LAKEWOOD RANCH Lakewood Ranch Corporate Park wants to add 2 million square feet of office space to its 1,300-acre complex off University Parkway, which many already refer to as the new commercial hub for the region.

Developer Schroeder-Manatee Ranch was limited in an earlier plan to building 2.3 million square feet of office space at the park through 2014. But it has already built or has construction approvals for 2.2 million square feet, so it is petitioning the county to expand that figure to 4.3 million square feet.

“We’re up against it; that’s why we’re here,” said Todd Pokrywa, SMR’s vice president of planning. The developer won an 8-0 vote Thursday night from the Sarasota County Planning Commission. The change of plans next goes to county commissioners for a final vote on Aug. 26.

The going might be tougher there since county officials are pushing SMR to make its huge development more multimodal. That is an industry term for beefing up plans for bus and shuttle service, bike paths and pedestrian access with the aim of making the park less reliant on the automobile.

“We’re committed to working on a multimodal plan,” Pokry- wa said, noting that negotiations with the county are ongoing.

Sarasota County Commissioner Joe Barbetta said there was “no question” that pushing the developer for commitments on an overall transit plan would be the biggest issue at the August hearing.

The county is considering the addition of a bus route to the corporate park and is interested in plans for a local shuttle that would feed into the public transit system.

SMR’s new plan also calls for another 534,000 square feet of office space to be built between 2015 and 2019, bringing the total to 4.9 million square feet.

To get a grasp on how big 4.9 million square feet is: It is 112 acres, or 1.1 million square feet more than is contained in the Sears Tower, North America’s tallest building.

The numbers are big enough that the county now considers SMR’s corporate park to be the region’s commercial center, said Sarasota County Administrator Jim Ley.

The park has been so successful that other areas in northern Sarasota County once envisioned as being home to commercial office space have not gotten off the ground.

“They’re the sucking sound sucking things into that area, and that’s not bad,” Ley said.

Unlike other parts of the country, most of the income of Sarasota County residents comes from transfer payments, such as investments, Social Security checks and other forms of income that are not wages.

In most places, workers’ paychecks are the biggest source of income.

It is that need to diversify the local economy and attract higher-paying jobs that led to the county’s approval of the project in 1995 and its continued support for it, said County Commissioner Jon Thaxton.

While SMR is not immune to the downturn in real estate, the plans reflect what the developer believes will happen over the next six years, Pokrywa said.

The new plan suggests long-term hope for a commercial market that has grown soft with the other sectors of real estate. However, the plan also shows an uncertainty about Florida’s ability to attract manufacturers.

SMR is cutting the amount of industrial space at the corporate park in half. Earlier plans had called for 2.8 million square feet for manufacturers, but that number is cut to 1.4 million square feet in the new plan.

“The office market is weak right now,” said Carl Wise, a principal with Preferred Commercial in Sarasota. “The housing downturn hit everyone in the butt.”

But Wise added that executives at SMR are “good, thoughtful, long-term thinkers.”

In the current market, an industrial building will sell for $80 to $150 per square foot, while an office building will sell for $250 to $350 per square foot, Wise said. So, it is lucrative for a developer to switch to commercial from industrial, if it can, he said.

“We’re not seeing anything conducive to industrial in Florida,” Wise said. “They tax these guys to death and make it really hard for them. That’s why so many manufacturers are leaving.”

By Carl Cronan

Money is apparently no object for guests staying in luxury hotels with traditionally upscale flags such as Ritz-Carlton or Waldorf-Astoria. The same might also be said for capital sources when it comes to financing such facilities. While lenders appear to be in lockdown mode for every other type of commercial real estate, they seem to be more willing to open the vault for established upscale hotels. Financial services firms believe that charm can be extended to new projects, depending on where they are located across the country.

“It’s just a pure flight to quality in this market,” says Andrew Colman, vice president with Walker & Dunlop in Bethesda, MD, whose Hotel Finance Group has arranged more than $300 million in loans to hotel development and management companies over the past year and a half. The volume of transactions in the luxury hotel market is double its normal level, rising from 25% to 50% this year, he says.

Walker & Dunlop’s latest transaction is a $65-million refinancing for the Ritz-Carlton Philadelphia, which the firm says is based on the hotel’s brand, strong asset quality and exemplary owner sponsorship. Miami-based Gencom Group owns the 303-room, full-service luxury hotel that is designed to resemble Center City landmarks related to the nation’s birthplace.

