Savvy like Trump...but better hair!

Having completed over $6 Billion in real estate deals makes Robert Knakal someone to listen to and learn from.  I subscribed: Robert Knakal’s Streetwise.     

Welcome back old friend! Yes, we have seen a re-emergence of the blessed 1031 tax-deferred exchange in recent weeks, and what a welcome sight it is.    

 The opportunity to protect hard earned equity in the sale of an investment has been available to investors since 1921. However, this part of the tax code was so complex that only a small segment of the investment community took advantage of this mechanism.  In 1990, the Omnibus Budget Act provided more widespread access to a broader set of investors as this option was clarified and simplified. Section 1031 exchanges are often mischaracterized as “tax free” when they are actually “tax deferred”.     

Contact the team at Rose City Commercial Real Estate to begin investing in Portland’s future…and your own:  rick@rosecitycre.com or 503.577.1034.     

The theory behind this mechanism is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay taxes. Only the form of investment has changed, therefore, it would be unfair to collect a tax on a “paper” gain.  When an investor utilizes this mechanism, the deferred gain is payable when the replacement property is sold and is not part of yet another exchange. At that point, the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.    

 1031 exchanges in the investment property market have been growing in popularity since the mid-90s and fueled a majority of transactions in the mid to late 2000s. With falling property values and transaction volumes beginning in late 2007, we saw a significant reduction in 1031 transactions.    

 In previous StreetWise columns, I have gone into detail about the supply / demand imbalance and the fact that the volume of sales was so low due, mainly, to lack of supply as opposed to waning demand. The supply of available properties for sale is generally fed by discretionary sellers. When value falls, as it has done since 2007, discretionary sellers withdraw from the market and the supply is then fed by distressed sellers. Distressed sellers have not fed the supply in numbers which were expected because everything that has occurred from a regulatory perspective has allowed these sellers to avoid dealing with their distressed assets.    

 Recently, we have seen the flow of distressed assets begin to loosen as banks and special servicers are beginning to clean up their balance sheets and portfolios. Simultaneously, we have seen discretionary sellers returning to the market. The tangible evidence that this is actually happening can be seen in the 1031 activity we have seen recently. Distressed sellers are rarely left with any equity to reinvest in the form of a 1031 exchange. Discretionary sellers, on the other hand, often have significant equity to redeploy via this tax-deferred vehicle. We are, once again, seeing sellers ask for flexibility in closing periods to provide them with better chances of being able to effectuate an exchange.    

 During the past 4 weeks alone, we have signed 12 contracts with purchasers who are investing 1031 funds. Moreover, we are receiving multiple calls each day from investors who are looking for properties to complete exchange transactions. This is certainly reminiscent of 2006 and 2007 when so many transactions were motivated by tax-deferment. The demand side has been very strong for quite a while as institutional capital has returned to the market, joining the high-net-worth individuals and families which have dominated the horizon for the past couple of years. Foreign high-net-worth investors are present in rapidly growing numbers and the re-emergence of 1031 capital adds more pressure to already overwhelming demand for investment properties.    

 Don’t mistake my perspective as I am not suggesting that market conditions are back to the go-go, bubble inflating, years of 2005 to 2007. I am, merely, passing along a trend that we are seeing which has, for the most part, been absent for quite a while. It is yet another sign that the recovery is upon us.    

 From an intermediary’s point of view, or anyone’s, who is reliant upon transaction volume for their livelihood, it is positive to see this type of activity returning to the market. To the extent that distressed sellers continue to dispose of assets and discretionary sellers return to the market, transaction volume has no choice but to increase. As sellers with real equity sell, each transaction is likely to stimulate another transaction as a 1031 is contemplated.    

 This trend certainly bodes well for our projection that transaction volume will increase by about 40% this year over last year. Welcome back old friend, indeed!    

 Mr. Knakal is the Chairman and Founding Partner of Massey Knakal Realty Services in New York City and has brokered the sale of over 1,050 properties in his career having a market value in excess of $6.2 billion.

Making a difference

Multifamily investments are leading the way!

