NREI – With approximately $700 billion worth of loans coming due on distressed properties over the next four years, transaction activity in commercial real estate is picking up this year, albeit slowly, and is expected to intensify in 2011 and 2012.

Investment capital that had been waiting on the sidelines from mid-2008 and the first quarter of this year is getting back into the game as confidence returns in the form of the market’s stabilizing fundamentals.

“For example, life insurance companies, a traditional source of capital, are back in the market,” says Craig Butchenhart, the president and director of capital services for NorthMarq Capital, a national firm that offers commercial real estate investment banking. “And as more traditional sources come back to the market, there will be available capital to access.”

Many of the loans originated in 2006 and 2007 — the height of the commercial real estate boom — come due in 2011 and 2012. Morningstar, an investment resource specializing in fund investing, believes that will create an environment that fosters asset sales more aggressively than in 2010. To date, 2010 has produced better opportunities for refinancing than outright asset sales.

“Most institutions that we deal with believe that values are fairly stable now,” Butchenhart says. “Confidence that fundamentals are stabilizing and not deteriorating further is bringing these institutions back to the market.”

Of course, available capital is just one aspect of the picture. Financial institutions are lending again, but underwriting requirements remain conservative as stronger cash flows continue to be required as well as longer leases, and the ability of the borrower to pay back its loan.


One surprise that may generate more transaction activity in the near future is the return of the commercial mortgage-backed securities (CMBS) market. Many analysts hadn’t expected the CMBS market to turn around this early after it was considered dead for nearly two years during the recession. Since then, few CMBS-backed deals have occurred as investors and issuers, aware of the creditworthiness risks involved, painstakingly do their homework on these securities.

In June, JP Morgan Chase Commercial Mortgage Securities Corp. issued a $716.3 million CMBS-backed bond, primarily consisting of retail properties, in the second such deal this year.

“There’s a little life in the CMBS market,” Butchenhart says.

There’s significant maturity in the CMBS loan pipeline, and most of those maturing CMBS loans are being refinanced due to low interest rates as they are maturing at rates higher than the current interest rates. If they can’t be refinanced, the CMBS loans are being modified or extended for a period of time as the borrowers await capital.

“As long as those properties have maintained a reasonable amount of leasing, loans can be refinanced,” Butchenhart says.

FORTUNE – Investors have spent years dodging disaster in one area of the markets, only to find their investments coming to a bad end elsewhere. However, there is one sector that has been outrunning the grim reaper since 2007, and it’s the last place you’d expect to have survived so long: commercial real estate. For much of 2008 and 2009 CRE was awash in red ink, and yet it hangs on. Richard LeFrak, chairman of the LeFrak Organization, said at the Milken Institute Global Conference in April, “The failure that we were all anticipating in the commercial real estate market, it kind of didn’t happen. We blinked, it went away.”

The only question now is how long it can keep up the sprint while the ghosts of boom-time leverage haunt the sector, and $1.4 trillion in loan maturities loom three years over the horizon.

There is a sharp disagreement among experts in how things will play out. Some predict foreclosures, loan defaults and a national crisis of disastrous proportions. In that corner is Elizabeth Warren’s Congressional Oversight Panel, which flatly predicted this year that commercial real estate loans are heading for a crash that will bring down small banks, destroy small-business lending and create “a downward spiral of economic contraction,” in her ominous words.

On the other side, investors in commercial properties and buyers of commercial mortgage-backed securities believe that the commercial real estate market will continue to suffer until it hits a bottom, but it will never crash in the way that the residential market collapsed. They believe that commercial real estate will be an example of how a market can take the hits and keep on ticking, that not every spot of trouble results in a crisis, that an industry can actually, somehow, stop a crisis if it acts early enough and has enough support.

Peter Roberts, Chief Executive Officer of the Americas for property giant Jones Lang LaSalle (JLL), put it this way: “We’re not going to see a ‘crash’. We’re going to see a long work-through.” Roberts believes commercial property values are in the process of bottoming out and will get to the ground floor by early 2011.

He credits the government’s support programs in capital markets with reversing the psychology of nervous markets in 2009: “The powers that be are very focused in making sure that we don’t have a crash in the real estate market. That has infused the mindset of investors.”

