NBS Financial's Wally Harding to Speak at IREM Forecast Breakfast

NBS Financial's Wally Harding will be a guest speaker at the Institute of Real Estate Management (IREM) Oregon-Columbia River Chapter 23rd Annual Forecast Breakfast Dec. 2 at the Portland Ballroom at the Oregon Convention Center. Harding will be forecasting the market for commercial real estate finance in 2011. A number of other guest speakers will forecast the office, multi-family, industrial and retail markets.

Serving real estate professionals who manage all property types, the local IREM chapter has been an integral force in the greater Portland area since the 1960s. The organization is dedicated to delivering leading-edge networking and educational offerings for every stage of real estate professionals' careers and providing lifelong professional development opportunities.

As part of the Institute of Real Estate Management (IREM®) – a global organization that serves over 18,000 members and 500 corporate members worldwide – the Portland-area chapter can connect professionals with new contacts and business opportunities all over the globe.

NBS Financial Arranges $14.3M Construction/Perm Loan for Grandview Place Apartments in Vancouver, Wash.

NBS Financial Services' Blake Hering, Jr. and Jim Campbell have arranged a $14.3 million construction/permanent loan for Vancouver’s 154-unit Grandview Place Apartments. The lender was one of NBS Financial’s correspondent life insurance companies.

Grandview Place was developed by Courtesy Construction and Development and is located off of 192nd Avenue adjacent to a scenic wetland area. The project is now 97 percent leased at the rents originally projected two years ago.

“Achieving the budgeted rents in the current economic climate is an impressive testament to market acceptance of this high-quality project,” Hering, Jr. said.

Units range from an 854 sf one-bedroom, one-bath apartment to a three-bedroom, 2½-bath townhome with a two-car direct access garage. Grandview Place also features a beautifully appointed clubhouse with fitness center, pool and spa.

A construction/perm loan offers a developer a construction loan that then converts to a permanent loan after the property is completed and stabilized. Borrowers like construction/perm loans because the process is more streamlined than getting construction and permanent loans through different lenders, and because they may be able to lock in a low interest rate up-front and save on loan costs.

This is a unique transaction for NBS Financial, Hering, Jr. said. The company has arranged construction/perm loans for other property types, but this is its first for an apartment property. The majority of loans it arranges are permanent loans.

Some Positive Signs for Portland CRE During Third Quarter

This week we released our Third Quarter 2010 quarterly reports for the Portland metro area. There's no doubt that we're still seeing the impact of the recession, but the multifamily and central city office markets showed signs of improvement.

Office vacancy in Central City decreased to 12.13% with 282,442 sf absorbed, thanks to large leases at First & Main and the Meier & Frank Depot Building. Suburban vacancy remained stable at 24.06% with about 4,000 sf absorbed, the first positive absorption in the suburban office market since Third Quarter 2008.

Industrial vacancy was stable at 15.22%, with about 10,000 sf absorbed. A few large transactions occurred, including PFX Pet Supply leasing 70,000 sf at Columbia Corporate Park I in North/Northeast.

Retail vacancy decreased to 6.5%, and a few projects broke ground, including the 215,000 sf Progress Ridge Town Square between Tigard and Beaverton. Retail sales were up in August and September with the help of a strong back to school shopping season.

Multifamily was a bright spot during Third Quarter. Vacancy fell to 3.65%, the lowest it has been since Second Quarter 2008. The multifamily investment market also showed increased activity, especially for properties developed as condominiums and converted to apartments.

A PDF of all the reports can be found here.

Harding Arranges $8M in Refinancing for Spokane Multifamily Property

NBS Financial Services Senior Vice President Wallace E. Harding has arranged an $8 million refinance loan for North Star Lodge in Spokane, Wash.

North Star Lodge is a Class A, garden-style apartment community of 114 units. The 19-building complex with an additional clubhouse/leasing center is situated on 9.66 acres of land. The property was 94 percent leased at closing.

The loan was structured with a 10-year term (no interest only) with 9.5-year yield maintenance and a 30-year amortization. The loan was underwritten to a 79 percent loan-to-value with a 1.26x debt-service coverage ratio.

Commercial Loan Originations Up Year-Over-Year for Second Quarter

Some good news from the Mortgage Bankers Association (MBA) this week. According to the MBA's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, second quarter 2010 commercial/multifamily mortgage loan originations were one percent higher year-over-year, and 35 percent higher than during the previous quarter.

The one percent increase in commercial/multifamily lending activity during the second quarter was driven by loans for office and industrial properties, and there was a 148 percent increase in loans for life insurance companies. The 35 percent quarter-over-quarter increase was helped by loans for industrial and health care properties.

“Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."

Some Positive Signs in Second Quarter for Portland Multifamily Market

Overview

Multifamily vacancy decreased to 4.11% during Second Quarter. Downtown Portland units continued to be leased up at a healthy rate, as vacancy for both new and seasoned units fell around 2 percentage points. Last quarter, this report began tracking a number of recent central city deliveries, and two new properties, the Matisse in South Waterfront (272 units) and the Broadstone Enso in the Pearl (152 units), will be added to the report when they are stabilized in 2011. Rental rates increased by $10 overall, or a cent per square foot, and as expected, downtown units led these increases.

Market Trends

It’s a good sign that vacancy is down and rents are increasing, and landlords are offering fewer concessions (except for new downtown properties), which indicates a healthier market. If new units continue to be absorbed at the current rate and the economy shows signs of solid recovery, we should see stabilization in 2011. But owners and managers remain guarded in their optimism, questioning whether recovery will occur without significant job creation, which we haven’t yet seen.

Despite the uptick in occupancy and some other positive indicators, the multifamily investment market remains sluggish. According to CoStar’s sales comparables, just two transactions over $3 million occurred during Second Quarter, one being the $38.75 million sale of the 188-unit Tupelo Alley in North Portland, which was a solid institutional sale. Investors remain uncertain about the region’s economic outlook, and worry that the Portland Metro Area doesn’t have one particular economic driver or growth engine, which may lead to a flat recovery. Companies are hunkered down, waiting to see significant improvement before investing, and the volatility on Wall Street in May didn’t help. Potential owners are also deterred by the increased costs of utilities and fees associated with owning and developing.

The deals being done in Portland and around the Pacific Northwest are at lower cap rates; this doesn’t necessarily indicate recovery, but of finding the ideal buyer on the transaction. Few aggressive buyers are currently active, though, and there’s little leverage to do deals. Financing remains challenging, with a limited number of lenders. Fannie Mae and Freddie Mac are the two most active lenders, and a number of other sources, like Chase and some life insurance companies, are becoming more active in pursuing deals.

The full report can be found here.