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Sep 22, 2009 | No Comments | Sean Mills
Southern California Apartment Association Trade Show on 09/30/2009
The purchase prescription drugs without a prescription largest rental housing education and networking event is just around the corner. September 30, 2009 is the date for California’s largest rental housing expo to be held at the Long Beach Convention Center from 9:00 AM to 5:00 PM in [...]
Southern California Apartment Association Trade Show on 09/30/2009
The purchase prescription drugs without a prescription largest rental housing education and networking event is just around the corner. September 30, 2009 is the date for California’s largest rental housing expo to be held at the Long Beach Convention Center from 9:00 AM to 5:00 PM in Exhibit Hall B.
The event is designed and managed by The Apartment Association, California Southern Cities, and looks to be another great day with loads of free information on owning, managing and dealing with apartment housing.
You can discover and learn about all sorts of topics by browsing trade show booths, attending educational programs that will cover topics such as:
- Secrets to Creating Wealth
- Credit Checking in Today’s Market
- Covering Your Legal Bases
- Profitable Employment Practices
- Social Networking 101
- How to Rent to Today’s Tenants (Panel)
- Taking Advantage of a Depressed Real Estate Market
- How to Cut Costs and Put More $$$ in Your Pocket
- Solutions to the Water Problem for Owners (Panel)
- Fair Housing Conversation
- Resident Retention Techniques
- and much, much more…
Sep 22, 2009 | No Comments | Sean Mills
This article is compliments of Bloomberg and it underscores what we are seeing in Commercial Real Estate (CRE) in general. At the IMN symposium last week for distressed residential real estate on speaker for a top national brokerage stated volumn was off 45% from the volumn late last year. Unfortunately, things for CRE are only [...]
This article is compliments of Bloomberg and it underscores what we are seeing in Commercial Real Estate (CRE) in general. At the IMN symposium last week for distressed residential real estate on speaker for a top national brokerage stated volumn was off 45% from the volumn late last year. Unfortunately, things for CRE are only going to get worse unless President Obama gets involved in this market also. -Sean
Sept. 21 (Bloomberg) — Commercial real estate prices in the U.S. resumed a “steep decline” in July after showing signs of leveling off in June, Moody’s Investors Service said, as credit restrictions curtail lending and push landlords toward default.
The Moody’s/REAL Commercial Property Price Indices fell 5.1 percent in July from the month before, Moody’s said today in a statement. The index is down almost 39 percent from its October 2007 peak. The decline in June was 1 percent.
Commercial property sales this year may fall to an 18-year low. This latest set of numbers suggests no letup in that trend, said Neal Elkin, president of Real Estate Analytics LLC, a New York firm that partners with Moody’s in producing the report.
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Sep 22, 2009 | No Comments | Sean Mills
Rental Relief—Necessary Evil or Delaying the Inevitable?
ORANGE COUNTY-Given the economic conditions everyone is currently experiencing, a question that continually arises in the industry from tenants is “How do I get my rent reduced,” or from landlords: “Should I agree to reduce my tenant’s rent?” And when rent is typically one of the highest expenses as [...]
Rental Relief—Necessary Evil or Delaying the Inevitable?
ORANGE COUNTY-Given the economic conditions everyone is currently experiencing, a question that continually arises in the industry from tenants is “How do I get my rent reduced,” or from landlords: “Should I agree to reduce my tenant’s rent?” And when rent is typically one of the highest expenses as associated with running a business, more and more tenants are requesting a rent reduction from their landlord. However, under what circumstances does a rent reduction make sense to both the tenant and the landlord? Brad Nielsen, a partner in the office of the law firm of Allen Matkins Leck Gamble Mallory & Natsis LLP, and Randolph Mason, a senior vice president and one of the partners of Lee & Associates—Irvine Inc., take a look a this question in the article below, and explore compromises they currently see in the marketplace.
Landlord’s View:
One might ask, “Why would a landlord ever reduce its tenant’s rental obligation when there is a valid and enforceable lease contract in place?” The bottom line is: if a tenant goes out of business in this economy, it’s possible in many markets that the tenant’s space will sit vacant for many months. In this scenario, the landlord will neither be receiving base rent nor will they receive a reimbursement of any of the property’s operating expenses from the tenant, such as taxes, insurance, maintenance, landscaping, etc. For this reason alone, some landlords are willing to work with the tenant and agree upon a rental amount that tenant’s business can sustain during the short term.
Now, assuming tenant and landlord can come to an agreement on a reduced rental amount, typically the landlord will ask for an extension in the tenant’s lease term (in order for the landlord to recoup its temporary reduced rent), along with other assurances that the tenant will continue to timely make its rental payments throughout the extended term. Such other assurances that may be considered would be: an increase in the security deposit (however, most likely the tenant does not have the extra cash, otherwise they would have been timely making their prior rent payments); a letter of credit for a specified amount; or a personal guaranty on the lease from a credit worthy entity or individual affiliated Cialis with the tenant. Such assurances allow landlord to become comfortable that the tenant is committed to keeping its business running and paying its future rental obligations.
