Posts Tagged ‘Real Capital Analytics Inc’

Two New Studies: Commercial Real Estate Recovery Seen in 2011

Wednesday, February 24th, 2010

Two major new reports see recovery in 2011.  Commercial real estate will begin its long-awaited recovery in late 2011 or 2012, according to the fourth-quarter Korpacz Real Estate Investor Survey, which questioned more than 100 real estate investors, including REITs, pension funds, private equity firms and insurance and mortgage companies.  Confirmation is provided by a PricewaterhouseCoopers survey, which notes that Washington policymakers are increasingly tweaking the strings that impact pricing.

According to the Korpacz survey, “Rental rates will continue to decline until strong, consistent job growth resumes.  With $1.4 trillion of commercial real estate debt maturing by the end of 2012, some property owners will not be able to survive the downturn.  Problems related to refinancing that debt could further delay a recovery in the sector.”

Government and regulatory policy will have greater impact on pricing than occupancy levels or rents, according to Real Capital Analytics, Inc.  “Policymakers control what happens to commercial mortgages in default,” Robert White, the president of Real Capital Analytics, wrote in a report.  They “have encouraged loan modifications and extensions even in cases where loans are above a property’s current value.  Tax policy, meanwhile, has made it easier for special servicers to negotiate with borrowers, a move meant to prevent a wave of maturity defaults and property fire sales.  Keep rates low and easing restrictions on foreign capital will also influence industry prospects.”  Real Capital Analytics notes that commercial mortgage-backed securities (CMBS) hold 42 percent of distressed loans; American banks 31 percent; and foreign banks 13 percent.

Two New Studies: Commercial Real Estate Recovery Seen in 2011

Thursday, January 7th, 2010

Two major new reports see recovery in 2011.  Commercial real estate will begin its long-awaited recovery in late 2011 or 2012, according to the fourth-quarter Korpacz Real Estate Investor Survey, which questioned more than 100 real estate investors, including REITs, pension funds, private equity firms and insurance and mortgage companies.  Confirmation is provided by a PricewaterhouseCoopers survey, which notes that Washington policymakers are increasingly tweaking the strings that impact pricing.

According to the Korpacz survey, “Rental rates will continue to decline until strong, consistent job growth resumes.  With $1.4 trillion of commercial real estate debt maturing by the end of 2012, some property owners will not be able to survive the downturn.  Problems related to refinancing that debt could further delay a recovery in the sector.”

Government and regulatory policy will have greater impact on pricing than occupancy levels or rents, according to Real Capital Analytics, Inc.  “Policymakers control what happens to commercial mortgages in default,” Robert White, the president of Real Capital Analytics, wrote in a report.  They “have encouraged loan modifications and extensions even in cases where loans are above a property’s current value.  Tax policy, meanwhile, has made it easier for special servicers to negotiate with borrowers, a move meant to prevent a wave of maturity defaults and property fire sales.  Keep rates low and easing restrictions on foreign capital will also influence industry prospects.”  Real Capital Analytics notes that commercial mortgage-backed securities (CMBS) hold 42 percent of distressed loans; American banks 31 percent; and foreign banks 13 percent.

Boom Market for CRE Buyer-Users

Thursday, August 13th, 2009

In terms of commercial property investment, one positive sign is from firms buying properties to use for their own business operations.  Called user-buyers, these investors have proven they are able to get money from banks to spend on property acquisitions — a relative rarity nowadays.  Those who do not need a766981491_aa0ae36a4b loan already have earmarked their own funds for such a purchase, enabling these user-buyers to acquire a building despite the credit crunch and increasingly wary lenders.

Real Capital Analytics reports that the number of user-buyer transactions in the Philadelphia metro area, for example, rose between June 2008 and June 2009.  During that time span, 25 percent of the 40 office and industrial purchases completed in the region were by users.  Mike Margolis, president of investment sales at Professional Realty Advisors, states, “Considering users are generally 10 to 15 percent of the market, that’s a substantial increase.  “One of the most recent transactions was the acquisition of a 25,200-square-foot building in suburban Phoenixville by a Sheppard Redistribution Inc., affiliate.  The purchased property will be used by the firm for their daily operations.

Distressed CRE Hits $108 Billion

Monday, August 3rd, 2009

More than $108 billion of commercial properties in the United States are now in default, foreclosure or bankruptcy.   That preliminary statistic is nearly double the amount reported at the start of 2009, according to New York-based Real Capital Analytics, Inc.19and20

At the end of June, 5,315 buildings were reported to be in financial distress.  Hotels and retail properties are the most “problematic” assets after bankruptcy filings by mall owner General Growth Properties, Inc., and Extended Stay America, Inc.  The lack of credit is spurring property defaults throughout the country and among every type of investor.

“Perhaps more alarming than the rapid growth in the distress totals is the very modest rate at which troubled situations are being resolved,” according to Real Capital Analytics.  The good news is that approximately $4.1 billion of commercial properties have emerged from distress.  “In far more situations, modifications and short-term extensions are being granted, but these can hardly be considered resolved, only delayed,” the report notes.

Foreign Investors Like Luxury

Thursday, May 1st, 2008

You know what they say about polls.  Still, a recent one is an interesting temperature reading for the new economy.   Overseas investors in United States real estate prefer retail versus office or industrial space right now, according to a recent issue of Commercial Property News. This is just one conclusion in a survey that examined the influence of the current housing slump on the economy and consumer spending.  Nearly 200 members of the Association of Foreign Investors in Real Estate (AFIRE) revised their favored property rankings from the previous year.  Retail soared to first from fifth place, while hotels fell from second to fourth place  Office space plunged from first place to last. “While foreign investors are aware of the high occupancy and rental-rate increases in the office market, they fear that the credit crunch will cause tenants to lay people off and contract their space needs,” reported Karin Shewer, a principal for New York City-based Real Estate Capital Partners, which advises European investors about American real estate markets.  Shewer says multifamily’s lack of popularity is the result of a growing uneasiness with the United States condominium market.“Another issue with multifamily is that cap rates are very low right now and returns are limited,” Shewer said.  The strong preference for hotels relates to aging baby boomers.  According to Shewer, “A lot of baby boomers will inherit from parents who were conservative savers, and as they move toward retirement, they will have more time to travel, and they will occupy hotels.”  So why retail at the top?  Dan Fasulo, managing director for Real Capital Analytics, Inc., notes that “Retail is a diverse property type with many sub-niches.  What these investors might be referencing is high-end urban luxury retail.  We have seen a boom like never before in high-fashion apparel, jewelry and other upscale specialty stores that have been expanding globally as the worldwide economic expansion has driven up disposable incomes of affluent people around the world.”  The AFIRE survey also found that foreign investors still prefer American real estate to that in other countries.  To illustrate, AFIRE’s members collectively own $700 billion worth of real estate worldwide; $230 billion of that is invested in the United States.Lastly, AFIRE members were asked to rank their favorite cities for investment.  New York City and Washington, D.C., took first and second place.  London, Paris and Shanghai completed the list.