Multifamily Investments | Ashworth Partners

Value Add Deals Needed To Keep Up With Apartment Building Demand- Freddie Mac

Apartment building investors should be looking at renovation, value add and repurposing deals according Freddie Mac’s David Brickman, EVP for Multifamily Business. In an Executive Perspective note published last week Brickman covered these points:

Demographic forces alone could create as many as 4.7 million more renter households by 2023.
That even the 3.1 million new units expected over the next 10 years will not be enough to meet demand.

apartment kitchen remodel — Photo credit: http://www.apartmenttherapy.com

Compounding the issue, the existing rental housing stock is aging. Nearly 60 percent of U.S. rental properties with 20 or more units were built before 1980.
Supply already could be 1.5 million

Continue reading Value Add Deals Needed To Keep Up With Apartment Building Demand- Freddie Mac

Apartment Building Investment Still Leads as CRE Prices Up 11% YoY in CoStar’s Repeat Sales Indexes

CoStar is out with their latest Commercial Repeat Sale Indices (CCRSI) showing that:

Commercial Real Estate prices post double-digit annual gains in May
Momentum picks up in the General Commercial segment
Improvements in market fundamentals underpin growth in commercial property pricing
Capital flows remain healthy
Distress levels continue to dissipate
See link for numbers and details-

CoStar has been tracking the indexes of repeat commercial real estate sales since 1996. Note that the Value Weighted index is driven mostly by core properties while the Equal Weighted index is mostly driven by smaller, non-core property sales.

For apartment building investors the good news is that Continue reading Apartment Building Investment Still Leads as CRE Prices Up 11% YoY in CoStar’s Repeat Sales Indexes

#Multifamily REITs best performers in 1st half 2014

REIT.com had a piece called REIT Returns Outpace Broader Market in Solid First Half Showing out late last week and the part that caught my eye was the section titled: Apartment REITs Lead the Pack in First Half:

Apartment REITs were the strongest performers during the first half.
Total returns as of July 7 in the sector stood at 23.8 percent.

Apartment Building Investment REITS perform best during 1H 2014 — Click image to view article on REIT.com

“There was increasing comfort in the market that fundamentals in the [apartment] sector were not decelerating as fast as many had feared,” said James Sullivan, managing director at Cowen & Co.

Apartment REIT managers are some of the best multifamily operators in the world and it pays to pay attention to what they’re doing. Unfortunately the returns on REIT shares are too often driven by capital flows from the stock market rather than the pure performance these managers generate. Patient contrarian investors can be rewarded however by waiting for apartment REITs to fall out of favor with stock market investors and pick them up at bargain prices.

Click on the image above or use this link to see the article on REIT.com: REIT Returns Outpace Broader Market in Solid First Half Showing

Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

The apartment building loan rate we track came in today at 4.765% (see below for loan details), making it 22 straight weeks below the five percent mark. The spread to the 10 year Treasury (T10) also remained in the 2.1 and change range where it’s been since the beginning of March, indicating that the very competitive market for multifamily loans continues on.

For the gold plated ULI less than 60% LTV loan the spread dropped into the 1.2s from the 1.3 range where it had been holding since late February, taking the implied rate for these core institutional apartment loans down to 3.77%.

Speaking of the spread between the T10 and the Continue reading Apartment Investment Loan Rates Remain in 4.6-4.7% Range As Spread To Treasury 10yr Holds

Apartment Building Investment Rocks Q2 across the US (video)

That happy feet sound you hear is coming from apartment building investors as they see their results from the second quarter:

Rents Up
Vacancy Down
New Supply Being Absorbed as soon and it’s built

Here’s the video report from MPF Research:

And it’s not just the usual Continue reading Apartment Building Investment Rocks Q2 across the US (video)

70% of Americans think housing crises continues, 51% say renting is more appealing #Multifamily

A MacArthur Foundation survey conducted by Hart Research Associates shows that 70% of Americans polled think that the housing crises isn’t over and 19% think the worst is yet to come, good for apartment building investment I believe. As reported by the Wall St. Journal in an article titled: Allure of Homeownership Slumps Amid Worries of Continued Crisis the worst is yet to come figure is unchanged from last year, which may reflect a segment of the population that has been deeply scarred by collapse of the lending and housing bubbles. The still in the crises figure is down from 77% a year ago but it is still a big number that’s having a positive effect on apartment demand:

Referencing the chart above, the article stated that 51% of those polled said renting was more appealing than in past decades which is definitely positive for apartment building investors. Note that while urban apartment demand and development has been getting a lot of action, 35% of suburbanites think renting is Continue reading 70% of Americans think housing crises continues, 51% say renting is more appealing #Multifamily

More Apartment Renters on the way?

