Archive for the ‘Financial Services’ Category

Regions Reliant on Government Spending Take Hits

Thursday, May 16th, 2013

Sequestration and its $85 billion in federal budget cuts planned for this year will bring significant challenges on the U.S. economy and the commercial real estate recovery. According to the National Real Estate Investor, the forced reductions that began March 1st will have real consequences for the U.S. economy, including eliminated and reduced government contracts, reduced private and public sector jobs and furloughed workers.

The region that will take the biggest hit is obviously the nation’s capital and surrounding states. The District of Columbia, Maryland and Virginia, all of which report 19.8% of economic activity tied to federal spending mainly due to a high concentration of government agencies and federal contractors, are all prime targets for cuts. Hawaii (15.8% federal spending), Alaska (13.3% federal spending) and Kentucky (9.9% federal spending) are also states that will experience difficult times this year.

To read the full article from the National Real Estate Investor, click here.

Posted in Eastern, Economy, Financial Services, Real Property, Sequestration | No Comments »

High Leverage in Commercial Real Estate Becoming a Concern

Tuesday, May 7th, 2013

According to the National Real Estate Investor, commercial properties are taking on larger and larger loans relative to their stabilized income – and that could mean trouble down the road. A first quarter review by Moody’s Investors Service of CMBS found some initial signs of credit slippage, but also discovered that the currently low interest rates are strengthening property fundamentals, making it easier for owners to make their mortgage payments.

Still, those properties that remain highly-leveraged can expect to have trouble refinancing their debt when the loan ends and the balance come due. The amount of loans with an interest-only period reached 42% in Q1. With the average interest-only period lasting 57 months, borrowers generally have paid very little of the principal by the end of the terms. The risk here lies with the fact that commercial property prices will someday fully rebound to the levels of the income they generate.

To read the full article from the National Real Estate Investor, click here.

Posted in Economy, Financial Services, Real Property | No Comments »

Enforcing “Transparency” in CA Property Tax Consulting Industry

Wednesday, April 24th, 2013

Due to the on-going political scandal in the Los Angeles County Assessor’s Office and the backlash of negative press resulting from the case, the Los Angeles County Board of Supervisors has proposed an ordinance to monitor and enforce more “transparency” in California’s property tax consulting industry. The Los Angeles District Attorney has described the scandal as a “pay to play” scheme involving campaign contributions to the Assessor in return for lowered property tax assessments for those same contributors.

AB 1151, introduced by Assembly member (and former San Francisco Assessor-Recorder) Phil Ting (D-SF), is attempting to generate the desired transparency by establishing a standardized, statewide property tax agent registration system that will be accessible by the public. The legislation is being considered by various committees and is subject to numerous revisions.

To read the full article from Paradigm Tax Group, click here.

Posted in Financial Services, Paradigm Info, Real Property, Western | No Comments »

Dollar Stores are Big Business for Net Lease Investors

Wednesday, December 26th, 2012

As dollar stores continue to pop-up everywhere across the country, they are single-handedly changing the net lease investment market traditionally dominated by drug stores and fast food restaurants. According to the CoStar Group, triple net leased retail outlets have always proven to be popular with investors because of the minimal property management involved (triple net leases typically pass all expenses on to tenants), and the usually longer term leases favored by drug store and fast food users.

As triple net retail properties tend to be very popular, the aggressive expansion of the dollar store industry has also revved up investor interest in the sector as well. Transaction volume still remains the most heavily concentrated in recently constructed properties, but dollar stores located in above average markets with strong demographics remain in high demand no matter when they were constructed.

To read the full article from the CoStar Group, click here.

Posted in Financial Services, Real Property, Retail, Store Chains, Strip Centers | No Comments »

Community Banks Reach New Plateau for Commercial Real Estate

Tuesday, December 18th, 2012

The share of community banks’ assets devoted to commercial real estate loans has drastically increased over the last 20 years. According to Columbus Business First, commercial real estate loans made up about 26.7% of all assets at community banks in 2011, up from 19.6% in 2000 and from 14.5% in 1990. This is significantly higher than larger banks, which have shrunk their portfolios to 8.8% in 2011, down from 9.9% in 2000 and 12.1% in 1990.

The study, conducted by the FDIC, shows how community banks have evolved over the past 20 years and now predominantly focuses on lending secured by commercial real estate, which helps them maintain their advantage in generating higher net income. The study found that the overall performance gap between community banks (up to $1 billion in assets) and non-community banks stems directly from lower interest income over the last five years.

To read the full article from Columbus Business First, click here.

