REBusinessOnline

REAL ESTATE COMMUNITY COPES IN AFTERMATH OF HURRICANE SANDY

NEW YORK CITY — As the remnants of one of the largest storms to ever strike the East Coast dissipates, the full scale of the damage left in its wake is becoming apparent.

In New York, Hurricane Sandy crippled mass transit as its vast network of subways were halted by flooding. Subways started running again in much of New York City on Thursday. However, traffic at bridges remains backed up for miles and commuters are waiting in massive lines for buses.

In New Jersey, large swaths of the coastline lay in ruins and all 12 of Atlantic City's casinos have been shuttered for several days. Tony Rodio, president of the Casino Association of New Jersey and CEO of the Tropicana, told the Press of Atlantic City that he estimates the resort towns' dozen casinos are losing $4.5 to $5 million per day just from gaming revenues.

With financial losses mounting, casinos are anxiously awaiting word from Gov. Chris Christie about lifting the evacuation order.

The total damage from Hurricane Sandy could run as high as $50 billion, including property damage, lost business and extra living expenses, according to the forecasting firm Eqecat. That would make it the second-costliest storm in U.S. history after Hurricane Katrina.

Matthew Harding, president of Plainfield, N.J.-based Levin Management, which manages 95 retail properties on the East Coast, says most of the centers went dark following the storm, including Levin's office. “Some of the shopping centers were operating on generator power and stayed open as long as they could.”

Levin's property managers have been in the field tallying damage. So far, they have not reported significant structural issues. Harding adds that while there's no way to prevent the impact, the company did have an emergency plan for restoring communication with tenants. Along with property managers surveying the damage, the company has contacted its local network of general contractors to provide inspections.

“We have signs blown out and other related issues. We are already working on getting those fixed,” he says.

The hurricane's aftermath has also caused massive lines at New Jersey's gas stations, some as long as three hours, says Harding. With no power, many gas stations remain closed.

Many of Levin's properties have regained power and the company's Plainfield office is operating on a generator. Since employees don't have access to phone or Internet service, some are using their cell phones to access the web. The company is using social media to provide updates on sites such as Facebook and Twitter.

“We've also set up a Gmail account as a method for our tenants to get in touch with us for any issues,” says Harding.

Earlier this week, Jason Lail, manager of real estate research at SNL Financial, pointed to the potential impact to REITs. REITs own more than 1,600 properties in the hard-hit New York City metropolitan area.

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Alexander's Inc. (NYSE: ALX) leads the way among publicly traded REITs in regard to portfolio exposure in the area, with 100 percent of its primary retail portfolio there.

First Real Estate Investment Trust of New Jersey (NYSE: FREVS:OTC:BB) is second on the list, with 81 percent of its portfolio in New York-Northern New Jersey-Long Island, NY-NJ-PA MSA. Its portfolio there comprises eight multifamily properties and five additional retail assets.

Three out of four properties in Gyrodyne Co. (NYSE: GYRO) of America Inc.'s portfolio are in the area. Two of the three assets are medical office buildings and one is an industrial asset. The average total occupancy of the three is 88 percent.

Mack-Cali Realty Corp. and SL Green Realty Corp. round out the top five U.S. REITs in terms of exposure to the New York City metro region, with 68 percent and 63 percent of the companies' respective portfolios there.

SL Green reported minimal damage at most of the properties in its New York City portfolio Wednesday. One property, 180 Maiden Lane in Zone A, experienced flooding and four others were without power.

The company added that it carries comprehensive casualty and flood insurance and expects full coverage of losses.

Another of the largest property owners in New York City, Brookfield Office Properties Inc., is also reporting minimal water, window and other damages. The company's largest asset is The World Financial Center in Manhattan. In anticipation of the storm, Brookfield powered down each of its properties. As of Thursday, all power had been restored in each of the company's towers.

“The World Financial Center is all up and running and we're welcoming tenants back,” says Andrew Willis, a spokesperson for Brookfield's parent company, Toronto-based Brookfield Asset Management. “We are warning people that it is very difficult, just because of the lack of public transit.”

Flooding took place in the sublevels of One New York Plaza, Brookfield's other holding in Manhattan. Water removal is substantially underway, the company reports.

For properties that were harder hit, several local companies are stepping up to find room for Sandy's refugees, providing Internet and office space for workers in need.

TOTUS Business Centers is offering short-term “disaster recovery space” at its facility at 105 Maxess Road in Melville, N.Y. The spaces can accommodate 10 to 60 employees, and leases are available on a daily, weekly or monthly basis.

CPEX, a commercial real estate brokerage with offices in Brooklyn, New York City and East Rutherford, N.J. is also opening its doors to displaced workers. An email forwarded by the company states, “If anyone needs a place to work, charge a phone, send a fax, etc., please feel free to stop by our office. We have some cubicles that are available and we will do all we can to help our fellow New Yorkers cope with this crisis.”

— Liz Burlingame

Content Partners
‣ Arbor Realty Trust
‣ Bohler
‣ Lee & Associates
‣ Lument
‣ NAI Global
‣ Northmarq
‣ Pavlov Media
‣ Walker & Dunlop

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