Content Partner

How to Finance Multifamily Acquisitions Under Negative Leverage Conditions

by Sarah Daniels January 9, 2023

By Colin Grayson, Lument If you consider multifamily real estate assets to be a good investment, you are in good company. At mid-year, asset managers and private equity firms alone held an estimated $325 billion of levered dry powder set aside for this purpose, enough cash to finance nearly every acquisition closed in the United States in 2021, the highest investment sales volume on record. Despite nearly unanimous support for the asset class, however, multifamily transaction volume in the third quarter slumped year-over-year for the first time since the peak of the pandemic. The mainspring was a sharp rise in mortgage financing costs triggered by high inflation and the Federal Reserve’s commitment to raising rates to bring it under control. Generic rates for 65 percent loan-to-value (LTV) first mortgage debt stood on 5.71 percent at the end of November, representing an increase of 248 basis points since the beginning of the year. Even as financing costs soared, asset pricing changed very little. Initial net cash flow yields of transactions closed in the third quarter of 2022 averaged only 4.6 percent, according to Real Capital Analytics, an increase of 10 basis points from second-quarter 2022 levels. At the same time, cap …

January 9, 2023

Acquisitions Arbor Realty Trust Build-to-Rent Content Partner Features Midwest Multifamily Northeast Single-Family Rental Southeast Texas Western

Investors Drawn to Single-Family Rentals During Tough Economic Times

by Sarah Daniels January 5, 2023

By John Tarantino, Arbor Realty Trust The ongoing expansion of the single-family rental (SFR) market is capturing investors’ interest like never before. Construction starts in the sector topped a record 69,000 units over the past year, while the rate of rent growth remained positive for new leases and accelerated in renewals. That’s according to the third-quarter Single-Family Investment Trends Report Q3 2022, which Arbor Realty Trust recently published in partnership with Chandan Economics. SFR investors want to know what this latest market data reveals about how the sector is weathering economic changes and what it suggests about how their properties are likely to perform in the months ahead. In December, I was privileged to weigh in on these weighty questions as a panelist at Information Management Network’s 10th Annual Single-Family Rental Forum (West) in Scottsdale, Ariz. One of the messages I sought to convey to the audience that day is that single-family rentals have maintained their momentum as well as any corner of the housing market, as our third-quarter report bears out. And while rising interest rates and elevated risk have placed the housing market on shaky ground, SFR is on a secure foundation moving into 2023. With the average age …

January 5, 2023

Acquisitions Content Partner Features Midwest Multifamily Northeast Southeast Texas Walker & Dunlop Western

Freddie Mac Opens Its Doors to More Types of Multifamily Borrowers

by Sarah Daniels December 16, 2022

By Allison Herrera, Walker & Dunlop Effective Dec. 15, 2022, Freddie Mac began accepting ownership of two- to four-unit properties — aka duplexes, triplexes or quadplexes — as relevant experience for all loans in its Optigo® Small Balance Loans (SBL) program. Previously, Freddie Mac defined multifamily experience as controlling ownership of a property with at least five units or more and excluded two- to four-unit properties. By expanding its borrower experience definition, Freddie’s SBL program increases opportunities for investors who focus on small multifamily housing to grow their portfolios by accessing financing outside of banks. What Qualifies as Experience? Here’s what you should know. Freddie Mac expanded their definition of multifamily experience to include borrowers who have a portfolio of two- to four-unit properties that meet the following criteria: The borrower must own at least 10 units total The borrower must have owned each property for at least two years The borrower must have a controlling interest in all 10 units The 10 units do not need to be contiguous or located in the same county The new requirements provide investors access to agency debt when beginning to invest in larger properties, such as those with five to 50 units, …

December 16, 2022

Content Partner Development Features Hospitality Midwest NAI Northeast Southeast Texas Western

