KBS Strategic Opportunity REIT has filed a public draft prospectus with the Israel Securities Authority for an offering to raise $100 million to $150 million that would fund a new subsidiary that will own its properties.
CoStar's analysis of earnings reports and guidance finds that this year REITs will be net sellers of properties. The top five net sellers are expected to be Equity Residential, Prologis, Liberty Property Trust, Brandywine Realty Trust and Macerich Co. Property sales will fund REITs' acquisition, development and redevelopment pipelines.
Commercial property prices have doubled since the low point of the cycle in 2009, according to Green Street Advisors. Now, though, there are signs that price declines will occur this year due to rising interest rates and inflated valuations, says Green Street analyst Peter Rothemund. Some other analysts, however, expect continued growth.
Apartments located in the downtown areas of top suburban markets are commanding higher-than-average prices from investors, data show. "In vibrant suburban areas -- 'urban light' locations with proximity to jobs, transportation, retail and that have upper-income renters -- you see fundamentals that more closely resemble those of the urban core," says Jay Parsons of MPF Research.
Multifamily supply will continue to enter the market in response to strong demand this year, according to Freddie Mac's 2016 Outlook. "We expect the multifamily sector to continue to grow at a robust level, with the national vacancy rate staying below the historical average throughout 2016 and ending the year under 5%," said Steve Guggenmos, Freddie Mac multifamily vice president of research and modeling. Originations could rise to $250 billion to $260 billion this year.
Kimco Realty CEO Conor Flynn describes the company's portfolio as a defensive one, well suited to withstand recessionary forces. The American consumer is savvy and likes a deal, and Kimco tenants offer off-price options, he says. Kimco counts grocery stores among its tenants, and they are reporting larger basket sales as low gas prices allow consumers to buy "steak instead of chicken," he says.
More than half of new logistics projects planned for construction this year will be developed on a speculative basis, CoStar Group analysts estimate. Developers are banking on institutional appetite for these assets, for which vacancy rates are at the lowest levels since 1999.
A successful sustainability strategy requires a company to focus on the most important projects first, according to Aaron Binkley, director of sustainability at Digital Realty Trust. Trying to tackle everything at once -- green building certification, energy-efficiency programs, governance improvement and volunteering and social engagement -- is a common mistake, he says.
Sears may need to make bigger changes to stay afloat after years of falling sales and profits, said analysts at Evercore ISI on Tuesday. "Its inability to generate cash makes it likely it will need to sell assets or utilize its funding facility in 2016 to offset operating losses," said analyst Matt McGinley.
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