May 31, 2016

Price Gains Ease Slightly on National Basis

The annual pace of price gains nationally slowed slightly in March according to the SP Case-Shiller National Home Price Index.  The 10- and 20-City Composite Indices however increased at the same level as in February.

The National Index, which covers all nine U.S. census districts, was up 5.2 percent compared to March 2015.  The February-to-February gain was 5.4 percent. The 10-City Composite rose 4.7 percent year-over-year and the 20-City was 5.4 percent higher.  Both increases were identical to those in February. 

 

 

Three western cities continued to post double digit annual price increases.  Portland was up 12.3 percent, Seattle prices rose 10.8 percent and Denver’s by 10.0 percent.  Ten cities reported greater year-over-year increases in March than in February.

March prices increased nationally compared to February by 0.1 percent on a seasonally adjusted basis and 0.7 percent without adjustment.  In February the respective monthly increases were 0.2 and 0.4 percent.  The 10-City Composite recorded a 0.8 percent month-over-month increase and the 20-City Composite a 0.9 percent increase.  The two composite increases were the same both with and without seasonal adjustment.  After seasonal adjustment, six cities saw prices rise, one city was unchanged, and 13 cities experienced negative monthly price changes.

Econoday’s poll of analysts prior to the report asked only about the 20-City Composite.  The consensus for a seasonally adjusted monthly increase was 0.7 percent while the annual increase was projected at 5.1 percent.

 “Home prices are continuing to rise at a 5% annual rate, a pace that has held since the start of 2015,” says David M. Blitzer, Managing Director Chairman of the Index Committee at SP Dow Jones Indices. “The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates. Another factor behind rising home prices is the limited supply of homes on the market. The number of homes currently on the market is less than two percent of the number of households in the U.S., the lowest percentage seen since the mid- 1980s.

“Price movements vary across the country. The Pacific Northwest and the west continue to be the strongest regions. Seattle, Portland, Oregon and Denver had the largest year-over-year price increases. These cities also saw some of the largest declines in unemployment rates among the 20 cities included in the SP/Case-Shiller Indices. The northeast and upper mid-west regions were at the other end of the ranking. The four cities with the smallest year-over-year prices gains were Washington DC, Chicago, New York, and Cleveland. The unemployment rates in Chicago and Cleveland rose from March 2015 to March 2016.”

As of March 2016, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 10.5-12.5%. Since the March 2012 lows, the 10-City and 20-City Composites have recovered 35.7% and 37.6%.

 

 

The SP/Case-Shiller Home Price Indices are constructed to accurately track the price path of typical single-family home pairs for thousands of individual houses from the available universe of arms-length sales data. The SP/Case-Shiller National U.S. Home Price Index tracks the value of single-family housing within the United States. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50 percent appreciation rate since January 2000 for a typical home located within the subject market.

The 10-City Composite currently has an index level of 198.68 and the 20-City a value of 184.50.  The National Index is at 176.91.  Detroit continues to have the lowest index value at 103.94 and Los Angeles the highest at 244.52.

Article source: http://www.mortgagenewsdaily.com/05312016_case_shiller_indices.asp

Dalian Wanda Raises Buyout Offer for Property Arm

Chinese property-and-entertainment conglomerate Dalian Wanda Group Co. boosted its buyout offer for its $4 billion-plus Hong Kong-listed commercial property unit, calling the raised bid its best offer.

Wanda Commercial Properties Co. said in a statement to the Hong Kong stock exchange that its parent company will offer HK$52.80 for the company’s shares, an increase of 10% over its earlier offer of HK$48 per share. The announcement…

Article source: http://www.wsj.com/articles/dalian-wanda-raises-buyout-offer-for-property-arm-1464596388?mod=residential_real_estate

TIAA to Recap Colorado Center as Boston Properties Looks to Enter Hot Los Angeles Market


Boston Properties, Inc. (NYSE: BXP) confirmed reports that it will enter the Los Angeles market, expanding beyond its Boston, New York, San Francisco and Washington, D.C. strongholds, after agreeing to acquire a 49.8% interest in an existing joint venture with Teachers Insurance and Annuity Association (TIAA) that owns the six-building Colorado Center office park in Santa Monica, CA.

Real estate funds managed by Blackstone (NYSE: BX), through its investment in Equity Office Properties, are selling its interest to the Boston-based REIT for approximately $511.1 million, which would value the assets at roughly $866 per square foot.

Boston Properties is using existing cash on-hand, including a $25 million despoit, to fund the acquisition. The properties are currently unencumbered by existing debt.

The transaction, which is expected to close in July 2016, would enable Boston Properties to enter the Westside Los Angeles office market, one of the most attractive in the country, according to the buyer.

