New federal tax rules create advantage for real estate investment trusts

RTS Private Wealth Management | June 18, 2019

As Generation X and millennials inherit their baby boomer parents’ assets amid the so-called Great Wealth Transfer, some will look to invest it in rental property to generate income. This property might be a duplex, an apartment building or, depending on the location, a single-family house that could eventually become a retirement home. Yet many aren’t aware that because of the various costs and risks involved, becoming a landlord a role fraught with headaches may not turn out to be profitable.

Spotlight

TECHNOLOGY is changing the most fundamental truth about commercial real estate (CRE)—that value is based solely on location, location, location. While it still matters, of course, that a space be close to customers, employees, and/or suppliers, informationbased applications have the potential to add new ways for the CRE sector to create value for customers, differentiate from competitors, and even find new sources of revenue. Specifically, the Internet of Things (IoT) is already having a significant impact on the CRE industry, helping companies move beyond a focus on cost reduction. IoT applications aim to grow margins and enable features such as dramatically more efficient building operations, enhanced tenant relationships, and new revenue generation opportunities. Consider the increasingly popular smart thermostats that intuitively adjust the temperature, humidity, and light based on residents’ preferences and climatic conditions.


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INVESTMENTS

Lument Provides $26.7 Million Bridge Loan for the Acquisition and Renovation of Florida Multifamily Community

Lument | January 27, 2022

Lument recently announced the closing of a $26.7 million proprietary bridge loan to acquire and renovate Harbor Village Apartments and Townhomes, a 229-unit multifamily apartment community in Melbourne, Florida. Josh Messier, managing director at Lument, led the transaction. It was a pleasure to work with these experienced, repeat Lument clients, We were able to structure and fund 100% of the required capital expenditures with loan proceeds to help them achieve their goals, including $3.8 million in capital improvements to upgrade unit interiors and amenities." Messier. The $26.7 million bridge loan features a variable interest rate and a three-year term, with two 12-month extension options. The community's current occupancy is 96%. The Harbor Village property is made up of two sections: Harbor Village Apartments and Harbor Village Townhomes. Harbor Village Apartments was completed in 1976 and is situated on 6.43 acres of land with 143 apartments in eight buildings. Harbor Village Townhomes contains 86 units in 18 two-story wood frame town-homes and was built on 5.80 acres in 1983. Onsite amenities for each section include a swimming pool and laundry facility. About Lument ORIX Real Estate Capital Holdings, LLC, d/b/a Lument, is a subsidiary of ORIX Corporation USA. Lument is a national leader in commercial real estate finance. As the combined organization of legacy industry experts Hunt Real Estate Capital, Lancaster Pollard, and RED Capital Group, Lument delivers a comprehensive set of capital solutions customized for investors in multifamily, affordable housing, and seniors housing and healthcare real estate. Lument is a Fannie Mae DUS®, Freddie Mac Optigo®, FHA, and USDA lender. In addition, Lument offers a suite of proprietary commercial lending, real estate investment sales, investment banking, and investment management solutions. Lument has approximately 600 employees in over 25 offices across the United States. Securities, investment banking, and advisory services are provided through OREC Securities, LLC, d/b/a Lument Securities, Member FINRA/SIPC. Investment advisory services are provided by OREC Investment Management, LLC, d/b/a Lument Investment Management. OREC Investment Management is registered as an investment adviser with the U.S. Securities and Exchange Commission.

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REAL ESTATE TECHNOLOGY

REfresh Is Back - A Virtual Experience for Yardi Breeze Clients

Yardi Breeze | April 04, 2022

Following a very successful inaugural event in 2021, Yardi is hosting the REfresh user conference on April 6-7, 2022. This virtual event is free to Yardi Breeze and Yardi Breeze Premier clients in the U.S. and Canada. With over 6,000 companies now on Breeze or Breeze Premier, thousands of users are once again expected to attend the event featuring more than 85 on-demand classes, spotlight sessions and an exclusive keynote presentation by Nikki Greenberg, an influential real estate futurist and thought leader. The goal is to empower property owners, managers and investors with the information and tools they need to succeed. (And maybe have a little fun while they are it.) Attendees can learn more about their Breeze or Breeze Premier software and see how they can expand their platform with other key Yardi products designed to help them better market their properties, find quality residents and tenants, protect their assets and improve their operations through innovation and automation. Clients are automatically preregistered for REfresh. They only need to log in to their Breeze or Breeze Premier system on April 6-7 and click on the conference link to learn and connect. Attendees can engage with peers and Yardi experts via live chat. Plus, anyone who signs in will find multiple ways to win prizes! Abut Yardi Yardi develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide.

