Author: ipgocorp

(RECAP: Why not consider establishing a regionwide, quasi-governmental housing corporation serving the District as well as suburban Maryland and Northern Virginia? The regional corporation would complement but not duplicate the work of local housing authorities that focus mostly on helping low-income families. Housing the region’s neediest citizens would not be the corporation’s primary goal. Rather, its main mission would be expanding affordable housing opportunities for the region’s indispensable workforce, people with good jobs vital to the local economy but with household incomes insufficient for buying or renting new market-rate housing.)

NEW YORK, NY – At a seasonally adjusted annual rate of $706.4 billion, new construction starts in February rose 2% from the previous month, according to Dodge Data & Analytics.  This was the second straight monthly increase, following a 15% hike in January, as construction starts regained the upward track following four consecutive monthly declines to close out 2016. 

Much of February’s advance came from a strong performance by the public works sector, led by the start of a $1.4 billion natural gas pipeline in Ohio, West Virginia, and Pennsylvania, plus an improved level of highway and bridge construction.  The electric utility/gas plant category also strengthened with the start of two large power plants and a major transmission line project.  At the same time, nonresidential building made a partial retreat after its strong January performance, yet still remained slightly above its average monthly pace during 2016.  Residential building in February also settled back, due to a slide for multifamily housing.  During the first two months of 2017, total construction starts on an unadjusted basis were $98.5 billion, down 4% from the same period a year ago, which included elevated amounts for the often volatile manufacturing plant and electric utility/gas plant categories.  Excluding manufacturing plants and electric utilities/gas plants, total construction starts during this year’s January-February period would be up 7% compared to last year.

The February statistics produced a reading of 149 for the Dodge Index (2000=100), compared to an upwardly revised 147 for January.  The improved volume of construction starts during the first two months of 2017 also compares favorably to the 137 average for the Dodge Index during last year’s fourth quarter, as well as the 146 average for the full year 2016.  “The first two months of 2017 provide evidence that construction starts are still trending upward, even with the loss of momentum that occurred towards the end of 2016,” stated Robert A. Murray, chief economist for Dodge Data & Analytics.

“The subdued performance by public works and electric utilities in recent months had restrained the level of total construction starts, so their improved activity in February is a welcome development,” Murray continued.  “Also welcome during the first two months of 2017 is the strength shown by nonresidential building, and especially its institutional segment.  While nonresidential building settled back in February, its January amount had been lifted by the start of the $3.4 billion Central Terminal Building project at LaGuardia Airport in New York NY and several other large airport terminal projects.  In February, nonresidential building was still 2% higher than last year’s average pace, aided by the start of the $1.2 billion terminal building portion of phase 1 of the $1.8 billion South Terminal C project at Orlando International Airport and the $1 billion Chase Center sports arena and office complex in San Francisco CA that will be the home of the Golden State Warriors basketball team.  Earlier, the institutional portion of nonresidential building had joined the construction expansion in 2014, after a five-year decline, but then basically plateaued during 2015 and 2016.  The strength shown by institutional building so far in 2017 suggests that it will now make a more substantial contribution towards keeping the upturn for nonresidential building going.”

Nonbuilding construction in February jumped 35% to $167.7 billion (annual rate), reporting its highest level of activity in eight months.  The public works categories as a group climbed 24%, continuing to strengthen after a 37% rise in January that followed weak activity in December.  The miscellaneous public works category, which includes pipeline work and airport runways, advanced 29% in February. Providing much of the lift was the $1.4 billion Leach and Rayne Express Natural Gas Pipeline in Ohio, West Virginia, and Pennsylvania, plus the $200 million Dominion Leidy South natural gas pipeline in Pennsylvania, Maryland, and Virginia.  Also contributing to February’s miscellaneous public works gain was the $283 million airport runway portion of the South Terminal C project at Orlando International Airport and the $267 million earthquake safety program in Oakland CA to upgrade the Transbay Tunnel portion of the BART mass transit system.  Highway and bridge construction in February surged 38% after four months of decline that saw the level of construction starts fall by 29%.  Supporting the February increase for highways and bridges were the $457 million Georgia State Road 400 & I-285 Interchange project in the Atlanta GA metropolitan area and the $210 million roadway portion at Orlando’s South Terminal C project.  In February, the top five states in terms of the dollar amount of highway and bridge starts were – Georgia, Florida, Arkansas, Pennsylvania, and Michigan.  Also rising in February was sewer construction, increasing 33% with the boost coming from the $415 million EchoWater effluent pumping station in Elk Grove CA.  Registering declines in February were river/harbor development, down 6%; and water supply construction, down 47%.  The electric utility/gas plant category in February increased 113% after a lackluster January, helped by the start of the following projects – an $869 million natural gas-fired power plant in Louisiana, a $717 million wind power facility in Texas, and a $635 million transmission line project in Minnesota.

