A common theme adopted by the industry is that lenders continue to delay action on distressed assets for as long as possible.
The fact is that this scenario is borrower-specific. If a borrower is acting in good faith, the lender may allow the asset to continue operating, resulting in a commercial property “Twilight Zone.”
The Twilight Zone is made up of properties on which loans have defaulted or in which default is likely imminent, but the borrower is still willing to provide all available cash flow to the lender, even if it is not enough to cover the payments. The lender agrees to accept net rents and, in turn, keeps the building operational, albeit in a limbo period.
Gen Y—those between the ages of 16 to 33—represents about 25 percent of the population in the country and is now larger than the baby boomer generation, which is shrinking
The Gen Y group keeps getting larger for a number of reasons, including the fact that immigrants to the United States typically come as young adults—and rent. This group is expected to continue to expand over the next 15 years.
Through 2017, she adds, there are going to be more than 4.3 million people turning 22 each year (though analysts used to use 18 as the age people left home, young people have delayed forming new households). This number is expected to remain above 4 million until 2025. And, of course, fewer people looking to purchase a home also bodes well for the multi-housing industry.
Great advice from Barry Sternlicht plus much, much more on real estate, investment, capital, leadership, opportunity, Europe, China while speaking at the Schack real estate conference. He is one very smart guy while being personable and humble, a rare but valuable combination. Reminds me a bit of my virtual mentor Tom Barrack, and not just because of the haircut! Barry even mentions wanting to learn how to surf, something Tom could definitely help with.
Nice article in MHN Online, good tips and reminders. There are still plenty of properties worth less than the debt, and there are more foreclosures to come. Most of the distressed multifamily properties are B, C and D class properties. These properties can provide great returns with cap rates from 8 percent to 12 percent on existing income, and in most cases have plenty of vacancy for even more upside.
My top two that apply to all properties distressed or otherwise:
Good management: Distressed B, C and D properties require experienced and diligent asset and property management. Your management team should be top notch. Your turnaround plan should be realistic and properly implemented.
Talented leasing staff: Your leasing team should be properly motivated and for lease marketing extremely thorough. You want a well-thought-out, multi-disciplined lease up plan to stabilize properties in this cycle.
My cousin Teresa turned me on to this article, basically that for creative work (and learning too) the best stuff happens when we’re alone working uninterrupted. There may be hope for the traditional office building yet… See the whole article here: http://nyti.ms/yBWdxo