Real Estate Newsletter 4.2.24
Weekly News Roundup
- Rural Real Estate Heats Up
- Multifamily Value Add Strategies
- Behind the Scenes Debt Restructurings
Rural Real Estate Heats Up
Many so-called “halfbacks” — or boomers who moved from the Northeast and Midwest to Florida before settling in environs midway — are starting to populate once-heavily rural counties in areas that include Southwest Virginia, North Georgia, parts of both North Carolina and South Carolina, and portions of Alabama and Tennessee.
The boomer migration to North Georgia, East Tennessee, the Carolinas and western Virginia is already reshaping housing prices, traffic patterns, restaurant options and more due to explosive growth. The population in southern Appalachian counties that have retirement or recreational areas grew by 3.8% from April 2020 to July 2022 — a rate significantly higher than the national average.
Counties once defined by miles of countryside now see sustained development — newly-sprouted retirement communities featuring upscale amenities. Big-box stores, more commonplace in larger cities and suburbs, have also crept further into southern Appalachia, where local downtowns have long been the economic engines of many towns and small cities. With newer residents comes a growing demand for government services and additional housing and roads. Source: Business Insider
Multifamily Value Add Strategies
The current real estate market is presenting compelling value-add investment opportunities in multifamily apartments. In particular workforce housing or class-C apartments can sometimes involve capex investments as simple as installing washers and dryers in units in order to justify increasing rents closer to market rates.
The Select Financial Capital partners discuss value-add strategies for multifamily properties in the below video.
Click below for YouTube commentary
Behind the Scenes Debt Restructurings
As hundreds of billions of dollars of commercial real estate debts come due, deals are being arranged behind the scenes. For distressed properties borrowers and lenders hope that, by sharing some financial pain now, they can buy time to allow market conditions for troubled property assets to rebound and ultimately lessen their losses or even recover their investments.
Of the roughly $9.7 billion of commercial mortgage backed securities tied to office assets that fell into default last year, roughly 20%, about $1.9 billion, was subsequently pulled out of distress and extended, according to data from Trepp – and that number may grow. The effort to extend the due dates for property debts anticipates that, over time, interest rates will fall and property prices will rise.
“Many loans that were set to mature in 2023 have been extended or otherwise modified and will now mature in 2024, 2026, 2028 or in other coming years,” Jamie Woodwell, the head of commercial real estate research at the MBA said in a February research report.
“There is going to be some distress,” Alan Todd, the head of CMBS strategy at Bank of America said. “But I think the level, the amount of distress and the losses that one might infer, is wildly overstated.” Source: Business Insider