LWR Commercial
Lakewood Ranch Business Alliance – Amendment 4 Discussion
Mar 8th
What It Means To Our Local and Business Community
- Ryan Houck ~ Executive Director Floridians for Smarter Growth
- Jon Thaxton ~ Sarasota County Commissioner
- Ward Friszolowski ~ Former-Mayor St Pete Beach
The March luncheon will focus on Amendment 4, frequently referred to as “Hometown Democracy,” and what it means to our local and business community. This ballot measure would have residents vote on all land-use planning amendments in the development approval process. The Amendment 4 vote is still eight months away. It is, however, already proving to be one of the most contentious issues ever placed before Florida voters.
Space is limited and RSVP is required.
A networking opportunity will be available from 11:30 am – 12:00 pm with lunch and presentation from 12:00 pm – 1:00 pm.
Members are $20 and Non members are $30.
via Lakewood Ranch Business Alliance – LWRBA EVENTS.
Community Banks Continue to Crack Under Pressure
Mar 8th
Though the economy is showing signs of a gradual recovery, tumbling home prices, soaring loan defaults and rising unemployment continue to take their toll on small banks. As a result, U.S. regulators on Friday shuttered four more banks in Florida, Illinois, Maryland and Utah. This brings the total number of bank failures to 26 so far in 2010, compared to 140 in 2009, 25 in 2008 and 3 in 2007.
While we expect economic recovery to gain momentum soon, there remain lingering concerns in the banking industry. Failure of both residential and commercial real estate loans as a result of the credit crisis has primarily hurt banks. As the industry tolerates bad loans made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more bank failures.
The failed banks were: Boca Raton, Florida-based Sun American Bank with $535.7 million in assets and $443.5 million in deposits, Normal, Illinois-based Bank of Illinois with $211.7 million in assets and $198.5 million in deposits, Maryland-based Waterfield Bank of Germantown with $155.6 million in assets and $156.4 million in deposits and Centennial Bank in Ogden, Utah, with $215.2 million in assets and $205.1 million in deposits.
These bank failures will deal another blow to the Federal Deposit Insurance Corporation’s (FDIC) fund meant for protecting customer accounts, as it has been appointed receiver for these banks. The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets.
When a bank fails, FDIC reimburses customers for their deposits of up to $250,000 per account. The outbreak of bank failures has significantly stretched the regulator’s deposit insurance fund. However, the FDIC has about $66 billion in cash and securities available in reserve to cover losses of bank failures. Also, the FDIC has access to the Treasury Department’s credit line of up to $500 billion.
The failure of Sun American Bank is expected to cost the deposit insurance fund about $103.8 million, Bank of Illinois is estimated to cost abut $53.7 million, Waterfield Bank of Germantown is expected to cost about $51 million and Centennial Bank is estimated to cost about $96.3 million.
Bloomington, Illinois-based Heartland Bank and Trust Co. will assume the assets and deposits of Bank of Illinois. The FDIC will share losses with Heartland on $166.6 million loans and other assets of Bank of Illinois.
Raleigh, North Carolina-based First-Citizens Bank & Trust Co. will assume the assets and deposits of Sun American Bank and it will share losses with the FDIC on $433 million of the Sun American Bank’s loans and other assets.
FDIC was unable to find buyers for Centennial Bank and Waterfield Bank. However, Zions Bancorp. (ZION – Analyst Report) will take over some operations of Centennial Bank.
Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates bank failures to cost about $100 billion over the next three years. The failure of Washington Mutual in 2008 was the largest in U.S. banking history. It was acquired by JPMorgan Chase (JPM – Analyst Report).
The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB – Analyst Report), U.S. Bancorp (USB – Analyst Report), Zions Bancorp, SunTrust Banks (STI – Analyst Report), PNC Financial (PNC – Analyst Report), BB&T Corporation (BBT – Analyst Report) and Regions Financial (RF – Analyst Report).
We expect loan losses on the commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
via U.S. Bank Failures Reach 26.
Commercial Real Estate Crisis is Already Here
Mar 3rd
Commercial Real Estate Crisis is Here – FOXBusiness.com.
The most important part of the interview is where the CEO of Urban American (which holds property in Sarasota), explains how the private markets are already reacting to the lack of debt available in the markets and how the private sector is overcoming those roadblocks in order to generate returns. He then goes on to argue for government intervention, which created the problem in commercial real estate in the first place.