Colorado Center is comprised of six office properties totaling more than 1.18 million square feet, in addition to a three-level, subterranean parking garage with 3,100 stalls. The asset is currently 68 percent leased to tech companies including eHarmony, Yahoo, HULU, Riot Games, Home Box Office and RPA.

The 15-acre office campus is situated on a block-through site in the heart of Santa Monica’s media and entertainment district, one block north of the Bergamot Station on Los Angeles County’s new light rail service, and near the Santa Monica and San Diego Freeways.

Assuming no debt is placed on the assets, Boston Properties estimates that the acquisition will increase its projected 2016 diluted funds from operations by approximately $0.05 per share. The REIT plans to increase NOI at the park by filling 370,000 square feet of currently vacant space in addition to rolling up in-place, below-market rents as leases expire.

“Colorado Center is a proven and premier office campus, which provides us the opportunity to use our real estate skills to enhance and lease the property and realize the substantial upside potential we see imbedded in the asset,” said Owen D. Thomas, CEO of Boston Properties, in a statement confirming the investment. “We will also be acquiring critical mass and an excellent platform for Boston Properties to enter and grow in one of the strongest office markets in the United States. We are also delighted to broaden our productive and long-term relationship with TIAA, a leading investor in commercial real estate.”

Article source: http://www.costar.com/News/Article/TIAA-to-Recap-Colorado-Center-as-Boston-Properties-Looks-to-Enter-Hot-Los-Angeles-Market/182336?ref=/News/Article/TIAA-to-Recap-Colorado-Center-as-Boston-Properties-Looks-to-Enter-Hot-Los-Angeles-Market/182336&src=rss

Simon Baron Enters DTLA Market with Hotel Ground Lease


Simon Baron Development Group has acquired the leasehold interest in the Stay on Main hotel at 640 S. Main St. in Los Angeles, CA.

The sale marks the New York-based developer’s first foray into the Los Angeles hospitality market. The firm, led by Jonathan Simon and Mathew Baron, focuses on multifamily properties in the Greater New York City metro areas, currently controlling a portfolio valued at $1.7 billion.

Simon Baron plans to reposition the 170,000-square-foot, 15-story budget hotel into a modern, mixed-use facility by completing a significant capital improvement program. Originally built in 1924, the former Hotel Cecil sits on one-third of an acre in the Greater Downtown submarket, in close proximity to numerous restaurants, high-end retailers, the Fashion and Jewelry Districts, and public transit to LA Live, Hollywood, Chinatown, USC, Santa Monica and Venice Beach.

Ben Reznik of Jeffer Mangels Butler Mitchell LLP represented Simon Baron in the deal, while David Swartz of CGS3 represented the firm in the ground lease.

“We are very excited about our expansion into California, and more specifically Downtown LA which is transforming into a major developed area and undergoing a renaissance. The historic neighborhood that the property is located in is quickly becoming the trendy locale in Downtown and we are looking forward to contributing to that,” said Matthew Baron, president of Simon Baron. “We plan to use this project as a catalyst to begin more projects on the west coast, more specifically, in the greater Los Angeles area.”

Ayush Kapahi and Jerry Swartz with HKS Capital Partners, a financial advisory firm in Manhattan, closed the ground lease on behalf of Simon Baron. The deal was the first time HKS brokered a 99-year lease deal, explained Kapahi.

Back in New York, Simon Baron recently completed the $24 million acquisition of a Brooklyn industrial portfolio, which HKS financed.

Please see CoStar COMPS #3599880 for additional information on this transaction.

Article source: http://www.costar.com/News/Article/Simon-Baron-Enters-DTLA-Market-with-Hotel-Ground-Lease/182351?ref=/News/Article/Simon-Baron-Enters-DTLA-Market-with-Hotel-Ground-Lease/182351&src=rss

Mortgage Rates Calm Ahead of Long Weekend

Mortgage rates were sideways to slightly lower today, depending on the lender.  Financial markets closed early for Memorial Day weekend, and will be fully closed on Monday.  As such, lenders won’t be updating rate sheets again until Tuesday.  Today’s rate sheets aren’t too terribly different from yesterday’s.  Most lenders are unchanged and a few are offering just slightly lower costs for the same “note rates” seen yesterday.  The most prevalently-quoted conventional 30yr fixed rate continues to be 3.75% on top tier scenarios, but there are several lenders at 3.625%. 

The financial markets that underly mortgage rate movement are in a tricky spot at the moment.  Investors are weighing the possibilities of a Fed rate hike in June or July.  Although mortgage rates don’t move in lock-step with the Fed Funds Rate, an increase in rate hike expectations usually results in mortgage rates moving higher, and vice versa.  

