Blog

commercial (14)

Hope in Detroit: An Outsider on Motown’s Entrepreneurial Renaissance

Posted by Barbara Keila on December 18, 2012 at 5:30am

Long written off by many, Detroit is becoming an interesting city to watch from an urban revitalization perspective. At the core of these developments is the emergence of a startup ecosystem where (for the most part) one did not previously exist. While still early, the progress made in this area over the last several years has been impressive and is having an impact on the region. As an outsider looking in with experience in other entrepreneurial hubs, I wanted to share thoughts on conditions and trends coming together that may help elevate this into a more viable and sustainable model for the city going forward.

I grew up in the Detroit area in the 1970s and 80s. While officially in the suburbs, our house was only two blocks from the city border, bringing the city a bit more upfront in our personal lives. During high school and college, I also worked at the old Tiger Stadium, which afforded the opportunity to experience the city even further.

It was a tough time for Detroit, coming off the riots from the late 1960s and the accompanying exodus of hundreds of thousands of residents. Those challenges continued well after I had left, with the downsizing of the automotive industry, a shrinking tax base, and too much mismanagement and corruption at a local government level.

After graduating from college, I left the area for a programming job in another state. While I continue to spend time in Ann Arbor, I’ve spent little in downtown Detroit over the last 25 years. Still, with family and friends in southeastern Michigan, I have watched it from afar with interest over the years. More recently I’ve been intrigued to 

watch the rise of the startup community in the region. To be honest, I did not give it a lot of real hope considering the multitude of challenges facing the city.

Sometimes when you’re down, the only way is up. But the story goes much beyond that here. Despite the potential for municipal bankruptcy currently hanging over the city, there are good things happening in Motown. The recent TechCrunch profile of Dan Gilbert does a great job outlining some of them. The region is taking steps and riding some key trends that are starting to effect change. From an outsider’s perspective with some familiarity with the region, here are some of the key ones that are driving (at least for me) a more optimistic view of the city’s trajectory:

 

Read More: http://www.xconomy.com/detroit/2012/12/18/hope-in-detroit-an-outsider-on-motowns-entrepreneurial-renaissance/

Read more…

Smarter Investing: Distressed Property Notes vs. Short Sales

Posted by Brecht Palombo on September 11, 2012 at 6:07am

2012 has been dubbed by some as ‘Year of the Short Sale’, with even more short sales expected to be completed than last year. However, are they really a smart move for investors or is investing in distressed property notes a better way to go?

There has been a lot of buzz in the last few weeks about mortgage institutions cutting down on the time it takes to process short sales. Fannie Mae and Freddie Mac have announced new guidelines requiring loan servicers to now make decisions on short sales within 30 to 60 days. While Bank of America has sliced its short sale processing time back to 20 days from 45 or much, much longer via their new, improved online platform.

However, while short sales may be a great deal for sellers and even offer the feeling of nice discounts for those buying new residences or investing in the odd property here and there, they do pose some issues for full-time or more active investors. Let’s take a look…

5 Reasons Distressed Property Notes are better than Short Sales

1. Short Sale Fraud

Banks angry at real estate investors profiting while they take a hit by reducing and writing off principal balance debt have engineered flipping houses which are short sales for profit into becoming ‘short sale fraud’. Whether you agree with it or not, the disclosures and affidavits now required for those involved in short sales pretty much makes it illegal to immediately turn them around for profit. Considering the number of tasks forces and regulators hunting down real estate fraudsters (when they’re not partying it up in Cartagena, Colombia or Las Vegas) it just isn’t worth the risk to even be accused of such a thing.

2. Buying Notes Eliminates Hassles

Buying distressed property notes gets rid of a lot of hassle that comes with acquiring short sales. Besides the bizarre and trying upfront paperwork and negotiations short sales can come with big property management headaches and even tougher problems for those buying into the new fantasy breed of REOs to rentals on offer.

