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Mogul Minute 06/8/2016
June 8 | 2016

Mogul Minute

Here at RealtyMogul.com, we keep our finger on the pulse of all things real estate, from finance to technology and everything in between. We make a point of sharing interesting articles and think pieces among RealtyMogul.com staff to help our team stay abreast of the market, and ahead of the curve.

So we thought, why not share some of these insights with you, our partners?

Got A Minute? Here’s some recommended reading with key points from the content:

Market Trends Report – May 2016 (Axiometrics)

  • Anaheim had the largest monthly increase in annual effective rent among Axiometrics top 50 market markets with St. Louis, San Diego, and Minneapolis also among the top gainers for the months. Refer to the chart below:

  • Hartford, Sacramento, and Portland were among the largest losers in the change in month-to-month annual effective rent growth. While Sacramento and Portland saw moderation in their rent growth, their decline was due in large part to their massive rent growth pace over the past year and they still rank among the top markets in annual effective rent growth.  

 

Texas Dominates List of Most Overvalued Cities (Bisnow)

  • Of the most overvalued housing markets in the US, four of the top 10 cities were in Texas including Austin at #1, Houston at #2, Dallas at #8, and San Antonio at #9.
  • Per the report, Austin’s home prices are 42.3% higher than “what is considered sustainable based on the region’s income per capita.”​

 

IRS Shuts Down Remaining Channels for REIT Spinoffs (WSJ )

  • In response to a number of deals that sought the tax-beneficial status of spinning off into REITS, the IRS has shut down a gap in tax law that would ban the practice. With the law in place, companies that were created in tax-free spinoffs will not be able to declare REIT status until 10 years after the initial transaction.
  • The rule would “require spun-off companies that later get REIT status to pay corporate taxes as if they sold their appreciated real estate, a tax that would undermine much of the purpose of putting it in a REIT.”
  • This rule does not apply to REIT spinoffs that sought a private letter ruling form the IRS by December 7th of last year.
  • Before the rule was put into place, companies with significant real estate holdings could essentially break themselves into two, a corporation and a REIT. “The REIT could get property that has appreciated in value without paying taxes on the gains and would then enter a leasing agreement with the operating company.”

 

The Rise of the 18-Hour City (Globestreet)

  • Interesting notes from the RealShare AUSTIN conference:
    • “This trend toward smaller units really began in the mid- ‘90s before the millennials began renting apartments. In 1994, the size of an average one-bedroom apartment in Austin was 800 square feet. By the early 2000s the average size was down to 750 square feet. Now it’s 600 square feet, 25% smaller than 22 years ago.”
    • They also discuss the movement to a lower parking ratio in CBD Austin and the impact of no ride sharing in the city. “Austin made a mistake in voting yes to the law requiring mandatory fingerprint-based criminal background checks for new ride sharing drivers within Austin city limits. As a result, ride sharing companies Uber and Lyft have shut down operations in the city. This could greatly affect the Austin economy for the long term, according to JMI’s Taylor Vreeland, who explained how groups that may be planning large meetings and conventions in Austin will be forced to rethink having an event in a city without ride sharing for thousands of people.

 

WeWork to Halt Hiring, Make Major Cuts to Staff (Bisnow )

  • WeWork is planning cutting 7% of its workforce and has put on a temporary hiring freeze. They raised a $430M round of funding just three months ago and were valued at $16B.
Tim Ednoff Headshot
Written by , Associate - Commercial Equity at RealtyMogul.com

Tim evaluates investment opportunities as well as performs due diligence and writes content for various equity and debt transactions. Outside of the office, Tim is an avid sneaker collector, a passionate health and fitness advocate, and a dedicated podcast enthusiast.

 
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