The document discusses why now may be a good time to consider real estate investments due to market conditions created by the recession. Commercial real estate prices have declined substantially, around 35% from their peak. This has resulted in many properties that cannot refinance their loans, presenting opportunities for new investors. Diversifying into real estate can help reduce risk and potentially increase returns, as real estate tends to perform differently than other asset classes like stocks and bonds.
Angelic Real Estate 2014 Commercial Real Estate Capital Markets ViewGabriel Silverstein
Angelic Real Estate presentation delivered by company president Gabriel Silverstein at the Flint Oak, Kansas real estate investment summit on February 8, 2014.
The presentation includes a look back and recap of 2013, and a look forward at 2014 and beyond, including both market trend reporting and predictions and guidance. The primary focus of the presentation is commercial real estate lending and investment market activity and driving factors.
Gabriel Silverstein delivered this mini-presentation as the introduction to a financing panel discussion during the 2015 SIOR Tri-State Regional Conference on March 20, 2015 in New York City. The panel consisted of crowdfunding pioneer Dan Miller from Fundrise, John Randall from bridge lender PCCP, Mario DiCerbo from Bank of America's balance sheet occupier lending group, Michael Pierro from C-III Capital's CMBS lending platform, and Karen Kozlowski from Thompson Hine, legal counsel for both borrowers and lenders.
Exchange-Traded Proxy Hedge for Jumbo 30yr Fixed MortgagesJohn Coleman
Properly allocated, a basket of Eris Standard Interest Rate Swap Futures, ICE Eris CDX IG Credit Futures, CME Eurodollar Futures and CBOE VIX Implied Volatility Futures may be combined to emulate 30-year Prime Jumbo Mortgage Origination Pricing and Jumbo Rates.
Angelic Real Estate 2014 Commercial Real Estate Capital Markets ViewGabriel Silverstein
Angelic Real Estate presentation delivered by company president Gabriel Silverstein at the Flint Oak, Kansas real estate investment summit on February 8, 2014.
The presentation includes a look back and recap of 2013, and a look forward at 2014 and beyond, including both market trend reporting and predictions and guidance. The primary focus of the presentation is commercial real estate lending and investment market activity and driving factors.
Gabriel Silverstein delivered this mini-presentation as the introduction to a financing panel discussion during the 2015 SIOR Tri-State Regional Conference on March 20, 2015 in New York City. The panel consisted of crowdfunding pioneer Dan Miller from Fundrise, John Randall from bridge lender PCCP, Mario DiCerbo from Bank of America's balance sheet occupier lending group, Michael Pierro from C-III Capital's CMBS lending platform, and Karen Kozlowski from Thompson Hine, legal counsel for both borrowers and lenders.
Exchange-Traded Proxy Hedge for Jumbo 30yr Fixed MortgagesJohn Coleman
Properly allocated, a basket of Eris Standard Interest Rate Swap Futures, ICE Eris CDX IG Credit Futures, CME Eurodollar Futures and CBOE VIX Implied Volatility Futures may be combined to emulate 30-year Prime Jumbo Mortgage Origination Pricing and Jumbo Rates.
RBC Global Asset Management: Surprisingly Sustainable Canadian HousingEric Lascelles
Canadian housing will eventually run into affordability woes, but concerns about overbuilding, condo excesses and flighty speculators are largely overblown.
“Many different maturities of bond prices tend to appreciate in value with fa...shilendrasharma
“Many different maturities of bond prices tend to appreciate in value with falling rates, but the largest gainers are longer dated bonds, those with more than five years' maturity.”
Ask the Experts – Mercer’s 2013 European Asset Allocation survey
In this Quarterly Mercer Ask the Experts podcast, I’m joined by three Mercer investments experts Nick Sykes, Phil Edwards and Atul Shinh. They will be discussing key trends from Mercer’s 2013 European Asset Allocation survey.
Questions for our Experts included:
Against a continued uncertain macro-economic backdrop with investors facing the challenge of generating real returns while managing risk, what are the key trends that we see emerging from this years’ European Asset Allocation survey?
What are the key areas of focus for Alternative investments?
