Merger creates country's largest info technology firm In a transaction creating the nation's largest and most diverse provider of information technology and decision support solutions for the mortgage and real estate industries, The First American Financial Corp. and Experian Group have completed their previously announced merger. First American Real Estate Solutions LLC, as the newly formed company will be known, is 80% owned by First American Financial. Experian owns the remaining 20%. First American Real Estate Solutions anticipates annual revenues of more than $450 million and will employ a staff of 4,000.
The venture combines Experian's Real Estate Solutions' property data and title information services with all of First American Real Estate Information Services Inc.'s businesses with the exception of Excelis Inc., the mortgage loan servicing software division. Unrelated divisions of the companies, including Experian's credit division and First American's title insurance operations, were not included in this transaction.
First American Real Estate Solutions is based in St. Petersburg, Fla., as is First American Real Estate Information Services. John Long, president of Information Services, has been named president of the new group.
The First American Financial Corp. is based in Santa Ana, Calif., and is the nation's leading provider of real estate-related financial and information services.
Experian was formed in November 1996 from the combination of Experian and the CCN Group. The merged companies are located in Orange, Calif., and Nottingham, U.K.
Realty Income augments acquisition credit facility Realty Income Corp. has amended and restated its existing unsecured acquisition credit facility. The term of the credit facility was extended to three years and the available funds increased from $130 million to $150 million.
Realty Income's current investment grade debt ratings of BBB- provide for financing at LIBOR plus 85 basis points with a facility fee of 15 basis points.
The lead agent for Realty Income's acquisition credit facility is The Bank of New York, joined in providing the line by AmSouth Bank, Bank Hapaolim, Bank of Montreal, Dresdner Bank, First Union Bank and Sanwa Bank.
ARCS is No. 1 Fannie Mae DUS originator for 1997 ARCS Commercial Mortgage Co. L.P., Calabasas, Calif., has ranked as the No. 1 Fannie Mae DUS multifamily loan originator in America for 1997. This is the second year in a row that the company captured the lead position.
In 1997, including DUS, ARCS closed mortgages for 147 properties, totaling $752 million, which was a 50% gain over the 1996 performance. This growth was attributed to continuing favorable market conditions, sharply increased marketing efforts and branch expansion.
The volume gain is consistent with the company's rapid expansion, growing from two to 12 offices nationwide in its first two years and creating separate and specialized divisions for conventional multifamily housing, tax credit affordable housing and capital markets for other income properties.
ARCS is also one of the top Fannie Mae DUS multifamily servicers, earning the No. 1 spot for 1994, 1995 and 1996.
The company has a servicing portfolio exceeding $2 billion, serving more than 500 borrowers across 30 states. This is a 25% net increase in servicing portfolio size since last year. It is attributed to the 50% growth in loan origination volume and to strong loan retention through the refinancing of existing portfolio holdings.
ARCS President and CEO Howard J. Levine pointed out that the increase was accomplished without sacrificing loan quality. "In fact, our loan delinquency ratio, already among the lowest in the industry, decreased even more in 1997 to less than half a percent," Levine said.
Plans for 1998 include expansion into other key geographic areas and continued emphasis toward diversification into all types of investment property fundings.
The company is a Fannie Mae DUS lender, a Freddie Mac Program Plus lender and has conduit relationships with key Wall Street houses and NationsBank. It has branches in Arlington, Va.; Burbank, Calabasas Hills, San Diego and San Francisco, Calif.; Chicago; Dallas; Jacksonville, Fla.; Nashville, Tenn.; Philadelphia, Pa.; Portland, Ore.; and Princeton, N.J.
J.E. Robert Cos. closes $435M oppurtunity fund J.E. Robert Cos., a McLean, Va.-based real estate investment advisor and asset manager, has closed its first direct institutional investment fund, JER Real Estate Partners L.P., with total committed capital of $435 million, exceeding the company's target base of $300 million.
The fund will invest in a broad range of real estate-related investments, including equity and sub-performing debt, commercial mortgage-backed securities, real estate operating companies, mezzanine investments and tax liens.