Whether that translates to new projects remains to be seen. For example, New York-based Carlton Advisory Services is working with developers of a proposed 225-room Waldorf-Astoria hotel in Sarasota, FL, to get $100 million in bridge financing for land acquisition and pre-development costs. Lion’s Gate Development and Hilton Hotels Corp. are advancing the 18-story hotel as part of a planned $1-billion mixed-use project called the Proscenium in Downtown Sarasota.

Financing for luxury hotels can be difficult because of their size, though not impossible even in the current credit-squeezed environment, says Kenneth Herzberg, director with Carlton Advisory. Even upscale condominium units, which banks might not touch at normal pricing levels, are favorable if they have a hotel’s brand attached, he says.

“We have some significant interest from some groups,” Herzberg says. “It’s a combination of the brand, the sponsorship and how it’s presented, and the overall valuation of the project at the end of the day. If it’s a top label and it appeals to folks on the upper end of the scale, and it has a branded residential component, it’s going to make a deal a lot easier.”

Other luxury hotel brands such as JW Marriott, Renaissance and Grand Hyatt are still able to get financing at good terms, according to Colman, whose family has a lengthy history in the hotel industry. Now that commercial mortgage-backed securities have gone from abundant to extinct in just the past year, hotel financing is now driven more by who and what owners and developers know.

“My relationships take on increasing value,” Colman says. “Even if it’s a great deal, it’s still tough, but they are getting done.”

Article published Jun 16, 2008

Manatee land market said to be iffy
Real estate agents say the overall sales trend is still declining

PALMETTO Palmetto developer Alan Zirkelbach sold 138 acres of industrial land near Port Manatee to two groups of investors in April for $18 million.

Those two sales represented 46 percent of $39 million in land sales that took place in Manatee County during the 12 months ended May 31.

Because of those sales, the total dollar volume of land that changed hands was down only 4 percent from the $40.8 million in sales that were concluded in the county during the same period a year ago.

Commercial real estate agents, however, say that Zirkelbach’s sales were a blip on the radar screen. The overall trend in the market for vacant land continues to be downward with respect to price and the number of closings.

“There are a lot of buyers and a lot of sellers out there, but they’re miles apart in their philosophy at the moment,” said Stan Rutstein, an agent with Re/Max Gulfstream in Bradenton. “Buyers are evaluating land values with a microscope, while sellers, who either got in too high or are too leveraged, are operating with unrealistic expectations.”

The real estate buying decision is based on confidence, Rutstein continued.

“If you are nervous, which is the prevailing mood right now, you are going to take much longer to work out deals as you try to squeeze out all the risk out.”

Two years to recovery?

All told, there were 50 undeveloped land sales in Manatee County during the 12 months ending May 31, a 17 percent drop from the 60 deals that took place during the same period a year earlier and a 78 percent drop from the 215 sales that took place during the 12 months ending May 31, 2006, Manatee County property appraiser data show.

John Stephens, an undeveloped land specialist with North Manatee Realty in Palmetto, predicted that it will take at least two years before the market revives from its current moribund state.

“How many thousands of vacant residential lots are out there that we don’t have buyers for?” Stephens asked. “Until those lots are absorbed, there won’t be any demand for raw land.”

Stephens said the restrictions on the digging of new wells only exacerbates the problem.

“Because the water management district won’t allow new wells for farming, new farms can’t come in,” Stephens said. “As a result, demand for farm land has been depressed to zero.”

Another factor depressing the market is the price of gas, said Barbara Anson, an agent with Wagner Realty in Myakka City.

“People are holding back on buying land in rural areas because they don’t know what it will cost them to drive back and forth,” Anson said.

Demand hitting prices

Manatee County property appraiser statistics show that falling demand for empty land is having an impact on prices.

Where land was selling for an average of $78,210 per acre in 2006, the average price for the 17 deals that have closed this year is just $25,182 per acre — a level not seen since 2004.

There may not be enough sales in 2008 yet to get a clear picture, said Dale Friedley, a data analyst with the Manatee County Property Appraiser’s Office. “However, there is a definite further price downtrend,” Friedley said.

