Financial Turbulence Prompts Even More Sluggish Forecasts - CoStar

MARK HESCHMEYER, EDITOR

SEPTEMBER 8, 2011

WWW.COSTAR.COM

A WEEKLY NEWSLETTER FOCUSING ON CHANGING MARKET CONDITIONS, COMMERCIAL REAL ESTATE, MORTGAGES AND CORPORATIONS PUBLISHED BY COSTAR NEWS

IN THIS WEEK'S ISSUE: Financial Turbulence Prompts Even More Sluggish Forecasts ......................................................................................................... 1 Ten Years Later: Lower Manhattan Rises From the Ashes ............................................................................................................... 3 Gramercy Giving Up the Keys on 900 Bank Properties to KBS ......................................................................................................... 5 Go direct to capital sources. Expand your capital network. ............................................................................................................... 6 Some Office Segments Holding Up Amongst Otherwise Lousy Job Numbers .................................................................................. 7 CBRE: Investors Will Be Driven to the Full 'Four Quadrants' of Real Estate ..................................................................................... 7 Bankruptcy Auction in Houston ......................................................................................................................................................... 8 JP Morgan Downgrades CBRE on Back of Market Uncertainty ........................................................................................................ 8 Cushman CEO: Targeting Further Growth Despite H1 Loss ............................................................................................................. 9 Innkeepers USA Asks Bankruptcy Court To Level Millions in Damages over Cancelled Deal ........................................................ 10 AEW Plants Roots in Farmland ....................................................................................................................................................... 11 CMBS Delinquency Rate Recedes Sharply in August ..................................................................................................................... 11 Loan Maturities Taking a Breather in Next Few Years .................................................................................................................... 12 Wells Fargo To Spearhead Giant $2 Bil. Financing on Lone Star's U.S. Loan Portfolio .................................................................. 13 The Carlyle Group Files for Proposed IPO ...................................................................................................................................... 14 $100 Bil. Real Estate Advisor, The Townsend Group, Sold to GTCR ............................................................................................. 14 $12.7 Bil. in Assets and Stock's Not Worth a Buck.......................................................................................................................... 15 First Place in Danger of Losing its Place on Nasdaq ....................................................................................................................... 15 Two More Georgia Banks Fail ......................................................................................................................................................... 16 REal Money ..................................................................................................................................................................................... 16 Books-A-Million Taking Over 14 Border's Leases ........................................................................................................................... 17 William Blair, Hilco Slicing Up Giordano's Sites............................................................................................................................... 17 Worldgate Gets Loan Extension, Not Sure about the Tenant .......................................................................................................... 18 Old National Closing Nine Bank Branches ...................................................................................................................................... 18 Loans and Properties Under Surveillance ....................................................................................................................................... 19 Watch List: Office Loans 90 Days or More Past Due ...................................................................................................................... 19 $2 Bil. Auction of Distressed CRE ................................................................................................................................................... 20

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Financial Turbulence Prompts Even More Sluggish Forecasts Weaker Near-Term Growth Cuts Outlook for Commercial Real Estate Demand, Rents, Values The effects from late summer's national and international economic challenges have cast a huge shadow over the commercial real estate market recovery. Nothing postpones a leasing, development or investment decision like the uncertainty surrounding the prospect of a national default, volatile stock markets, a slowdown in retail sales, slouching corporate profit growth, and declining bank lending. These indicators (while still pointing toward growth) have generally grown progressively weaker since late 2010. And while last year they all pointed to improved employment recovery, that expected level of job growth no longer appears to be the case. In light of the financial turbulence, CoStar's economists have joined other market watchers in re-assessing its recovery forecast from this past spring in light of the more sluggish growth occurring now. OFFICE: WEAKER NEAR TERM By: Adrian Ponsen, CoStar Real Estate Economist Of all the lackluster economic data that's surfaced during the past few months, one of the most concerning for the office market was the decline in the ISM Non-Manufacturing Index.

THE WATCH LIST NEWSLETTER

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The recent movement in the ISM Non-Manufacturing Index (historically a strong leading indicator of office absorption) best encapsulates the economic slowdown described above and its implications for office demand. CoStar projects weaker near-term office demand growth. With our weaker near-term expectations of office-using employment growth, we are expecting about 13% less office demand growth than previously forecast through 2015 and higher vacancies in the near term. One blessing is that this downgraded demand outlook isn't surfacing at a time when developers are already underway on new projects. Along with weaker demand, supply growth will adjust accordingly, meaning fewer new projects will deliver during 2013–15. The outlook for rents has deteriorated, but not severely. For example, whereas year-over-year rent growth of 2.6% was expected for mid-2012, the forecast now calls for 2.1%. The difference in forecast value growth is more material, as weaker NOI performance keeps values nearly flat through early 2013. The strategic implications of the changing outlook are most important to value-add and opportunistic buyers, who depend on future growth to generate higher returns. WAREHOUSE: STILL HAS A GREEN LIGHT By: Shaw Lupton, CoStar Senior Real Estate Economist As gauged by the shoring up of retail sales, manufacturing output and trade, the climate for warehouse demand has improved markedly since this time last year. However, the shocks to the system (oil prices, supply chain disruptions) that disrupted economic growth in the first half of 2011, combined with the recent turmoil in the stock markets, have led us to temper our near-term absorption expectations. Consequently, we have also lowered our outlooks for rent and value growth. However, the takeaway remains the same: Now is an excellent time to invest in continued economic expansion by gaining exposure to warehouse properties. Other lingering factors that could continue to hold back warehouse demand are shadow supply and oppressively low housing starts. Despite this, we remain cautiously optimistic that the pace of absorption will improve in coming quarters. There are good reasons for optimism. Wholesale trade sales expanded at a 6% seasonally adjusted annualized real rate in the second quarter. Although a slowdown from the previous quarter, this rate of growth is in line with the 2004–07 average. With the ratio of wholesale trade inventories to sales within its "normal" band of about 1.1–1.2, firms have no choice but to restock in response to continued sales growth. Inventory restocking has led to the soaking up of shadow supply in recent quarters, allowing more future growth to translate to net absorption. As of June, wholesale trade inventories had clawed their way back to within 1.5% of their 2008 historical peak in real dollar terms. Finally, we continue to see strong leasing of modern product in major distribution hubs, which bodes well for absorption in the second half of the year. Nationally, there were 10 deals between 500,000 and 1.4 million square feet signed in the second quarter alone, and many more in the over-250,000-square-foot range. With construction at or near a low for the cycle, we expect a modest demand bounceback to translate into rent and income growth in coming quarters, giving developers the green light to build. RETAIL: LITTLE MARGIN FOR ERROR By: Ryan McCullough, CoStar Real Estate Economist The sluggish recovery scenario paints a bearish outlook for retail. The demand forecast is particularly dicey over the next four quarters; with a cumulative gain of just 1%, demand is barely expected to keep pace with population growth. This leaves precious little margin for error. Another shock like rising energy prices probably would be sufficient to send demand back into the red.