Nonresidential building, at $238.5 billion (annual rate), dropped 9% in February following its 18% January gain.  The institutional categories as group were down 14%, after soaring 42% in January due to the push coming from the start of the $3.4 billion Central Terminal Building at LaGuardia Airport plus other airport terminal projects at San Francisco International Airport, Seattle-Tacoma International Airport, and Chicago’s O’Hare International Airport.  Although transportation terminal work in February was down 62%, the latest month did include the start of the $1.2 billion terminal building portion of the South Terminal C project at Orlando International Airport and a $163 million terminal modernization project at Atlanta’s Hartsfield-Jackson International Airport.  Also retreating in February was the public buildings category (courthouses and detention facilities), down 30% following its improved January amount.  On the plus side, the amusement and recreation category surged 101% in February, reflecting the $562 million sports arena portion of the Chase Center project in San Francisco.  Educational facilities in February grew 12%, helped by the start of three university projects – a $218 million facility that’s part of New York University’s Greenwich Village expansion in New York NY, a $150 million school of engineering and applied sciences in Allston MA for Harvard University, and a $113 million facility at the University of Nebraska in Omaha NE.  Healthcare facilities in February improved 4%, and included the start of the $127 million Precision Cancer Medicine Building at the University of California San Francisco and the $126 million Sloan Kettering Cancer Center outpatient treatment facility in Uniondale NY.  The religious building category in February grew 25% after a weak January.

The commercial side of the nonresidential building market dropped 11% in February, pulling back after its 12% January gain.  Office construction fell 40% following its strong January performance, although the latest month did include the start of several noteworthy projects, such as the $361 million office portion of the Chase Center project in San Francisco, the $240 million Coda building in Atlanta GA, and the $93 million office portion of a $155 million mixed-use building in New York NY.  February declines were also reported for commercial garages, down 17%; and hotels, down 3%.  On the plus side for commercial building, February gains were reported for warehouses, up 47%; and stores, up 7%.  The warehouse category was lifted by the start of two United Parcel Service distribution centers, located in Salt Lake City UT ($125 million) and Atlanta GA ($120 million).  The manufacturing building category in February jumped 147% after a weak January, reflecting the start of a $985 million refinery modernization in Richmond CA and a $100 million Mercedes Benz van manufacturing facility in North Charleston SC.

Residential building in February slipped 3% to $300.2 billion (annual rate).  The decline was due to a 23% retreat for multifamily housing, which follows 24% growth over the previous two months.  February featured 5 multifamily projects valued at $100 million or more, compared to 13 such projects that reached groundbreaking in January.  The large multifamily projects in February included a $173 million apartment building in New York NY and the $160 million multifamily portion of a $175 million multifamily/retail building in Miami FL.  Through the first two months of 2017, the top five metropolitan areas in terms of the dollar amount of multifamily starts were the following – New York NY, Los Angeles CA, Chicago IL, Washington DC, and Atlanta GA.  Single family housing in February grew 5%, moving upward for the fifth straight month after receding during last year’s third quarter.  By region, single family housing in February showed growth in all five major regions relative to January – the Midwest, up 12%; the South Central, up 6%; the West, up 4%; the South Atlantic, up 3%; and the Northeast, up 2%.

The 4% slide for total construction starts on an unadjusted basis for the first two months of 2017 compared to last year was the result of mixed behavior by major sector.  Nonbuilding construction year-to-date fell 31%, with public works down 3% and electric utilities/gas plants down 71%.  Residential building year-to-date receded 1%, with multifamily housing down 20% while single family housing grew 9%.  Nonresidential building was the one major sector to report a year-to-date gain, climbing 21%, with institutional building up 62%, commercial building down 3%, and manufacturing building down 32%.  By geography, total construction starts for the January-February period of 2017 showed two regions with year-to-date declines – the South Central, down 26%; and the Midwest, down 4%.  Total construction year-to-date gains were reported for the South Atlantic, up 4%; the West, up 7%, and the Northeast, up 8%.

