In Brief: June CRE Prices Decline at Moody's, Up at S&P in May

MBA (8/21/2008 ) Murray, Michael
While Moody’s Investors Service, New York, said commercial real estate prices declined 3.3 percent in June from May—the fourth consecutive month in a row of falling prices—Standard & Poor’s, New York, said prices increased in May.

June commercial real estate prices fell 9.6 percent below their June 2007 prices, as measured by Moody's/REAL Commercial Property Price Indices from Moody's Investors Service. The CPPI now stands 11.8 percent below its peak in October 2007 but .6 percent below its level from two years ago, Moody’s reported.

However, S&P/GRA Commercial Real Estate Indices from Standard & Poor's reported commercial real estate prices increased 3.6 percent in May. Annual price appreciation increased to 3.6 percent from May 2007, up from the 3.1 percent reported in April's data and down 11.4 percent from the cycle's peak of 14.5 percent two years ago, based on S&P’s national composite.

The national composite posted its highest monthly return—0.7 percent—in May from April, and the Midwest, the Northeast and the Pacific West reported “relatively positive results,” S&P said. It reported office with the largest gain for the second straight month, reporting a one-month return of 1.7 percent in May. Apartment returns were up 0.6 percent for the month and retail returns were lowest at 0.5 percent.

Moody’s said all four property types measured in the index posted negative returns during the second quarter with the national industrial market showing the largest price drop, down 9.3 percent for the quarter.

The national apartment market returned down 7.1 percent, while offices showed negative 5.9 percent returns and retail had a negative 4.6 percent return.

Moody’s said transaction volume dropped more than 25 percent during the first half of this year from the first half of 2007, despite a slight increase in number and dollar value in June from the previous month.

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Cushman & Wakefield Sonnenblick Goldman, New York, said it would expand its U.S. operations to Los Angeles and Atlanta this month to help meet increasing demand for access to debt and equity capital sources. The two new offices will include CWSG’s investment banking teams.

Thomas MacManus, CEO and chairman of CWSG, said investors put more reliance on recapitalizations, refinancing, capital raising, joint venture structuring, loan sales and advisory services during times of capital market uncertainty. CWSG’s current offices include San Francisco, Boston, Chicago and Washington, D.C.

Dan MacDonnell, managing director, and Stephen O’Connor, director in the San Francisco office, will join the L.A. office and focus on southern California. C&WSG placed more than $1 billion in debt and equity financing on Los Angeles’ west side—including financings of the Beverly Hilton Hotel and Montage Hotel & Residences.

Michael Ryan, executive director from the firm’s Washington, D.C. office will transfer to the Atlanta office and focus on debt and equity finance for all property types with a high level of expectation for multifamily transactions.

The firm previously arranged capital transactions involving two office buildings in the Atlanta office—one in Roswell, Ga. and the acquisition financing for AXA Advisors’ headquarters in Alpharetta, Ga.

Steven Kohn, president and principal of C&WSG, said Atlanta is not only a major growth market but home to many major institutional and off-shore investors.

C&WSG plans to place investment banking teams in other markets, including Texas and South Florida with Denver and Phoenix also under consideration.