Real Estate Forum - January 2008

by 10-year Treasuries.

The downturn in the overall market has US REIT stocks trading at a 15% discount to net asset values. This difference could be appealing to investors, says Michael Grupe, Nareit’s executive vice president of research and investor outreach.

Meanwhile, New York City-based Fitch has a somewhat positive outlook for REITs. Steven Marks, the company’s managing director and head of its REIT group, rates the sector as stable, owing to strong fundamentals and high occupancy rates. However, the firm warns that property trusts will suffer from modestly poorer results next year.

Wimmer relates that Moody’s also has a stable outlook on the industry as a whole. REITs, he explains, are in a better position to compete for assets now that “opportunistic, leveraged players” are no longer able to obtain inexpensive debt financing. “Even if there is a downturn in the economy, we don’t see anything out there that’s going to have a significant negative impact on REITs,” he asserts.

As for specific property sectors, Citi’s Litt expects well-positioned retail and

NEWS WRAP continued on page 62

In Brief

• Dutch pension fund PGGM has increased its investment in Dallas-based Behringer Harvard to $200 million, adding to the $100-million infusion it gave the firm’s multifamily platform last spring. PGGM also has the option to increase its latest investment to $300 million.

• Forestar Real Estate Group Inc. is now operating as a stand-alone company, having spun off from Temple-Inland Inc. Now trading on the New York Stock Exchange under the symbol FOR, the Austin, TX-based firm has some 374,000 acres of real estate located primarily in growth corridors in the South.

• In a deal set to close this quarter, GE Capital will buy most of Chicago-based Merrill Lynch Capital, Merrill Lynch and Co. Inc.’s middle-market commercial finance business, which includes the healthcare finance unit. Financial terms of the transaction, which does not involve the commercial real estate finance unit, were not disclosed. Norwalk, CT-based GE Capital will gain

more than $10 billion in assets and $5 billion in commitments in the sale.

• Veteran real estate executives David Carlson and Mike Isaacson have teamed up to form Redwood Capital, a firm that will acquire and manage multi-family properties. Based in Chicago, the company’s focus will be on value-add investments primarily in the Midwest, Southeast and Sunbelt states and will utilize equity raised from a variety of sources. It has also partnered with Dallas-based Westdale, which will provide property management services to all of Redwood’s communities.

• JER Investors Trust Inc. and JER Partners have closed JER US Debt Co-Investment Vehicle LP, a $220-mil- lion private equity fund. Some $200 million came from the California Public Employees’ Retirement System, while JRT and JER Partners will each kick in $10 million. The vehicle will invest in B-notes, mezzanine and whole mortgage loans, as well as preferred equity, CMBS and CMBS-related products.

Recent Transactions Across the Country

Debt & Structured Finance

Advocate Health Remount Business Park Shopping Center Portfolio
$17,500,000 $35,000,000 $12,300,000
Chicago, IL Charleston, SC Columbus, OH
Office Office Retail

Enhanced First Mortgage Construction Loan First Mortgage

Development

Forestbrook Village

Food Lion-Anchored

Shopping Center

Myrtle Beach, SC

New Development

Acquisitions

Sprint Building Sonora Canyon HOK Global HQ Building 147,000-SF 388-Unit 95,000-SF

Office Building Apartment Complex Class A Office Building Kansas City, KS/MO Mesa, AZ Kansas City, MO Core Acquisition Value-Add Acquisition Core Acquisition

To discuss your real estate transactions, please contact:
Kurt Pairitz Mike Huffman Eric Wollan

Executive VP Senior VP Senior VP

Development Debt & Structured Finance Acquisitions
312-669-6461 312-669-6424 312-669-6460
kurt.pairitz@orix.com mike.huffman@orix.com eric.wollan@orix.com

Or see our website at www.orix.com.

OREC is a 100% wholly owned subsidiary of ORIX USA Corporation.

ORIX Real Estate Capital, Inc.

100 North Riverside Plaza, Suite 1400 • Chicago, Illinois 60606

The Vue
35 Waterfront
Condominium Units
Bellevue, WA
Condo Conversion

Gateway Center
110,000-SF
Class A Office Building
Columbia, MD
New Development

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