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7.19.2006
It’s a mad, mad, mad, mad world: or at least some developers think so.
Commentary by Joe Caccamo:
Case in point: I recently secured an all-cash offer with a 21 day close – at a 5.25% Cap, on a Starbucks deal in the Inland Empire in Southern California. And the developers rejected it! We’re talking about an offer, a 5.25% cap, all-cash, 21-day close offer: before they even completed construction and listed it. They claim that several brokers, (including the one that’s going to get the listing now that my deal didn’t make it) have told them they should list at a 4.5% or 4.6% cap in order to achieve a 5% cap....go figure! I'm dumbfounded. You can’t finance a deal that’s more than $1,000 per square foot, so we’re talking about a pretty limited pool of all-cash buyers who have locked themselves in a cryogenic freeze machine for the past six months (while interest rates and cap rates have spiked 60 bps) and who have money to incinerate like Jay-Z in St. Tropez! Not too many characters like that around anymore … at least I don’t think so! I will show up at ICSC Palm Springs this fall in a gorilla suit if they do better than a 5.25% Cap. You heard it here first!
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