Morgan Stanley, BofA Said to Sell Stake in Times Square Tower

Morgan Stanley and Bank of America Corp. (BAC) agreed to sell their 49 percent stake in 1633 Broadway, a 48-story tower near New York’s Times Square, according to three people with knowledge of the transaction.

The buyer is Paramount Group Inc., the U.S. real estate unit of Germany’s Otto Group, said the people, who asked not to be identified because the deal is private. The purchase valued the building at about $2 billion, making it the most expensive New York commercial property transaction since Google Inc.’s $1.8 billion acquisition last year of 111 Eighth Ave., according to the New York Observer, which reported the sale yesterday.

Paramount, which also holds interests in Deutsche Bank AG’s North American headquarters tower at 60 Wall St., and the former Credit Lyonnais Building at 1301 Avenue of the Americas, bought the remaining stake after exercising a right of first refusal under its partnership, one of the people said.

Jolanta Bott, a Paramount spokeswoman, declined to comment, as did Mark Lake, a spokesman for New York-based Morgan Stanley. (MS) Jessica Oppenheim, a Bank of America spokeswoman, didn’t return calls for comment. The Charlotte, North Carolina-based bank acquired its interest when it took over Merrill Lynch & Co. in 2009.

Eastdil Secured LLC was the broker on the transaction. Doug Harmon, senior managing director for the New York-based firm, declined to comment on the deal.

Date: 19 April 2011 | For the full report, please visit http://www.bloomberg.com

Brookfield Office Projects Lower FFO as Leases Expire

Brookfield Office Properties, owner of lower Manhattan’s World Financial Center, forecast 2011 funds from operations below analysts’ estimates as lease expirations in New York and Boston may result in new deals at lower rents.

FFO this year will be $584 million to $609 million, or $1.05 to $1.10 a share, the New York-based company said today in its fourth-quarter earnings statement. Analysts projected $1.13 a share, the average of 12 estimates in a Bloomberg survey.

Brookfield may be hurt by a Goldman Sachs Group Inc. lease expiration at 1 New York Plaza in Manhattan and the end of a deal at 75 State Street in Boston, according to James Sullivan, an analyst at Cowen & Co. who cut his rating on the stock today. The company also is facing a 2013 expiration of 4.6 million square feet (427,000 square meters) of space rented to Bank of America Corp. at the World Financial Center.

“Lease expirations in Boston and New York are having a bigger effect than we expected,” Sullivan wrote in a note, reducing his rating to “neutral” from “outperform.” “Also, we were disappointed that the company did not confirm more leasing progress at the World Financial Center.”

Brookfield said it expects same-property net operating income to fall 1.5 percent this year, partly because of two lease rollovers in New York and Boston.

The company is expecting 933,000 square feet of leases to expire this year at its lower Manhattan properties, according to the company’s fourth-quarter supplemental earnings statement. It expects 4.9 million square feet to expire in 2013.

“Filling this space is a priority for us this year,” Chief Executive Officer Richard “Ric” Clark said on a conference call. “The timing of our lease expiries allowed us to effectively skate through the worst of the economic crisis while continuing to maintain steady growth in our earnings.”

Besides the expirations, Brookfield also has to contend with 4.4 million square feet of new offices rising at the World Trade Center, just to the east of World Financial Center, to be completed in 2013.

Clark said on Nov. 4 the financial center’s attractiveness to tenants will be enhanced by the rebuilt World Trade Center, with its Santiago Calatrava-designed mass transit hub connecting Brookfield’s waterfront buildings to downtown’s core, and by a rising number of young New Yorkers living in the area.

Office availability in lower Manhattan was 13.4 percent at the end of January, up from 11.5 percent a year earlier, broker CB Richard Ellis Group Inc. reported on Feb. 9. Landlords were seeking $38.14 a square foot, up 1 percent from a year ago. In Midtown, the biggest and most expensive U.S. office market, the January availability rate was 12.4 percent and the asking rent was $55.82.