Rates are on the upper edge of a range that has been getting more and more narrow as we approach the June 15th Fed Announcement.  Anxiety could cause a break outside that range even before then, and that would create a temporary, but potentially faster-paced move toward higher rates.  Such an event would have to be taken seriously in the short term (i.e. favor locking vs floating), but the final verdict on this range won’t be in until we get official word from the Fed.  Even then, there are several ways the ball could bounce, but we’ll cross those bridges as we come to them in mid-June.

Loan Originator Perspective

“Technical levels have been the most relevant indicator for my lock vs. float decisions and recommendations to my clients.  The 10 YR Treasury has been in a confined range, with limited volatility above and below certain key levels.  All that being said, we are consolidating further in the mid 1.8’s on the 10 YR (a great place to be), a lot of energy is building up here.  With the ongoing headlines of a Fed rate hike, bullish moves in the stock market, and a lack of willingness for yields to move lower, it makes a strong case to lock for many.  I think trading between 1.84-1.87 is a safe zone, and would only recommend locking if yields presented a threat of breaking out above, or a benefit of trading below.  There has been plenty of data to push rates in either direction, but it appears the big money traders are waiting for something much more definitive.  In the interim, always be ready to pull the trigger.  Have a safe Memorial Day weekend.” –Constantine Floropoulos, VP, The Federal Savings Bank

Today’s Best-Execution Rates

  • 30YR FIXED – 3.75%
  • FHA/VA – 3.25%-3.5%
  • 15 YEAR FIXED – 3.00%
  • 5 YEAR ARMS –  2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th, causing fears of rising rates in 2016, but markets began the new year with rates moving surprisingly lower.  Major losses in stocks and oil prices were part of the same trend of investors moving away from risk.
  • After bottoming out fairly close to all-time lows in February, rates have seen only brief episodes of volatility in a low, narrow range.  

  • The Fed’s most recent announcement at the end of April reinforced their cautious approach to rate hikes.  This helped rates improved through mid May
     
  • Now some investors are getting concerned that the Fed may be more prepared to hike rates than markets currently expect.  This could create volatility and pressure toward higher rates heading into the June Fed meeting, thus favoring locking vs floating.
     
  • As always, please keep in mind that the rates discussed generally refer to what we’ve termedbest-execution(that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also ‘bang-for-the-buck.’  Generally speaking, our best-execution rate tends to connote no origination or discount points–though this can vary–and tends to predict Freddie Mac’s weekly survey with high accuracy.  It’s safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie’s once-a-week polling method).

Article source: http://www.mortgagenewsdaily.com/consumer_rates/618050.aspx

Amazon Inks 1M-SF Industrial Lease with Goodman Group

Goodman Group, an international industrial property group with assets under management in 16 countries valued at more than US$25 billion, has secured a long-term lease through its wholly-owned, North American subsidiary, Goodman Birtcher, with eCommerce giant Amazon for an in-development, 1.03 million-square-foot distribution building.

Bldg. B is expected to deliver in fall 2016 at 4880 Hamner Rd. in Eastvale, CA, directly off the Cantu-Galleano Ranch Road exit of the I-15 in the Riverside County submarket of the Inland Empire.

“Ecommerce logistics requires strategic locations with innovative design to help our customers efficiently process, sort and distribute goods to their demanding online customers,” said Greg Goodman, CEO of Goodman Group. “As a leader in ecommerce logistics design, Goodman is distinguished by its property management services, enabling customers to modify and upgrade the property to stay competitive in a fast-moving industry.”

The facility will be the first of two 1 million-square-foot buildings constructed by Goodman Birtcher as part of its 205-acre, mixed-use Goodman Commerce Center Eastvale development. With this lease in place, Goodman Birtcher plans to move ahead with construction of Bldg. A at 4890 Hamner Rd., with an anticipated delivery date in early 2017. When completed, the campus will offer various space options including distribution, business center, retail and medical office space.

Goodman Commerce Center Eastvale
Click aerial to view larger.
“We are delighted to complete this leasing deal with Amazon and welcome them to Goodman Commerce Center Eastvale,” said Brandon Birtcher, CEO of Goodman Birtcher, which currently has $2.3 billion in its U.S. development pipeline that will add some 17.7 million square feet of class A logistics space. “Amazon found our state-of-the-art logistics center a good match for its operational requirements.”

Peter McWilliams and Michael McCrary with JLL represented the landlord in lease negotiations, and are marketing Bldg. A for lease along with Timothy O’Rourke and Michael Fowler of JLL. Philip Lombardo at Cushman Wakefield represented the tenant in lease negotiations.