3. Reducing Costs & Risks

Investing in distressed property notes means slicing out soaring costs associated with closings, financing and points and rehabbing. Then there are the huge liabilities that can come with these properties as a direct owner which can threaten your investments including personal injury.

4. Resales

Distressed property notes can actually be a lot easier to sell and cash out in any market. A little seasoning and you can pump up their value and if you like cash out just a portion of the payments while retaining the note.

5. Better Bargains

There are good deals to be found among short sales. They may not all be turning in profits but buying a home that was once sold for $6 million for just $2 million can feel great. However, commercial and construction distressed property notes currently often offer even better discounts and bargains as there may be even more of these being held by banks than single family residences. Plus there is far less competition for them.

Read more…

Freddie Mac Weekly Update: Bond Yields Rise and So Do Mortgage Rates

Posted by Howard Bell on January 27, 2011 at 2:08pm


30-year fixed-rate mortgage: Averaged 4.80 percent with an average 0.7 point for the week ending January 27, 2011, up from last week when it averaged 4.74 percent. Last year at this time, the 30-year FRM averaged 4.98 percent.

The 15-year fixed-rate mortgage: A veraged 4.09 percent with an average 0.7 point, up from last week when it averaged 4.05 percent. A year ago at this time, the 15-year FRM averaged 4.39 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: A veraged 3.70 percent this week, with an average 0.7 point, up from last week when it averaged 3.69 percent. A year ago, the 5-year ARM averaged 4.25 percent.

One-year Treasury-indexed ARMs: A veraged 3.26 percent this week with an average 0.6 point, up from last week when it averaged 3.25 percent. At this time last year, the 1-year ARM averaged 4.29 percent. 

Freddie Sayz

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

Mortgage rates followed bond yields a little higher this week amid positive data reports from  The Conference Board that suggest the economy is strengthening. The index of leading indicators rose 1.0 percent in December, nearly twice that of the market consensus forecast and represented the sixth consecutive monthly increase, according to the Board. They also reported a stronger gain in consumer confidence for January, rising to an eight-month high. In addition, the share of households who said jobs were plentiful rose to the highest level since May 2009.

Consumer demand in the housing market is also showing some positive gains. Sales of  existing homes  rose in December to the strongest pace since May and sales of  new homes jumped to the highest since April. At their current sales rate, the expected time on the market fell from 9.5 to 8.l months for existing houses and fell from 8.4 to 6.9 months for new home

 Related Articles

Commercial Property: Money Becoming Available

A Recent Survey: Is It Time To Buy Rental Property

Section 8 : An Owners Guide

 

Read more…

Mortgage Bankers Weekly Update: Applications Decrease

Posted by Howard Bell on January 27, 2011 at 2:08pm
                                             Mortgage Bankers Association for the week of 01/5/2010

Market Composite Index: (loan application volume) d ecreased 3.9 percent on a seasonally adjusted basis from the prior week. For the week ending December 31, 2010, this index increased 2.3 percent on a seasonally adjusted basis.

Refinance Index: decreased 7.2 percent from the previous week and the seasonally adjusted Purchase Index increased 3.1 percent from one week earlier. The following week, the Refinance Index increased 3.9 percent and the seasonally adjusted Purchase Index decreased 0.8 percent

Purchase Index: decreased 18.1 percent the week before Christmas and decreased 12.2 percent the week following. This measure was 12.1 percent higher and 6.1 percent lower, respectively, than the same period a year ago.

Refinance Share of Mortgage Activity: for the week ending December 31, 2010 was 71.0 percent, an increase from 70.3 percent for the week ending December 24, 2010.

Arm Share: No info available this week

MBA outlook: (Excerpted from mbaa.org)

The financial markets response to the announcement of QE2 on November 3 has likely been a disappointment to the Fed. Equity prices have risen, but long-term rates have backed up considerably, with the yield on the 10-year Treasury pushing up past 3%. And turmoil in Europe has led to an increase in the value of the dollar in exchange markets, not the decline that had been expected in response to QE2. Had the Feds proposal for renewed large-scale asset purchases been well received, Fed officials might now be considering increasing the announced rate of purchases to $100 billion per month or more. But dong so under present circumstances would likely evoke a political firestorm.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.34 percent, up 23 basis points from last quarter and down eight basis points from one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 4.39 percent, down 18 basis points from the second quarter of 2010 and down eight basis points from one year ago. The seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.70 percent, a decrease of 41 basis points from last quarter, and a decrease of 15 basis points from the third quarter of last year.

