A report from the Urban Land Institute. “‘Real estate doesn’t appear to be the sector where we are taking risks that won’t pay off,’ says Sam Chandan, an associate dean of New York University’s Schack Institute of Real Estate. ‘By and large, we have been fairly reserved in our development activity, in our investment activity.’”
“That said, Chandan does worry about some loans made to apartment properties. ‘Commercial real estate has been much more reserved in the expansion of its debt with the exception of multifamily,’ he says. Lenders had $1.4 billion in loans outstanding to apartment properties. That’s twice the volume of apartment loans outstanding just before the financial crisis, he says.”
“In the rush to make those loans, some lenders may have lent too much. The average apartment borrower carried $13.95 of debt for every $1 of net operating income in the second quarter of 2019, up from an average of less than $10 of debt in 2010, according to Chandan. ‘Not all of that debt is going to have been structured in a way that is going to survive maturing in a downturn,’ says Chandan.”
“Chandan also sees a mismatch in the housing markets: ‘The bulk of development that we have seen has been that class A, urban, high-rise building that is well amenitized and is in the top decile of the asking-rent distribution, if not even higher.’ That creates a glut of housing for upper-income people, and an expensive shortage for everyone else.”
The Business Observer on Florida. “The resiliency of the multifamily market statewide, but particularly in Tampa, continues to defy the odds. ‘Eight years ago, Tampa Bay may not have been on people’s radar, but today it is,’ says Zach Ames, senior director at Franklin Street in Tampa, in the CoStar report. ‘I don’t think we’re overbuilt, even though it may seem that way. There’s still a shortage of housing.’”
“A pair of recent deals helped push Tampa Bay’s price-per-unit average to around $143,000. That bests Dallas-Fort Worth, Houston and Las Vegas, the report shows, while trailing New York, Miami and Chicago.”
From WBAA in Indiana. “Tippecanoe County’s 2019 Student Rental Report recommends a self-imposed moratorium on building any more high-rise apartment complexes in the near future. The numbers suggest occupancy rates have decreased in West Lafayette as hundreds of new beds became available this fall. As occupancy rates are decreasing, West Lafayette Development Director Erik Carlson says so are rental prices for apartments surrounding the Purdue University campus.”
“‘We’ve seen a significant decrease in rent within a half-mile of the campus about 5 and a half to 6 percent and then at the half-mile to mile range around campus is actually around 29 percent decrease in rent,’ Carlson says.”
“‘Rents have gone down because there’s more supply that’s just a fact, students have a heck of a lot more choices than they used to and there’s more competition,’ Plan Commission Assistant Director Ryan O’Gara says.”
“Carlson says the amount of available housing has discouraged lenders from funding new student housing options. But First District City Councilor Nick DeBoer says although rates are decreasing, high rent costs are still a problem. ‘The cost per square foot is still more expensive than San Francisco and Boston,’ DeBoer says.”
The New York Post. “Actress Jennifer Lawrence has slashed the price of her Upper East Side penthouse yet again. The three-bedroom, 4½-bathroom home, at 400 E. 67th St., is now asking $12 million — down from an already discounted $14.25 million. That’s far less than the $15.6 million she paid for it in 2016. (The penthouse was asking an astonishing $21 million in 2014.)”
From Bloomberg on California. “The real estate market in downtown Los Angeles is taking a hit as Chinese cash dries up. Condo sales plunged 31% in the third quarter from a year earlier, according to data from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.”
“Chinese buyers have made about 50% of the purchases in downtown Los Angeles in recent years, said Stephen Kotler, who oversees the western region for Douglas Elliman. But tightened restrictions on capital flowing out of China have hampered the market.”
“Roughly 13,000 apartments have been built in the area since 2014, swelling the inventory there by almost 50%, according to CoStar Group Inc. An additional 4,000 units are under construction. There’s also been a push to develop luxury condos, with about 2,000 units under construction and several thousand more moving through the pipeline, CoStar said.”
“But without wealthy Chinese buyers, condos priced above $800,000 aren’t selling. ‘New building prices are too high for what buyers think is valuable,’ Kotler said.”
The St. Louis Post Dispatch in Missouri. “While more lawmakers and inspectors close in on T.E.H. Realty over dismal living conditions at the firm’s low-income apartment complexes, one player has been able to get work done quickly for tenants.”
“Fannie Mae, a federal government-sponsored enterprise that secures loans, recently convinced St. Louis County Circuit Judge Joseph L. Walsh III to grant an emergency order to help protect collateral here at Springwood Apartments. Nicholas Zluticky, an attorney for Fannie Mae, argued that a receiver was needed to ‘protect and preserve the property’ and ‘maximize the value of assets.’”
“The troubled property, near Interstate 170 and Natural Bridge, has garnered hundreds of citations from Bel-Ridge code enforcement and lots of lawsuits between the landlord and tenants. This week, Trigild representatives had locks changed and went unit by unit, looking behind each door. One of the new managers donned a respirator mask. A police officer had a gun drawn.”
“According to the receivership case, the lender notified T.E.H. Realty in March that it had failed to maintain the property and it must fully repair ‘Life Safety’ items listed in a property condition assessment that valued the needed work at $933,217. After failing to make the repairs, the firm went into default. As of Sept. 30, SM-T.E.H. Realty 1 LLC owed Fannie Mae $4,329,630 for the property, records show.”