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Credit Crunch for Farm Renters Compounds Stress on U.S. Growers

June 14, 2016 by Randybaconin Real EstateLeave a Comment

(Bloomberg)—American farmers who expanded production using rented land during the commodity boom a few years ago are now struggling to repay loans.

A crop glut has eroded prices and sent profit to a 14-year low, but rents have barely budged and debt levels are the highest in more than three decades, government data show. Bankers are cutting back on loans that aren’t secured by land, so more farmers are tapping into a U.S. Department of Agriculture program designed to be the lender of last resort. And it’s almost out of money.

The USDA’s Farm Service Agency has allocated $140 million a month on average for direct operating loans since Oct. 1, leaving just $129 million in the budget for the remaining four months of the fiscal year. With about 39 percent of U.S. farms operating on rented property, increased government intervention signals lower land values and more consolidation because debt-strapped and younger farmers will be forced to quit, according to farm groups advocating for more financial aid.

Read entire article in Bloomberg news and republished in National Real Estate Investor

To discuss financing needs contact Liberty Realty Capital.

Mind The Gap

June 13, 2016 by Randybaconin Real EstateLeave a Comment

Falling Revenue At Retailer Creates Uncertainties For CMBS Loans

231 securitized commercial mortgages, with a balance of $13.9B, are now exposed due to the struggling retailer GAP. According to data obtained from Morningstar Credit Ratings, more than half of the loans are backed by collateral where leases with Gap expire within the next two years.

32 properties with a combined balance of $819M could have their occupancy level fall below 80% if Gap vacates. However, the vast majority are offset by the relatively small space the retailer occupies, with only 14 locations compromising more than 20% of gross leaseable area.

Read entire article on The Gap at Bisnow.com

SoCal Facing Possible Electricity Shortage This Summer

May 19, 2016 by Randybaconin Real EstateLeave a Comment

Remember the brownouts of 2001? It could happen again, according to Steve Berberich, chief executive of California Independent System Operator (ISO), the state’s grid manager. He told the San Diego Union-Tribune that power plants are expecting a shortage of natural gas this summer, particularly during hot days when gas-fueled power plants need to meet peak demand. Berberich explained this potential shortage is due to Southern California Gas (SCG) taking the Aliso Canyon natural gas storage facility offline after one of the company’s 115 wells leaked, forcing thousands of residents in nearby Porter Ranch to flee their homes. Pictured above are equipment and machinery at Southern California Gas Co’s SS25 natural gas well near Porter Ranch, which is part of the Aliso Canyon facility, where a leak was discovered Oct. 23, 2015. He says the ISO has moved quickly to put new mechanisms in place to reduce the impact of gas curtailments on the reliability of electricity, but urged SoCal residents to respond to calls for energy conservation on days “we call a Flex Alert.”

Read entire article at Bisnow.com.

To see more information about commercial real estate financing contact Liberty Realty Capital.

The Amazon Effect: Warehouse Rents Shot Up In 2015

May 16, 2016 by Randybaconin Real EstateLeave a Comment

The e-commerce boom is pushing up demand for US warehouse space, leading to rent growth in the sector. Rents for prime US warehouse space rose 9.9% in 2015 compared to just 2.8% worldwide, according to CBRE, as retailers and distributors grabbed facilities near import hubs and population centers. Six US markets were in the top nine worldwide for rent growth, with Oakland seeing the fastest spike, at 29.8% year-over-year—almost twice the rate of the white-hot northern NJ market, the Wall Street Journal reports. CBRE’s head of Americas industrial and logistics research, David Egan, says new construction can’t keep up with the demand boom fueled by e-commerce, and he expects the supply gap to continue, pushing rents in top markets up another 6%. “There are huge premiums being placed right now on being close to the consumer,” David tells the Wall Street Journal. “Speed of service, speed of delivery, is a critical component of why people choose to buy from one retailer over another.”

Read entire article at Bisnow.com

Regulatory Costs Account for Quarter of a New Home’s Price

May 12, 2016 by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment

According to a new study released this week by the National Association of Home Builders (NAHB), on average, regulations imposed by all levels of government account for 24.3 percent of the sales price of a new single-family home in the U.S. in 2016.

Breaking down the total regulatory costs further, the study revealed that three-fifths of this–14.6 percent of the final house price–is due to a higher price for a finished lot resulting from regulations imposed during the lot’s development. The other two-fifths–9.7 percent of the house price–is the result of costs incurred by the builder after purchasing the finished lot.

“This study demonstrates the type of over-regulation our industry is facing,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “Not only is it inhibiting builders’ ability to produce competitively priced homes in a still recovering housing market, but this regulatory burden trickles down to the consumer level and prices many would-be buyers out of the market.”

While NAHB’s previous regulatory estimates in a 2011 study were fairly similar, the price of new homes increased substantially in the interim. When applying these percentages to Census data on new home prices, the data show an estimate that regulatory costs in an average home built for sale went from $65,224 to $84,671–a 29.8 percent increase during the roughly five-year span between NAHB’s 2011 and 2016 estimates. Meanwhile, disposable income per capita in the U.S. increased 14.4 percent during that same time period, meaning that the average cost of regulation embodied in a new home is rising more than twice as fast as the average American’s ability to pay for it. –

See entire article in World Property Journal

5 Tips to Get the Most Cash Out of Your Small Apartment Property

May 11, 2016 by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment

If you own a small multifamily property—now, more than ever—it’s good to be you. For the better part of a decade, a robust multifamily market has delivered low vacancies and higher rents. Post-recession, 2015 has been the strongest year for the rental market so far¹.

With apartment values up more than 120 percent since the end of 2009², lenders are sharpening their pencils to meet another growing demand: owners of small apartment communities looking to capture market improvements by refinancing.

Indeed, now is a great time for a mortgage reboot, especially if your loan was originated in more difficult economic times. Multifamily market growth is ongoing and rates are still near historic lows. Without the right preparation, though, you could find yourself short-changed.

Here are five tips to help you put the most cash in your pocket:

1. Aim for Accuracy.

Keeping accurate financial statements for your property is essential. If your records are spotty, it’s difficult for lenders to accurately size a loan, which could reduce the cash you take away from the deal. To get the most bang for your buck, make sure you have at least three years of historical annual operating financial statements and monthly rent rolls. If you made any capital improvements in the past, be sure you include explanations on your statements.

View entire article here in National Real Estate Investor

To find out more about our multifamily financing options click here or visit us at Liberty Realty Capital.