Paul Klick, a commercial agent with Coldwell Banker in Sarasota, agreed that the market for residential land is catatonic. But he said buyers are still interested in commercial and industrial land. Zirkelbach’s two sales in April are certainly proof of that, Klick said.

Zirkelbach originally paid $6.1 million for the 138-acre tract off Buckeye Road in northern Manatee in July 2005. He then submitted plans to convert the land into an industrial park for distributors and light manufacturers, originally intending to market the park to end users over time. But when the downturn hit, Zirkelbach put the whole property up for sale.

Klick, who helped Zirkelbach sell the land, said the ultimate sale resulted from three factors: intensive marketing, obtaining site plan approval and getting a group of developers to commit to building a 123,367-square-foot regional distribution center for Federal Express Ground.

“Federal Express ended up being the anchor tenant for the industrial park, which was the linchpin to putting the deal together,” said Klick, who was assisted in the sale by Coldwell Banker agents Charles Clifton and Jerry Lamb.

Indianapolis-based Scannell Properties ended up paying $5.5 million for 16.5 acres where the FedEx distribution center is being built. The rest of the property was bought for $12.5 million by a consortium of developers led by Clearwater builder Brad Shirley of Jomar Development.

Klick said that while the Fed-Ex sale was driven by a national company’s need to expand its regional distribution network, the sale of the remaining land was due to developers who believe in the future of the area.

“Port Manatee is expanding tremendously,” Klick said. “It is starting to handle containers. And being the closest U.S. port to the Panama Canal, it will benefit from the expansion of the Canal Zone.”

Besides commercial and industrial users, the only other buyers of undeveloped land in recent months have been investors who are taking advantage of the fact that they are the only ones taking advantage of available opportunities.

Carlos Beruff, a longtime Southwest Florida builder and developer, bought 47 acres for $1.1 million, or $23,787 per acre, in December, according to property appraiser records. That price was 74 percent less than the $4.2 million, or $89,362 per acre, that Kimball Hill Homes paid for the South Manatee property in April 2005.

Similarly, Ronald G. Allen, an Osprey resident who made a fortune investing in real estate, bought 101 acres near Myakka City in May for $3.4 million, or $33,663 per acre.

“I didn’t steal it,” said Allen, who bought the property from Michael Ferro. “But I don’t think I got taken either.”

Allen said that he sold his house on Casey Key to Ferro for $3.2 million and agreed to pitch in an extra $200,000 for Ferro’s land in eastern Manatee.

“The land has already been rezoned,” Allen said. “The former owner spent about $500,000 to develop it. That’s what made it interesting to me.”

Allen believes his money is better off invested in land than it would be if it were sitting in the bank.

“If you don’t panic and you hang on to what you have, the market will come back,” Allen said.

TALLAHASSEE, Fla. (AP) – June 13, 2008 – Local governments in the midst of writing annual budgets face lower property tax revenues because of a new state constitutional amendment and falling real estate values.

Amendment 1, which voters approved in January, was expected to cut local property taxes by $9.3 billion during the first five years, though it may be a bit less because of the housing market decline, said Chris Holley, executive director of the Florida Association of Counties.

Holley, speaking Thursday at a news conference about how local governments are cutting expenses, said the full effect of the real estate slump hasn’t yet been calculated. But one thing is certain.

“The impacts of the housing market thud are much more severe to local government than Amendment 1,” he said.

Holley estimated property values will drop about 8 percent on average, but he said it could be worse for high-growth coastal counties. And it may be worse next year, he said.

The housing slide that began last year follows several years of soaring property values. That boom resulted in dramatic tax increases for many taxpayers and prompted the Legislature to order a tax rollback in 2007 and put Amendment 1 on the ballot.

Primary homeowners are expected to get an average $240 annual reduction because of a higher homestead exemption in Amendment 1. Homesteaders were sheltered from the worst of the tax increases during the boom by the 1992 Save Our Homes Amendment, which limited annual assessment increases to 3 percent.

They were unable, though, to transfer accumulated Save Our Homes benefits when they moved, but Amendment 1 also has a “portability” provision to fix that. It lets homeowners take those benefits with them for up to $500,000 in property value.

The depressed market means fewer people are moving, so the portability provision won’t be as costly as initially thought, Holley said. The estimate was $2.7 billion of the five-year total.