Additional perspective is obtained by looking at twelve-month moving totals, in this case the twelve months ending February 2017 versus the twelve months ending February 2016, which lessens the volatility present in comparisons of just two months.  On this basis, total construction starts were up 2%.  By major sector, nonbuilding construction dropped 12%, with public works down 4% and electric utilities/gas plants down 30%.  Residential building was up 4%, with multifamily housing down 2% while single family housing grew 7%.  Nonresidential building increased 10%, with institutional building up 16%, commercial building up 12%, and manufacturing building down 23%.  By geography, the twelve months ending February 2017 showed this pattern for total construction starts – the South Central, down 13%; the Northeast, down 2%; the Midwest, up 5%; the South Atlantic, up 10%; and the West, up 11%.

SAN FRANCISCO, CA – Trulia, a leading destination for homebuyers and renters, released the findings from the Trulia Inventory and Price Watch. This quarterly look at the supply of starter, trade-up and premium homes on the market nationally and in the 100 largest U.S. metros found that markets with the biggest gains in home values since 2012 are facing the tight supply of for-sale homes.

Buyers Face Tightest Inventory Levels Heading into 2017 House-Hunting Season
Nationally, housing inventory hit its lowest level on record in the first three months of 2017. The number of homes on the market dropped for the eighth consecutive quarter, falling 5.1% over the past year. Across different housing segments, starter and trade-up home inventory fell 8.7% and 7.9% year-over-year nationally. Meanwhile, the stock of premium homes remained relatively unchanged since last year, having fallen just 1.7%.

Affordability Becoming a Bigger Obstacle for Starter-Home Buyers
This persistent and disproportional drop in starter and trade-up home inventory continues to make homeownership less affordable – especially for first-time buyers. A typical starter-home buyer would need to dedicate 38.3% of their monthly income to buy a starter home – a 2.9-point increase from last year. Trade-up and premium homes, on the other hand, are still relatively affordable despite being more expensive.

Home Value Recovery May Be Causing Inventory Crunch
A strong recovery may be partly to blame for the large drop in inventory some markets have experienced over the past five years. Housing markets – including San Francisco, Seattle, Nashville, Tenn. and Colorado Springs, Colo., – which have had greater home value recovery since 2012 have experienced larger decreases in inventory. In other words, not only are buyers in the hottest markets likely to be priced out, potential sellers may be locked in to their existing homes.

Ralph McLaughlin, Chief Economist for Trulia stated, “Recovering home values have proven to be a double-edge sword. While homeowners across the country are thrilled to regain equity in their homes, many have not been in a hurry to trade up. This has added to the inventory gridlock that ties up would-be starter-home inventory from ever coming on to the market, further constraining supply and decreasing affordability.”

McLaughlin added, “Saving up for a down payment is one of the biggest obstacles to homeownership for first-time buyers. In markets plagued with tight inventory and decreasing affordability, Millennials who make up most of these first-time buyers may find homeownership increasingly out of reach. However, there continues to be an uptick in new construction – which should help increase supply in some inventory-constrained markets.”

FARMERS BRANCH, TX – Centurion American Development Group and the City of Farmers Branch announce the groundbreaking ceremony for the mixed-use development Mercer Crossing, at the corner of Luna Road and Whittington Lane in Farmers Branch, Texas.

“We’ve spent the last two years planning every detail of this project with the City of Farmers Branch and feel there couldn’t be a more perfect time to break ground,” said Mehrdad Moayedi, Centurion American President and CEO.

Centurion American and the City of Farmers Branch have partnered to create the 370 acre, $1 billion development. The property, located in the heart of the Metroplex, will include more than 800 single-family homes, 2,250 apartments, retail stores, restaurants, a boutique hotel, 48-acre office park, amphitheater, and a boardwalk entertainment district.

Mercer Crossing is the culmination of more than two years of planning with the City of Farmers Branch and will result in an exciting new development for the area. Construction has already started with residents able to move in next year.

Centurion American is one of Texas’ largest developers of single-family home neighborhoods. Since 1990, they have developed over 20,000 single-family homes and currently have several mixed-use projects being built throughout the Metroplex.

IRVINE, CA – Steadfast Senior Living announced plans for another addition to their senior housing portfolio with a new ground-up development in Morgan Hill, Calif., just south of San Jose. The new facility will provide 67 apartment homes for seniors in need of assisted living and memory care.