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Stock growth, already weak, is even weaker in the sluggish recovery scenario and does not seriously threaten fundamentals over the next few years. The end result is an economic vacancy curve that trends down over the forecast but at a sluggish pace indeed. Much like demand, the outlook for rents and investment performance is notably weaker in the sluggish recovery scenario. Rent growth re-emerges in early 2012 but at a grinding pace. Values will bounce along the bottom through 2012, and cap rates will remain above 8% until 2013. Overall, rents and values will not come close to recouping their losses by 2015. APARTMENT: UPSIDE HAS BEEN LARGELY REALIZED SHORT TERM By: Erica Champion, CoStar Senior Real Estate Economist The performance of the apartment market has really impressed over the past 18 months. However, the demand from falling homeownership rates, reduced shadow supply and decoupling of roommate and multigenerational households has largely been realized by now. Going forward, job creation will have to fuel further recovery. But the job creation momentum that looked so promising at the very beginning of the year has been disappointing of late. In a sluggish recovery scenario, stalled employment growth will dampen apartment demand throughout the forecast and most significantly through 2013. However, thanks to a low number of units in the supply pipeline and a lack of confidence in the single-family market, vacancy levels are not expected to reverse their downward trajectory. As demand slows, however, eager developers will wait on the sidelines for a little while longer. Even though absorption through 2015 may prove to be about 10% to 12% less than originally anticipated, terminal vacancies would only take a minor hit, landing 30 basis points higher than the 11Q2 Base Case. Rent growth would be less robust in the near term as vacancies hang a little higher, but should post similar growth during the outer years (see Exhibit 2). The total hit to nominal asking rents would be about $50, or 3%, by year-end 2015. So while the national economic setbacks may rain on the parade, the forecast does not call for a violent downpour. Tweeting news live most business days, follow me

Ten Years Later: Lower Manhattan Rises From the Ashes By: Randyl Drummer A full decade following the tragic events of Sept 11, 2001, downtown New York is moving quickly toward one of the most dramatic transformations of its urban landscape of the last century. Two new skyscrapers totaling 4.8 million square feet are under construction, along with a memorial and museum dedicated to the more than 3,000 people who died in the horrific attacks. Other recent notable achievements for the area include publisher Condé Nast's momentous decision to move its headquarters downtown and become One World Trade Center's anchor tenant, and the recent completion of architect Frank Gehry's and developer Forest City Ratner's remarkable 76-story luxury apartment tower at 8 Spruce Street, which is billed as "the tallest residential building in the Western Hemisphere," and hailed by some critics as the best new skyscraper in New York City in decades. Meanwhile, World Trade Center developer Larry Silverstein believes two additional office towers could be built at the WTC site by 2015. Given the extent of the transformation seen in this market, perhaps anything is possible. New Yorkers themselves, while vowing to never forget the attack, seem more focused on the promise of the future than the tragedy of the past. Mayor Michael Bloomberg spoke to the sense of progress and transition that seems to define New York City when he said, "We will never forget the devastation of the area that came to be known as ‘Ground Zero.’ Never. But the time has come to call those 16 acres what they are: The World Trade Center and the National September 11th Memorial and Museum."


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For those in real estate, the events of September 11, 2001, continue to have a profound effect on the industry, ranging from a renewed focus on security and building safety, to radical notions on the future of cities. "After the attacks, a lot of people had doubts about whether or not cities would empty out and the work force would decentralize, particularly with the rise of the Internet, which allowed people to work in different ways," said Patrick L. Phillips, chief executive officer of the Urban Land Institute (ULI). "The city has endured." The terrorist attacks changed the world, and with it, the physical shape of the built space and the business of commercial real estate. Commercial property professionals are still grappling with the changes and incorporating best practices to keep their buildings and tenants safe, an effort accentuated by technology, according to Dan Pufunt, president of property management for Jones Lang LaSalle. "The impact of September 11 was far-reaching -- not only on deeply personal, social and political levels, but across different industries," said Pufunt, "For the commercial real estate industry, specifically, it spurred a movement toward increased risk management and emergency preparedness like never before." "Overall, I believe that the attitudes of most property managers and owners remain in a heightened security state following 9/11, but the fact is many security budgets have decreased over time," added Mark Anderson, Jones Lang LaSalle’s national security liaison and security director at 71 S. Wacker in Chicago. "Building owners and managers need to understand the importance of minimizing risk and developing emergency response plans." The Building Owners and Managers Association (BOMA) International, which represents professionals at the front lines of building security, said the industry has stepped up its use in the largest markets of electronic and optical identification and monitoring, X-ray machines and metal detectors, and the use of bomb dogs. Major metros have re-written fire evacuation laws in an effort to minimize potential casualties from future events, requiring at least annual practice evacuations. Meanwhile, building management is using "smart" video software to track suspicious activity. Balancing the sometimes-competing goals of enhanced security and public accessibility is a major concern for the projects under construction or at various stages of planning at the World Trade Center site, where the two buildings in Lower Manhattan are the largest pending office developments in the U.S., according to CoStar information. In fact, the 4.8 million square feet under way at the World Trade Center site account for 38% of all CBD office space under construction in the U.S., according to Cushman & Wakefield, which along with The Durst Organization, are exclusive leasing and marketing agents for One World Trade Center. Projects underway or planned at the site include the following: One World Trade Center, a 104-story tower at the northwest corner of West Greenwich, Vesey and Fulton streets. Construction has reached the 81st floor at the skyscraper, which will top out at 1,776 feet when completed in late 2013 or early 2014, making it the tallest building in the Western hemisphere. The 3 millionsquare-foot project developed by the Port Authority of New York/New Jersey and The Durst Organization includes 40,000 square feet of retail and 71 floors of office space. 2 World Trade Center at 200 Greenwich St, slated to include 2.4 million square feet of office space and 130,000 square feet of retail. The 88-story tower, designed by Foster & Partners, is currently under construction and slated to reach grade level by late this year, but will likely be the last of the WTC towers to come online. When complete, it will become the second-tallest New York skyscraper at 1,349 feet. 3 World Trade Center, a 2.4 million-square-foot project developed by Silverstein at 175 Greenwich expected to reach grade level late this year with delivery projected for 2015. Construction includes a 2.24 million-square-foot tower designed by Richard Rogers Partnership of the UK at the center of the around the 9/11 memorial. The 1,140-foot tower will have five retail levels totaling 133,000 square feet, two above the ground floor and two below grade.

