Philip Blumberg Blog

Porsche Moves to Pennsylvania

Porsche Cars North America, Inc. plans to open a Northeast Regional Support Center next year at the to-be-constructed Chrin Commerce Centre in Pennsylvania's Lehigh Valley, less than 70 miles from both Philadelphia and New York City, one of Porsche's most vital sales regions. Porsche makes this move in an effort to improve customer service by increasing operating efficiency across the board, building a center which is made up of a Porsche Academy Training Center (including a 15,000 square foot indoor test track), Porsche's Area East Office and new Northeast Parts Distribution Center.

"The Lehigh Valley was the best choice primarily from a logistic perspective for parts deliveries and accessibility to the dealers who will be serviced by the facility," Rob Nemchik, the general manager for Porsche Logistics Service tells GlobeSt.com. "The Training Center is for technical training of Porsche Dealership personnel. It is not a repair shop." The proposed building will be LEED certified along with Porsche’s green initiatives. "We are environmentally conscious," says Nemchik.

Pending the Palmer Township approval, ground is planned to be broken in October 2008 for the new facility. The facilitiy's grand opening is currently planned for the summer of 2009.

For more real estate news and information, visit Blumberg Capital Partners.

Housing Relief Bill Signed

President Bush today signed a housing relief bill providing the most sweeping housing legislation in decades. The bill is aimed at calming rocky financial markets and giving mortgage relief to up to 400,000 homeowners. Bush's signing of the housing bill follows months of often contentious negotiations; the House passed the bill last week, but nearly three-quarters of the Republican members voted against it.

“On a macro level, this is touted as a cure-all but when you read the bill, you realize that the money will help a small percentage of the people affected by this crisis,” Dan Gorczycki, managing director, Savills Granite, tells Multi-Housing News. “This is not going to have a wide sweeping impact. Even if it prevents 400,000 people from foreclosure, it is not enough because eventually this number is going to go up to 6 million.”

One of the key parts of the bill authorizes the FHA to help homeowners who, because of falling prices, owe their lenders more than their houses are worth. If lenders agree to forgive a portion of the debt and write new loans worth no more than 90 percent of the home's lower value, the FHA will insure the new loans and agree to pay off the lenders if borrowers default. Homeowners also will get an immediate equity stake in their properties, which they would have to share with the government if they sell or refinance.

The bill provides temporary authority to the administration to offer Freddie Mac and Fannie Mae an unlimited line of credit, a move designed to calm global concerns about the government-sponsored but investor-owned firms. Freddie and Fannie guarantee nearly half of all outstanding mortgages in the United States.

For more real estate news and information, visit Blumberg Capital Partners.

Lake Las Vegas Files Bankruptcy

The latest in a string of failed projects plaguing the west, owners of Lake Las Vegas have placed the project in bankruptcy proceedings according to a Wall Street Journal article. Late last week the Las Vegas-based Atalon Group put the development and 14 affiliates into Chapter 11 protection in U.S. Bankruptcy Court in Las Vegas.

The bankruptcy filing was the result of "too much debt and our inability to pay it down combined with the threat of litigation, no liquidity and a very difficult real-estate market," said Atalon Chief Executive Frederick Chin. Lake Las Vegas was weighed down by a combination of more than $800 million in debt, the housing downturn and lack of cash brought on by the global credit crunch. In addition to its financing needs, the project is also facing potential lawsuits from homebuilders and various lenders are also attempting to foreclose on properties.

Atalon acquired Lake Las Vegas -- a resort community that boasts three golf courses, two luxury hotels and a 320-acre man-made lake in the desert outside Las Vegas -- earlier this year after its original developer, Transcontinental Corp., defaulted on a $540 million loan provided by a group of lenders led by Credit Suisse. Developers broke ground on the massive 3,600-acre project about 15 years ago. The plans call for 9,000 homes, about 1,600 of which have been built. The development, which encompasses 29 neighborhoods, includes Mediterranean-style villas and multimillion-dollar estates.

Mr. Chin said the bankruptcy filing will allow the company to implement a revised business plan that will focus on appealing to full-time residents and not just upscale second-home buyers attracted by the underutilized golf courses. The project is valued at less than the $670 million owed to the lending group led by Credit Suisse.

For more real estate news and information, visit Blumberg Capital Partners.

Optima International Purchases More Cleveland Property

Optima International of Miami, the same company that bought skyscraper One Cleveland Center earlier this year, purchased 55 Public Square, a 22-story office building in downtown Cleveland, from Willett Companies for $34 million. 55 Public Square has 420,604 square feet of office space and also includes a 439-space parking garage. The property is the central hub of Cleveland’s three rapid transit lines and is close to the federal, state and local courthouses according to an article on Cleveland.com.

Jaime Fink and Jeff Bramson, managing directors at Holliday Fenoglio Fowler, arranged the sale. Downtown Cleveland is poised for the development of a new convention center and proposed medical mart facility that are both within walking distance of 55 Public Square,” said Fink. “If completed these would further diversify the tenant base in the building to include medical industry related tenants and tenants that need to be in close proximity to the convention center.” The building is currently 84 percent occupied by Climaco, Lefkowitz, Peca, Wilcox & Garfoli, LLC and Mansour, Gavin, Gerlack & Manos, LPA.

Chaim Schochet, an Optima investment executive, said "We don't plan on stopping just yet," of Optima's local real estate acquisitions. "Optima is looking at properties internationally, but we're going to be looking at more properties in Cleveland in the future." Optima International of Miami is the U.S. branch of a private, global company heavily invested in oil, gas, telecommunications and manufacturing in Eastern Europe. Optima International launched a real estate arm last year and made its first major purchase in May -- One Cleveland Center -- for nearly $86.3 million.

