Commerical Short Sale Scam Warning – From CREOBA NEWS
By Duncan Wierman on Mar 31, 2010 in Duncan's Opinion, In the News
CREOBA sponsored and exhibited at the Real Estate 2010 conference produced by Real Estate Forum and GlobeSt.com this month.
Let’s get to the good news first. Wells Fargo, which acquired Wachovia, is on track to start releasing Commercial REO properties in the next two months. They say they won’t fire sale the assets and they will have a steady flow of assets for the next 3 to 5 years.
Taylor Grant, the founding principal of California Real Estate Receiverships, said that the receivership business is booming. You should get to know some receivers. You can find them on the receiver.org website. In case you are not familiar with receivers, when banks have a problem property, like a hotel that is not making their mortgage payments, if they foreclose, they would have to run the hotel and have liability for its operation. They prefer to have a judge appoint a receiver. Many receivers also perform property management services. Triguild, located in San Diego, is one of the larger receiver companies. Receivers normally have the authority to liquidate the asset and can choose the listing agent.
There was lots of buzz about the last FDIC auction. Colony Capital was the winning bidder at .44 on the dollar, which was about $180 Million for a 40% interest of the 1 billion dollar portfolio. This would value the portfolio at $448 Million. Since the FDIC provided 60% financing, Colony Capital only had to come up with about $90 million in cash.
Some institutional investors I talked to believe prices will still fall another 10-20%. Realize that in the hardest hit markets we are already seeing properties sell about 50% of their 2007 highs. Most of the speakers were optimistic and believe we have hit bottom and will start back up later this year. I talked to a few of the panelists and gave them my impression of the market, which is on the falling side. They told me off the record that they were asked to be positive and optimistic.
The deals are all over the map. Some of the stories were about a high end apartment complex selling at under 5% cap rate. Others talked about 15% cap and projecting IRR’s of 25% on 5 year holds.
The class of assets that seem to be performing the best are Multi-Family. The experts accounted for that because Fannie and Freddie are still providing financing for apartments. It is difficult to obtain financing for Retail, Industrial and Office.
Some of the panelists were joking about Tiger Woods and they were asking which would come back first, Tiger Woods or the CMBS market. The consensus is that the CMBS market is back. It is a trickle now, but at least deals are getting funded. Wayne Comer, Managing Director of JP Morgan Asset Management, says, “The CMBS market is back and Growing.”
One panelist said, unemployment in LA is at 13% and will NOT start down until sometime in 2011. Everyone agreed that NEW JOBS are the key to the recovery.
The panelists were asked about interest rates. Some were projecting up .25 to .5%; others flat to down. The majority was flat to .25% up.
ALSO TO TAKE NOTICE IN REGARDS TO COMMERCIAL LOAN MODIFICATION
New Final Regulations Resolve Open Issues for Modifications of Commercial Mortgages Held by REMICs – LTD 9463, Rev. Proc. 2009-45, Notice 2009-79] By: Richard Ivar Rydstrom, Esq. Chairman, CMIS (Coalition for Mortgage Industry Solutions) News: New Final REMIC Regulations Start September 16, 2009
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June 6th, 2010 at 1:54 am
ALSO TO TAKE NOTICE IN REGARDS TO COMMERCIAL LOAN MODIFICATION
Nеw Final Regulations Resolve Open Issues fοr Modifications οf Commercial Mortgages Held bу REMICs – LTD 9463, Rev. Proc. 2009-45, Notice 2009-79] Bу: Richard Ivar Rydstrom, Esq. Chairman, CMIS (Coalition fοr Mortgage Industry Solutions) News: Nеw Final REMIC Regulations Stаrt September 16, 2009
June 10th, 2010 at 6:09 pm
Decent consensus. While sure, everyone is “told” to be upbeat and positive, at some point the truth needs to be told (or in this case, fronting until it DOES get better)…not to be “super negative” and create panic (although the panic is that panic will occur, but panic is a hyped-up version of fear), but that information needs to get out there otherwise.
Rates should stay in that agreed-upon flat to .25% for at least the next 8 months (maybe early next year’s meeting might hold better consensus of things appear to be getting better), but the job front is the key. Last month’s report said it all; census workers are “1 job” if they work for 1 hour/month…and many are getting hired, “fired”, re-hired, and others hired as well. That still wasn’t enough and it’s supposed to end in the next 3 or so months. Although there they are “told” to stretch their work out as long as possible…gee, I wonder why?
As for multi-families, one needs to look no further then see duplexes and 3-units in the cities selling as REO’s for sometimes 20-25 cents on the dollar. Most that get fixed up, you’re still in it for about 80 cents tops, and that usually means a viable cash flow with it fully paid off in roughly 3-5 years time.