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REAL ESTATE TECHNOLOGY

First-time buyers, inventory expected to rebound in 2024

Zillow | March 25, 2022

The housing market is expected to return to pre-pandemic, 2019 norms — at least in terms of inventory and the share of purchases made by first-time home buyers — by 2024 according to a panel of housing market experts polled in the latest Zillow Home Price Expectations Survey. The dwindling supply of homes for sale has been a key driver of the recent explosion in U.S. home values, which have risen 32% in the past two years. Total inventory has fallen from a monthly average of 1.6 million units in 2018 and 2019 to just over 1 million in 2021, and monthly figures in 2022 are lower still. Inventory should return to a monthly average of 1.5 million units or higher in 2024, according to the largest group (38%) of respondents to Zillow's survey. But many are more optimistic — the second-largest group (36%) believes supply will bounce back to pre-pandemic levels in 2023, while 2025 earned the third-highest share of votes with 12%. Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond. We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill." Jeff Tucker, Zillow senior economist Return of the first-time home buyer The pandemic ushered in record-breaking price growth alongside rent hikes that made saving for down payments even more difficult. As a result, the share of first-time home buyers dropped from 45% in 2019 to 37% in 2021, according to a Zillow survey of recent buyers. First-time buyers should regain their pre-pandemic share of the market in a couple of years, according to the majority of experts polled, with 26% pointing to 2024, and 25% liking 2025. Eighteen percent of the experts polled did not believe the share of first-time buyers will rise above 45% until after 2030, despite millennials — the largest U.S. generation ever — aging well into their prime home-buying years before that time. Inflation considerations Inflation has already begun eroding the bottom lines of American households, with the Bureau of Labor Statistics noting rising costs for energy, housing and food as prime factors driving it to a four-decade high. Of the six categories considered, survey participants expect energy prices to increase the most over the course of 2022, followed by house prices, residential rents and food costs. Employee wages and stock prices were ranked fifth and sixth, respectively, rounding out the list. Price growth projections Pulsenomics founder Terry Loebs said the panel's average projections for home price growth in 2022 have been revised upward, from 6.6% three months ago to 9% in this survey. "Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year," Loebs said. "If price increases this year for homes, rents, energy, and food each exceed wage growth – as the panel expects – home affordability challenges will intensify further, especially for low- and moderate-income renters." Zillow economists forecast a 16.3% rise in typical home values from February through December. 1 This edition of the Zillow Home Price Expectations Survey surveyed 109 housing market experts and economists between February 16 and March 2, 2022 to gather their predictions for the outlook of the housing market in 2022 and beyond. The survey was conducted by Pulsenomics, LLC on behalf of Zillow, Inc. The Zillow Home Price Expectations Survey and any related materials are available through Zillow and Pulsenomics. About Zillow Group Zillow Group, Inc. is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. Zillow Group's affiliates and subsidiaries include Zillow, Zillow Offers, Zillow Premier Agent, Zillow Home Loans, Zillow Closing Services, Zillow Homes, Inc., Trulia, Out East, ShowingTime, Bridge Interactive, dotloop, StreetEasy and HotPads. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287. About Pulsenomics Pulsenomics LLC is an independent research firm that specializes in data analytics, opinion research, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey, The U.S. Housing Confidence Survey, The Housing Confidence Index, and The Transaction Sentiment Index. Pulsenomics, The Housing Confidence Index, The Transaction Sentiment Index, and The Housing Confidence Survey are trademarks of Pulsenomics LLC.

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REAL ESTATE INVESTMENT

City Office REIT Announces Raleigh Acquisition

City Office REIT | January 03, 2022

City Office REIT, Inc. (NYSE: CIO) ("City Office" or the "Company") announced today that it has closed the acquisition of Bloc 83, a premier two-building office complex located in Raleigh, North Carolina, for a gross purchase price of $330.0 million exclusive of closing costs. The 494,000 square foot, newly built Class A complex possesses a prime location, market-leading features and strong tenancy. Bloc 83 is situated in the Glenwood South submarket, a preeminent live-work-play district of downtown Raleigh. Glenwood South has attracted a population of young professionals relocating from larger metro areas and is the epicenter of Raleigh's dining, shopping and entertainment district. Bloc 83 features best-in-class, modern tenant buildouts, common areas and amenities. Highlights of the property include state-of-the-art fitness centers, a rooftop sky lounge, a yoga studio, various retail amenities and expansive lounges. The first building was delivered in 2019 and is currently 93% leased with a weighted average lease term remaining of approximately 10.3 years. The second building was delivered in 2021 and is in its initial lease-up phase at approximately 67% leased as of closing. Adding Raleigh to our footprint of high growth markets in the south and west strategically enhances our portfolio, Raleigh's highly educated workforce has been a driver for growth in the STEM and life science industries. The region's tier one research universities, high quality of life and diverse economy positions it favorably over the long term." James Farrar, the Company's Chief Executive Officer. About City Office REIT, Inc. City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located in leading 18-hour cities in the Southern and Western United States. City Office currently owns or has a controlling interest in 6.2 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.

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Spotlight

TECHNOLOGY is changing the most fundamental truth about commercial real estate (CRE)—that value is based solely on location, location, location. While it still matters, of course, that a space be close to customers, employees, and/or suppliers, informationbased applications have the potential to add new ways for the CRE sector to create value for customers, differentiate from competitors, and even find new sources of revenue. Specifically, the Internet of Things (IoT) is already having a significant impact on the CRE industry, helping companies move beyond a focus on cost reduction. IoT applications aim to grow margins and enable features such as dramatically more efficient building operations, enhanced tenant relationships, and new revenue generation opportunities. Consider the increasingly popular smart thermostats that intuitively adjust the temperature, humidity, and light based on residents’ preferences and climatic conditions.

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