Archive for September, 2012

Greensboro Hosiery Mill to be Converted to Apartments

From the Triad Business Journal:

A Virginia-based development company plans to invest about $20 million to convert the historic Mock-Judson-Voehringer hosiery mill into 150 loft-style apartments.

Octagon Partners, a Charlottesville real estate investment firm with an extensive portfolio of projects, cleared a major hurdle last week when Greensboro officials approved the final piece of a rezoning process that began in 2010…

When built out, the 160,000-square-foot mill, located near the Lindley Park area, would add to a string of other upscale apartment developments in Greensboro, including the $10 million, 196-unit Greenway at Fisher Park Apartments. The proliferation of these apartment communities is a reminder of the enthusiasm that developers continue to have for rental units in the Triad.

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September 28, 2012 at 6:17 pm Leave a comment

Mixed Signals in Housing Sector

One of the contributing factors to the strong multifamily market is the relative difficulty for home buyers to get a loan, and that was evidenced by the very low lending levels in 2011 according to this article in the Wall Street Journal:

Mortgage lending declined to its lowest level in 16 years in 2011 amid weak demand for mortgages and tighter lending standards, according to a report released by federal regulators Tuesday.

Banks funded about 7.1 million mortgages in 2011, down 10% from the year before, and the lowest tally since banks issued 6.2 million mortgages in 1995. The Federal Reserve analyzed data submitted by more than 7,600 lenders under the Home Mortgage Disclosure Act.

Loans funding home purchases fell by 5% last year and stood 64% below the level of 2006, when the housing market reached its peak. Refinances, which are more sensitive to modest swings in interest rates, fell by 13% in 2011 from 2010 but rebounded at the end of the year, after the average 30-year fixed-rate mortgage dropped below 4%.

Things are beginning to thaw in 2012, but some of that action is due to institutional investors:

The report covers only loans made in 2011. Housing demand has improved this year, largely because investors and other buyers who have been paying in cash have scooped up quantities of foreclosed and other distressed properties. While lending to non-owner-occupants is down sharply from five years ago, it rebounded last year, rising 10% from 2010.

Banks have become much more cautious about making loans since the housing bust. The median credit score for approved loans has increased by about 40 points since 2006. Median credit scores “now exceed by a considerable margin” those for any time in the past 12 years, the report said. The bottom tenth of all home-purchase borrowers had seen an even larger increase of around 50 points.

Still,  any upswing is good news for the home builders and another Wall Street Journal article points out that prices are rising and home building is picking up:

Compared with a year ago, prices in July were up in 16 of the 20 metro areas tracked. Home prices are up by 15% since the end of last year in Phoenix and by 10.1% in San Francisco. By contrast, prices were up by just 1.7% in the New York metro area, the smallest year-to-date gain of any of the 20 cities. Nationally, prices were up 1.2% from July 2011, the largest year-over-year gain since home-buyer tax credits fueled a burst of sales two years ago…

Construction of single-family housing in August reached its highest level in more than two years, though it is still far below its pre-bubble level, the Commerce Department said last week. It is set to report on August sales of newly built homes on Wednesday.

Rising prices largely reflect a dwindling number of foreclosed homes being sold by banks and other lenders as well as stronger demand for those properties from investors. Foreclosures and other “distressed” homes typically sell at larger discounts, and with fewer of those properties selling, prices are under less pressure.

But is the recovery sustainable?

Some economists question whether the budding housing recovery is sustainable, particularly when wage and job growth remain sluggish. While home prices typically weaken during the second half of the year, the pace of such possible declines depend largely on whether the pace of buying keeps up and how banks resolve their overhang of distressed loans that could become foreclosures.

All of this is, of course, of great interest to the multifamily sector. It will be interesting to see how the simultaneous surge in home prices and home building affects the rental housing market, particularly if lending standards stay tight and the job market stays soft. It’s truly a mixed bag of economic indicators.

September 28, 2012 at 1:50 pm Leave a comment

Parr Investments Announces 272-Unit Kernersville Project

Chris Parr recently revealed plans for a 272-unit project off of Union Cross Road in Kernersville:

In a move to capitalize on explosive growth taking place in one of the fastest-growing areas of Forsyth County, Greensboro developer Chris Parr plans to develop a 272-unit apartment project at the intersection of Union Cross Road and I-40 near Kernersville.

Once built out, total project costs for The Grand at Union Cross will amount to $17.6 million, including land and construction.

Construction on the 285,000-square-foot apartment project is not expected to get under way until 2015, but plans by Parr illustrate a growing enthusiasm among local developers and businesses alike for expansions and capital investments in and around Kernersville, a town located between Greensboro and Winston-Salem that has grown exponentially during the past year.

