Tag: commercial mortgage financing

Commercial Property Sales Plummet In February

by Randybaconin Real EstateLeave a Comment on Commercial Property Sales Plummet In February
Financing_interest_rates
The roller coaster of the current real estate cycle might be topping off, even if we’re not headed for a plunge anytime soon. Commercial real estate sales tanked in February with $25B in sales, compared to $47.3B in the same month last year. “Clearly there has been a plateauing,” Jonathan Gray, Blackstone’s global head of real estate, tells the Wall Street Journal. In January sales were $46.2B. Prices and commercial property values are also beginning to level off.

Is The Cycle Coming To An End? Commercial Property Sales Plummet In February

An index of hotels tracked by Green Street Advisors was off 10% last month year-over-year, and Green Street’s broad valuation index in February rose 8.7%, a drop from March ’15’s 11% surge. It’s not clear yet whether February is an anomaly or a sign of the new normal, although other developments seem to favor the latter. Brandywine Realty Trust sold off $765M of property this year, for example.

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/february-slump-could-be-first-sign-of-a-plateau-57755?rt=11595?utm_source=CopyShare&utm_medium=Browser
To discuss an opportunity contact Liberty at http://libertyrealtycapital.com/contact-liberty/

Historic Elevator Ride

by Randybaconin Real EstateLeave a Comment on Historic Elevator Ride

“Historic” elevator ride to top of 1 World trade Center

The elevator in 1 World Trade Center plays a time lapse of the NYC skyline from 1500 to today.

Read more at: https://www.bisnow.com/tv/national/video-of-the-day-this-elevator-has-a-breathtaking-time-lapse-of-the-nyc-skyline-57590?utm_source=CopyShare&utm_medium=Browser

 

Real estate’s ticking bomb: Who gets hurt

by Randybaconin Real EstateLeave a Comment on Real estate’s ticking bomb: Who gets hurt

New Tax Law Will Boost US Real Estate

Commercial real estate had a banner year in 2015, and the fundamentals of high demand and low vacancies are still driving rents higher. There is, however, a catch that could cool the market quickly, at least when it comes to financing. Investors are insisting on high yield, and the bonds backing commercial mortgages are not giving them that, so they are moving on to other products, leaving a big crack in commercial financing.

“I think cracks is a little bit of an understatement for where the market has been for January and February, where, for all practical purposes, the market was frozen,” said Willy Walker, chairman and CEO of Walker & Dunlop, a real estate finance firm.

Commercial real estate, which includes apartments, shopping malls, offices and warehouses, are backed by nearly $3 trillion in mortgages, according to the Mortgage Bankers Association (MBA). The lenders include big banks, which are the largest, insurance companies and commercial mortgage backed securities (CMBS), which are bonds sold to investors. That last one is where the problem lies. It is the second-largest source of commercial real estate debt, and during the last boom, back in 2005, CMBS was very popular.

CMBS tends to have a 10-year life span, at which point the debt matures and real estate owners have to refinance the loans. These maturities are expected to surpass $400 billion annually this year and in 2017, according to CBRE, a real estate services firm. That is $100 billion more than last year. CBRE “conservatively” estimates that 18 percent of loans this year and 29 percent of loans next year could have problems refinancing, due to lack of investor demand for the bonds. This translates into about $43 billion in potentially troubled loans over these two years.

“We think some of these are going to be remonetized through asset sales, but some will certainly hit the foreclosure list and end up on the special services list of loans to be worked out,” said Brian Stoffers, who oversees the debt and structured finance practice at CBRE.

View entie article here at CNBC.COM

If you would like to find out more about commercial real estate financing contact us at Liberty Realty Capital Group.

 

The Reality Of The Commercial Real Estate Boom

by Randybaconin Real EstateLeave a Comment on The Reality Of The Commercial Real Estate Boom

 

After months of optimism, commercial real estate (CRE) forecasters have come back down to earth, with Morgan Stanley predicting no growth whatsoever in commercial property prices this year. The tonal shift is warranted: While rents and prices are soaring in urban areas, CRE is stagnating or even declining in terms of new investment and in most non-urban sectors. In many ways, the trends we’re seeing today are the culmination of nearly two decades of generationally driven migration patterns. Although Boomer youth eschewed cities in favor of rural living, Millennials want to live and work in urban areas—a shift that is triggering a highly focused boomlet that has left most of the rest of CRE untouched.