Investors are making the most of their good luck while they can. There have already been deals of several different varieties that show us their plan for addressing the problem of high-water mark commercial mortgages coming due.

Of them, there’s no better example of temporarily sidestepping the debt monster than Blackstone Group’s clutch move with Hilton Hotels. The PE firm’s $26 billion buyout of Hilton in 2007 — with $20 billion of outstanding debt due by 2013 — is a prime example of the sweaty palms that high leverage deals can cause even savvy investors.

But in April, Blackstone (BX) bought back $1.8 billion of Hilton’s debt and restructured another $2.1 billion to turn it into preferred equity. Blackstone also pushed off the maturities of the remaining $16 billion until 2015, buying itself two whole years of breathing room. Hilton is still debt-laden, but it’s not dead — and hedge-fund investors speak approvingly of Blackstone’s decisions to face its problems early.

The deal has kicked off a quiet trend of what one real-estate investor at a hedge fund calls “mini-Hiltons” — a pending wave of real estate investors seeking to buy back and restructure their own debt to stay alive until the recovery.

In another pattern, auctions for distressed assets are becoming more and more competitive, giving troubled assets quick homes. One of the most notable was the acquisition of Corus Bankshare’s $4.5 billion real estate portfolio, sold for a mere 60 cents on the dollar in an FDIC auction to a group of real estate investors and hedge funds including Barry Sternlicht of Starwood Capital Group, TPG Capital, WLR LeFrak and Perry Capital. The FDIC kept the majority of the portfolio, but gave the buyers zero-percent financing — a sweet deal for any investor.

Since properties have become so hard to buy, many investors have turned with voraciousness to the bundles of securitized loans known as commercial mortgage-backed securities, or CMBS. If anything in commercial real estate stands ready for a reckoning, it is these securities.

Despite CMBS hurtling toward higher default rates, however, investors who have faith in them are practicing some serious compartmentalization. They say that there are only some CMBS — and some tranches of CMBS — that will be hurt. They believe that the highest-rated tranches, rated triple-A, are in no danger.

They also say that CMBS could never create as much havoc as their residential cousins because of their structure: They are made of whole loans that haven’t been chopped up as much in the Wall Street sausage factory, and are based on stronger assets.

The tranches most likely to be hurt, of course, are those with the worst ratings – the triple Bs. These were the biggest victims of lax underwriting standards. According to Commercial Mortgage Alert, the boom years of 2005 through 2007 saw a total of $602 billion in CMBS issuance. (The CMBS written during those three years, by the way, account for a whopping 49% of all CMBS written over the past 20 years.) Those are likely to be the problematic securities. The CMBS written before and after don’t have as much leverage put on them, say investors.

CMBS, however, accounts for only about 20% of the total loan market, according to Jones Lang LaSalle’s Roberts. The bigger danger to the capital markets — and to banks — are speculative commercial loans, like those in construction and land loans. Those aren’t backed by firm assets and are a key part of the reason that many smaller banks have failed in recent years. It is these loans, in particular, that worry Warren and others, and could yet bring a reckoning to CRE.

There is a lot riding on the outcome of commercial real estate’s do-it-yourself salvation. If the sector can escape the same kind of crash that took down residential real estate, then we have a case study in how investors and government can prevent a crash before it happens. If it doesn’t work, however, the economy could be hit again at a moment when it is least able to bear the punch

MetLife Inc., the largest U.S. life insurer, said there are signs of a recovery in the commercial real estate market after property values dropped about 40 percent from their peak.

“We have seen a pick-up in office-leasing activity compared to last year, and hotel occupancies are starting to improve,” Chief Investment Officer Steven Kandarian said today in a conference call. “We believe commercial real-estate valuations have bottomed out.”

MetLife is benefitting from a rebound in its investment portfolio after posting three quarterly losses last year when assets declined. The New York-based company posted first-quarter profit of $835 million yesterday, the most since 2008, as holdings backing insurance policies gained in value.

MetLife has about $35 billion in commercial mortgages and more than $16 billion in securities backed by such loans. Kandarian joins Larry Zimpleman, chief executive officer of Principal Financial Group Inc., in saying the market may be improving.

