Cincinnati’s Largets RE/MAX office merges with local Real Estate Firm

         

             To me this move is one of a personal challenge, for I belong to that RE/MAX firm! The briefing was delivered on 2 platforms, one near Kemper road and the other in Blue Ash. Upwards of 500 RE/MAX Unlimited agents notified in-depth the reasons the worlds largest firm was being moved. The largest portion of the change is our new name, Comey & Shepherd, a firm I know very little about. Comey is a local brand with offices primarily on the east side of the city. According to the booklet I was handed, they have been practicing real estate since 1946.

A few moments stick out in my mind that took place during the meeting, one of which was approximately 6 members of the office staff all moving simultaneously to the back of the room each picking up a stack of blue folders and standing as if at attention in a civil war regiment. Shortly after the logo of Comey and Shepherd flashed on the power point screen, those folders were passed out as if our futures were being delivered to us without consultation. This room was a large ball room at a location I will leave anonymous and in that room it was as if everything I had been truly loyal too simply died.

We were told during the opening statements that REMAX officials were in the building, which was later discovered to be factual. Those officials have now organized a secondary meeting with all the soon to be Comey agents, during 2 hour intervals starting at 9am later this morning. My attendance my be in 1 of those later today.

Reasons for the merger were given at length, they involved unacceptable franchise agreements, financial indifference between the brokers and the regional REMAX officials, and some ethical decision made by those same officials. We were not only told, but shown in writing several quotes, notes and conversations that our brokers have had in attempts to remedy these complications.

However, this is a business that is not organized as a business. I don’t often share my opinion on sensitive matters but my loyalty has been damaged. I feel like my firm has left me, when I wasnt prepared; this is important as through my loyalty I never left my firm when they weren’t prepared. Most would say and so goes life, I believe life is simple and only people make it hard. I will not make this move hard, I will not make this shift difficult and I will not approach the task ahead of me as arduous.

Since the news was released today, I have been in contact with many brokers, current and past clients, co-workers and family. I  hold close to my wishes of great things to those this change will greatly affect. My focus has not only been on those wishes but the wishes of my clients, they come first! I will do exactly what puts them in the best position to maximize their needs. When asked today my initial thoughts of what I am going to do, my reply was constant, I am not sure where I will go, but I know the choice I make will be the best one for my clients and my team.

I have a choice where to focus my energy, and I have been given leverage in this moment. Our team has helped a great lot of people this past 20 months, and we deserve to be given what is best to secure many more months, years and decades of that continued success. When asked several times today what I am going to do another response was, I am going to let the brokers fight over ME, and I will go where ever the best package can be delivered from!

This is one of the DOZENS of emails today from a  broker that I’ve never met nor communicated with unitl this day:

To: Kcooper629@yahoo.com
Sent: Mon, August 9, 2010 9:55:26 PM
Subject: Hey Kris!

I know ***** gave you a call earlier, but I just wanted to follow up and see if there is anything we can do to make the move as easy as possible for you. I’d love to sit down and show you all we have to offer!

 
Let me know when might be a good time for you!
 
My response
I can appreciate your offer for me to meet with you to see what you have to offer. However, I would rather show you what I want and then you draft a package that may be able to fit my vision. Only then would my move be as easy as possible.
 
We all have received numerous calls and emails today.
 
This is a time not just to make a smart decision, but a brilliant decision. I think that’s exactly what I am going to do
Published in: on August 10, 2010 at 19:06  Comments (2)  
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Surge in Loan Workouts is Healthy Sign for Distressed Real Estate

 

Surge in Loan Workouts is Healthy Sign for Distressed Real Estate

 

The worst of the debt crisis may be over for the commercial real estate industry. Several measures suggest that the pace of loans newly classified as delinquent, in default or foreclosure has slowed and lenders are gaining ground in their efforts to resolve problem debts.

Some $6.3 billion in U.S. commercial real estate loans fell into distress in June, the smallest monthly increase since October 2008, according to New York-based Real Capital Analytics (RCA), which tracks loans on commercial real estate properties valued at $5 million or more.

In fact, the $56.8 billion in loans that moved into special servicing or delinquency in the first half of 2010 marked a 24% decrease from the distress that accumulated in the first half of 2009.

Lenders and special servicers resolved $14.6 billion in troubled commercial real estate loans during the first half of 2010, up 272% from $3.8 billion during the first half of 2009.

