A half-empty building in Manhattan was sold at an Internet auction for within $1 million of the property’s value at the height of the boom in 2007, underscoring investors’ faith in the real estate recovery.
The six-story office tower at 246 Fifth Ave. was purchased for $19 million last week by HH Realty Equities, a New York-based owner and developer, Ariel Akkad, a principal at the firm, said in a telephone interview. The sale was conducted onAuction.com LLC, an online real estate broker.
The building’s previous owner defaulted on $14.5 million in debt that was part of a $3.6 billion commercial-mortgage backed securities deal sold during the market’s peak in 2007. The property’s value, which stood at $20 million in 2007, fell as low as $8.4 million in September 2012, according to data compiled by Bloomberg. Higher prices are a boon for bondholders, enabling them to recoup more cash on soured loans.
“If this building is back to the peak that means everything in the city is back to the peak,” said Ben Thypin, director of market analysis for Real Capital Analytics, a New York-based property research firm. “This particular property needs a lot of work.”
Read More: http://www.bloomberg.com/news/2013-12-09/manhattan-building-purchased-online-shows-boon-for-bondholders.html
Miami’s roller coaster real estate market is booming again after its worst crash left dozens of unfinished buildings and failed condo projects.
Related Group of Florida, Adler Group and Area Property Partners LP, are among builders developing amid a shortage of rental properties as the economy improves. The average rent for a two-bedroom apartment increased 6 percent to $2,568 a month in the third quarter, compared with the year ago period, according to Condo Vultures LLC, a brokerage and consulting firm.
“There’s a boom in Miami that we’ve never seen before,” said Stephen Ross, chairman and founder of New York-based Related Cos. and owner of the Miami Dolphins football team, at the Bloomberg Commercial Real Estate Conference in New York on Nov. 13. “Miami is probably the hottest real estate market in the U.S. from a residential perspective.”
Between the real estate trough and the middle of this year, price per buildable unit -- the price of land per number of units that are entitled to be constructed on it -- in Miami jumped 155 percent for multifamily developments, according to Real Capital Analytics Inc.
“If developers are paying more on a price-per-buildable- unit basis, that means they believe that after construction is complete, the property will be worth sufficiently more than the sum of the price of the land and the cost of construction to justify the risk the developer is taking,” RCA analyst Ben Thypin said.
Price per buildable unit climbed to $75,028 during the recovery starting in 2011 through July from $29,455 between the trough between 2008 to 2010, RCA said. Baltimore followed in second place with an 87 percent increase from the trough to the recovery and Philadelphia in third with a 74 percent climb, according to RCA.
Read More: http://www.businessweek.com/news/2012-11-19/miami-booms-like-never-before-on-rental-demand-mortgage
New York’s real estate professionals are generally an optimistic crowd, but when you ask them about buying loans or properties controlled by special servicers, they turn cool.
In fact, a handful of Manhattan investment sales brokers and company principals say they have given up hunting for opportunities involving special servicers for their clients. Some say their impression is that special servicers rarely sell and, therefore, are not worth approaching.
Others gripe that buying loans from these servicers is so difficult that it’s not worth the trouble.
“What is clear to me is that there are two huge trends among the servicers,” said Ben Thypin, director of market analysis at RCA. “First, they are extremely averse to foreclosure and taking possession of collateral. The second big trend is that servicers are much more likely to liquidate a troubled loan than restructure it.”
Thypin said that if these trends continue, “The most likely outcome for the 75 assets still in trouble are likely to be a short sale, note sale or sale and loan assumption.”
Read More: http://therealdeal.com/issues_articles/an-insiders-game/
While the world is anxiously watching to see how the European debt crisis will unfold, many real estate investors in the United States are eagerly seeking opportunities to reap profits from the Continent’s distress.