He said most cities and counties are cutting what are considered nonessential services such as libraries, parks, health care and transportation to avoid reducing core services such as fire and police protection. The vast majority are also trying to avoid tax increases.

“What I’m hearing from my members: ‘The people have spoken, we’re going to try to implement Amendment 1,’“ Holley said.

He joined Florida TaxWatch at the news conference to announce a report by the private budget watchdog group that contains 150 ways cities, counties and school districts have cut costs in recent years.

It’s an effort to share those ideas with other local officials now looking for ways to trim costs.

They include a limit on annual spending increases in Hillsborough County that’s based on the inflation rate and population growth; Palm Bay’s use of plastic instead of wooden to form concrete sidewalks; and a Miami-Dade County program that lets people exchange conventional shower heads for high-efficiency models.

© 2008 The Associated Press, Bill Kaczor (Associated Press Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.

Golf & Dinner at the Ranch
Legacy Golf Club
Thursday, October 9, 2008

CID’s popular annual golf tournament/fundraiser draws many participants who come out to enjoy an afternoon of golf at the beautiful Legacy Golf Club followed by a delicious dinner and entertainment in the clubhouse. Proceeds from the tournament will benefit the following CID Charities.

As a CID member or Business Affiliate, you have the first opportunity to reserve sponsorship for this event. What a great way to expand market awareness of the products and services you provide the real estate community.

SPONSORSHIP OPPORTUNITIES

PLATINUM SPONSOR - $5,000

• Includes 8 complimentary passes for Golf and Dinner;
• Company name in the Program;
• Recognition at Dinner;
• Recognition in Weekly CID Blast Emails

Gold Sponsor - $2,000

• Includes 4 complimentary passes for Golf and Dinner;
• Company name in the Program; Recognition at Dinner;
• Recognition in Weekly CID Blast Emails

Silver Sponsor - $1,000

• Includes 2 complimentary passes for Golf and Dinner;
• Company name in the Program;
• Recognition at Dinner

Bronze Sponsor - $500

• Includes 1 complimentary pass for Golf and Dinner;
• Company name in the Program

Hole Sponsor - $300

• Includes Banner at hole with Company name;
• Company name in the Program

We also need contributions for raffle prizes and for the “Goodie Bags” for each player. Suggested raffle prizes: $100, $200 & $300 levels - Golf clubs; Gift Certificates for Foursomes of Golf; Golf Items; Restaurants; Gift Baskets; Golf Related B ooks, Pictures, Posters, Clothing; Dozen Golf Balls. Suggested Goodie Bag gifts - Golf Tees; Golf Towels; Suncreen; Visors; Keychains; Coozies.

Download the CID Golf Tournament Sponsorship Form to get involved!

Download the Registration Form to play.

Proceeds from the event go to:

International Marketing by Pat Tan

The Sarasota Young Realtors welcome Patricia Tan for their June meeting on the topic of International Marketing. Patricia Tan has teamed up with Carla Rayman to head a team of experienced professionals qualified to conduct international business, listing and selling commercial properties, land and residential homes.

The team already represents international listings here and in other countries, including Bahamas, Dominican Republic, Nicaragua, Costa Rica, Panama, Mexico, Argentina, the Caribbean and Malaysia. They have also been recognized in the United Kingdom and have been quoted in various real estate publications.

For the past three years, the pair has attended international property shows, and held real estate seminars locally and in other countries that target end users as well as other real estate professionals.

Join Us Friday, June 13th

• DATE: 6/13/2008 TIME: 12:00pm - 12:30pm — Luncheon
• 12:30pm - 1:30pm — Meeting
• COST: $5.00
• LOCATION: Conference Room A
• RSVP: RSVP with teri@sarasotarealtors.com

Please pre-register online at www.sarasotarealtors.com, click on Education, then register for classes

or email your credit card information, expiration date, along with the name(s) of people attending to teri@sarasotarealtors.com.

Sincerely,
Anthony Homer

NEW YORK – May 9, 2008 – Despite a sluggish economy, a credit squeeze and slowing fundamentals, investors this year are plowing money into funds that invest in real estate investment trusts, reversing a long trend of outflows.

A total of $1.23 billion flowed into domestic REIT funds in the first three months of the year, according to a recent research note from Keefe, Bruyette & Woods.