We expect that mortgage originations will decrease to $967 billion in 2011, the lowest level of originations since 1997. This is a decline from $1.5 trillion in 2010 and a little under $2.0 trillion in 2009. Purchase originations should increase to $615 billion in 2011 up from $473 billion in 2010. Refinance originations, primarily impacted by the level of mortgage rates, are expected to drop sharply in 2011 to $352 billion and fall further in 2012 to $237 billion. We expect that the refinance share of originations should fall from 69 percent in 2010 to 36 percent in 2011, and then 24 percent in 2012 as rates climb above the 6 percent mark.

 

Related Articles

FHA Offers Short Refi Program For Underwater Homeowners

Good News! MBAA New Forebearance Program

Filling The Vacancy

Read more…

Freddie Mac Weekly Mortgage Update: Long-Term Mortgage Rates Fall for the Ninth Week Out of Ten

Posted by Howard Bell on August 28, 2010 at 10:06am

30-year fixed-rate mortgage: Averaged 4.36 percent with an average 0.7 point for the week ending August 26, 2010, down from last week when it averaged 4.42 percent. Last year at this time, the 30-year FRM averaged 5.14 percent.

The 15-year fixed-rate mortgage: Averaged a record low of 3.86 percent with an average 0.6 point, down from last week when it averaged 3.90 percent. A year ago at this time, the 15-year FRM averaged 4.58 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: Averaged 3.56 percent this week, with an average 0.6 point, unchanged from last week when it also averaged 3.56 percent. A year ago, the 5-year ARM averaged 4.67 percent.

One-year Treasury-indexed ARMs: Averaged 3.52 percent this week with an average 0.7 point, down slightly from last week when it also averaged 3.53 percent. At this time last year, the 1-year ARM averaged 4.69 percent.

Freddie Sayz
Attributed to Amy Crews Cutts, deputy chief economist, Freddie Mac.

Existing home sales plunged 27 percent in July, while new homes fell 12% to a new all-time record low, which led to some market concerns that the housing market may slow the economic recovery. As a result, long-term bond yields fell to the lowest levels since January 2009, allowing fixed mortgage rates to ease to new record lows this week.

Much of the slowdown in sales, however, was expected due to the recently expired homebuyer tax programs, which pulled through future home purchases into the first half of the year. For instance, average existing home sales over the first seven months of 2010 were nearly 8 percent higher than over the same period a year ago.
Moreover, house prices still appear to be stabilizing. Nationally, house prices rose 0.9 percent on a seasonally-adjusted basis during the second quarter of this year this year after 11 consecutive quarterly declines,

Read more…

Mortgage Bankers Weekly Update: Mortgage Refinance Applications Continue to Increase

Posted by Howard Bell on August 28, 2010 at 10:05am
Mortgage Bankers Association for the week of 08/25/2010

Market Composite Index: (loan application volume) increased 4.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.5 percent compared with the previous week.

Refinance Index: increased 5.7 percent from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 0.6 percent from one week earlier.

Purchase Index: decreased 1.1 percent compared with the previous week and was 38.8 percent lower than the same week one year ago.