“Our objective is to create quality assets in the senior living space,” said Christopher Hilbert, president of Steadfast Companies, “We believe that this ground-up development in Morgan Hill will provide a great quality of life experience for residents with assisted living and memory care needs.”

The two story, 62,000-square-foot development will consist of studio, one- and two-bedroom residences ranging from 400 square feet to 1000 square feet, and will feature high ceilings and spacious bathrooms and kitchenettes.

Planned amenities will include large common areas, lounges, bistro, spa, beauty salon, fine dining, fitness center, movie theatre, game room, computer lab and library. Residents will also enjoy an enclosed courtyard with fireplace, outdoor fountain, BBQ, putting green, gardens and walking paths.

Steadfast Senior Living currently owns two other assisted living and memory care communities, the newly opened GranVida, in Carpinteria, CA, and Crestavilla, currently under construction in Laguna Niguel, CA.

Ground breaking for the project is expected to begin in the summer of 2017 with the facility scheduled to open in 2018.

AUSTIN, TX – Campus Advantage, a leader in student housing, providing property management, consulting, acquisitions, and development services, announced it has been selected to manage two new student housing properties being developed in Austin, TX and Arlington, TX. The developments, Liv+ in Arlington and Skyloft in Austin, tap into Campus Advantage’s long history of third-party management capabilities and services.

“Third-party management is an integral part of our growth and success at Campus Advantage,” said Pam West, Vice President of Operations at Campus Advantage. “This was a highly-competitive selection process, and we look forward to being a part of these future world-class facilities.”

Skyloft, a 22-story high rise, will house approximately 677 students at the West Campus location of the University of Texas. It will include an expansive amenity package including a rooftop pool and fitness center. Catalyst, an Austin-based agency specializing in creative marketing for student and multifamily housing, will partner with Campus Advantage to develop branding for the property.

“We are extremely excited to be partnering with Campus Advantage to design a very innovative brand that will speak to both students and guarantors considering West Campus housing,” said Jamie Matusek, Vice President of Catalyst. “We are ready to hit the ground running and watch Skyloft come to life right here in our own backyard in Austin.”

Located just a half mile from the new College Park District on the University of Texas at Arlington campus, Liv+ is a new 789 bed development and will feature a mix of studios, one, two, three, and four bedroom apartments. Amenities will include an expansive fitness center, Fitness on Demand, pool, outdoor cabana area, fire pits, cyber cafe, pet park, and a fresh market.

Campus Advantage provided consulting support for the Liv+ development throughout the past year. The company is currently recruiting staff and is working with the Liv+ development team to finish the layout of the community amenities and unit interiors to ensure the development features the best options for students.

Catalyst is also collaborating with the Liv+ in-house marketing team to develop a brand that targets the student demographic and showcases the unique experience students can expect when living at a Campus Advantage community.

Both properties are expected to open in Fall 2018, with pre-leasing to begin this summer.

ATLANTA, GA – Robbins Electra, one of the fastest-growing multifamily owner-operators in the Southeastern U.S, has announced the acquisition of Ashley Vista, a 312-unit apartment community in Lithonia, Ga. The company acquired the asset from Bridge Properties, and intends to renovate and rebrand it as “Belle Vista.”  

This is Robbins Electra’s second multifamily acquisition so far this year in Atlanta (earlier this month the company acquired Marbella Place in Stockbridge), and it has three more Atlanta multifamily communities under contract to close in coming months. 

“Atlanta’s strong job market and continued population growth have created healthy demand for apartments, particularly in the ‘middle-market’ space where Robbins Electra operates,” said Joe Lubeck, CEO of Robbins Electra. “Our multifamily properties cater to professionals and working families who aren’t quite ready for home ownership, but still want to live in nice, reasonably priced communities with plenty of conveniences and amenities.”

Robbins Electra’s portfolio now includes three multifamily rental communities in the Atlanta area, totaling 1,669 apartment units, including Landmark at Mountainview (Stone Mountain, GA), which it already owned. Robbins Electra’s national portfolio includes more than 22,700 apartment units totaling over $2.5 billion in value.

According to the Atlanta Regional Commission, the region’s population has rapidly grown and added 69,200 new residents from 2015 to 2016, making it to the largest single-year population increase since the Great Recession. The city has also experienced strong employment growth by adding 77,000 jobs in 2016.

Robbins Electra will carry out a multimillion dollar property renovation at Belle Vista, upgrading apartment interiors and enhancing the community’s amenities.