“Smart capital is starting to queue up” to invest in commercial real estate, Zimpleman said this week in an interview at Bloomberg headquarters in New York. “Prices have now sort of bottomed out and have actually started to slowly move back up again.”

REF: Bloomberg

Consultants say that investors are starting to put faith in prime residential real estate as an asset classes and they regard 2010 as a good year to buy.

Property continues to make up the largest share of high net worth individuals’ investment portfolios averaging 33%, states The Wealth Report 2010 from global real estate consultants Knight Frank and Citi Private Bank.

This mainly due to the tangible and straightforward nature of residential real estate, especially during these uncertain times, the report reveals, with some 71% of high net worth individuals saying 2010 will be a good year for property.

They are interested in property for long term capital growth rather than income and with most property markets experienced a horrendous time during the 2008 global economic crash, investors now see their chance to buy at a low point in the cycle.

For cash rich investors ultra low interest rates have meant bank deposits have looked distinctly unattractive, while the low yields on bonds and volatility in the stock market have given additional pause for thought, the report suggests.

‘Added to this, the impact of the financial crash has not been as hard on the typical ultra high net worth buyer of prime property. This has meant that many wealthy owners of property are again looking for investments,’ says Michael McPartland, managing director and head of residential real estate at Citi Private Bank.

‘The wealth market is relatively insulated. Our clients look for opportunities when everyone else is circling the wagons. Buying becomes opportunistic in a downturn, particularly as people turn to hard assets such as property when other assets experience dislocation,’ he adds.

How to buy has never been more sophisticated with a myriad of direct property investment options, funds and listed and unlisted companies, as well as more complicated instruments,such as derivatives, now on offer, he points out. ‘This allows investors to build up a portfolio spread over asset classes and sectors, as well as risk and reward,’ says McPartland.

For many, residential property remains the most attractive investment, given the dynamics that underpin key cities, such as London, New York and Hong Kong. There is a focus on the very prime areas, says McPartland, which are always in short supply and facing steady demand from buyers and tenants in global centres of finance and culture.

Liam Bailey, head of residential research at Knight Frank, says residential investment makes a lot of sense over the long term for these kinds of buyers. ‘In most locations supply of property either keeps pace or falls short of demand. Most high net worth investors tend to cluster around the best locations in the world,’ he explains in the report.

Key cities such as London with prices up 15% in the 10 months from March 2009, and Hong Kong, up by around 41%, have seen a sharp bounce in prime values since reaching their nadir last year, benefiting from the limits on building, growing demand and sustained investor requirements.

Although this could put downwards pressure on yields, rents are at last beginning to climb, adds Bailey. But there is still uncertainty about short term growth, says Bailey, particularly given the speed of recent growth. He points to the uncertain economic recovery, and the potential for rising unemployment and interest rates, as risks for house price growth.

ref: Property Wire

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

According to a new poll, Americans appear to be slightly more optimistic about the economy than at a similar stage last year.

A CNN/Opinion Research Corporation survey was released Friday morning indicating that 19 percent of the public now says that an economic recovery is underway. A marked increase from previous figures.

“While that’s not a great number, it’s significantly higher than the 12 percent who felt that way in January,” says CNN Polling Director Keating Holland.

Thirty four percent of people questioned in the poll says the economy is still in a downturn. Again, this figure was higher last year at thirty nine percent.

What is even more interesting, is that almost half of the public sample were of the impression that conditions have now stabilized.

The CNN/Opinion Research Corporation poll was conducted April 9-11, with 1,008 adult Americans questioned by telephone. The survey’s overall sampling error is plus or minus three percentage points.

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

As reported by CNNMoney.com

One may be surprised to see that shares of real estate investment trusts, or REITs, are on fire this year. The iShares Dow Jones Real Estate (IYR) exchange-traded fund, which owns about 75 real estate stocks, is up 9% so far in 2010.

There are various types of REITs focusing on different types of properties. And REITs across the board are having a good year.

Hotel owner Host Hotels & Resorts (HST, Fortune 500), which is in the S&P 500, has shot up 25% this year. So have shares of Kimco Realty (KIM), a REIT that primarily owns shopping centers. Office property owner Boston Properites (BXP) is up nearly 15%.

