December 9, 2016

Commercial Asset Group Hires Shabani

Alex Shabani, senior managing director with Commercial Asset Group (CAG)
Alex Shabani, senior managing director with Commercial Asset Group (CAG)Alex Shabani has joined Commercial Asset Group, Inc. as a senior managing director.

In his new role, Shabani will handle leasing and sales of both retail and office properties for the Los Angeles market.

Shabani was previously at Centers Business Management, where he completed more than 500 lease transactions and was a repeat recipient of the CoStar Power Broker award. He is a member of the International Council of Shopping Centers (ICSC).

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MBS RECAP: Bonds Move Right Back to Pre-ECB Stance

Yesterday we discussed the rally in bonds as a function of short-covering.  That meant traders were in a defensive position on Tuesday night–betting on rates moving higher–and then closed those positions yesterday.  Closing a short position equates to “buying.”  Buying results in yields moving nicely–and even unexpectedly lower.  

The problem with short-covering rallies is that they’re not indicative of organic buying demand.  That means that the news or event prompting traders to move to the sidelines has to have a positive impact on bond markets or trading levels will simply move right back to where they were before the short-covering rally.  In a nutshell, that was today.

2016-12-8 Close

Yields never even thought about approaching some of the higher recent levels, but neither did they make a serious attempt to move below the 2.35% technical level.  The ECB “tapered” (though Draghi said the word never came up) inasmuch as it announced a reduction in the pace of its asset purchases.  The announcement was bond-friendly enough that it had fairly minimal impact.  For example, German Bunds only rose to .38 from .35 at yesterday’s close–fairly well in line with the .37 close from Tuesday.

With no more significant data or events on tap this week, all we can do is watch technical levels and wait for markets to give us a sign.  Until 2.42% in 10yr yields is definitively broken, it continues its fight to act as a ceiling.  Even if it breaks, the big-picture pivot is just overhead at 2.50%.

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Mission Foods Renews 200,000-SF Lease in Panorama City

Manufacturing company Mission Foods Corporation has renewed its lease for the entire 200,004-square-foot industrial building at 14200-14220 Arminta St. in Panorama City, CA.

The tenant has occupied the industrial building since 2007. The two-story was developed by Selleck Development Group, Inc. in 2006. Veratex, Inc. sold it to Zodax the same year for $18.23 million, according to CoStar data.

David Eseke and Blake Anderson of Cushman Wakefield represented Mission Foods Corportation in lease negotiations.

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Recapping Existing Home Sales; Reverse Mortgage Conference and Issuance Trends

Today is the 75th anniversary of the Japanese attack on the U.S. naval base at Pearl Harbor in Hawai’i where 2,403 Americans died and 1,178 were wounded. There are those that believe that ghosts still haunt “Pearl” but there modern day “ghost towns” in other parts of the U.S. where high vacancy rates, declining populations, and large numbers of vacant properties are creating blight. The list of 20 towns includes places in Kansas,
Texas, Oklahoma, Alabama, Illinois, Michigan, New Jersey, Mississippi, and
Pennsylvania, Florida, and Indiana.

Home Sales, “Existing” Home Sales, and “New” Home Sales – take your pick. They
all show something slightly different, and economists have their favorites.
Housing and jobs play critical roles in the United States economy, thus the
abundance of various statistics for each one. And trends are more informative
than spot numbers every month. What have Existing Home Sales been doing during the
last several months? Remember
that the data reflect the number of homes that have previously been constructed
(and therefore accounted for by the new home sales indicator) and are now being
resold. And it is usually broken down by region.

Back around Easter U.S.
Existing Home Sales rose to a 5.45 million seasonally adjusted annualized rate
in April from March’s 5.36 million (revised up from 5.33 million). The uptick
in April was fueled by a 12.1% increase in home sales in the Midwest. That
gain, and a 2.1% increase in home sales in the Northeast, offset existing home
sales declines of 2.7% and 1.7%, respectively, in the South and West.