Located at 100 Camellia Lane, Belle Vista features one-, two- and three-bedroom apartments in three-story buildings, and offers resort-style amenities including a swimming pool, soccer field, business center, clubhouse, movie room, fitness center, barbecue areas and dog park. The community is set among beautifully landscaped grounds and is conveniently located near DeKalb Medical Center, I-20 and downtown Atlanta. The property is currently 91% occupied with average monthly rents of approximately $940.

MURFREESBORO, TN – National Health Investors announced it has purchased five memory care facilities, totaling 223 units, located in Texas and Illinois for $61.8 million and will lease back the facilities to a new NHI tenant, The LaSalle Group.

The lease term is 15 years plus three renewal option periods and has an initial cash yield of 7% with annual fixed escalators. The acquisition was funded by a draw on NHI’s revolving credit facility.

The LaSalle Group is a private, Dallas, Texas based, family-owned business that was founded in 1990 and began focusing on senior care in 2000. The facilities acquired are Autumn Leaves communities, part of The LaSalle Group’s standalone memory care design.

Eric Mendelsohn, CEO and President of NHI, stated, “NHI is happy to be entering into a relationship with The LaSalle Group, a growth-oriented operator with long term focus. Their management team has excellent experience with over 16 years of developing and operating memory care communities. The addition of these facilities will further strengthen NHI’s portfolio.”

National Health Investors is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI’s portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals.

BETHESDA, MD – Walker & Dunlop recently financed two student housing portfolios for Scion Student Communities, a joint venture among The Scion Group, GIC and Canada Pension Plan Investment Board. Both portfolios were financed through Fannie Mae credit facilities.

The first transaction involved the acquisition of six student housing properties. Walker & Dunlop utilized the expansion and borrow-up features of an existing Fannie Mae credit facility to achieve optimal proceeds of $233 million. A second Fannie Mae credit facility of $416 million was structured for the acquisition of 11 additional properties.

The facility has both fixed and floating rate components to it with varying maturities. Many of the eleven properties qualified as Green Certified, reducing Scion’s borrowing cost significantly.  

Managing Directors Brendan Coleman and Will Baker led the Walker & Dunlop team on both transactions.

Mr. Coleman commented, “We are very excited to once again work with Scion, GIC and CPPIB on a highly strategic transaction. Our partnership with Fannie Mae has helped the joint venture to continue to expand its best-in-class student housing portfolio.”

Mr. Baker added, “In 2016 Walker & Dunlop financed $1.6 billion of student housing properties.  We have deep experience financing student housing properties, and these financings for Scion demonstrate our team’s expertise with large, structured transactions.”

Walker & Dunlop is one of the largest commercial real estate finance companies in the United States providing financing and investment sales to owners of multifamily and commercial properties.

OXFORD, MS – Southern California-based Nelson Brothers Professional Real Estate recently closed on the purchase of Molly Barr Trails and Molly Barr Ridge, two adjacent student housing properties near the University of Mississippi.

The properties were recently built (2012 and 2015 respectively) and fully amenitized. At the time of purchase, both properties were at 100% occupancy with 12-month leases. The offering was offered as a DST (Delaware Statutory Trust) structure and eligible for 1031 investors.

Combined, the two properties have 125 units and 303 beds with 152,800 square feet. Each unit features a bathroom and bedroom for each student, nine-foot ceilings, washers and dryers, modern appliances and furnished common areas. Additional amenities include a pool, lounge, fitness center and surface parking with spots for each student. The properties are among some of the closest to Ole Miss and also near a hiking and biking trail.

“We’re really pleased with the strong performance of this property and considering that it’s a relatively new acquisition, this has already become a showcase in our portfolio,” stated co-owner and Chief Marketing Officer Brian Nelson. “We have found that Ole Miss has been a great draw for us based on the growing enrollment and with our first acquisition of Taylor Bend. “We believe that the university will continue a slow but steady growth and with limited new projects in the works, occupancy rates will tighten as demand continues to grow.”

Molly Barr was offered as a DST (Delaware Statutory Trust) structure and eligible for 1031 investors. The initial total offering price to investors for the two properties was $25,777,637 of which approximately $11.2 million came from investor equity.

This was Nelson Brothers’ 27th equity raise since their founding in 2007. To date, the firm has raised over $175MM from over 900 investors through the registered investment advisor and broker dealer marketplace.