Economic Headwinds Slow Post-Pandemic Recovery for Select-Service Hotels

by Sarah Daniels December 15, 2022

For a little more than a year now, Americans have gone on a collective road trip, making up for time stolen during the lockdowns. In turn, that has fueled a rebound in the hotel industry, which was decimated in 2020 and much of 2021. Revenue per available room (RevPAR), a key measure of hotel profitability, is expected to end 2022 at an average of $93, up nearly 8 percent versus 2019, according to a hotel forecast update in late November by STR, a hospitality research organization based in Hendersonville, Kentucky. Meanwhile, the projected average occupancy of 62.7 percent will mark an increase of 5.1 percentage points over 2021, and the estimated average daily rate (ADR) of $148 will best last year’s number by $23, STR reports. Select service lodging properties in particular are helping to lead the recovery, says Steven J. Martens, chairman of NAI Martens, a Wichita-based commercial real estate brokerage that is one of five brands under the Martens Companies umbrella. “The majority of the midscale and upper midscale assets are very dependent upon leisure travel, and they are seeing a rebound throughout the country,” he adds. “Most good operators with strong hotel brands have seen very healthy …

December 15, 2022

Bohler Content Partner Development Features Industrial Midwest Multifamily Northeast Office Retail Southeast Texas Western

Retail Development Program Lessons Apply Across Property Types

by Sarah Daniels December 13, 2022

Retail development programs have allowed retailers to streamline their goals by creating prototype models based on site particulars. This process saves developers and retailers money as they can be flexible in choosing models that work for each site without needing to alter layouts and features too much between builds. But what makes for successful prototypes and program standards? Can this approach work outside of the retail world? “The lessons of retail programs can apply across property types in this sense: land development consultants and site designers can learn how specific clients need their set of standards and guidelines implemented. It’s essential to thoroughly understand a program client’s procedures, and we’re expected to know these parameters inside and out,” says Steven T. Fortunato, a senior project manager at Bohler’s Rehoboth Beach office in Delaware. Bohler is a land development design and consulting firm that specializes in helping developers move their projects forward faster. “The retail program methodology translates well to other sectors. Starting off with either a new developer or a new client is an opportunity to learn their standards — or help the client create them. The end result must offer the same level of confidence whether the product is retail or …

December 13, 2022

John Ducey Walker & Dunlop Affordable Housing

Affordable Housing Content Partner Development Features Leasing Activity Midwest Multifamily Northeast Southeast Texas Walker & Dunlop Western

Walker & Dunlop: Affordable Housing Crisis Calls For New Solutions, Effective Programs

by Sarah Daniels December 8, 2022

By John Ducey, chief production officer of Walker & Dunlop’s affordable lending group Private industry and the federal government are rallying to recover ground lost to a housing affordability crisis that has been decades in the making. Nearly half of the nation’s renters, 46 percent, are housing cost-burdened, which the Census Bureau defines as those families paying 30 percent or more of their income on rent and utilities. The burden is higher for some, with nearly one in four families (23 percent of Americans) paying half or more of their income for housing. The situation calls for a change in tactics, a recognition of recent policy failures and a shared commitment to double down on programs with proven efficacy. As a nation we must ask, what can we do differently to put more homes within reach for the growing ranks of Americans who struggle to meet basic housing costs? A Building Problem The gap between housing costs and strained household budgets has widened due to both insufficient supply and wage stagnation that has fueled demand for affordable housing. The larger of the two issues — a lack of supply — traces chiefly to the 2008 financial crisis, which put a …

December 8, 2022

Content Partner Features Leasing Activity Midwest Multifamily Northeast Pavlov Media Southeast Student Housing Texas Western

The Evolution of Internet Setups: How Student Housing Internet Preferences Are Influencing Traditional Multifamily

by Sarah Daniels November 29, 2022

Multifamily properties have witnessed a rapid expansion in Internet needs, a trend presaged by burgeoning Internet demands in student housing. Multifamily residents have increased their connection demands and are becoming increasingly sophisticated in their requirements for high-quality Internet. What can the lessons of student housing connectivity teach us about traditional multifamily trends, especially when it comes to bulk Internet? Bulk Internet approaches allow for more sophistication in multifamily properties, as demonstrated by student housing best practices. Student housing pioneered built-in networks to keep mobile devices from competing for Wi-Fi bandwidth, minimize downtime and use fiber connections to ensure speed and reliability. This style of network is becoming the gold standard for constant, heavy-duty Internet use in multi-dwelling units (MDUs). High-level connectivity is becoming an absolute necessity for multifamily properties, drawing in residents and improving their Internet-driven lifestyles. And as never-before-seen demand for bandwidth is graduating from dorm rooms to traditional apartments, well-planned multifamily Internet connections can help operators adapt gracefully. COVID’s Role in Internet Use Expansion COVID lockdowns accelerated already growing Internet requirements, which pushed Internet quality to the forefront as connectivity became increasingly important. “COVID put the spotlight on properties to make sure they had great infrastructure. The demand …