However, landlords providing rental reductions pose various obstacles. First and foremost, landlords typically buy buildings with debt with the belief that the rents received will offset the mortgage and other expenses and hopefully provide some level of return on investment. Any rental reduction will obviously affect the landlord’s return on investment. Decreased rents can also impact the ability of the landlord entity to maintain and provide certain services to the building, which in turn can affect the likelihood of leasing vacant spaces, which further impacts the cash flow of the property. As a result, a rent reduction may not be an alternative available to every landlord out there.
Tenant’s View:
Differing greatly from landlord’s intentions, tenant’s typically ask for rental relief due to the fact that the cash flow from their clients is decreasing or their accounts receivable is aging longer into the future, both circumstances creating a precarious position for the tenant to pay their bills. Case in point, a client recently showed us a letter that one of their clients systematically distributes to all of their venders asking for a no questions asked 10% decrease in funds due. It was pretty much, please sign this form and we will continue to use your services. A few nationwide retail tenants have also sent out similar letters to “all” of their landlords across the country.
We also have numerous other clients whose gross revenues are off dramatically and who are attempting to renegotiate their leases with their existing landlords. The landlords are asking for current income statements and balance sheets, along with an explanation as to how the tenant proposes to increase their future revenues in order for them to stay in business. Basically, the landlord is looking for their business plan, a reason to grant a rent reduction and comfort that the tenant is going to survive the current down economy. As a result, a tenant seeking a rent reduction should gather all this information upfront and approach its landlord with its best foot forward. Landlords need to believe that it is worth “betting” on its tenant’s business and that the landlord’s loyalty will pay off in the future.
Conclusion:
We believe we will see more of these requests coming in the future months and there needs to be some up front, candid discussions early on between the tenant and landlord. Additionally, the tenant needs to understand a landlord’s motivation and vice versa. No one wants to “delay the inevitable,” so tenants should come to the table armed with evidence of how it plans on weathering the current economic downturn.
Source Article
Sep 16, 2009 | No Comments | Sean Mills
Treasury Relaxes Restrictions on Refinancing in an Effort to Stave Off Commercial-Mortgage Defaults
The Treasury, responding to the growing pain in the commercial real-estate industry, released new tax rules that make it easier for distressed property owners to restructure loans that were packaged by Wall Street firms and sold as securities.
Most in the real-estate industry, which [...]
Treasury Relaxes Restrictions on Refinancing in an Effort to Stave Off Commercial-Mortgage Defaults
The Treasury, responding to the growing pain in the commercial real-estate industry, released new tax rules that make it easier for distressed property owners to restructure loans that were packaged by Wall Street firms and sold as securities.
Most in the real-estate industry, which lobbied intensely for the move, applauded the action. But some warned it has opened a Pandora’s box, especially for servicers of the securities who will likely come under new pressure from borrowers and competing classes of investors.
The move is the first round of “additional guidance” the Treasury is weighing to stave off what many fear will be a commercial real-estate crisis, according to people familiar with the matter. A Treasury spokesman declined to comment. A record of more than $150 billion of loans bundled into commercial-mortgage-backed securities, or CMBS, will come due between now and 2012. But as financing remains scarce and values of offices, strip malls, hotels and other Buy Cialis Online types of commercial property continue to drop, more property owners are finding it hard to refinance debt as it matures.
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Sep 10, 2009 | No Comments | Sean Mills
SAN DIEGO-Spreads are tightening, but some financing deals are cautiously being made, speakers said at a session on capital markets at the International Council of Shopping Center’s Western Conference and Idea Exchange, which concludes here today.
Funds are still extremely tight, and the money that is available is looking for quality, says Steve Fried, a vice [...]
SAN DIEGO-Spreads are tightening, but some financing deals are cautiously being made, speakers said at a session on capital markets at the International Council of Shopping Center’s Western Conference and Idea Exchange, which concludes here today.
Funds are still extremely tight, and the money that is available is looking for quality, says Steve Fried, a vice president of Mesa West Capital, Los Angeles. The result is an odd situation in which spreads are tightening, from 13% to 15%, to 11% to 13%, despite a dearth of deals.
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Sep 9, 2009 | No Comments | Sean Mills
I have been reading lately about foreign investors, China specifically, had been quietly looking at buying up distressed commercial real estate to take advantage of the falling dollar and crumbling CRE markets. Funny that the Fed’s rescue program, PPIP, is being considered for the acquisitions. With all the REIT fundraising for distressed assets [...]