Are there yet more new renters on the way? More new demand for apartment building investors? Bill McBride over at Calculated Risk has a piece out today on the latest Mortgage Monitor from Black Knight. Reams of data all organized nicely into charts and the good news is that the percent of of mortgages with negative equity has dropped to 10% but…

The numbers on mortgages that have been modified are in far worse shape and the story can be told in two charts. The first (on page 20 of the Monitor) showing that there are almost two million modified loans facing interest rate resets, meaning that the mortgage payment could be going up. The second chart completes the picture:

40 percent of modified mortgages have negative equity — Source: Black Knight Financial Services

The title of the chart says it all: More than 40% of all modified mortgages are underwater and another Continue reading More Apartment Renters on the way?

Apartment Building Investment Loan Rate Trends Lower as 10yr Treasury and Spread Fall.

The apartment building investment loan rate we track continued to trend downward as both the 10yr Treasury (T10) and the spread between the two came in during April. Today’s new rate on the loan is 4.733%, a 212 basis point spread over the T10 which was in the 2.61% area today. The six month moving average spread continues to fall suggesting that lenders are more confident and/or aggressive but the spread itself is above the March 17 low of 209bp.

This month we add a new rate which the ULI (Urban Land Institute) reports on from the Trepp survey. According to the ULI the Trepp rate is what large institutional borrowers could expect to pay on a 10 year fixed rate, less than 60% LTV loan for a “crème de la crème” core apartment property located in a gateway market. We track this rate as a barometer of what the largest lenders are offering their best customers on the most secure loans for any advanced warning about future rate and spread changes. See the ULI<60LTV Rate on the chart below (in gold). Note that the spread we chart is between 10yr loan we track (in orange) and the T10 (in blue):

Speaking of the spread between the T10 and the ten year apartment loan rate, now that Continue reading Apartment Building Investment Loan Rate Trends Lower as 10yr Treasury and Spread Fall.

Apartment Investment Loan Rates Drift Lower But Spread Widens

Over the last month the apartment loan rate we track eased slightly from 5.17% to just under 5 at 4.959% as the 10 year Treasury continued to fall causing the spread to rise above its 6 month average for the first time since July of last year but remains tighter than a year ago:

Speaking of the spread between the T10 and the ten year apartment loan rate, now that Continue reading Apartment Investment Loan Rates Drift Lower But Spread Widens

Apartment Building Financing Outlook for 2014

Apartment building investment loans in 2014, thoughts and predictions on what’s in store from lenders large and small and the organizations who represent them:

Greystone via MultiHousingNews: We do think there will be more capital available,” says Bob Barolak, co-COO at Greystone. Lenders will become even more eager to make loans in the multifamily space, he says, because of greater confidence in the economy and markets.

Another major reason for an expected bump in capital available in the next 12 months is that CMBS financing has come back into the multifamily sector—from a volume of practically zero in 2012. They will continue to increase market share significantly in 2014.” Currently, CMBS multifamily financings are carrying interest rates of about 5.10 to 5.20 percent, or about 10 to 15 basis points lower than rates in Fannie Mae transactions, according to Barolak.

Maximum LTVs on CMBS loans—up to 75 percent on 10-year terms for multifamily properties—have also become competitive with those of Fannie and Freddie loans. Moreover, CMBS lenders can become “extremely aggressive” for deals they want to acquire to round up a securitization pool, Barolak says. In such instances, “they can dramatically lower the interest rate significantly below what Fannie and Freddie will offer.”

Life insurance companies are another Continue reading Apartment Building Financing Outlook for 2014