November 29, 2022

Content Partner Development Features Industrial Midwest Mixed-Use Multifamily Northeast Northmarq Office Retail Southeast Texas Western

Project Destined: Training a New and Diverse Generation for Real Estate Careers

by Sarah Daniels November 15, 2022

For the better part of the last two decades, billions of dollars have poured into underserved neighborhoods across the U.S. as corporations, millennials and real estate investors rediscovered downtowns and other urban districts. But to former Carlyle Group executive Cedric Bobo and real estate entrepreneur Fred Greene, young people who grew up in the neighborhoods were often excluded from playing a role in the transitions. To remedy that problem, in 2016 they began training 15 Detroit high school students in real estate fundamentals and invested $150,000 to buy two properties with the idea of using the cash flow to fund scholarships. Soon after, Bobo and Greene officially launched Project Destined, an endeavor to effect social change in the commercial real estate industry by providing college students with financial literacy, entrepreneurship and real estate training. “Cedric found that there was a real need for diverse talent in commercial real estate but that it was hard for companies to find it,” reports Cristina Ciacciarelli, a junior at Burach College in New York City who completed the program in 2021 and now heads up corporate partnerships for Project Destined. “It was also hard for the companies to sell themselves to diverse talent even …

November 15, 2022

Content Partner Features Industrial Leasing Activity Loans Midwest Multifamily NAI Northeast Office Retail Southeast Texas Western

Experts Turn to Opportunistic Moves, Lending During Uncertainty of Economic Downturn

by Sarah Daniels November 7, 2022

As we shift through economic uncertainty and changes in the market, commercial real estate businesses are planning for a range of scenarios — and looking to historical trends to make predictions. REBusinessOnline sat down with two industry experts to talk about how this period of uncertainty compares to previous eras and where there may be benefits and opportunities in the current landscape. Jay Olshonsky, president and CEO, and Cliff Moskowitz, executive vice president, at NAI Global spoke about the commercial real estate outlook and the challenges it is likely to face in the immediate future. REBusiness: Looking at the current environment, how does it compare to previous periods of uncertainty? What might be the impacts on commercial real estate? Olshonsky: To start with, we are in a recession. We’ve already had two quarters of negative GDP growth. I think the most fundamental difference between this cycle and a lot of other cycles is that we have extremely low unemployment, differentiating this moment from others, for example, 2009. Even though the most recent job numbers were lower, they were still fairly strong. Jobs create the demand for commercial real estate at all levels, but especially at the services level. We do …

November 7, 2022

Acquisitions Content Partner Development Features Industrial Leasing Activity Lee & Associates Midwest Multifamily Northeast Office Retail Southeast Texas Western

Lee & Associates’ Third-Quarter 2022 Economic Rundown by Sector

by Sarah Daniels November 3, 2022

Lee & Associates’ newly released 2022 Q3 North America Market Report examines third-quarter 2022 industrial, office, retail and multifamily outlooks throughout the United States. This sector-based review of commercial real estate trends for the third quarter of the year examines the difficulties facing each asset class and where opportunities in the commercial real estate landscape may be emerging. Lee & Associates has made the full market report available here (with further breakdowns of factors like vacancy rates, market rents, inventory square footage and cap rates by city), but the summaries below provide high-level considerations of the overall health and obstacles for the industrial, office, retail and multifamily sectors. Industrial Overview: High Rent, Low Vacancy Everywhere North American industrial space availability is tight everywhere while rent growth and property prices remain near or have moved beyond historic highs. Through the third quarter, the United States’ vacancy rate settled at 4 percent, up 10 basis points from second quarter 2022. Average rents increased 11.4 percent year over year with gains of 19 percent in Miami, 18.7 percent in Southern California’s Inland Empire, 16 percent in Phoenix and 14.6 percent in Atlanta. Since the COVID lockdown in March of 2020, developers of U.S. logistics space have been …

November 3, 2022

Newer Posts

Older Posts