The funds include REIT mutual funds, which invest in a diversified portfolio of REIT stocks; exchange-traded funds, or ETFs; and closed-end funds, which raise money once and offer a finite number of shares.

March marked the third straight month of positive inflows into these funds following a 10-month stretch of outflows that ranged between $150 million to $2.8 billion each month.

“Last year, REITs got thrown out with the financials’ bath water,” said Alexander Goldfarb, a REIT analyst at UBS AG.

Outflows from domestic REIT funds started last March and picked up steam in the summer when the credit crisis gripped the markets after an unprecedented number of homeowners defaulted on their mortgages. REIT stock prices got clobbered in 2007, losing 15.69 percent.

But, so far this year, equity REITs are outperforming the broader markets. The equity REIT index has gained 7.13 percent year-to-date, while the Dow Jones industrial average has fallen 3.4 percent and the Standard & Poor’s 500 index has dropped 4.49 percent.

The top equity performers this year are self storage owners U-Store-It Trust and Public Storage, apartment REITs Mid-America Apartment Communities Inc. and Associated Estates Realty Corp. and office owners Liberty Property Trust and Corporate Office Properties Trust.

Investors now are attracted to REITs’ dividend yields of about 5 percent, which are more appealing than yields on Treasuries, said Sheila McGrath, a senior vice president at KBW. Also, investors are realizing that the sector is less risky than other financial stocks because it’s not as highly leveraged, she said.

Goldfarb also added that REITs’ longer-term leases provide a stable cash flow underpinned by hard assets.

“What people are realizing now is those cash flows don’t die overnight the way they do with homebuilders,” Goldfarb said.

The note also showed that inflows outpaced global fund flows in February and March, the first time since January 2007. Through 2007, inflows in global funds helped to keep inflows for all real estate funds in positive territory.

“When U.S. REITs ran up a lot in ‘07, they looked more expensive on a relative basis to other countries,” McGrath said. “But after their slide, across the countries’ property stocks, domestics looked more favorably priced.”

Copyright © 2008 The Associated Press, J.W. Elphinstone (AP Business Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

The 2004-2007 run up in commercial real estate prices was as big a wave as bankers and lenders had ever seen. And they were all eager to jump on board and ride the crest. They did and rode it well until it crashed ashore last summer and had property prices retreating back into a leveling sea.

Federal banking regulators, which had already started worrying about banks overextending themselves on the commercial real estate wave, are now wading in to assess the damage from the wave’s impact.

The U.S. Comptroller of the Currency, John C. Dugan said this past week that, with problem commercial real estate loans rising, it’s imperative that bank management identify and address problems realistically and that the OCC deal with national banks in a consistent and balanced way.

(Editor’s Note: This is the second of a two-part story examining the state of commercial real estate finance. CoStar Advisor reviewed the first quarter results of more than 75 bank and bank holding companies, read through more than a 300,000 words in earnings call transcripts (the equivalent of more than 225 CoStar Advisor news stories) and culled through several federal regulatory surveys and banking reports. Part I looked at the current state of commercial real estate markets from the lenders’ viewpoint. Part II of the story published here looks at how lenders are and will be responding to market conditions and their outlooks for the coming year.)

The Comptroller said that commercial real estate loans played an outsized role in the banking downturn of the late 1980s and early 1990s, and added that they weren’t anxious to see it repeated.

“Too many community banks today are having too hard a time coming to grips with problems in these portfolios” today, Dugan said. “These bankers are reluctant to charge off obviously troubled loans or even to flag problems to their examiners. While this resistance to recognizing problems at the beginning of an economic downturn may be human nature, it’s not healthy, because denial is not a strategy.”

The Comptroller underscored that the OCC plans to review banks more closely to address problems as they arise.

For clarification purposes, the vast majority of banks treat residential construction loans as commercial real estate lending because that is how federal banking regulators categorize such loans. The vast majority of writedowns, reappraisals and delinquencies in the asset portfolios of U.S. banks are tied to residential construction. And without exception, the outlook for that segment of their business is still dismal.

On the other hand, as CoStar Advisor reported last week, commercial real estate markets were generally reported to be steady or softening in most areas. Still for the most part, Dugan’s message is getting across to banks, which are fairly aggressively beginning to reassess all their assets and address any problems and concerns head on.