Refinance Share of Mortgage Activity: increased to 82.4 percent of total applications from 81.4 percent the previous week, which is the highest share observed since January 2009.
Arm Share: increased to 5.8 percent from 5.7 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org)

Existing home sales in June declined 5.1 percent to a seasonally adjusted annual rate of 5.37 million units from 5.66 million in May, and are 9.8 percent higher than in June of last year. Single family home sales fell 5.6 percent to 4.70 million units in June from 4.98 million units in May, and are 8.5 percent above the pace in June 2009. For both total existing home sales and single family home sales, the monthly decrease was the largest since January this year. We predict that mortgage originations will decrease to $1.5 trillion in 2010 from an estimated $2.1 trillion in 2009. Purchase activity continues to be weak, while refinance activity is being propped up by mortgage rates that are close to historical lows, although there is much less refinancing going on now than in previous periods of comparably low mortgage rates. Purchase originations will fall to $576 billion from $750 billion in 2009 and refinance originations will decrease to about $900 billion in 2010 from $1.2 trillion in 2009.

Related Articles

Good News! MBAA New Forebearance Program

Short Sellers And The Forclosed Catch A Break

The longer term outlook for apartments remains good.
Read more…

Commercial Real Estate Key to Success

Posted by Ron Costa on June 7, 2010 at 5:00pm

I am currently reading the Emerging Trends Real Estate 2010 report and happened upon this quote to start the Second Chapter of the document:

“The key to success in real estate investing is to follow the capital flows, not the fundamentals. Anticipate what capital wants and be there.”

This is a must-read report for anyone in the commercial real estate world or just anyone looking for knowledge on where the industry has been and where it is going. You can download the report on the homepage at the www.CommercialREOs.com website.

According to the report:

Slowly, capital will flow back into commercial real estate markets during 2010, led by all-cash investors “looking for pop” in quality assets owned by distressed borrowers or sold by lenders out of growing REO portfolios.

... a very interesting read indeed

Read more…

REO's and the world of Commercial Real Estate

Posted by Jason Record on May 6, 2010 at 6:01am
As a current member of a Commercial real estate team and an eight year background in Residential real estate...I wonder how the world of REO is going to effect agents who are currently specialize in Residential REO's, but want to venture into the Commercial side of REO.

Do residential agents want the commercial REO's? And if so, are they getting listings from their asset managers?

If residential agents don't want the commercial REO's - where and/or who are those listings going to.

Do assest managers believe that residential agents have the knowledge to sell commercial properties? And do most asset managers have residential and commercial portfolios?

Is there a market for agents that do both residential and commercial? Or is it more effective to have a specialty within one or the other?

Does anybody think teaming up a residential agent with a commercial agent will be a proactive and profitable move for future REO business?

There are so many more questions and comments to make regarding this scenario that I can't mention all of them at this time. We are in a volatile and daily changing market that predicting the future based on history seems futile.






Read more…

What Does the Stock Market Have to Say About Housing

Posted by Howard Bell on March 17, 2010 at 11:35am


Real Estate Investment Trusts
REITs are investment vehicles that trade like stocks or bonds.

Looking at the REITs and the various real estate sectors can help understand the underlying real estate trends we work with.

REITs have spent the past year raising money. All the sectors have been seriously damaged and therein lies the

opportunity. REITs that have been able to raise money are positioned for opportunistic buys. Cash heavy REITs wont have to rely on banks for loans and are waiting for banks have to unload non performing loans.These are going to be the winners here as some banks can no longer hold back on foreclosures. Stock market investors will often try to pre position themselves, to buy before the rest and hope to reap greater profits. They arent always right and they can certainly be too early.


REIT Sector Performance

1. Regional Shopping Malls: Up 11.9% in February
2. Shopping Centers: Up 8.9%
3. Apartment Sector: Up 8.4%

Given that many of these same sectors dropped 20-25% this time last year, its another sign that investors are beginning to think the worst may be over. According to the recent Price Waterhouse survey: many commercial real estate investors who held investments, overleveraged, or bought late in the cycle now face struggles because 2010 is expected to present many challenges as capital remains limited, rents continue to decline, and vacancies. But even with these snags, the firm says next year will be a great time to buy commercial real estate assets.

The Price Waterhouse survey goes on to note that Next year should open the gates on distressed properties as more community and regional banks fail and the Federal Deposit Insurance Corp. sells their assets. Surviving banks will keep their best performing commercial real estate loans alive but foreclose on the rest as their loan-loss cushions allow. Sounds like bottoming to me...

