Senate Democrats Unveil Comprehensive Infrastructure Plan, Affordable Housing Included
At the end of January, Senate Democrats unveiled their infrastructure plan: A Blueprint to Rebuild America’s Infrastructure. The $1 trillion plan aims to create over 15 million jobs and addresses issues including broadband internet, downtown revitalization, water and sewer, schools, roads and bridges, and also includes investments for public and affordable housing.
Specifically, the section titled “Revitalize America’s Main Streets: $100 billion – Creating 1.3 Million New Jobs” mentions the $26 billion backlog of physical repairs needed in public housing.
In the section entitled “Closing the Infrastructure Financing Gap: $10 billion – creating 1.3 Million New Jobs”, the plan proposes leveraging private capital by providing $10 billion as seed money in the form of low cost loans or loan guarantees and includes affordable housing as one recipient sector.
With a Republican president and Republican-controlled Congress, it is unlikely the Democratic plan will be adopted. However, it will be important to see what parts, if any, are taken under consideration by Republicans on any potential infrastructure legislation. While affordable housing is a prime topic for infrastructure reinvestment, it could also prove a tough sell considering Republicans’ plans to cut non-defense discretionary funding. *
Freddie Mac Releases Outlook Report on Multifamily Housing Demand
The Freddie Mac Multifamily Research Group released its 2017 Multifamily Outlook on demand, vacancies and rent growth nationally and in the nation's top metro markets.
At the national level, oversupply risks are expected to be kept in check by steady absorption rates, a modest drop in multifamily starts, stable employment growth, new household formations and changing lifestyle preferences that favor rental housing.
Vacancy rates are expected to top 5 percent nationally for the first time since 2011.
Rents are expected to grow at their 2016 pace and exceed historical averages for another year. Overall, gross income growth is expected to average 3.4 percent in the nation's top 70 metropolitan markets. Performance in individual metros will vary based on local supply and demand characteristics.
"Demand for rental units is at a historic high due to demographic changes and lifestyle preferences, but increasing new supply and other factors are likely to moderate multifamily market growth in 2017," said Steve Guggenmos, Freddie Mac Multifamily vice president of research and modeling. "In particular, landlords are likely to pull back on rent increases as new supply enters the market and vacancy rates rise."
"Looking at our list of top ten markets, we see the west coast remain a dominant player but moving away from the Bay Area to other western cities -- Sacramento, Seattle, Tacoma and Portland -- and a number of less likely candidates -- Jacksonville, Phoenix, and Tampa -- moving up the rankings in the coming year," Guggenmos added.
Freddie Mac Multifamily is the nation's multifamily housing finance leader. Nearly 90 percent of the rental homes we fund are affordable to families with low to moderate incomes. **
CRE Leaders Optimistic About ‘Continued Boom’ in US Property Market Through 2017 and Beyond
A pair of new surveys point to continued favorable market conditions for US commercial real estate this year, with a strengthening economy paired with improved property fundamental and ready access to capital shoring up the real estate expansion through 2017.
A survey by KPMG LLP of senior US real estate executives further finds that uncertainties over President Trump's tax and regulatory policies, rising interest rates and the threat of data breaches and other cybersecurity risks have not dampened bullishness among real estate owners and investors.
Fifty-two percent of real estate executives polled believe that improving real estate fundamentals in 2017 will be the biggest driver of their company’s revenue growth, while 91% of investors are bullish on access to equity capital, with 25% expecting an improvement in 2017 and two-thirds believing that the positive trend will remain the same.
"Although prices of Class A assets in the US are high and yields are lower, the promise of reliable returns leads to sustained interest in the sector overall, especially when compared to other global markets," noted said Greg Williams, national sector leader for KPMG's Building, Construction & Real Estate division. “A growing US economy, coupled with healthy real estate fundamentals and strong access to financing and capital, make real estate leaders optimistic about a continued boom in the US market."
“KPMG anticipates continued growth in the open-ended and debt funds due to their stable yield, diversification, and higher levels of liquidity for open-ended funds”, said Phil Marra, national real estate funds leader.