If we could just get a clear signal from the federal government that they are going to stop the meddling, a degree of certainty could could come back into the market and investors could begin adapting. Then we will begin to have meaningful recovery.
Multifamily Housing Developers Inch Back Into Market – WSJ.com
Mar 3rd
Multifamily Housing Developers Inch Back Into Market – WSJ.com.
In St. Petersburg, Fla., close by Tropicana Field, an unusual structure is emerging from a construction site: a rental apartment building.
The work in progress on the Fusion 1560, a 325-unit upscale project in one of the states hit hardest by the housing crisis, is a sign that developers of multifamily housing are tiptoeing back into the business. This year, real-estate investment trusts, or REITs, are expected to start close to $1 billion in new multifamily projects, according to real-estate research firm Green Street Advisors. While that still is less than average, it is a significant increase over the $100 million of development starts in 2009.
![[MULTIFAM]](http://sg.wsj.net/public/resources/images/MI-BB806_MULTIF_NS_20100302210423.gif)
Analysts caution that the increase in construction doesn’t mean there has been an improvement in the business. Apartment vacancy is at a record and unemployment, essential to the sector’s health, remains elevated.
But operators are betting that limited new supply, combined with an improving economy, will lead to ideal market conditions nationwide starting in 2011 or 2012. From then until 2015, “apartment REITs may generate the best property net operating income growth that they’ve seen in a very long time, maybe ever,” said Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods Inc.
To be sure, there are risks. Given the multiyear construction window, companies have to start now to be ready in time. If the economy weakens further and recovery is delayed, landlords may be forced to keep rents low or offer free rent to get leases signed.
“There’s an element of risk,” said Andrew McCulloch, an analyst with Green Street. “But if you were to go back a year, the outlook is much more clear today. Their confidence level in that eventual recovery is much higher.”
Owners said the rent declines appear to have bottomed out in some areas and concessions are moderating. In New York, Equity Residential said it has stopped paying broker fees for certain unit types. In better times tenants pay that fee, typically one month’s rent.
The gap between new and renewal leases has narrowed from about 10% nine months ago to about 5% today, a sign of confidence as landlords have to give up less to sign new tenants, Mr. St. Juste said.
Landlords also are excited about demand. The 20-to-34 age group, prime renting age, is expected to increase by five million in the next decade, according to Hessam Nadji, managing director of Marcus & Millichap, a real-state-investment brokerage firm. People who moved home or who bunked with roommates during the downturn also might ink leases as the economy improves.
Moreover, construction costs “have fallen rapidly in the last two years,” said Tom Toomey, chief executive of apartment owner UDR Inc. A unit that would have cost $300,000 to build two years ago could now be built for as little as $220,000, Mr. Toomey said.
Lumber prices have been cut 15%, while concrete prices are down 10%, he said. Labor costs have fallen as much as 15%. Starting development now “is starting to become an easier decision,” Mr. Toomey said.
The sector’s optimism was apparent in January’s housing starts. Construction of multifamily dwellings rose 9.2%, the Commerce Department said.
At Humphreys & Partners Architects LP in Dallas, which designs apartments, inquires and job counts have more than doubled from a year earlier, said Chief Executive Mark Humphreys. “This time last year the financial world had come to an end,” Mr. Humphreys said. “Everybody was frozen in time; they were just stunned. The phone was not ringing. Well, the phone is ringing now.”
Developers said they are avoiding Las Vegas and Phoenix, which were overbuilt during the housing frenzy, in favor of more stable markets, including Washington, Boston and San Francisco.
In 2011, AvalonBay Communities Inc. plans to complete six projects with more than 2,100 units in locations including Walnut Creek, Calif., New York and West Long Branch, N.J. The rents will average more than $2,000 a month, according to securities filings.
Equity Residential, meanwhile, plans to deliver 111 units in New York’s Chelsea neighborhood in late 2011.
Developers also are using conservative projections when planning projects. Zaremba Group, which is building Fusion 1560, is targeting rents between $925 and $2,300 a month in 2011, when it hopes to be fully leased. Mr. Zaremba said that matches the current market.
“We’re not banking on [rent increases],” he said.
Hometown democracy debate set
Mar 3rd
Bradenton.com | 03/03/2010 | Hometown democracy debate set.
LAKEWOOD RANCH — Manatee County Republican Commissioner Joe McClash and Sarasota County Republican Commissioner Jon Thaxton are set to debate the merits of Amendment 4, a proposed change to the Florida Constitution that will be on the ballot Nov. 2.