Back then the bulk of the
total existing home sales increase was led by sales of existing condominiums
and co-ops
, which jumped 10.3% to a seasonally adjusted annual rate of 640K
units. Single-family home sales were up just 0.6% to 4.81 mln, although they
are up 6.2% year-over-year. The median price for all housing types in April was
$232,500, up 6.3% y/y. The share of first-time buyers in April was 32% versus
30% in March and the same period a year ago. At the sales pace back then,
unsold inventory sits at a 4.7-month supply, which is up from 4.4 months in
March. Still, that is well below the 6.0-month supply typically seen during
normal periods of buying and selling.

Skipping ahead to Memorial
Day, Existing
Home Sales
 rose 18% in May to 5.53
million. This was the highest pace since February 2007. The median house price
was $239,700 up 4.7% YOY. Total housing inventory was at 2.15 million units,
which represented a 4.7-month supply. Inventory was still tight. The first-time
homebuyer accounted for 30% of all sales, a decrease from last month and last
year. Days on market dropped to 32 days, a record.

When school let out in June
they rose to a 5.57 million annual rate in June from 5.51 million in May
(revised down from 5.53 million). While existing home sales in June were at a
seasonally-adjusted annual rate of 5.57 million, their highest level since
2/07, sales remain 22% off the peak of mid-2005. A key reason; a low inventory
that essentially hadn’t budged since late 2011. And why might that be? A rise
in the number of renter-occupied single-family homes (which aren’t for sale)
from 10.5 million in 2000 to 17.5 million!

We sailed through the summer,
back when rates were low, and in August Existing
Home Sales fell 0.9%
 as tight inventory
depressed transactions. The median home price was just over $240,000 which was
a 5.1% YOY increase. Housing inventory was down to just over 2 million homes,
which is a 4.6-month supply. First time homebuyers accounted for 31% of sales.
Strong job growth and low mortgage rates are pumping up demand, but builders
remained reticent.

Passing Labor Day Existing
Home Sales were +3.2% in Sept.
Existing-home sales rebounded strongly in September and were propelled by sales
from first-time buyers reaching a 34 percent share, which is a high not seen in
over four years, according to the NAR. All major regions saw an increase in
closings last month, and distressed sales fell to a new low of 4 percent of the
market, and the annualized pace hit 5.47% from a downward-revised pace of 5.3
million in August. The median home price was up 5.6% to $234,200. The
first-time homebuyer represented 34% of all sales, which is a big improvement
from the 30% – 32% range it had been stuck in for the past year. Inventory
remains tight, however with about 2.05 million homes on the market, which
represents a 4.5-month supply. A balanced market is closer to 6.5 months. 

In September, distressed sales
(foreclosures and short sales) represented 4% of all sales, which is a
post-crisis low. Days on market ticked up to 39 days from 36 in August. The
increase in the first-time homebuyer was good news, and we may finally be
seeing the pent-up demand that has been building over the past 10 years finally
come to market. 

And then around Halloween
Existing Home Sales rose 2% to a seasonally-adjusted run rate of 5.6 million in
October, according
to the NAR
. September’s numbers were
revised upward to 5.49 million. October’s number is 5.9% higher than a year
ago, and the highest reading since February 2007. The median home price rose 6%
to $232,200. Total housing inventory dipped to 2.02 million units, which
represents a 4.3-month supply at current levels. (NAR considers 6.5 months’
worth to be a balanced market.) Days on market ticked up to 41 days from 39 the
month before. The first-time homebuyer accounted for 33% of all sales, which is
up a couple percentage points from a year ago. Now, if we could just get
housing starts up to catch up with the increase in sales we could have a real
recovery on our hands. 

Shifting to the economy and
rates, data in the last few weeks, for all its faults, continues to show
economic conditions continue to improve. GDP was revised in the 3Q
and is now estimated to have risen at a 3.2% annualized pace. While business
investment was even weaker than originally reported, stronger consumer spending
helped the economy to grow at the fastest pace in two years. Personal income in
October rose a solid 0.6 percent; primed and ready for the holiday shopping
season. Higher expected inflation, however, in the coming months will erode
some of the income gains for households. The PCE deflator, the Fed’s preferred
gauge of inflation, rose 0.2 percent in October due to rising energy prices,
pushing the year-over-year rate to 1.4 percent getting closer to the Fed’s
target of 2%.