What are the trends for the future? What is the expected direction of travel?
http://www.mercer.com/asktheexperts
http://www.mercer.com/assetallocation
Series of lectures from Brian Butler, given during fall 2008 session at Thunderbird Global MBA, Miami campus:
This lecture 02: learn to use International Fisher effect (IFE), and PPP, Law of one Price, Big Mac index to estimate long term currency (FX) trends
From evaluating when it makes sense to refinance your mortgage, to selecting the right lender for your refinancing, to processing your new loan, the FREEandCLEAR.com Mortgage Refinance Guide provides a comprehensive explanation of the refinance process from start to closing.
Debt and equity availability update: The guide to financing in commercial rea...JLL
In the last three years, commercial property lending has continued to gain momentum and it is fundamentally strong, while still maintaining disciplined underwriting standards. The fundamentals of the real estate markets also are improving via the growth in the housing markets, construction, industrial production, and the further strengthening of the consumer psyche. The convergence of these factors leads us to an optimistic 2014 forecast for the real estate lending markets. Banks now trust the improved value of real estate again, which results in increased lending competition that should keep spreads tight and fuel strong performance up the risk curve to broader geographies and asset types this year.
To learn more, visit: http://www.us.jll.com/capitalmarkets
RBC Global Asset Management: Surprisingly Sustainable Canadian HousingEric Lascelles
Canadian housing will eventually run into affordability woes, but concerns about overbuilding, condo excesses and flighty speculators are largely overblown.
“Many different maturities of bond prices tend to appreciate in value with fa...shilendrasharma
“Many different maturities of bond prices tend to appreciate in value with falling rates, but the largest gainers are longer dated bonds, those with more than five years' maturity.”
Ask the Experts – Mercer’s 2013 European Asset Allocation survey
In this Quarterly Mercer Ask the Experts podcast, I’m joined by three Mercer investments experts Nick Sykes, Phil Edwards and Atul Shinh. They will be discussing key trends from Mercer’s 2013 European Asset Allocation survey.
Questions for our Experts included:
Against a continued uncertain macro-economic backdrop with investors facing the challenge of generating real returns while managing risk, what are the key trends that we see emerging from this years’ European Asset Allocation survey?
What are the key areas of focus for Alternative investments?
What are the trends for the future? What is the expected direction of travel?
http://www.mercer.com/asktheexperts
http://www.mercer.com/assetallocation
Series of lectures from Brian Butler, given during fall 2008 session at Thunderbird Global MBA, Miami campus:
This lecture 02: learn to use International Fisher effect (IFE), and PPP, Law of one Price, Big Mac index to estimate long term currency (FX) trends
From evaluating when it makes sense to refinance your mortgage, to selecting the right lender for your refinancing, to processing your new loan, the FREEandCLEAR.com Mortgage Refinance Guide provides a comprehensive explanation of the refinance process from start to closing.
Debt and equity availability update: The guide to financing in commercial rea...JLL
In the last three years, commercial property lending has continued to gain momentum and it is fundamentally strong, while still maintaining disciplined underwriting standards. The fundamentals of the real estate markets also are improving via the growth in the housing markets, construction, industrial production, and the further strengthening of the consumer psyche. The convergence of these factors leads us to an optimistic 2014 forecast for the real estate lending markets. Banks now trust the improved value of real estate again, which results in increased lending competition that should keep spreads tight and fuel strong performance up the risk curve to broader geographies and asset types this year.
To learn more, visit: http://www.us.jll.com/capitalmarkets
Columbia National Real Estate Finance Q1 Capital Markets Report Justin Brindger
Columbia National Real Estate Finance is pleased to present our Q1 Capital Markets Report. The information included has been put together through our team’s extensive market research and analysis as well as data collected at the Mortgage Bankers Association conference, recently held in San Diego, California. We expect to continue to produce quarterly updates covering everything from the latest financing trends to information specific to each capital source.
The annual rate of growth in housing credit has started to stall over recent months and with the banks tightening their lending criteria where will it go from here?
High Real Estate C&I Market presentation feb. 2018William Boben
High Real Estate Group commercial and industrial real estate review of 2017 and forecast for 2018, includes national, regional, and local statistical data with observations from our Lancaster Team.
