The U.S. economy added 248,000 jobs to payrolls in September, marking the seventh time in the past eight months that employment has increased by more than 200,000.
PICOR Connect | Trends in Commercial Real Estate
In this era when it seem that taxes only go up and never disappear, I have some good news to report.
You can hardly watch a business newscast or read a business publication these days without a reference to the looming “fiscal cliff” – that precipice at which $1.2 trillion in spending cuts are made while Bush-era tax cuts expire.
Apparently, even the Greeks were tired of being in the limelight, which helped the financing markets avoid another summer meltdown and allowed the market to build some momentum going into the fourth quarter. CMBS lenders are reporting strong origination volume and seem more comfortable than any time in the past few years that they will be able to book profits on the deals they’ve been warehousing. Spreads tightened steadily through July and August, though the market gave back about 5bps in spreads during the last two weeks.
Operating fundamentals took their usual second quarter dip with students, seasonal visitors and seasonal employees departing for the summer. Market occupancy dropped 285 units which is on the light side of typical for Tucson. During the past 12 months, total occupied units continued climbing upward, increasing 995 units over Q2 2011 and gaining 2,245 units since Q2 2010.
Much has been written about the significant joint undertaking by FASB and IFRS to update lease accounting rules in the name of improved transparency. With real estate leases comprising a high percentage of all operating leases, the potential impact for the commercial real estate industry looms large, for landlords, tenants, brokers and property managers alike.
In a September 12, 2011 special report entitled "The Road Ahead for CRE and the US Banking Sector," Deutsche Bank researchers summarize the size and scope of commercial real estate's finance picture with insights for CMBS investors and others in the industry.
As everyone knows, the past few years have been a tumultuous time for the commercial real estate market. On the financing side, banks have spent a lot of time managing their loan portfolios of underperforming and nonperforming loans. Most banks have required more frequent reporting of property operations, and if there has been any deterioration of performance or loan maturity, a new appraisal has been ordered. Based on the value conclusions from the new appraisals, many times borrowers have been asked to make principal remargin payments to bring LTV’s (loan-to-value ratio), debt coverage ratios and loan yields back in line with bank regulator requirements. In most cases, borrowers and lenders have been able to come to an agreement where the bank received additional cash and the borrower received additional time.