In recent articles I have detailed about how equity players, particularly the big REITs are returning.  The Bid/Asked Gap is closing.  The final piece of the puzzle is the availability of affordable financing.  Please see the attached article about capital markets.

A friend of mine asked me recently if there was ever going to be a good time to invest.  I told him that there was no need to get in now…there will be another great time to buy in a few decades.  I’d call 503.577.1034 now!

from:  National Real Estate Investor

Real estate capital markets continue to improve. As investor sentiment rebounds, there is a large amount of equity capital chasing a relatively constrained supply of for-sale core assets. This increased liquidity has helped to boost sale prices for core assets in primary markets by more than 10% over the past few months.

Lenders also are beginning to re-enter the commercial mortgage market, with increasing competition between lenders leading to lower mortgage rates and higher loan-to-values. As of March 2010, the average commercial mortgage rate was approximately 6.8% to 7%, with spreads over the 10-year Treasury narrowing to 320 to 370 basis points.

On the CMBS front, all tranches have rallied appreciably. Spreads on the AAA CMBX index have narrowed by more than 100 basis points during the first quarter of 2010.

In early April, Royal Bank of Scotland (RBS) successfully completed a $309.7 million commercial mortgage-backed securities (CMBS) offering backed by multiple loans, suggesting that the securitization market also is strengthening.

According to Real Capital Analytics (RCA), distressed assets in the U.S. surged to $234 billion as of March 2010. We expect the amount of distress to continue to grow as more loans mature over the next three years.

Although some of the loans will be restructured and extended, we expect to see good debt and equity opportunities for well-priced and/or distressed investments in 2010 and 2011.

The NAREIT Equity REIT Index gained 10% during the first quarter, outperforming the S&P 500 Index (5.4%). Improved access to both debt and equity markets is helping to fuel REIT performance.

Meanwhile, the NCREIF Property Index (NPI) posted a total return of 0.76% during the first quarter, following six consecutive quarters of negative returns [Figure 1]. The income portion of the quarterly return was resilient at 1.7%, but prices depreciated by 0.9%. The total return was positive for all property sectors except lodging.

Try this on for size:  Pay cash for a distressed asset for a dimes on the dollar.  Remedy vacancy challenges and stabilize occupancy over 90% for six months.  Place a 70% LTV HUD loan on the property and you’ll be able to pull out virtually all of your original equity.  It will still cash flow. What’s the IRR calc when you’ve got $0 cash left in?  Infinite.  Call 503.577.1034 to discuss this further!

From:  CCIM Magazine 

Government-sponsored enterprises Fannie Mae and Freddie Mac have been a lifeline for multifamily investors, providing liquidity that is sadly missing outside of the apartment realm. “That has softened the amount of value decreases in the sector,” says Dan Fasulo, managing director at research firm Real Capital Analytics. “For prime multifamily, we’re not seeing the type of 40 percent to 60 percent declines in value that we are seeing in the office, retail, and hotel sectors.”

CCIMs say the U.S. Department of Housing and Urban Development’s loan programs may soon overshadow Fannie and Freddie as the darlings of multifamily borrowers. Those programs, insured by the Federal Housing Administration, include 223(f) loans, which can be used to refinance assets, and 221(d)(4) loans for new construction.

Loan-to-value ratios can be as high as 90 percent of construction costs and typically amortize over the 40-year term of the loan, says Jeff Siebold, CCIM, an appraiser and owner of Siebold Group in Caswell Beach, N.C. “This is not about subsidized housing; it is about market-rate apartments,” Siebold says. “Some of the nicest class A or B properties that you see very well might have a 221(d)(4) loan as part of their program.”

Government-backed loans won’t work for every project, in part because they are limited to stabilized properties, according to Brad Miner, CCIM, a CB Richard Ellis associate in Phoenix.

Brokers say cash transactions also are mushrooming. Wealthy individuals concerned about inflation are increasingly interested in multifamily as a conservative investment vehicle, says Robert Vallera, CCIM, principal of Commercial Realty Advisors in La Jolla, Calif. Vallera contends that many investors worry U.S. fiscal policy will soon fuel rapid inflation. “I have closed more all-cash apartment transactions with private investors in the past year than in my prior 25 years of apartment brokerage combined,” he says.