What’s the attraction of REITs in what remains a stormy market for residential and commercial real estate? It’s tempting to sum it up in one word. Yield.

Real estate investment trusts pay at least 90% of their taxable income to shareholders in the form of dividends. Doing so exempts REITS from having to pay federal income taxes.

For that reason, REITs tend to sport eye-popping dividend yields that make them more intriguing than bonds for fixed-income investors, especially in a low interest rate environment such as this.

The yield on the iShares REIT ETF is currently 4.5%. By way of comparison, the benchmark U.S. 10-year Treasury is yielding about 3.9%.

“REITS have been running up a bit as investors chase yield. Individuals that are largely in fixed income are starting to realize that there are better investments,” said Jill Cuniff, president of Edge Asset Management, a Seattle-based investment firm that runs the Principal Equity Income fund.

So the REIT rally makes sense when you consider that owning stocks that consistently pay dividends is a smart strategy for a long-term investor.

According to Ned Davis Research, stocks that steadily grow their dividends have had an average annualized return of 9.3% going back to 1972. That beats the S&P 500’s average return of 7.1% and is far better than the puny return of just 1.3% for stocks that don’t pay dividends.

But there’s more to the real estate run than a hunt for a high yield. Jeung Hyun, principal with Adelante Capital Management, an Oakland. Calif.-based money manager, points out that another sector known for steady dividends — utilities — has lagged the market this year.

Hyun said that even though there are still worries about the current state of the economy, investors are anticipating improvement later this year and in 2011 — and that’s helping to lift REIT stocks.

“There have been expectations of a commercial estate crash. We expect softness but we think some of the concerns about a crash are overdone, she said. “If real estate investors are waiting for a sell-off and huge bargains, they are not going to come.”

But Cuniff said that investors need to be more cautious when looking at REITs since the sector has already enjoyed a solid run. She said investors shouldn’t paint REITs with the same brush and need to focus more on individual stocks.

Along those lines, Cuniff said REITs that own hospitals and other health care facilities could benefit from the recently passed health care reform bill. One that the Principal Equity Income fund owns is simply called Health Care REIT (HCN). It pays a dividend that yields 5.9%.

Hyun said investors that are optimistic that the recovery is for real should be looking beyond defensive areas like health care though.

Because of the prolonged weakness of the economy, there hasn’t been a rush to build new shopping centers, apartment buildings, hotels and offices. That will help REITs since it should keep prices stable, Hyun said.

He said his firm owns shares of Taubman Centers (TCO), a firm that owns shopping centers that yields 4%, and hotel owner Starwood Hotels and Resorts (HOT, Fortune 500). Starwood is not a REIT, however, and its yield is just 0.4%.

Cuniff said her firm is also looking at REITs that can do well in an improving economy. The Principal fund owns Annaly Capital Management (NLY), a REIT that invests in residential mortgages and yields a whopping 14.7%, and Kimco, which yields 4%.

Merger activity could help REITs as well, according to Hyun. He pointed out how General Growth Properties (GGP), a mall owner that went bankrupt last year, has surged following a takeover bid from rival Simon Property Group (SPG).

Another investment group, led by Toronto-based REIT Brookfield Asset Management (BAM), mutual fund company Fairholme and private equity firm Pershing Square are planning to invest more in General Growth to keep it independent once it emerges from bankruptcy.

“General Growth is highlighting the value in real estate,” Hyun said. “The fact that there is a bankrupt company that is attracting significant investor interest is proving that.”

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

The Federal Reserve has held interest rates near zero while also highlighting increased momentum in the US economy’s recovery, during its latest meeting on monetary policy.

The Fed’s nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months.

Kansas City Federal Reserve Bank President Thomas Hoenig said the commitment to keep rates exceptionally low for an extended period was no longer warranted.

It said the US labour market was stabilising, which is a view that is more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was ‘abating’.

The Fed also said business spending on equipment and software had risen ’significantly’. Again, this is a brighter assessment than the one it gave in late January.

The US economy resumed growth in the second half of last year, and expanded at a robust 5.9% annual pace in the final three months of the year.

