10 Must Reads for the CRE Industry Today (May 2, 2016)

10 Must Reads for the CRE Industry Today (May 2, 2016)

  1. Banks' Loss Rates For Commercial Real Estate Have Risen “Loss rates on banks’ commercial real estate (CRE) loans rose in the final quarter of 2015 after being at multi-year lows the rest of the year, according to data from Sageworks, a financial information company. First-quarter data is expected in the next several days, but the fourth-quarter increase in CRE loss rates (annualized net charge-offs as a percentage of average loan balance) occurred as regulators warned they are beginning to pay special attention to institutions’ activity tied to commercial real estate lending.” (Forbes)
  2. The Toxic Billion Dollar Goldman Sachs Bond Deal that the SEC Let Get Away “In early 2012, the Securities and Exchange Commission had Goldman Sachs, and perhaps the rest of Wall Street, in its sights. SEC enforcement lawyers believed they had uncovered evidence showing that Goldman had defrauded investors, misleading them into thinking a particularly toxic subprime $1.3 billion mortgage bond, Fremont Home Loan Trust 2006-e, was a safe bet. Internal Goldman emails showed that one of the bankers on the deal knew that Fremont, the loan originator, had never verified the value of the homes on which the loans in the deal were based. Worse, many of the mortgages in the deal had previously been rejected by Goldman. But this time around, a supervisor at Goldman instructed a quality assurance staff member to make ‘liberal assessments.’” (Fortune)
  3. Fannie Mae gives 'transactors' credit for good behavior "A transactor is someone who pays off credit bills in full every month or makes more than the minimum required payment. A revolver is the opposite: Someone who routinely makes the minimum payment on credit cards and other debts, rolling balances over to the next month. Credit industry statistical research suggests that, all other factors being equal, revolvers tend to present higher risks of future default to lenders, especially when they are accumulating substantial unpaid balances. Transactors tend to be lower risk. But up until now, mortgage lenders and investors had difficulty distinguishing revolvers from transactors." (The Real Deal)
  4. Camden Property Trust to Sell $630M Vegas Portfolio “Camden has parted with its last holdings in Sin City, selling 15 multifamily communities, a retail center and 19.6 acres of undeveloped land for $630 million. ‘We received numerous unsolicited offers for the portfolio at prices higher than we expected,’ Campo said, later adding that the response to this group of properties with an average age of 23 years was ‘very encouraging.’ Camden has declined to identify the buyer but during the earnings call, CFO Alexander Jessett implied that news articles that have named names are not wrong. Business publication Vegas Inc., reported that ‘people with knowledge of the deal’ pointed to Bascom Group and Oaktree Capital Management as the buyers of the portfolio of assets. In terms of size, it’s quite a collection. Totaling a whopping 4,918 units, the portfolio consists of 11 apartment properties in Las Vegas proper, with the remaining communities located in the neighboring suburb of Henderson.” (Commercial Property Executive)
  5. Exclusive: Ares, Apollo vying for American Capital – sources “Ares Management LP and Apollo Investment Corp, the business development company of Apollo Global Management LLC, are among those competing for the assets of American Capital Ltd, people familiar with the matter said. Fortress Investment Group LLC and Blackstone Group LP have also submitted expressions of interest in the auction for American Capital, a U.S. private equity and credit investment firm with a market capitalization of $3.8 billion, the people said this week. American Capital, which said in January it would solicit offers for the company and its various business lines, will collect another round of offers before deciding on its next steps, the people added. They asked not to be identified because details of the sale process are confidential. American Capital, Ares, Apollo, Fortress and Blackstone declined to comment.” (Reuters)
  6. What will surround Dolphins stadium? A city wants more control “Nearly two years after suing Miami-Dade County over building rights at New Miami Stadium, Miami Gardens plans to take the issue to voters and to a resolution. The City Council voted Wednesday to change language in the city charter that deals with building and zoning control at the stadium and surrounding properties. It will give the city and the county joint control over zoning in the area. Any zoning applications would have to be processed through the city. Mayor Oliver Gilbert has said fighting for the zoning rights centered on the city’s efforts to continue developing the stadium area with new businesses.” (Miami Herald)
  7. In reversal, staff of Coastal Commission recommends approval of Newport Beach hotel and housing project “In a reversal of its previous position, the staff of the California Coastal Commission is recommending approval of a hotel and housing complex on the last big block of private land on the Southland coast. The proposal to build an upscale hotel, retail space and hundreds of homes on a coastal bluff next to Newport Beach has helped stoke the controversy surrounding the commission, which was created to guard against over-development of the state's famous coastline. Commissioners last October brushed aside a staff recommendation to reject the Newport Banning Ranch project and questioned the staff's environmental evaluations of the 401-acre oil field.” (Los Angeles Times)
  8. More Housing Being Created In Boston, Rents Accelerating More Slowly “The City of Boston released its quarterly housing report this week, and among other things it detailed how Boston remains on target to meet its goal of creating 53,000 units of housing by 2030. During the first quarter of 2016, some 565 new housing units were permitted, for a total of 17,183 units that have either been permitted or completed since the launch of the administration’s housing plan, Housing a Changing City: Boston 2030, in October 2014. Currently, there are more than 8,000 new units of housing in construction in Boston, representing more construction employment in the housing sector than at any time in the last 20 years, the report said. Also, completions are now exceeding projected population growth: in the last year, enough housing came on line to house 5,900 people, while the Metropolitan Area Planning Council’s projection for population growth is 4,590 people per year.” (Multihousing News)
  9. When complete, Hudson Yards will contribute $18.9 billion to the city—more than Iceland's GDP “The company behind the $20 billion Hudson Yards development on Manhattan's West Side expects economic activity there to eventually rival the gross domestic product of Iceland, according to an analysis released Monday. Related Cos. is aiming to finish the project between West 30th and West 34th streets—which includes 10.4 million square feet of office space, eight residential buildings, a cultural center and retail—by 2025. A study commissioned by the developer indicated that total economic output of the companies projected to occupy Hudson Yards will contribute $18.9 billion to the city's gross domestic product. Iceland's gross domestic product is $15.3 billion.” (Crain’s New York Business)
  10. A Checklist for New Landlords “Being a landlord is about far more than banking the rent checks. Here are some tips: Be Ms. or Mr. Fix-It. Sometimes, just making sure things are plugged in or turned on can save you hundreds. A clogged toilet? Give it a shot. Anything to do with gas or electricity, leave to the professionals. Have help on speed dial. Keep a running list of trusted plumbers, electricians and handymen for repairs that are out of your realm.” (New York Times)
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