. - Heidelberg, MS - 24 Nantucket Apts. - Alliance, OH - 60 Newton Apts. - Newton, MS - 36 Oak Hill Apts. - Franklin, PA - 120
Riviera Holdings Corp.Riviera Holdings owns and operates the Riviera Hotel & Casino on the Las Vegas Boulevard (the Strip) in Las Vegas, NV, and Riviera Black Hawk Casino, a limited-stakes casino in Black Hawk, CO. Riviera Las Vegas’ hotel is comprised of five towers with 2,075 guest rooms Including 177 suites. Its current debt consists of a 7-year, $225 million term loan that matures on June 8, 2014, and a $20 million 5-year revolving credit facility. In February, the company received a notice of default on its New Credit Facility from Wachovia Bank. In March, the company decided not to pay the accrued interest of approximately $4 million that was due March 30. It has entered into discussions with Wachovia to negotiate a waiver or forbearance regarding the debt and the anticipated payment default and an anticipated going concern default.
Trump Entertainment ResortsTrump Entertainment owns and operates three casino hotels in Atlantic City, NJ. In February, Trump Entertainment Resorts and some subsidiaries filed voluntary petitions for Chapter 11 restructuring in the U.S. Bankruptcy Court for the District of New Jersey. The filing constituted an event of default on $1.25 billion 8.5% senior secured notes and on $493 million on a senior secured term loan agreement. As a result, all of the debt became automatically due and payable. The company was also was delisted from the Nasdaq Stock Market Donald J. Trump and his daughter Ivanka M. Trump resigned as members of the company's board of which Donald Trump was chairman. Mr. Trump also abandoned any and all of his 23.5% direct limited partnership interest in Trump Entertainment Resorts. Property - # of Rooms Trump Taj Mahal - 2,027 Trump Plaza - 900 Trump Marina - 728 Total - 3,655 As of May 2008, Trump Entertainment Resorts had a deal to sell Trump Marina to , Coastal Development LLC. That deal still needs approvals from New Jersey governmental authorities.
Download this story and all of the stories in the Watch List Newsletter here. The Adobe pdf version also includes all of this week’s leads of distressed properties and loans of concern, lease cancellations applied for in bankruptcy proceedings, all of the local and national facility closures & layoffs, banks with distressed real estate portfolios and lists of loans approaching their maturity date. Plus the pdf version contains bonus news items not found in these columns or the CoStar Group web news pages.
More US National Commercial Real Estate News Stories:
Macklowe Defaults, Loses Another New York Office Tower
CoStar's People of Note for Friday (Apr. 12 - 18)
Opus South Corp. Files Bankruptcy
Retail Space Availability Reaches All-Time High
Updates to GGP's Bankruptcy Filing: More Malls Put into Chapter 11
Talking TALF: CRE Industry Urges Quick Fed Action to Extend Loan Lengths
Building Energy Label Proposed in Climate Change Bill
Closures & Layoffs (Apr. 19-25): GM Fires 1,800 This Week
Lease Cancellations (Apr. 19-25): Luxury Los Angeles Lofts File for Bankruptcy
Expansions, Relocations & Extensions (Apr. 19-25): Target, IDS Sign Major Leases
For more info cal oe email ed@houstonrealtyadvisors.com
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or www.houstonrealtyadvisors.net
New Industrial park for Houston
Pinto Realty Partners is developing a 1,000-acre project that is being called the largest office/warehouse distribution business park in the city of Houston.
The yet-to-be-named business park is designed for a huge chunk of vacant land near the southwest corner of Interstate 45 and the North Belt. The acreage is owned by the Cockrell family, which controls Houston-based Pinto Realty.
Ernie Cockrell, managing director of Pinto Realty, declined to comment on the project.
