Archive for the ‘Distressed Assets’ Category
Friday, February 19th, 2010
It’s always a good time to buy commercial real estate…really!
The law of supply and demand is changing, more inventory, lower prices right, not exactly! The commercial real estate market has plenty of inventories, but just not yet priced right for bargain hunters. The combination of more commercial real estate inventory on the market coupled with improved financing terms and fewer buyers will create the perfect buying storm!
Why? Although there are plenty of commercial inventories on the market, there are fewer investors buying and seller’s motivations are short of buyer’s expectations.
This is a preview of BUY COMMERCIAL REAL ESTATE NOW: FACT OR THEORY? . Read the full post (355 words, estimated 1:25 mins reading time)
Tags: Buy Commercial Real Estate, Buying Commercial Real Estate, Commercial Real Estate, cre
Posted in Distressed Assets, Market Overviews, Multifamily, Retail | No Comments »
Friday, February 12th, 2010
Jerry Anderson, CCIM
Wednesday morning at 7am I posted a tweet on Twitter that a Sperry Van Ness Florida advisor had a “buyer that was frustrated with being unable to get an FDIC commercial real estate contractor to present an offer on a property now in receivership with the FDIC.” I wrote the tweet without a tone of criticism but simply one of frustration and I did not name the contractor, bank involved, location or property .
This is a preview of Is the stuffy, slow moving, conservative FDIC paying attention to Social Media? . . . Absolutely!! . Read the full post (507 words, estimated 2:02 mins reading time)
Tags: CBRE, CCIM, Commercial Real Estate, Distressed Assets, FDIC, Jerry Anderson, Prescient, real estate commercial, Sperry Van Ness Florida, SVN Florida
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Monday, November 16th, 2009
ATLANTA, GA, Nov., 16, 2009 - (by John Johnson, CCIM)
Recently, I lent my perspectives on the real estate auction world to Investor’s Business Daily. Auctions are gaining focus right now, with hopes to bring back a realistic sense of fair market value:
Many owners who bought property in the last five years are now upside-down on their loans and have no way out, says John Johnson, head of the Accelerated Marketing unit of Sperry Van Ness.
The commercial real estate firm conducts dozens of live auctions across the U.S. every year. But in today’s market, it runs few reserve sales, which allow the seller to accept or decline the final bid.
This is a preview of Interview: Commercial Real Estate Auctions Rev Up . Read the full post (243 words, estimated 58 secs reading time)
Tags: absolute auction, auction, buyer, commercial, cre, distressed, economy, investments, investors, John Johnson, market value, minimum bid, real estate, transactions
Posted in Distressed Assets, Miscellaneous | No Comments »
Saturday, November 7th, 2009
By Robert Pliska
Have we gone from “mark-to-market” to “mark-to-make believe”? The FDIC just released its policy statement - Prudent Commercial Real Estate Loan Workouts. The FDIC’s purpose is provide transparency and consistency to commercial real estate workout transactions and not curtail the availability of credit to sound borrowers. While the FDIC’s intentions are honorable, the policy may provide the opposite effect – lack of transparency and consistency and extending the lack of credit to sound borrowers.
This is a preview of Going From Mark-To-Market to Mark-To-Make Believe! . Read the full post (432 words, estimated 1:44 mins reading time)
Tags: commercial, distressed, FDIC, Fed, investment, mark-to-market, real estate
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Monday, October 26th, 2009
An Analytical Walk Down Commercial Real Estate Main Street
Fort Collins CO 10-26-09 (by Steve Kawulok, Sperry Van Ness / The Group Commercial LLC)
Many investors are interested in taking advantage of distress commercial loan situations. Theoretically, if one can purchase an existing note at a discounted price, there should be a decent return on investment. To play out this investment requires the note-purchaser to perfect ownership of the commercial asset through a foreclosure action and then sell off the asset which collateralized the loan.
Tags: Commercial Real Estate, commercial real estate return on investment, Distressed Commercial Real Estate, Distressed Commercial Real Estate Loans, Greeley CO commercial real estate, new frontier bank loan sales, northern Colorado commercial real estate, Packaged Loans
Posted in Distressed Assets, Market Overviews | No Comments »
Wednesday, October 14th, 2009
ATLANTA, GA, Oct., 14, 2009 - (by John Johnson, CCIM)
Real Estate Auctions: A viable option to move properties quickly in a slow market.
