Kearney Construction, one of the oldest, largest and most respected developers in the State of Florida, filed Chapter 11
Source:kearneydev.com
bankruptcy today. We never intended to make this blog a corporate obituary site, but, unfortunately, we have had to give a fair share of our Internet real estate to discuss these issues of late. In just the last six months, we have seen venerable companies such as Opus, Heidt, GVA Advantis and now Kearney, one after another, file bankruptcy or close their doors. It is not surprising really that this is happening, but all of my professional life, I have known nothing but these industry stalwarts dominating the local development scene. The development and building industry in the Tampa Bay area will eventually emerge from its current morose state, but the landscape will be markedly different when it does.
Source: Tampa Bay Business Journal
Kearny Construction Co., LLC, one of the oldest and largest site developers in the Tampa Bay area, is seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
The company, founded in 1956, estimated its liabilities and assets at $10 million to $50 million in its bankruptcy petition filed Wednesday.
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Commercial Real Estate Opinions
This is an interesting piece on the equity markets from today. Tony Dwyer of FTN Equity Capital and Lee Munson of Portfolio Asset Management finished their interview talking about the commercial real estate market. Granted, they were discussing the equity market surrounding REIT’s, which usually leads market fundamentals. Regardless, the two made points about the market that we have discussed in this forum. In a nutshell, here were their thoughts (you can click on the picture to watch the entire piece. They begin the meat of the real estate discussion at the 3:20 mark of the video):
- REITs and Institutional buyers make up a significant portion of all real estate in the market
- Yes, refinancing with banks is a challenge….BUT, the REIT’s don’t necessarily have to worry about refinancing. Their stock prices have risen quite a bit and they can access equity through the markets to re-balance their debt to equity ratios.
- The two analysts cited Boston Properties as a REIT that took advantage of the current market price to recently access more capital.
- The negativity is already priced in to the market
- The US Government has said that it will intervene in markets that are not functioning properly. The government will not allow the Commercial Real Estate market to take the banking system down.
I would add to their argument that institutional buyers have written down their fee simple real estate assets substantially and with the rise in the stock market are potentially significantly underweight real estate according to their investment policies. They could very well be looking to increase their real estate holdings in the near term.
In the end, the market is profoundly complex and resilient. In spite of all the negative press surrounding commercial real estate of late, this market may not behave they way many of the pundits are predicting, with a massive crash that jeopardizes the foundation of our financial system.
What do you say?
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This is an interesting article from Asset Preservation, one of the largest Qualified Intermediaries (QI) in the Section 1031 Exchange market, about a court ruling on bankrupt QI, LandAmerica. In summary, the bankruptcy court recently ruled that the funds designated for exchange by one of LandAmerica’s former clients were to be included in the LandAmerica’s general assets to be distributed to creditors. This is HORRIBLE news for any exchanger that had funds with LandAmerica. The chances of these exchangers ever seeing their funds again after creditors, attorneys and the courts receive their distributions are not very good. We certainly understand the logic of the court’s ruling. In fact, the IRS code and subsequent rulings on ownership of funds is quite clear that the QI owns the funds and the funds are not a “for benefit of” or “Trustee” relationship. However, the ruling is more cold water in the face of a market that is already reeling from the worst real estate environment in a generation. (read more about it from Asset Preservation)
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