When The Blackstone Group agreed to buy the US mall portfolio of Sydney-based Centro Properties Group last March for $9.4 billion, one might have imagined the deal impossible to finance. However, a significant portion of the investment was funded via the commercial mortgage backed securities (CMBS) market in a sign that this relatively dormant part of real estate finance was re-awakening.
“These private equity firms are hoping the CMBS market is
available both to finance their acquisitions and refinance maturing
loans on properties they already own,” says Ben Thypin,
director of market analysis at Real Capital Analytics. “So it’svery much in their best interest to have a robust CMBS market.”
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The $127 million refinance of Harbor Group International’s 200 Public Square office tower in downtown Cleveland, announced last Friday, is both one of the larger recent CRE refis and an exemplar of the current refi trend. The existing CMBS financing on the 45-story, 1,264,000-square-foot class A building was refinanced with a new 10-year CMBS loan provided by JPMorgan Chase.
It’s hard to quantify, but there has indeed been a recent surge in refis, Ben Thypin, director of market analysis for Real Capital Analytics, told Commercial Property Executive. “There are a lot of loans maturing,” he said, typically five- and seven-year loans taken out during the active period before the recession.
Read More: http://www.cpexecutive.com/finance/127m-loan-on-cleveland-office-typical-of-refi-trend/
Around this time last year, many conduit lenders were getting pretty excited.
The CMBS industry appeared to be back in full force, quoting rates that were competitive with Fannie Mae and Freddie Mac for the first time in years. Borrowers suddenly had more options, agency and balance-sheet lenders suddenly had more competition, and the industry as a whole was enticed by the prospect of more liquidity.
Yet, as soon as it came, it disappeared—rates came down too far, too fast, and investors pushed back. Then, capital markets shocks like the debt ceiling standoff and the Greek debt crisis continued to derail the CMBS industry’s momentum.
But now, through the first few months of 2012, CMBS pricing continues to fall.
Will that momentum build to a point where conduits are again giving the GSEs a run for their money? “I’m not even sure if that’s the right way to look at it because the rates being offered by the GSEs right now are so good,” says Ben Thypin, a senior market analyst for New York-based Real Capital Analytics. “CMBS is lending on product the GSEs wouldn’t lend on—it may be pre-stabilized properties, or deals in secondary or tertiary markets.”
Read More: http://multifamilyexecutive.com/cmbs/cmbs-heats-up-but-is-it-back-to-stay.aspx
When Arenda Capital Management LLC bought an Atlanta apartment complex whose owners defaulted on a $26 million loan, they did something distressed investors rarely do: They paid full price, deciding not to wait for lender LNR Partners to foreclose and face competition from other acquirers.
“If I don’t buy the deal, then it may be 12 to 24 months before I’d have another chance to buy it, and they still may not be selling unless I make them whole,” said Ryan Millsap, managing principal at Los Angeles-based Arenda, which bought the 592-unit property in October.
Demand for U.S. apartment buildings is surging as the homeownership rate hovers near the lowest level since 1998 and government-supported mortgage companies provide record levels of financing for apartment properties. That’s fueling a rush by investors to buy buildings and helping lenders recover 75 percent of the value of defaulted mortgages tied to multifamily housing, the highest recovery rate on all commercial property.
Sales of U.S. apartment properties totaled $3.8 billion in January, a 53 percent increase from the same month a year earlier, the strongest start to the year compared with offices, and shopping centers, according to Real Capital Analytics Inc., a New York-based commercial property data firm.
Fannie, Freddie LoansThe dollar volume of multifamily loan originations by Fannie Mae and Freddie Mac hit an all-time high in the fourth quarter, according to a Mortgage Bankers Association index that has tracked the data for 11 years. The government-supported entities increased lending by selling $33.9 billion of bonds tied to apartment buildings last year, from $21.6 billion in 2010, according to data compiled by Bloomberg.
“Freddie Mac and Fannie Mae originate a huge portion of the loans out there for apartments,” said Ben Carlos Thypin, director of market analysis for Real Capital Analytics Inc. “If a buyer can secure cheap financing, whether from a government sponsored entity or elsewhere, that allows them to be able to pay more for a property.”
Read More: http://www.bloomberg.com/news/2012-03-07/recovery-on-commercial-property-fueled-by-apartments-mortgages.html
In its most recent sales report, New York–based Real Capital Analytics (RCA) says apartment sales volume rose 53 percent, to $3.8 billion, in January. The jump in volume was fueled by the sale of two trophy New York properties. The first was Two Cooper Square, a $134 million deal between seller Atlantic Development Group, based in New York, and buyer Wafra Investment Advisory Group (the Kuwaiti government’s social security fund). The second property was Columbus Square, a $30 million deal between sellers Chetrit Group, based in New York, and Stellar Management, headquartered in Silver Spring, Md., and buyers MetLife, based in New York, and UDR, the Denver-based REIT. Without the sale of those two properties, sales would have risen only 21.8 percent.
“These are both newly built [deals],” says Ben Thypin, a senior market analyst for RCA. “There are not that many newly built Class A, institutional-quality properties in New York.” The total number of properties actually fell year over, dropping from 206 to 184 properties sold nationally. However, in December 2010, 442 properties sold, compared with 531 properties sold in December 2011.
An active December is one of the reasons Thypin thinks the market is healthier today. “We’re coming off of a more active December,” he says. “Yields actually went up slightly. It’s a healthier market but still not gangbusters.”
Read More: http://multifamilyexecutive.com/dispositions-and-transactions/apartment-sales-jump-53-percent-in-january.aspx
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.