The Fed has allowed special lending facilities to close as financial markets have returned to normal after the crisis, and it recently raised the discount rate it charges banks for emergency loans to 0.75% from 0.5%. Fed officials stressed the move was in keeping with the settling of financial markets and was not a precursor to efforts to tighten lending conditions.

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

There seems to be many early buds in the recovery of the Real Estate market. Here we have identified two reports from the Real Deal as an example. The first talks about the mortgage industry and the other of the lumber industry. Neither on their own are strong enough to signal that a Spring thaw is imminent but in combination do offer some positive early indicators. Lets hope that they keep on coming to the point where consumer confidence is back towards its previous levels.

Lenders jump back into commercial real estate

February 09, 2010 10:00AM

Despite an anticipated $120 billion in commercial real estate losses between 2008 and 2011, lenders are ready to get back to business. In a Jones Lang LaSalle survey of 60 banks and other financial institutions at the annual Mortgage Bankers Association conference last week, 24 lenders each said they would make between $2 billion and $4 billion worth of commercial real estate loans in 2010. More than half of those surveyed said they were willing to lend $50 million or more toward a single property purchase, up from the $25 million most were willing to lend for a single asset last year. Some lenders were even open to the idea of $150 to $500 million loans, said David Hendrickson, managing director of Jones Lang LaSalle. While banks are still facing substantial losses, most have already set aside reserves or marked down their portfolios to reflect them, and market experts say the opportunity to pick up commercial real estate assets at discounts of 44 to 55 percent off of 2007’s peak prices, as estimated by Moody’s Investors Service, is luring lenders back into the game.

Home improvement retailers see positive signs

February 09, 2010 08:40AM

Following the news that Morgan Stanley upgraded Home Depot stocks, CNBC sat down with two hardline retail experts to discuss what potential gains in home improvement stocks say about the housing market recovery. According to Stephen Chick, managing director of hardline retail at FBR Capital Markets, lumber prices are beginning to rebound — having seen price increases over the last two to four months not matched since 2004, and that could be a positive, though often-underestimated indicator for housing. Michael Lasser, vice president and senior research analyst of hardline retail at Barclays Capital, pointed to an increased demand for appliances. Lasser said it’s too soon to tell whether indicators from stores like Lowe’s and Home Depot mean a full-fledged recovery, but retailers are certainly benefiting from higher transactional volume, stemming from more people moving to new homes and doing improvements and repairs.

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

We are all conscious of the dark cloud of commercial real estate debt which lingers on the brightening horizon – with $3.4 trillion in outstanding debt, $1.4 trillion of which is coming due by the end of 2012— many feel this will spur the next leg in the credit crisis and possibly derail the broader economic recovery.

The situation seems especially ominous given that commercial real estate values are out by up to 40% from market highs and credit markets are only now raising their heads from hibernation. This means indebted owners do not have the ‘get out’ option of disposing the property and repaying their mortgage with the proceeds.

It also makes refinancing difficult. Borrowers have to put more of their own equity into a deal and lenders have increasingly tighter standards. Loan-to-value (LTV) ratios are not only lower than they were at market peaks, but have to be based on the current value of the property, which again is much lower than it was years previously.

However, according to many real estate economists, this fear is largely misplaced. Commercial real estate debt will likely put a dent in the the recovery in the credit markets, but due to a few key factors such as the the limited impact of commercial real estate loans on the overall economy, it won’t bring about the same wave of distress as the housing downturn did.

“As far as the impact of commercial real estate on the overall economy, I don’t think it’s going to be the next shoe to drop,” says Robert Bach, senior vice president and Chief Economist with Grubb & Ellis. “These problems are focused in regional banks and the Federal Deposit Insurance Corp. (FDIC) has a tested method of shutting those down on Friday and opening them on a Monday under the auspices of a bigger bank. These are not too big to fail banks. I don’t see [commercial real estate] as an unmitigated disaster—I see it as a repeat of what happened in the 1990s, but the economy can handle it.”

The FDIC, however, faces some concerns. A recent analysis by the agency’s Office of Inspector General found that during the peak of the real estate market many banks ignored FDIC’s 2006 recommendation that they keep commercial real estate holdings at less than 300 percent of total capital. Meanwhile, after dealing with 100 bank bankruptcies last year, today the agency is facing a deficit for the first time since 1933 and might lack the funds to deal with the potential fallout of a commercial real estate crisis.