Few have been clearer than Don Wilson, chief operating officer of Amcore Financial Inc., on how banks have reacted to the collapse of the residential real estate markets and consequent spillover into commercial real estate. Wilson outlined a 10-point strategy Amcore has followed as market conditions have deteriorated. And for the most part, various pieces of the plan are common across the industry right now.

Amcore Financial:

· Introduced a new risk rating system to provide more detailed information on the conditions underlying its portfolio;
· Reorganized its commercial credit approval process to provide more consistent credit control;
· Increased its reserves to cover more loans of concerns;
· Slowed the opening of new branches to only those that were already in the construction pipeline and terminated arrangements for others;
· Shifted the management of all the residential development loan relationships into a specialty unit with extensive experience in that market and product;
· Added staff and resources to its special assets group to pursue resolution of nonperforming assets;
· Reduced its commercial lending staff;
· Pursued an efficiency review across its organization and reduced overall staff 15%;
· Started implementing a new processing system to improve the accuracy, efficiency and information content of its commercial lending process; and
· Hired experienced commercial lenders to rebuild its commercial lending organization with less dependence on real estate lending.

The other element that has been common to the banks’ response to the credit crunch has been to go out and raise more capital from new investors.

Deloitte Financial Services hosted a seminar this past week entitled, “A Credit Crunch Update: Implications for Financial Institutions.” The accountancy firm said banks are moving through a three-stage cycle:

· Triage: dealing with the most severe problems first;
· Restructuring: Reducing costs, improving processes and reviewing products and distribution strategies; and
· Long-Term Rebuilding: Considering business consolidations or mergers and acquisitions.

This strategy Deloitte suggested would go on until investors have confidence that they can recognize value and begin to trade distressed assets.

That time of trading distressed assets, while it may have already started at some banks, is by no means universal in its appeal to banks and thus the return to normal may be a ways off.

Paul Beideman, chairman and CEO of Associated Banc-Corp. explained the reasoning.

“In this review process that we’ve gone through, we’ve gone back and looked at these loans very very closely and there is really very few of them that I would suggest that we would regret having made,” Beideman said. “It’s good high quality customers that have been in existence for quite sometime that for the reasons that again that are obvious, their prospects have deteriorated. But if we’ve underwritten them well, if the land is at 65% loan to value and we’ve applied conservative general standards to it, okay, it’s a nonperforming loan. But we are not going to take a 40%, 50% charge-off on the thing. We are going to — if there is a charge-off in at all — it’s going to be relatively small and in many cases it’s our hope that it just doesn’t exist.”

“Could we sell them,” Beideman asked. “Probably at some point we could [sell] some of them. But in this environment right now, the losses you are taking are exaggerated because of just the nature of the markets and the demand. And when we see our collateral position, it’s much enhanced over what those levels of alternatives would be.”

Richard J. Johnson, CFO of The PNC Financial Services Group Inc. said, “We continue to hold about $2.1 billion in held for sales loans. Our held for sale commercial mortgage loans are high quality assets that are performing as expected, in fact none of these loans were delinquent in the first quarter.”

“We intended to reduce our inventory in the first quarter,” Johnson added, “but we elected not to participate in the few deals that were in the marketplace. As we believe the fundamentals of these loans are better than what the market is offering today.”

And I love this quote from Robert E. Lowder, CEO of Colonial BancGroup Inc.

“There is a lot of liquidity out there for [bank assets],” Lowder said. “I mean, there’s money everywhere. Of course, they don’t want to pay any reasonable amounts. They want to pay 40 or 50 cents on the dollar. But just remember, these people that put together all these billions of dollars of funds and want to come down here and buy this property for 50 cents on the dollar, they’re not buying it because they think 12 months or 18 months or 24 months from now it’s still going to be worth 50 cents on the dollar. They’re buying it because it’s going to be worth $1.50.”

“So we think that the properties that we have, have good values,” Lowder said, “they have not decreased. The properties that are decreasing the greatest are the Grade C, D and F properties. We think our properties are better than that. So we just need to be careful that we don’t panic and give away properties this year that 12 months or 18 months from now are going to be worth a whole lot more than anybody paid.”

Dominic Ng, chairman, president and CEO of East West Bancorp, said many of his borrowers also are in no hurry yet to sell assets at prices buyers expect to pay in today’s markets.

