Commercial Real Estate Beats Treasury Bonds
NEW YORK – Sept. 2, 2010 – Yields on U.S. commercial real estate are nearing a record high compared to Treasury bonds. Many investors take that as a signal to buy property. Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, as calculated by the National Council of Real Estate Investment Fiduciaries. That was 4.29 percentage points higher than the yield on 10-year government bonds as of June 30 and 4.75 percentage points higher than Treasury yields as of Aug. 31. Current returns are near the record 5.39 percentage points in the first quarter of 2009, when the U.S. was dealing with the worst economic downturn since the Great Depression. The spread shrank to less than 80 basis points when commercial real estate prices peaked in 2007. “The data indicate that real estate is poised for a rebound,” says Gerardo Lietz, who advises pension funds on property investments.
Source: Bloomberg, Hui-yong Yu (09/01/2010) Reposted from Florida Realtors © Copyright 2010 INFORMATION, INC. Bethesda, MD
Sarasota Commercial Real Estate Experts:
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Tuesday, July 6
Commercial Occupancy Up As Lease Rates Drop
In March, Sarasota County landlords took in $55 million, their best single month since May 2005. What is different in Sarasota County, commercial brokers say, is not that tenants are willing to pay higher rents. It is that landlords have accepted reality, greatly lowering their rents and spurring a lot of movement by businesses seeking deals.
Read more from the Sarasota Herald Tribune 07/05/2010
Lease space at the Orange Dolphin Galleria, in Burns Court, Downtown Sarasota, is now available at $6 psf NNN for a limited time. Yes, $6 psf NNN.
Contact us for more info: 941-953-9772.
Sarasota Commercial Real Estate Experts:
http://www.rkwrealestate.com/
In March, Sarasota County landlords took in $55 million, their best single month since May 2005. What is different in Sarasota County, commercial brokers say, is not that tenants are willing to pay higher rents. It is that landlords have accepted reality, greatly lowering their rents and spurring a lot of movement by businesses seeking deals.
Read more from the Sarasota Herald Tribune 07/05/2010
Lease space at the Orange Dolphin Galleria, in Burns Court, Downtown Sarasota, is now available at $6 psf NNN for a limited time. Yes, $6 psf NNN. Contact us for more info: 941-953-9772.
Sarasota Commercial Real Estate Experts:
http://www.rkwrealestate.com/
Thursday, April 22
Commercial real estate perks up
NEW YORK – April 20, 2010 – The darkest cloud over the economic recovery – the troubled commercial real estate market – may be clearing a bit. Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months. Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently. The developments won’t alleviate the sector’s biggest problem: the rising pace of defaults. But they should contain the damage and provide a lifeline to better-performing properties, analysts say. Developers put up too many commercial buildings earlier this decade and paid the price when the economy wilted as vacancies rose and rents fell. Default rates jumped to 3.8 percent from 1.6 percent in 2009 and will hit 5.1 percent this year, Real Capital Analytics says. Many larger deals were financed by CMBS. Investment banks bundled loans for several projects into securities they sold to investors. A record $230 billion in securities were issued in 2007 vs. $3 billion last year, Commercial Mortgage Alert says. Already this year, $4 billion in deals have been done. Tom Fink of research firm Trepp predicts about $25 billion in CMBS will be issued in 2010. Investors and banks have waded back into the market because property values have bottomed and lending standards have toughened, says David Nackoul of mortgage broker Holliday Fenoglio Fowler. And with bond interest rates at low levels, investors are seeking higher yields. The money isn’t rescuing distressed properties. It’s refinancing high-quality loans as they mature. Even borrowers who bought projects before the real estate bubble have had a hard time refinancing because of scarce funding and lenders demanding higher downpayments. Michael Glimcher, CEO of Glimcher Realty Trust, recently snared $100 million in loans that will be sold into the CMBS market. He’ll use the money to refinance loans for shopping centers in Tennessee and Ohio after struggling to refinance malls last year. “The pipeline has opened back up,” he says. The funds’ availability also could help some borrowers whose properties have fallen in value since they bought them but who are still making payments, Fink says. Deutsche Bank analyst Richard Parkus says most of the $1.4 trillion in mortgages maturing by 2013 won’t qualify for refinancing unless borrowers put up more cash. That could lead to foreclosures, further depressing prices, though many lenders have extended loans on the hope prices will rebound. The new capital “will moderate (the slump),” Fink says. Other good signs: • Commercial real estate values have edged up 6 percent in recent months, Real Capital Analytics says. They fell 45 percent from 2007 to 2009. • About $13.7 billion in loans were modified the past six months, Parkus says.