St., also 71-story, buildings including

4 World Trade Center, a 2.85 million-square-foot project at 150 Greenwich St. directly facing the 9/11 memorial and park under development by Silverstein Properties Inc., is under construction and scheduled for delivery in


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fall 2013. The 64-story tower designed by Maki & Associates will include 140,000 square feet of retail space in the first five floors. The Port Authority of New York and New Jersey and the City of New York will occupy twothirds of the office space, and Silverstein Properties will lease the remainder to commercial tenants. 5 World Trade Center will stand at the site currently occupied by the remains of the Deutsche Bank building at 130 Liberty St., which was irreparably damaged in the terrorist attacks. Developed by the Lower Manhattan Development Corp., the tower will serve as the new headquarters for JPMorgan Chase's investment bank. Providing the huge development with its sense of place and purpose will be the National September 11 Memorial, designed by architect Michael Arad, which will be dedicated on Sunday, the 10th anniversary of the 9/11 attacks. A museum will open in 2012. The WTC Port Authority Trans-Hudson (PATH) Transportation Hub, located at Church and Fulton streets, which began construction in 2007, will accommodate more than 250,000 pedestrians per day. The Fulton Street Transit Center will link 12 subway lines with the PATH and accommodate more than 300,000 riders daily. "It’s hard to imagine a site that’s more fraught with emotional, and therefore political, complexity," said ULI's Phillips. "But 10 years on, there’s a million-square-foot anchor tenant in a dramatic and beautiful new building, there’s an adjacent office building that’s fully leased, there’s a global destination emerging in the form of the memorial and museum and the park and there’s an incredibly complex transportation solution to make all of it happen. "That’s a lot to accomplish in 10 years, even under the best of circumstances," he added. The slow pace of project design and approval caused many to be skeptical about how much of the project would be completed before the 10-year mark. Just two projects totaling 3.7 million square feet have delivered in downtown since the 9/11 attacks, including 7 World Trade Center, a 52-story, 1.7-million-square foot building at 250 Greenwich St. built in 2006 by Silverstein Properties, and 200 West St. a 2 million-square-foot, 43-story office building with street-level retail space in Battery Park City. Opened in October 2009, the building, designed by Pei Cobb Freed & Partners, is the global headquarters for Goldman Sachs. However, the most significant changes in the historic transformation of the Lower Manhattan market may still lie ahead. Over the next five years, the submarket will see a higher proportionate share of office leasing as the new supply makes rents more competitive with Midtown properties, Jones Lang LaSalle said in a report. Professional services, media and technology are expected to take a greater share of office space even while Lower Manhattan maintains its status as financial hub of the world. Underscoring the trend is publisher Condé Nast, which signed a lease in May to become One World Trade Center's anchor tenant, occupying 1,046,260 square feet for 25 years. Cushman & Wakefield and The Durst Organization are co-exclusive leasing and marketing agents for the building’s office space. "Along with the entire city, Lower Manhattan will continue to benefit from the continued migration of a highly educated, creative work force to urban centers," said Peter Regard, president of Jones Lang LaSalle's New York region. "Recent demographic trends show that Lower Manhattan remains a destination that is more than capable of attracting and retaining top human capital. Lower Manhattan, along with adjacent neighborhoods, has become a preferred location for industry leaders and decision makers to live and work."

Gramercy Giving Up the Keys on 900 Bank Properties to KBS Gramercy Capital Corp. agreed to transfer ownership of substantially all of its properties to its mezzanine lenders -- Goldman Sachs Mortgage Co., Citicorp North America Inc. and KBS Debt Holdings LLC, which together held a combined $549.7 million senior and junior mezzanine loans on the properties. As of Sept. 30, 2010, Gramercy Realty's portfolio consisted of 627 bank branches, 323 office buildings and two land parcels, of which 54 bank branches were owned through an unconsolidated joint venture. The occupancy of the properties was 83.7%.


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Under the agreement, the company's Gramercy Realty division will transfer the properties to an affiliate of KBS in exchange for a mutual release from having to repay the outstanding mezzanine loan balance and interest. Gramercy Capital Corp. is a specialty finance company focused on originating and acquiring loans and other fixed-income investments secured by commercial and multifamily real estate. SL Green created Gramercy Capital to continue its structured finance business as a separate public company. The company's initial transfer of approximately 317 properties to KBS occurred Sept. 1. Additional property transfers to KBS will occur over the next several months, according to Gramercy, with all in-place mortgage debt and other liabilities. Gramercy Capital will retain 58 properties carrying approximately $31.8 million in first lien mortgage debt held by a company-affiliated CDO. Gramercy Realty will also continue to provide management of the transferred collateral through Dec. 31, 2013, for a fixed fee of $10 million annually plus up to $3.5 million in incentive fees. With the execution of the collateral transfer and settlement agreement, Gramercy Capital expects that it will complete and file its annual report for the fiscal year ended Dec. 31, 2010, and its quarterly reports for this year no later than Sept. 30. Tweeting news live most business days, follow me

Go direct to capital sources. Expand your capital network.


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Some Office Segments Holding Up Amongst Otherwise Lousy Job Numbers U.S.-based employers went into the Labor Day weekend adding no new jobs in August, according to the U.S. Bureau of Labor Statistics. In addition, the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.4 million to 8.8 million in August. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. Employment decreased in the office and industrial sectors in August, but increased in retail according to the BLS. The office (excluding federal employees) and industrial sectors shed 12,000 and 1,000 jobs, respectively, in August, while the retail sector added 2,000. "Employment growth ground to a halt in August as sagging consumer confidence discouraged already skittish U.S. businesses from hiring," said William Hughes, senior vice president / managing director Marcus & Millichap Newport Beach, CA. "The August report was the weakest in almost a year." "If job growth does not accelerate, it could take more than four years to return to pre-recession employment levels," Hughes wrote in the company's weekly capital markets report." Hessum Nadji, Marcus & Millichap's managing director of research services, said there were a couple of bright spots in the August employment numbers. The brightest spot in the August figures was the addition of 34,000 education and health services jobs. Medical office space has outperformed through the recession and vacancy stands to fall to 11.4% by year-end 2011, a 40-basis-point improvement from last year. However, spending cuts could adversely impact this segment in the coming months as many of these positions are heavily reliant on the government's Medicare and Medicaid spending. The professional and business services sector added 28,000 jobs for the second consecutive month in August, offsetting modest cuts and gains in most other private-employment sectors, Nadji said. Since the beginning of the year, this segment has added 35% of the new jobs in the country, fueling net absorption of more than 8 million square feet of office space. However, until these high-paying positions translate into ancillary positions, the unemployment rate will remain near 9%. Tweeting news live most business days, follow me

CBRE: Investors Will Be Driven to the Full 'Four Quadrants' of Real Estate By: James Wallace, CoStar's London-based Finance Editor Investors' real estate strategies will need to capture a broader acceptance of alternative investment strategies, according to CB Richard Ellis. In the real estate finance team's latest Four Quadrants report – which analyses trends across the real estate quadrant of public debt, private debt, public equity and private equity – CBRE said broader investor routes to the real estate market will be driven by the combination of the increased divergence between: prime and secondary asset performance; economic uncertainty and the scale of regulatory changes on the horizon and in particular; and Solvency II, Basel III, and AIFM. These elements, the reports says, will see a greater emphasis placed on understanding and capitalizing on the interaction of all approaches to real estate exposure – whether indirect or direct. "We are seeing a longer-term shift in investor behavior – this is not a knee-jerk reaction to the downturn," Tony Martin, senior director, CBRE Real Estate Finance. "Investors now seem increasingly likely to look more holistically at the 'best' route to gain real estate exposure to deliver the optimum possible performance. While


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direct investment into real estate will remain a core strategy for most investors, we expect regulatory, macroeconomic and internal drivers to alter how and why investment decisions are made." "We have seen evidence of this in 2011 so far with life insurers re-entering the real estate debt markets in response to Solvency II legislation," he added. "Furthermore, we expect to see other investors at the forefront of the market assess and increase their understanding of indirect, real estate derivatives and debt strategies." While it is unlikely that all the changes above will occur, CBRE argues the real estate landscape as structurally evolving through an interaction between the indirect segments. Ultimately, it expects to see the market evolve with a shift in the way that real estate is owned and managed. The Four Quadrants report, created by CBRE Real Estate Finance, examines the full spectrum of the real estate investment market and how investors can utilize signals from each quadrant, public debt, private debt, public equity, private equity, derivatives and direct investment to understand how they can best position their portfolio's exposure to real estate to enhance returns.