“Let’s just assume the commercial real estate price will drop because of the illiquidity of the market and because of the media in New York Times, and Wall Street Journal and L.A. Times like to write bad news and keep saying the prices will go down, down, down, and then the prices do go down,” Ng said. “If the price does go down, I don’t think our borrowers need to be in a hurry to resolve it because they have good cash flow, they don’t need to sell.”

That doesn’t mean banks are not selling things - they’re selling CMBS holdings. For example, Wachovia Corp. substantially reduced its CMBS exposure from about $12 billion to net exposure of $3 billion as of the end of the first quarter and took a markdown of $521 million in doing so.

They’re selling branch buildings. For example, John Allison, chairman and CEO of BB&T Corp., said, “We are in the process of considering doing the sale of leaseback on a number of our physical facilities. We haven’t finalized the agreement and that would obviously depend on the pricing being something that is favorable to us. If we are able to execute the sale of leaseback it will increase [earnings per share] about 1 cent this year because of the timing, but the annual run rate going forward will be about 4 cents a year and we hope that transaction will get done in the next of quarters.”

For the most part, while banks go through this extensive review and re-engineering process, there has been little effort to lend new money. Or as Ng from East West put it, “This is not the year that we need to be out there every day and go to golf tournaments trying to solicit new customers.”

No, the whole focus on commercial real estate lending today is to maintain existing relationships - even with single-family developers.

Xandra McKeown, executive vice president of commercial banking at West Coast Bancorp, said, “We will continue to support new projects with our established developers and builders in submarkets that support additional inventory to have liquidity and comprehensive management expertise. We are not pursuing acquisition of new builder clients for single-family residential financing.”

What new deals that are getting done, McKeown said, are small condo projects that are in the process of converting to apartment, due to the lack of sales in the condo market but only with investors who have the liquidity.

Not all banks are sitting still, smaller community banks have seen an opening in the tighter credit conditions.

The “trickle down effect” from the subprime lending mortgage mess may be affecting the market and many communities, but “it’s also actually creating opportunity for financially strong community banks,” said Denny Buchanan, president and CEO of Independent Bank of Austin.

“Community banks, on the whole, did not participate in subprime lending because of the availability of secondary market financing, but the crisis affects our market, since we do lend funds for projects to buy and develop properties or to own a residence.”

“As a result, Independent Bank of Austin and other community banks are getting many great opportunities to be selective in funding solid loans - prudent choices based on sound principals. The current lending environment also allows us to get more equity into each project,” Buchanan noted. “That’s a huge change from even six months ago.”

For the near term, lenders across the nation foresee increasing bankruptcy rates, little or no growth from their customers and more tightening credit, according to the results of last quarter’s Phoenix Management “Lending Climate in America” survey.

And, they don’t think the economic stimulus package will help. An overwhelming majority of lenders (99%) said they believe that the economic stimulus package will have moderate to little impact on the U.S. economy over the next 12 months, Phoenix Management said.

Dale Green, executive vice president and chief credit policy officer for Comerica Inc. put it this way: “I would expect that the next two quarters would be the most challenging. If the markets continue to not rebound a bit, not a lot just a bit, then we’ll continue to see problems throughout the rest of ‘08 and potentially a little bit into ‘09.”

But George L. Engelke, Jr., chairman and CEO of Astoria Financial Corp., sums up nicely the bankers’ viewpoint of commercial real estate markets: “By no means do I see the entirety of America going to hell in real estate.”

Modern, energy efficient, award winning architecture combine for a great work
environment in a central location. Unique building with good signage and excellent
visibility keep occpuancy rates high. Energy efficiency keeps overhead low and CAM
expenditures down.

• American Institute of Architects, State of Florida Deisgn Award of Excellence
• American Institute of Architects, Tampa Bay Chapter Design Merit Award
• “Best Modern Building in Florida”
• 24,872 Building Sq. Ft. / 21,378 Interior Sq. Ft.
• Highly trafficked Fruitville corridor (50,000+ ADT)
• Easy access to and from I-75 (2 miles)

Directions: West on Fruitville from I-75, building is on your right.

Directions: West on Fruitville from I-75, building is on your right.

• Building Profile
• Tenants Floorplan
• Pro Forma - 5 Year
• Phototech World Headquarters - Brochure