Good News For Investors

National Real Estate Investor

Despite poor commercial real estate fundamentals, retail and apartment real estate investment trusts (REITs) are enjoying a powerful resurgence.

For the 12-month period ending February 28, a key equity REIT index soared 95.19%, outdoing both the Nasdaq and Standard & Poor’s 500 index of stocks, according to a new report.
For the month of February, U.S. REITs gained more than 5%, according to the report by the National Association of Real Estate Investment Trusts (NAREIT), a trade group based in Washington, D.C. The gains were driven by investment in the retail and apartment sectors, according to the report.
“This has been a period of tremendous growth for REIT shares,” says Ron Kuykendall, vice president at NAREIT. “What it means, I believe, is that investors are betting on a recovery.”
The performance represents a remarkable contrast to the period from the market peak in early 2007 to the trough in March 2009, the lowest point for REITs. Share prices fell a devastating 75% during that period, says Kuykendall.
If investors indeed are betting on recovery, that could provide a shot in the arm to the commercial real estate industry across the U.S. Although REITs comprise just 10% to 15% of the total U.S. commercial real estate marketplace, they represent many of the largest companies and property owners across all property types — retail, multifamily, office, industrial and hotel.

Dealmakers get busy…contact Rose City Commercial Real Estate at 503.577.1034 or Rick@rosecitycre.com.

Continued…

A developing trend that factors into the recent investment in shares is that acquisitions are once again beginning to take place after the nation’s deep recession and credit shortage, particularly in the retail and apartment sectors.
“We have seen apartment companies like Avalon Bay and Equity Residential doing some strategic acquisitions. It has also begun to happen in the retail sector, where you have of course the General Growth situation,” says Kuykendall. Several rival REITs have expressed interest in buying mall REIT General Growth as it attempts to emerge from Chapter 11 bankruptcy.
“Equity One has been talking to Liberty about acquiring some of their retail shopping centers,” as well, says Kuykendall.
Over the past year, many REITs strengthened their balance sheets as they recapitalized, raising fresh equity through secondary equity offerings and paying down debt, says Kuykendall. The steps made them more attractive to investors.
“There were about $22 billion in secondary equity offerings in the REIT marketplace last year,” says Kuykendall. “That represented more shares coming onto the market.” The offerings followed a trend developing over the past year of share growth rather than a reduction in the number of shares outstanding.
Regional malls recorded an 11.9% return on the FTSE NAREIT Equity REIT Index in February, while shopping centers registered 8.9%. During the month, apartments also showed strong gains of 8.4%, a dramatic improvement from a year earlier. In February 2009, shopping center index returns declined 25.8% while regional mall returns dropped 21.1%. In the same period, apartment returns declined 24.7%.
This year, REITs are generating more optimism. “Investors have been looking forward to the returns that REITs are going to be able to generate by acquiring high-quality property at good prices,” says NAREIT economist Brad Case. “What we’ve seen in the last month is that those opportunities have arrived.”
The investors are driving the prices of REIT stocks up in anticipation of better REIT performance going forward, says Case. He notes that in addition to the improved returns for retail and apartments, lodging REITs recorded a 6% gain in February.
Tough year for fundamentals
The gains have taken place against the backdrop of a brutal climate for commercial real estate fundamentals. The vacancy rate for community and neighborhood shopping centers is projected to rise to 11.5% this year, according to New York-based data research firm Reis. That would represent the highest vacancy rate for the centers since at least 1999.
The shopping center vacancy rate is projected to rise to 12.2% next year. For apartments, Reis projects a vacancy rate of 8.3% in 2010, shattering records for the last 11 years.
Because REITs have been able to raise fresh capital through equity offerings, unlike private companies, they have not been hamstrung by banks’ unwillingness to lend money for acquisitions, says Kuykendall. That has made a crucial difference in their ability to grow as the nation attempts to shake off the effects of the economic slowdown.
Another problem for private commercial real estate companies is that many are weighed down by maturing debts, while banks practice a policy of “extend and pretend” rather than foreclosing on assets.
That’s why the investment marketplace has looked more favorably on REITs, says Kuykendall. Debt maturities still hang over the private companies, while REITs are positioned for opportunistic buys. “These are going to be the winners as banks come to a point where they are no longer willing or able to do the pretend and extend.”