Bankruptcy Auction in Houston

JP Morgan Downgrades CBRE on Back of Market Uncertainty By: Helen Roxburgh, CoStar's London-based Multi-Media Editor JP Morgan US analysts have downgraded its forecasts for CB Richard Ellis, driven by a weaker global economic outlook. The U.S. analyst has lowered its estimates for the global property services provider, in order to factor in the company's second quarter results and increasing uncertainty in global markets.


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JPMorgan reduced its annual 2011 earnings per share forecast (EPS) by 11 cents to 95 cents, which is 12 cents below consensus forecast. For 2012, the analyst has lowered its EPS estimate by 19 cents, to $1.21; in 2013 the forecast is lowered 20 cents to $1.57. Nonetheless the analyst remains bullish on the investment sales for the group, predicting a 6% and 4% year on year increase in investment sales revenues over the third and fourth quarters of 2011 respectively. This brings its predictions for the full-year investment sales to $900 million – up 17% on the full year. For 2012 and 2013, investment sales revenue growth was previously predicted at 14% and 10% respectively – new forecasts predict 10% annual increases for both. JPMorgan said that CBRE has "underperformed significantly" in the last couple of months, but still outperformed the analysts' projection for its second quarter performance. It therefore said it is not "backing off the name" but readjusting its forecasts to factor in the market turbulence. With regards to Europe, the Middle East and Asia, the investment sales revenues are predicted to remain flat. In the appraisal and valuation business, the U.S. analysts are forecasting an 11% year-on-year increase in revenue in 2011 to $365 million, a 7% increase in 2012 and a 6% increase in 2013. For development services however, it is predicting an 8% decline in revenues this year to $67 million, followed by a 5% increase in 2012 and another increase, of 10% in 2013. JPMorgan predicts an estimated $182 million full year revenue.

Cushman CEO: Targeting Further Growth Despite H1 Loss By: Helen Roxburgh, CoStar's London-based Multi-Media Editor The chief executive of Cushman & Wakefield said the global property services firm remains "keenly focused on growth" despite a first half loss of $22.4 million. Glenn Rufrano, president and chief executive of Cushman & Wakefield, said that the company had upheld a strong operating performance in the last six months and despite the loss was left with the potential for further borrowing to fund its growth plans. The company reported its results for the first six months to June 30 this past week. "During the second quarter, the firm replaced its existing $350 million credit facility with a new $500 million credit facility, most of which is undrawn, thereby expanding the company's borrowing capacity to fund growth while lowering its cost of capital," Rufrano said. "As a firm, we remain keenly focused on growth initiatives, with a cautious optimism that the economy will continue to improve, albeit at a more moderate pace than originally projected." Cushman said that the market saw "moderate global growth" in the first half of this year and a significant increase in commercial real estate investment, lending and leasing activity. Speculation in the industry has been high that the firm will make a bid for a rival firm as part of its ambitious expansion plans following the signing of the new $500 million senior debt facility earlier this month. Bank of America Merrill Lynch and JPMorgan led the refinancing as joint lead arrangers. Cushman said that the first half loss was due to one-off compensation and tax charges of $13.6 million. In the same period last year, the firm posted a similar loss of $22.8 million. However, the second quarter 2011 saw a strong 21.5% increase in revenue to $504.4 million, the firm's seventh consecutive quarter of double-digit revenue growth. Over the six months, revenue increased 17.7% to $884.4 million and pre-tax earnings increased by $10.7 million to $8.6 million.


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112,473 Industrial Building

1400 Westpark Way Euless, Texas

Heavy Power

For Sale

Offer Deadline - 10/6/11

112,743 sf Industrial Building 1400 Westpark Way Euless, Tarrant County, Texas LAND SIZE Primary Site: 5.275 Acres (229,799 SF) Excess Land: 5.478 Acres (238,622 SF) EAST BUILDING (BUILDING 100) Built in 1984 42,473 SF • 10,000 SF Office • 32,473 SF Manufacturing Survey - Primary Site

WEST BUILDING (BUILDING 200) Built in 1997 70,000 SF • 800 SF Office • 69,200 SF Manufacturing CLEAR HEIGHT 25 feet OVERHEAD DOORS East Building: 1 Dock High and 4 Grade Level doors West Building: 3 Grade level doors ELECTRICAL POWER East Building: 3 Phase - 1200 Amps and 600 Volts West Building: 3 Phase - 1200-4000 Amps and 480-600 Volts

Machinery & Equipment for Sale Auction Date: 10/6/11 Contact Roy Gamityan at 818-884-3737

INDUSTRIAL SERVICES

Survey - Excess Land

LARRY DENISOFF

JON DIAMOND

[email protected]

[email protected]

GA Keen Realty Advisors 135 Maxess Road, Suite 1000 Melville, NY 11747 646-381-9222 -- Main [email protected] [email protected] www.greatamerican.com/keen

3102 Maple Avenue, Suite 350, Dallas, Texas 75201 214.954.0600 214.953.0866 fax The information contained herein was obtained from sources deemed reliable; however, The Weitzman Group makes no guarantees, warranties or representations as to the completeness or accuracy thereof. The presentation of this real estate information is subject to errors; omissions; change of price; prior sale or lease; or withdrawal without notice. The Weitzman Group, which provides real estate brokerage services, and Cencor Realty Services, which provides property management and development services, are divisions of Weitzman Management Corporation, a regional realty corporation. 8-22-11A

This is up from a loss of $2.1 million over the previous six months. Rufrano said that the results followed a seasonal pattern of reporting worse results in the first half of the year. "The firm's historical operating results have always followed a seasonal pattern, with the first half revenue and operating results being significantly less, or in a loss position, as compared to the second half of the calendar year," Rufrano added. "In the first half of 2011, higher revenues were offset by an increase in employment expenses driven primarily by investment related to the pursuit of the company's long-term strategic growth plan, as well as higher incentive compensation tied to improved business performance." "However, the firm's stronger operating performance in the first half led to significantly improved cash flow and debt reduction, as reflected in the firm's net financial position, which improved by $98.6 million, or 46.1%, as of June 30, 2011," he added. Total operational expenses increased in the six months by 12.1% to $435.1 million, which the firm puts down to an increase in employment costs and compensation expenses. Cushman has had an active hiring spree in the U.K. Earlier this month, it poached Calum Ewing as a partner in the retail team from Knight Frank as part of an expansion in the firm's U.K. retail offering, which has seen three other retail appointments this year. Also this month, the firm announced the hiring of Douglas Hardman, a DTZ European capital markets director, as partner in its Central and Eastern Europe investment team.