However, promotional materials on the business park were being distributed last week at the 2009 Commercial Expo, an annual trade show by the Society of Industrial and Office Realtors and Commercial Gateway that attracted more than 800 professionals. For more information on this site and other checkout: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
The yet-to-be-named business park is designed for a huge chunk of vacant land near the southwest corner of Interstate 45 and the North Belt. The acreage is owned by the Cockrell family, which controls Houston-based Pinto Realty.
Ernie Cockrell, managing director of Pinto Realty, declined to comment on the project.
However, promotional materials on the business park were being distributed last week at the 2009 Commercial Expo, an annual trade show by the Society of Industrial and Office Realtors and Commercial Gateway that attracted more than 800 professionals. For more information on this site and other checkout: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Saturday, April 18, 2009
Not so Rosey
The Houston office market experienced the highest quarterly negative net absorption rate in the last five years in the first quarter of 2009, according to the Office Market Trends Houston report by Grubb & Ellis Co.
Houston had nearly 919,000 square feet of negative net absorption for the quarter. Of the total, about 6,600 square feet was Class A space, 768,000 square feet was Class B space and 143,500 square feet was Class C space.
The Grubb & Ellis report shows the Houston office market reached a 14.7 percent vacancy level during the first quarter, the highest level since the end of 2006. Vacancy rates are expected to continue rising since 5.3 million square feet of office space is under construction in the Houston area.
The sublease space, or space put back onto the market by companies that no longer need it, rose by about 845,300 square feet to nearly 3.5 million square feet during the first quarter. The amount is still significantly lower than the 5.5 million square feet of sublease space that hit the market during the last economic downturn that began in 2001, according to Grubb & Ellis.
Asking rents for Class A space, or the nicest, newest office space, declined by 7 cents to $30 per square foot for the quarter. But asking rents in downtown Houston actually rose by 5 cents during the quarter to $38.43 per square foot.
Asking rents for Class B space decreased the most during the quarter, dropping by 36 cents to $20.68 per square foot. Asking rents for Class C space also fell — by 23 cents to $15.65 per square foot. For more information see www.houstonrealtyadvisors.com
Houston had nearly 919,000 square feet of negative net absorption for the quarter. Of the total, about 6,600 square feet was Class A space, 768,000 square feet was Class B space and 143,500 square feet was Class C space.
The Grubb & Ellis report shows the Houston office market reached a 14.7 percent vacancy level during the first quarter, the highest level since the end of 2006. Vacancy rates are expected to continue rising since 5.3 million square feet of office space is under construction in the Houston area.
The sublease space, or space put back onto the market by companies that no longer need it, rose by about 845,300 square feet to nearly 3.5 million square feet during the first quarter. The amount is still significantly lower than the 5.5 million square feet of sublease space that hit the market during the last economic downturn that began in 2001, according to Grubb & Ellis.
Asking rents for Class A space, or the nicest, newest office space, declined by 7 cents to $30 per square foot for the quarter. But asking rents in downtown Houston actually rose by 5 cents during the quarter to $38.43 per square foot.
Asking rents for Class B space decreased the most during the quarter, dropping by 36 cents to $20.68 per square foot. Asking rents for Class C space also fell — by 23 cents to $15.65 per square foot. For more information see www.houstonrealtyadvisors.com
Wednesday, April 15, 2009
Z Gallerie Closes stores in USA
Z Gallerie has filed for Chapter 11 bankruptcy reorganization.
The Gardena, Calif.-based retailer filed Friday in the U.S. Bankruptcy Court for the Central District of California in Los Angeles.
It has stores locally in Memorial City Mall, Market Square in The Woodlands, Highland Village and Sugar Land Town Square.
Z Gallerie “filed to reorganize voluntarily under Chapter 11 in order to remove the liability from 22 leases associated with closed stores and an Atlanta distribution center and to strengthen its balance sheet,” the company said in a news release.
Z Gallerie closed 21 stores, mostly in March, and has not announced any more store closings, a company spokesman said in an interview Tuesday.