Similar to Cpa Cpe Why Consider A Real Estate Investment In The Current Market July 2009 (20)
High Real Estate C&I Market presentation feb. 2018
Cpa Cpe Why Consider A Real Estate Investment In The Current Market July 2009
1. Why Consider a Real Estate Investment in the Current Market Qtr 3 - 2009 Presented by: Richard Zimmerman, Founder 1031 Exchange Provider CPA Continuing Education Series
13. Occupancy & Rental Rates are on a Sharp Decline Vacancy Rate by Property Segment (%) Source: Property & Portfolio Research; BIG Year over Year Rental Growth by Property Segment (%)
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16. Past vs. Present: Diverging Perspectives REFINANCE ANYONE? Past Underwriting Present Underwriting Going In Cap Rate 5% to 6.5% 8% to 10% (or more) Loan to Value More Debt- Higher LTV ratios (75% to 85%) More Equity- Lower LTV ratios 50% to 60% Amortization 5 yrs Interest Only then 30 yr Amortization 30 yr Amortization Term 5 to 10 years 10 years Interest Rate 95 points over 10 year UST (5.65%) 525 points over the 10 year UST (8.10%) Occupancy Levels 95%+ Average Occupancy Levels 80%+ Average Occupancy Levels Rental Growth Assumptions 3% to 6% Annual Rental Growth -5% 0% Annual Rental Growth for 3 years then 3% Operating Expense Assumptions 2.5% Annual Expense Growth 3% Annual Expense Growth NOI Growth Average 8% Annual NOI Growth -5% to 0% NOI Growth for 3 years then 3% NOI Growth Tenant Retention Ratios 90% Retention of Tenants 60% Retention of Tenants Lease Downtime from Rollovers 4 to 6 months 6 to 12 months for first 3 years, 6 months thereafter Average Lease Term 5 years 2 to 3 years Refinancing Assumptions Refinancing under original loan terms Refinancing under new terms Exit Cap Rate 5% to 6.5% 8% to 10% (or more) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
17. Required ROE for levered CRE investors suggests price declines of 45% or more Source: Deutsche Bank 13.0% 12.8% 13.8% ROE 8.6% 7.4% 4.8% Cap Rate (going in) 58 68 105 Purchase Price ($MM) 60% 66% 85% Loan to Value (LTV) 23 23 16 Equity ($MM) 35 45 89 Loan Amount ($MM) 30yr 30yr IO Amortization 2.86% 2.86% 4.69% 10-year UST 25 25 50 Swap Spread 500 500 45 Credit Spread 8.11% 8.11% 5.64% All-in Rate 2.82 3.61 5.05 Yr 1 Interest Cost ($MM) 5.5 6.5 6.5 Yr 10 NOI ($MM) 1.36X 1.25X 1.00X Yr 1 DSCR 45% 35% Implied Price Decline 64 89 137 Yr 10 value 8.6% 7.4% 4.28% Cap Rate (exit) New Underwriting 15% NOI Decline New Underwriting 2007 Underwriting
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27. So, Why Invest Now? Reason One Diversification Reduces Risk and Potentially Increases Total Return
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37. Private Real Estate Has Performed Private Real Estate - compared to Public Real Estate, Stocks and Bonds – has provided the highest average returns over the past 3, 5 and 10 year periods. Source: National Council of Real Estate Investment Fiduciaries. The chart above shows the average returns of different investments. Each of the respective investments possess different features, including investors’ expectations, investment objectives, risks, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal, returns (if any), and tax features, which must be considered when evaluating the performance of such investments. The index returns are shown for illustrative purposes only, you cannot invest in directly in an index. Past performance is no guarantee of future results.
38. Lower Risk Levels for Privately Held Real Estate Standard Deviation 1985-2008* Source: Morningstar, Inc. * Chart Benchmarks: Direct real estate is represented by the Transactions-Based Index of Institutional Commercial Property Investment Performance (TBI) from the MIT Center for Real Estate. REITs are represented by the FTSE NAREIT Equity REIT Index, large cap stocks are represented by the S&P 500, small cap stocks are represented by the performance of the Dimensional fund Advisors, Inc. (DFA) United States Micro Cap Portfolio, and international stocks are represented by the Morgan Stanley Capital International Europe, Australasia, and Far East.(EAFE) index. The data assumes reinvestment of all income and does not account for taxes or transaction costs.