Innkeepers USA Asks Bankruptcy Court To Level Millions in Damages over Cancelled Deal Innkeepers USA Trust and its affiliates filed a complaint with U.S. Bankruptcy Court for the Southern District of New York against Cerberus Series Four Holdings LLC, Chatham Lodging Trust and other related defendants for breach of contract and other claims for reneging on their commitment to acquire 64 hotels from Innkeepers. Cerberus and Chatham entered into a binding commitment letter in May to acquire the properties for $1.12 billion as part of Innkeeper's Chapter 11 plan of reorganization. However, late last month Cerberus and Chatham terminated the agreement without explanation other than to generally reference the material adverse event language in the binding commitment letter. The "defendants purport to terminate their binding and irrevocable commitment based on an unidentified and unexplained 'material adverse effect,'" according to Innkeepers' complaint, "but no such material adverse effect has occurred. Cerberus' and Chatham's failure to provide any evidence of a material adverse effect is not surprising because the debtors' (Innkeepers') business remains strong and on course." Moreover, the binding commitment letter contains no "market" material adverse event clause, according to the complaint. According the complaint, as of Aug. 5, the parties "stood at the goal line to consummate the transaction and close the deal." All closing documents were finalized, including loan assumption documents, franchise agreements, and a detailed funds flow memorandum. Late that afternoon, Cerberus said it would not close but offered no explanation, According to the complaint, Chatham told Innkeepers USA that it was ready to close, but could not because Cerberus, Chatham's partner in a newly formed joint venture was refusing to close that day due to purportedly unresolved issues with certain franchise agreements.


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On Aug. 9, Cerberus told Innkeepers USA in a telephone conversation that it was considering whether conditions in the equity markets had resulted in a "material adverse effect" that would qualify as a termination event. The following day, Cerberus asked Innkeepers USA to consider a price adjustment. Innkeepers said, no. In its complaint Innkeepers USA states: "Cerberus' and Chatham's purported termination is nothing more than a calculated effort to apply leverage upon the debtors and their constituents to renegotiate the terms of the parties' binding contract. Regardless of their motives, one thing is clear: Cerberus and Chatham are not excused from their obligations under the plain terms of the binding commitment letter and term sheet." "We remain pleased with the operating performance of our properties," said Marc A. Beilinson, Innkeepers' chief restructuring officer. "That's why we expect to once again see substantial interest in the 64 hotels that Cerberus and Chatham failed to purchase, in the event Cerberus and Chatham fail to live up to their contractual obligations." Innkeepers is seeking an order requiring Cerberus and Chatham Lodging Trust to perform their obligations under the binding commitment letter or pay substantial damages in an amount determined at trial for the defendants' improper termination of their binding and irrevocable commitment to purchase 64 of Innkeepers' hotels. The damages could exceed their $20 million deposit, which is being held in escrow. Tweeting news live most business days, follow me

AEW Plants Roots in Farmland AEW Capital Markets hopes to find fertile ground in farmland. This week, the company announced the formation of AEW Agriculture, a new business unit to invest in farmland in North America. "We believe that agricultural real estate will be an increasingly important asset class for institutional investors over the next decade, and is a natural extension for AEW," said AEW CEO Jeffrey Furber. "Today, institutional ownership is less than one-half of 1%. But investor interest in farmland is growing driven by compelling long-term fundamentals, strong current income and protection against inflation. Adding agricultural investment strategies to the AEW platform will help our clients gain exposure to opportunities in this emerging asset class." "Over the past 20 years, agricultural investment has outperformed virtually all asset classes with relatively low volatility," said Mike Acton, head of AEW Research. "We expect this trend to continue as the growth of the world population, which according to the UN is expected to increase to 9.2 billion by the year 2050 from 6.7 billion today, will lead to an increased demand for food." "More importantly, as income levels rise in developing economies, like China and India, people will consume not only more food, but more animal protein," Acton said. "Very simply, more meat will require substantially more grain production. These changes in the diet of the developing world will have major implications for agriculture." Hunt Stookey joins AEW as a director and the head of AEW Agriculture. Previously Stookey was a managing director with HighQuest Partners where he worked with operating companies globally across the agricultural value chain. He also led the firm's investment consulting practice, advising both leading investment managers and large institutional investors with respect to diverse agricultural investments worldwide. Tweeting news live most business days, follow me

CMBS Delinquency Rate Recedes Sharply in August After a dismal July delinquency reading, the CMBS market rebounded smartly in August, according to Trepp LLC. The delinquency rate for U.S. commercial real estate loans in CMBS fell 36 basis points in August to 9.52%. This is the second largest drop since the beginning of the credit crisis in 2008 and the third time the rate has dropped in the past four months. The drop in CMBS delinquencies in August is good news for the market that took a drubbing in July.


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The percentage of loans seriously delinquent (60+ days in foreclosure, REO, or non-performing balloons) is now 8.79%. For August, the delinquency rate for industrial properties jumped 15 basis to 11.24%. All other major property types were flat or improved. The hotel delinquency rate dropped 128 basis points to 13.76% The office delinquency rate remained unchanged at 8.17% The multifamily delinquency rate fell 50 basis points but remains worst major property type at 16.44%. The retail delinquency rate dropped 47 basis points to 7.38% and remains the best performing major property type LOAN RESOLUTIONS A little more than $1 billion in CMBS conduit loans were resolved with losses in August, as the rate of loan resolutions slowed for the second consecutive month, according to Trepp. Unfortunately, the average loss severity was up sharply from the July reading. In total, 159 loans were liquidated in August. (That compares to 175 loans and $1.3 billion in face amount in July.) The losses on the August liquidations were about $505 million – representing an average loss severity of 49.9%. In July, the average loss severity was 40.2%. The August loss severity average is well above the average loss severity of 42.2% over the last 20 months. The special servicers have been liquidating at a rate of about $1.01 billion per month over that time – so the liquidations this month are right at the average over the last 20 months. MATURITY PAYOFFS The percentage of loans paying off on their balloon date barely budged last month. In August, 39.5% of loans reaching their balloon date paid off. This was just a shade lower than July’s 39.6% reading. The August number was just above the 12 month rolling average of 39.2%, Trepp reported. By loan count – as opposed to balance – only 43.1% of the loans paid off. This was down more than six points from July’s reading of 49.4%. On the basis of loan count, the 12 month rolling average is now 48.8%. Prior to 2008, the payoff percentages were typically well north of 70%. Since the beginning of 2009, however, there have only been two months where more than half of the balance of the loans reaching their balloon date actually paid off. Tweeting news live most business days, follow me

Loan Maturities Taking a Breather in Next Few Years The amount of U.S. CMBS loans maturing should fall off dramatically next year, according to Fitch Ratings. In transactions rated by Fitch Ratings, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to mature in 2012. This represents a sizeable drop compared to 2,000 loans totaling $22.5 billion that were to mature this year. Maturities remain modest in 2013 and 2014 as well at $13.3 billion and $15.5 billion, respectively, before jumping again to $29 billion in 2015. Loans scheduled to mature in 2012 have an average balance of $13.9 million and were originated between 1996 and 2007. Loans secured by office properties represent the largest concentration of maturing loans next year at 38%; followed by multifamily (22%), and retail (20%) properties. Fourth quarter 2011 maturities remain modest at only 204 loans representing $4.4 billion.