The Florida Hometown Democracy Land Use Initiative would require voter approval of all changes to a community’s comprehensive plans.
The commissioners’ discussion will be before the Lakewood Ranch Democratic Club at 7 p.m. Tuesday at the Lakewood Ranch Town Hall, 8175 Lakewood Ranch Blvd.
The meeting is open to the public.
Show your support if you’re available, and be sure to get out the vote on this issue.
LWR BUSINESS ALLIANCE AMENDMENT 4 LUNCHEON PROGRAM
Mar 2nd
>> The Lakewood Ranch Business Alliance’s March 10 luncheon will focus on Amendment 4, frequently referred to as “Hometown Democracy,” and what it means to businesses and the community. Scheduled speakers include: Ryan Houck, executive director of Floridians for Smarter Growth; Jon Thaxton, Sarasota county commissioner, and Ward Friszolowski, former mayor of St. Petersburg Beach. The meeting will begin at 11:30 a.m. at the Polo Grill, 10670 Boardwalk Loop. The cost is $20 for members and $30 for nonmembers. Register online at www.lwrba.org.
Commercial Property Sales Jump
Feb 26th
Commercial-Property Sales Jump – WSJ.com.
Debate Over Reaching Bottom Follows Two Months of Gains
By CHRISTINA S.N. LEWIS
The number of commercial real-estate sales rose sharply in December, triggering fresh debate about whether the sector has reached bottom.
Property sales, a gauge of market health, rose 75% in December from the prior month, according to Real Capital Analytics. The end of the year traditionally sees an increase in volume. But the recent increase is significant even after adjusting for that, says Neal Elkin, president of REAL, a research firm that analyzed the data.
The Moody’s/REAL All Commercial Property Price Indices, or CPPI, which track values, measured a 4.1% increase in December. This followed an increase of 1% in November, which was the first time since 2007 that there were two consecutive months of rising values.
But Moody’s and REAL agreed that it is too soon to conclude that the market has hit bottom.
“It makes me feel very confident that the dramatic violent price movement that we saw in the first part of 2009 is over,” says Mr. Elkin of REAL. “But I would never be so bold to say that we are going straight up from here.”
Cushman & Wakefield / One Brigham Circle in Boston
There were 716 transactions in December, according to the CPPI. That compares with more than 1,600 deals in December 2007.
Sales activity has been in the doldrums for months because of a dearth of financings and sellers’ unwillingness to put property on the block when prices are down sharply from a few years ago. That means competition can be fierce when prime buildings are put up for sale.
Earlier this month, an institutional real-estate fund run by J.P. Morgan Asset Management bid on a large $100 million-plus rental-apartment property in Washington. Seventeen other buyers submitted offers, says Kevin Faxon, head of U.S. Real Estate for J.P. Morgan Asset Management.
“We are actively in the market seeking to acquire properties,” Mr. Faxon says. “We are not on the sidelines. We’re not taking a view that prices are going to be cheaper tomorrow than they are today.”
Also, some healthy properties are still commanding decent prices. In Boston, a nearly 200,000-square-foot office and retail property called One Brigham Circle is in contract to sell for $97 million to AEW Capital Management, according to a person with knowledge of the deal. Brokers for Cushman & Wakefield are representing the seller, the Rappaport family’s New Boston Fund.
![[VALUES]](http://sg.wsj.net/public/resources/images/MI-BB675_VALUES_NS_20100223181226.gif)
The cap rate, an industry term for the buyer’s nonleveraged yield on the property at current net rents, is less than 6.5%, a return that is comparable to property prices in 2005 and 2006, according to local brokers. The building is fully leased.
The conflicting market signals come at a time when the commercial real-estate sector faces significant challenges. The economic fundamentals, such as anemic hiring, mean that office rents are likely to continue falling while vacancies continue to rise. Meanwhile, apartment rents also are low, driven down by record low home prices and increased supply from investors stuck with unsold properties who have put them on the rental market.
In addition, many top-of-the-market real-estate deals are still expected to go bad, like Peter Cooper Village and Stuyvesant Town, a sprawling Manhattan residential complex that is in default on $4.4 billion in debt.
Market bulls agree that the sector continues to perform badly. But they argue it is doing better than people thought it would. Therefore, real-estate assets are undervalued and prices are going up, they say.
“No one believed me that values were going to go up so soon,” says Dan Fasulo, head of research for Real Capital Analytics. “But there’s enough anecdotal evidence now that we’ve come well up off the bottom already.”