Resolution entails a 100% recovery rate or repayment of the loan amount, as opposed to a loan modification, which may bring a partial recovery through recapitalization, an extension or other changes that leave the lender exposed to the collateral.

The dollar volume of loan modifications also more than doubled to $15.6 billion, bringing total workouts to $30.2 billion, equivalent to the workout volume for all of 2009.

“This is the first clear evidence we’ve been able to gather that lenders are starting to resolve their troubled issues,” says Dan Fasulo, managing director at RCA.

Stabilized, core assets in primary markets have recovered much of the market value lost since the onset of the credit crisis and recession, Fasulo says. That is making it easier for lenders and borrowers to restructure debt or bring in equity partners to resolve loans, he says.

For example, an office tower at 333 Market St. in San Francisco sold in June for approximately $333 million, about 5% less than the $370 million it traded for in 2006.

In Chicago, a 60-story office tower at 300 North LaSalle traded for $655 million this month. The capitalization rate on the deal was close to 6%.

“That’s pricing we haven’t seen since close to the height of the market,” Fasulo says. “Clearly, we’ve seen a situation develop where owners that may have been under water 12 months ago may now be in the black again.”

The recovery in property values is limited so far to stabilized assets in markets and locations highly sought after by investors, Fasulo emphasizes. Property values remain depressed for assets out of favor with investors, including undeveloped land or buildings with high vacancy rates.

Recovery rates vary

Resolutions accounted for 48% of all workouts in the first two quarters this year, up from 43% of workouts a year ago. Recovery rates are uneven across lender types.

Regional and local banks recovered just 64% of the unpaid loan balance in their workouts during the first half of 2010, for example, compared with recovery rates of 71% for national banks and 77% for international banks.

The poorer performance of regional and local banks is due in part to a heavier concentration of construction loans on those balance sheets, according to RCA.

Commercial mortgage-backed securities (CMBS) special servicers had the lowest recovery rate at 63%. In fact, CMBS lags other forms of commercial real estate debt by volume of workouts.

Securitized loans accounted for 64% of new distress by dollar volume in the first half of the year but only 45% of workouts, according to RCA.

The low recovery rate in CMBS stems in part from a preference among special servicers to extend loans in hopes of more favorable market conditions down the road rather than liquidate debt.

Special servicers restructured $9.8 billion in delinquent loans in the first half of 2010, compared with just $3 billion in loan resolutions, according to RCA.

Hopeful signs for CMBS

Even so, there are signs that CMBS special servicers are making headway to address the level of distress. For one, the CMBS delinquency rate is slowing in its ascent after nearly a year of steady monthly increases on loans 30 days or more past due, in foreclosure, or taken back by lenders as real estate owned.

July’s all-time-high delinquency rate of 8.71% marked a gain of just 12 basis points from the previous month’s rate, according to Trepp LLC, a New York-based commercial real estate data and analytics firm. The rate climbed only 17 basis points in June.

June and July’s increases pale in comparison with the previous 10 months, when the delinquency rate jumped an average of 39 basis points each month, says Paul Mancuso, vice president of Trepp.

“Although the volume of distress in the CMBS market remains at historic levels,” he says, “the last two months give hope that perhaps the darkest days for the CMBS market are behind us.”

Nearly $3.2 billion in conduit loans were referred to special servicers in each of the first five months of 2010 before tapering to $140 million in June and $500,000 in July, according to Trepp.

Mancuso attributes the slower growth in CMBS delinquencies in part to increased loan modifications. In fact, the $12.1 billion in CMBS loan modifications that Trepp tracked in the first half of 2010 exceeds the $9.2 billion total for modifications in 2008 through 2009.

Fasulo of RCA acknowledges that lenders and CMBS special servicers still have most of their work ahead of them when it comes to resolving the current volume of distressed debt, but he is encouraged by this summer’s progress in the sector.

“Do they still have a long ways to go? Sure, especially the regional and local banks,” he says. “But incremental improvement is a positive sign for the marketplace.”

Surge in Loan Workouts is Healthy Sign for Distressed Real Estate

Published in: on August 7, 2010 at 02:26  Leave a Comment  
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Global Commercial Property Sales Soar in First Half of 2010 as U.S. Deals Rebound

 

Global Property Sales Soar in First Half of 2010 as U.S. Deals Rebound

Aug 4, 2010 11:20 AM, By Denise Kalette, NREI Managing Editor

 

A new report on global commercial property transactions shows that sales of major properties valued at $10 million or more surged in the first half by 75% compared with the same period in 2009. 

