Socal Multiunit Real Estate

ONLY MULTIUNIT CAP RATES HOLDING STEADY

MULTIUNIT CAP RATES HOLDING STEADY

Edited by Jodi Summers

Bravo to the apartment building market for keeping investors satisfied through the recession. Although deal volume has been dropping in the first quarter, the cap rate for closed transactions has been holding steady at 6.8%.  –> The multiunit sector is the only major property category to hold the line on cap rate expansion.

Get it all @ http://www.costar.com/News/Article.aspx?id=805689186917C1830E65776FC4A47B2B&ref=100&iid=123&cid=383F14EEE265B182474DA2442BACBBBF

COMMERCIAL REAL ESTATE FINANCE TAKES A HIT

COMMERCIAL REAL ESTATE FINANCE TAKES A HIT

by Jodi Summers

Those involved in commercial real estate are feeling confident that the marketplace won’t take anywhere near as hard a hit the residential real estate market…but the fallout has certainly begun. Some companies, such as Anthracite Capital, may not survive to benefit from the Federal Reserve’s effort to resurrect the U.S. financial markets with cash.

Forbes.com, the rock for reliable statics and information, reports that BlackRock-managed Anthracite Capital invests in high-yield (read: junk) bonds and loans that finance commercial real estate. Recently, the company announced a mammoth fourth-quarter loss - financial problems ranging from busted loan covenants to unpaid margin calls - and a warning by its auditors that its demise may be imminent.

The experts perceive that when times are tough and market conditions are deteriorating, banks behave differently. As markets deteriorate, bank loan portfolios erode in value putting pressure on bank capitalization ratios.

“Undercapitalized banks shift their attention to short-run capital preservation rather than long-run profit maximization, and this change in goals has several undesirable effects,” observed Eric S. Rosengren, president and CEO of the Federal Reserve Bank in Boston. “Perhaps the most undesirable is that undercapitalized banks, finding it difficult to raise additional capital, are forced to improve their capital ratios by shrinking assets.”

“Since loans are usually the bank’s most significant asset, lending becomes more restrictive,” he said. “And, because undercapitalized banks seek to shrink without incurring additional losses, the specific form the asset shrinkage took could be perverse. For instance, some banks would support troubled borrowers in an effort to avoid loss recognition, while reducing credit to more creditworthy borrowers with whom the bank could curtail credit without incurring a loss.”

Anthracite’s Problem goes back to the company’s business model, which call for a steady stream of outside funding. Issue is, the company has been shut out of the financial markets by the subprime-spawned disaster, and this issue subsequently affected the company’s commercial sector. Anthracite Capital reported a loss of $3.49 per share, miles below the 25 cents per share gain Wall Street had expected. Sales meanwhile were only $26.3 million, 69.6% below the $86.5 million consensus forecast. During the 2007 fourth quarter the company earned 24 cents per share.

In response, It lost half its value on March 18th, closing at 40 cents. The shares began to falter in the middle of 2007, when the subprime crisis started to freeze up credit markets; the stock traded above $12.50 at the time and spun off an annual dividend of about $1.20.

Forbes.com concludes: “Anthracite is a perfect example of what can go wrong with real estate-related businesses. As financing for the sector evaporated, it caused prices to drop, leading to reduced demand for the securities and loans in which Anthracite dealt.”

Original content @

http://www.forbes.com/2009/03/18/anthracite-capital-blackrock-markets-equity-commercial_print.html

http://www.costar.com/News/Article.aspx?id=A8CD2AA8205D4246D8EF8B4AAA852644&ref=100&iid=123&cid=383F14EEE265B182474DA2442BACBBBF

http://www.flickr.com/photos/fox-orian/2561000243/

http://www.cramerproject.com/info.php?symbol=AHR

http://fs.silobreaker.com/thumbs/p/q/pqmhr2vjgdx.jpg

http://www.kfwimer.com/images/ss-subprime.jpg

MULTIUNIT REAL ESTATE UPDATE

MULTIUNIT REAL ESTATE UPDATE

By Jodi Summers

Multifamily is the brightest spot in today’s real estate market.

“The apartment rental market is more stable simply because home sales are depressed,” confirmed Realtors® Commercial Alliance Committee chair Robert Toothaker.

The most recent Commercial Leading Indicators Report notes that the apartment rental market – multifamily housing – has held its own as a result of depressed home sales, and impending foreclosures. Multifamily vacancy rates are forecast to edge up to 6.0% in third quarter of this year from 5.8% in the third quarter of 2008.

Average rent is projected to grow 1.7% this year, following a 2.9% gain in 2008. Multifamily net absorption should be 127,500 units in 59 tracked metro areas in 2009.

“The stimulus package is designed to create jobs, and that would eventually lead to an upturn in the commercial market,” Toothaker said. “However, we need to quickly restore liquidity to commercial real estate lending so transactions can move forward and debt on existing properties can be rolled over.”

Get the whole story @ http://www.realtor.org/press_room/news_releases/2009/02/commercial_re_activity_to_continue_decline

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

by Jodi Summers

Several major East Coast Real Estate Developers have been named as victims in Bernard Madoff’s complex Ponzi scheme, which is rumored to have stripped investors of $50 billion in assets.

