3rd largest REIT raising $1 billion vulture fund

Vulture funds are starting to emerge to take advantage of the current and future drops in commercial real estate

Vornado Realty Trust, the third- biggest U.S. real estate investment trust by market value, is trying to raise $1 billion to invest in real estate assets, according to a person with knowledge of the fundraising.

Property investors including REITs are raising money from stock investors and through private funds to take advantage of falling real estate prices as debt financing becomes scarce.

Vornado, which owns mainly office and retail properties, is one of about 50 REITs that raised a total of $15.7 billion from equity sales through June 26, according to the National Association of Real Estate Investment Trusts, the trade group based in Washington. Vornado completed a $741.8 million stock sale in April with proceeds earmarked for cutting debt and making acquisitions.

U.S. commercial real estate values fell almost 23 percent through March 31 from the peak in October 2007 as credit dried up, Moody’s Investors Service said May 18.

Hey Vornado, I know a few projects in San Francisco you might be interested in (i.e. Turnberry's lot on Lancing Street).

SOURCE: BLOOMBERG

Turnberry calls it quits on SF

As reported last month here on HighRiseSF, Turnberry had been shopping their lot on Lansing Street, looking to exit the SF market after an ambitious plan to build super luxury condos. Well, now San Francisco Business Times confirms that Turnberry will be packing up and heading back to Miami:

Rincon Hill developer Turnberry Associates has canceled its 40-story deluxe condo tower at 45 Lansing St., and asked the city to refund an $8.4 million affordable housing fee it paid when the building permit application was filed in 2007.

In a letter dated May 4, land use attorney Andrew Junius said the building permit for the 227-unit tower “will be withdrawn immediately by the project sponsor.”

The cancellation is a significant blow to the future of highrise development in Rincon Hill and other downtown neighborhoods. Turnberry bought the property in September, 2006, near the height of the market, paying $30 million, or $130,000 per buildable unit. At the time Turnberry President Bruce Weiner told the Business Times that the project would cost $230 million to $240 million and would be the most upscale development Rincon Hill has seen, with “exotic marble baths, Italian Snaidero cabinetry, Gaggenau cooking appliances, Jacuzzi hydrotherapy tubs with built-in TVs, individual security systems and 12-foot penthouse ceilings.”

SOURCE: SF Biz Times

Turnberry lot up for sale

According to Socketsite, Turnberry is shopping their lot at 45 Lancing. The ritzy builder, famous for its projects The Residences at MGM Grand in Las Vegas and Fontainebleau in Miami Beach, said in September 2006

"We have big plans for California overall, and San Francisco fits our model. We like world-class cities and San Francisco is certainly one of them."

So either San Francisco is no longer a world-class city, or Turnberry is no longer a world-class builder. Which do you think it is?

The implications: likely no new building at 45 Lansing for 5-10 years, and extremely low odds that once developed it will be the uberluxury product Turnberry (and neighbors) had envisioned.

For those of you looking forward to the ultra-luxurious finishes Turnberry was promising, you'll have to settle for the opulence of Russian Hill and Pacific Heights instead.