CRE in Florida Gets Foreign Investor Push

A new article from the National Real Estate Investor titled Lenders are Helping Foreign Investors Push Florida’s Real Estate Market to a New Peak examines the current international influx and impact bringing the market to a crest. An excerpt follows:

The established model is to pay all cash for the first property and leverage the income gained for the second deal. Now, they are joining with others to buy an apartment building, convert it to a condominium, and sell the units to individuals in foreign countries who agree to leave them in the rental pool run by the management company. Why? Foreign investors are more comfortable owning units than shares in an LLC. These transactions are all cash transactions from the seller’s standpoint.

Foreigners are also making regular use of syndicators who scout properties, which are often in the Miami area. Syndicators provide a second benefit of using their track records to help obtain financing. Due to the fact that these syndicators have or do own property in the country already, and have an operation, bank accounts, etc., a lender is able to qualify them in a traditional way. If a borrower approaches a bank and doesn’t have any assets in the states already, they know they will not be able to go outside the country to collect on any deficiency in case of a default. On top of that, they can’t know if the buyer or entity is getting their funds from drugs or other illegal affairs.

Lenders are also becoming much more accommodating than in recent years. The Florida banks that survived the Great Recession are returning the market. Their loan criteria put greater weight on the sponsor’s track record than the property as they seek to minimize risk and regulatory scrutiny.

To read the full report, click here. For more news and information visit Blumberg Capital Partners.

NYT Says Office Market is Making a Comeback

A new article from the New York Times reports that, for the first time since the collapse of the commercial real estate market, investors are returning with interest in office buildings with some properties commanding prices "reminiscent of the boom years". An excerpt:

Though the market is only now becoming active, last year about $27.7 billion worth of office properties worth $5 million or more had changed hands through mid-December, more than twice the volume in 2009, according to Real Capital Analytics, a New York research firm that tracks sales.

Some deals have been so costly that buyers have had to settle for low initial rates of return of 6 percent or even less. These yields, known as capitalization rates, have fallen faster for office buildings than for any other type of commercial real estate, Real Capital Analytics said.

To read the full article, click here. For more news and information visit Blumberg Capital Partners.