As of late-January, $80 million of the fund's total capital had been committed in equity throughout the United States, Canada and overseas. Investments include institutional real estate and loan portfolios, CMBS investments in single-B and unrated tranches, single asset investments in office, industrial, retail and multifamily product and two joint ventures. The fund's acquisition pipeline stood at $1 billion at that time.
In addition to Joseph E. Robert Jr., founder, chairman and chief executive officer of J.E. Robert Cos., the fund will be led by the company's current senior management team who have been working together the past six years. The team includes Deborah L. Harmon, principal, office of the president, strategic and new business development, and Jonathan S. Kern, principal, office of the president and chief investment officer of the fund.
PNC Bank Corp. agrees to buy Midland Loan Services PNC Bank Corp., based in Pittsburgh, and Midland Loan Services L.P. have agreed that PNC will acquire the assets of Midland. Terms of the agreement were not disclosed. The transaction is expected to close in the second quarter of 1998 and to be neutral to earnings in 1998 and accretive thereafter.
Midland, based in Kansas City, Mo., is a technology-based real estate financial services firm specializing in commercial mortgage loan servicing and the origination of commercial mortgage loans for securitization. At year-end 1997, Midland was the largest servicer of commercial mortgage-backed securities in the United States, with a servicing portfolio, including CMBS servicing, of approximately $24 billion.
Since 1990, the CMBS market has grown from $1.2 billion in new issues to a record high of $43 billion in new issues in 1997. The real estate financing market formerly relied on traditional loans from banks or insurance companies, according to Bruce E. Robbins, chief executive officer of PNC's secured lending line of business, which includes real estate banking.
That focus has shifted to a market in which loans are originated, warehoused and combined into securities with specific yield or credit characteristics that are then sold to institutional investors, according to Robbins.
"The integration of Midland's high-quality real estate operations with the distinctive competencies of PNC and BlackRock will allow us to offer a wide array of products and services to a broad national customer base," says Alan L. Atterbury, president and chief executive officer of Midland. BlackRock, an affiliate of PNC, is an investment advisory firm specializing in fixed-income securities.
Atterbury will remain with Midland in his current capacity. Midland's employees will remain with the firm in Kansas City. The company will continue to operate under its own name and will report to Robbins.
BellSouth, GMAC work together to provide services The Tenant Services Division of GMAC Commercial Mortgage Corp. has reached an agreement with Atlanta-based BellSouth to provide apartment residents with Internet access and local telephone and cellular services through rental offices at participating properties throughout the Southeast.
A $19 billion communications services company, BellSouth is the fourth telecommunications provider to agree to make its services available through GMAC's Resident's Advantage since the program's September 1997 launch.
Resident's Advantage allows apartment community residents to buy products and services from national vendors through their property's rental office. The GMAC program also includes banking and financial services, insurance, moving and storage services, furniture purchase and rental, newspaper subscriptions and consumer products.
BellSouth's service area includes more than 23 million lines in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North and South Carolina and Tennessee.
REITs lead commercial real estate investment pack According to the CCIM/Landauer Investment Trends Quarterly, report, real estate investment trusts continue to be the leading purchaser of commercial real estate in the nation. REITs account for 27.3% of all investment spending. This reflects the impact of the capital markets on commercial property pricing.
"Real estate investment trusts' buying activity continues to be fairly well diversified, with preferences generally mirroring the wider market's buying inclinations," said Dewey Struble, CCIM, president of the Commercial Real Estate Institute, Chicago. "The concentration of REITs on offices is very much in tune with other investors."
Sector to sector, according to the report, REITs account for 26.7% of all office acquisition capital, focusing primarily on large, Class-A buildings. In fact, the average REIT office purchase is $44.3 million, or $125.60 per sq. ft. at an initial cap rate of 8.4%.
REITs represent 37.3% of the aggregate investment volume for the multifamily sector, although their total multifamily spending is lower than their office spending. The trusts are also responsible for 28.7% of the lodging industry's transactions' dollar volume.