REsourced from www.yourpropertypath.com

You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com

Related Articles

Home Trends Price Stability
Case Shiller: Slowly Getting Better
Small Banks In Trouble



Read more…

Commercial Property: Money Becoming Available

Posted by Howard Bell on February 23, 2010 at 2:28pm


Lenders may be beginning to open up as they see some signs of an economy that is stabilizing. Data released by the Mortgage Bankers Association (MBA) notes commercial and multifamily mortgage originations rose 12% in the fourth quarter year over year. Loan originations in the fourth quarter also were 15% higher than in the third quarter. see chart

life insurance companies posted 112% increase in loan originations in 4Q of 2009 compared with the fourth quarter of 2008, reports MBA. if you look to the chart, you can see relative stabilization in the last five quarters.

To be sure, commercial and multifamily originations remain at low levels. The Commercial/Multifamily Mortgage Bankers Originations Index, fell 79% over the last two years.The Commercial/Multifamily Mortgage Bankers Originations Index, for example, fell 79% over a two-year period ending in the third quarter of 2009.

And more to come: According to Foresight Analytics. For banks with $100 million in assets to $100 billion, commercial real estate is the largest part of their loan portfolio. Relatively little single-family. The regional banks are the sweet spot for bad commercial paper, with most small and midsized regional banks about to take the brunt of the storm.

Most of the problem loans were made between 2003 and 2007 and will be looking to refi or face possible default. They are expected to face the markets and the default rate should level off around 2011, Foresight Analytics
thinks we are about 60% through the loss process.

Money from large insurers and REITs seem to be picking up the slack as the banks still remain on the sidelines, preferring to rebuild their balance sheets rather than lend into a recession. Wherever the money is coming from, it is looking up

What it means for buyers and sellers of small properties and residential homes is that loan availability may be more likely from larger banks rather than the regionals as they brace
for the onslaught of bad paper expected to crest in late 2010 or 2011.

REsourced from www.yourpropertypath.com
You may republish this article, as long as you do not edit and you
agree to preserve all links to the author and www.yourpropertypath.com

Related Articles
FHA Financing Now Available For REO Properties
Fannie and Freddie Mae Get a Blank Check For Christmas
FHA and Fannie Mae Propose Rule Change


Read more…

REITs: Where Are The Good Deals

Posted by Howard Bell on February 23, 2010 at 2:00pm


Real-estate investment trusts sold $24 billion in new stock last year, raising to profit from commercial-property distress by picking up high-quality real estate at bargain prices. But they are having trouble finding deals. Tishman Spier, recently handed the keys back to the banks. Peter Cooper village and Stuyvesant Town comprise 56,000 units. Another 2.6 billion dollar deal was handed back to Barclays and they have no intention of putting these properties up at bargain basement prices. They are looking past the problem waiting for better days. see chart

So, REITs bought only $4.6 billion of property in 2009, a 67% decline from the previous year, according to research firm Real Capital Analytics. They cant get prime properties on the cheap. After dumping so much residential property on the market, driving prices down and gathering much evil eye for doing that, they learned a lesson.

Why

Commercial property prices some 35% to 50% off their peaks, most banks are keeping their best assets off the market. Many REIT expected the number of distressed buildings forced to market to surge as owners defaulted and lenders foreclosed. But while the number of problem loans has been growing, so far this hasn't translated into many fire sales. Finally there are some signs of an end to the equity drubbing taken by commercial real-estate owners.

From a cash-flow perspective, REITs still face declining rents and occupancy levels and equity evaporation. The REITs raised so much money waiting for the banks to hand off quality properties on the cheap and instead, they are going to manage and hold property. This may not be the generational opportunity the REITs expected. but I think it speaks volumes about how the world has changed for the better. Suddenly, there is a view that better times are coming.

