al other indices were formed to try to
spark this growing market—Barker maintains there is room for improvement. He
points out that the US commercial real
estate market is the only major asset
class not supported
by a robust derivative market. “I think
part of the problem
is just a lack of
understanding.
That’s one of the reasons that this group
BARKER: got together,” he
“Many potential states. “Many poten-
investors aren’t tial investors aren’t
cognizant of the cognizant of the ben-
benefits and efits and possibilities
possibilities that that derivatives
derivatives could bring to their
could bring to portfolio manage-
their portfolio ment. Our role is to
management.” make these possibili- ties more accessible
and easier to under-
stand and implement.”
The organization will initially distribute information through its website,
www.red-sig.org, which will answer
basic questions about derivatives. In
addition, PricewaterhouseCoopers will
provide tax information for those interested in investing in the product, Barker
adds.
RED-SIG is also looking to host
workshops and seminars as well as team
up with other industry groups to promote the investment tools. “We’re hoping to garner support throughout the
industry and promote derivatives
through further education,” Barker
says.—Jennifer McCandless
AZL Shareholders OK
Switch to New REIT
Shareholders of Phoenix-based Arizona
Land Income Corp. have approved its
acquisition of the Shidler Group’s West
Coast office building holdings and its
reincorporation as Pacific Office
Properties Trust Inc. The new entity
will reportedly trade on the American
Stock Exchange.
Under the deal, ownership interests
in nine office properties in Honolulu,
San Diego and Phoenix controlled by
affiliates of Shidler with a gross asset
value of approximately $563 million
will be contributed to an umbrella partnership REIT to be formed by AZL.
This is in exchange for limited partnership interests in the UPREIT and an
unsecured promissory note for $12 mil-
lion. In addition, Pacific Office
Properties will issue 180,000 shares of
common stock at a price of $7.50 per
share and grant options to purchase up
to 500,000 shares of common stock,
also at $7.50 a share. The transaction is
valued at roughly $570 million.
Headquartered in Los Angeles,
Pacific Office Properties’ strategy will
be to focus on the western US, primarily the cities of Honolulu, San Diego,
Los Angeles and Phoenix, and form
joint ventures with institutional partners. Heading up the new REIT as
CEO is Dallas E. Lucas, formerly the
executive vice president and chief
financial officer of Maguire Properties
Inc. James M. Kasim has been appointed chief financial officer of Pacific
Office Properties. He comes to his new
job from private investment company
BentleyForbes, where he was executive
vice president and CFO.
The Shidler Group, a private investment firm, was founded by veteran real
estate investor, Jay Shidler, who serves
as its managing partner. Shidler currently chairs the boards of First
Industrial Realty Trust Inc. and
Corporate Office Properties Trust.
ENERGY TAX ACT
continued from page 12
efficient products, the alliance maintained, would in turn boost the waning economy by generating new
domestic jobs. One member of the
coalition, the American Council for
an Energy-Efficient Economy, found
in a recent analysis that extending the
provisions would add roughly 15,000
jobs.
Historically, Congress has agreed
to one- to two-year extensions for
clean energy credits, which according
to the coalition stifles the industry’s
growth.
“While we are happy to see these
extensions, the effort to design and
construct buildings that incorporate
these features, as well as the process
of designing, tooling up and manufacturing the appliances that would benefit as a result of these incentives take
a long period of time,” argued RK
Stewart, president of the American
Institute of Architects, based in
Washington, DC.
Other segments of the energy industry, namely oil and gas, enjoy permanent tax incentives, noted the president of the Washington, DC-based
Solar Energy Industries Association,
Upgrades to Outnumber
Downgrades for CMBS
Ratings agency Moody’s Investors
Service expects to see more upgrades of
US commercial mortgage-backed securities than downgrades in 2008, despite
a softening economy and declining
property values.
In recent years, upgrades have outnumbered downgrades by a large margin, Tad Philipp, managing director of
Moody’s commercial real estate finance
group, noted during a recent conference call. However, the New York City-based executive expects that difference
to narrow this year. “The last few years
we’ve had upgrades outnumber downgrades by about 10 to one as we harvested the effects of amortizations,
defeasance and rapid property appreciation,” he explained. “But much, if not
all, of the low-hanging upgrade fruit has
been picked. Even though we’re heading into a potential downturn, we still
think upgrades are likely to exceed
downgrades for the coming year, just
not by the margins we’ve seen in the
past.”
NEWS WRAP continued on page 17
Rhone Resch, who called on Congress
to consider parity in this decision.
Ironically, the repeal of some of those
gas and oil incentives to finance the
pending act may squash the bill in the
Senate. Republicans in that body have
expressed strong opposition, backed
by the Bush Administration, which is
threatening to veto the bill if it gets
past the Senate.
During the conference call members of the coalition addressed the
funding concern, but were unable to
offer alternative financing avenues.
“We are not focused on it as a coalition. Individual members may have
positions on those, and there are certainly those on the Hill trying to figure out what revenue raisers make
sense,” said Jim Presswood, energy
advocate for the Natural Resources
Defense Council.
With the bill now before the
Senate, the coalition is hoping for a
quick turnaround before the end of
the quarter. “We need these tax credits passed literally by the end of the
first quarter, not just for the big projects that have long lead times, but
also with respect to the manufacturers
and how they allocate products,” said
Resch.—Danielle Douglas