I have been reading lately about foreign investors, China specifically, had been quietly looking at buying up distressed commercial real estate to take advantage of the falling dollar and crumbling CRE markets. Funny that the Fed’s rescue program, PPIP, is being considered for the acquisitions. With all the REIT fundraising for distressed assets the speculation was China would funnel their money into those coiffures.-Sean
China’s $300 billion sovereign-wealth fund is eyeing big investments in distressed U.S. real estate, according to people familiar with the matter. To finance some of the deals, China may rely on an old trading partner: the U.S. government.
In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge of the matter.
In addition, CIC is weighing investing through one of the U.S. government’s bailout programs, the Treasury’s Public-Private Investment Program, known as PPIP. The program is designed to rid banks of toxic mortgage securities by enticing investors to buy these assets with financing from the U.S. government.
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Sep 3, 2009 | No Comments | Sean Mills
In the past few months, a number of private firms have issued initial public offerings (IPOs) or announced they are mobilizing for public offerings in an attempt to scoop up what they anticipate to be a flood of distressed commercial real estate. And the movement doesn’t seem to be waning, with New York-based Marathon Real [...]
In the past few months, a number of private firms have issued initial public offerings (IPOs) or announced they are mobilizing for public offerings in an attempt to scoop up what they anticipate to be a flood of distressed commercial real estate. And the movement doesn’t seem to be waning, with New York-based Marathon Real Estate Mortgage Trust and Brookfield Realty Capital announcing last week that they want to raise $500 million and $300 million, respectively.
More than 10 private equity groups targeting real estate have either filed or announced plans to file IPOs this summer. The most notable was Greenwich, Conn.-based Starwood Property Trust, which raised $800 million, making it the largest REIT IPO to date this year. The goal of these groups: To buy or originate debt used to finance commercial real estate. They acknowledge commercial opportunities in any number of sectors but say multifamily loans won’t be a specific focus.
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Sep 3, 2009 | No Comments | Sean Mills
One of my partners and I were looking very hard at a deal in the Portland area and the biggest stumbling block with the sellers and listing agent was the vacancy rate for the building. Of course they liked a 5% vacancy rate with a building which had an actual YTD vacancy rate of 8.9% [...]
One of my partners and I were looking very hard at a deal in the Portland area and the biggest stumbling block with the sellers and listing agent was the vacancy rate for the building. Of course they liked a 5% vacancy rate with a building which had an actual YTD vacancy rate of 8.9% and current rate approaching 20%. Needless to say we weren’t buyers based on their numbers.
If you want to figure a good rate look at the unemployment rate in the areas you are interested in, for Portland Oregon area that rate is 13.2%. It makes sense vacancies should trail and track the unemployment numbers especially for a blue collar working class building. Well enough of my rant here is an article from the latest issue of Multifamily Executive.-Sean
Rental Owners Report Soaring Vacancies: People Who Lose Homes Move in With Families Instead of Renting Apartments
Aug. 28–Southern Oregon Rental Owners Association reported a 9.4 percent vacancy rate for June, the highest level in the 20 years that the organization has surveyed its members.
“We knew some of our renters couldn’t afford it and moved in with families,” said association manager Roberta Claudson of SOROA, which consists of rental owners with anywhere from a few rentals to hundreds of properties. “We thought it would be balanced out by people who had lost their homes. But apparently, they’ve moved in with families, too.”
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Sep 1, 2009 | No Comments | Sean Mills
More bad news this time coming form the Commercial Real Estate (CRE) market. The CRE properties are unable to refi due to the correction in values of the underlining asset even though in a lot of cases the property produces sufficient cash flows to service the debt and expenses of the underlining property. Banks are [...]
More bad news this time coming form the Commercial Real Estate (CRE) market. The CRE properties are unable to refi due to the correction in values of the underlining asset even though in a lot of cases the property produces sufficient cash flows to service the debt and expenses of the underlining property. Banks are requiring borrowers to bring cash in to close on the refi in order to have the LTV in line with the market price for the assets. -Sean
Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.
Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn’t been pretty.
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Aug 28, 2009 | No Comments | Sean Mills
It seems to me we are hearing the same old thing from the experts at the conference, hurry up and get ready because now is the time..-
Sean
Halford joined moderator Jeff Moore, senior managing director of CB Richard Ellis Inc.; Brandon Birtcher, president and CEO of Birtcher Development & Investments; Guy Johnson, president of Johnson Capital; [...]
It seems to me we are hearing the same old thing from the experts at the conference, hurry up and get ready because now is the time..-
Sean
Halford joined moderator Jeff Moore, senior managing director of CB Richard Ellis Inc.; Brandon Birtcher, president and CEO of Birtcher Development & Investments; Guy Johnson, president of Johnson Capital; Martin Pupil, executive managing director of Colliers International; and Tom Sherlock, senior managing director of Buchanan Street Partners during the event’s opening panel.
“I think that cleansing is healthy, but it is going to be a painful cleansing,” said Halford. “But if you can get your mind past that, and if the numbers or values get low enough, people will start sniffing around investing, whereas 90 days ago, they wouldn’t dare even talk about investment.”
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