"We also expect to see an influx of new investment in real estate, both from existing investors as well as new entrants," Marra said.
A recent survey of Commercial Real Estate Finance Council members finds that the real estate finance market is to benefit from economic growth, the incremental nature of rising interest rates, low levels of new construction and ample availability of capital and credit to borrowers for new loans and refinancings.
Spreads on commercial mortgage-backed securities (CMBS) are likely to remain volatile in 2017, mainly due mainly to external factors such as geopolitical trends and potential contagion from other asset classes.
“CMBS issuers have adjusted to new risk-retention requirements that took effect on Dec. 24, and portfolio lenders, private equity and a new generation of other lenders are stepping in to fill gaps and enable opportunity in the investment marketplace”, said CRE Finance Council Executive Director Lisa Pendergast.
"Though there is some concern that we are nearing the peak of the current US real estate cycle, valuations are generally holding with ample credit available for new loans and refinancings of maturing quality loans," Pendergast said. ***
Senior Housing Investments & Transactions
Capital Senior Living Acquires Two Facilities for $56 Million
Capital Senior Living Corp. (NYSE: CSU) has acquired two assisted living communities for $56 million. The communities were previously owned by Keystone Senior.
The sale of the properties was facilitated by Stephen Snider, an independent senior housing broker. Snider represented Keystone Senior LLC.
Joint Venture Acquires $54 Million Senior Affordable Housing Community
Nonprofit organization Jamboree Housing and Community Preservation Partners (CPP) have acquired a senior affordable housing community in Anaheim, California, for $53.5 million. CPP purchased the asset in a joint venture with Jamboree Housing from a private owner, Multi-Housing News reported.
The transaction was syndicated by CPP’s parent company, WNC & Associates. CPP will invest $7.4 million in renovations, such as new air conditioning units, energy efficient improvements, paint and flooring improvements, amenity upgrades and more.
The Anaheim Housing Authority (AHA) will maintain below-market rents for 124 of the 179 units in the community. The remaining units will be covered by affordability restrictions put in place by CPP. The community is 97% occupied.
Forty one-bedroom apartments will be available for seniors at the lowest end of the low-income spectrum at 35% of the area medium income. Eight studio apartments will be available for seniors at or below 50% of the average median income. The remaining units will be available for seniors at or below 60%.
CPP will partner with Eco-Gen Energy to keep utility costs down and have the option to bring the community off the power grid.
Wardman Group Acquires South Carolina Senior Housing Community
An affiliate of Washington, D.C.-based Wardman Group, a boutique real estate investments and asset management firm, has acquired Summers Landing Polo Road, a senior hosing community in South Carolina.
The community, located in Columbia, South Carolina, has 92 units and will be managed by Integral Senior Living (ISL), a senior living management company that manages 59 independent, assisted living and memory care properties. The community is ISL’s first managed community in South Carolina.
Wardman has embarked on a $1.4 million renovation of the property, including interior renovations of the common areas, exterior upgrades, expansion of the dining area and an expansion of the memory care wing from 14 units to 22 units.
Upon completion of the renovation, the community will feature 38 independent living, 32 assisted living and 22 memory care apartments.
IPA sells $47 Million Community
Institutional Property Advisors (IPA), a division of Marcus & Millichap specializing in institutional and major private investors, has negotiated the sale of The Villa at San Mateo for $46.5 million.
The community, a 135-unit age-restricted property, was originally constructed as a hotel in 1957 before being converted into apartments in 2006.
The community was purchased by Elder Care Alliance. The property is mixed use, with six ground floor retail spaces in addition to the apartments. It is located in the Bay Area city of San Mateo, California.
Stan Jones, Phil Saglimbeni, Sal Saglimbeni, Mark Myers and Joshua Jandris, of IPA, represented the seller, Acacia Capital.
The transaction was financed in part by $30.4 million in acquisition financing arranged by CBRE Capital Markets’ debt & structured finance team. Fannie Mae will provide the 10-year, fixed-rate financing.
Cushman & Wakefield Arranges Sale of Two Senior Living Communities
Cushman & Wakefield arranged the sale of a 233-unit independent living and assisted living community in the Los Angeles suburb of Laguna Hills.
