Real Estate Research Corporation’s (RERC’s) investment conditions ratings for the institutional apartment and central business district (CBD) office sectors each jumped a full point during second quarter 2010, making them the two highest-rated property types that RERC surveys.
The findings are included in the RERC’s new summer report, Riding the Edge of Success.
The investment conditions ratings are based on a scale of 1 to 10, with 10 being higher and most favorable.
For the apartment sector the rating increased to 7.1 during second quarter 2010 from 6.1 during the first quarter. The investment conditions rating for the CBD office sector increased to 6.0 during the second quarter, up from 5.0 for the first quarter.
“These high ratings reflect the increased investment prospects we are seeing for commercial real estate in general,” said Ken Riggs, RERC president and CEO. “Institutional investors skittish about the slowing economy and the volatility and risk exhibited in the stock market are finding the diversification, stability, and higher absolute returns of the commercial real estate asset class increasingly attractive.”
Although the apartment sector, long-recognized as the commercial property type that generally possesses better risk-versus-return characteristics, has often presented an investment conditions rating higher than those for other property types RERC rates, it has not had a rating this high since second quarter 2001, when the rating was 7.4 on the same scale.
Basically, that means that apartment investments are proving to be safer bets during slowed economic times and are meeting the strategic initiatives of most investors.
“I wouldn’t say the apartment sector is ‘recession-proof,’ but it is the sector that is regarded as ‘most safe’ and also seems to garner the most demand when times are tough, whether it is in this recession or the last one,” said Riggs.
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Aug 23, 2010 10:26 AM, By Ben Johnson, NREI Contributor
Wednesday, September 15, 2010
Second-Quarter Loan Originations Flat Year Over Year
Commercial and multifamily mortgage loan originations in the second quarter were 1% higher than the same period a year ago and 35% higher than the first quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
“Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to,” says Jamie Woodwell, MBA's vice president of commercial real estate research.
"Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."
The report shows that originations for life insurance companies and CMBS conduits increased dramatically on a percentage basis. Meanwhile, originations for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac fell by more than half from 2009 levels.
The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties. When compared with the second quarter of 2009, the increase included a 183% increase in loans for industrial properties; a 180% increase in loans for office properties; an 18% increase in loans for hotel properties; a 76% decrease in loans for health care properties; a 25% decrease in multifamily property loans, and a 9% decrease in retail property loans.
Among investor types, loans for conduits for CMBS saw an increase of 173% compared with last year's second quarter. There was also a 148% increase in loans for life insurance companies, and a 12% decrease in loans for commercial bank portfolios. The dollar volume of loans for Fannie Mae and Freddie Mac saw a decrease of 55%.
Among investor types, loans for conduits for CMBS saw an increase in loan volume of 106% compared with the first quarter; loans for life insurance companies saw an increase in loan volume of 57% compared with the first quarter; originations for GSEs increased 21% from the first quarter to the second quarter of 2010; and loans for commercial bank portfolios decreased by 2% during the same time span.
Compared with the first quarter, second-quarter originations for hotel properties saw a 405% increase. There was a 114% increase for industrial properties; a 107% increase for health care properties; a 56% increase for office properties; a 38% increase for multifamily properties; and an 11% decrease for retail properties.
Jul 29, 2010 10:46 AM, By NREI staff
“Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to,” says Jamie Woodwell, MBA's vice president of commercial real estate research.
"Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."
The report shows that originations for life insurance companies and CMBS conduits increased dramatically on a percentage basis. Meanwhile, originations for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac fell by more than half from 2009 levels.
The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties. When compared with the second quarter of 2009, the increase included a 183% increase in loans for industrial properties; a 180% increase in loans for office properties; an 18% increase in loans for hotel properties; a 76% decrease in loans for health care properties; a 25% decrease in multifamily property loans, and a 9% decrease in retail property loans.
Among investor types, loans for conduits for CMBS saw an increase of 173% compared with last year's second quarter. There was also a 148% increase in loans for life insurance companies, and a 12% decrease in loans for commercial bank portfolios. The dollar volume of loans for Fannie Mae and Freddie Mac saw a decrease of 55%.
Among investor types, loans for conduits for CMBS saw an increase in loan volume of 106% compared with the first quarter; loans for life insurance companies saw an increase in loan volume of 57% compared with the first quarter; originations for GSEs increased 21% from the first quarter to the second quarter of 2010; and loans for commercial bank portfolios decreased by 2% during the same time span.
Compared with the first quarter, second-quarter originations for hotel properties saw a 405% increase. There was a 114% increase for industrial properties; a 107% increase for health care properties; a 56% increase for office properties; a 38% increase for multifamily properties; and an 11% decrease for retail properties.
Jul 29, 2010 10:46 AM, By NREI staff
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