Archive for July, 2013

Buy-to-Rent Bonds and IPOs

Two stories from today’s Wall Street Journal focus on the burgeoning buy-to-rent market:

Blackstone, Deutsche Bank in Talks to Sell Bond Backed by Home Rentals
Excerpt:
Blackstone Group LP BX -1.40% is in negotiations to bundle monthly rental payments on about 1,500 to 1,700 of its homes. The private-equity giant is among the firms that have spent billions buying homes out of foreclosure, an investment strategy that has helped to bolster demand and strengthen the U.S. housing market.

The bond comprised of the Blackstone homes would be structured and marketed to investors by Deutsche BankAG, DBK.XE -1.72% the people say.

The creation of a new type of security shows that Wall Street’s financial engineering, blamed for deepening the financial crisis, is revving back up.

Some investors and analysts have said they are wary of a bond backed by rental payments, citing the dearth of long-term data on how often tenants living in previously foreclosed homes pay their rent on time.

Also, some investors and analysts have raised concerns about how quickly firms have purchased thousands of homes, and whether they have the management track record and expertise to oversee the maintenance of properties scattered across the country.

Single-Family Rental Firm’s IPO to Test Market
Excerpt:
American Homes 4 Rent, founded in 2011 by Malibu, Calif.-based billionaire B. Wayne Hughes, is expected to price shares of its stock Wednesday in a bid to raise $750 million in an initial offering on the New York Stock Exchange. The company is targeting a range of $16 to $18 a share, which would value the company at around $4 billion.

With more than 19,000 homes owned or controlled, American Homes would be largest publicly traded company in the fledgling single-family rental business, which took off after the housing-market crash caused home prices to tank and put hundreds of thousands of bargain-priced foreclosures on the market.

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July 31, 2013 at 10:02 pm Leave a comment

Sunset of State Tax Credit Could Impact Historic Redevelopment in the Triad

The Triad Business Journal has a nice feature article about the growing number of historic redevelopment projects in the Triad, and the potential impact if North Carolina’s tax credit program sunsets:

Developers in the 12-county Triad have worked on a total of 235 projects using state historic tax credits since the program began in 1998. That represents $32,285,317 in eligible investment, according to a Triad Business Journal analysis of research from the N.C. State Historic Preservation Office.

With 165 projects representing $24,521,723 in eligible investment, Forsyth and Guilford counties combined represented more than half of those Triad projects…

None of those projects would have been possible without the use of state and federal historic tax credits, those developers say. But the state historic tax credits are due to sunset next year.

The state credits are on a cyclical schedule, with renewal required every couple of years. The credits have been renewed for a new cycle every time since their introduction in 1998…

Barry Siegal, co-developer of the Southeastern Building at 102 N. Elm St. in the heart of downtown Greensboro, said there’s no question the project would not happen without state and federal historic tax credits.

The building, which is nine stories tall and spans 100,000 square feet, has qualified for about $4 million in state and federal historic tax credits, said Siegal, who is developing the building with Willard Tucker. Demolition started earlier this spring, and construction is anticipated to take about a year to convert the building into retail, office and apartments.

 

July 26, 2013 at 3:56 pm Leave a comment

Things to Know About Greensboro’s Post-RUCO Program

At its last meeting the Greensboro city council unanimously approved an ordinance that will bring the city’s old rental inspection ordinance known as RUCO into compliance with state laws passed two years ago. Most of the ordinance will take effect on September 3, 2013. Below are some highlights of the new ordinance provided by TREBIC’s Marlene Sanford:

 

GSO Post-RUCO Program – Last night the City Council passed revisions to the Minimum Housing Code that comply with 2011 state law changes that outlawed “profiling” inspections of rental housing simply because it was rental housing. Most of the ordinance takes effect September 3rd. A blacklined version of the code changes is linked below. Here’s what it says:

 

