A housing portfolio is going on the block as Honolulu tests investors’ appetite for affordable apartments in a high-rent paradise.
The city and county of Honolulu hope to fetch more than $28 million for a 65-year lease on 12 affordable apartment complexes containing 1,257 units, according to Sam Moku, director of the city and county of Honolulu’s Department of Community Services. The properties were last appraised at $28 million in 2009, near the trough of the financial downturn, and values have since risen, Mr. Moku said. CBRE Group Inc. has been tapped to market the properties.
Apartments have recently been one of the hottest sectors of the commercial real estate market. And the same forces fueling demand for market-rate apartments are generating increased demand for affordable apartments, analysts say.
“Demand for apartment properties has grown broadly since the recession, with rental demand increasing as people got kicked out of houses,” says Ben Carlos Thypin, director of market analysis for Real Capital Analytics. Real Capital estimates the volume of affordable housing sold in 2010 rose about 80% from the year earlier, though 2011 is on pace to be slightly lower than last year.
Read More: http://blogs.wsj.com/developments/2011/11/23/a-rare-affordable-portfolio-sale-in-honolulu/#
“It’s not a surprise that there is a potential transaction out there,” says Ben Thypin, director of market analysis for New York-based research firm Real Capital Analytics. “That said, it’s uncertain whether this will end up being the winning transaction. The sellers that are selling, Bank of America and Barclay’s, are financial sellers. So one would expect a financial buyer to take their place. Equity is an operator.”
But ultimately, no one knows when the situation will be settled. “For a long time, people have been talking about it eventually getting sold,” Thypin says. “They’ve been selling assets or refinancing assets in preparation for that. There’s still that uncertainty about when and how this will get resolved. At the very least, it shows the recapitalization process has begun in earnest.”
Read More: http://multifamilyexecutive.com/dispositions-and-transactions/report-says-equity-residential-leads-in-archstone-chase.aspx
We’ve all seen the headlines: “Apartments Shine as Beacon of Hope” and “Multifamily Sales Defy the Slump.” National newspapers, industry blogs, and local business publications, among others, have joined in a chorus singing the praises of apartment investment opportunities throughout the country.
“Multifamily investments have received a lot of good press over the past several years, and this has attracted more money — and more investors — into the mix,” says Jeff Siebold, CCIM, MAI, owner of Siebold Group Consulting in Caswell Beach, N.C.
Of course, this trend is the result of more than just the media frenzy. “The key [to multifamily’s success] in today’s market is net income or dividend to investors with upside potential, which is creating solid risk-adjusted returns,” says Kenneth P. Riggs Jr., CCIM, CRE, MAI, CCIM Institute’s chief real estate economist and president of Real Estate Research Corp.
And, compared with other sectors, apartments have shorter lease terms that allow for rent bumps as the economy grows. These factors, coupled with a large number of former homeowners entering the rental market, are making multifamily the go-to investment product right now, Riggs says.
For the last few years, apartment investment activity has mostly been concentrated in primary markets. And, in terms of volume and pricing, they’re still leading the pack. New York, Los Angeles, Washington, D.C., Atlanta, and Dallas saw a combined 1H2011 transaction volume of more than $7.9 billion, according to Real Capital Analytics.
The increased competition has pushed average class A capitalization rates in primary markets down to the 4-percent-to-4.5-percent range, with some markets reporting cap rates below 4 percent, according to Marcus & Millichap.
The star sector’s overexposure, manifested in the cap rate compression and the pricing rebound, has kept all but the largest institutional investors and real estate investment trusts from competing for assets in primary markets. And even these investors are now searching for alternatives.
“Some REITs are buying land to build apartments,” says Ben Thypin, RCA’s director of market analysis. “It would be more common if more land were available in markets like New York and San Francisco.”
But since land is a limited resource — especially in densely populated primary markets — multifamily investors have been forced to look for opportunities elsewhere. This is the story behind the story. It might not be garnering a lot of headlines, but it is good news for CCIMs.
Read More: http://www.ccim.com/cire-magazine/articles/multifamily-media-frenzy
They’re about 300 miles apart, but in terms of the recovery they’re much farther away from each other.
Throughout the downturn, Las Vegas and Phoenix were linked together as the poster children of distress. And while each market still presents its share of challenges, Phoenix has bounced back much more swiftly than its sandy brethren.
“When you’re investing in Phoenix, you can price in some rent growth or at the least population growth,” says Ben Thypin, a senior market analyst for New York-based market research firm Real Capital Analytics (RCA). “Whereas in Vegas, the economic outlook is just so uncertain.”
Read More: http://www.multifamilyexecutive.com/distressed-assets/phoenix-and-vegas-where-are-they-now.aspx?rssLink=Phoenix+and+Vegas%3A+Where+Are+They+Now%3F
Schnitzer West LLC has put up for sale its luxury retail shopping center in downtown Bellevue.
The Shops at the Bravern opened in the fall of 2009, in the dark aftermath of the financial crisis, with the only Neiman Marcus department store in the Northwest as the anchor tenant. The Bravern’s other retailers include luxury goods sellers such as Louis Vuitton, Hermes and Jimmy Choo.
Vacant spaces are less of an issue with a newer property, according to Ben Thypin, director of market analysis at New York research firm Real Capital Analytics Inc. Investors are also more interested in secondary markets, such as Bellevue and Seattle, because prices have increased sharply in primary markets, such as New York, Washington, D.C., and San Francisco, Thypin said.
He noted the April sale of the nearby Bellevue Galleria mixed-use project, which was fully leased at the time. Thor Equities LLC bought the 12-year-old property for $87.5 million, or $429 a square foot. Thor Equities specializes in well-located but underperforming properties.
Even though the Shops at the Bravern are newer than the retail shops at the Bellevue Galleria, Thypin anticipates they could sell for less per square foot because the new owner would bear the cost of building out the 14 vacant spaces for the new tenants. If that is correct, the price tag for the Shops at the Bravern would fall below the range of $133 million.
Read More: http://www.bizjournals.com/seattle/print-edition/2011/11/04/buyers-circling-luxury-retail-center.html?page=all
Gramercy, which had been in default on its loans, agreed on Sept. 1 to settle $549.7 million in mortgage debt by transferring hundreds of U.S. buildings to lenders. It has since become current on filing financial reports with regulators. Private-equity firms including Apollo Global Management LLC, Colony Capital LLC and Starwood Capital Group LLC have backed publicly traded REITs that make property-related investments.
“Now that Gramercy is current on its debt payments and regulatory requirements, Eastdil can comfortably shop it to interested parties who can underwrite with more certainty,” said Ben Thypin, director of market analysis for New York-based Real Capital Analytics Inc. “A platform like Gramercy would allow private-equity firms to use public markets to raise debt and equity capital for investing in real estate.”
Read More: http://www.bloomberg.com/news/2011-11-01/gramercy-capital-bankers-said-to-solicit-bids-from-buyout-firms.html
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.