Sunday Summary: Aby Rosen Opens Up on Chrysler, Amazon and More

Actions speak louder than words, and while Aby Rosen had been largely silent in the press for a while, he certainly hasn’t been quiet in his real estate dealings.

Some of it has been good, like refinancing the Seagram Building for a worthy $1.2 billion.

Some of it was not so good, like getting embroiled in the Chrysler Building, which has what is probably an unworkable ground lease with Cooper Union and is in need of a seriously expensive renovation.

Some of it has been very, very good — like selling 522 Fifth Avenue to Amazon in nine days for $450 million.

But after much action in the last 18 months, this lion of the industry has a lot to say. He sat down with CO for the cover story last week.

Rosen was the perfect exemplar of our Midtown Issue, which also included a story about the remaining garment businesses fighting the push for residential conversions in the Garment District, and another one about the fact that there’s actually a bit of a drought for premium Class A office space in the Plaza District.

To wit, a number of the city’s most famed developers have been quietly taking steps to get to work on some seriously spectacular real estate the moment they lock an anchor tenant into place.

All three are worth a nice, long read this Sunday.

Earn this

We’re in the thick of quarterly earnings season, and there were a lot of big calls last week.

Despite the fact that in July, Alexandria Real Estate Equities scored a monster, 466,598-square-foot lease at Campus Point in San Diego, the largest life sciences landlord in the country saw funds from operations drop.

But this was a long time in the making, with every Tom, Dick and Harry trying to get in on the life sciences space.

“A very low interest rate environment went along with that,” said Alexandria Chairman Joel Marcus on the earnings call, “which incentivized really foolish speculation by financially motivated real estate companies, and their even more foolish capital partners. This brought an unwanted, unnecessary oversupply of many of the innovation submarkets, which had never happened in this real estate niche before. But they’re learning painful lessons that this real estate niche is unique and different from all others.”

AvalonBay Communities’ third quarter was also more middling than one would have expected.

“Apartment demand has been softer than anticipated this year,” said CEO Benjamin Schall on AvalonBay’s earnings call, “which we attribute to the reduced job growth backdrop with related factors such as higher macroeconomic uncertainty, lower consumer confidence, and a reduction in federal government hiring and funding.” This was compounded by repairs and skyrocketing insurance costs.

But… revenue increased by 2.3 percent, and AvalonBay has around $3 billion in liquidity — which ain’t half bad.

And that might have been the worst of it. Many of the other calls were pretty upbeat.

Net operating income rose modestly (as did visitors to the Empire State Building) for Empire State Realty Trust, and, while leasing was down from the second quarter, it was due to the fact that the portfolio doesn’t have much space left to rent. Which is a pretty good problem to have.

And it’s not like ESRT didn’t have good leases, expansions and renewals — not to mention at least one good place to grab sushi — to gush over.

BXP got a small but potent 1.4 percent bump in revenues over last year’s third quarter (beating expectations), bringing its tally in at $871.5 million, and boasted 1.5 million square feet in leases.

At Equity Residential, revenue grew to $782 million (it was $748 million in the second quarter), which was about $3 million more than expected.

Cushman & Wakefield saw a 9 percent increase in leasing revenue (up a point from the second quarter) and an 11 percent increase in revenue from last year’s third quarter, up to $2.6 billion.

“This is a real strong point for us leasing-wise, particularly with larger deals constituting a 40 percent increase year-over-year in the pipeline of what we’ve seen,” said CEO Michelle MacKay. “Leasing volume is really on track, very importantly, in both industrial logistics and office, and our clients are moving to better quality space. They are paying more rent for it, and we’ve seen a big valuation bump in those leases. It’s just a big area of strength for us.”

Data center developer Equinix reported $2.3 billion in third-quarter revenue (a 5 percent rise from where it was last year).

And Blackstone Mortgage Trust had impressive news — because it’s Blackstone Mortgage Trust. Namely, $7 billion in originations, loan acquisitions and net leases before the end of the year.

But the thing that really knocked our jaw to the floor (and which we haven’t quite been able to lift back up since) was the Invesco earnings call where they bandied about their assets under management.

It’s $2.1 trillion.

That’s considerably more than the GDP of Spain. (Not even Dr. Evil could conjure up such a sum when he was holding the world hostage.) We almost couldn’t even pay attention to what Invesco did to earn all that filthy lucre, but you’re more than welcome to read about it here.

Not earnings, but still pretty important

Oh, yeah. The Fed cut interest rates.

Not by a ton, but nevertheless the benchmark interest rate was lowered by 25 basis points, bringing short-term borrowing rates below 4 percent for the first time in three years.

And activity was certainly robust.

Brookfield closed on $1.3 billion in CMBS refinancing for 660 Fifth Avenue. (And if that didn’t convince you Brookfield was busy, the company also filed plans with New York City to convert floors four through 13th floors at Four Manhattan West into residential housing.)

Gary Barnett tipped his hand on the old Hotel Wellington, filing plans with the city for a 71-story mixed-use tower. (Which is a lot bigger than what Extell originally proposed.)

In Southern California, Bridge Logistics Properties just dropped $109 million on two industrial properties in the City of Industry totaling 450,000 square feet.

And Carmel Partners spent $141 million on a 244-unit apartment complex in Marina Del Rey from Nuveen — which was a big haircut for the seller.

But losses are not so uncommon in the Southern California real estate market these days. Irvine Company is seemingly exiting the San Diego office market, selling One American Plaza to Saca Development for $120 million — which is less than half of what Irvine paid for it ($300 million) back in 2006.

If the Irvine folks are willing to drive to Pacific Palisades, they can drown their sorrows in a sea of calories now that Rick Caruso announced he is teaming up with restaurateur Nancy Silverton to anchor Palisades Village, the shopping and dining project slated to open next year in the community that had been hit so bad by fires in January.

See you next week!