Reflecting continued optimism about the U.S. economy, industrial REITs are generating 20.5% of that sector's investment volume. Despite that optimism, however, REITs represent only 15% of the investments in the retail sector.
"While REITs have clearly been stepping up their pace as buyers, it's important to note there's an eclectic mix of other investors still playing an important role in the marketplace," said Hugh Kelly, executive managing director of Landauer Associates. "Private investors, owner/users and developers currently account for 35% of all investment dollars."
Focusing on the industry as a whole, offices garner the bulk of investor interest, attracting 42.4% of investment dollars. Meanwhile, the decline in industrial vacancy is flattening as spec development is on the rise.
On the multifamily front, apartments attract 19.3% of all commercial property investments. Investors are drawn to luxury properties and hence are increasing cap rates.
Retail investments comprise 13.4% of the commercial investment market. Shopping center prices are averaging a weighted average price per sq. ft. of $118.64 and, with a mean cap rate of 10.3%, retail's yield rate is at its most aggressive since early 1995.
Hospitality's sales have slowed, although mergers and acquisitions are brisk, reflecting an ownership shift at the corporate - rather than individual property - level.
Land transactions comprise 5.5% of total industry volume, but the threat of a dangerously accelerated building boom is negated by financial discipline on construction speculation.
Corrections NREI featured a year-end update on the state of multifamily market cap rates and prices nationwide on page 10 in the January issue. This data was provided to us by Property Information Exchange (PIX), based in New York. An error was made in the multifamily section, and the corrected market cap data is below.
Multifamily: Based on the year-end 1997 numbers, multifamily market cap rates were 11.17% nationwide in December, down from 11.30% in December 1996. The average for the year was 11.20%.
In pricing terms, PIX data indicates that, for 1997, the price per sq. ft. remained relatively stable throughout the year, showing a slight year-end decrease of $57.54 per sq. ft. vs. $57.84 per sq. ft. in December 1996. The average for the year was $57.62 per sq. ft.
Also, our January supplement Multifamily Monitor ranked the top 10 apartment real estate investment trusts and in error left out Avalon Properties Inc., a multifamily REIT based in Wilton, Conn. According to ASSETrac Inc., an information service based in Bloomfield, N.J., the market capitalization for Avalon is $1.19 billion, ranking it No. 7 on the list.
In a column from the National Multi Housing Council by Stephen Lefkovits in the January Multifamily Monitor supplement, a line of type was left out in the jump from page 7 to page 9. The corrected sentence should have read as follows: "The creation of the Multifamily Housing Institute (MHI) as the central source of financial and property performance data for the multifamily industry is a major step by the lending industry attempting to harness this benefit."
MIPIM '98 to showcase Europe's rising tide What do you call an international conference that for the past seven years has drawn thousands of major commercial property players from all over the world to the south of France? Well, they call it MIPIM, which in French stands for Marche International Professionels de L'Immobilier, or just plain international property market. This year it all happens again March 12-15 at the famous Palais des Festivals in Cannes.
Since you won't see any famous movie stars there that time of year, why should you be interested in some far-flung international real estate conference? For the last few years, the number of Americans in attendance at MIPIM has steadily increased, and 1998 looks like another banner year for American involvement. Why? The answer is a simple one -- many believe that Europe represents the next great property market for American developers, managers and investors.
In Europe, there aren't 18 million real estate conferences to attend each year. That makes MIPIM an important event. Consider the numbers for MIPIM '97 -- 6,800 participants, 2,776 companies, 1,017 exhibiting companies, 264 journalists. In all, 52 countries were represented there. This up substantially from about 3,000 attendees during MIPIM's first conference held back in 1990.MIPIM also has become known for its annual awards competition , which recognizes the top property projects based on their technical and architectural quality. The categories include office buildings, business centers, shopping centers, residential developments and refurbished office buildings.
For more information on MIPIM, please contact Ronald Kolber in New York at 212-689-4220.