Archive for National News
The appetite for fast food restaurants continues with sales of such properties on pace again this year to exceed more than $1.2 billion as they did last year. Those amounts top the combined totals for 2010 and 2011.
In the latest major acquisition, Centre Partners, a leading middle market private equity firm, acquired Captain D’s Holding Corp. a leading national chain of 521 seafood-themed fast-casual restaurants in 26 states. Terms of the private transaction were not disclosed.
Captain D’s senior management team will own a significant stake in the business and continue to serve in their current roles. The seller was Sun Capital Partners Inc.
In another notable set of deals that closed just before this past Thanksgiving, an entity affiliated with New York-based American Realty Capital Trust V Inc. purchased and leased back at least 18 Youngstown, OH and Cleveland-area Burger King restaurants for a total of $28.66 million, averaging $1.59 million per eatery.
Seniors housing occupancy rose 30 bps in the third quarter of 2013, marking a halfway point in the metric’s recovery since the recession’s lows. While it increased in both primary and secondary markets during the quarter, the secondary markets pulled the overall seniors housing occupancy level up to 89.7%. Occupancy rose in both the independent living and assisted living segments, increasing 20 bps for IL properties and 40 bps for AL properties in the third quarter, according to the NIC MAP® Data and Analysis Service, 3Q2013. Occupancy remains the lowest in freestanding memory care properties, at 85.0%, and highest in combined independent/assisted living properties, at 90.3%.
Take a guided tour of the stunning property that is going up for auction on November 22. Concierge Auctions has the pleasure of selling the greatest basketball player’s 9 bedroom, 19 bathroom and three multicar garage abode. The 56,000 square foot home is settled on over seven acres nestled in Highland Park, Illinois. It’s an auction, so who knows you might be able to get the mansion for a deal of like $20 million.
The 2013 3Q PwC Real Estate Investor Survey™ arrived this morning. A quick glance at the survey shows that respondents report declining cap rates in every category except Net Lease (+15 bp) and Power Centers (+4 bp). The industrial sector leads the way in cap rate declines with Warehouse cap rates down 18 basis points, and Flex/R&D down 32 basis points since the last quarter. Apartment cap rates continue to decline, and set the low end of the range at 5.61%.
Michael B. Dodds, MAI, CCIM
In the recently released September 2013 edition of Hotel Horizons®, PKF Hospitality Research, LLC (PKF-HR) affirms its forecast of strong fundamental performance for the U.S. lodging industry. The lack of meaningful increases in hotel supply, an economy that supports growth in lodging demand and market leverage that allows for real room rate growth leads to PKF-HR forecasts of healthy increases in both revenues and profits in 2013 and 2014.
It is very rare for PKF-HR to say we have no concerns about the near-term outlook for the U.S. lodging industry, but that is what we see from our econometric models, as well as discussions with our clients. If you look at the factors that historically have derailed the good times for hotel profit growth, very few, if any, exist today.
According to the September 2013 Hotel Horizons® report, PKF-HR is forecasting U.S. hotels to enjoy a 5.9 percent increase in revenue per available room (RevPAR) in 2013, followed by RevPAR gains of 7.2 percent in 2014 and 8.1 percent in 2015. All of these projections are well above the long-run average annual RevPAR increase of 2.9 percent as reported by Smith Travel Research (STR).
Location has always been considered the most important factor in commercial real estate. But top-flight, single-tenant net-lease properties have become so scarce that some investors in that sector have begun looking outside the core markets in their hunt for deals.
The Boulder Group, a net-leased investment brokerage firm specializing in single-tenant assets, has, for example, completed the sales of a single-tenant McDonald’s ground-lease located at the intersection of Wabash Ave. and Archer Elevator Rd. in Springfield, Illinois for $978,260, and a single-tenant Aaron’s property located at 1418 East 4th Ave. in Hutchinson, Kansas for $1,241,000.
“While the majority of single-tenant investment activity is focused on core markets, we are starting to see investors focus primarily on the quality of the tenant rather than the top tier locations,” says Randy Blankstein, president of the suburban Northbrook-based Boulder Group.
The first half of the year was chock-full of surprises, according to Real Capital Analytics and Integra Realty Resources, which jointly revealed a summary of the nation’s performance—including a comparison of the U.S. to other spots on the globe—from January to June of 2013 during a presentation Thursday in Midtown Manhattan.