Date: 12 February 2011 | For the full report, please visit http://www.bloomberg.com

American Assets Raises $564 Million in First IPO of U.S. REIT in 17 Months

American Assets Trust Inc. raised $564 million, more than originally sought, in the largest initial public offering of a U.S. real estate investment trust in more than a year.

The owner of properties from San Francisco to Honolulu sold 27.5 million shares at $20.50 each yesterday after offering 25 million for $19 to $21 apiece, according to data compiled by Bloomberg. The sale was the biggest for a U.S. REIT since Starwood Property Trust Inc. raised $932 million in August 2009. The San Diego-based investment trust will begin trading on the New York Stock Exchange today under the ticker AAT.

American Assets completed the first U.S. initial offering of 2011 after more than half the IPOs by REITs last year left buyers with losses, data compiled by Bloomberg show. Barclays Plc of London estimates U.S. initial sales will raise $50 billion this year, an increase of 34 percent, after the Standard & Poor’s 500 Index recovered all of its losses spurred by the collapse of Lehman Brothers Holdings Inc. in September 2008.

“Investors are adjusting their risk profile,” said Daniel Genter, president of RNC Genter Capital Management in Los Angeles, which oversees about $3.7 billion. “People are becoming less concerned about the bottom falling out from under them.”

Bank of America Corp. of Charlotte, North Carolina, Wells Fargo & Co. in San Francisco and New York-based Morgan Stanley led the offering. American Assets owns office, retail and hotel properties in California, Hawaii and Texas valued at about $2 billion, according to Green Street Advisors, which has specialized in real estate research for more than two decades.

Proceeds from the IPO will be used to pay debt. At the original midpoint price, American Assets would have had a market capitalization of $1.01 billion, or a 5.9 percent discount to its net asset value of about $1.08 billion, its prospectus and data compiled by Bloomberg show. Non-mortgage REITs trade at an average premium of 17 percent, according to Green Street.

The eight REITs that completed U.S. IPOs in 2010 advanced an average of 1.9 percent, trailing the 13 percent climb by the S&P 500, according to data compiled by Bloomberg. Ten property trusts postponed or withdrew their initial sales, the data show.

Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com

U.S. Foreclosure Filings May Jump 20% This Year as Crisis Peaks

The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.

“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said in an interview at Bloomberg headquarters in New York. “But it’s probably not going to feel good in the process.”

A record 2.87 million properties got notices of default, auction or repossession in 2010, a 2 percent gain from a year earlier, the Irvine, California-based data seller said today in a report. The number climbed even after a plunge in filings in the last part of the year — including a 26 percent drop in December — as lenders came under scrutiny for their practices.

Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent.
Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. They have fallen as much as 33 percent since peaking in 2006, based on the S&P/Case-Shiller Index of 20 cities.

Banks seized more than 1 million homes in 2010, according to RealtyTrac. That was up 14 percent from a year earlier and the most since the company began reports in 2005.

About 3 million homes have been repossessed since the housing boom ended in 2006, Sharga said. That number could balloon to about 6 million by 2013, when the housing market may “absorb the bulk of distressed properties,” he said.

“What makes this almost inevitable is the fact there are 5 million seriously delinquent loans not yet in foreclosure,” Sharga said. “They’ve got to eventually get in the pipeline unless the homeowners cure the defaults.”

As many as 250,000 foreclosure filings that would have occurred at the end of 2010 were delayed by the ongoing probe into lender practices, according to RealtyTrac. Those proceedings will be pushed into this year, resulting in an “ugly” first quarter, Sharga said.

Attorneys general in all 50 states are investigating whether banks and loan servicers used faulty documents and signatures on loan documents, a process that has come to be known as robo-signing. Companies including JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. halted some repossessions as they reviewed their procedures.

Foreclosure filings in December totaled 257,747, the lowest monthly tally since June 2008. The number fell 2 percent from November and 26 percent from a year earlier, the biggest annual decline in RealtyTrac records.

Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com