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The Reality Of The Commercial Real Estate Boom

February 25, 2016 by Randybaconin Real EstateLeave a Comment

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

February 23, 2016 by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment

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

To discuss commercial mortgage financing needs contact Liberty Realty Capital Group

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

February 22, 2016 by Randybaconin Real EstateLeave a Comment

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.

From retail to revamped: Eastgate Metroplex fills up its biggest spaces

February 18, 2016 by Randybaconin Real EstateLeave a Comment

Eastgate Metroplex

Gerry Chauvin is no stranger to the redevelopment of dead malls — he’s successfully converted malls or consulted with cities converting malls to business use across the country, and Eastgate Metroplex is the sixth he’s been involved with.

Although he estimated his previous redevelopments have taken three to five years to fill up, the former Eastland Mall has taken more time due to the recession as well as the difficulty of changing the perception of the building as a dead mall.

“Even to this day, when we talk to groups they sometimes hold onto the idea of this as an old mall, and they don’t want to be part of it,” he said.

But that perception is fading. As of now, 72 percent of the building’s 900,000 leaseable square feet are now occupied, and Chauvin, a development consultant for Eastgate Metroplex, said an impending deal with a Fortune 500 company for the first floor of the former Dillard’s store will push that up to 83 percent.

Should that deal pass, the biggest remaining space would be the 35,000 square feet that was once a movie theater.

“We don’t have any big blocks anymore,” Chauvin said. “It’s just bits and pieces.”

View entire article by ROBERT EVATT World Business Writer in the Tulsa World

To discuss commercial mortgage financing needs contact Liberty here.

Negative Interest Rates, Explained

February 15, 2016 by Randybaconin Real EstateLeave a Comment

First there was zero interest-rate policy. Now a number of countries are toying with the idea of negative interest rates, an unconventional monetary experiment that—despite the upside—some economists consider ineffective, if not outright dangerous. But how exactly do they work? And how can interest rates be moved below the theoretical lower-bound of zero? Bisnow breaks down the economics behind it—and gives you a quick take on everything you need to know about negative interest rates.

Why are negative interest rates in the news?

Negative interest rates made headlines in January, when the Bank of Japan stunned the markets by introducing the country’s first-ever negative interest rate policy. The move was completely unexpected, as BOJ Gov. Haruhiko Kuroda (pictured) seemed bullish on the economy as recently as December. Previously, only the European Central Bank, Denmark, Sweden and Switzerland had moved their rates into negative territory.

Read more at: https://www.bisnow.com/national/news/economy/negative-interest-rates-explained-55706?single-page?utm_source=CopyShare&utm_medium=Browser

To discuss commercial mortgage financing needs contact Liberty here.

Self-Storage Shows No Sign Of Slowing Down

February 12, 2016 by Randybaconin Real EstateLeave a Comment

One of the biggest deals for the entire self-storage industry closed this quarter when Harrison Street Real Estate sold a 1.1M SF 13-property portfolio to Sovran Self Storage. The $186.4M purchase comprises four properties in California, six in New England and three in Texas. The transaction is one data point in a trend of massive and steady investment sales in the self-storage sector. NGKF managing director Aaron Swerdlin, who repped Harrison Street in the deal, tells Bisnow he hasn’t seen so much interest in a deal in probably five years—and that includes another big deal he did in December worth about a quarter of a billion dollars. For the Harrison Street portfolio, at the end of the process there were five or six potential buyers, all with cash in hand. That kind of rampant interest is creating a market for new investors. Over the last 10 years, Aaron says, those investors have gotten smarter and more educated. Unlike in other sectors, Aaron isn’t detecting any softness in the market. He points out that for 20 years, self-storage has been the top-performing asset in the REIT world. Year-over-year, slower growth can’t really be perceived as softness just because you have 6% growth rather than 9% or 12%.

Read more at: https://www.bisnow.com/houston/news/commercial-real-estate/self-storage-shows-no-sign-of-slowing-down-55763?utm_source=CopyShare&utm_medium=Browser

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