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc.
Sarasota Commercial Real Estate Experts: www.rkwrealestate.com
NEW YORK – April 20, 2010 – The darkest cloud over the economic recovery – the troubled commercial real estate market – may be clearing a bit. Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months. Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently. The developments won’t alleviate the sector’s biggest problem: the rising pace of defaults. But they should contain the damage and provide a lifeline to better-performing properties, analysts say. Developers put up too many commercial buildings earlier this decade and paid the price when the economy wilted as vacancies rose and rents fell. Default rates jumped to 3.8 percent from 1.6 percent in 2009 and will hit 5.1 percent this year, Real Capital Analytics says. Many larger deals were financed by CMBS. Investment banks bundled loans for several projects into securities they sold to investors. A record $230 billion in securities were issued in 2007 vs. $3 billion last year, Commercial Mortgage Alert says. Already this year, $4 billion in deals have been done. Tom Fink of research firm Trepp predicts about $25 billion in CMBS will be issued in 2010. Investors and banks have waded back into the market because property values have bottomed and lending standards have toughened, says David Nackoul of mortgage broker Holliday Fenoglio Fowler. And with bond interest rates at low levels, investors are seeking higher yields. The money isn’t rescuing distressed properties. It’s refinancing high-quality loans as they mature. Even borrowers who bought projects before the real estate bubble have had a hard time refinancing because of scarce funding and lenders demanding higher downpayments. Michael Glimcher, CEO of Glimcher Realty Trust, recently snared $100 million in loans that will be sold into the CMBS market. He’ll use the money to refinance loans for shopping centers in Tennessee and Ohio after struggling to refinance malls last year. “The pipeline has opened back up,” he says. The funds’ availability also could help some borrowers whose properties have fallen in value since they bought them but who are still making payments, Fink says. Deutsche Bank analyst Richard Parkus says most of the $1.4 trillion in mortgages maturing by 2013 won’t qualify for refinancing unless borrowers put up more cash. That could lead to foreclosures, further depressing prices, though many lenders have extended loans on the hope prices will rebound. The new capital “will moderate (the slump),” Fink says. Other good signs: • Commercial real estate values have edged up 6 percent in recent months, Real Capital Analytics says. They fell 45 percent from 2007 to 2009. • About $13.7 billion in loans were modified the past six months, Parkus says.
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc.
Sarasota Commercial Real Estate Experts: www.rkwrealestate.com
Tuesday, February 16
Vacant lots become hot property
TALLAHASSEE, Fla. – Feb. 15, 2010 – Vacant residential lots are looking better and better to real estate investors.
The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price. There are a number of these ready-to-go lots on the market at about half what they actually cost to prepare. Investor groups are snapping them up, figuring that the time will come soon when they will be in demand.
“The country needs 1.2 million new units for the next 10 years just because of population growth,” says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. “[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant.”
Source: Inman News, Steve Bergsman (02/12/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
http://www.rkwrealestate.com
TALLAHASSEE, Fla. – Feb. 15, 2010 – Vacant residential lots are looking better and better to real estate investors.
The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price. There are a number of these ready-to-go lots on the market at about half what they actually cost to prepare. Investor groups are snapping them up, figuring that the time will come soon when they will be in demand.
“The country needs 1.2 million new units for the next 10 years just because of population growth,” says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. “[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant.”
Source: Inman News, Steve Bergsman (02/12/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
http://www.rkwrealestate.com
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