Tag: commercial real estate

Multifamily Lending Starting to Level Off

by Randybaconin Commercial Mortgage LendingLeave a Comment on Multifamily Lending Starting to Level Off

Lenders will keep pouring money into apartment properties over the next two years, originating about the same volume of loans in 2016 and 2017—with slight increases—that they are likely to close in 2015, according to the latest Commercial/Multifamily Real Estate Finance Forecast from the Mortgage Bankers Association (MBA), an industry trade group.

“The forecast anticipates continued strength and growth,” says Jamie Woodwell, vice president for the research and economics group at MBA.

That’s still going to be a big change from the last few years, when business of lending on multifamily real estate didn’t just grow a little, but instead grew incredibly quickly. So far in 2015, lenders have increased the volume of apartment loans they made by well over 10 percent compared to the year before. In 2016, experts expect more moderate growth, with less frenetic competition to make deals.

Outsized growth

Lenders will likely originate a total of $224 billion in permanent loans to multifamily properties in 2015, according to MBA. That’s a 15 percent increase from the $195 billion they lent in 2014, which in turn marked a 13 percent increase from $173 billion in multifamily originations in 2013. That year marked an 18 percent increase in originations from 2012.

Lending volume can’t grow like that forever. The growth this year already caught most experts by surprise.

Read entire post in National Real Estate Investor here.

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Private Equity Funds Are Sitting on $244B for Commercial Real Estate

by Randybaconin Real EstateLeave a Comment on Private Equity Funds Are Sitting on $244B for Commercial Real Estate
Private Equity Funds Are Sitting on $244B for Commercial Real Estate
Private equity firms are loving them some commercial real estate as funds ended Q3 with $244B of dry powder ready for investments in the industry, Preqin data says. Additionally, private institutional investors are still raising money to bankroll investments in core product in core market—i.e. pricier assets—with 52% of funds focused on North America. “The easy money has clearly been made and pricing is very aggressive,” Vornado CEO Steven Roth says. Vornado holds $555M in property investments and is now focusing on building up its cash reserves from $1B to $2B by the end of the year. Among other funds to keep an eye on, Blackstone Real Estate Partners VIII closed last quarter after raising $15.8B, making it the largest commercial real estate PE fund ever. [CoStar]

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/private-equity-funds-end-q3-with-244b-for-cre-52017?utm_source=CopyShare&utm_medium=Browser

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Why Investors Like Carlyle Are Bullish on Trailer Parks

by Randybaconin Real EstateLeave a Comment on Why Investors Like Carlyle Are Bullish on Trailer Parks
Why Investors Like Carlyle Are Bullish on Trailer Parks
As investor demand for mobile home parks heats up, especially in areas with high housing demand fueled by tech company growth, Carlyle Group has made its second West Coast buy in the past two months. The equity giant closed on Sunnyvale’s Plaza Del Rey mobile home park last week. Carlyle is reported to have spent around $180M to purchase the 85-acre Plaza Del Rey, which is south of Tasman Drive and west of Lawrence Expressway. The company is among investors grabbing up mobile home rental communities across the nation. Carlyle purchased a majority interest in Pacific Skies Estates in Pacifica last month.

Read more at: https://www.bisnow.com/silicon-valley/news/neighborhood/carlyle-group-buys-second-bay-area-mobile-park-51626?utm_source=CopyShare&utm_medium=Browser

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Class-B, Suburban Class-A Apartment Properties Gain Momentum

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Class-B, Suburban Class-A Apartment Properties Gain Momentum

Class-A apartments in core neighborhoods may no longer be the best investment in today’s market. Vacancy rates are rising for the most expensive apartment communities in urban neighborhoods, research shows.

“The urban class-A market is seeing some pressure. It’s not a crisis by any means, but it’s now an underperforming segment of the market,” says Jay Parsons, an expert with MPF Research, a division of RealPage, Inc., an apartment market intelligence firm. “We expect that to remain the case through 2016 and likely into 2017.”