With the rapid decline in prices driving market demand down, commercial properties of virtually all types are being successfully sold using accelerated marketing or auction techniques. By 2010, one in every three properties will be sold using an auction method of marketing, according to a National Association of Realtors study.
Tags: absolute auction, auction, buyer, CCIM, commercial, cre, investors, John Johnson, market value, minimum bid, sales, sealed-bid, seller, transactions
Posted in Distressed Assets, Uncategorized | No Comments »
Thursday, September 10th, 2009
By: Jerry Hall, CCIM
For several months now news about how the nation’s current economic crisis is affecting the commercial real estate market has been spreading like wildfire. Warnings about growing defaulted loans and foreclosures have dominated headlines. Troubled assets are becoming more and more common, and real estate investors are on the look-out for the new deals - both off market and on - that are coming available. In fact, according to research firms like Real Capital Analytics, “the volume of troubled commercial properties grew by 122% in the first half of 2009 as approximately $67b of properties became troubled and few troubled situations were resolved.” Loan modifications and sales have only resolved 10% of this distress.
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Friday, September 4th, 2009
In today’s market, the difference between traditional and distressed sales is mostly in the buyer’s mindset. Traditional sales currently are driven by need - only investors who need to fulfill Section 1031 exchanges or other financial or market-driven concerns are acquiring non-distressed properties. At the same time, investors with immense amounts of private capital are sitting on the sidelines waiting for distressed assets to be listed at deeply discounted prices. At this point in the cycle, buyers won’t buy unless they perceive assets are priced well below market value.
Another major factor in today’s distressed asset market is lender requirements. Currently, investors must put 35 percent to 50 percent down to close traditional deals. However, financing parameters are changing faster than ever before. For example, in July 2008, a company looking to raise cash for its business listed its office building with a national brokerage firm for $14.6 million. The property went under contract for $12.2 million as a sale-leaseback, but there was a delay in due diligence as lender financing became more stringent and less acceptable to the buyer, who eventually pulled out the deal.
In February 2009, a different buyer placed the same property under contract, but for $10.1 million, or 69 percent of the original asking price. That buyer currently is seeking additional equity as the lender now is requiring a larger down payment.
Looking Ahead
As the commercial real estate cycle proceeds, expect land, industrial, and retail properties to lead foreclosure reports. To acheive long-term industry stability, these real-estate-owned properties must by cycled through the system. In addition, new U.S. tax policies must come to fruition, and the meat of those policies must be realized by property owners and investors, specifically treatment of capital gains, 50 percent depreciation on the first year for investment in certain areas, and favorable rules to encourage investment in real estate. The fuzzy picture surrounding securitization and conduit loans also must come into focus.
A foreclosure boom will only recede when distressed property values approach what buyers consider to be standard market values. In the interim, those looking to throw their hat into the distressed property ring should not delay.
Commercial real estate professionals can arm themselves with stategies to compete in this unconventional environment. Combined with smart financing tactics, these tips can help industry professionals close deals in the turbulent market.
Success With Distressed Assets
To succeed with distressed opportunities, industry professionals must know where to look and how to secure these non-traditional listings.
Finding Real-Estate-Owned Properties. Bank Web sites can be a prime place to find REO opportunities since many lending institutions list their properties online. Searching for “commercial REO properties” online reveals a multitude of bank sites listing REO properties. Foreclosure sites such as www.realtytrac.com and www.foreclosuredataonline.com primarily aggregate residential foreclosure listings, but both also have commercial real estate listing sections. Banking industry Web sites, including www.bankimplode.com/list/troubledbanks.htm and www.fdic.gov (click on Asset Sales) also may be good sources for REO listings. Subscription sites that track commercial default and foreclosure notices include Real Capital Analytics Troubled Asset Radar ( www.rcanalytics.com) and First American ( www.corelogic.com). Finally, local newspapers list foreclosures on a daily, weekly, or monthly basis.
