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©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
March 31, 2009
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; based on properties & portfolios $5 million and greater.
Robert M. White Jr., CRE, FRICS
Capital Markets and Valuation: Current Transactions and Valuation Implications for Buyers, Sellers, Lenders, & Borrowers
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Glimpse into 2009
listed for sale
$22.7b foreclosure initiated
$11.6b
foreclosure concluded
$1.7b
reported closed/sold
$5.6b
reported in contract
$2.4b
contractterminated
$3.0b
+ -
January-February 2009
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
J'06
F M A M J J A S O N D J'07
F M A M J J A S O N D J'08
F M A M J J A S O N D
Billions
-100%
-50%
0%
50%
100%
J'06
F M A M J J A S O N D J'07
F M A M J J A S O N D J'08
F M A M J J A S O N D J'09
Year-Over-Year Change in
Commercial Property Sales
Monthly US Commercial
Property Sales
Two Shocks to MarketFinancial
CrisisRecession
Credit Crunch
F
J'09
F
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Sales Rare, But Offerings Plentiful
Monthly Ratio of Offerings to Closings
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
'05 '06 '07 '08 '09
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
'01 '02 '03 '04 '05 '06 '07 '08 '09
Moody/Real CPPI – National, All Properties, Monthly
US Commercial Property Prices
Pricing Trends
21% from peak
~’05 levels
[Prior to Wave of Distressed Sales]
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
CMBS AAA39% of par
14.14% yield
Bricks or Paper?
An Investors Dilemma
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
When In Doubt, Use A Ten Cap
Historic Distribution of US Cap Rates
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Summary of Current Distress
By Property TypeAs of 3/20/09
$ in bil. # of Props $ in bil. # of Props $ in bil. # of Props
Retail $14.0 946 $2.5 192 $16.5 1,138
Development $10.4 247 $2.4 114 $12.8 361
Apartment $6.4 735 $3.9 278 $10.3 1,013
Office $5.9 266 $2.8 92 $8.7 358
Hotel $6.0 119 $2.7 71 $8.7 190
Other $1.6 101 $0.8 73 $2.4 174
Industrial $1.2 154 $0.6 84 $1.8 238
Grand Total $45.4 2,568 $15.7 904 $61.1 3,472
Total2008 2009 YTD
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Summary of Current Distress
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Debt Capital – No Replacements in Sight
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Composition of Sellers
34%
46%39%
14%
6%
8%
5%
11%11%
26%12%
16%
5%8%
6%
14% 14%16%
2% 3% 5%
PeakCreditCrunch
FinancialCrisis
Distressed
Institutional
Cross Border
Public
User/Other
Equity Fund
Private
Equity Capital
33%40%
55%
23% 10%
9%3%
6%
13%
11%9%
7%
10%9%
1%
21%25%
15%
Market PeakCreditCrunch
FinancialCrisis
Institutional
Cross Border
Public
User/Other
Equity Fund
Private
Composition of Buyers
©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.
Capitulation?
Equity Fund
Institutional
Private
Public
87%
88%
89%
90%
91%
92%
93%
94%
95%
96%
97%
1'06
2 3 4 1'07
2 3 4 1'08
2 3 4 1'09
market peak credit crunch crisis
Percent of Asking Price Achieved By Seller Type