New York City Tri-State Area: Data Points – Where & How the Trades are Happening

 The investment market held its collective breath late last week as the 10-year US Treasury touched 4% before settling at 3.79% on Friday. The sharp upward movement of the 10-year was a reminder of how important debt is to the overall economic recovery and our business in particular. Over the past twelve months, we’ve seen the continuation of a number of debt trends that are shaping the deals that close today: assumable debt that drives transactions; regional lenders filling a lending void for smaller (sub-$25MM) deals, and Fannie & Freddie drawing buyers to multi-family with attractive first mortgage financing.

The potential for out-sized returns created through in-place debt is helping to make larger purchases possible, as we experienced with the sale of Corporate Center last week, a 1,046,811± SF multi-headquarter office campus located just off I-84 in Danbury, Connecticut. Constructed as the Union Carbide World Headquarters, Corporate Center is primarily leased to major credit quality tenants including Boehringer Ingelheim, Praxair and Honeywell, and was 62% occupied at the time of sale. The property’s $72.4 million price was driven, in part, by existing short-term financing that yields a nearly 20% first-year cash-on-cash return based on the in-place NOI. The amenity-rich headquarter property and strong in-place financing made Corporate Center an attractive investment.

The Corporate Center transaction also highlighted something we’ve discussed in the recent past on this blog: the reemergence of the private buyer. Patiently waiting on the sidelines for the past few years, the private buyer is back and bidding more aggressively.

We cover this and much more in our team’s Summer 2009 newsletter.