39. Non-Correlation to Other Asset Classes Real Estate Vs. Equities 1985-2008 * Chart Benchmarks: Direct real estate is represented by the Transactions-Based Index of Institutional Commercial Property Investment Performance (TBI) from the MIT Center for Real Estate. REITs are represented by the FTSE NAREIT Equity REIT Index, large cap stocks are represented by the S&P 500, small cap stocks are represented by the performance of the Dimensional fund Advisors, Inc. (DFA) United States Micro Cap Portfolio, and international stocks are represented by the Morgan Stanley Capital International Europe, Australasia, and Far East.(EAFE) index. The data assumes reinvestment of all income and does not account for taxes or transaction costs. 1.00 0.59 0.74 0.44 0.21 Int’L Stocks (MSCI) 1.00 0.80 0.64 0.26 Small CAP Stocks (Russell 2000) 1.00 0.53 0.29 Large CAP Stocks (S&P 500) 1.00 0.33 Publicly Traded REITS 1.00 Direct Real Estate Int’l Stocks (MSCI) Small CAP Stocks (Russell 2000) Large CAP Stocks (S&P 500) Publicly Traded REITS Direct Real Estate
40. Real Estate may be able to Lower Risk and Increase Returns Hypothetical Portfolio Allocation 1989-2008 Source: Morningstar (Data as of 12/31/08 – This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Stocks are represented by the S&P 500, which is an unmanaged group of securities and considered to be representative of the stock market in general. Bonds are represented by the 5-yr US Govt. Bond, Treasury bills by the 30-day US Treasury bill, and direct real estate by the Transactions-Based Index of Institutional Commercial Property Investment Performance (TBI) from the MIT Center for Real Estate. The average return and risk are represented by the arithmetic average return and standard deviation respectively. Standard deviation measures the fluctuation of returns around the arithmetic average return of the investment. The higher the standard deviation, the greater the variability and thus risk of the investment returns. WITH NO REAL ESTATE HOLDINGS WITH 10% REAL ESTATE HOLDINGS WITH 20% REAL ESTATE HOLDINGS Return 8.3% Risk 8.2% Return 8.4% Risk 7.6% Return 8.5% Risk 7.1% Stocks Bonds T-Bills Real Estate
41. Why Invest Now Reason Two Recovery is Poised to Create Greater Demand
42. Space Demand Will Outpace Supply Source: Property & Portfolio Research Apartment Forecast Office Forecast
43. Space Demand Will Outpace Supply Source: Property & Portfolio Research Retail Forecast Industrial/Warehouse Forecast
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45. Why Invest Now Reason Three There is Blood in the Streets
46. Investors Cycle of Market Emotions We Are Here Optimistic “ Time to buy” Greatest Potential Risk Greatest Potential Opportunity “ Time to sell” “ Time to evaluate” Excited Elated Concerned Nervous Frightened Relieved Optimistic “ This is only temporary”
48. Savvy Investors Cycle of Market Timing We Are Here “ This is only Temporary” Optimistic “ Time to evaluate” Greatest Potential Risk Greatest Potential Opportunity “ Time to Buy” “ Time to Buy” Concerned Nervous Relieved Optimistic Excited Elated Optimistic “ Time to Sell”
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59. Thank you Richard Zimmerman, Founder 1031 Exchange Provider (866) 590-9858
Editor's Notes
This Chart shows how private commercial real estate has performed compared to other asset classes during the last 3, 5 and 10 years. Historically private real estate has performed better on the upside than the other comparable asset classes.
It could be said that real estate investing is an art and science. Different types of real estate have various benefits and features for just about every client. Financial advisors need to consider what works best for their clients and their practice. By incorporating non-traded, directly owned real estate into a client portfolio, financial advisors may be able to lower risk and increase returns because real estate is not directly correlated to the daily fluctuations of the broader markets. This chart illustrates 3 hypothetical portfolios. The first portfolio consists of a blend of stocks, bonds and 30-day T-Bills (as represented by the S&P 500, the Lehman Bros. Bond Index and T-bill yields). The average annual return from 1989 to 2008 is 8.3% with a standard deviation of 8.2% The second and third portfolios illustrate that by including real estate to the portfolio (10% and 20% of the respectively) the average yield increased and the standard deviation decreased. Source: Morningstar (Data as of 12/31/08) – This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Stocks are represented by the S&P 500, which is an unmanaged group of securities and considered to be representative of the stock market in general. Bonds are represented by the 5-yr US Govt. Bond, Treasury bills by the 30-day US Treasury bill, and direct real estate by the Transactions-Based Index of Institutional Commercial Property Investment Performance (TBI) from the MIT Center for Real Estate. The average return and risk are represented by the arithmetic average return and standard deviation respectively. Standard deviation measures the fluctuation of returns around the arithmetic average return of the investment. The higher the standard deviation, the greater the variability and thus risk of the investment returns.