The bond market Tuesday was a
snoozer. Rates hardly did anything aside from a little shuffling between
coupons and maturities – barely noticeable to LOs or borrowers. I won’t waste
your time, other than to say that yesterday the 10-year note closed 2 ticks
lower to yield 2.39%, and 5-year Treasuries and agency MBS prices were pretty
much unchanged.

This morning we’ve had the
MBA’s application data for last week (a non-event at -.7%, refis -1%, purchases
+4%). The October JOLTS and November Help-Wanted OnLine data will be released
at 10AM ET. This
morning the 10-year’s yield is hovering around 2.37% with both 5-year Treasury
and agency MBS prices better slightly than last night’s close.


There is a whole loan trading webinar today from 2-3PM ET.

Registration is now open for The Mortgage Collaborative’s Winter Lender Member Conference, set to take place March 1-4, 2017 at the Omni Scottsdale Resort Spa at Montelucia. The independent cooperative network’s winter event will offer an interactive agenda featuring over 50 different breakout sessions, a heavy emphasis on peer-to-peer networking and exchange of best practices, and a sharp focus on the multitude of new technology and innovation options in the mortgage industry.  For more information about The Mortgage Collaborative or their Winter Lender Member Conference, contact Rich Swerbinsky.

Do you know that half of the US residential property equity is controlled by people 62 and older? That’s $6 trillion in equity. If you’re not familiar with the Home Equity Conversion Mortgage (HECM) product, you could be losing your most valuable retiree and senior customers. Attend a FREE session available only to people new to the reverse industry February 8 at UserCon 2017 in San Diego. 

While we’re on the topic, in case you’re interested in knowing the “who’s who” in terms of reverse mortgage loan issuance, there is an interactive chart of issuance trends which boasts the tracking every loan, bond, and CMO ever created.

Jobs and Announcements

“Do you want to grow your business with a Top 10 lender who is one of the only wholesale lenders to offer the financial stability of being a highly profitable bank? MB Financial Bank was ranked #6 in 2015 Total Wholesale Volume by Scotsman Guide, but ranks even higher in the number of loans closed per Account Executive. MB is looking to expand its sales team with candidates that have a thorough knowledge of the mortgage lending process, excellent interpersonal skills, and an unparalleled customer service instinct and capability.” MB is currently hiring Wholesale Account Executives in the following markets: CA (Los Angeles/Inland Empire, Sacramento and East Bay), CO (Denver), FL (Southern and Tampa/Sarasota), HA, IL (Chicago), KS, MI (Southeast), NV (Las Vegas), NJ (Southern), ND/SD, OH (Northeast), PA (Western), TN/KY, TX (San Antonio/Austin) and WI. Contact Mark Mazzenga (610-496-1277) with confidential inquiries. (MB Financial, Inc. is the Chicago-based holding company for MB Financial Bank, N.A., which has approximately $19 billion in assets. EEO/AA Employer. Equal Housing Lender. Member FDIC. NMLS#401467.)

Kansas-based Peoples Bank has an exciting opportunity for an experienced direct to consumer purchase loan manager in its Orange County, CA Sales Center. This person would have experience originating and managing a sales team to fund purchase loans in a call center environment from direct mail, internet, and telemarketed inbound leads. The ideal candidate would help lead the purchase sales efforts and can effectively recruit and train inbound purchase mortgage loan officers. Peoples Bank is a 144-year-old federally chartered bank that prides itself on an industry leading customer service experience. If interested, please forward resume to Jason Friend.

A Regional Retail Mortgage lender based in Orange County is searching for a Chief Financial Officer. The ideal candidate will have several years of experience in the mortgage banking industry with senior management experience. An advanced degree or CPA and/or CFO certification is desired, as is expert knowledge of cash management, including warehouse lines. The company serves the Western United States, servicing a billion-dollar retained portfolio, with strong capital reserves, and an expansive product portfolio. “Join an experienced, energetic management team in our plan to grow the company to $1 billion in annual loan origination volume over the next two years.” Confidential inquiries and resumes should be sent to me at; please specify opportunity.

