Category: Focus 2020

Commercial and Multifamily Mortgage Delinquencies Decline in October

Posted on by Sarah

Delinquency rates for mortgages backed by commercial and multifamily properties declined in October, according to the Mortgage Bankers Association’s (MBA) latest monthly MBA CREF Loan Performance Survey. The survey was developed to better understand the ways the pandemic is – and is not – impacting commercial mortgage loan performance. “Commercial and multifamily mortgage performance improved in October, but there continues to be evidence of elevated stress, especially among loans backed by retail and lodging properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The share of loans becoming newly delinquent fell again in October, but a larger share of non-current loans shifted to later-stage delinquencies. In essence, fewer loans are becoming delinquent, but those that are delinquent show fewer signs of curing.”

Key Findings from MBA’s CREF Loan Performance Survey for October 2020:  
Commercial and multifamily mortgage loan performance improved for the second straight month in October, driven by fewer new loans becoming delinquent.

  • 94.6% of outstanding loan balances were current, up from 94.3% in September.
  •  3.4% were 90+ days delinquent or in REO, down from 3.5% a month earlier.
  •  0.6% were 60-90 days delinquent (unchanged from September).
  •  0.6% were 30-60 days delinquent, down from 0.7%.
  •  0.7% were less than 30 days delinquent, down from 0.9%. 

Click to read more at www.mba.org.

A Return to OZ

Posted on by Sarah

The opportunity zone program continues to thrive despite skepticism and the pandemic.

By Sarah Hoban | Fall 2020

It’s only been three years since opportunity zones were created to encourage investment in low-income communities across the country. The program has been welcomed and used by many, though some look on with skepticism. Now, opportunity zones face new challenges related to the COVID-19 pandemic. The Qualified Opportunity Zones program had bipartisan backing as a part of the 2017 Tax Cuts and Jobs Act. State governors nominate low-income census tracts to be opportunity zones, which are then certified by the Treasury Department. Investment comes through opportunity funds, a vehicle developed for the program. Funds need to invest at least 90 percent of their capital in OZ assets, which are classified broadly and include not only commercial and affordable residential real estate, but also investment in startups and local entrepreneurship, historic renovation, industrial developments, and job creation initiatives. The program’s tax incentives are meant to encourage long-term investment. Investors get numerous benefits: a temporary tax deferral for capital gains invested in an opportunity fund; a step-up in basis (the basis of the original investment is increased by 10 percent if the investment in the fund is held by the taxpayer for at least five years and by 15 percent if held for at least seven years); and a permanent exclusion of any future capital gain income realized upon the sale or exchange of an investment in a fund if the investment is held for at least 10 years. Still, the program has generated controversy, with critics noting examples of questionable designation of tracts and billionaires using the tax break for projects such as luxury condos or other high-end uses that provide little benefit to struggling neighborhoods. Click to read more at www.ccim.com.

Commanding Capital: Flagship Capital Partners Funds Flow in Otherwise Dry Market

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“Our phones have really been ringing off the hook,” said J.C. Clemens. The director of investments for Houston-based Flagship Capital Partners, Clemens said the past few months have been about as close to business as usual as they can be under the current circumstances. “We’re being very smart about the deals we’re choosing to lend on and we’re being thoughtful on our underwriting, but that’s how we’ve always operated as a capital source,” he said. Doing so has made Flagship dependable and durable, able to continue investing in projects even as the capital markets dried up due to the COVID-19 pandemic. “There are many larger capital providers with a lot of exposure to hotels, retail and oil and gas. Therefore, a lot of them have gone away,” said Clemens. He said the advantage of a private capital source such as Flagship is that the company keeps all its loans on its balance sheet. It doesn’t sell those loans off, as some other groups do. “Given all the uncertainty that’s in the market, people are looking for a lender who can close, somebody who can close on the terms they quoted in that first call. There’s no bait-and-switch,” Clemens said. “This is what we can do. We know we can do it. And we’re closing on those terms.” Flagship does it so well, its clients are spreading the word about the reliable capital provider that is actively looking to lend right now. Click to read more at www.rednews.com.

PinPoint Commercial Looking to Sell 32 Acres in its Trinity Business Park Industrial Development in Southeast Houston

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PinPoint Commercial has hired NAI Partners to market the 32 acres it has available in Phase II of its 51-acre Trinity Business Park industrial development, located in Southeast Houston. The property is available for land sales, build-to-suits, and spec development of single-tenant light industrial products. NAI Partners’ Travis Land will be responsible for marketing the remaining land in the business park, developed with regional detention and utilities. The business park will feature excellent truck access via two major TXDOT roads; an ideally located port area location and Interstate Highway access via US Highway 99; master stormwater detention; water service via local public provider and private sanitary sewer. Phase 1 of the park consisted of 19 acres, which were sold to a Houston-based industrial contractor, which serves the area’s chemical and petrochemical plants. Phase I is currently under development, including an 80,000-square-foot warehouse building. “We are extremely pleased with the momentum created by our Phase I development project in Trinity Business Park,” said PinPoint’s president and CEO, John Thompson. “Phase II is currently in the design and site development permitting process. This development is ideal for single occupancy industrial companies serving the submarket’s many major industrial players.” Despite some economic headwinds, the Houston Southeast industrial submarket overall has continued to perform well, with year-to-date total net absorption of positive 919,580 square feet, and more than 4.1 million square feet currently under construction, representing 25 percent of the entire Houston market’s 16.2 million square feet.

Restaurant Fulfillment Company Doubles Footprint with 134,000-SF DFW Lease

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Dot It Restaurant Fulfillment has secured a new, long-term, 134,272-square-foot lease at 4200 Empire Road in Fort Worth, immediately south of Dallas-Fort Worth International Airport. The company previously occupied approximately 60,000 square feet in Arlington, Texas. Transwestern principal John Brewer and associate Riley Maxwell represented Dot It in the transaction. Luke Davis and Matt Dornak with Stream Realty Partners represented the landlord, ML Realty Partners. “4200 Empire gives Dot It the much-needed infrastructure and space to further grow its efficiency and processes to take their business to the next level,” Brewer said. “Dot It has weathered the recent uncertainty in the economy extremely well by pivoting to produce a variety of labels for food delivery services across the nation, on top of its normal lines of business.” Dot It is a single-source brand partner specializing in food safety products and print fulfillment solutions, including sourcing, printing, kitting, order processing, warehousing and distribution for growing brands looking to streamline supply chain and maintain brand consistency. 4200 Empire was one of the few existing facilities on the market that offered the above-standard office space Dot It needed, as well as fully air-conditioned warehouse space. According to Transwestern’s third quarter industrial report, large users have sustained demand, particularly in submarkets near airports, such as DFW and Alliance Airport.