  • Reduction of the total maximum cure period that the inspector can grant from 270 days to 90
  • An option for the Department director to grant extensions beyond 90 days
  • A requirement that any requests for extensions must be made 1) IN WRITING, 2) with back up documentation if appropriate, 3) and must be submitted BEFORE the current cure period expires.
  • New, significant, and rapidly escalating reinspection fees for properties that do not cure their violations within the applicable cure period ($150, $300 and $400.) (The Fire department implemented these fees for reinspections 5 years ago and their delinquency rate dropped in half.)
  • A registration program for properties that do not cure violations in the applicable cure period will be instituted January 1, 2014 after software changes are made. 
  • A threat that the city may inspect all of the units owned (or a subset thereof, such as a building or complex), if an ownership entity has 2 or more verified violations that were uncured in the allotted time. The city will be developing guiding policy that states that they will only exercise this right if there is other probable cause to suspect violations exist in the other units owned (such as reputable complaints, violations visible from the outside, etc.), AND will contact the owner first.
  • No landlord should suffer the penalties in 11-40 (inspection of all units owned, registration list), or the financial penalties in 11-42 (reinspection fees, civil fines), will not be incurred if all the violations are tenant violations. SO PLEASE DOCUMENT MOVE-IN CONDITION! Because you’ll have to prove the tenant (or his guests) caused the violations.

FINAL proposed Chapter 11 tracked changes – 7-11-13

 

July 24, 2013 at 6:23 pm Leave a comment

Gov. McCrory Signs Bill That Shortens Eviction Time

From the Apartment Association of North Carolina‘s announcement that Gov. Pat McCrory today signed House Bill 802:

Many North Carolina housing providers have struggled for many years with the length of the process for evicting a non-paying tenant. Each day that the tenant remains in the rental unit is another day of unpaid rent and another day that the unit cannot be prepared and marketed for a new tenant. In some urban areas of the state it takes 45 days or more to complete the eviction (12% of the income producing capability for that property). This legislation addresses some of the areas in the system that can assist in speeding up the eviction process as follows:

  • would require magistrates to make their decisions the same day of the conclusion of the evidence, except magistrates may take 5 days for more complex summary ejectment cases which are spelled out in the bill
  • would only allow a magistrate to continue a case for not more than five days or until the next session of court, whichever is longer, unless the parties have both consented
  • would reduce the time frame from 20 days to 10 days to pay the costs of court to appeal a case
  • would require the tenant in an appeal to state a defense orally or in writing and make any necessary bond payments or the landlord can file a motion to dismiss the appeal
  • would reduce from 10 days to 7 days the time required to hold a tenant’s property once a summary ejectment is won and a writ to obtain the rental property is executed

The new law goes into effect September 1, 2013. If you’d like to read the full text of the bill you can find it here.

July 24, 2013 at 5:16 pm Leave a comment

Dearth of First-Time Home Buyers

The Wall Street Journal has a story about the relatively low number of first-time home buyers in today’s housing market:

Such buyers, typically couples in their late 20s or early 30s, have accounted for about 30% of home sales over the past year. They represented 40% of sales, on average, over the past 30 years, and accounted for more than 50% in 2009, when recession-era tax credits fueled the first-time market, according to data from the National Association of Realtors.

The depressed level of first-time buyers could prove to be a drag on the housing rebound and the broader economic recovery over the longer haul. First-time home buyers are the foundation of the real-estate market and are major contributors to their local economies, often buying up older homes, revitalizing communities and spending money on furniture and renovations.

The low first-time home buyer rate could help explain the continued high rate of occupancy in the apartment market.

 

July 23, 2013 at 6:54 pm Leave a comment

Inside the Southeastern Building

The Triad Business Journal got a sneak peek at BSC Holdings Southeastern Building project in Greensboro. Lots of work to be done, but you can see that the “bones” are still good on the old building. The finished project promises to be quite unique.

July 23, 2013 at 4:47 pm 1 comment

SBV Communities Buys LeMans at Lawndale

From CoStar Group:

Kansas City-based SBV Communities, the multi-family real estate division of Spectrum Business Ventures, Inc., recently closed on its fifth acqusition of a Greensboro apartment property, buying the 109-unit LeMans at Lawndale at 205 West Cone Blvd. in a transaction that closed on June 26th. ..

Last month, the investment firm purchased Lexington Commons, a 106-unit apartment complex located just north of downtown Greensboro. And at the end of May the firm bought three smaller apartment communities on Hewitt St in Greensborototaling 503 units for $10.5 million, including Misty Creek Apts., Wendover Apts., and Aspen Woods Apts. 

July 19, 2013 at 1:16 pm Leave a comment

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