Article source: http://www.costar.com/News/Article/Amazon-Inks-1M-SF-Industrial-Lease-with-Goodman-Group/182399?ref=/News/Article/Amazon-Inks-1M-SF-Industrial-Lease-with-Goodman-Group/182399&src=rss

MBS RECAP: Bonds Do Mostly Nothing on Mostly Pointless Day

  • GDP was +0.8 vs +0.9 forecast this morning
  • Consumer Sentiment was 94.7 vs 95.4
  • Inflation expectations were the lowest since 2010
  • But markets didn’t trade any of that data
  • Anyone who was still working, was waiting to see if Yellen would say something
  • She did, and the 3 people still working sold bonds

These pre-holiday half-days are fairly pointless, and only really exist as a courtesy to the folks who need access to financial markets for operational reasons.  To a lesser extent, they also provide another day for economic data releases without needing to reschedule them, potentially clogging up the calendar on a more worthwhile day.  

Harvard and Yellen made markets wait until half an hour before the early close to find out if she would say anything about monetary policy.  She did.  It was generic and boring.

“It’s appropriate, and I’ve said this in the past, I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably in the coming months, such a move would be appropriate.”

Markets wanted a yay or nay verdict from Yellen on all the recent chatter about a June or July hike.  This verdict was essentially an agreement with that chatter.  A few market participants held out hope that Yellen would push back on those recent comments with a bit more bond-friendly tone.  When she did not, a few traders sold a few bonds and it had an outsized effect on trading levels due to low volume.  Even then, 10yr yields ended the day up only 2.5bps and Fannie 3.0s closed down only 2 ticks.

Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/618079.aspx

An Oceanfront Home With Room Service

It will be hard to get a room this year at Gurney’s Montauk Resort during the peak summer season, even at the going rate of $1,800 a night.

But the owners who restored the luster to the former Gurney’s Inn, George Filopoulos and Lloyd Goldman, have something else to offer: 15 oceanfront homes at prices from nearly $5 million to $12 million.

Article source: http://www.wsj.com/articles/for-a-bundle-a-montauk-home-with-room-service-1464223417?mod=residential_real_estate

CoStar’s People of Note (May 27)


It’s time to update those contact managers with CoStar’s People of Note, reporting news on significant new CRE hires and promotions. This week’s issue includes the following markets: Boston, Chicago, Atlanta, Phoenix / Tucson, Charlotte, New York City, Los Angeles, Washington DC, Austin, Philadelphia, Westchester / Connecticut, Houston, and South Florida.

BOSTON

Avison Young Hires Colliers Execs for Northeast Expansion

By Kara Franz

LtoR, Top Row: Ron Perry and Larry Epstein.
Bottom: Jeff Gates, Mike McElaney, Matt Perry.

Avison Young has recruited five professionals from Colliers International, including its president and head of brokerage, to its Boston office as the firm looks to expand its service offerings throughout New England.

The new hires are led by Ron Perry and Larry Epstein, who will continue to handle tenant and landlord assignments in downtown Boston as principals with the firm. Additionally, Jeff Gates and Mike McElaney have been appointed senior vice presidents, and Matt Perry has been brought in as a senior associate.


CHICAGO

CBRE Names Akins to Lead Multifamily Capital Markets Group

By Jason C. Sturgill

CBRE has hired multifamily investment sales specialist Christine Akins as senior managing director of its multifamily capital markets practice in Chicago. In her new position, Akins will manage 175 multifamily investment professionals throughout the Americas.

The former LaSalle Investment Management managing director brings more than 20 years of experience to CBRE. At LaSalle, Akins oversaw sourcing, underwriting, structuring and the closing of more than $3 billion of multifamily assets throughout the U.S. Before that she was with LaSalle Property Fund and Equity Residential.


CoStar’s People of Note is published each Friday covering the latest commercial real estate executive level promotions and new hires.
Click on the headline of each article to jump to full coverage.
Follow the news on Twitter @TheCoStarGroup and @JSumner2.

Send new executive hires and promotion announcements to news@costar.com.

ATLANTA

Harper to Lead Cushman Wakefield’s Asset Services Team

By Lewis Sloan

Laurie Harper has earned a promotion that will see the 20-year industry veteran head up Cushman Wakefield’s asset services team in Atlanta.

For the past three years, Harper has served as a portfolio manager within the firm’s asset services platform, a division that manages more than 12 million square feet. Prior to joining Cushman Wakefield, Harper served as a senior vice president with JLL. She has also held title as a regional finance director with Equity Offices Property Trust before that.