By Mark Heschmeyer

To be certain, the number of property sales with price tags of $5 million or more still declined 16% in January from the number of sales in January 2009, according to CoStar Group Inc. And that was a steeper decrease than seen in November and December.

However, that decrease in dollar volume can be attributed to fewer deals and smaller properties being sold. The average size of the properties sold this past January was 5% smaller than a year ago, and the number of deals was down 15%. That helped raise, the average price per square foot being paid for institutional-quality properties from $141 per square foot to $149 per square foot January to January, the third month in a row that the average price paid was more than it was in the year-earlier period.

What’s more, multifamily sales in the $5 million and up category increased 50% over the year earlier. This was the second month out of the last three that multifamily sales had increased month over month. Apartment sales were up in November and flat in December.

Hospitality property sales also took a huge upward turn in January – up more than 250% over the year-earlier period. Although, it was the first monthly increase since the recession started, the trend over the last four months has clearly been improving for hotel properties. They were down 58% in October 2009 compared to October 2008, but down only 1% in the December-to-December period.

While no one is jumping to the conclusion that the results clearly indicate commercial real estate has turned a corner, they do appear to lend more credence to the belief that a painfully slow rebound may be in progress.

“We’ll see more transactions involving institutional quality property because buyers are beginning to understand that prices for top-quality properties may be at or near a bottom,” said Bob Bach, chief economist at Grubb & Ellis. “I think we’ll see a gradual increase in sales this year of perhaps 20% to 30% or possibly considerably more.”

“We’ll also see [more activity in] Class B and C troubled assets in secondary and tertiary markets because lenders realize there’s no reason to hang on for better prices because these properties will be the last to recover,” Bach said. “Prices are expected to drift moderately lower, more into the strike zone where buyers and sellers will start to make deals. But the pricing correction is [still] probably [only] two-thirds to three-quarters over with.”

In addition to attractive pricing and lenders more willing to sell, confidence from the resumption of job growth is also expected to stimulate the willingness among investors to seek outsized returns by taking on greater risk.

As CoStar’s Property and Portfolio Research (PPR) noted in its 2010 Predictions white paper, “Once we start getting a couple of months of positive job numbers, particularly if there is an accelerating trend, we’re going to see a lot of investors interested in cashing in on the opportunities that are out there, whether this means acquiring half-empty buildings or taking on assets with big lease-roll exposures.”

According to PPR, the best-performing opportunity funds from a vintage standpoint have been those that are executed in the last year of a recession or the first year of the recovery. Looking back to the last downturn, 2001 and 2002 vintage funds were the best-performing opportunity funds over the previous eight years.
Multifamily Investment Sales

“There has undoubtedly been an uptick in transaction velocity in multifamily deals, and I believe it is due to a variety of factors,” said Darron Kattan, partner and senior multifamily broker for Franklin Street Real Estate Services in Tampa, FL. “Multifamily is always the top choice of investment dollars and therefore there are a lot of buyers looking for deals. Nothing new in this cycle versus previous where multifamily is the first to recover due in large part to the availability of buyers. Multifamily was actually the first to hit the distressed radar screen, with the shortest term leases (outside of hotels), and therefore became the first to get hit hard by the downturn and land on asset managers’ desks at lenders and servicing companies, and therefore are the first working through the system.”

In addition, Kattan noted that AIMCO and Equity Residential were large net sellers in 2009 due to balance sheet and stock pricing issues. That, he said, opened the door for attractive deals to hit the market.

Tim Wang, vice president, senior investment strategist for ING Clarion in New York noted that Freddie Mac, Fannie Mae, and HUD have been dominating the multifamily financing.