Over recent months, media outlets have touted CRE’s comeback. And for good reason: Overall prices have skyrocketed—up 93% from 2010’s low and 16% above 2007’s high. At the same time, investors are flooding the market. By the end of the first quarter of 2015, banks had $1.7 trillion of CRE loans outstanding—just 2.6% shy of the record set in the first quarter of 2009.

After months of optimism, commercial real estate (CRE) forecasters have come back down to earth, with Morgan Stanley predicting no growth whatsoever in commercial property prices this year. The tonal shift is warranted: While rents and prices are soaring in urban areas, CRE is stagnating or even declining in terms of new investment and in most non-urban sectors. In many ways, the trends we’re seeing today are the culmination of nearly two decades of generationally driven migration patterns. Although Boomer youth eschewed cities in favor of rural living, Millennials want to live and work in urban areas—a shift that is triggering a highly focused boomlet that has left most of the rest of CRE untouched.

Over recent months, media outlets have touted CRE’s comeback. And for good reason: Overall prices have skyrocketed—up 93% from 2010’s low and 16% above 2007’s high. At the same time, investors are flooding the market. By the end of the first quarter of 2015, banks had $1.7 trillion of CRE loans outstanding—just 2.6% shy of the record set in the first quarter of 2009.

Read entire article at Forbes Online here http://www.forbes.com/sites/neilhowe/2016/02/24/has-the-bubble-burst-in-commercial-real-estate/#29095cc555c7

 

Everything You Need To Know About The ‘Reverse 1031’ Tax Workaround

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Everything You Need To Know About The ‘Reverse 1031’ Tax Workaround
Everything you need to know about the 1031 reverse tax workaround
Real estate investors have been using conventional 1031 Exchanges to swap buildings and hurdle big chunks of capital gains taxes. But 1031 Exchanges come with a tight timeline that’s hard to abide by in these market conditions. So here’s Bisnow’s breakdown of a spin on the 1031 that lets buyers duck its normal deadline.
Everything You Need To Know About The ‘Reverse 1031’ Tax Workaround

Fast Facts:

  • 1031 exchanges let investors save up to 30% in capital gains tax on a sale by deferring the tax bill tax free onto another property within a six-month deadline.
  • In a seller’s market, finding a buyer is pretty straightforward. It’s finding a good deal for your 1031 credit that becomes tricky—especially within the tight deadline.
  • To get around that, so-called “reverse 1031” exchanges let buyers snag their replacement property before selling the old asset.
  • In a reverse 1031, seller puts the funds from their sale directly into another building, rather than taking it in as income.
  • Still under the radar for most investors, the reverse 1031 helps in a seller’s market, where high prices, tight lending guidelines and compressed cap rates make it tough to find a replacement.
  • Reverses aren’t for everyone—they work best in the high-end market with big-name clients.

The Reverse Process

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/everything-you-need-to-know-about-this-new-tax-workaround-reverse-1031s-55705?utm_source=CopyShare&utm_medium=Browser

To discuss commercial mortgage financing needs contact Liberty Realty Capital Group

CRE Valuations are Flat-Lining as Market Cycle Enters Ninth Inning

by Randybaconin Real EstateLeave a Comment on CRE Valuations are Flat-Lining as Market Cycle Enters Ninth Inning

CRE Valuations are Flat-Lining as Market Cycle Enters Ninth Inning

Nothing lasts forever, least of all increasing valuations on commercial properties. The most recent Commercial Property Price Indices (CPPI) released by ratings firm Moody’s and research firm Real Capital Analytics (RCA) show that the all-property composite index remained flat in December. There was even a slight (0.3 percent) decrease in prices reflected in the core commercial index. Moody’s/RCA researchers note that this was the lowest the indices have dipped since the market recovery got underway.

In fact, only apartment properties and suburban office buildings continued to see rising prices in December, with indices for those property types rising by 0.8 percent and 1.6 percent respectively. The rest of the core property types experienced price decreases.

The price index for office buildings in Central Business Districts (CBDs) declined the most, by 2.1 percent, followed by index for office properties overall, which declined by 0.4 percent. The indices for retail and industrial properties both showed decreases of 0.2 percent.

According to a recent note from RCA, cap rates on commercial assets have also showed little movement in January and February.

Read entire article in National Real Estate Investor.

To discuss commercial mortgage financing needs contact Liberty Realty Capital.