Z Gallerie stores will be remain open without interruption. The retailer, in the release, said it “has sufficient cash to operate all aspects of its business, including custom furniture orders through its stores and Web site, and is seeking court approval to do so.”
The filing allows Z Gallerie to “eliminate certain lease liabilities from discontinued stores, and to continue to operate and serve our customers well,” Mike Zeiden, chief financial officer and co-founder, said in the news release.
The retailer is seeking court permission to pay pre-filing wages and benefits, honor existing customer programs and deposits and maintain its cash management system.
“Vendors who do business with the company going forward will be paid on an administrative priority basis for all goods and services the company receives after today,” the company said in the release on Friday. “The law prohibits payment for goods and services received before today’s filing.”
Z Gallerie began closing 21 stores nationwide on Feb. 18. Those stores were either poor performers or in markets that the retailer wanted to pull out of, the release said. The company also made arrangements to close its Atlanta distribution center. Now Z Gallerie is supplying merchandise from its central distribution center facility in Gardena.
Founded in 1979, the retailer now has 56 retail locations in 18 states and one outlet at headquarters in Gardena. It employs nearly 900 people.
Turnaround manager Broadway Advisors LLC is advising Z Gallerie. Its bankruptcy counsel is Pachulski Stang Ziehl & Jones LLP. for more information see: www.houstonrealtyadvisors,com or www.houstonrealtyadvisors.net
The Gardena, Calif.-based retailer filed Friday in the U.S. Bankruptcy Court for the Central District of California in Los Angeles.
It has stores locally in Memorial City Mall, Market Square in The Woodlands, Highland Village and Sugar Land Town Square.
Z Gallerie “filed to reorganize voluntarily under Chapter 11 in order to remove the liability from 22 leases associated with closed stores and an Atlanta distribution center and to strengthen its balance sheet,” the company said in a news release.
Z Gallerie closed 21 stores, mostly in March, and has not announced any more store closings, a company spokesman said in an interview Tuesday.
Z Gallerie stores will be remain open without interruption. The retailer, in the release, said it “has sufficient cash to operate all aspects of its business, including custom furniture orders through its stores and Web site, and is seeking court approval to do so.”
The filing allows Z Gallerie to “eliminate certain lease liabilities from discontinued stores, and to continue to operate and serve our customers well,” Mike Zeiden, chief financial officer and co-founder, said in the news release.
The retailer is seeking court permission to pay pre-filing wages and benefits, honor existing customer programs and deposits and maintain its cash management system.
“Vendors who do business with the company going forward will be paid on an administrative priority basis for all goods and services the company receives after today,” the company said in the release on Friday. “The law prohibits payment for goods and services received before today’s filing.”
Z Gallerie began closing 21 stores nationwide on Feb. 18. Those stores were either poor performers or in markets that the retailer wanted to pull out of, the release said. The company also made arrangements to close its Atlanta distribution center. Now Z Gallerie is supplying merchandise from its central distribution center facility in Gardena.
Founded in 1979, the retailer now has 56 retail locations in 18 states and one outlet at headquarters in Gardena. It employs nearly 900 people.
Turnaround manager Broadway Advisors LLC is advising Z Gallerie. Its bankruptcy counsel is Pachulski Stang Ziehl & Jones LLP. for more information see: www.houstonrealtyadvisors,com or www.houstonrealtyadvisors.net
Tuesday, April 7, 2009
BIG INDUSTRIAL LEASE FOR HOUSTON, TX.
Parsippany, N.J.-based B&G Foods has renewed its lease for 151,966 square feet of warehouse space for an additional 5-year term. The space is located at Suite 140 of 7150 Business Park Dr. in Houston. Edward Bane of Houston-based Holt Lunsford Commercial represented the landlord, Des Moines, Iowa-based Principal Financial Group. B&G Foods was represented by Mike Hill of Michael Hill Properties. for more information see: www.houstonrealtyadvisors.com oe www.houstonrealtyadvisors.net
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