REsourced from www.yourpropertypath.com
You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com

Related Articles
Case Shiller And Housing Markets
REITs: The Other Big Lenders
Multifamily Apartments: Get Higher Rents and Lower Your Vacancy
Read more…

NFSTI REO Coach-A-Thon Schedule

Posted by Marcelo Da Silva on August 28, 2009 at 6:30am
•Are you interested in increasing REO?•What about Commercial REO?•Do you know what to say to an Asset Manager?WEEK ONE•Foreclosure Angel Foundation Introduction (Today - Friday)WEEK TWO•8/31/09 - State of the Market•9/01/09 - Explosive Commercial REO Oportunities•9/02/09 - BPO Automation Made Simple and Profitable•9/03/09 - Loan Modification as a Secondary Revenue Stream•9/04/09 - Social Media - The Blogging EffectWEEK THREE•9/08/09 - Foreclosure Angel Foundation•9/09/09 - Putting the 'Short & Sweet' into Short Sales•9/10/09 - Razor Sharp Seling Skills w/Side of Motivation•9/10/09 - How to Attract More Buyers Than You Ever Thought Possible•9/11/09 - Social Media Marketing Strategy for REO AgentsWEEK FOUR•9/14/09 - Office Organization, Systems adn Peace of Mind•9/15/09 - REO Task Management Simplified & Served Hot!•9/10/09 - How to Talk with An Asset ManagerThe best REO coaches in the nation are coming together to benefit the Foreclosure Angel Foundation. For more information go to www.clubtsunami.netBe A Piece Of The Solution!
Read more…

CMBS Outlook Finds Conditions Are Bad And Getting Worse For Commecial Real Estate

