There have been fewer sales in 2008 and 2009 than seen in previous years. The reduced number of sales is due in some degree to the lack of credit available and the particular aversion to risk on behalf of lenders as well as investors in the current market. The uncertainty surrounding the ultimate fallout from [...]

On April 25, 2009 we posted an article entitled Cap Rates on the Rise for Walgreens. Five months later, it appears that capitalization rates have stabilized for this asset class. The following is a discussion of the tenant, investment demand and evidence for prevailing Walgreens cap rates.

The Tenant – Walgreens is a national, retail drugstore chain that sells prescription and non-prescription drugs and general merchandise. The company was founded in 1901, and as of August 2009, operated 6,996 drug stores located in 49 states and Puerto Rico. The company is publicly traded on the NASDAQ National Market, the New York Stock Exchange, and the Chicago Stock Exchange under the symbol WAG, and is included in the Standard and Poor’s 500 Index and the NASDAQ 100 Index. Moody’s rates Walgreens long-term debt A2 and short-term debt Prime-1. Standard & Poor’s rates Walgreens long-term debt A+ and short-term debt A-1. The outlook from both agencies is stable.

The Portland Metro Area (PMA) apartment market was experiencing low vacancy trends (5% and below in most areas) and increasing rental rates from 2005 through late 2008. Since that time; however, the rental market has seen steady decline in rental rates and increases in concessions and vacancy due to the national recession that has seen [...]

By: Ben Wilcox, MAI
The impact of the recession and financial crisis on commercial real estate has been widely reported. With securitized lending out of the picture and banks less able to lend, purchase financing has been more difficult to obtain and available in smaller quantities. This has led to a slowdown in sale transactions for [...]

Now that the reality of the credit market crisis, which really began in July 2007, has fully taken effect, 2009 has been a period of repositioning within the market.  Ironically, the repositioning will be a “return-to-the-old”.  Commercial real estate values are returning to the core fundamentals that always drove the market prior to the rise [...]

The medical office market is a subsector of the larger general office market. The current identity crisis of the real estate industry and general instability of the economy are creating the need to separately analyze the medical office subsector, as the supply/demand conditions impacting this asset class is vastly different than the overall office market. The following is an industry overview for medical office space in Oregon marketplace. Key supply/demand indicators are summarized in the following table.

Do you think the collapse of the real estate market place is determinism (by design) or randomness (everything means nothing)? We can not deny that we have experienced a “bubble”. A bubble merely transfers a share of the future demand into the present. It’s linked with dramatic valuations and always debt funded. It is this [...]

The dislocation in the commercial real estate capital markets that exists today in the second quarter of 2009 has frustrated users of capital and left them feeling hopeless. The small universe of debt and equity providers that are willing and able to provide capital today want to advance less loan dollars on your deal while also taking on less risk. Most of the time that means that it’s a deal you cannot make. Thankfully, after successive quarters of bad news, most of us are past the denial stage and are making attempts to exist in a broken market. The leverage being offered by capital providers today would make sense if cap rates were closer to double digits, but unless and until that market correction happens, there will be further frustrations as both borrowers and lenders are fighting to preserve their equity and maintain returns seen earlier in the decade. The following are some survival tips that could help your deal:

Recent events in the financial markets have led real estate investors to question the impact on the value of investment grade real estate. Uncertainty breeds risk and risk in real estate requires higher yields. This will lead to continued declines in values for the first quarter 2009. However, good quality industrial assets should fare well [...]