Securing Listings From Lenders. Up to 80 percent of today’s brokers have never experienced a severe market downturn. Without that past experience, the thought of securing listings from lenders can seem challenging.
One of the most important steps to securing lender listings is to partner. Brokers who don’t have relationships with lenders must partner with colleagues who do. Inexperienced commercial real estate professionals should partner with collegues who have been through past recessions - ideally experts who worked with lenders during the last REO crisis.
In addition, brokers must expand their businesses to offer as many services as possible. If you don’t have the experience to be considered full service, partner with one or more brokers to create a one-stop shop for lenders, including resources for obtaining brokers’ opinions of value, property management services, leasing and value preservation.
Finally, do some homework before calling or scheduling a meeting with a lender and be prepared to discuss a specific property in your area of expertise, along with your plans and solutions. Bring a broker price opinion as well as an analysis of the property. Most importantly, understand that banks want to sell properties “as is, where is”, and they probably have them priced to sell.
Marketing Makes a Difference. When it comes to marketing distressed properties, there are a few stategies that will help distinguish your listings. First, every marketing tool must convey that the property is distressed.
Today’s investors are only interested in distressed assets at perceived distressed prices. Additionally, distressed assets are the only listings that brokers can finance today with out putting a significant amount down using seller financing.
Conduct a comprehensive marketing campaign using a variety of tools, including Web and e-mail campaigns. For example, Sperry Van Ness Real Estate Services recently completed the sale of the bank owned Trilogy on 5th, a 25 unit luxury multifamily community in San Diego. Several local, regional, and national brokerage firms had been following this property, waiting for it to go into foreclosure.
SVN’s San Diego office made about 25 calls to Bank of America to inquire about the note and secure a listing proposal meeting. The bank selected SVN to sell the property because of its proactive marketing approach as well as its understanding of the distressed asset business. The marketing campaign for this asset included a property Web site, e-mail marketing to 65,000 brokers and investors, direct marketing to specailized industry segments, four broker open house tours, and an extensive advertising campaign. San Diego-based Conrad Prebys Trust purchased the proeprty from Bank of America for $10.25 million, or $410,000 per unit.
Finally, make sure marketing efforts are tailored to brokers and investors. Brokers are the conduits to investors. They have relationships with investors who may be interested in the listings. They also are the ones who frequently receive calls from investors asking if they know of any distressed properties for sale.
Authors:
David E. Gilmore CCIM, CAI, AARE
John L. Johnson CCIM, CPA
Sperry Van Ness Accelerated Marketing Co. Inc.
Permanent link to this post (1029 words, estimated 4:07 mins reading time)
Tags: bank owned, Distressed Assets, foreclosure, investors, real estate, REO
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Thursday, July 23rd, 2009
By Jerry Anderson, CCIM
I am so tired of reading and hearing the bad news in the industry of my passion - commercial real estate, that I’ve stopped talking to nay sayers and am taking proactive aggressive action. We all know values have tanked, but how can we personally take advantage and help our clients through the maze? Lenders are not any fun to deal with these days. Any type of what we used to consider reasonable leverage seems impossible. What precious stash of cash we do have, we are not willing to risk on one particular deal, so forget 50%-60% down and borrowing the balance with unreasonable terms and high closing costs. Success in commercial real estate investment is usually a matter of how fast you can adapt to changes that create opportunity. The only position to occupy in today’s market is that of buyer; a buyer with cash that can perform quickly. The answer lies not in borrowing to buy assets like in the past, but reversing the leverage scenario – yes, put in MORE cash. But diversification and partners is the key.
Posted in Distressed Assets, Market Overviews, Miscellaneous, Uncategorized | No Comments »
Monday, February 9th, 2009
RICHMOND, VA, Feb., 9, 2009 - (by Jim Tucker, CCIM) Much of the attention surrounding non-performing commercial real estate assets tends to focus on the complexities associated with sell-side discussions. That being said, my advice is not to overlook the buy-side opportunities currently presenting themselves. While all investors yearn for a buyer’s market, not all sponsors have the risk profile to dive into this market. Even for those that do, they may not be well positioned to take advantage of deeply discounted troubled assets.
Posted in Distressed Assets | No Comments »
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