Archive for April, 2010
Bullish on Investment in Multifamily Property
Apr 23rd
Why are we so bullish on multifamily as an investment property? Multifamily fell off a cliff during this recent super recession. Multifamily vacancy rates are quite high. Of course it depends on what markets you are in, but vacancy rates are in double digits, low double digits or very high single digits in most markets. But we are only producing about 100,000 multifamily units. That’s not enough to even replace those units that are being burnt, destroyed, by floods, fires, etc. We need about 320,000 units a year for that. What really has happened to multifamily is that the loss of 8.5 million jobs has caused people to double up. Instead of forming new households, they are doubling up. More >
A Good Value is Invaluable: Cap Rate vs. Discount Rate
Apr 23rd
With the stock market surging, and economists predicting job increases and a “prolonged recovery,” conventional wisdom provides that happy days may yet be here again. What a relief!
Uh oh… just as we hope to experience the tail end of the residential foreclosure mess, it’s an upsurge in commercial real estate loan failures that could potentially threaten America’s financial system. Between 2010 and 2014, roughly $1.4 trillion in commercial real estate mortgages will reach the end of their terms. It’s estimated that roughly half of these properties are “underwater,” whereby the borrowers owe the bank more than what the property is worth. Across the country, commercial property values have generally fallen more than 40% since their peak in early 2007. Rising vacancies and decreasing rental rates have exerted a strong downward pressure on how much these properties are worth. More >
Tenants Looks More Closely at Landlord’s Balance Sheet
Apr 22nd
If you show me yours, I’ll show you mine-(balance sheet that is!)
Traditionally, financial information has flowed in one direction only. It was standard procedure for the Landlord to assess credit risk by reviewing the Tenant’s financial information before entering into a lease agreement. Nowadays, in this topsy-turvy market, the rules of the game are being rewritten by savvy tenants (and the brokers who represent them).
Tenants are taking advantage of leasing incentives right now, but they are not rushing in blindly. One of the most common scenarios of caution involves the tenant improvements, which are largely funded up front by the Landlord. Any delay or failure of the Landlord to deliver the premises as promised could be detrimental to the operations of the Tenant’s business. Even if the Tenant is released from the lease obligation, they would be hard pressed to find a new location on such short notice. More >
Choose Wisely – Tips for Selecting a Franchisee
Apr 21st
We are often asked whether it is better to work with large companies and conglomerates where your brand is just another spoke in the wheel or with young, hungry entrepreneurs. In working worldwide with leading franchisors, franchisees, retailers, landlords and companies large and small, I’ve seen start-up ventures get lost, delayed and mismanaged in big companies and entrepreneurs who didn’t have sufficient capital and resources to properly grow the brand. Finding a balance between these two extremes is critical.
Big or small, one area that should never be left to chance or dependent on the franchisee/partner is real estate. A new venture can ill afford one or two bad locations; this will kill the brand’s successful launch and introduction to the market. The ability to provide franchisees/partners with extensive global real estate expertise and resources needs to be among a franchisor’s core competencies and services. It is not a coincidence that the world’s largest F&B chain, McDonald’s, has historically devoted as much or more resources toward real estate development as franchise development. More >
NAI Bluestone Real Estate Capital Receives Financing “Deal of the Year” Award
Apr 21st
Mid-Atlantic Real Estate Journal Recognizes NAI Bluestone Real Estate Capital for Fourth Consecutive Year
NAI Bluestone Real Estate Capital is the recipient of this year’s Financing “Deal of the Year” Award from the Mid Atlantic Real Estate Journal. This marks the fourth consecutive year NAI Bluestone has been awarded this honor, which recognizes the top financing deals in the PA, NJ, DE and VA region.
This year’s award winning deal was for NAI Bluestone’s role in securing a $44M senior construction loan for The District at ODU, a 909 bed student housing facility in Norfolk, VA on behalf of Norfolk Housing, LLC, an affiliate of a national real estate development company. The District at ODU is a four-story, 307 unit facility located within walking distance of Old Dominion University, one of the nation’s fastest growing More >