Posted in Banks, Economy, Financial Services, Real Property | No Comments »

Commercial Mortgage Debt Outstanding Increases Again

Wednesday, December 12th, 2012

Commercial and multi-family mortgage debt outstanding increased in the third quarter of 2012 by $6.6 billion, or roughly 0.3%. According to RealEstateRama, for the fourth quarter in a row, the net increases in lending by investor groups has outpaced a decline in the balance of commercial and multi-family mortgages held in commercial mortgage backed securities. Commercial banks continue to hold the largest share of the total outstanding debt at $819 billion, or 34% of the total.

Over the third quarter, the largest increase in dollar terms of holdings was seen by agency and GSE portfolios with a rise of $9.4 billion. Banks and thrifts increased their holdings by $4.4 billion, while CMBS, CDO and other ABS issues saw the largest decrease of $9.5 billion.

To read the full article from RealEstateRama, click here.

Posted in CMBS, Economy, Financial Services, Multi Family, Real Property | No Comments »

Commercial-Mortgage Market Improving

Monday, December 3rd, 2012

Over the course of 2012, the commercial mortgage market has improved greatly as deals once thought impossible to refinance are actually being pushed through. According to The Wall Street Journal, strong investor demand for yield in a low-interest rate world has unleashed a lending boom in commercial mortgages, producing the most favorable conditions for borrowers since 2008. There is expected to be $46 billion in new CMBS issues in 2012 and as much as $65 billion in 2013.

While this may seem good at the surface, industry experts express some concern as they believe underwriting standards already are beginning to suffer as there has been an up to 20% increase in leverage put on properties in recent CMBS deals compared to borrowings in mid-2010 when the market began to come back to life. That being said, the greater availability of financing has also given a needed boost in capital to property owners.

To read the full article from The Wall Street Journal, click here.

Posted in CMBS, Economy, Financial Services, Real Property | No Comments »

Hotel Buyers Looking for Debt Post-Deal

Monday, November 26th, 2012

Hotel investors are beginning to pay all cash first for properties, then layering in debt later to move deals along quicker. According to HotelNewsNow.com, a hotel buyer purchasing a hotel all cash and paying off existing mortgages, and then replacing the debt with lower-cost financing is not a new idea, but one that has increased around the industry as the transaction environment has been slow moving over the course of 2012 thus far.

Much of the drop in transaction activity for 2012 can be attributed to the amount of time it takes to work out a deal with special servicers or do the credit with the buyer, a process that can be minimized when coming to the table with all cash. An added benefit of cash is that it eliminates many complex issues that exist when buying a hotel these days as it gives the buyer and seller leeway to hash out the intricacies of the transaction.

To read the full article from HotelNewsNow.com, click here.

Posted in Economy, Financial Services, Hospitality, Hotels, Real Property, Special Services | No Comments »

Commercial Property Faces Risk on Yields

Thursday, November 15th, 2012

Commercial real estate investors are beginning to borrow less and expect lower returns due to rising risks that include increases in interest rates. According to Bloomberg, investors are less interested in taking advantage of all the money they can borrow, and more interested in investing their cash. Due to the Federal Reserve’s policy of keeping its benchmark interest rate near zero, sales of commercial properties across the US rose 19% in the third quarter from a year earlier to $67 billion.

Prices continue to be driven up by the low rates which in the past have inflated values leading to their eventual falling back to the norm. Investors are still warned to be mindful of their cash flow, even as debt-ridden owners try to dispose of properties. The current trends in the commercial real estate market are making secondary markets outside gateway cities in the US a good place for investors to spend cash as the buildings are lower priced and rents are rising.

To read the full article from Bloomberg, click here.

Posted in Economy, Financial Services, Real Property | No Comments »

LA County Assessor Arrested after Yearlong Corruption Probe

Thursday, October 18th, 2012

As a conclusion to a yearlong investigation into influence peddling and dramatic reduction of property taxes for political allies, Los Angeles County, California assessor John Noguez was arrested Wednesday. According to The Washington Post, Noguez was arrested along with his chief appraiser Mark McNeil and Arizona tax consultant Ramin Salari after being accused of conspiring to slash property values and save millions of dollars in property taxes for clients of Salari, a campaign contributor to Noguez.

Investigators have been looking into over 100 cases of improper tax breaks among wealthy property owners since Noguez’s election. Employees in the Assessor’s office complained they were pressured to lower property taxes for clients of prominent campaign contributors. If convicted, Noguez could face just over 30 years in state prison, Salari could face just over 29 years and McNeil could face just over 20 years.

To read the full article from The Washington Post, click here.

Posted in Economy, Financial Services, Real Property, Western | No Comments »

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