A report from Click Orlando in Florida. “For the second time in two months, an Orlando sports legend’s sprawling home has become a little more affordable. Shaquille O’Neal’s Isleworth mansion can now be had for a reduced price. Shaq first put the 31,000-square-foot home on the market in 2018 for $28 million. After failing to sell, the price was reduced to $19.5 million in September. It is now down to $16.5 million.”
The Los Angeles Times in California. “Actress JoBeth Williams and her husband, film director John Pasquin, just sold their pedigreed home overlooking the links of Bel-Air Country Club for $18.5 million. Williams and Pasquin were asking $30 million for the home in January.”
The Real Deal on New York. “As luxury stores remain shuttered, the pandemic and economic fallout are sparking a rift among owners of residential and retail property in one of the country’s top real estate markets. For many condominium and co-op buildings in Manhattan, Brooklyn and Queens, adding spaces for retail tenants was good business. But as one of the toughest years in decades comes to a close, many of the cafes, gyms and shops in those spaces are struggling to pay rent or have shut down until further notice.”
“Because of these delinquent retail tenants, condo and co-op owners are seeing their dues rise and the value of their homes sink. The pain is compounded for any homeowners or developers trying to sell units. ‘When someone goes to sell their unit, one of the questions is: ‘What’s the current common charges?’ If you have a higher number than the rest of the market, it’s going to certainly lower the property values,’ said Leni Morrison Cummins, a New York real estate attorney.”
“The attorney said she saw a significant increase in liens placed against commercial units by condo and co-op boards over the summer. Some are now turning into full-blown foreclosure suits. Attorney Mark Hakim has represented co-op boards on similar cases. He said the emphasis is on negotiating an agreement with retail tenants because the last thing any board wants is a vacancy and no income. Now that the retail is stumbling, those costs will spill over to apartment owners and investors alike. ‘That’s where the dominoes start to fall,’ Hakim noted.”
From Business Traveler News. “Apartment-style lodging provider Lyric essentially will leave the hospitality rental space after its lease agreement at 70 Pine St. in New York City is taken over by Mint House this month. The Financial District location was the last of its markets, according to a Forbes report in July. Lyric in March began laying off staff and pulling out of cities. By the time it exited all but the New York market, the company had pivoted to a focus on software tools, including an existing pricing tool for accommodations, according to Forbes. Another apartment-style lodging provider, Stay Alfred, ceased operations earlier this year.”
From Multi-Housing News. “For their part, borrowers want to know what loan-to-value ratio lenders will offer; whether a financial guarantee or a personal guarantee will be required; how loans are being structured; and where cap rates are. So says Matthew Dzbanek, a capital services executive at Ariel Property Advisors, a boutique lender specializing in arranging complex deals.”
“Six months ago, lenders were giving credit for vacant units and structuring loans around them. ‘Now lenders are saying if it’s vacant, we won’t count that income or we won’t close until it’s occupied, which has been a big shift for a lot of value-add operators,’ Dzbanek reports.”
“As the industry continues to digest fluid and challenging conditions, one strategy that seems to draw more interest than implementation is cashing out equity in existing portfolios and using the proceeds to buy distressed properties at deep discounts. According to Real Capital Analytics’ recent report on multifamily capital trends, distressed apartment loans reached $840 million in the second quarter. That represents a year-over-year surge from $254 million for the same period last year.”
From The Universal Hub on Massachusetts. “The challenges faced by the Boston housing market have been well documented in 2020. It effectively took one of the nation’s hottest real estate markets and caused it to come to a grinding halt as apartment vacancies soar all over the city. When looking at the data trends for year over year inventory growth, we’re seeing vacancy numbers that we’ve never seen before in certain areas. The availability rate equals all current vacant apartments plus those becoming available, divided by the total number of apartments.”
“Downtown: 11/2020 Availability Rate: 18.56%, 11/2019 Availability Rate: 1.26%, YOY % Change: +1373.02. Beacon Hill: 11/2020 Availability Rate: 7.08%, 11/2019 Availability Rate: 0.66%, YOY % Change: +972.73%. Allston: 11/2020 Availability Rate: 12.04%, 11/2019 Availability Rate: 1.34%, YOY % Change: +798.51%.”
From Bisnow on Georgia. “There are 12 privately owned student housing projects encompassing more than 2,700 units and 7,800 beds in Atlanta’s pipeline. Three projects are currently under construction, which will add an additional 1,500 beds to the city once they deliver, Haddow & Co. Managing Partner Ladson Haddow said. Landmark Properties CEO Wes Rogers — whose firm has two Midtown projects, Mark Atlanta and The Standard, both along Spring Street — said rents for student housing units were deteriorating last year after years of development.”
“‘We had another site near Georgia Tech we were evaluating but decided to walk away from it due to concerns over deteriorating fundamentals,’ Rogers wrote in an email to Bisnow. ‘I am concerned that this market will soften considerably if most of the proposed projects move forward. Once debt and equity realize how the market is really performing, I imagine much of the potential supply may end up not coming to fruition.’”
The Wall Street Journal. “Mall landlords are starting to seek bankruptcy protection or shutting down, the latest signs that the pandemic is deepening a crisis that began before Covid-19. Many malls purchased with a mortgage within the past 10 years are now underwater, leading owners to return properties to their lenders at a record pace. But some lenders don’t want struggling properties on their balance sheet and have batted them back by extending their loans.”
“‘The quantity of distressed debt and distressed opportunity is at a historical high,’ said Andy Weiner, president of RockStep Capital, a shopping center investment firm that owns 11 malls across the country.”