BOSTON

Trammell Crow Residential Launches New England Office

By Ryan Stambaugh

Trammell Crow Residential is expanding into the Northeast with a new regional office in Boston. The new office will be headed up by Andy Huntoon, former GID vice president and director of Central Region acquisitions.

Huntoon will oversee sourcing and development opportunities throughout the Northeast as managing director. While at GID, Huntoon sourced stabilized apartment acquisitions and assembled joint ventures for the ground-up development of new multifamily communities in Texas and Chicago.


SIOR Elects 2017 Officers: Kasselman to be Installed as President at Fall World Conference in October

By Justin Sumner


LtoR: Brett Abramson, Andrew Medley, Jason Moore, Charles Steele, Keith Lammersen
PHOENIX / TUCSON

JLL Phoenix Announces Five Senior Level Promotions

By Justin Sumner

JLL has promoted five brokers in its Phoenix, AZ office to senior-level positions. Andrew Medley has been promoted from vice president to executive vice president, while Brett Abramson, Keith Lammersen, Jason Moore and Charles Steele have been promoted to senior vice president.

“Each of these individuals brings a unique skill set to our team,” said Dennis Desmond, senior managing director, JLL. “That diversity has helped build out the full-service vision of our Phoenix office. Their expertise as brokers and their ethical commitment to our clients that will keep that vision moving forward.”


CHARLOTTE

Charter Promotes Pair on Construction Mgmt Team

By Matthew R. Hamburger

Charter Properties, a Charlotte-based real estate investment, development and management subsidiary of the Springs Investment Co., has promoted two members of the firm’s construction management division.

James L. Horman, who has been with the firm for 30 years, has been named a senior vice president. Kevin E. Cox (pictured, right) has been promoted to vice president after 10 years with Charter.


Savills IM Makes Senior Appointments, Naming Two Regional CEOs as Company Expands in Europe and Asia Pacific

By James Buckley


NEW YORK CITY

Waggner Joins Avison Young

By Daniel Hausman

Dennis Waggner has joined Avison Young as a senior director of operations in the firm’s New York City office.

In his new role, Waggner will provide operational guidance and support to the Tri-State Region, including financial, budgeting, HR, facilities management and brokerage services while growing individual offices within the region through recruitment, retention and implementation of best practices. Waggner’s career in operations spans more than 35 years, having most recently worked at Cushman Wakefield as senior managing director of its New York, Tri-State and New England regions.


LOS ANGELES

Masenga Joins Sheppard Mullin Richter Hampton

By Keith Dornin

Tom Masenga has joined law firm Sheppard Mullin Richter Hampton LLP in the firm’s Los Angeles office as partner in the firm’s real estate, land use and environmental practice group.

Masenga joined from Seyfarth Shaw and has more than 35 years of experience representing pension funds and separate account advisors, co-mingled funds, banks, life insurance companies, private equity funds, REITs and other institutional real estate’s investors and lenders.



WESTCHESTER / CONNECTICUT
Overlock Joins Reckson/SL Green
By Curtis Buchheister

Willard Overlock joined Reckson, a division of SL Green Realty Corp. as vice president of leasing. Overlock will be based out of Reckson’s White Plains, NY office, where he…


HOUSTON
Transwestern Adds Garrett as VP
By Tyler Grote

Transwestern has recruited Tyler Garrett to join the firm in its Houston headquarters as vice president of the agency leasing division. Garrett will implement leasing strategies…


SOUTH FLORIDA
Farmer Joins Franklin Street Financial
By Chabria Hill

Franklin Street Financial Partners, a full-service real estate company, has hired Tom Farmer as a director of agency leasing in the firm’s Miami, FL office. With more than 10…


PHOENIX / TUCSON
LPC Hires Orsak as Director
By Brett Wyatt

Lincoln Property Company – Desert West has hired 15-year industry veteran John Orsak as a director of real estate. Orsak will focus on acquisitions, dispositions, development…


Follow the news on Twitter @TheCoStarGroup and @JSumner2.
Check out last week’s edition of People of Note.


Article source: http://www.costar.com/News/Article/CoStars-People-of-Note-May-27/182390?ref=/News/Article/CoStars-People-of-Note-May-27/182390&src=rss

Soho Project Gets Financing

A joint venture of Madison Capital and Vornado Realty Trust is moving ahead on the construction of a six-story mixed-use building in SoHo after buying a parking lot and obtaining financing for the project, according to a Madison executive.

The companies closed on the $25.8 million purchase of the site from the New York City Economic Development Corp. on Friday. The deal capped a several-year process during which Madison emerged as…

Article source: http://www.wsj.com/articles/soho-project-gets-financing-1464224244?mod=residential_real_estate