Through the end of the second quarter, 2010 sales reached $231 billion, according to the report issued today by New York-based research firm Real Capital Analytics (RCA). That figure is 75% higher than a year earlier and includes the apartment, retail, office, industrial and hotel sectors.

Commercial property sales in top U.S. markets such as Washington, D.C., New York and San Francisco helped drive the global momentum and a 21% increase in transactions within the Americas from the first quarter to the second, according to RCA.  

“Activity in the Americas really exploded,” says Dan Fasulo, managing director at RCA. “It makes sense in that the U.S. has been two to four quarters behind Europe and Asia with recovery.”

Sales of commercial properties in the Americas totaled $22.1 billion, the highest since the third quarter of 2008, the company reports. Total volume in the first half reached $39.7 billion in the Americas, an 83% gain over the first half of 2009. Of that total, the largest share, $33.2 billion in property sales, took place in the U.S.

The biggest buyer in the Americas in the first half was Denver-based Dividend Capital Total Realty Trust, a non-traded real estate investment trust that spent $1.3 billion on a portfolio from iStar Financial (NYSE: SFI).  The portfolio included 32 office and industrial properties in 16 U.S. markets. 

The acquisition further diversified Dividend Capital’s commercial real estate holdings by property type, tenant base and region, the REIT’s president, Guy Arnold, said after the sale was completed in late June.

The number of properties trading in the Americas rose by just 12%, however, indicating that the transactions taking place this year have been significantly larger than last year — a sign of an improving marketplace, RCA reports.

Investors pause as prices rise

Although the year-to-date sales increased dramatically over the same period in 2009, the pace of global sales in the second quarter slowed from the first quarter of this year. One reason for the slower pace in the second quarter was uncertainty over prices, says Fasulo.  “Investors are digesting the new price levels,” he says.

Although commercial property prices have risen in Europe and Asia, prices have not appreciated as significantly in the U.S. “America has lagged recovery in Europe and Asia, but it is starting to catch up,” says Fasulo.

Worldwide, commercial property sales of at least $10 million in the second quarter reached a total of nearly $100 billion. That represented a decline from the $135.1 billion in transactions recorded in the first quarter of 2010. Still, the second-quarter sales were 33% higher than in the second quarter of 2009, according to RCA. 

The six-month transaction figures are a strong showing, even though they do not rise to the level of pre-recession sales, says Fasulo. As the market attempts to return to the earlier pricing levels, it needs to digest some of the overhang of properties still unsold. Fasulo foresees strong sales for 2011 and 2012.

“The year-over-year figures are very bullish. Barring another slowdown in the world economy, the global markets are well on their way to recovery.”

Global Property Sales Soar in First Half of 2010 as U.S. Deals Rebound

Published in: on August 6, 2010 at 15:04  Leave a Comment  
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Market Update: Interest Rates

*4.375%              

30 Year Fixed Rate

$250 Closing Cost Special

*4.0%            

10 Year ARM                     

Normal Closing Costs

*3.875%              

15 Year Fixed Rate                         

$250 Closing Cost Special

*4.50%

FHA/VA 30 Year Fixed

0 Points

Other loan programs available. Please call for details.

*The above  interest rates are based on 80% LTV and a 30 day lock. $250 closing costs are based on loan amounts above $125,000. Loan amounts below $125,000 are subject to be slightly higher in closing costs. The rates are for conforming loan amounts up to $417,000 owner occupied. The interest rates are subject to change based on market conditions and are subject to credit approval, credit scores and underwriting. Full Documentation required. . The interest rates above 80% LTV can be different based on the CLTV, credit scores, and loan programs. Please call me for more details. 1st National Bank is an equal housing lender. For Realtor/Builder use only.  Loan programs and loan guidelines are subject to change without notice. Restrictions apply. The low closing cost interest rates are based on using specific title companies. If another title company is used, closing costs can be higher.

 

Courtesy of TR Wise

TR Wise

Sales Manager

1st National Bank

7451 Mason-Montgomery Road

Mason, Ohio 45040

Office/Cell (513) 238-0999

Fax              (513) 672-0479

Published in: on August 6, 2010 at 09:25  Leave a Comment  

As a Hedge Against Inflation, Commercial Real Estate Investment Remains a Smart Play

 

As a Hedge Against Inflation, Commercial Real Estate Investment Remains a Smart Play

Aug 2, 2010 9:22 AM, By David J. Lynn, Ph.D., Contributing Columnist

 

In economic terms, inflation is defined as a rise in the general level of prices of goods and services in an economy over a period of time. When prices rise, each unit of currency buys fewer goods and services, eroding real consumer purchasing power. Although deflation also is a risk to the economy, moderate inflation is much more prevalent over the course of modern history.

