Browse Tag: United States

Ventas Healthcare REIT CEO Debra Cafaro

REIT.com’s latest video touches on the topic of the entire medical properties market by way of a chat with Debra Cafaro, CEO of the medical properties REIT Ventas (VTR).  Ventas is a major player in medical properties from hospitals to senior care and from national to international markets, working, as do all REITs in the sector, as a channel for Medicare payments to be transformed into dividends distributed to shareholders. Cafaro says of the healthcare market that a mere 15% of US healthcare properties are present in REIT portfolios, but if she and her competitors have anything to do with it, the acquisitions will only pick up steam as time goes on.

 

The Odd Story Of Finance In The Senior Living Sector

Sunrise Senior Living - Church Road, Edgbaston...
Sunrise Senior Living (Photo credit: Ell Brown)

The senior living sector is a major growth area in commercial real estate. The reasons for this boil down to classic supply and demand driven by demographics. Longer life expectancy in the United States mean steady growth in age cohorts that move into senior living facilities.   The over-85 segment of the population is growing at three times the rest of the population.  In 25 years, it is set to double. Further, a great number of existing facilities are older product, so new unit development is being spurred in most markets.

REITS stepping up

This population growth meeting a 7% penetration rate  – the rate at which seniors become residents in senior living facilities – means the requirement over the next 15 years is to build 375,000 new units of assisted living and senior living facilities.  This requirement comes with a $57 billion capital cost.  Yet the investment dollars for this sector have not come from mainstream sources.  Financing of projects and acquiring equity has until recently been largely the domain of local banks, producing a highly fragmented and some would say eccentric financing picture.  Only recently has the REIT industry stepped up its acquisitions in the senior living space.  Speaking at the recent Real Estate Journal Senior Living Conference in Chicago, Manisha Bathija, Senior Investment Officer of Ventas, a REIT working the senior living space, said the portfolio she leads has picked up $18 billion in senior living property acquisitions the last 10  years and expects to continue the trend.

REITs are only one of the classic capital sources in our industry.  What about pension funds and insurance companies?  Here’s where it gets odd, and suggests a greater change.

The Missing Usual Suspects

Speaking at the conference, Jacob Gehl, VP Investments of MArcus & Millichap pointed out a surprising observation: Even though insurance giants once financed this space decades ago, in his experience, insurance companies and pension funds today “don’t like to invest in anything with a bed in it”.   Why the shyness around senior living and multifamily?  Because one aspect of ownership of such properties is evictions, and pensions and insurance companies are in the business of paying out to millions of beneficiaries.  There is a perception of a potential public relations disaster for a pension who is on one hand financially supporting a pensioner, and on the other hand, kicking that pensioner — their own beneficiary — out of his or her apartment.  Therein lies an institutional bias, one that may take some work to overcome.

Operations vs. Equity

Similar to hospitality properties of all kinds, the business of senior living property ownership is a mix of equity and operations.  It’s operations that drive performance, particularly in properties where cost controls and rent caps associated with government affordability programs are part of the picture.  If there was a theme at the conference, it was a reverence for skilled operators of senior living facilities, as they hold the key to performance.

 

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REALTORS® Relief Foundation Hurricane Sandy Donations

Logo of Realtors Relief FoundationDuring the REALTORS® Conference & Expo in Orlando NAR collected donations to the REALTORS® Relief Foundation (RRF) for Hurricane Sandy disaster assistance. At a member forum at the conference, NAR President Moe Veissi announced that NAR would match members’ donations up to $500,000.  Moe later wrote on Realtor.org:

“As REALTORS®, we help build and maintain communities. We aren’t just there when the time comes to buy or sell a home. We are there during periods of need as well. Now—in the wake of Hurricane Sandy—is one of those occasions.

It will take more time to know the full impact of Hurricane Sandy, but the devastation in the mid-Atlantic is widespread. I personally have contacted the state associations in New York, New Jersey, and all the affected areas. At this point, we know that more than 8.2 million homes and businesses lost power in the United States because of Sandy, and there is a significant loss of life attributed to this deadly storm.

For more than 11 years, the REALTORS® Relief Foundation has been dedicated to providing housing-related assistance to victims of disasters. Without a doubt, there are many, many families out there who need our help now. If you can spare even a small amount, now is the time to make that commitment. A little bit can go a long way when we all give.

So please, follow your heart and reach out a helping hand to those in need.”

You can make a donation today to Hurricane Sandy victims through the REALTORS® Relief Foundation.

The REALTORS® Relief Foundation distributes one hundred percent of all funds collected to disaster relief causes. The funds are distributed on an “as-needed” basis by the Foundation’s Directors. The Foundation cannot guarantee donors that donations made in response to a particular disaster will be used for that specific disaster, but the Foundation does guarantee all donors that one hundred percent of their donation will be used for an appropriate disaster relief effort.

For the RRF, REALTORS® have raised and successfully distributed over $23 million in its 11 year history with the grants going directly to victims of disasters to provide immediate & temporary housing related assistance – that’s the mission and focus.  In many disaster situations, RRF checks have been the first forms of aid victims have received.  Because the RRF guarantees that 100% of each donation will go directly to the victims, we do not give our funds to other charities to further distribute.  The majority of charities take administrative fees out of each donation and the final net amount that ultimately reaches the victim is usually less than the original amount donated.   For Sandy, we’ve raised $1.9 million since the beginning of November and have already sent help to 200 members who have been impacted by this superstorm.  There are many more RRF will be assisting in the coming weeks.
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Commercial Podcast: Flood Insurance Program Renewal Passes In DC

capitol hill

 

In the latest Commercial Podcast from NAR Treasurer Bill Armstrong, news comes of the passage on Capitol Hill of the National Flood Insurance Program.  You can hear the cast, called “Flood Insurance Win” in its entirety here.

