AMERICAS NEWS: Family values

After starting 2010 the way Tishman Speyer did, one might expect the New York-based firm to be in a state of semi-hibernation, licking its wounds while it waits for the US real estate market to recover.

Since handing back the keys to the massive Manhattan multifamily complex Stuyvesant Town and Peter Cooper Village in January, however, Tishman has remained fairly active, completing workouts, raising new capital and looking for new deals. 

Town and
Peter Cooper

Last month, the firm announced it had reached an agreement with lenders to restructure a reported $1.4 billion of debt secured by five downtown Chicago office properties. The deal enabled Tishman to meet its obligations and “complete all leasing and capital projects” on the five properties, managing director Casey Wold said in a statement. Wold added that Tishman would continue to pursue real estate ownership and operational positions in Chicago for “many more years”.

Just a week later, Tishman struck again by investing $700 million of equity in a portfolio of 28 Washington DC-area office buildings, paying down $600 million of debt and providing $100 million of working capital.

In an interview with PERE, Tishman president and chief executive officer Rob Speyer said the DC investment was a “difficult decision” but an important one for the firm. Brookfield Properties reportedly acquired about half the DC-portfolio’s debt at a discount and had launched foreclosure proceedings in April.

“Whenever you infuse new capital into an existing deal, you have to look at the investment as a brand new transaction and apply the same rigour to that decision,” Speyer said. “This was a portfolio that we wanted to continue to add value to and enjoy the benefits of ownership and eventually the benefits of the investments we’ve made. We think Washington DC is one of the best office markets in the world, and we think this is the best portfolio in that market.”

Whenever you infuse new capital into an existing deal, you have to look at the investment as a brand new transaction and apply the same rigour to that decision.

Tishman Speyer president and chief executive officer Rob Speyer

Tishman acquired the 28 properties, formerly known as the CarrAmerica portfolio, in 2006 for an estimated $2.8 billion. The DC office market, Speyer said, has attracted as much institutional interest from a capital markets perspective as any market Tishman has seen.

Although Speyer said his firm has a “great deal of leasing to do” – and that this would be their first priority – he added that Tishman had a “flexible” outlook with regards to the DC portfolio, and underscored the firm’s commitment to the US capital in the long term.

Since the beginning of the year, Tishman has raised more than $2 billion of equity for investments in cities such as Washington DC and Chicago, with an additional $2 billion of existing capital available for new deals.

“We have been aggressive in looking [at deals] but patient in pulling the trigger,” Speyer said. “We’ve looked at dozens of deals around the world, we just haven’t seen many new deals that are compelling. I can’t say there are very many deals that we wish we had done.”

While Speyer submits that Tishman has “not been sellers” over the last year – excluding a “couple” of assets in Brazil – he said the firm was putting a “handful of assets” on the market in the US and Europe. Other areas in which Tishman has shown interest include India, where it is developing a 400-acre integrated township and a 2.5 million-square-foot office campus in Hyderabad. Tishman is also in China, where it has a Shanghai office for development and investment purposes. 

“We’re very happy that a good deal of our business is in China, India and Brazil because we’re particularly optimistic about those markets,” Speyer added.

Despite Tishman’s rocky start to the year, and the general anxiety felt by all real estate investors regarding when the US market will make a full recovery, Speyer reinforced the firm’s positive outlook. “We’re definitely optimists about the future,” he said.