September 26, 2012 at 5:40 pm Leave a comment

Housing Authority of Winston-Salem Introduces Path Program

The Housing Authority of Winston-Salem is introducing a new program to help people move from public housing to home ownership. From a story in Yes! Weekly:

The Path program is available to all public-housing residents in Winston-Salem. Employment will be required for all participants over the age of 25. Those currently unemployed will be offered access  to one-stop career counseling through the Forsyth County JobLink Center, and training and job placement from Forsyth Tech — all free of charge.

(HAWS CEO) Woods said the Path program is the only one of its kind in the nation: No other housing authority has established a partnership with another development agency to provide new opportunities to residents.

The Path program fits into a broader vision promoted by the Housing Authority to break up large blocks of public housing…

Woods told the public-housing residents that those approved for the Path program will get the opportunity to move into the Oaks at Tenth, a 50-unit apartment community that is currently under construction one block away.

“If you qualify to move into this development, then you will be eligible to receive financial literacy assistance — find out how to budget your money,” Woods said. “If you’re having credit problems, they’ll help you resolve credit problems. Get your credit straightened out. If you have a job, no police activity in the household, your kids are going to school and you have children, then you become pre-qualified for a mortgage, the Housing Authority is guaranteeing to give you a voucher to help subsidize your mortgage so you can buy a house. You will be a homeowner at that point.”

The audience erupted in applause and an “amen” could be heard from one man in the back of the meeting room.

Woods said that the Winston-Salem Foundation has agreed to provide more than $1 million per year for tuition assistance to residents who are 18 to 25 years old.

September 19, 2012 at 3:56 pm Leave a comment

Blue Ridge Companies’ David Couch Featured in Triad Business Journal

A recent issue of the Triad Business Journal featured Blue Ridge Companies CEO David Couch in its Up Close column:

David Couch’s leadership abilities first emerged on the athletic field as a quarterback for the Asheboro High School football team. He later took those skills to the college level as a punter on the Wake Forest University football team and a catcher on the Demon Deacons baseball team — all while managing a double major in Spanish and economics.

Couch has since parlayed his leadership skills to a very different role: CEO of Blue Ridge Cos., a High Point-based company that employs more than 250 and is one of the Southeast’s most prolific developers of apartments, shopping centers, condos, town homes and restaurants located across the Carolinas and into Virginia, Georgia and Mississippi. With the backing of a talented work force and business partner Chris Dunbar, who co-founded the Blue Ridge Cos., Couch leads a company that is planning to double its property management portfolio to 20,000 units during the next 24 months.

You can read the full interview here (subscription required).

September 18, 2012 at 12:23 pm Leave a comment

Greensboro Planning Board Reviewing Plans for Mill – Potential Apartments

From the Triad Business Journal:

Plans to convert the Mock-Judson-Voehringer hosiery mill in Greensboro into a mix of apartments and office space could move forward if city officials sign off on the final piece of a rezoning process that first began two years ago.

Steve Galanti, planning manager for the city of Greensboro, said the rezoning process for the mill began in 2010 and that the Greensboro Planning Board will decide on Wednesday whether to approve the “unified development plan,” which sets the development standards and zoning conditions for the project. Those standards and conditions are recorded with the Guilford County Register of Deeds.

Galanti said the city’s Technical Review Committee has already reviewed the plan and is recommending approval. Approval by the planning board would clear the way for the developers to submit site plans for the project, he said.

September 17, 2012 at 9:58 pm Leave a comment

Big Firms Enter the Foreclosure-to-Rental Game

The business of buying foreclosed homes, fixing them up and then renting them out is no longer just for mom-and-pop operations. From the Wall Street Journal:

According to investment bank Jefferies & Co., major financial firms led by Colony,Blackstone Group LPBX +4.98% Och-Ziff Capital Management and Oaktree Capital Group LLC have raised more than $8 billion to buy houses, largely in markets pummeled by the housing crisis.

At first, many investors hoped lenders would sell foreclosed houses in bulk. But most banks prefer to sell one house at a time, figuring that approach will fetch higher prices.

As a result, the foreclosure circuit hasn’t yet produced a giant windfall for buyers like Colony, though executives say early returns are promising. Yields on rents from houses owned by the firm are 7% to 8%, higher than many other types of real estate. Purchase prices have averaged 12% less than Colony expected, which should make it easier to sell the homes or borrow against them and exit with double-digit percentage gains.

So what’s the end game? It likely depends on what happens to the housing market over the next couple of years:

Colony executives say the numbers look fine to them. Once the private-equity firm spends about $11,000 to renovate the house in Lithonia, Colony expects to rent it for about $1,550 a month. After taxes, fees and other expenses, Colony investors should get a net yield on this house of 8.2% a year.

Colony has indicated it may take its rental business public or sell its homes after values appreciate. “When I look at other opportunities out there in the commercial-real-estate space, to get the same current yield, adjusting for risk, it’s very difficult,” Mr. Fuhrman says. “Of all the real-estate asset classes, this is probably the most liquid.”

September 17, 2012 at 11:58 am Leave a comment

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