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Fitch Ratings continues to expect the majority of loans to pay off at maturity despite the short-term volatility of the capital markets. "Most maturing loans, particularly those from earlier vintages, benefit from stable performance and years of scheduled amortization, which make them more easily financeable in today's market," said Adam Fox, Fitch senior director. "The most challenging loans to refinance are those that were originated in 2007, the peak of real estate values, meaning that borrowers will likely need to contribute additional equity to secure financing for fiveyear loans," said Fox. While not all loans will pay off at maturity, Fitch Ratings continues to observe a willingness among commercial servicers to work with borrowers when property performance is not an issue. "Servicers are also still reaching out to borrowers early and if needed, providing short term forbearances to complete the refinance process," Fox said. Approximately 83% of loans scheduled to mature during the first six months of 2011 have paid off. Of the loans that did not payoff, only 20% are classified as in foreclosure or real estate owned, while 42% are classified as current or performing matured. Fitch Ratings has observed that smaller balance loans secured by traditional property types are the first to refinance while those with near term lease expirations or in tertiary markets are more difficult. Of the $2.5 billion of outstanding loans that failed to pay off at maturity during the first six months of 2011, 35% are secured by retail and 25% are secured by office properties. Tweeting news live most business days, follow me

Wells Fargo To Spearhead Giant $2 Bil. Financing on Lone Star's U.S. Loan Portfolio By: James Wallace, CoStar's London-based Finance Editor Wells Fargo is spearheading a giant $2 billion debt financing package behind Lone Star Funds' distressed U.S. real estate loans bought from Anglo Irish. Lone Star won five of the eight pools of U.S. real estate loans – with a book value of $5.1 billion – in a fiercely-competitive auction in which there were three winners, the other two being Wells Fargo and JP Morgan Chase. The global real estate distressed loan investor is thought to have commanded a much steeper discount than the average 20% at which the overall portfolio sold, given the five pools were the highest leveraged and the most distressed in the portfolio – comprising both sub-performing and non-performing. Lone Star's weighted average discount is understood to have ranged between 35% and 38%, according to people familiar with the deal. This would put the price Lone Star paid at between $3.2 billion and $3.3 billion, which CoStar News understands is being leveraged at 60%, meaning the debt required will range between $1.9 billion and $2 billion. The cost of debt to Lone Star reflects a spread of over 400 to 500 basis points. Wells Fargo, itself a winner in the $9.6 Anglo U.S. real estate loan sell-off, may choose to bring in a co-lead manager or arrange a syndication or securitization by itself. The competitive tender to finance the Lone Star loan portfolio is expected to close before the deal itself does in October. Underbidders on the financing deal, which are understood to no longer be in the running to be co-lead arranger, include JPMorgan and Citigroup. "Would Lone Star be able to do this debt financing in Europe? It would be a long old effort… I doubt it at the moment, but you can in the U.S. Wells Fargo will securitize or syndicate this debt – like the Isobel banks were


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going to do, but you need someone to step up to the mark initially and take on some balance sheet risk," said a banker familiar with deal. Wells Fargo bought two pools of predominantly performing loans with a face value of between $3 billion and $3.5 billion, at a less than 20% discount. "Wells Fargo was surprised at the quality of the loans and the underlying assets – which are predominantly prime offices in gateway cities such as Washington, Boston, Chicago, San Francisco and Los Angeles. With that kind of collateral, they were never going to get a 20% discount," said another source. JPMorgan, the third winner, won the best performing loan pool of the eight, with a book value of between $1 billion and $1.5 billion on loans due for maturity in under two years, at the shallowest discount of all three winners. Based on all these figures, Eastdil Secured, the sales agent on the loan portfolio, sold Anglo's U.S. loan portfolio, with a book value of $9.6 billion, for somewhere between $6 billion and $7 billion, lower than previously reported. Eastdil's Boston-based managing director Jim McCaffery led the auction. Lone Star's re-priced and leveraged loan portfolio comes to a total size of between $5.1 billion and $5.3 billion, bought by the Lone Star Real Estate Fund II, which closed a $5.5 billion equity raising in May. The fund's total spending power, based on Lone Star's preferred 60% leverage on a deal-by-deal basis, is $13.75 billion. The Anglo deal, together with two other much smaller U.S. loan deals completed earlier this summer, takes the fund to the half-way mark in just three months. Lone Star has already started raising capital for its next non-real estate global private equity fund, the Lone Star Fund VII. By June UBS, appointed by Lone Star to the capital raising mandate, has raised around $2.5 billion.

The Carlyle Group Files for Proposed IPO Global alternative asset manager The Carlyle Group LP, which operates 11 commercial real estate funds, filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for a proposed $100 million initial public offering of its common units. Carlyle Group's funds pursue real estate investment opportunities in Asia, Europe and the United States and generally focus on acquiring single-property opportunities rather than large-cap companies with real estate portfolios. Its team of more than 110 real estate investment professionals has made 453 investments in more than 120 cities/metropolitan areas around the world, including office buildings, hotels, retail properties, residential properties, industrial properties and senior living facilities. As of June 30, its real estate funds had in the aggregate $12 billion in assets under management. Washington, DC-based Carlyle intends to use the net proceeds from the offering to repay debt and for general corporate purposes, including general operational needs, growth initiatives, acquisitions and strategic investments and to fund capital commitments to, and other investments in and alongside of, its funds. Tweeting news live most business days, follow me

$100 Bil. Real Estate Advisor, The Townsend Group, Sold to GTCR Aligned Asset Managers LLC, a portfolio company of private equity firm GTCR, acquired a majority interest in The Townsend Group.