Private equity firms, whose investors include pension funds, university endowments and foundations, have been vying to buy portfolios of European bank debt consisting of troubled commercial real estate mortgages. By acquiring these loans at deep discounts, they hope eventually to earn generous returns of 12 to 18 percent, investors and advisers say.
So far, the pace of sales has been modest. Last year, the region’s institutions received an infusion of capital from the European Central Bank, easing the pressure to trim their balance sheets.
In 2011, CBRE, the giant real estate company, tracked more than 20 European loan portfolio sales with a value of 20 billion euros (about $26 billion at current exchange rates). The pace so far this year has dropped, with 14 transactions totaling 7.5 billion euros. Another 11 billion euros’ worth of loans are currently being marketed, CBRE said. Many individual loan sales are also taking place in private.
“The market is opaque,” said Ben Carlos Thypin, director of market analysis at Real Capital Analytics, a New York research firm. “There’s certainly more going on behind the scenes than is clear now.” The buyers have primarily been big names in private equity that are based in the United States — and are accustomed to taking on risk — including the Blackstone Group of New York, Lone Star Funds of Dallas and Colony Capital of Santa Monica, Calif. All are beefing up their presence in Europe, by adding employees, acquiring local real estate companies, or both.
Read More: http://www.nytimes.com/2012/09/19/realestate/commercial/american-real-estate-investors-seek-opportunities-in-europes-debt-crisis.html?ref=commercial
Many struggling shopping malls are trying to find salvation by going small—in their purchasers, sales prices and, in some cases, size.
As the nation's largest mall owners sell off or give up their most-troubled properties—dogged by deteriorating neighborhoods, newer rivals and online sales—smaller real-estate companies are snapping them up at discount prices and trying to find ways to pull them out their death spirals. Sometimes, that involves demolition.
It is a high-risk turnaround game that is gaining favor among local companies and small specialists that are gambling they know local markets well enough to succeed where the big guns failed.
According to Real Capital Analytics, 48 of the 201 U.S. malls that traded hands since early 2010 were sold out of "troubled" situations, most often involving delinquent mortgages. In most cases, the value of those properties fell so sharply that they were sold for much less than was owed on them. In the past year, malls with defaulted mortgages were sold at prices amounting to an average of 63% of their mortgage balances, according to Real Capital.
"These mall transactions show that investors now are interested in higher risk but potentially higher yielding retail investments in the U.S.," said Ben Carlos Thypin, Real Capital's director of market analysis.
Read More: http://online.wsj.com/article/SB10000872396390444230504577615932347574446.html
MetLife Inc.'s recent purchase of the Reynolds Plantation, a posh lakeside golf and resort development in Georgia, is the latest sign that the insurer is back in the acquisition game.
MetLife paid about $160 million in equity and assumed debt for the Reynolds Plantation, which was acquired out of receivership, people familiar with the property said.
The deal raises MetLife's acquisition volume this year to a postcrisis peak of $820 million. That is below the recent annual peak volume of $1.2 billion in 2005 but up from $259 million for all of last year, according to research firm Real Capital Analytics.
"We like what we're seeing," said Robert Merck, global head of real-estate investments for MetLife, who declined to comment on expected returns from the Reynolds transaction. "You get decent income, especially compared with what you can get on fixed-income assets in this low-rate environment."
"They're starved for yield like everyone else so they need to venture out further on the risk curve and get back into buying," said Ben Carlos Thypin, director of market analysis at Real Capital Analytics, a New York real-estate-research firm.
Read More: http://online.wsj.com/article/SB10000872396390443713704577601580295762576.html?mod=googlenews_wsj
Hawaiian-condo investors, homebuyers in Montana and travelers seeking a room at Miami Beach’s upscale Setai Hotel all can turn to one company to meet their needs: Lehman Brothers Holdings Inc.
Four years after filing the largest bankruptcy in U.S. history amid soured real estate bets, Lehman is still in the property business, wagering it can recover about $12.9 billion from mortgages and assets around the globe. Its $3 billion purchase this year of the remaining 53 percent of apartment owner Archstone Inc. made it the biggest buyer of U.S. commercial property by value in the last 12 months, according to research firm Real Capital Analytics Inc.
