Wednesday, April 1, 2020

COVID-19: What’s the Long-Term Impact of Moratoriums on Apartment Evictions? via RealPage

On Sunday, the National Multifamily Housing Council endorsed a number of unprecedented measures in response to the COVID-19 crisis. Among them is a 90-day moratorium on most evictions, meaning apartment owners and managers effectively stripped themselves the ability to remove residents delinquent on rent. The move comes after a wave of local and state governments across the country put similar bans in place.

The timing matches an expected increase in delinquency as job losses mount (particularly in the hotel and restaurant sectors) and unemployment claims surge.

Read more...COVID-19: What’s the Long-Term Impact of Moratoriums on Apartment Evictions? via RealPage

COVID-19 Hit on Multifamily Will Be ‘Modest’ via Multi-Housing News Online

If the numbers from China are accurate—and there’s no way to be certain about that—the COVID-19-induced recession should be a rather short one, according to RCLCO, the Bethesda, Md.-based real estate advisory firm. And the apartment sector won’t feel too much of a sting.

Charles Hewlett, a managing director at the company, said during a webinar late last week that the economic turndown should last a relatively quick two months.

Read more...COVID-19 Hit on Multifamily Will Be ‘Modest’ via Multi-Housing News Online

CRE Loan Defaults Soar Under Trepp Stress Test But Won’t Be as Bad as Great Recession via GlobeSt

To gauge the impact of the COVID-19 disruption, Trepp has applied an economic and real estate forecast scenario to a portfolio of 12,500 commercial real estate loans.

The findings were perhaps to be expected: defaults are expected to increase, in some cases significantly.

Under the scenario Trepp used, the cumulative default rate across commercial mortgages overall will rise to 8%, up significantly from the current 0.4% default rate. The impact will be most immediate and severe in the lodging sector, with a cumulative default rate approaching 35%.

Read more...CRE Loan Defaults Soar Under Trepp Stress Test But Won’t Be as Bad as Great Recession via GlobeSt

Tuesday, March 31, 2020

For Some Family Offices, Now Is the “Buying Opportunity of a Century” When It Comes to CRE via NREI

As America grapples with the coronavirus-impaired economy, family offices are feeling the same uncertainty as other investors are. In some cases, it means it’s time for them to selectively search for commercial real estate opportunities. In other cases, it’s time to pause investment activity.

For investors who want to act rather than stand still, execution of acquisitions and sales has been hampered by market volatility and illiquidity, says Randy Hubschmidt, managing partner of Fortis Wealth, a multi-family office in King of Prussia, Penn. He’s seen deals extended or canceled altogether due to the inability to wrap up previously approved financing.

Read more...For Some Family Offices, Now Is the “Buying Opportunity of a Century” When It Comes to CRE via NREI

Texas Economic Activity Suddenly Contracts in March; Outlook Worsens Due to COVID-19 via Dallas Fed

The economic downturn in Texas has begun, recent data suggest. The coronavirus (COVID-19) outbreak initially affected manufacturers and retailers with supply lines in China. The virus’ subsequent arrival in the U.S. has produced a severe drop-off in demand for large parts of the service sector.

Some of the demand declines have intensified due to public health measures, such as social distancing and shelter-in-place policies. Additionally, record-low oil prices and the prospect of sustained depressed levels in the energy sector will further slow growth in Texas.

Before the COVID-19 outbreak in the U.S., economic activity in Texas had broadly improved. Service sector revenue and manufacturing production increased in January and February.

Read more...Texas Economic Activity Suddenly Contracts in March; Outlook Worsens Due to COVID-19 via Dallas Fed

Texas Service Sector Outlook Survey March 2020 via Dallas Fed

The Texas service sector saw a dramatic decline in March amid the ongoing coronavirus (COVID-19) pandemic and related measures, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, plummeted from 14.0 in February to -67.0 in March, an all-time low reading for the survey.

Labor market indicators reflected a sharp contraction in employment and significantly shortened workweeks. The employment index fell from 6.1 to -23.8, its lowest reading on record. The hours worked index drastically dropped over 47 points to -43.0, with nearly half of respondents noting a cut in employee hours.

Read more...Texas Service Sector Outlook Survey March 2020 via Dallas Fed

Will coronavirus permanently change CRE lending? via American Banker

The economic paralysis from the coronavirus outbreak could upend commercial real estate and accelerate loan losses for banks.

High vacancies are hurting hotels, while closed retail outlets are poised to cause headaches for malls and shopping centers. Offices could struggle over the long run as more Americans work remotely and employers decide they can get by with less space.

Those developments are apt to cause near-term credit issues and long-term adjustments in the CRE business.

Read more...Will coronavirus permanently change CRE lending? via American Banker

Monday, March 30, 2020

Multifamily Remains Long-Term Investment Vehicle via GlobeSt

Not only has COVID-19 upended Americans’ daily routines but also how capital is invested and transactions are conducted in the multifamily industry. While the caution level in the industry is warranted, that same cautiousness must be met with careful optimism based on detailed analysis, hard data and level-headed assessment of the new reality, says Berkadia.

Initial lease renewal rates exceeded 53% in 2019. According to RealPage, renewal rent growth has consistently registered around 4.5% annually for the past few years. Operators can also expect renters to stay put in the meantime as the COVID-19 crisis continues to unfold.

Read more...Multifamily Remains Long-Term Investment Vehicle via GlobeSt

Evictions in Texas are halted, but what happens to renters when the suspension lifts? via Dallas Morning News

The stress that comes with the first day of every month has never been more acute for Dallas Fort-Worth residents forced out of work by the COVID-19 pandemic.

For the week ending March 21, jobless claims in Texas soared more than 860%. And if the swamped phone lines at Texas unemployment offices are any indicator, the state could see those numbers rise even more.

To a degree, local and state officials anticipated this.

Read more...Evictions in Texas are halted, but what happens to renters when the suspension lifts? via Dallas Morning News

Texas Manufacturing Outlook Survey March 2020 via Dallas Fed

Texas factory activity declined sharply in March, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, plummeted from 16.4 to -35.3, suggesting a notable contraction in output since last month.

Other measures of manufacturing activity also point to a sudden decline in March. The new orders index dropped to -41.3, its lowest reading since March 2009 during the Great Recession. Similarly, the growth rate of orders index fell to -44.9. The capacity utilization and shipments indexes fell to -33.4 and -33.8, respectively, also the lowest readings since the Great Recession. Capital expenditures declined sharply, with the index dropping from 6.9 to -34.3.

Read more...Texas Manufacturing Outlook Survey March 2020 via Dallas Fed