By way of a plugged-in tipster and the Wall Street Journal, Tishman Speyer is contract to sell 550 Terry Francois Blvd. (a.k.a. Gap’s outpost in Mission Bay) for $136.5 million.
Tishman paid $173.1 million for the 282,773 square foot, fully leased (through 2017), and “state-of-the-art” building in 2005. Call it a 21% drop below 2005 values (versus peak).
∙ Australian Investors Feel U.S.-Office Pinch [Wall Street Journal]
remember, there were 3-4 yrs rent income off this (gap signed a full-building lease at peak rates prior to 2005, and did not move old navy in until later) — and a “12 year” lease (2005-2017) is worth far more than a “7 year” lease (now-2017). pop in cap rates notwithstanding, of course
More from the WSJ on the woes of Tishman:
http://online.wsj.com/article/SB125547827547583747.html
Does anyone know how you can find out when properties like this are for sale? I’ve never seen this on the MLS or anything
Prices paid continued to rise until early 2007, and office sales values will show drops of 30-40% when assets are sold over the next year.
considering the sharp drop in rents in SF — from $60 to $35 psf and still falling, the rise in vacancy from 10% to 20%, and the rise in cap rates of at lease 150 basis points, tishman did well on this sale.
Very interesting WSJ article re: Tishman. I have to wonder where else they might be in trouble.
Whew, it’s a good thing Tishman has “deep pockets” as people have pointed out on this site over the years. Otherwise one might worry a little about carrying costs at The Infinity, their covering HOA equivalents over the years it will take to sell out and their ability to cover any major issue should one arise.
Tishman Speyer (and every other company that used big leverage on big deals is in trouble). No one has pockets “deep” enough to save the Stuy Town deal in NY since it is bleeding about $1mm a DAY…
The courts ruled earlier this year that many of the Stuy Town deals have to be put back under rent control, and with the loss of jobs in Manhattan the red ink under the current debt could go as high as 1/2 a BILLION a year…
http://stuytownluxliving.com/
andyc:
it’s funny you bring up “deep pockets”
I remember back in 2007 when I was constantly told by some socketsiters how Tishman and Richard Ellis (for ORH) had “deep pockets” and thus there could never be a problem
then I looked into Richard Ellis (and CBRE their investment arm) and found some cracks.
never bothered with Tishman at the time.
Former Apt Broker is correct: almost all of the big developers who relied on debt/leverage are facing serious headwinds.
commercial mortgages are a nightmare and will be for some time.
it is one of the many “next shoes to drop” in the green shoots economy.
“It’s funny you bring up “deep pockets”
I remember back in 2007 when I was constantly told by some socketsiters how Tishman and Richard Ellis (for ORH) had “deep pockets” and thus there could never be a problem”
Ex SF-er – Although I usually agree with you, I think most of the ‘deep pockets’ commentary was about Tishman as opposed to CBRE. From what I understand the developer at ORH recently announced to homeowners that he has paid off all outstanding loans on the building. As a result, there is limited pressure to sell the remaining 20% of inventory, most of it on higher floors. This is definitely positive for existing owners. Contrast this with the issues for Tishman which explain why they needed the fire sale at the Infinity earlier this year. However, despite the revenue generated from those 30% discounted units, Tishman probably still has to relinquish their ‘crown jewel’ in NYC, and who knows what else may follow.
actually, the “deep pockets” arguments were about ORH and CBRE investors, specifically in regards to whether or not they would build ORH tower 2.
My contention years ago was that ORH tower 2 would not be built (or delayed severely). Others said that I was misinformed because CBRE investors (and Ullico) had deep pockets and could finance the entire thing by themselves without any problem.
thus, I dug into CBRE and CBRE Investors as well as the other financial parties (Ullico is private so can’t do digging).
you can read the old thread here:
https://socketsite.com/archives/2008/03/the_straight_scoop_on_whats_up_with_one_rincon_hills_to.html
you can read this post of mine on that thread specifically:
Posted by: ex SF-er at March 9, 2008 8:21 AM