Wednesday, May 25, 2011
Wednesday, May 18, 2011
Click here to download the PDF of the apartment market analysis. For the complete analysis on industrial, retail and office properties, read the full report.
Multihousing News reports > > >
Tuesday, May 17, 2011
by Joel Kaplan and Elia Popovich
Attorneys at Law - Oregon Law Group
In today's challenging financing environment, apartment owners have increasingly turned to Freddie Mac as a ready source of financing for apartment acquisitions. Freddie Mac’s new and sometimes onerous loan process may, however, present obstacles for borrowers not familiar with Freddie’s Capital Markets Execution (CME) loan product.
CME loans were developed in the summer of 2009, after the residential real estate bubble burst. These loans are pooled, tranched and sold as mortgage-backed securities. By securitizing the CME loans, Freddie is able to provide greater liquidity and stability to the residential markets. However, along with this greater liquidity comes less flexibility and more stringent legal requirements than the standard portfolio loan.
The following Freddie Mac requirements are particular to the new CME loans:
- All borrowers must be special purpose entities (SPEs) that own only a single asset. This provides protection against the risk of borrower bankruptcy for activities unrelated to the collateral.
- All SPEs must be formed in Delaware, and have either one springing corporate member or two springing members who are natural persons. This requirement provides Freddie with protection against the inadvertent dissolution of the borrowing entity.
- Opinions from the borrower's counsel about the enforceability of the loan documents will be required. This provides the lender with assurance that in the event of a default, Freddie will be able to recover the loan proceeds.
- Borrowers have less ability to modify loan terms. CME loans demand greater document uniformity to facilitate cost-effective securitization.
- Escrow for immediate repairs and reserves for long-term capital replacements are required, in part because the SPE limitations leave the borrower with no assets other than the mortgaged real estate.
- CME loans may not be prepaid if the loan is securitized within a year after origination. As a consequence of securitization, they must instead be defeased, but even then only after a two-year lockout.
Joel and Elia are partners in Oregon Law Group, a Portland-based law firm that specializes in the acquisition, development and management of multifamily projects. Joel Kaplan can be reached by phone at 971.285.4260 or email firstname.lastname@example.org. Elia Popovich may be reached by phone at 971-285.4261 or email email@example.com.
Monday, May 16, 2011
“The real question is, when will the A assets start to pull on the B and C stuff? We’re just starting to see that happen,” says Greg Frick, a partner at Portland-based brokerage HFO Investment Real Estate. “There’s a lot of private equity coming in that doesn’t want to compete with institutions, but is looking for quality B assets.” Read the full story.
Thursday, May 12, 2011
Thursday, May 5, 2011
The Census estimate pegging the Portland area's vacancy rate at 4.0 percent is on track with the spring 2010 Metro Multifamily Housing Association vacancy estimate of 3.8 percent.
Seattle-Tacoma-Bellevue, WA had a Q1 2011 vacancy estimate of 6.8 percent, up from 6.2% the prior quarter and the nation's 15th lowest.
The nation's 10 lowest vacancy rates were:
- Portland-Vancouver-Beaverton, OR-WA - 4.0%
- Allentown-Bethlehem-Easton, PA-NJ - 4.1%
- Grand Rapids-Wyoming, MI - 4.2%
- Boston-Cambridge-Quincy, MA-NH - 5%
- Bridgeport-Stamford-Norwalk, CT - 4.6%
- Nashville-Davidson-Murfreesboro, TN - 5.0%
- Bakersfield, CA - 5.2%
- Los Angeles-Long Beach-Santa Ana, CA - 5.3
- Charlotte-Gastonia-Concord, NC-SC - 5.5%
- New York-Northern New Jersey-Long Island, NY - 5.5%
- Tucson, AZ - 16.7%
- Birmingham-Hoover, AL - 17.3%
- Detroit-Warren-Livonia, MI - 18.9%
- Jacksonville, FL - 19.1%
- Orlando, FL - 22.6%
Read More >>
Tuesday, May 3, 2011
Read more in Multifamily Executive.
Monday, May 2, 2011
Reuters reported last week that two of the largest U.S. apartment owners -- Avalon Bay Communities and Equity Residential -- posted higher funds from operations, meeting Wall Street expectations. "...fueled by higher rents... the sector continues to be one of the brightest spots in commercial real estate." Read more > > >