The pressure is due to the fact that developers are building so many new luxury apartments in urban areas, especially in downtown districts. Vacancy rates are lower and rent growth is steady for apartment communities that don’t have to compete so hard to attract renters—including class-A apartment communities in suburban areas, where there isn’t so much new construction, and class-B apartment communities everywhere.

“Class-A vacancy rates will continue to rise, while class-B vacancy should decline as few developers build class-B buildings,” says Barbara Byrne Denham, economist with New York City-based research firm Reis Inc.  “Rents should continue to rise, although the rate of growth for class-A rents will be lower than it has been. The rate of growth for class-B rents should stay the same.”

Vacancy rates fall for class-B apartments

Usually, class-A communities have significantly fewer vacant apartments than class-B communities. Over the last dozen years, from 2003 to present, the class-A apartment vacancy rate averaged 5.2 percent. That’s 40 basis points lower than the vacancy rate for class-B apartments. But that difference has vanished as class-B apartments catch up to class-A—both had an average vacancy rate of 4.9 percent over the last two years, according to data firm Axiometrics Inc.

Read entire article in National Real Estate Investor here.

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Everything You Need to Know About Commercial Solar

by Randybaconin Real Estate, TechnologyLeave a Comment on Everything You Need to Know About Commercial Solar
Everything You Need to Know About Commercial Solar
As the price of solar panels continues to drop–they’re already 80% lower then in 2008–more commercial companies are finding several reasons to switch over. Actually, make that several billion reasons. The commercial sector consumes more than 1.3 trillion kWh each year, and since the average electricity rates for commercial users have inched up more than 20% in the past 10 years—from $0.08/kWh to more than $0.10/kWh—that adds up to an increase of tens of billions of dollars in utility bills. So it definitely makes sense for companies to generate their own electricity. So much so, that it could become the top source of electricity by 2050.
The Challenges
But while the benefits are promising, there are still some challenges. For starters, there’s always a possibility that Congress won’t extend a 30% tax credit for solar power beyond 2016. That would deliver a financial blow to commercial and utility scale projects. Meanwhile, smaller commercial companies are already facing the hurdle of high upfront costs. Fortunately, solutions like third-party ownership—where a third-party takes on the initial costs of designing, constructing and owning the solar system, then sells the electricity to the customer at lower rates—help mitigate that problem. Then there’s the issue of land. The National Renewable Energy Laboratory (NREL) estimates that a 100% solar America would require solar installations on up to about 0.6% of the country’s total land area. Or roughly the size of West Virginia.

Read more at: https://www.bisnow.com/national/news/energy/everything-you-need-to-know-about-commercial-solar-51455?rt=title?utm_source=CopyShare&utm_medium=Browser

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Investors Score High Yields for Older, Less-Expensive Rental Homes

by Randybaconin Real EstateLeave a Comment on Investors Score High Yields for Older, Less-Expensive Rental Homes

In many markets, high rents and relatively low home prices are providing solid investment returns for single-family home rentals.

“It’s still a good time to buy rental single-family homes,” says Daren Blomquist, vice president with data firm RealtyTrac.

The highest yields for these types of properties can often be found in secondary and tertiary neighborhoods in secondary and tertiary markets, however, far away from the places where the largest institutional investors have bought their thousands of rental homes. Somewhat older homes in older neighborhoods are benefiting from rent growth and strong demand for rental housing.

The deals are out there

The rents are rising at single-family rental homes across the country. Rental rates on new leases rose an average of 4.5 percent nationally over the past year, up from a rate of 3.4 percent in July 2014.

“Strong job growth and historically high occupancy rates are fueling higher rents,” according to John Burns Real Estate Consulting.

The average investment return on rental homes is strong and getting stronger. The average gross rental yield is nearly 9 percent, according to the latest report from RealtyTrac.

Read entire article here in National Real estate Investor.

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