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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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Weyerhaeuser Launches $190M Dierks Sawmill Project

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Weyerhaeuser Launches $190M Dierks Sawmill Project

One of the oldest sawmill operations in the state is undergoing a $190 million rebirth at its historic southwest Arkansas home. Site preparation for the new Weyerhaeuser complex at Dierks (Howard County) is winding down as the project shifts into a new phase of construction.

“We’re in the process of setting up the concrete batch plant,” said Scott Copas, president and CEO of Little Rock’s Baldwin & Shell Construction Co. “We’ll be starting work toward the end of the month.”

The new facility will have an annual production capacity of 387 million board feet, 25 percent more than current capabilities.

A joint venture of Baldwin & Shell and Bass Commercial Concrete LLC of Little Rock will oversee the production and pouring of 40,000 cubic yards of concrete during the next 16-18 months.

The new sawmill will adjoin the east side of the current location, where lumber production has occurred continuously for more than 100 years. The old facility will continue production on the west side of Holly Creek until the new one is fully operational.

Weyerhaeuser employs about 250 at the Dierks complex, which generates jobs for scores of loggers who cut and transport timber to supply the sawmill.

Four drying kilns will be the first piece of the new complex to come on line. The old facility will be demolished in phases, just as the new one is built in phases.

View entire article on Arkansas Business here.

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CMBS market steady despite widening spreads

by Randybaconin Commercial Mortgage LendingLeave a Comment on CMBS market steady despite widening spreads

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Despite concern from some – including the Federal Reserve – about widening spreads on investment-grade commercial mortgage-backed securities, metrics on CMBS issuances and falling delinquencies indicate a fairly sunny outlook.

In minutes detailing the Federal Reserve’s meeting last month – in which the Fed decided it would maintain interest rates near zero – the central bank noted that spreads on CMBS “widened noticeably in August, reportedly a result of heavy issuance as well as the increased volatility in broader financial markets.”

But analysts have pointed to metrics indicating such conditions as more of a temporary blip than a sign of a more pronounced slowdown in the controversial market.

“There has been a widening of spreads,” Sean Barrie of CMBS analytics firm Trepp told The Real Deal, citing “a lot of deals stacking the opposite ends of the spectrum” in terms of loan-to-value ratio. Barrie noted, however, that so far October has “seen spreads stay even keel,” which he characterized as a “good sign.”

– See more at: http://therealdeal.com/blog/2015/10/14/cmbs-market-steady-despite-widening-spreads/#sthash.wg7NTQOw.dpuf

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Four Strategies to Address Catastrophe Property and Liability Exposures in Real Estate Sector

by Randybaconin Real EstateLeave a Comment on Four Strategies to Address Catastrophe Property and Liability Exposures in Real Estate Sector

Managing the various, often-volatile property and liability risks that commercial real estate owners and managers face daily requires a vigilant risk management strategy that includes frequently evaluating risks and assessing insurance programs to ensure proper coverages are in place. For instance, when it comes to estimating potential losses from such catastrophes as hurricanes and earthquakes, real estate companies are challenged by the inadequacy of modeling tools. The inherent low-frequency rate of catastrophic event also means standard actuarial techniques are not as effective. On the liability front, making sure policies align with contractual exposures requires a significant amount of due diligence combined with real estate risk management expertise. All of these challenges point to a greater need for real estate companies to partner with risk management experts that have a thorough understanding of the industry’s unique challenges. Additionally, companies need to stay informed on the changing risk environment and latest risk management techniques that can help to mitigate their financial exposures. Following are a few strategies addressing catastrophe property and liability exposures in real estate.

View entire article at National Real estate Investor.

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To discuss commercial mortgage financing needs contact Liberty Realty Capital Group.

 

Moody’s, RCA: CRE Prices Top Pre-Recession Levels

by Randybaconin Real EstateLeave a Comment on Moody’s, RCA: CRE Prices Top Pre-Recession Levels
Moody's, RCA: CRE Prices Top Pre-Recession Levels
Moody’s and RCA’s joint Commercial Property Price Indices (CPPI) reveal that the CPPI rose 1.6% in August, thanks in large part to a 1.8% rise in its best-performing segment, central business district. Central business district office has been the top performer for the past three months, rising 6.3%, while suburban office comes in second, rising 3%. The CPPI also topped its November 2007 peak for the first time, adjusting for inflation. It’s now 14.5% above its pre-crisis peak on a nominal basis, and 1.5% above when adjusted for inflation. Additionally, apartment prices exceeded their pre-crisis peak by 33%, with core commercial property prices about 8% higher than their previous peak. [Moody’s]

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/core-commercial-segment-leads-a-rising-cppi-50820?utm_source=CopyShare&utm_medium=Browser

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Morgan Stanley: Crowdfunding Loans Showing Up in CMBS

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Morgan Stanley: Crowdfunding Loans Showing Up in CMBS
Morgan Stanley: Crowdfunding Loans Showing Up in CMBS
Crowdfunding has become a hit in real estate circles, providing a new way to raise capital—and a nice way for investors to get a piece of the action with as little as $1k. But who knew it would find its way to CMBS? Morgan Stanley analyst Richard Hill did some digging, discovering three loans (worth $71M total) made to Colony Hills Capital—underpinning two CMBS deals—secured against a portfolio of five multifamily properties. And here’s the kicker: this portfolio received $12M of crowdfunding on EarlyShares.com (an ad that can still be found here), Morgan Stanley says, which could signal a new trend. It’s an “untested ownership structure in CMBS,” Richard says. While it’s something to pay attention to, “the question becomes, how many of these are showing up in CMBS and, more importantly, what happens when these things go bad?” Richard says. “I really don’t know.” [Bloomberg]

Read more at: https://www.bisnow.com/national/news/other/morgan-stanley-real-estate-is-the-final-crowdfunding-frontier-50579?utm_source=CopyShare&utm_medium=Browser

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