Capital availability for U.S. commercial real estate (CRE) has increased gradually since the financial crisis. Per a 2013 Association of Foreign Investors in Real Estate (AFIRE) survey, 81 percent of respondents plan to increase their portfolio size in the United States. Closer to home, we are seeing non-traditional investors, such as hedge funds, acting as shadow lenders for properties in the secondary and tertiary markets, where bank loans are still hard to get. And then, real estate investment trusts (REITs) are flush with funds with the opening up of the equity and debt markets.
Not surprisingly, this has translated into an increase in CRE transactions (individual asset deals) and M&A activity (deals between entities holding CRE properties). In 2013, transaction activity increased 20.1 percent over 2012 to $359.4 billion1 and M&A activity rose 69.2 percent to $65.3 billion2. Real estate investors with healthy balance sheets and liquidity are now looking at the value offered by properties in non-prime markets when designing their portfolio and acquisition plans, given compressed cap rates for prime assets in primary markets. Companies are also considering different routes for investments — direct purchase, M&A (domestic and/or international) and/or sale and leaseback transactions — where traditionally, capital availability and property location have been key influencers of transaction decisions in the CRE sector. Take the case of the office and apartment property sectors that have posted large recent-deal volumes, primarily in the small-to-mid-sized segment, as more corporate entities are opting for deals to unlock value of their owned real estate and earn higher returns on their core businesses.
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Mike Stinson, a native of Monroe, Louisiana, is a graduate of Louisiana State University (LSU). A real estate licensee since 2004, Mike specializes in the sale and leasing of commercial real estate. A Designee member of the Certified Commercial Investment Member Institute (CCIM), Mike’s other professional memberships include Baton Rouge’s Commercial Investment Division (CID), the LSU Alumni Association, REALTOR Land Institute (RLI), an associate member of Louisiana REALTORS® (LR), and an associate member of the National Association of REALTORS® (NAR).
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).