Overall in commercial real estate, the US fared well. And in some interesting turns, new sectors became ripe for investment while other tried-and-true property types may have topped out; investors weren’t terribly jumpy over rising interest rates and there have been unusual shifts in the market leaders versus laggards, according to analysts.
“We’ve had a good first half, transaction activity was up about 25% over 2012,” said Bob White, president, RCA. “It’s going to be tough to match that in the second half of the year. The activity at the end of 2012 because of the capital gains tax year pushed a lot of activity to early 2013. Now, we’re seeing a slowing in the rate of acceleration but I don’t think that’s evidence of any impact of rising interest rates; we haven’t seen the market respond to the run up of rates in May and June. A handful of deals fell through but that actually made investors eager to get deals done, in order to lock in rates.”
NNNet Advisors is a net lease investment brokerage firm with five offices across the country, including Charlotte. They do a nice report, and their Q2 2013 Single Tenant Net Lease Property Report can be downloaded HERE
So a conventional real estate listing might look for a piece of property for sale on Graves Island, 9 miles off the Massachusetts coast. When the owner is the US government, however, and the property is a 110-year-old working lighthouse anchored to a rocky, wave-battered ledge near the entrance to Boston Harbor, that hardly does the offering justice.
For that matter, simply getting to, and into, the lighthouse, which has been listed on the National Registry of Historic Places since 1987, presents a formidable challenge for anyone looking to buy what would be a truly novel vacation home.
Commercial and multifamily mortgage lending and borrowing continued to grow during the second quarter. The apartment market continues to be the belle of the ball, with multifamily mortgage originations running 31 percent ahead of last year’s first half total. And after a slow start to the year, lending by life insurance companies surged in the second quarter to record the highest quarterly volume on record for that sector.
According to our latest Quarterly Index of Commercial/Multifamily Mortgage Bankers Originations, second quarter 2013 origination volumes are:
- 7% higher than in Q2 2012
- 36% higher than in Q1 2013
- 8% higher year-to-date from last year’s year-to-date levels
MBA’s Quarterly Index of Commercial/Multifamily Mortgage Bankers Originations provides quarter-year updates on changes in the originations market and details changes in the volume of loans originated and breaks the data down by property type and by investor type. It’s available for download, free of charge, HERE
The Boulder Group Publishes 2nd Quarter Net Lease Market Research.
Click on the photo below to download the report in PDF
The office market followed fourth quarter’s impressive performance with continued momentum. After the mean cap rate compressed by 70 basis points during the fourth quarter, it compressed by another 30 basis points during the first quarter of this year to fall to 6.7%. This is the lowest that the mean cap rate has been since the third quarter of 2008, before the market hit the skids, when it stood at 6.4%. Although the mean office cap rate has been somewhat idiosyncratic over the last few years, at this juncture that kind of cap rate expansion seems unlikely. The mean cap rate might continue to jump around in the future, but a recovering office market should keep cap rates compressing for the foreseeable future.
In contrast, the 12-month rolling cap rate is not approaching the low levels that were reached before the market imploded. The 12-month rolling cap rate is still approximately 80 basis points above where it bottomed during the third quarter of 2008. We will need to see more than two quarters of compressing mean cap rates if we are to test that low, which indicates we should pay close attention to cap rates in the coming quarters. But if the 12-month rolling cap rate starts to test historically-low cap rates, that would mean that the recovery is becoming more entrenched and investors are buying office properties in anticipation of improving fundamentals over the medium-term.
U.S. hotels are poised for significant gains in all the major metrics in 2014. PKF Hospitality Research LLC is projecting that U.S. hotels will enjoy a 7.7 percent increase in revenue per available room (RevPAR) in 2014, along with a 15.4 percent boost in net operating income (NOI).
“We expect the factors that have inhibited lodging performance during the first half of 2013 will dissipate as the year goes on,” says Mark Woodworth, president of Atlanta-based PKF Hospitality Research. “By 2014, any uncertainty caused by fears of fiscal cliffs and sequestration should be alleviated, thus resulting in improved attitudes among hotel guests, owners and operators.”
One lingering concern among hoteliers may be the recent rise in interest rates. “Moody’s Analytics, our source for the economic forecasts that drive our econometric models, has been projecting a 150 basis point increase in interest rates by year-end 2014. Accordingly, our positive lodging forecasts do incorporate any detrimental influence this may have on investments and inflation,” notes Woodworth.