“This is the only property sector that you can still lever up to 75% loan to value and have positive leverage to juice up investment returns,” Wang said. “The Fed plans to end its $1.25 trillion mortgage debt purchase program by the end of next month, which could potentially lead to an increase in GSE mortgage rates. So, there is a rush in the marketplace to take advantage of the attractive financing terms and do multifamily deals before this deadline.”
Hospitality Investment Sales

“Hotel demand is highly correlated with economic growth,” Wang said. “Historically, it is one of the first property sectors to recover after recession. The sector is definitely improving, albeit from probably the steepest downturn in the U.S. lodging industry history. We are seeing generally stabilized occupancy while the average daily room rate is still declining but at a slower rate. The major difference in this downturn is that there was excess hotel supply delivered to the market in 2008-2009. Consequently, the revenue per available room recovery this time around could be slower than in the past.”

Gordon L Wicker, chief operations officer for AXIA Real Estate Appraisers in Tucson, AZ, said, “with respect to the hospitality market statewide, average daily room rates and average daily occupancies remain well off 2007 numbers, so most sales activity in the larger regional/national market appears to be an increase in activity from REITs both as a long-term investment, and also due to a lack of attractive investment alternatives.”

Timothy D. Chamberlain, principal at Koda Ventures LLC, and senior director at Lee Kennedy Co. Inc. in Quincy, MA, also noted that hospitality, while still distressed, is becoming appropriately priced.

“Hospitality is discounted enough to start to move and apartments represent stabilized cash flow, which is what the market wants today,” Chamberlain said. “All other classes are getting kicked down the road and are not yet priced appropriately for a reasonable risk adjusted return.”
Office, Industrial and Retail Investment Sales

“There will be an uptick in volume in 2010, but not much,” Chamberlain said. “2011-’12 will be an active years for the industrial, office and retail food groups.”

Of the three primary commercial real estate property sectors, 2010 investment sales numbers seem to indicate that office properties have improved the most over 2009. For starters, the pace at which sales have been declining has slowed dramatically. October 2009 sales were 50% fewer than they were in October 2008. That dropped to 24% fewer for December 2009 over December 2008. And in January of this year, office property sales of $5 million and up were off just 6% from what they were a year earlier. Notably, the average price per square foot is down dramatically from what it was a year ago: $158 compared to $202.

Retail and industrial property sales were still way down from year earlier numbers. Retail sales in January totaled 38% less the year-earlier period and industrial sales declined 68% month over month.

“Retail will generally continue to struggle until investors can get a feel for when occupancy rates and net operating incomes will stop deteriorating,” said Mac McCall, senior director of Franklin Street Real Estate Services in Atlanta, GA. “With many retailers continuing to see declining sales, especially mom and pops, vacancy rates will continue to tick up without the added boost of increased employment in the overall economy.”

“Additionally,” McCall continued, “if you factor in the potential of bank-owned retail properties hitting the market in the coming years, buyers of this product will be able to get away with charging lower rents because their acquisition basis is much lower than their neighboring properties which were either built or acquired during the peak of the cycle and therefore have to charge higher rents to justify their mortgage payments. Both of these key factors make it a tough sell to a potential investor to invest in an asset with so much uncertainty regarding future cash flows.”

Manish Rajguru, who oversees the evaluation of CMBS and other CRE debt instruments at Red Pine Advisors LLC in New York, said that, “the industrial [property sector] should increase, especially those related to trade (exports in particular). The office and retail property sectors should continue to lag given uncertainty of growth in office using employment and consumer respectively (and General Growth Properties’ fallout as some malls will have to be repositioned/closed).”
Buyer Demographics

The buyer profile of institutional quality properties has shifted in the last four months from what it was a year earlier. Developer/owner and investment manager buyers continue to be the primary buyers of properties and, in fact, have increased their outlay year over year. Developer/owner purchases were up to about $7.3 billion in the last four months compared to $6.8 billion in the same period a year earlier; and investment manager buys were up to $5.5 billion from $3.7 billion.

REITs and corporate buyer have decreased their buying activity in the last four months from a year ago. REIT activity was down slightly from $5.4 billion to $5 billion; and corporate buying activity was down from $3.5 billion to $2.6 billion.

Notably, it appears that banks and financial institutions have stepped up their foreclosure activity. Bank/finance firms accounted for $1.9 billion in purchases in the last four months up from $480 million in the same period a year earlier.