For more real estate news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners Video

How are the problems of the subprime market and resulting credit crunch impacting the commercial real estate market? Watch the video below to view an interview with Philip Blumberg of Blumberg Capital Partners discussing the credit crunch and its impact on retail and office real estate.  For more real estate news and information, visit www.blumbergcapitalpartners.com.

180 Madison Ave Bought for $146 Million

In a joint venture between Prudential Real Estate Investors and New York's Clarett Group, the 80 year old building at 180 Madison Avenue in New York City has been bought from Sitt Asset Management for $146 million. The 274,000 square foot office building, built on the southwest corner of Madison Avenue and East 34th, stands 23 stories tall and is well located within walking distance of both Grand Central Terminal and Penn Station with access to 12 subway lines. Clarett plans to further improve the asset through a strategic renovation plan to increase the property's value. Veronica Hackett, managing partner of the Clarett Group, said in a prepared release that the company believes that the Midtown market is "poised for robust growth over the next several years." Hackett further noted that the high-quality asset's location will enable the firm to "achieve significant value appreciation."

An anonymous industry source not involved with the same, but familiar with the Midtown market, tells GlobeSt.com that they question where the robust growth will originate "with widespread uncertainty and weakness in the credit and equity markets, strong inflation in food and energy prices, and an economy bordering on recession."

CB Richard Ellis has been hired to manage the leasing of the building. According to MrOfficeSpace.com, asking rents at 180 Madison Ave. are $60 per sf. Current tenants include International Intimates, Vandale Industries Inc., Age Group Ltd., Kellwood Co., A.C.T., Andrew Levin, Bendon USA, Next Generation Intimates, O'Brian Brothers, Pacific Group, Panties Plus, Paradise Lingerie, Riveria Trading Inc., St. Eve International Inc., the Natori Co. Inc. and Vivien International.

For more real estate news and information, visit Blumberg Capital Partners.

Subprime Market Troubles an Equal-Opportunity Problem

ComplianceTech, an Arlington, Virginia consulting firm, released a report today indicating that a large percentage of subprime borrowers aren't poor or minority-group members (as the market is often portrayed) -- more than two-thirds of the high-rate mortgages issued in 2006 were made by middle- and upper-income borrowers, and more than 55% of those loans went to white borrowers.

The study, which analyzed data filed under the federal Home Mortgage Disclosure Act (HMDA), suggests that lenders and policy makers seeking solutions to the mortgage crisis need to understand how many groups of Americans are being hurt by rising subprime delinquencies says ComplianceTech Managing Director Maurice Jourdain-Earl, the study's author, in a Wall Street Journal article. "We need to broaden the prism," says Jourdain-Earl, "and realize that there are a number of families, many of whom are suburban or even rural, who are suffering."

Foresight Analytics, a California-based provider of real estate market consulting service with a focus on real estate market analysis and forecasting, estimates that construction-loan delinquencies among all property types reached 9% in the quarter, up from 7.2% in the first quarter and 2.4% in the year-earlier period. The data are based on a preliminary analysis of federally insured banks' second-quarter earnings results and regulatory filings. Among loans to single-family-housing developers, an estimated 12% of the loans were at least 30 days past due, compared with 10.8% in the previous quarter and 3.1% a year earlier.

For more real estate news and information, visit Blumberg Capital Partners.

Hyatt Regency Phoenix Sells for $96 Million

PCCP, LLC, an integrated real estate finance and investment management firm, in a joint venture with DiNapoli Capital Partners, acquired the 25-story, 696-room Hyatt Regency Phoenix in downtown Phoenix, Ariz., for $96 million from Strategic Hotels and Resorts, Inc. according to a crefeed.com listing. The Hyatt Regency Phoenix is a 696-room, full-service hotel built in 1976 and extensively renovated in 1999. The 26-story hotel features an eight-story atrium in the lobby and has more than 48,000 square feet of function space in 30 meeting rooms. The property also includes four restaurants, an outdoor pool, health club and gift shop.

“The joint venture plans to commence a major renovation of the rooms and common areas in order to make the property more competitive in the downtown market,” said Rob Cohen, vice president with PCCP. “This investment was compelling because it presented an opportunity to purchase an asset with strong in-place cash flow at a discount to replacement cost.” Renovations of the property are expected to be complete in 2009. The Phoenix Convention Center, directly adjacent to the Hyatt Regency, has undergone a $600 million renovation, significantly increasing its size from 550,000 square feet to 2.5 million square feet with construction completion expected in late 2008. This expansion will increase the number of city-wide conventions to over 50 events per year.

Jones Lang LaSalle represented the seller, Strategic Hotels and Resorts, Inc. Financing for the acquisition was provided by ING Real Estate, LLC.

For more real estate news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was recently featured on Investors.com. Touting Heavenly Workspaces.

An excerpt:

A recent online survey of 500 office workers in the U.S. backs this point. For 80% of those polled, their office conditions had a direct bearing on how they perceived their employers. Many griped about extreme temperatures and messy bathrooms.

Almost 70% said that office conditions affected their productivity and motivation. One-third of those polled said they had left a past job due to building problems. The survey was done on behalf of Blumberg Capital Partners, a real estate investment firm.

Blumberg Capital Partners Video

What's going on in the commerial real estate market today? Watch the video below to view an interview with Philip Blumberg of Blumberg Capital Partners regarding the current economy and its impact on retail and office real estate.

For more real estate news and information, visit www.blumbergcapitalpartners.com.