Posted by Carlos H. Silva Sr. on April 9, 2009 at 10:34pm
CMBS Outlook Finds Conditions Are Bad and Getting Worse for Office, Retail and Hotel SectorsDeteriorating CMBS Loan Performance Indicates Worst May Not Be OverArticleBy Mark HeschmeyerApril 8, 2009Judging from the latest analysis coming out on the commercial mortgage-backed securities (CMBS) market, the worst may be yet to come for commercial real estate.Recent reports issued by Deutsche Bank, DBRS and Fitch Ratings find that commercial real estate fundamentals have dramatically weakened across most major property segments and markets, with some starting to reach the depressed levels of the last major recession in the early 1990s.And as conditions worsen, borrowers and workout specialist may have fewer and fewer options, the reports warn, which could further depress the industry.Richard Parkus, head of CMBS Research at Deutsche Bank, projected in his firm's commercial real estate outlook last month that property prices are expected to decline 35% to 45% (or more) overall during this recession. That would exceed the sale price declines seen in the early 1990s. Parkus added that declines in rental and vacancy rates may also approach levels of the early 1990s.CMBS collateral performance are currently deteriorating at a historically fast pace and Parkus predicted the total delinquency rate could likely to exceed 3.5% by year-end. That is one of the highest estimates that have been projected by CMBS analysts. Worse still, Parkus added, it could go as high as 6% by 2010. The peak delinquency rates in early 1990s were 6% to 7%.CRE at a PrecipiceBy far the greatest risk facing CMBS loans right now is maturity default/extension risk, not term default risk, Parkus of Deutsch Bank said.A large percentage of CMBS loans made in 2005-2008 may not qualify for refinancing without substantial equity injections due to much tighter underwriting standards, massive price declines and declining cash flow.Multifamily loan performance has been deteriorating at a dramatic pace, Parkus said, with Midwestern "rust-belt" states plus Florida, Georgia and Texas among the worst performing markets. Interestingly, California and Arizona, ground zero for residential mortgage problems, continue to experience very low multifamily delinquencies.Parkus also noted that the deterioration of office properties values are beginning to accelerate due to job cuts. "We expect office to be one of the hardest hit property segments," Parkus said.Parkus noted what happened with 1540 Broadway in New York. Macklowe Properties purchased the office building in Time Square two years ago from Equity Office Properties for $1,080 per square foot.Last month, CBRE Richard Ellis Investors purchased the building for $403 per square foot -- an almost 63% price decline in two years.Retail CMBS Loss Severities To ClimbMeanwhile, Fitch Ratings put out a particularly bleak outlook for retail loan performance, projecting that loss severities on retail loans are likely to trend upward for the next several years as defaults on retail loans increase.Exacerbated by declining consumer spending and the shrinking U.S. economy, retail vacancies will likely increase to new highs as bankruptcies, store closings and retail consolidation continues, the bond rating agency said.Consumer spending has declined 4.3% as of year-end 2008. That contrasts with the Internet-bubble reduced recession of 2002 and 2003 when consumer spending remained positive.Retail delinquencies account for $1.7 billion of the $6.2 billion total delinquencies in the Fitch Loan Delinquency Index. The Loan Delinquency Index across all property types is 1.28%; with 1.17% of all retail loans within the index currently delinquent. Fitch expects defaults in the retail sector to contribute a greater percentage of the index into 2010.Specifically, Fitch said it expects losses on retail loans may increase as much as 34% to 60% from the 5-year cumulative average of 44% for current defaults."Increased vacancies in the retail sector will lead to longer resolution times as it will take longer to re-tenant space which will ultimately result in higher losses," said Mary MacNeill, managing director of Fitch Ratings.Hotel CMBS Loan Performance Deteriorating RapidlyIn a report issued on hotel loans held in commercial mortgage-backed securities by DBRS, the bond rating agency noted that, in a declining economy, commercial real estate investors are seeking long-term leases, low tenant rollover, low expense ratios and the ability to pass along increasing operating expense to tenants. Unfortunately, hotel properties offer none of these features."News coming out of the hotel market is, quite simply, not good. Well, bad actually. No, make that terrifying," the bond rating agency said. "Predicting hotel performance over the next 12 to 18 months is like juggling chainsaws while riding a unicycle."Most informed market participants seem to be gathering consensus around a high single-digit percentage decrease for revenue per available room (RevPAR). Given the apparent inability for most individuals to grasp just how bad the economy is and how bad it will get, it would not be surprising to see decline in RevPAR by well more than 10% in 2009, DBRS said.Options NarrowingAs CMBS loan delinquencies climb, Parkus of Deutsch Bank said, the options available for borrowers will likely start to narrow.As CMBS special servicers are appraised out of their controlling class positions over the next two years, they may have less incentive to extend maturing loan, Parkus said. In addition, senior bondholders are becoming much more activist against extensions."We expect this conflict to intensify significantly over time, bringing the threat of legal action against special servicers that practice widespread extensions," Parkus said.Fitch Ratings also said special servicers may need to explore several different options to maximize recoveries. For example, with single-tenant retail, spaces can be marketed to non-traditional entertainment tenants. Conversely, they can also be subdivided in order to attract smaller tenants. Large vacant mall locations, such as those left vacant by Steve & Barry's or Macys, typically find more interest by subdividing the space or even selling the space back to the mall operator for redevelopment.Barring such options, special servicers could be more likely to foreclose on properties as borrowers become unable to fund operating shortfalls due to the loss of tenants, Fitch Ratings said.
Read more…

Are You In The Commercial Distressed And/Or Bank Owned Real Estate Assets Market?

Posted by Carlos H. Silva Sr. on February 26, 2009 at 7:30pm
We have an investment network with great opportunities in nationwide distressed/bank owned real estate markets. Our offerings consists of land, semi-completed residential/commercial developments, commercial properties, multi-family, large apartment buildings, resorts, hotels, portfolios and any type of real estate asset. We are always looking for new partners, offerings and investors to add to our network. If this is one of your main markets please accept my invitation to join the REOPro Commercial REO group.*******If you are interested in acquisitions please contact me directly if prepared to provide qualifications and ability to perform. We reserve the right to only respond to offering inquiries from ready, willing and able prospects!********
Read more…
Liberty House Realty | Online Montessori Preschool | Digital Marketing Agency