The community is located next to a master-planned, age-restricted community with more than 14,000 residents. The purchase price was not disclosed. The buyer was also not disclosed. Senior Resources Group, based in San Diego, will manage the property.
The seller was represented by David Rothschild, Mary Christian and Allen McMurty of Cushman & Wakefield’s national senior housing investment advisory.
Cushman & Wakefield also arranged the sale of a 75-unit senior housing community in Ann Arbor, Michigan. The community, University Living at Ann Arbor, is a 75-unit/79-bed assisted living and memory care facility. It is made up of 63 assisted living units and 12 memory care units (16 beds).
The community underwent extensive renovations in 2014. It was purchased by Capitol Seniors Housing, which plans to invest in resident care technology and additional common area and unit renovations. Provision Senior Living will remain as the manager.
Cushman & Wakefield’s Executive Managing Director Richard Swartz, Executive Director Jay Wagner and Associate Caryn Miller were involved in the transaction.
Birchwood Health Care Properties Acquires Vacant Florida Community
Birchwood Health Care Properties, LLC, a Chicago-based health care real estate private equity firm, has acquired a 230-unit former housing community in Dade City, Florida.
The community was once a historic hotel, and, at its peak in early 2015, served more than 200 residents before running into a number of clinical and operational challenges.
Birchwood intends to deploy roughly $750,000 in renovations to revitalize the community. Priority Life Care will manage the building. The two companies already own and operate a community about 30 miles away.****
- Gill Group plans to attend National Housing & Rehabilitation Association’s Annual Meeting February 22nd – 26th in Bonita Springs, FL.
- Gill Group attended the National Leased Housing Associations’ Mid-Year Meeting February 1st – 3rd in Naples, FL.
- Gill Group and National Title & Escrow attended the Council for Affordable Rural Housing’s (CARH’s) Midyear Meeting (Strengthening Rural Housing with Valued Partnerships) January 23rd – 25th in Sarasota, FL.
- In 2016, Gill Group attended over 75 meetings and conferences across the entire United States.
GROWTH (2016 - Highlights):
- Gill Group added over 20 staff members throughout our 15 national and regional offices including MAIs, General Certified Appraisers, PE Engineers and AIA Architects.
- Gill Group’s subsidiary, National Title & Escrow (NTE), added two new underwriters: Fidelity National Title Insurance Company and Stewart Title Guaranty Company.
- NTE also added a new sales representative, Jimmy Crace, bringing 20+ years of experience and well over 100 national relationships in commercial and multifamily title.
- In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.
GROWTH (2015 - Highlights):
- Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
- Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
- Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.
- Gill Group attended 40+ meetings and conferences throughout the United States in 2014.
GROWTH (2014 - Highlights):
- Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
- Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
- Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff.
Gill Group has published the following:
- New York Real Estate Journal - How can low-income housing facilities translate into high profits?
- New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
- Tax Credit Advisor - Boston MSA Market Snapshot
- Tax Credit Advisor - Seattle MSA Market Snapshot
- Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
- Affordable Housing Finance – Urban and Rural Market Studies.
- Tax Credit Advisor – LIHTC Appraisals 101
- Affordable Housing Finance – Five Ways to Optimize a Market Study
Cash Gill, MAI has had the opportunity to speak on the following topics:
- (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
- (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
- (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
- (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
- (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
- (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
- (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
- (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
- (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
- (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
- (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
- (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
- (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
- (Chicago, IL) AHF Live – Strategies for Rural Deals.
- (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
- (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
- (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
- (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
- (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
- (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
- (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
- (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
- (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
- (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
- (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
- (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
- (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
- (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
- (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
- (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
- (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
- (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
- (Seattle, WA) NCSHA – Rural and Native American Development Strategies
- (French Lick, IN) AHAIN – Appraisals and CNAs
- (French Lick, IN) AHAIN – Pulling it All Together
- (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
*as seen on housingonline.com
**as seen on multifamilybiz.com
***as seen on costar.com
****as seen on seniorhousingnews.com
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