Optimizing your investment

 
Cost segregation, though known by many real estate owners, is sometimes overlooked.

It is a methodology used to reallocate certain building costs into separate identifiable components that can be depreciated over shorter lives. The primary purpose of a cost-segregation study is to reallocate as much building costs between land improvements and tangible property. The more costs allocated to tangible property, the greater the desired tax benefit. Tangible property creates tax benefits because it is depreciated over five or seven years while normal building costs are depreciated over 27.5 or 39 years.

A cost-segregation study may be performed for real estate already in service, for new construction and acquisitions. Generally, it is easier to analyze a building’s cost structure during initial construction or expansion since building plans are readily available and can be utilized to identify various components that may qualify as tangible property.

Costs that may be reallocated to land improvements consist of, but are not limited to, certain landscaping, sidewalks and fencing which are depreciated over a 15 year recovery period.

Costs that may be reallocated to tangible property include movable partitions, furniture, removable carpeting and wallpaper, certain fixtures and window treatments. Support systems that are needed to run certain equipment or machinery could be considered tangible property under certain circumstances.

There are several internal levels of cost-segregation studies ranging from a detailed engineering approach through a less formal rule-of-thumb appraisal. The Internal Revenue Service prefers the engineering approach since it will produce the most accurate results.

All businesses that acquire, construct or renovate real property would benefit from a cost-segregation study.

The real benefit of a properly documented cost-segregation study is the enhanced depreciation deductions it yields. A major advantage of the study is not necessarily that it produces more depreciation deductions, but that expenses accelerate more rapidly, producing a greater benefit due to the time value of money.

The ability to write off specific components identified as they are replaced is yet another advantage. For example, when a study is performed, the cost of the roof would be specifically identified. As the roof will eventually be replaced, the remaining cost could be written off.

One disadvantage of a cost-segregation study is the potential triggering of depreciation recapture and possible understatement penalties a taxpayer could incur for studies that are too aggressive in classifying costs. To avoid penalties and pass IRS scrutiny, the study must be objective and supported by contemporaneous records. Studies supported by an engineering study add credibility and produce the most accurate cost allocations.

Overall, cost-segregation studies can produce tremendous tax savings for those who build, acquire any business that builds, acquires or renovates property. The increased tax savings increase cash flow, which in turn, businesses can reinvest.

Gary Anderson, a certified public accountant and senior manager at Reznick Group P.C. in Baltimore, can be reached at gary.anderson@reznickgroup.com.

Good news for real estate investors!

By Ben Johnson, NREI contributor

What did private equity investors, including huge institutional players such as pension funds, learn most from the recent collapse in commercial real estate values? They want more of the asset class.
A new study of 90 global private equity real estate investors by London-based researcher Preqin confirms that instead of fleeing to the hills, institutional investors intend to commit more capital to private equity real estate funds in 2010 than they did in 2009. And surprisingly, none of the participants in the survey conducted in the fourth quarter of 2009 has abandoned commercial real estate.
In fact, 41% of investors plan to increase their investment in the sector, while 29% expect to invest less than last year. Another 15% say that they will maintain their allocations, and the remaining 15% are unsure as they await the bottom of the market and recalibrate their strategies accordingly.   

Overall, the survey results suggest that “confidence is returning and investors are feeling more optimistic about the asset class,” says Forena Akthar, co-author of the Preqin study.

Hesitation lingers

Despite the apparent optimism, investors have not completely thrown caution to the wind when it comes to investing in real estate, whether making direct investments or committing capital to private equity funds. According to the survey, 55% of private equity real estate investors made no new fund commitments in 2009.
That helps explain the huge decline in private equity real estate fundraising activity. According to Preqin, the total capital raised in 2009 equaled just 31% of the levels reached in 2008. In all, 103 funds closed in 2009 with total commitments of $42 billion.   