On June 29th, the Senate passed the Biggert-Waters Flood Insurance Bill, and President Obama signed it into law on July 9th. This is a  culmination of years of steady effort by NAR members and its legislative team, including  a final push at NAR’s Midyear Legislative Meetings and REALTOR® Rally.

The years of temporary extensions to the National Flood Insurance Program (NFIP) were by definition unable to offer protections to commercial property markets, and in fact led twice to shutdowns, including one that stalled more than 40,000 real estate transactions requiring flood insurance for financing in June 2010 alone.

Reauthorization of NFIP means stakeholders will no longer need to take their chances in the virtually nonexistent market for private flood insurance. There are 21,000 communities across the US that require flood insurance as a financing prerequisite, and the passage of the bill ensure that 5.6 million business and home owners will have access to the coverage they need.

The bill addresses not just the coverage but also sources of the problem in the market.  It has provisions for more accurate flood plain mapping so that the industry can better target where flood insurance is required and where it is not.  Also included are provisions for a more streamlined process for challenging the accuracy of the flood plain map in use by the federal government in a business’s area of operation.

Biggert-Waters ensures that taxpayers will spend less for federal assistance for flood disasters over the long run.  You can be sure NAR will carefully monitor the program’s new implementation and be on the lookout for reforms as needed to protect commercial property owners.

Listen to Bill’s podcast here.

 

(Photo credit: Kynan Tait)

 

 

 

United States Real Estate Market Ranked Most Transparent, Says Jones Lang LaSalle

Jones Lang LaSalle

As the global commercial property market evolves, it is marked by two kinds of growth. First, the sources of investment capital grow in number around the world. Then comes growth in the number of destinations for such capital. Buyers and investors in commercial real estate are increasingly international, so investments and returns have to make long trips to get where they’re going. When that’s true, the demand for clarity, predictability, reliable measurement and sustainability — known collectively in commercial real estate as transparency — becomes increasingly important.

The United States Provides Great Transparency In Commercial RE Deals

The 2012 Global Real Estate Transparency index released by real estate services firm Jones Lang LaSalle this week places the United States on the top of the list when it comes to transparency in real estate. The study looked at nearly 100 real estate markets worldwide and at nearly as many different factors:

Among key findings from the report:

  • The United States ranks as the world’s most transparent real estate market in 2012, followed by the United Kingdom and Australia. Also ranking as ‘Highly Transparent’ : Canada, Netherlands, New Zealand, France, Finland, Switzerland and Sweden.
  • The MIST growth markets (Mexico, Indonesia, South Korea and Turkey) are significantly improving in transparency, with Turkey leading the way.
  • Looking at regions, Latin America shows the strongest progress in transparency.
  • Environmental sustainability and energy efficiency  has emerged as an important transparency factor with the United Kingdom, Australia and France the most transparent markets in terms of real estate sustainability. The UK has a long history of building energy efficiency system and introduced the world’s first Green Building rating system.  Australia has been the test bed for new environmental laws, regulations and incentives.

What Is Transparency?

Transparency in commercial real estate is a complex set of public and private factors that interrelate to produce a positive environment for investment and economic growth.  One defining aspect of transparency is the publishing of data — by government, by lenders, by practitioners, by owners — so that key performance indicators are easily available in order to allow comparisons and benchmarking.  Transparency is both a count of the number of these indicators as well as their reliability.   Law and regulation in the US tends to produce more real estate market transparency in the net.

How Does Sustainability Relate To Transparency?

One example of a private indicator that adds to transparency is the set of various metrics illuminating the performance of a commercial property, right down to its energy efficiency.  How much energy per square foot a property uses in a month can make or break a decision to invest in that property today; energy markets are volatile and capital is making a very long trip these days.  Today, the energy profile of a property is no less important than its debt load, permitting/zoning, improvements history or other obviously critical indicators when evaluating potential investment.
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Mall Is Well: Retailer Optimism Up In February

Forgive the corny headline, but there’s more than a couple of indicators that the long-sagging national retail sector is gaining even more strength this quarter.  Let’s take a peek at a few:

RBC Capital National Retailer Demand Monthly (NRDM): This collection of positive indicators comes from north of the border (RBC being Royal Bank of Canada) but focuses on US retailers.  “Our database has about 1/4 of the 150,000 US retailers”, said analyst and report author Rich Moore.  Report highlights:

  • The view from the floor: According to the data collected, retail management teams “appear to have grown generally more upbeat about sales prospects going forward”.
  • Retail employment statistics show increases, with sharp rises in retail hiring and average hours worked.  The average work week for retail workers rose to 2006 levels.
  • The analysts “look for store opening plans to accelerate further in the coming months”.
  • Leading retailers in expansion of new stores: Subway, Dollar General, Quizno’s, Five Guys Famous Burgers, and Spirit Halloween Superstores
  • On the rise in planned store openings: gift specialties, package stores, pawn shops, family restaurants.  On the decline: books, salons.spas, housewares, and women’s apparel

Download a full copy of the RBC Capital Markets report here. 

 

 

 

 

 

 

 

 

 

 

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