Moody’s: CRE Prices Increasing $$

• Posted by ToddSullivan
• on February 22nd, 2010

Is David Simon out there????

Now, I will admit that two months does not a turnaround make. That being said, one has to assume that those players involved in the market now how the first few months of 2010 has looked.

It also would explain GGP’s outright dismissal of Simon’s (SPG) bid, Simon’s near panicked response to it and the markets reaction to the whole process.

If CRE market participants are seeing prices rebound then GGP is correct in demanding more for equity holders, Simon’s response makes sense as everyday that passes means higher prices for GGP’s assets and the market is correct is bidding the stock above SPG’s offer as it is simply too low for the quality assets in GGP’s portfolio.

Moody’s says US commercial real estate prices increase 4.1% in December US commercial real estate prices as measured by Moody’s/REAL Commercial Property Price Indices (CPPI) increased for the second month in a row in December, rising 4.1%. It was the largest month-over-month increase in the nine year history of the CPPI and followed a small, 1% gain in November. The volume of transactions also rose in December, as is typical for the end of the year. Overall, 716 transactions totaling $9.0 billion were recorded in the month.

Moody’s is uncertain whether the price increases represent passing the bottom of the market or are only the volatility of a market in transition. “Although we are unable to conclude that the bottom to the commercial real estate market is here, we do believe that the period of large price declines is over,” says Moody’s Managing Director Nick Levidy. “We will need to see data from the first few months of 2010 to develop a better picture of where things stand.”

As of the end of December, prices are down 29.2% from a year ago and 39.8% from two years ago. They are 40.8% below their peak values.

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