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Townsend, established in 1983, is the one of the largest global specialty real estate advisory and investment firm, with more than $100 billion of total advised assets. Townsend allocates real estate for more than 85 institutional clients from offices in Cleveland, London, San Francisco, and Hong Kong. "Townsend represents the ideal platform investment for Aligned," said David Minella, CEO of Aligned. "It embodies our strategy of focusing on industry leaders in growing asset classes, and we look forward to helping Townsend build on its strong track record and deep relationships with a world-class institutional investor base." Townsend's existing leadership team will maintain responsibility for management of the business. The transaction will broaden Townsend's employee ownership base, and management will continue to own a material stake in the company. Led by its founding partners, Terry Ahern and Kevin Lynch, all members of the management team will remain with the firm upon completion of the transaction. The terms of the transaction were not disclosed. Tweeting news live most business days, follow me

$12.7 Bil. in Assets and Stock's Not Worth a Buck The New York Stock Exchange told Flagstar Bancorp Inc. in Troy, MI, that it did not satisfy one of the NYSE's standards for continued listing. Specifically, the NYSE said that Flagstar was "below criteria" for the NYSE's price criteria for common stock because the average closing price of the company's common stock was less than $1 per share over a consecutive 30-trading-day period. Under NYSE policy, Flagstar must cure the deficiency by Feb. 18, 2012. Until then, the company's stock will remain listed on the NYSE. With $12.7 billion in total assets as of June 30, Flagstar Bancorp is parent company of Flagstar Bank, one of the largest publicly held savings banks based in the Midwest. As of June 30, Flagstar operated 162 branches in Michigan, Indiana and Georgia. Flagstar Bank has reported losses of more than $1.1 billion since the Great Recession began in 2007. This summer, Flagstar has entered into agreements to sell or lease its 27 branches in Georgia and 22 branches in Indiana. Tweeting news live most business days, follow me

First Place in Danger of Losing its Place on Nasdaq First Place Financial Corp. received a letter from The Nasdaq Stock Market notifying the Warren, OH-based company that, for 30 consecutive business days, the company's common stock had not maintained a minimum bid price of $1 per share as required for continued listing. In order to regain compliance, the company must correct the deficiency by Feb. 21, 2012. Until them, its stock will remained listed on Nasdaq. "We believe our stock price has been adversely impacted by the ongoing process of restating our consolidated financial statements for the fiscal years ended June 30, 2010, and 2009," said Steven R. Lewis, president and CEO of First Place. "We are making progress on our restatement and we look forward to getting our financial statements completed and filed, thus removing the uncertainty regarding our financial condition." Nasdaq had previously notified the company regarding noncompliance and possible delisting for failing to file financial reports on time due to the company's pending restatement. Nasdaq has granted the company an extension until Nov. 10, to file all reports that are delinquent as of that date, as well as the restated financial statements.


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Two More Georgia Banks Fail Georgia Commerce Bank in Atlanta entered into purchase and assumption agreements with loss-share arrangements with the Federal Deposit Insurance Corp. to assume the deposits and certain assets of the two latest U.S. bank failures: CreekSide Bank and Patriot Bank of Georgia. CreekSide Bank is based in Woodstock with a branch in Acworth. Patriot Bank is based in Cumming, GA, in Forsyth County. As of June 30, Patriot Bank of Georgia had $150.8 million in total assets and held more than $10 million in foreclosed commercial real estate. CreekSide Bank had total assets of $102.3 million. The FDIC and Georgia Commerce Bank entered into loss-share transactions on the failed banks' assets. The loss-share transaction for Patriot Bank of Georgia covers $136.2 million of its assets, and the loss-share transaction for CreekSide Bank covers $69.2 million of its assets. The FDIC estimates that the cost to its Deposit Insurance Fund for Patriot Bank of Georgia will be $44.4 million and for CreekSide Bank, $27.3 million. The banks are the 69th and 70th FDIC-insured institutions to fail in the nation so far this year and the 18th and 19th in Georgia. Tweeting news live most business days, follow me

REal Money Cassidy Turley BRE Commercial arranged a $17.1 million loan for Eagle Glen Plaza at the northwest corner of Interstate 15 and Eagle Glen Parkway in Corona, CA. The 95,777-square-foot shopping center is anchored by Stater Bros. Market and is currently at 100% occupancy. Goldman Sachs Commercial Mortgage Capital provided the borrower with a 5-year, fixed rate, non-recourse loan with a 4.8% interest rate. Thomas D. Wood and Co. secured $13.25 million in financing with AIG for Homestead Town Square. The nonrecourse loan has a term of 10 years, based on a 25-year amortization and an interest rate of 5.38%. The loanto-value is 60%. The borrower needed to refinance out of the previous mortgage that had matured. The 205,614square-foot retail center was built in 1994, and is home to major tenants Publix, Pet Supermarket, OfficeMax and Marshalls. Homestead Town Square is located at 803 Homestead Blvd. in Homestead, FL. HFF secured a $7.5 million refinancing for University Hills, a 116-unit multi-housing complex near the University of California at Riverside in Riverside, CA. Working on behalf of the borrower, Riverside University Hills Apartments LLC, HFF placed the 10-year, 4.38%, fixed-rate financing including two years of interest-only with Freddie Mac. University Hills has four residential buildings on 2.5 acres at 140 - 200 W. Big Springs Road. Overall the property is 91.3% leased with 23% occupied by students. Thomas D. Wood secured $1.45 million in financing with The Standard Life Insurance Co. for Villa Des Chenes. The fully-amortizing full-recourse loan has a term of 25 years, based on an interest rate of 5.5%. The loan-tovalue is 69.86%. The borrower needed to refinance out of the previous mortgage that had matured. The 38-unit multifamily complex was built in 1969, and is at 1500 W. Bay Drive in Largo, FL. Tweeting news live most business days, follow me


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Books-A-Million Taking Over 14 Border's Leases Books-A-Million Inc. (BAM) has cut a deal to pick up 14 Border's book locations slated for closure. BAM will acquire the unexpired nonresidential real estate leases of 14 stores for $934,209. Each of the BAM eases was marketed by Border's real estate advisors, DJM Realty. Columbia Crossing, Columbia, MD Bangor Mall, Bangor, ME Maine Mall, South Portland, ME The Strip, Canton, OH Oak Point Plaza, Eau Claire, WI Grand Traverse Crossing, Traverse City, MI Wrangleboro Road, Mays Landing, NJ Northridge Shopping Center, Davenport, IA Edwardsville Crossing, Edwardsville, IL Fort Eddy Plaza, Concord, NH Haines Avenue, Rapid City, SD Valley Square Center, West Lebanon, NH Viewmont Mall, Scranton, PA Waterford Commons, Waterford, CT Tweeting news live most business days, follow me