According to GlobeSt.com this list includes:

· Larry Silverstein, the World Trade Center developer;

· The Wilpons and Rechlers families;

· Brokers at Newmark Knight Frank and CB Richard Ellis–including Stephen Siegel, chairman of worldwide operations there,

· New Jersey developer Fred Daibes is rumored to have lost a significant amount of money;

· Mort Zuckerman, the chief executive of Boston Properties;

· Fred Wilpon, who owns the Mets and is head of Sterling Equities;

· Steven Simkin, a partner at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison and chairman of the firm’s real estate department;

· A number of limited real estate partnerships in DC are also among the supposed victims.

· Other recognizable names on the list include John Malkovich, Sandy Koufax and Tim Teufel, - if these are the actor and baseball players, respectively, is unconfirmed, as is Larry King, the talk-show host, Frank Lautenberg, the Democratic senator from New Jersey, and Mark Green, a former public advocate of New York City.

Madoff was known to have focused on the rich and famous, sometimes requesting as much as a $20 million minimum.

A large number of the developers who invested with Madoff are reported to have pledged securities held by him for development projects. It has yet to be determined whether the actions of one person, will again impact bank lending criteria.

The complete client list of Madoff has been provided by the Wall Street Journal:

http://online.wsj.com/public/resources/documents/madoffclientlist020409.pdf

Info courtesy of:

http://www.globest.com/news/1341_1341/newyork/176748-1.html

https://ecf.nyeb.uscourts.gov/

http://designdepartment.wordpress.com/2006/09/07/

http://marketplace.publicradio.org/display/web/2006/10/27/down_in_debt/

http://www.observer.com/term/25509

http://gothamist.com/2007/09/07/revised_vision.php

http://blog.lib.umn.edu/mcgin017/blog/fall_2008/honors_intro_to_philosophy_fall_08/

REAL ESTATE ROUNDTABLE CONCLUDES THAT THE END IS IN SIGHT

REAL ESTATE ROUNDTABLE CONCLUDES THAT THE END IS IN SIGHT

by Jodi Summers

Recently there was a recent real estate round table in downtown Los Angeles. Hosted by Marty and Barbara Stolzoff, only top real estate executives were invited. What everyone took away is we are in the dredges of that u-shaped recession our governmentalists talk about.

Christopher Thornberg, an economic adviser to the State Controller, and co-founder of Beacon Economics, noted, “The good news is, we’re about halfway through this. You’re looking at the bottom of the recession around the third or fourth quarter of this year.”

Thornberg’s investment takeaway: People with cash seeking distressed assets should start looking for commercial foreclosures somewhere around the end of 2010.

Randy Zisler, chairman and CEO of Zisler Capital Partners, said he sees real estate securities “bottoming in 2009,” and that the “middle of the year is a good time to start looking to buy.”

Jack Kyser, chief economist of the Los Angeles County Economic Development

Corp., agreed the third quarter is the likely bottom for the regional and national economies, pointed to some possible high notes, including the stabilization of the LA area’s aerospace manufacturing industry.

A very positive note is the renewed interest in C-17 Globemaster cargo aircraft, thanks to the Obama administration.

“Obama seems to like the C-17,” Kyser added.

This is brilliant for Boeing Co. who is on the verge of issuing a “stop work” order to its suppliers for the C-17 cargo aircraft, which is manufactured in Long Beach, with several subcontractors located throughout Southern California.

Get all the dirt @ http://www.globest.com/news/1328_1328/losangeles/176350-1.html

Cisneros to Keynote 5th annual Apartment Finance Today Conference

Attend the Premier Event in the Apartment Industry

The 2009 Apartment Finance Today Conference, March 30-April 1, 2009 in Phoenix, Arizona.
  
Henry G. Cisneros, former secretary of the Department of Housing and Urban Development and executive chairman of CityView, will keynote the Apartment Finance Today Conference, March 30-April 1 at the Arizona Biltmore in Phoenix.

The celebrated housing, business, and city government leader will highlight a high-voltage lineup of multifamily owners, developers, and capital partners working out high-level plans and in-the-trenches tactics to weather the economic storm and position apartment properties large and small for a sustainable marathon run to recovery in the future.

In a luncheon keynote presentation, Cisneros plans to address a wide-ranging agenda of issues for survival amid our era’s most hostile economies. His remarks will focus on the importance of apartments and rental housing, particularly in the throes of the broader housing and economic crisis.

For a complete program, visit www.aptfinanceconf.com

NATIONAL DO NOT CALL LIST CELL PHONE REMINDER

NATIONAL DO NOT CALL LIST CELL PHONE REMINDER

Shortly, all cell phone numbers are being released to telemarketing companies and you will start to receive sale calls.

…. YOU WILL BE CHARGED FOR THESE CALLSTo prevent this, call the following number from your cell phone:

888-382-1222.
It is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.

NEW MARKET TERMS

NEW MARKET TERMS

 by Jodi Summers

We get lots of interesting email…this one, from Sanddra ay Costalife Services rollover@costalifeservices.com  gives us a chuckle…

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET — A 6 to 18 month period when the kids get no allowance and the wife gets no jewelry.

VALUE INVESTING — The art of buying low and selling lower.

BROKER — What my broker has made me.

STANDARD & POOR — Your life in a nutshell.

STOCK ANALYST — Idiot who just downgraded your stock.

INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.

PROFIT — An archaic word no longer in use.