Retail News Blog

Now that the effects of the credit crisis have become more fully evident while continuing to grip our economy, 2009 has revealed a repositioning within the real estate markets. Commercial real estate values are returning to the core fundamentals that always drove the market prior to the rise of Commercial Mortgage Backed Securities (CMBS). [...]

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 [...]

Woe is the market analyst who shoots from the hip. There is too much opportunity and rationale these days, or for that matter, at any time, for closer examination of the data, analysis, and conclusions set forth by appraisers reporting the decision-making processes of participants in the real estate market.
Who among us has not been [...]

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 [...]

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:

According to the most recent Real Capital Analytics® Quarterly Retail Report the national retail asset sales volume at $1.9 billion (1st Quarter 2009) is down more than 74% from the same quarter one year ago. The only regional mall sale transaction in 2009 year-to-date (YTD) on a national level was the Cincinnati Mall which traded [...]

Ask yourself this simple question:  What will the world look like for my children’s grandchildren?  This is not a question about politics or global warming. This is a question about the legacy we leave.
The real estate industry is responding quickly.  “Sustainability”, “LEED”, “carbon credits”, “cap and trade” are terms that are rapidly infiltrating our day [...]

How have the Capital markets affected lending for the manufactured home community industry?
The significant turmoil in the real estate capital markets has resulted in a considerable vacuum in financing opportunities for Manufactured Home Communities. Once a favorite of the now inactive CMBS/Conduit loan industry, the MHC asset class has become increasingly reliant on Fannie Mae, [...]

On April 15th, we posted an article that described some of the financial difficulties that Walgreens is experiencing, and how this company is retooling to ensure long-term sustainability given current economic conditions. The recent struggles with this company along with scarcity of loan dollars and decreased market demand for all triple net properties are causing [...]

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 [...]

Capitalization rates reflect the degree of risk associated with an investment. Net operating income divided by the capitalization rate equals value.
Beginning in 2008, and carrying over into 2009, market conditions have led to a noticeable increase in capitalization rates.  These trends are a function of increased risk perceived by investors and more stringent lending conditions [...]

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

“VALUATION TECHNIQUES FOR COMMERCIAL REAL ESTATE AMIDST A WORLD OF CHANGE”
Introduction

There is broad sweeping change in the mindset of the World economy caused by the credit crisis, economic downturn and long-term uncertainty, which is having a profound impact on the real estate market. Our job as appraisers is to interpret what is occurring in the [...]

Capitalization Rate Analysis
In this article, a capitalization rate for a strip center is analyzed based on (1) market extraction; (2) national survey; and (3) debt coverage/equity dividend analysis. This is an in-depth analysis that shows how a capitalization rate can be derived when little data is available in a market area. This presentation is an [...]

PGP Valuation Inc is proud to bring you a Retail Newsletter for the first quarter of 2009. This four page newsletter talks about the economic market and its effects on the retail industry in the northwest and nationally.

A look at capitalization rates the past few months may leave you wondering where the value in your property has gone. Many property owners are sitting on properties that have lost 10 to 15 percent of their value in the past year. Chris Rodriguez of Retail Chatr stated it best in his recent article on [...]