Out of Cherry Hill, New Jersey, comes word from Kevin Crichton, President and COO of E Mortgage Management LLC (EMM) that the company has contributed funds to the Opens Doors Foundation of the Mortgage Bankers Association (MBA). “I am a strong believer in commitment and giving back to community. This contribution goes toward the Foundation’s role in providing mortgage and rental assistance payment grants to parents or guardians with critically ill or injured children allowing them to spend precious moments together,” said Crichton. As a member of the MBA, we believe that the foundation offers outstanding philanthropic activities focused on home and community support and that is why we chose to sponsor the cause. Its mission seeks to aid, nurture and empower people and communities by developing and supporting programs that promote and defend sustainable homes for American families. The most valuable initiative of the foundation is that its programs offer mortgage and rental assistance payment grants to parents and guardians with critically ill or injured children, allowing them to take unpaid leave from work and spend precious time together without jeopardizing their cherished homes. ( is a private, direct-endorsed local lender, in business for over 12 years serving clients nationwide through its network of home loan agents. The company offers Fannie Mae, Freddie Mac, HARP, FHA, VA, USDA, and individual state programs, and has access to a portfolio of private investors, nationwide.)

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Equinix to Acquire Verizon Data Center Portfolio for $3.6B

Continuing the trend of large telecommunications companies divesting their data center properties, Verizon Communications Inc. has agreed to sell sites across 15 metropolitan areas of the U.S. and South America to Redwood City, CA-based Equinix, Inc. (Nasdaq: EQIX) for $3.6 billion cash.

The value of the transaction easily exceeds Centurylink’s agreement in early November to sell its data center and colocation center business totaling 195 megawatts and 2.6 million square feet to funds advised by buyout firm BC Partners. In January of this year, Equinix paid $3.8 billion to acquire European data center provider TelecityGroup.

The purchase encompasses 29 buildings operated by Verizon totaling 2.4 million square feet at 24 sites, including Atlanta and Norcross, GA; Westmont, IL, near Chicago; Billerica, near Boston; Culpeper, VA; Dallas (Irving, Richardson-Alma and Richardson-Pkwy); Englewood, CO, near Denver; Houston, Torrance, CA; Miami and Doral, FL, New York (Carteret, Elmsford and Piscataway), Kent, WA, near Seattle; Santa Clara and San Jose, CA; and Washington, D.C. (Ashburn, Manassas and Herndon). The transaction also includes centers in São Paulo, Brazil and Bogotá, Colombia.

In addition to strengthening Equinix’s Latin American presence, the transaction expected to close by mid-2017 would enabled the Redwood City, CA-based company to enter the Culpeper and Houston markets, and accelerate its penetration of such market sectors as government and energy. The Verizon portfolio includes about 900 customers, including a significant number of enterprise customers new to Equinix’s platform.

Upon closing, Equinix’s global footprint would expand to 175 data centers in 43 markets and about 17 million gross square feet across the Americas, Europe and Asia-Pacific markets.

Article source:$36B/187071?ref=/News/Article/Equinix-to-Acquire-Verizon-Data-Center-Portfolio-for-$36B/187071&src=rss

Pop-Ups, the New Darling of Retail

Manhattan’s softening retail market is making allies of the pop-up and the landlord.

Retailers are getting to test the waters in the priciest shopping districts with pop-ups, often at discounted rents. And landlords are using the temporary stores to show off the space to prospective long-term tenants, say brokers and retailers.


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After Bulking Up US Portfolio, Global Logistic Properties Undertakes Strategic Review

The huge distribution center portfolio of Global Logistic Properties Ltd. (SGX:MC0), one of the largest owners of industrial properties in the U.S., may be in play after the Singapore-based firm announced it has appointed JP Morgan (SEA) Ltd. as its financial advisor and constituted a special committee to review options to enhance shareholder value.

The move comes at the request of the firm’s largest shareholder, GIC Pte. Ltd., Singapore’s sovereign wealth fund.

“As part of the strategic review, Global Logistic Properties through JPMorgan is in the process of making preliminary approaches to various parties to evaluate the viability of options available for its business,” Global Logistic Properties said, while notingh that a transaction may not materialize.

GIC reportedly called for the move after GLP drew unsolicited interest from an investor group including China Investment Corp., Hillhouse Capital Management, and HOPU Jinghua (Beijing) Investment Consultancy Co., according to a Bloomberg report. GLP made no mention of this unsolicited interest in its announcement.

