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Mogul Minute 11/04/2016
November 4 | 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:

Fed Likely to Raise Rates in December, Unless There’s Mayhem Following Nov. 8 Election (Bisnow)

  • The Fed announced that they held rates steady following yesterday’s meeting but did give some hints to a December raise. FOMC Chair Janet Yellen said that it only needed “some” further evidence that inflation and employment were on track towards their goals to hike. Most analysts are taking this to mean that a December rate raise is inevitable barring anything unforeseen in the election over the next month or so.

Q3 Commercial, Multifamily Mortgage Originations Up 2 Percent Annually in U.S. (World Property Journal)

  • While it has been a rough year for CMBS, the Mortgage Bankers Association (MBA) is reporting that commercial and multifamily mortgage loan originations for the first three quarters increased 2% compared to the same period last year. Third quarter 2016 commercial and multifamily mortgage loan originations were 5 percent higher than the third quarter of 2015 and seven percent higher than the second quarter of 2016.
  • “Rising property values, robust property fundamentals, low interest rates and a strong transaction market continue to drive potentially record setting paces in commercial and multifamily mortgage originations. Through the first nine months of the year, borrowing and lending backed by commercial real estate is running two percent ahead of last year's pace," - Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.
  • Getting a little more granular in comparing the year over year numbers, 3Q 2016 to 3Q 2015: The third quarter saw a 32 percent year-over-year increase in the dollar volume of loans for industrial properties, a 26 percent increase for multifamily properties, a 5 percent decrease for office properties, a 23 percent decrease for retail properties, a 30 percent decrease in hotel property loans, and a 59 percent decrease in health care property loans. Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) loans increased by 82 percent year-over-year.  There was a 3 percent year-over-year decrease for life insurance company loans, a 4 percent decrease in Commercial Mortgage Backed Securities (CMBS) loans, and a 9 percent decrease in the dollar volume of commercial bank portfolio loans.

Prologis Seattle project takes warehousing to the next level (SupplyChainDIVE)

  • In what is already popular in parts of Asia, Prologis is beginning to work on the construction of a 3-story, 580,000 SF industrial warehouse in Seattle. The project is being billed as the first multilevel warehouse in the US and is set to be completed in 2018. They are said to also be looking for similar projects in dense areas like NY and LA.
  • WSJ is citing declining vacancy figures and e-commerce as the driver for the development as this will enable companies to be closer to the customers who are increasingly demanding speedier delivery. 

 

Vornado to Spin Off DC Portfolio in $8.4B Merger with JBG (CPE)

  • The merger will create the largest pure-play Washington DC real estate company and will be named JBG Smith Properties. The company will manage 79 assets including 50 office properties totaling approximately 12 million square feet 18 multifamily units totaling nearly 4,500 units.
  • For Vornado, the move is part of a strategy to move back to core as they are shifting their focus to New York City. “The main event for us is our flagship New York business, which is more than four times the size of Washington. Separating Washington from New York will daylight New York’s treasure trove of assets and superior financial performance.” – Steven Roth, Chairman & CEO of Vornado.

US CMBS Delinquency Report: Delinquency Rate Climbs Again; Readings for All Five Major Property Types Increase (Trepp)

  • The delinquency rate rose by 20 basis points from September and is now up to 4.98%. The rate is now only 25 basis points lower than the year-ago level. 

Discount grocery Aldi heads into wealthier areas (MarketWatch)

  • The German chain is planning on expanding their stores in wealthier areas as Americans are becoming more budget-conscious and their traditional low-to-middle income niche gets crowded with competitors. They also planning on increasing their stock of organic foods in order to appeal to the changing demographics of moving into better areas.
  • Bernstein Research analyst, Alexia Howard, is bullish on the subsector and expects discounters to more than double their average annual sales growth to 15% between 2015 and 2020, from 6% over the prior five years.
  • Aldi currently has approximately 1,600 locations in the US and the majority of their latest stores have opened in large suburban retail centers in middle-income or higher neighborhoods. 
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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