Word: reals
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Dates: during 2000-2009
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...recent Chapter 11 bankruptcy filing of commercial real estate lender Capmark Financial Group appears to validate the doom-and-gloom scenario for commercial real estate fundamentals...
...buying binge comes as commercial real estate rents and occupancy rates continue to plunge, leaving industry experts wondering if the rally was premature at best - and overdone at worst. "I'm a little bit more cautious in the near-term, given the rally that we've had and where valuations sit," says Michael Bilerman, a Citigroup Global Markets analyst. "They're trading at a 15% to 20% premium to NAV [net asset value]." He says he wouldn't be surprised if REIT stocks saw a 5% to 10% correction in the near-term. (Read "New REITs Pounce on Distressed Mortgage...
...commercial real estate market seems headed for trouble, the next potential victim of the speculative frenzy that has already devastated the residential housing market. That prospect apparently hasn't scared investors. Shares of real estate investment trusts (REITs, which buy and manage buildings and mortgages) have been on a tear for the past seven months, almost doubling in value on average. REITs now trade at a double-digit premium to the value of their underlying properties...
...While the U.S. economy is emerging from recession, we still anticipate a prolonged period of declining growth for REITs and commercial real estate," said Goldman Sachs analyst Jonathan Habermann in an October research note. Habermann doesn't expect to see a significant improvement in real estate rents, occupancies and property values until late 2012 at the earliest. Joseph Betlej, vice president of Advantus Capital Management and portfolio manager of the Ivy Real Estate Securities fund, believes it could be late 2012 or even 2013 before office REIT fundamentals bounce back...
Historically, real estate lags behind an economic recovery. In the 1991 recession, it took the industry 14 months to rebound after the recession's end, and in the 2001 downturn, it took 29 months for the sector to recover, says Bob Bach, chief economist with Grubb & Ellis Co., a commercial real estate services and investment company. Even if the current recession ended in the second quarter, it could take anywhere from 14 to 29 months for real estate to bounce back, says Bach. Unemployment, which is expected to hit 10.5% in 2010, exacerbates the situation, he says. All of this...