William Blair, Hilco Slicing Up Giordano's Sites Fourteen company-owned properties of Giordano's, the storied Chicago pizza restaurant chain, are now available for sale, either as a portfolio or individually. The properties include the chain's flagship restaurant and building at 740 N. Rush St. on Chicago's Gold Coast. Giordano's, a casual dining concept best known for its "World Famous Chicago Stuffed Pizza," filed for Chapter 11 bankruptcy relief in February 2011. William Blair & Co. and Hilco Real Estate were retained to advise the debtors. Bids are being solicited for the going-concern business as well as the real estate assets on a standalone basis. Properties are in the Chicago area, Florida and Arizona. They include a mix of income producing restaurants and value-add real estate opportunities. Most locations are leased to the corporate entity or franchisees. The deadline for initial indications of interest is set for Sept. 8. Type, Location, Square Feet Mixed-Use (HQ / Flagship), 740 N. Rush St., Chicago, 138,845 Single Tenant Restaurant, 1040 Belmont Ave., Chicago, 5,925 Single Tenant Restaurant, 280 W. 22nd St., Oakbrook Terrace, 8,900 Single Tenant Restaurant, 641 Plainfield Road, Willowbrook, 7,596 Multi-Tenant Retail, 1323 W. Lake St., Addison, 6,800 Multi-Tenant Retail, 2870 W. Rt. 34, Oswego, 7,120 Multi-Tenant Retail, 2075 S. Ridge Road, Minooka, 6,265 Single Tenant Restaurant, 333 Executive Parkway, Rockford, 4,400 Single Tenant Restaurant, 1115 Chicago Ave., Oak Park, 3,510 Cold Storage Warehouse, 2206 S. Busse Road, Mt. Prospect, 27,600 Vacant Retail, 401 Dale Mabry Highway, Tampa, FL, 6,362 Unimproved Land, 2462 Sand Lake Road, Orlando, FL, 2,287,466 Unimproved Land, 185 Cranes Roost Blvd., Altamonte Springs, FL, 74,488 Unimproved Land, 17014 W. Bell Road, Surprise, AZ, 42,920 Tweeting news live most business days, follow me


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Worldgate Gets Loan Extension, Not Sure about the Tenant Excelsior LaSalle Property Fund Inc. entered into a 2-year loan extension on the $35.2 million mortgage loan collateralized by Monument IV at Worldgate in Herndon, VA. The mortgage loan now matures on Sept. 1, 2013, with option for an additional year. The loan continues to bear interest at 5.29% and is interest-only throughout the extension. At loan closing, the fund contributed $3.3 million in cash reserves to the lender to be used for future leasing costs and debt service. This additional contribution brings accumulated cash reserves to $5.7 million for future retenanting and debt service. Excelsior LaSalle Property Fund will be required to escrow additional cash reserves of $550,000, quarterly. All escrows can be used to pay for re-tenanting costs or cover debt service shortfalls in the future. The fund can prepay the loan, at par, with 30 days notice. As of this filing, the single tenant of the building, Fannie Mae, has not renewed its lease that is set to expire at the end of this year. LaSalle Investment Management Inc., the owner's advisor, said the extension will allow additional time to retenant the property if Fannie Mae walks. Tweeting news live most business days, follow me

Old National Closing Nine Bank Branches Old National Bancorp in Evansville, IN, which acquired all 52 branches of the former Integra Bank in July in an FDIC-assisted transaction, now intends to close nine of the 52 branches this month. Employees at the branches being closed will be transferred to the consolidated locations or assist with staffing needs at other former Integra branches. Old National's transition team will continue its ongoing assessment of the entire combined network of banking centers (Old National branches and former Integra branches), which could lead to additional consolidations. These additional consolidations would not take place until after a planned December systems conversion has been completed. The former Integra branches to be closed this month are as follows. Evansville, St. Joe → consolidated into main office Evansville, Waterford → consolidated into N. Green River Road Evansville, Eastland → consolidated into N. Green River Road Evansville, Hwy 41 and Maxwell → consolidated into First Ave. and Mill Road Evansville, Michigan and Main St. → consolidated into main office Clay, KY, Main Street → consolidated into Providence, KY Madisonville, KY, Main Street (south) → consolidated into Madisonville, KY (north) Poole, KY, Hwy 41A N. → consolidated into Sebree, KY Mt. Vernon, IL, Times Square → consolidated into Mt. Vernon Broadway Tweeting news live most business days, follow me


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Loans and Properties Under Surveillance

Watch List: Office Loans 90 Days or More Past Due The following information for these lead listings was provided by Trepp LLC, an on loan and commercial real estate performance underlying the CMBS market. Maturity Property Address Current Bal. Date 575 Lexington 575 Lexington Ave., Avenue New York, NY $160,313,116 10/15/2013 119 West 40th 119 West 40th St., Street New York, NY $160,000,000 4/10/2017 Continental 1701 W. Golf Road, Towers Rolling Meadows, IL $115,000,000 12/15/2016 333 City Boulevard City Tower West, Orange, CA $115,000,000 5/15/2017 800-806 S. Douglas Douglas Road, Coral Gables, Entrance FL $102,500,000 4/12/2014 2400 E. Katella Ave., Stadium Towers Anaheim, CA $100,000,000 5/15/2017 Century Centre 2601-2603 Main St., Office Irvine, CA $95,393,631 2/10/2015 401-433 Hackensack Continental Plaza Ave., Hackensack, NJ $88,000,000 9/12/2011 1201 Main St., Dallas, One Main Place TX $66,992,235 7/10/2012 Rock Pointe 1330 N. Washington Corporate Center St., Spokane, WA $66,429,510 12/15/2015


industry leader in providing surveillance data

CMBS BofA 2007-1 GS 2007GG10 Cobalt 2006C1

Special Servicer CWCapital Asset Management CWCapital Asset Management CWCapital Asset Management

CS 2007-C4

Torchlight Loan Services

MSC 2007HQ12 JPM 2007LDP11

LNR Partners CWCapital Asset Management

GS 2005-GG4 JPM 2004CIBC10

LNR Partners

GE 2005-C3 Deutsche 2006-CD2

Midland Loan Service

LNR Partners

LNR Partners

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Property U.S. Bank Tower One Westchase Center 10 Milk Street 625 Broadway 520 Broadway

Address 633 W. Fifth St., Los Angeles, CA 10777 Westheimer Road, Houston, TX 10 Milk St., Boston, MA 625 Broadway, New York, NY 520 Broadway, Santa Monica, CA

Current Bal.

Maturity Date

$64,740,000

7/12/2013

$63,582,644

2/10/2012

$58,000,000

5/12/2017

$53,000,000

6/15/2017

CMBS BS 2004TOP14 Greenwich 2007-GG9 ML-CFC 20077 JPM 2007LDP11

$51,000,000

4/19/2012

CS 2007-C3

Special Servicer

LNR Partners

C-III Asset Management LNR Partners Midland Loan Service CWCapital Asset Management

$2 Bil. Auction of Distressed CRE Auction.com, the nation’s leading real estate auctioneer and loan sales advisor, announced today its upcoming online auctioning of over 325 Non-Performing Notes & Commercial REO Properties located throughout the Southeastern U.S., representing the largest online auction of commercial real estate to date for the company that pioneered modern real estate auctions. The online auction for properties and collateral spans over 18 days, beginning on Sept. 19, 2011, and concluding on Oct. 6, 2011. It includes multifamily, mobile home parks, retail, mixed-use, hotel, land, self-storage, office, industrial, and special-purpose assets. Starting bids range from $500 to $10.5 million. The online auctions are currently comprised of 151 assets in Florida, followed by 98 in Georgia, 38 in North Carolina, 16 in Tennessee, 13 in Alabama, 14 in South Carolina, seven in Virginia, five in Mississippi, and two in both Kentucky and Maryland. All properties and auction details can be reviewed at www.auction.com/CRE.


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