Thursday, December 11, 2008

Nervous But Activity Is There

The credit markets are still frozen up on the eve of General Growth's $900 million refi prayer.
The holiday party circuit has been all about,"can you believe what happened to the reits"
Well reits that were on a buying binge on 80% ltv and paying up through 2007 find themselves looking ahead to serious refi issues in 2009. Who will want to fund the depreciating assets?
Some serious trading of properties may occur. Good deals will be based on tenant's that have a product that the citizens of the USA NEED not WANT., ie: soap, food, paper, beverage, auto parts and the consumer staples. Everything else is fair game for serious scrutiny. Rental rates are falling, landlord's willing to offer rent abatement in order to have tenant's move.
Sales that did happen in 2008 were already teed up in 2007.
Medical space seeing very good activity. Office depot dumping stores as well as KB Toys this week. Looks like we are trending to a reset down to levels seen in 2000. Ten year bill could go to 2% and borrowing will be at 65% ltv and up in 2009.
Big Box warehouse space is abundant at Exit 8A, South Brunswick, Monroe.
Exit 7A has big vacancy as well.
Cookie cutter deals at 25,000 sf and under continue to be a mainstay in the 4th quarter.
In the meantime there is a whole lot of enthusiasm towards a rip roar sale market in 2009, the only problem is what will be the catalyst towards acquiring assets that continue to decline in value? It will be all about the tenant's credit and their risk participation in the lease that govern 2009.