Fannie, Freddie and Ginnie do $13.5B in apartment investment lending biz during Q1, +81% YoY.
Filed under: Multifamily Investments, The Economy and Current Affairs
Bonds backed by Fannie Mae and Freddie Mac tied to apartment investments soared to a record as the government-supported mortgage companies made low-cost loans on rental properties amid a continued slide in home values. Fannie Mae, Freddie Mac and Ginnie Mae sold $13.5 billion of securities tied to apartment buildings in the first quarter of 2012, an 81 percent increase from the year-earlier period and up from $5.2 billion issued in all of 2008, according to data compiled by Bloomberg. It’s the highest quarterly issuance since records began in 1993.
The interest rate for a 10-year, fixed multifamily loan Read more
Rising rates won’t necessarily lead to higher cap rates on CRE, apartment building investments. CBRE debt & equity podcast.
Filed under: Commercial Real Estate, Multifamily Investments, The Economy and Current Affairs
Great podcast on the financing market for CRE and apartment building investment with a look at potential impacts from events around the world.
“In this Global In-Sights podcast, Spencer Levy, Executive Managing Director for CBRE Capital Markets, shares his view on the commercial real estate debt and equity finance markets. What are current key sources of capital, what is the current pricing of CRE debt, and what are expectations going forward? Are there key sectors that are attracting most of the capital flows? What are expectations for interest rates and how are investors underwriting the possibility of an interest rate spike in the next 2 to 3 years? What are some of the key positive trends that we suggest our clients look out for when selecting markets in which to invest?”
A few bullet points: Read more
What do these Niche Multifamily Teams know about battling the big guys (and winning) with Apartment Building Investment?
Filed under: Commercial Real Estate, Multifamily Investments
Great MFE article on apartment building investment niche strategies from teams who battle the big guys and win. Five different teams and strategies are profiled and they all have something to teach but I wanted to highlight one company whose strategy is very similar to ours. Here’s my exec sum in bluue:
LumaCorps Apartment Building Investment Strategy
LumaCorp. quietly owns and operates a 4,800-unit portfolio of 1980s, Class B properties managed to meet the needs of working-class renters.
These [renters] historically can’t buy a house, but they still want clean, quality, safe housing. We think it’s a much bigger slice of the market than other renter demographics.
Rent growth can be modest, but that’s OK. One of the advantages of owning property in small tertiary markets is that they are less active [in terms of new construction and competition, the rent growth is more predictable.
LumaCorp. begins with old-fashioned real estate research, looking for distressed or underperforming working-class properties with potential. “We make money by fixing problems.”
But the firm isn’t interested in just any Class B property with deferred maintenance and an attractive price.
We’re very picky about the properties we acquire
We know our market very well, and we know what works in terms of floor plans, unit mix, and architectural designs.
We pick a property with good bones, and then we invest the money to bring it up to our standards.
LumaCorp. runs some of the tighter costs, yet when you drive up to the property, it always looks terrific. Some multifamily firms spend lots of money, and their properties still look tired.
Only a few properties will make the cut for the LumaCorp. treatment. “We might look at 100 packages. Out of that, we’ll find 20 worth looking at, and 10 will get offers. One might get done,” says Kelly, who made “a couple dozen offers” in 2011 and got one—Bardin Oaks in Arlington, Texas.
See the whole MFE Mag article here: Niche Guys Win
Pathfinder Buys REO Multifamily Complex Near Seattle for $5.1M Via MHN Online. 78 units @ $65.4k+/unit
Filed under: Commercial Real Estate, Multifamily Investments
San Diego-based Pathfinder Partners LLC makes Apartment Building Investment in Seattle area.
San Diego-based Pathfinder Partners LLC has acquired the View at Redondo, a 78-unit apartment property in Federal Way, south of Seattle. The apartment complex, built on a …. [Cut to the chase]
Key Concept:
“We believe there are opportunities throughout the major markets in the western United States to invest capital in high-quality projects with distressed or fatigued ownership that will result in significant returns,” Lorne Polger, senior managing director of Pathfinder Partners, tells MHN. “To that end, Pathfinder focuses on smaller apartment building investment, sized below the radar of the largest institutional buyers.”