The company owns 562 million square feet of logistics facilities in 113 cities in China, Japan, Brazil and the United States. In the U.S., it has more than 170 million square feet under management in 32 key markets across the country. The bulk of its U.S. holdings was acquired over the last two years.

In Dec. 2014, GLP co-invested with GIC to acquire IndCor Properties, one of the largest industrial platforms in the U.S., for $8.1 billion from funds affiliated with Blackstone Real Estate Partners VI and VII. The platform comprised 117 million square feet of industrial properties in major markets throughout the U.S.

It then added to its holdings in July 2015 acquiring a 58 million-square-foot logistics portfolio from Industrial Income Trust spread across 20 U.S. markets for $4.55 billion.

GLP has continued it its buying spree announcing just two months ago it was purchasing a 15-million-square-foot logistics portfolio from Hillwood Development Co.The portfolio includes 10 million square feet of newly built, 100% leased logistics buildings.

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MBS RECAP: Mid-Day Rally Reinforces Narrowing Range

After today, we’re left with a clearer picture of the prevailing short-term range in bond markets.  The volatile reaction to the weekend’s Italian referendum, among other things, drove the intraday extremes that helped define the pattern.  

The first trade during Asian market hours was logical.  Bonds rallied because Italy voted “no” on the referendum.  Regardless of the facts underlying the referendum (different implications could be argued for either result), a “no” vote was generally considered to increase uncertainty, chiefly because it likely paves the way for a new government.  To oversimplify, a “no” vote in the Italian referendum became roughly analogous to a Trump vote in the US election.

Much like election night in the US, bonds’ first move was into stronger territory, but when trading began in Europe, the gains abruptly reversed.  The resulting sell-off wasn’t nearly as dramatic in this case.  Then again, the Italian referendum wasn’t nearly as big a deal as the US election.  

Bonds hit the US session in moderately weaker territory and the losses continued after stronger ISM Non-Manufacturing data.  At the weakest levels, 10yr yields were as high as 2.449 and Fannie 3.5s were as low as 102-09 (roughly 3/8ths of a point lower on the day).  

Despite the response to the ISM data, it was European trading that drove much of the weakness.  As Europe wound down for the day, bonds began to bounce.  The shift in momentum prompted a few big trades in the futures complex, further supporting the notion that some traders were indeed willing to catch the falling knife (i.e. bond traders seeing low enough prices that buying seems like a “good deal”).  

Ultimately, that buying demand was put in its place by the increasingly apparent consolidation pattern.  In other words, bonds rallied nicely, but stopped well short of making any attempt to break through the most logical technical floor–today around 2.36 in terms of 10yr yields.   This “triangle” (lower highs and higher lows) suggests that  bonds have roughly located the plateau from which they’ll digest Thursday’s ECB news and, from there, embark on the next big move.

2016-12-5 close

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Mega-Development Gets Under Way on Long Island

GLEN COVE, N.Y.—As this Long Island city prepares to break ground Tuesday on one of the region’s biggest real-estate projects, it faces opposition even as some residents have warmed to such large-scale developments.

The project known as Garvies Point will include 1,100 apartments and condominiums along with parkland and waterfront access. It will be built on a Superfund site where a factory produced munitions decades ago. A cleanup…

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JRK Buys Rancho Solana Apts in Oxnard

Los Angeles-based JRK Property Holdings acquired the 168-unit Rancho Solana apartments at 2400-2444 Alvarado St. in Oxnard, CA from Tom Redfern Associates for $30.68 million, or about $183,000 per unit.

The 144,090-square-foot, garden-style multifamily community was built in 1973 and features a mix of one-, two- and three-bedroom units. The community features controlled access, swimming pool and spa, barbecue area, sports courts, a playground and covered parking.

The asset is approximately one mile from Serenade at RiverPark, a 400-unit apartment property that JRK acquired in 2015.

Gregory Harris, Kevin Green and Joseph Grabiec of Institutional Property Advisors (IPA), a division of Marcus Millichap represented both parties in the sale.

Please see CoStar COMPS #3753879 for more information on this transaction.

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