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Mogul Minute 07/05/2016
July 5 | 2016

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:

REITs Outperform Broader Markets During H1 2016 (Trepp Talk)

  • Among the highlights:
    • REITs performed well during the first half of 2016, the FTSE NAREIT ALL REIT index had a total return of 13.65% - surpassing the global returns from the stock market as it absorbed the recent Brexit shock.
    • The US economy is healthy with low unemployment, rising wages (slightly), and high prices for existing home sales. Interest rates are expected to remain low for the foreseeable future and construction is slated to tick up.
    • The $5.4B expansion of the Panama Canal will increase allowable containers from 5,000 to 14,000 which should mean more imports will be moving across the country.
    • The upcoming reclassification of REITs to its own category should be a net plus for the industry as many large cap core mutual funds currently under weigh real estate.

Multitenant Properties Dominate the Industrial Sector (Globestreet)

  • A couple interesting blurbs from the Multitenant Distribution Warehouse Segment in the US Outlook Summer 2016 by C&W:
    • “In 2015, multitenant distribution warehouse boasted the highest year-over-year rent growth of any property type, at 6.5%. Over the past decade, national rent growth for these properties has averaged 1.9% per year while the average for bulk distribution warehouse was 1.2% per year.”
    • “Values for this segment today are about 20% higher than the broader warehouse market and pricing continues to increase. In 2015, the report states, multitenant distribution warehouse achieved a 5.3% income return and a 9.3 % appreciation return for a total return of 14.6%, well ahead of the overall industrial market return of 12.7%.”
    • The report also notes that this property type will continue to be important with the rise of e-commerce as tenants will need to fulfill the “last mile gap” that currently exists when goods leave the companies’ distribution warehouses.

Updated: Hines REIT Approves $1.7 Billion Asset Liquidation Plan (Costar)

  • The plan includes the sale of seven office assets totaling nearly $1.2B to an affiliate of Blackstone.
  • Hines is also planning on selling eight grocery anchored retail centers to New Market Properties, a subsidiary of Preferred Apartment Communities, who are based in Atlanta.

Today's Renters Really Are Worse Off Than Their Parents (WSJ)

  • Inflation-adjusted rents have risen by 64% since 1960, but real household incomes only increased by 18% during that same time period. Things were especially bad for renters between 2000-2010 as rents rose 18% while household incomes fell by 9%.
  • The reasons for increasing costs include rising construction costs, limited supply, and the migration of tenants to more expensive urban environments.

AEG May Build an 18,000 Seat Sports and Entertainment Arena in Downtown San Diego (Bisnow)

  • Proposals are in to develop a downtown sports and entertainment arena in San Diego that would mirror what AEG has done at LA Live. The proposal includes “three hotels with 1,700 rooms; up to 325k SF of shops and restaurants; 125k SF of “blue tech” and creative office space; a 10k SF learning center and tide pools for Scripps Institution of Oceanography; and a 2k SF performance space for the San Diego Symphony.”
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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