Of the U.S. real estate assets still held by the Lehman estate -- including joint ventures and loans -- 43 percent are located in major metropolitan areas, where values are recovering amid strong investor demand, according to Ben Carlos Thypin, director of market analysis at Real Capital Analytics. The majority are in smaller markets, such as Greensboro, North Carolina and Norcross, Georgia, where institutional investors aren’t interested in buying, keeping values low, Thypin said.
“That means that no matter how quickly and profitably they can liquidate the major market assets, the estate is still going to be sorting through a lot of smaller assets in small markets for years to come,” Thypin said.
Read More: http://www.bloomberg.com/news/2012-08-13/lehman-lives-to-pay-18-cents-on-dollar-with-new-sales-mortgages.html
The curtain has been partially pulled back on the group of the Virginia Tech alums who bought the troubled First & Main shopping center in Blacksburg.
The group, operating as a new Florida limited liability company called Blacksburg APF Partners, paid nearly $11.8million for the 24-acre shopping center June 29, according to real estate papers filed in Montgomery County Circuit Court.
As conditions looked uncertain, Wells Fargo, which lent money to the project developer, took ownership of the property in a transaction normally associated with a type of foreclosure-like event. Before the Tech alums bought it, it had been bank-owned for the prior year and a half.
Wells Fargo was not alone in deciding to take legal hold of a struggling shopping center to which it lent money. The number of lender-repossessed shopping centers exceeds 500 across the country and is growing, though at a substantially slower pace than in 2011, said Ben Thypin, director of market analysis at Real Capital Analytics.
Read More: http://www.roanoke.com/news/roanoke/wb/311604
After years of financial turmoil at Savoy Park, an 1,800-unit Harlem apartment complex, Vantage Properties and Area Property Partners finally unloaded the troubled development for more than $210 million last month.
The sale allows the two firms to pay off the outstanding balance on the senior mortgage that’s been looming over them for years.
While Vantage and Area are still fighting foreclosure suits on several properties in New York City, the mega-sale came just three weeks after the partnership managed to sell off a portfolio of eight distressed Harlem and Washington Heights buildings for $65 million, far less than the original purchase price of $87.7 million.
Analysts say the sale of Savoy Park to the New York Affordable Housing Preservation fund — created by Citigroup and L+M Development — is likely to help Vantage CEO Neil Rubler overcome his firm’s considerable struggles and reposition the company in a market where multifamily properties are showing strong investor interest.
“In general, people in this industry have very short memories,” said Ben Thypin, director of market analysis at research firm Real Capital Analytics.
Read More: http://therealdeal.com/issues_articles/a-new-vantage-point/
The shadow market now has its first government program.
The Federal Housing Finance Agency (FHFA) rolled out the pilot phase of its Real Estate Owned (REO) Initiative in February. The program allows investors to buy foreclosed single-family properties in the nation’s hardest-hit metros, with a catch—those properties must remain rentals for a certain number of years.
Fannie Mae is supplying the first round of foreclosures, offering pools of various types of assets, including homes already being rented, vacant properties, and nonperforming loans. But it’s just a guinea pig to test investor interest, operational strategies, and financing structures to prove the idea out.
The biggest question is, how will that management challenge cut into an investor’s return? “The yields in scattered single-family are still very uncertain—it could be on par with the low cap rates we’re seeing, because of how management-intensive they are,” says Ben Thypin, director of market analysis at New York–based research firm Real Capital Analytics. “Figuring out how to manage scattered sites is the puzzle. Whoever can figure out how to do that properly will make a lot of money.”
Read More: http://www.housingfinance.com/aft/articles/2012/march-april/0312-feature-The-Top-5-Risks-of-Single-Family-Rentals.htm
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.