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MARKET
UPDATE
February 8, 2012 |
WESTCAP CORP is pleased to announce that we are a new member of Q10 Capital, an organization of 17 of the top independent commercial mortgage banking firms in the country, with 26 offices in the United States. Q10 members arranged over $10 billion in the last 3 years, with a combined servicing portfolio of over $15 billion for its institutional lenders. Q10 Capital’ s shared database of sources and shared market intelligence insures our ability to best serve your needs. www.Q10Capital.com
| COMMERCIAL REAL ESTATE FINANCE CONFERENCE We just returned from the CREF Conference in San Diego where we meet with all of our correspondent life companies and many more debt sources for all types of income property financing requirements. The message from all sources was simple: They have bigger allocations of funds to place and they are hungry for more business. On a macro level, MBA's Chief Economist Jay Brinkmann and Jamie Woodwell provided a conservative but positive outlook for the economy and the commercial and multifamily markets in 2013 in their presentation at the 2013 MBA CREF Conference in San Diego, yesterday. A copy of their presentation is available at http://www.mbaa.org/CREFForecasts.htm. They forecast continued GDP growth at 2.0% in 2013 increasing to 2.5% in 2014, Inflation remaining at the 2% level, Unemployment continuing to come down slowly to 7.6% in 2013 and 7% in 2014, with a modest increase in interest rate with the 10 year Treasury increasing to 2.2% in 2013 and 2.5% in 2014. The second half of the presentation was devoted to how different property types were doing. Apartments lead the way with a vacancy factor of 5% +/-, with asking rents and NOI back to peak levels. Retail was second with approximately 11% vacancy, 97% of peak rents and at peak NOI levels. Office was third with higher vacancy levels but approaching peak levels for asking rent and NOI followed by industrial. Remember these are national numbers and in our market industrial would do better than our office market.
Deals of the Month
$5,640,000 life company
permanent on this 44,000 square foot retail center
located in Palm Springs. CLOSED
$50,000,000
life company permanent for a 203-unit luxury apartment building over ground
floor retail, at 4.15% 10/30 with 5 years interest only. CLOSED
$2,850,000 life company permanent for a 35,000
SF single tenant office building in Irvine, CA. CLOSED$25,500,000 on an investment grade lease with 16 years remaining on a 170,000 SF office building. CMBS quote at 250+ 10-year Swaps for a 10/30, 74% loan-to-purchase. COMMITTED & IN CLOSING $6,300,000 on a 32,770 SF Rite Aid anchored neighborhood shopping center in Indio with a conduit lender. CLOSED $9,400,000 bridge loan on a 62% leased 71,000 SF strip retail center on the following terms: 6% for a 5-year term amortized over 30 years with one of our many bridge lenders. CLOSED $6,350,000 Life Company Forward Commitment Escondido owner-user build to suit warehouse 4.35%, 15/15 (borrower’s request to match lease term), rate locked in June prior to construction of improvements for a forward funding in December upon completion of construction. CLOSED
Expert's
Opinions
MBA Economic News / Cliff
Avoided, Growth Continues:
http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=36498 How Long Can The FED Keep Buying Treasuries? Scary: http://wallstcheatsheet.com/stocks/the-feds-balance-sheet-1-trillion2-trillion3-trillion.html/2/
Treasuries
Fall On News The Worst Of The European Debt Crisis May Be
Behind Us: http://www.bloomberg.com/news/2013-01-26/treasuries-fall-most-since-start-of-year-as-refuge-demand-eases.html
Global Growth Glimmers As Maufacturing Picks Up Speed: http://www.bloomberg.com/news/2013-01-24/euro-area-services-manufacturing-slump-eases-as-crisis-wanes.html If you are interested in access to just about every major financial publication’s editorials, check the following website and save it in your bookmarks: http://www.realclearmarkets.com Ports Of Long Beach & Los Angeles Driving Our Local Economy: Port of Long Beach: http://www.polb.com/economics/default.asp Long Beach Container Data: http://www.polb.com/economics/stats/tonnage.asp Port of Los Angeles: http://www.portoflosangeles.org/ Los Angeles Container Data: http://www.portoflosangeles.org/maritime/stats.asp
The Month In Review The 10-year
Treasury opened at 1.97% this morning (February 6), up
from 1.92% on January 7, on positive investor reaction to the 12th
hour fiscal cliff deal. The month opened with oil at $92.86, the Euro at
$1.3054 vs. the Dollar and Gold at $1,642.40. The
year started off with employers adding 155,000 jobs in December, and
the unemployment rate at 7.8%, although the real unemployment rate stands
at 14.5%. Initial quarterly corporate earnings reports are being
well received. Oil prices are projected to rise on China's recovering
economy. The Fiscal Cliff deal sees a surge of cash into stocks.
Investors feel confident that the worst is behind Europe's debt crisis. It looks like the Greek melt-down is no longer considered a threat to bring down the EU, European banks are looking stronger and government borrowing costs are down. Although this all sounds good, the EU countries recently slid into their second recession in three years, and the EU reported last week that their unemployment rate had reached 11.8%. The consensus is that although the worst my be behind them, its going to be a painful slog for many years. The OC housing market ended 2012 on a strong note, with the median home price up 17.5% over a year ago, and December sales volume up 19.4% over the same month a year ago. Record low inventory continues to drive the housing recovery across the country. Housing starts are up 12.1% nationwide over the past year. Job growth has not kicked in enough yet to move the unemployment rate materially nationwide, but it did help lower OC's unemployment rate to 6.8%, and as inventories continue to drop nationwide, jobs will come faster. This is a very good sign. Average large apartment rents in OC rose 4.9% over the past year, another sign of lower inventory. In addition, 2012 OC bankruptcies fell to their lowest level since 2009, down 29.7% from 2011. Retail sales rose 0.9% in November and December vs. a 0.1% pick-up for the same period in 2011, and besting the past 21 year average of 0.6% for the last two months of the year. We have also now seen retail sales increase over 5% per year for the past three years, which is the first three year consecutive gain in excess of 5% since 2004-2006, and strong corporate earnings reports continue to roll in. The US economy unexpectedly shrank in the 4th Q, restrained by the biggest plunge in defense spending in four decades and dwindling inventories as household purchases picked up. GDP dropped at a 0.1% annual rate, weaker than any economic forecast and the worst performance since the 2nd Q 2009, when the US economy was still in recession. A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6% from growth. Employers added 157,000 jobs last month, still well below 250,000 needed to reduce unemployment, as evidenced by the increase in unemployment last month to 7.9%, and real unemploy continues to hover at 14.5%. February 6 saw oil at $96.63, the Euro at $1.3519 vs. the Dollar and Gold at $1,676.50. WESTCAP CORP services over $1.2 BILLION with what we believe to be the best stable of life companies in Southern California. We are representing some of the largest and most sophisticated developers and investors in Southern California on an ongoing basis, confirming that our sources offer great rates, flexibility and dependable execution. These are solid lender relationships, which in most cases were originated almost 30 years ago with WESTCO, and then followed the principals to CAPMARK and then to WESTCAP in 2007. WESTCAP’s capacities include capital procurement for the following:
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