Saturday, March 2, 2013

February Was Kind to Borrowers Seeking Debt

Jeanne Peck
Chicago, IL,  March 2, 2013 - The shortest month of the year closed with overall improved real estate capital market conditions -- at least for borrowers seeking debt.  Treasuries dropped about 15 basis points and mortgage spreads compressed, resulting in nearly 25 basis points lower rates.

 Renewed fierce competition among funding sources negates any clear differentiation between various types of lenders today.  
Banks, lifecompanies, Wall Street, agencies and private capital sources are all bidding within very tight underwriting ranges for higher-quality assets and creating new lending programs to fit almost every client preference. Floating rate loans enjoy historically low pricing and benchmark LIBOR and bank prime rates remain flat for more than a year. 

That said, any meaningful pricing discussions are within the realm of the fixed-rate debt.

Based upon term, current pricing ranges for multifamily, office, retail and industrial properties requiring fixed-rate debt and assuming typical leverage levels of much as 75% are as follows:

*  Five-year term: 2.75% to 3.5%, with banks prevailing in this term.Often times, such loans are structured using swap contracts.
*  Ten-year term: 3.75% to 4.5% with life companies and conduits leading the pack.  Select banks offer such terms to preferred customers.Agencies still lead the market for apartment deals.      

With so much competition on pricing at levels many funding sources find unprofitable, the capital markets are reevaluating risk spectrums.  In search of yield, more lenders find themselves targeting secondary markets, higher leverage and non-traditional property types.

For example, an un-flagged hotel in a secondary market will be priced at least 75 to 100 basis points than typical loans.   All in all, such risk premiums are far much more compressed than in any time since the Great Recession when pricing was double to triple of today's levels.  In fact, even high-risk, short-term "situational" debt yields are moving into the higher single-digit yield range in many cases.

The Real Estate Institute's Jeanne Peck notes, "With the economy skirting a
contraction in December 2012, improving economic conditions and limited new
supply [especially] in the non-multifamily property sectors, lenders feel
more comfortable with risk today.  Many are clearly willing to widen risk
tolerances to snag more yield."


Jeanne Peck,
 Executive Director

$10.8 Million Retail Center Sale in Johnson City, NY Arranged by Marcus & Millichap

Johnson City Town Center, Broom County, NY
JOHNSON CITY, N.Y., March 1, 2013 – Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has arranged the sale of Johnson City Town Center, a 83,866-square foot retail property in Johnson City, a village in Broome County, N.Y. that is part of the Binghamton, N.Y.metropolitan statistical area.

The sales price of $10,800,000 equates to $129 per square foot.

Steven Stoehrer
Steven Stoehrer, a senior associate, and Preet Sabharwal, an associate, both in the firm’s Manhattan office, represented the seller, a New York-based development fund. The buyer is a Canadian equity fund.

            “Johnson City Town Center is a stable asset with long-term leases backed by a 100 percent national tenancy,” says Stoehrer. “The new owner has a value-add opportunity in the form of a 9,120-square foot approved pad site that was included in the sale.”

            “We generated 12 offers and achieved 100 percent of the listing price,” adds Sabharwal.

Preet Sabharwal
The property is located along a strong retail corridor at 420 Harry L Drive in Johnson City, one-half mile away from the Oakdale Mall, a major indoor shopping destination for the greater Binghamton area.

Johnson City Town Center is anchored by a 34,627-square foot Christmas Tree Shops that comprises 41 percent of the tenancy. Other tenants include Petco, Party City, Five Below and Lumber Liquidators.

 For a complete copy of the company’s news release, please contact:

J.D. Parker,
 Regional Manager
(212) 430-5100

775-Unit, Two-Property Multifamily Sale Arranged in Arizona by Steve Gebing and Cliff David of Marcus & Millichap

Little Cottonwoods Apartments
Tempe, AZ
PHOENIX, March 1, 2013 – Marcus & Millichap Real Estate Investment Services Inc. has arranged the sale of a two-property multifamily portfolio in the Phoenix metropolitan area. The terms of the sale were not disclosed.

Steve Gebing
The properties are:

· Country Brook, Chandler, Ariz., 396 units
· Little Cottonwoods, Tempe, Ariz., 379 units

Steve Gebing, a vice president investments and Cliff David, also a vice president investments, both in Marcus & Millichap’s Phoenix office, had the exclusive listing to market the properties on behalf of the seller, a publicly traded real estate investment trust.

Clifford David
The buyer is a company formed by Bascom Arizona Ventures LLC.

Located at 4909 West Joshua Blvd. in Chandler, Country Brook was developed in three phases: 1986, 1993 and 1996.

Ninety percent of apartments’ interiors have been upgraded with new kitchen and bath cabinetry, new countertops, new fixtures and flooring, a new Whirlpool appliance package and painted accent walls.

Little Cottonwoods is located at 1820 East Bell De Mar Drive in Tempe.
For a complete copy of the company's news release, please contact:

Public Relations
(925) 953-1716