Urbanexus Update - Issue #105
This compilation of selected real estate and community development comes to you from H. Pike Oliver. It is free to anyone who cares to subscribe. Inclusion of articles does not imply endorsement. And some links lead to items that are behind a paywall.
Real estate investment and finance
Despite another week of downright ugly economic data, Hoya Capital reported that U.S. equity markets delivered their best month since 1987 amid rising optimism of an impending economic reopening. Progress on coronavirus treatment options - underscored by the FDA approval of Gilead Sciences' (GILD) Remdesivir - is expected to enable a faster reopening of the U.S. economy, one that could not come soon enough as a staggering 30 million Americans have filed for unemployment over the last six weeks. With healthcare REITs reporting that hospital beds have sat largely empty across much of the country while the forecasted COVID surge "didn't materialize in a big way," a swelling faction of frustrated and recently unemployed Americans are eager to see economic shutdowns lifted.
$2.4 Bn refinancing of multifamily portfolio
Walker & Dunlop Inc. has provided a $2.4 billion Fannie Mae loan to refinance a 67-property multifamily portfolio in the Washington, D.C., metro area. The borrower is Virginia-based multifamily owner and manager Southern Management Corp. (SMC). The portfolio includes 22,439 units in total, more than 60 percent of which qualify as affordable housing. The loan package features staggered maturities across a mix of fixed- and floating-rate, full-term, interest-only financing
Stockdale Capital raise $550 million fund
While the commercial real estate industry may be slowing, Stockdale Capital Partners recently secured a $550 million real estate opportunity fund called SCP Real Estate Opportunities Fund I. The fund, which originally had a target of $300 million, was backed by pension plans, foundations, individuals and endowments. The fund will be doing adaptive reuse projects that entail converting the property, for example turning a former shopping center into office space.
Retail, restaurants and cities
How the pandemic may change things
Derek Thompson believes we are entering a new evolutionary stage of retail, in which big companies will get bigger, many mom-and-pop dreams will burst, chains will proliferate and flatten the idiosyncrasies of many neighborhoods, more economic activity will flow into e-commerce, and restaurants will undergo a transformation unlike anything the industry has experienced since Prohibition.
This is a dire forecast, but there is a glimmer of hope. If cities become less desirable in the next few years, they will also become cheaper to live in. In time, more affordable rents could attract more interesting people, ideas, and companies. This may be the cyclical legacy of the coronavirus: suffering, tragedy, and then rebirth. The pandemic will reset our urban equilibrium and, just maybe, create a more robust and resilient American city for the 21st century.
Office and downtwons of cities
Stretching out work-from-home policies
Business and government insiders say other companies and organizations are contemplating similarly extended time frames as they consider the new realities of the workplace in the COVID-19 era. As disruptive as the coronavirus crisis has been, many companies have not merely adapted to the work-from-home mode, but in some cases have found it preferable to a model that requires tens of thousand of employees to commute each day. While too early to be certain, this could be a harbinger of longer-term reduction in the demand for downtown office space.
Residential
A call to #CancelRent alarms apartment owners From New York to Los Angeles, tenant groups are encouraging millions of renters to withhold May rent, which landlords warn would be devastating.
With summer break fast approaching, many universities are beginning to turn their attention to the upcoming academic year. The question lingering on the minds of many is: What will fall semester look like during a pandemic? Will international students return? Will enrollment numbers fall? And will campuses even host in-person classes? The answer to each of these questions begets an impact on student housing, both on and off campus.
Why do luxury condos stay empty?
Some argue that empty condos as a sign that enough housing is getting built. But the market is more complex than that.
55+ builder confidence plummets in the USA According to the National Association of Home Builders latest 55+ Housing Market Index (HMI) released this week, U.S. builder confidence in the single-family 55+ housing market dropped 30 points to 38 in the first quarter of 2020.
Regional and metropolitan dynamics
Geographic housing market opportunities
While shelter-in-place is common among most markets, they each have very different housing market fundamentals.
