Simon makes offer for General Growth Properties

Simon Property Group Inc., the world's largest shopping-mall operator, has put in a $10 billion offer for General Growth Properties in a deal it says would speed up the latter’s trip through bankruptcy court. General Growth filed for Chapter 11 bankruptcy protection in April; while the company has restructured $11.6 billion in mortgages on its malls, it has do the same with $3 billion of mortgages and pay $7 billion in unsecured debt with either cash or equity. According to information in The Wall Street Journal, Simon’s offer would give creditors about $7 billion in considerations by providing a 100% cash recovery of par value plus accrued interest and be divided to holders of various debt and securities. General Growth shareholders would receive more than $9 a share, including $6 in cash plus assets valued at more than $3 a share. Simon would also offer company common shares instead of cash to General Growth holders interested in owning Simon stock. Secured debt on General Growth's portfolio would remain in place. Simon Property's stock opened Tuesday at $72.94 per share.

Ascension, Livingston home sales up in January

The number of houses sold in Ascension and Livingston parishes in January was higher than what was recorded the year before. There were 73 houses sold in each parish, according to figures from the Greater Baton Rouge Association of Realtors Multiple Listing Service. In January 2009, there were 64 homes sold in Livingston and 63 in Ascension. Ascension even saw a modest increase in the average sale price, up from $203,016 in 2009 to $203,400 in January. Livingston saw a significant drop in average sale price, down to $148,587 from $175,459 in January 2009.

MLS home sales were down 16% in East Baton Rouge, from 242 in 2009 to 203 in January. The average sale price went up, from $194,209 to $195,101. In the category that includes MLS sales in parishes such as West Baton Rouge, Iberville and the Felicianas, there were 22 houses sold in the first month of the year, compared with 25 in January 2009. The average sale price rose to $144,984 from $105,076 the year before.

Overall home sales were down 6%, from 394 to 371. The average sale price was down 1%, from $186,916 to $184,610.

Habitat Home & Garden ahead of last year's rental pace

Booth rentals for the Habitat Home & Garden Show are running ahead of last year's pace. The event, set for March 13 and March 14 at the Baton Rouge River Center, is on track to bring in 250 booths, says Denise Emmons, director of special events for the Capital Region Builders Association, which sponsors the show. "We're trying to educate the public," Emmons says. "If builders are not building and remodeling isn't happening, the economy shuts down," she says. Apart from gathering the booths, which showcase all sorts of home products, the event will feature seminars on a variety of topics, from protection from contractor fraud to outfitting outdoor kitchens. The show will be held from 9 a.m. to 7 p.m. March 13 and from 10 a.m. to 6 p.m. March 14. Admission is $7 for adults. For more information, click here.

Capital Region foreclosures few in 2009

The 2009 foreclosure rate in Baton Rouge ranks among the lowest 25% for U.S. metro areas, according to a new report. Baton Rouge had the 157th highest foreclosure rate among 203 U.S. cities, according to RealtyTrac, which follows the market for seized homes. One out of 121 homes in the Capital Region was involved in the foreclosure process in 2009, a 139% jump from the year before. RealtyTrac warns the actual increase may be due to improvements or changes in reporting techniques. Three other Louisiana cities had lower foreclosure rates than Baton Rouge: Shreveport was ranked 163rd, with one foreclosure per 140 homes; Lafayette was 170th, with one foreclosure per 183 homes; and Houma-Thibodaux was 193rd, with one foreclosure per 363 households. Nationally, the foreclosure rate averaged one for every 45 households. Las Vegas and Fort Myers, Fla., were the two weakest markets, with one out of every 8 homeowners facing foreclosure during 2009.

Poll: EBR home construction about the same

Thirty-eight percent of people who responded to a Real Estate Weekly poll say the pace of residential construction in East Baton Rouge Parish hasn’t changed in the past three months. Thirty-two percent of people who took the survey say that homebuilding locally has slowed down, while 25% say it has picked up; 5% are unsure. About 100 people participated in the survey.

This week's question: How would you best describe the market in the Capital Region for homes under $300,000?

No Cook this week

Tom Cook is off this week. His column will return next week.

Brian Andrews: Concession versus accommodation

I recently participated in a panel discussion with bankers from across south Louisiana and representatives of their primary regulatory agencies. And while this might sound like a snooze-fest more boring than a Tom Cook Trends presentation, it really was great, with lots of good information coming out of lively discussions.

An overall theme of the discussions concerned what bankers could and could not do when renewing an existing commercial real estate loan without being criticized by the examiners. "It depends," say the examiners, "on the reason for the extension and the terms under which the extension is made." If the renewal is done at market terms without duress on the part of either side, it would be an "accommodation" to the customer, and there would be no criticism. If the renewal is done at other than market terms and the lender has the impression that there was no alternative but to extend the loan, there is the potential for a "concession" requiring a few more questions.

If the lender extends the loan without consideration of the project cash flow or the support of the guarantors and simply kicks the deal down road at the same terms as an "extend and pretend" loan, you can bet the bank will be criticized. If the lender considers cash flow and guarantor support and adjusts terms while protecting the bank's interest, potentially including new collateral or other support, the bank would probably not be criticized. The loan would still be subject to criticism, and a downgrade would probably be warranted; but those are internal matters for the bankers.

The regulators wanted to make it clear that they encourage lenders to work with borrowers and maximize the chances for recovering outstanding loan balances. Their requirement is that any extensions of maturities be done in a thoughtful manner that recognizes risk and appropriately structures the loan.

More from this panel discussion next week.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: Report says Capital Region home values drop 4.3% ... Upscale restaurant coming to Shaw Center ... Preis re-lists Spanish Town property

In line with national figures: Home values dropped 4.3% in metro Baton Rouge during 2009, according to a new report from an online real estate marketplace. The Zillow Home Value Index, a median valuation for neighborhoods and cities, gave a reading of $180,000 for the Capital Region, down from $188,000 at the start of the year. That result is about consistent with Zillow's national average for home values, which fell 5% during the year to a median price of $186,200. Home values in some local areas tracked by Zillow saw increases during the year: Plaquemine home values were up 43%, to $129,900; values in the Westminster neighborhood in Baton Rouge were up 31%, to $210,000; and the community of Killian in Livingston Parish saw values go up by 10%, to $285,000. Old Jefferson and Gardere saw double-digit percentage drops in home values.

More downtown dining: An upscale restaurant is set to open in the old Brunner Gallery space in the Shaw Center for the Arts, says John Spain, executive director of the Baton Rouge Area Foundation. Spain, who made the announcement last week at a preview event for the Manship Theatre, would not reveal the name of the restaurant, but says the hope is to have the enterprise running within 90 days.

Controversy redux? Richard Preis’ 1.7-acre lot in Spanish Town is officially back on the market with an asking price of $4.07 million, or $2.93 million per acre. That’s virtually unchanged from what Preis was asking for the property last year, when he ignited a firestorm of controversy in the historic neighborhood by announcing plans to sell the land to David Slaughter to develop an apartment complex. After that deal fell through, Preis said he was continuing to keep all options open. He echoed that view in a recent statement: “All options on the property are open. I might build, I might sell.”