Of those investors who plan to invest in commercial real estate in 2010, only 29% could estimate the number of funds they would invest in, and only 24% had an approximate figure in mind for the amount of capital they would commit.
These figures are much lower than in previous years, when most investors could more clearly predict both the number of funds and the amount of capital they would invest over the next 12 months.
When it comes to the long-term view, however, 75% of investors surveyed remain bullish on the real estate sector. “Despite the gloom, many investors did not lose confidence in the long-term benefits of investing in private equity real estate. They simply were not investing in 2009,” says Akthar, the survey’s co-author.
According to Preqin, returns from private equity real estate funds topped the S&P 500 Index by 35.8% over the past five years.
One long-time institutional advisor, Ted Leary, head of Los Angeles-based Crosswater Realty Advisors, thinks investors will cautiously re-enter the real estate game. He also notes that investors will be in a stronger position to dictate terms, including a reduction in fees, with their fund managers.
“The real estate investment manager community needs to regain the trust of their investor clients,” says Leary. “Some managers will, some managers won’t.”
When and where?
Nearly six in 10 investors (58%) plan to make their real estate investments in the first half of 2010. The remaining 42% are uncertain about when they will make a move in 2010.
And when they do pull the trigger, U.S. investors will likely stick close to home. That means potentially less capital for emerging property markets like China and India.
Not surprisingly, the vast majority of investors (73%) also are shifting their focus to target the two pillars of the commercial real estate industry — debt and distress.
“While investors are still attracted to value-added and opportunistic funds, a growing number of investors are looking to capitalize on opportunities presented by the dislocated real estate market,” says Stuart Taylor, a senior real estate analyst at Preqin.
The largest of these commercial real estate investors — targeting both mortgage notes and properties — include the Abu Dhabi Investment Authority with $62.5 billion in funding. Also in the mix is U.S.-based Allstate Investment Management with $20.7 billion, the California Public Employees’ Retirement System with $13.6 billion and TIAA-CREF with $13 billion.   

If you’re an investor wishing to re-enter the market, contact Rick Bean or Robert Poe at: 503.577.1034.  Whether you are looking for Portland distressed real estate or Hillsboro multifamily, we are ready to give you full service!

Why should you sign up for the Deal Room?

Simple:

1. Bid on off market deals.  You know…the ones where you hear that someone closed on a great deal and you say:  “Heck…I’d have bought that if I knew it was available at that price!”
2. The lowest proforma deal IRR currently is 20%.  Others are over 50%!
3. Current opportunities:
   • Portland, OR deals
   • Phoenix, AZ deals
   • Dallas, TX deals

More cities and more deals are coming soon!

To be notified in advance of off market distressed properties becoming available, contact us to get your free pass to the Deal Room!

Rick M. Bean and Robert H. Poe

Rick@rosecitycre.com

503.577.1034

As with any investment there is an element of risk.  Purchaser should perform a complete Due Diligence Inspection before closing any deal.  Best of luck to you!

FOCUS ON MULTIFAMILY: Mr. Mark Barry will be the featured speaker at the Portland CCIM’s monthly luncheon on January 6, 2010 at the MAC Club. His focus will be current local apartment trends and 2010 projections. With over 4,000 appraisals completed, he is widely held as the leading apartment appraisal specialist in the area; Mark’s opinions carry great weight in the commercial real estate community. TIME: 12:15 to 1:30 PM on Wednesday, January 7, 2008.

LOCATION: The Multnomah Athletic Club is located at 1849 SW Salmon St. At over 550,000 Sq. Ft., The MAC is the worlds largest indoor athletic club. Phone: 503.223.6251 Web: www.TheMac.com CCIM: There are fewer than 9,000 professionals worldwide that have earned the designation; many industry insiders refer to CCIM as the “Doctorate of Real Estate.” The CCIM Institute provides cutting edge training on a broad range of Real Estate Investment topics, as well as signifcant networking opportunities. The Portland Chapter meets at the MAC on the first Wednesday of each month. Brokers network and share “Haves and Wants” from 10:00 am to noon; top tier industry specialists speak at the luncheon, 12:15 to 1:30 PM.

CONTACT RICK BEAN: PH-503.577.1034; EM- rick@rosecitycre.com If you would like:

• A copy of Mr. Barry’s 2010 Apartment Trends Report.
• Information on joining the CCIM Institute.
• To list your multifamily property.
• To discuss commercial property tax liability reductions.