Write to Christina S.N. Lewis at christina.lewis@wsj.com
Lakewood Ranch Company Spurs Development with Land Sales
Feb 26th
Lakewood Ranch firm buys lots … $81 million worth | Section Home | HeraldTribune.com.
Published: Friday, February 26, 2010 at 1:00 a.m.
HERALD-TRIBUNE ARCHIVE
Mike Moser, Starwood Land Venture’s east regional president.
Starwood Land Ventures, a Lakewood Ranch firm formed three years ago to acquire distressed real estate, has scored one of the largest land purchases in Florida in the past year.
Starwood Land officials say the company’s $81 million acquisition of nearly 5,500 lots from the bankrupt Tousa Homes Inc. will allow it to re-energize communities from Jacksonville to Miami and generate sales to builders.
“This is really the culmination of Starwood Land’s efforts in regards to searching and bidding on residential assets,” said Mike Moser, the local company’s east regional president.
As part of the acquisition, Miami-based Lennar Corp. has committed to buy 1,400 of the Starwood lots, and has options to buy another 1,350.
Analysts said Starwood Land’s deal could also send ripples throughout Florida’s housing market, and spur activity because of its scope and size.
“Look at it this way: A typical residential subdivision is 150 to 200 lots,” said Jack McCabe, chief executive of McCabe Research & Consulting, of Deerfield Beach. “A purchase of 5,500 lots, at one time, is massive.”
The acquisition also signals that, for hedge funds and well-capitalized home builders, at least, Florida’s four-year housing depression may be ebbing.
“When you see a national company making an $80 million commitment of capital, betting that the market is headed up, it’s a positive sign,” said Pat Neal, president of Neal Communities, a developer and home builder also based in Lakewood Ranch.
“This is a sign that for builders, the market has definitely hit bottom,” Neal said. “Now, they’re mostly out there looking for lots to build on.”
The Starwood lots are in 36 communities statewide, including in Tampa and Orlando. Of the nearly 5,500 home sites, all but 900 are “finished,” meaning they have necessary infrastructure such as lighting and sewer and water hookups.
The lots will allow builders to develop homes with roughly 13,000 residents — comparable in size to the city of Sebring in Highlands County or half again as large as the population of Anna Maria Island.
Neal and others noted that Starwood’s price will allow it to sell lots at a reasonably low price to builders, who in turn can develop and sell moderately priced homes — undercutting competition in many areas.
“Today, everything is about price and cost,” Neal said. “At roughly $14,000 per lot, Starwood Land and its partners will be able to build more inexpensive homes for customers.”
Lennar said in a statement it intends to construct single-family homes, townhomes and garden villas “priced from the low $100,000s.”
“We are pleased to work with Starwood on this transaction and we view this deal as a major step forward for Lennar’s growth in the state of Florida,” said Fred Rothman, Lennar’s regional president, in a statement.
Starwood Land acquired the Tousa portfolio through an auction held late last month by the U.S. Bankruptcy Court Southern Florida district, in Fort Lauderdale.
Starwood Land finalized the purchase with the court on Feb. 17, Moser said.
Tousa filed for bankruptcy in January 2008.
In addition to Starwood Land, a partnership of hedge funds Paulson & Co. and Greenpoint Advisors and a team composed of Metro Development Group II and Dune Real Estate Partners also bid on the Tousa lot portfolio.
Both Starwood Land and Lennar characterized the lots as “one of the most desirable real estate portfolios to come to market in years.”
The deal brings to $160 million the total amount Starwood Land has invested in property, Moser said. Of that, $100 million has been invested in the past 90 days. “We’re starting to see some loosening,” Moser said.
In all, the company now owns 13,100 home sites in Florida, Arizona and California.
Starwood Land is an affiliate of Starwood Capital Group, a Connecticut-based company that has roughly $13 billion in assets under management. It controls the Westin hotel chain, lender iStar Financial and links operator Troon Golf.
“They’re taking advantage of a great deal,” McCabe said. “Because Florida’s future long-term is excellent.”
This story appeared in print on page A1
Copyright © 2010 HeraldTribune.com — All rights reserved. Restricted use only.
Commercial Real Estate Bottoming
Feb 25th
Commercial Real Estate Bottoming?
Neal Elkin, of Real Estate Analytics, and Harvey Green, of Marcus & Millichap Real Estate Investment Services, talk about whether commercial real estate is finding a bottom.
Come Out and Support the Schools!
Feb 24th
|
|||||||||
