Category Archives: Real Estate Finance

Creating Commercial Real Estate Alpha

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by paracap August 9th, 2012

In modern portfolio theory, Alpha is the excess return of an investment above the market or benchmark return. In the capital markets, Alpha is the excess return of common stocks above a benchmark like the S&P 500 Index or the excess return of a portfolio of REIT stocks above the FTSE NAREIT Index.

In CRE, Alpha is the excess return generated by the investment owner/manager above the market return like the NCREIF NPI Index (see the June 15, 2012 VOM for current returns). The Alpha return in CRE as opposed to stocks and bonds is primarily… [Full Article]

Investors Look to Secondary and Tertiary Markets for Multifamily

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Aug 8, 2012 11:53 AM, By Bendix Anderson, Contributing Writer

Investors tired of paying super-high prices for apartment properties might follow the lead of Panther Properties Investment LLC, which just bought the Effingham Parc Apartments, located a few miles outside of Savannah, Ga.

“We are at that point in the cycle when in search of yield, investors look to secondary and even tertiary markets,” says Dan Fasulo, managing director of data firm Real Capital Analytics, regarding the sale, which closed in July.

The Effingham deal could represent the shape of things to come—as investors once again begin to pay respectable prices for class-A assets in these strengthening secondary markets. Panther Properties paid $30.8 million for Effingham, or about $87,500 per apartment for the class-A, 352-unit property. The capitalization rate for the deal.. [Full Article]

Fits and Starts for Commercial Real Estate Volume

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By Bendix Anderson, Contributing Writer

The commercial real estate recovery, like the rest of the economy, had a late spring slowdown. “We had a strong first quarter and a softer second quarter as investors became concerned about sovereign debt issues,” says Janice Stanton, senior managing director of Capital Markets for commercial real estate broker Cushman & Wakefield.

Commercial real estate brokers and researchers see a similar stall in momentum. The strongest activity is still confined to [Full Article]

Several Price Indices Show CRE Values on the Rise

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Jul 25, 2012 1:02 PM, By Bendix Anderson, Contributing Writer

Prices keep rising for commercial real estate properties, according to indices kept by top real estate firms—but not as quickly as in the years just after the crash.

“There’s been a pause in the numbers,” said Jeffrey Havsy, director of research for the National Council of Real Estate Investment Fiduciaries (NCREIF). “People are waiting to see… We’ve had some economic uncertainty. Retail sales are sluggish.”

Top indices from NCREIF, Moody’s/Real Capital Analytics, the CoStar Group and Green Street Advisors all show a sharp, [Full Article]

Value-Add Has its Day

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by Matt Hudgins (http://www.reforum-digital.com)

When Clarion Partners acquired the Plantation Apartments at the Woodlands late last year, the 432-unit, luxury complex north of Houston was just three years old and required only minor upgrades and leasing to increase the revenue stream and boost value. Clarion expects an easy task of maintaining full occupancy at its new multifamily
asset. After all, the Houston metropolitan area’s economy is one of the strongest in the nation, having added more than 85,000 jobs in the 12 months that ended in [Full Article]