The company’s strategy, Polger adds, is to buy the loan on a small property that needs finishing, has a large vacancy, or is beset by other issues. “These are typically transactions that need to be concluded very quickly, on an all-cash basis,” he says. “We have a track record of closing this type of deal in 15 to 20 days, and frequently get the call when a financial institution is seeking to conclude a challenging deal quickly.”
A very good strategy indeed.
Increasing Sources of Multifamily Rehab Funding Spur Value-add Projects.
Filed under: Commercial Real Estate, Multifamily Investments, The Economy and Current Affairs
3-4% 10yr bridge money for apartment building investment and rehab “coming out of the woodwork”. See the whole article here: Capital Streams Grow for Rehab
Where is your apartment market in the cycle? Latest Multifamily Market Cycle Charts now posted via Glenn Mueller, PhD.
See the details and charts for the other CRE sectors here:
Latest NMHC Multifamily Survey: Tightening Markets, More Sales, Debt and Equity Financing Becoming More Available.
Filed under: Commercial Real Estate, Multifamily Investments
See the report here: NMHC Quarterly Survey of Apartment Market Conditions
Multifamily Sales Close Out 2011 on the Rise, Lead by Garden Style.
Filed under: Multifamily Investments, The Economy and Current Affairs
A recent report from New York–based commercial real estate research firm Real Capital Analytics (RCA) reveals that apartment sales figures closed out 2011 on a positive note. The firm’s “2011 Year in Review” report shows that the fourth quarter of 2011 netted $16.6 billion in sales, the highest quarterly volume racked up since 2007. This marks a 16 percent increase from the previous quarter and a 24 percent bump from fourth-quarter apartment sales in 2010. Among the more optimistic data revealed in the report was the rebound of garden-sector sales.
Garden properties ended up 47 percent ahead of the 2010 figures, and it appears that the sales momentum experienced in the fourth quarter will carry over into the first quarter this year. “Given the stable cap rate environment for garden properties, compared to sinking caps in mid-/high-rise, that trend is likely to continue in 2012,” projects Thypin.
See the whole AHF article here: Apartment Sales Close Out 2011 on the Rise
Seattle Area Multifamily Report now posted on Reis Reports- Caps flat, rents mixed but vacancy down
Filed under: Commercial Real Estate, Multifamily Investments
See the report here: http://bit.ly/xm8uUG
Zero Bound Interest Rates, The Zirp Dimension, Stagflation and #Multifamily
Filed under: Multifamily Investments, The Economy and Current Affairs, Value Investor's Guide to Apartment Buildings
Zero interest rates and apartment building investment.
First my condolences to Bill Gross on the loss of his brother-in-law. Reading his piece in PIMCO’s latest Investment Outlook it is clear that the world’s biggest bond manager is running out of places to generate returns for their investors and by extension this applies to all income investors, especially retired people trying to live on interest income. For those would like to retire soon you may have to delay that decision for “an extended period’ as Edward Harrison over at Credit Writedowns put it in Permanent Zero and Personal Interest Income.
Gross’ points out that the Fed’s zero interest rate policy (ZIRP) which they have just announced to maintain through 2014 and their defacto though opaque continuation of quantitative easing (QE2.5 as he tweeted it) threaten to take us into another dimension where their policies have the opposite effect of their intentions.
“Much like the laws of physics change from the world of Newtonian large objects to the world of quantum Einsteinian dynamics, so too might low interest rates at the zero-bound reorient previously held models that justified the stimulative effects of lower and lower yields on asset prices and the real economy.” – Bill Gross
His bullet points:
- Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside.
- Most short to intermediate Treasury yields are dangerously close to the zero-bound which imply limited potential room, if any, for price appreciation.
- We can’t put $100 trillion of credit in a system-wide mattress, but we can move in that direction by delevering and refusing to extend maturities and duration.
For more views on this and Europe too see also Entering the Debt Dimension from Phil’s Picks on the Phil’s Stock World Blog.
What does this mean for Multifamily?
The Zirp Dimension leads to Stagflation where economic growth remains anemic yet prices on essential Read more
Connect with us!