In the long run, the most significant factor influencing inflation is the growth rate of the money supply. Inflation occurs when the nominal supply of dollars grows faster than the real demand to hold dollars. However, in the short and medium term, inflation may be largely affected by supply and demand pressures in the economy, and influenced by the relative elasticity of wages, prices, and level of interest rates.

In the U.S., inflation is estimated by calculating the rate of change of the Consumer Price Index (CPI). The CPI measures prices of a selection of goods and services purchased by a typical consumer. The magnitude of inflation — the inflation rate — is usually reported as the annualized percentage growth of the CPI Index.

Inflation outlook

Inflation rates vary from year to year [Exhibit 1]. Since 1949, the U.S. inflation rate as measured by annual change in the CPI has ranged from minus 1% in 1949 to a high of 13.1% in 1980. Over the past 60 years, the average annual inflation rate has been 3.7%.

Between 1991 and 2008, we experienced a prolonged period of low inflation with the CPI ranging between 1.6% and 3.3% annually. The average inflation during this 18-year period was 2.8%, considerably lower than in the 1970s and early 1980s.

The Federal Reserve’s monetary policies, which explicitly target maintaining low inflation, were partially responsible for this period of relative stability. Another factor was the tremendous productivity gains generated through the benefits of technology and lower costs of imported goods due to increasing global trade.

The CPI Index declined by 0.3% in 2009, just the third period of annual deflation since 1949. This data point has raised concerns about the potential for ongoing deflation, given a relatively weak economic recovery. In the near term, we believe that the outlook calls for a low inflationary environment, but we do not expect ongoing deflation. The low level of inflation is due to several factors:
•    an anemic economic recovery;
•    high unemployment;
•    deleveraging in both the business and consumer sectors;
•    high productivity;
•    low capacity utilization;
•    low cost imports from China and other emerging countries.

At the same time, we are concerned about the potential for higher inflation in the future for the following reasons:
•    record money supply;
•    record federal budget deficits ($1.5 trillion, or 10.6% of GDP);
•    record and surging national debt ($13 trillion, or 88.9% of GDP);
•    generally rising commodity prices due to demand from high-growth developing countries;
•    rising federal funds rate.

The consensus forecast from 45 leading financial institutions suggests that the inflation rate will remain low, but increase steadily over the next five years [Exhibit 2]. The consensus view is an average of a wide range of forecasts, reflecting the diversity of opinions on the topic.

Despite increased concerns of additional deflation, it is telling to note that only one of the 45 economists surveyed for the Blue Chip Financial Forecasts in July is calling for even a single quarter of deflation over the next two years. Like most observers, we believe that the pace of growth will be slow over the next year, but will be strong enough to allow prices to continue to rise.

We believe that as the global economy recovers over the next few years, demand for goods and services should climb accordingly, thereby increasing inflationary pressures. We believe it is reasonable to expect a return to the mean inflation rate over the past 20 years of approximately 3%. The significant monetary expansion in recent years could lead to even higher levels.

Effects on commercial real estate

Investors widely consider commercial real estate an asset class that can help offset the impact of inflation over the long term. In fact, that benefit is regularly cited as one of the advantages of adding real estate to a mixed-asset portfolio of investments.

Academic literature on the inflation-hedging benefits of real estate are mixed, but generally agree that private real estate is at least a partial hedge against inflation.

The ability to adjust rents over time is typically credited for real estate’s inflation-hedging benefits. Typically, robust economic growth should result in higher inflation, and therefore stronger rent growth.

The Great Recession has put downward pressure on both inflation and rents. Although empirical evidence suggests that rent growth seems to keep up with inflation over the long term, the changes in rent levels largely depend on short-term supply and demand fundamentals and lease terms.

Over the past 18 months, average rents across all property types have declined significantly faster than the inflation index. Based on our market forecasts, rent growth should outpace the inflation index as the U.S. economy recovers over the next few years, particularly in more supply-constrained markets.

David Lynn is managing director and head of U.S. research and investment strategy with ING Clarion based in New York.

As a Hedge Against Inflation, Commercial Real Estate Investment Remains a Smart Play

Published in: on August 3, 2010 at 16:12  Leave a Comment  
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