The Wall Street Journal reports:
Some of the world's biggest real-estate investors have lost their gumption.
"Having been hammered by boom-era plays in risky "opportunity" funds that speculated in new developments, they now are flocking to "core" funds that generally feature low leverage, well-leased buildings and stable returns. The trend has effectively split the real-estate market: Values of mature, well-performing properties are increasing, while turnaround situations continue to suffer."
Separately, and somewhat contradictory was the following:
"Jamestown Properties, an Atlanta firm that manages real-estate funds held by thousands of largely German investors, made headlines last week when it was reported that Google Inc. was considering buying a Manhattan office building from a Jamestown venture with a price tag that could hit $2 billion.
But also worth noting is a building that Jamestown is buying: a two-million-square-foot former store and warehouse in Atlanta built in the 1920s by a predecessor to Sears Holdings Corp. Jamestown is planning to redevelop the building into a mixed-use property with rental apartments, condos, retail and office space.
The two deals reflect a strategy at Jamestown that is worth paying attention to given that the firm has been remarkably prescient in its 27 years of buying and selling U.S. commercial property. Jamestown's decision to put the 2.9-million-square-foot building at 111 Eighth Ave. in New York on the block reflects the view of Christoph Kahl, Jamestown's founder, that investors are willing to pay up for core office property because there is a scarcity of it on the market.
Mr. Kahl, 56 years old, who started his career at a German real-estate syndicator, founded Jamestown in 1983. Mr. Kahl said he expects to see more buying opportunities as the values of prime U.S. office towers fall in the next year or two, because he predicts the market will be flooded with office properties as owners are pressured by rising interest rates and lower rents, as well as the expected supply of distressed properties coming to market..."
