on retail is that they feel that some of
the retail—and, for that matter hospitality—properties where the most pain
has been felt represent the best opportunity for a cheap buy and a turnaround,
according to Guy Johnson, president of
Irvine, CA-based Johnson Capital. And
Bach of Grubb points out that companies like BH are focusing on some of
the geographic markets that have felt
the most pain, like Phoenix, Las Vegas
and the Inland Empire.
According to Johnson, opportunistic
acquisitions of troubled retail properties began more than a year ago. He
points out that there are several outlet-center developers who would like to buy
higher-end retail projects and turn
them into discount concepts since the
discount market has been hurt less,
Johnson says. He adds that need-based
retail is also viewed as a good risk
because it has been performing well.
“What is not working is high-end rents
and occupancy costs that have not been
translating into robust high-end margin
sales,” he concludes.—Natalie Dolce
Steadfast Launches $1.7B Private REIT
To Buy Multifamily, Industrial Assets
IRVINE, CA—Steadfast REIT Investments
LLC, an affiliate of locally based Steadfast
Cos., has launched a $1.65-billion initial
public offering for a nontraded REIT.
Dubbed Steadfast Income REIT Inc., the
vehicle will concentrate primarily on
acquiring and operating multifamily and
industrial properties. These will include
stabilized, income-producing and value-added properties, according to filings by
the REIT.
The new REIT expects that multifamily properties will compose between 55%
and 75% of the aggregate cost of its portfolio after it has invested substantially all
of its offering proceeds, according to its
prospectus. It expects industrial properties will compose between 20% and 30%
of the aggregate cost of the portfolio.
The head of the new REIT is Rod
Emery, the founder of Steadfast Cos.,
who serves as the chairman, chief executive officer and president of Steadfast
Income REIT. Before founding Steadfast
in 1994, Emery served for 17 years as the
president of Cove Properties, a property
management, construction and development firm specializing in the industrial
sector.
The new REIT’s prospectus cites
research suggesting that the multifamily
market is likely to post positive gains
Las Vegas Retail Will Gain More Pain
Thoughts on Sin City’s retail market by John Matt Stater, research manager for the Las Vegas
office of Colliers International:
Vacancy Will Rise: “Las Vegas retail vacancy should continue to climb in the second quarter of 2010, given that
employment is still on the decline and we are still experiencing double-digit declines in taxable sales.”Absorption
Will Be Flat: “Net absorption in the anchored retail market can be hard to predict, since the retail spaces are either
fairly small or quite large. For example, positive movement in the smaller spaces can be erased with a single
anchor space coming onto the market. That being said, most signs for retail point to a continued, steady decline
in net absorption. Retail appears to have entered the recession behind the office and industrial sectors and is still
locked in the downward slide from which the other sectors are beginning to emerge.”
Completions Will Be Steady: “There are several anchored retail projects that are in limbo at the moment, with anchors
completed and the remainder of the project on hold. Given the still-low level of local retail consumption, this state of
affairs is not likely to change in the near future.”
Rental Rates Will Fall: “As with industrial,
most of the leasing activity in retail is being
driven by low rental rates. Retail employment
continues to fall, and taxable sales have not yet
recovered, so we think lower asking rents will
continue at least for the short term.”
Q1-10 Q2-2010 (projected)
Vacancy; ;
Net Absorption ; ;
Construction; ;
Rental Rate ; ;
Source: Colliers International-Las Vegas
Vital Signs
over the next several years as the US
economy recovers. The prospectus says
that although the apartment market
today remains in contraction because of
the economic downturn, “We anticipate
that a cyclical upturn in the economy,
increased employment rates, favorable
demographic trends, increases in immi-
gration rates, stabilization in the hous-
ing market and a modest new apartment
supply will significantly improve apart-
ment market fundamentals and perfor-
mance.” It says that the expected increase
in demand for apartments and the con-
tinued downward pressure on pricing
“presents attractive near-term and lon-
ger-term investment opportunities in the
multifamily sector.”
Regarding the industrial sector, the
REIT’s prospectus says that it “may be
ready to post a strong recovery due to
the high correlation between growth in
the gross domestic product and demand
for industrial space.” The industrial sec-
tor “is closely correlated with GDP
growth and therefore is likely to experi-
ence recovery ahead of other real estate
sectors such as office and retail.”
The new REIT is offering up to $1.5 bil-
lion in shares of its common stock for sale
at $10 per share and up to an additional
$150 million in shares of its common stock
under its distribution reinvestment plan at
$9.50 per share, typical pricing under the
nontraded REIT structure. Steadfast
Capital Markets Group is the dealer man-
ager and will distribute the REIT shares
through retail broker-dealers and invest-
ment advisors.—Bob Howard
Executive Moves
SAN DIEGO—Richard
Murdock has joined
Grubb & Ellis Co. as SVP
of investment services.
He brings the number
of professionals who
have joined the company’s San Diego office to
16 since its opening in
late March.
LOS ANGELES—Wells Fargo & Co. hired Wayne
Brandt as a managing director of its real
estate capital markets group. He was most
recently head of commercial real estate
lending and debt investments for the
Buchanan Funds, a private equity firm.
HONOLULU—Hawaiian
Properties Ltd., one of
the oldest real estate
management companies
in Hawaii, has hired John
Jepsen Jr. as senior property manager and vice
president of its condo
division.
LAS VEGAS—Jones Lang
LaSalle Inc. hired Dean Kaufman and
Bret Davis as SVPs in its regional office
here. Kaufman is leaving a post at Colliers
International, while Davis comes to JLL
from CB Richard Ellis. ◆
Murdock
Jepsen
For the latest news on executive
hires, moves and promotions, visit
www.globest.com/executivewatch.