In 2009, bank failures cost the agency $25 billion on top of the $20 billion it doled out in 2008. To deal with the money shortage, the FDIC is requiring banks to prepay $45 billion of insurance premiums by the end of this year. The premiums would cover the fourth quarter of this year and all of 2010, 2011 and 2012. Overall, the agency is projecting that bank failures between 2009 and 2013 will cost it $70 billion.
Meanwhile, more than $1.4 trillion in commercial real estate loans are scheduled to mature between 2009 and 2012, including $320 billion next year, according to ING Clarion Real Estate, a real estate investment management firm.

That’s coming at a time when new sources of refinancing remain scarce and valuations of commercial real estate properties are getting battered by weakening fundamentals. In the first half of 2009, the volume of distressed commercial assets grew 122 percent, ING reports, to $138 billion, including $32 billion in the retail sector.

The good news is that total volume of commercial real estate debt is about a third of the total amount of outstanding residential mortgage debt, which stands at approximately $10.9 trillion, according to the Federal Reserve Board’s figures.

Another important factor to keep in mind is that the residential mortgage crisis affected almost every homeowner in the country and so had a devastating follow on impact on consumer spending. Americans had been refinancing their homes and using the proceeds in the high street. By contrast, troubles in the commercial real estate industry might cause damage to banks and large institutions, but will have a limited effect on Main Street, says Clint Myers, strategist with Property & Portfolio Research, a Boston-based real estate research firm.

Any potential damage will also be mitigated by the fact that commercial real estate debt has been largely concentrated on the balance sheets of regional banks, rather than the big national players, and that most of the loans issued before 2005 feature solid underwriting, adds David J. Lynn, managing director with ING Clarion Real Estate.

Today, 54 percent of all commercial real estate loan defaults come from loans sponsored through commercial mortgage-backed securities (CMBS), which were a major source of real estate debt between 2005 and 2007. Loans issued by national and regional banks account for only 12 percent and 11 percent of all defaults, respectively.

That’s not to say that all those commercial loans won’t cause serious problems in the credit markets. As long as banks avoid realizing losses on commercial mortgages, commercial asset values will remain artificially high, Myers says. That, in turn, will likely limit the flow of new credit into the commercial real estate market, leaving some owners cash-strapped.

“The real stress in the system [will be on] the banks,” he says. “The pace at which regional banks fail will probably accelerate from this year to the next. And what it will mean is that there will be very little new lending activity for commercial real estate and it’s going to be very hard to grow.”

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com

The US economy grew at a faster than expected 5.7% annual pace in the fourth quarter, the quickest in more than six years.

The first estimate put Q4 gross domestic product growth at its fastest pace since the third quarter of 2003. The economy expanded at a 2.2% annual rate in the third quarter. Analysts had forecast GDP, which measures total goods and services output within US borders, growing at a 4.6% rate in October-December period.

Growth was boosted by a sharp slowdown in the pace of inventory liquidation, a factor that could serve to mask the strength of the economic recovery. However, even stripping out inventories, the economy expanded at an annual rate of 2.2%, accelerating from the 1.5% increase in the third quarter, reflecting relatively strong performance from other segments of the economy.

Business inventories fell only $33.5 billion in fourth quarter after dropping $139.2 billion in the July-September period.

The change in inventories alone added 3.4 percentage points to GDP in the last quarter. This was the biggest percentage contribution since the fourth quarter of 1987.

In the last three months of 2009, consumer spending increased at a 2% annual rate, below the 2.8% recorded in Q3 when consumption received a boost from the government’s car scrappage scheme.
Consumer spending, which normally accounts for about 70% of US economic activity, has been held back by the worst labor market in a quarter century.

Business investment in the fourth quarter grew for the first time since the second quarter of 2008 as the drag from the troubled commercial property sector was offset by robust spending on equipment and software. Business investment rose at a 2.9% rate.

The growth of spending on new home construction slowed sharply in the fourth quarter to an annual rate of 5.7% from an 18.9% pace in the third quarter. Export growth outpaced imports, leaving a trade gap that contributed half a percentage point to GDP growth in the last quarter.

Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com