Political uncertainty affecting residential development land prices

Knight Frank | May 22, 2019

Average greenfield development land prices fell by 0.6% year on year in the first quarter of 2019, the first annual decline in two years and likely due to Brexit uncertainty. Urban brownfield land values increased by 0.8% during the quarter, moderating the annual decline to 0.2% but in the prime central London development land market values were down by 2%, taking the annual decline to 7.5%. According to the residential development land index report from real estate consultants Knight Frank house builders are seeking to protect their margins to account for future risks, particularly in the South East.

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REAL ESTATE INVESTMENT

StratCap Acquires Cleveland Data Center

StratCap | June 07, 2022

StratCap’s institutional data center real estate investment platform, Strategic Datasphere, LLC, has completed the acquisition of a 187,000 square foot facility with a high-density data center, banking operations center and flex/R&D space in Cleveland, OH. Serving as a central connectivity point between Chicago and New York, Cleveland has seen an influx of interest due to local and regional companies looking to outsource their data center presence. And because Cleveland is an NFL city, it has seen an increase of cloud and edge customer activity from AWS, Google, Microsoft, and Facebook who are looking to establish nodes and local zones in these markets. Located 5 minutes from the Cleveland Hopkins International Airport and 15 minutes from downtown Cleveland, this facility benefits from robust fiber connectivity from over seven providers. Originally built in 1988 as National City Bank’s operations and data center facility, it was expanded in 2008 when a major financial institution acquired the property to create a modern technology campus. This financial institution (an investment grade tenant) leases about 26% of the facility and has approximately 14 years of lease term remaining on their current lease. As a value-add investment opportunity, the property has approximately 138,500 square feet of space available to lease. There is an 8,000 square foot turn-key data hall that can supply 3 MW of critical power at N+1. The data center has a 48” raised floor with liquid cooled racks capable of supporting over 300 watts per square foot. The building also has about 59,000 square feet of flex/R&D space can likely be repositioned to accommodate additional data center space as well. We believe the existing 3 MW data center is unique in the local market and will be appealing to technology and financial services firms that run high-density compute applications. The ability to convert underutilized space into operational data halls also creates an attractive value-add opportunity for this asset. In addition, the current lease structure provides us with what we believe are long-term, predictable rental revenues.” Bryan Marsh, CEO of StratCap’s data center platform The Seller, Legacy Investing, LLC, a Virginia-based company focused on mission-critical real estate, was represented by Jones, Lang, LaSalle, Inc. Datasphere purchased the property on an all-cash basis. About StratCap StratCap is a privately held, global alternative investment management platform committed to providing access to dynamic asset classes and highly experienced investment professionals in order to provide clients with attractive risk-adjusted returns. The company is focused on a wide range of digital economy investments with an emphasis on digital infrastructure, sustainability, and technology-centric sectors. About Strategic Datasphere Datasphere is a data center real estate and infrastructure investment platform. Datasphere is focused on the acquisition, development and management of fully and partially stabilized data center facilities across North America and Europe. Datasphere has access to significant committed equity capital that is expected to support more than $1.5 billion in potential investments alongside debt financing. Datasphere is led by data center industry veteran, Bryan Marsh, and supported by a seasoned management team with several decades of collective experience in the data center industry. About Legacy Investing, LLC Headquartered in Northern Virginia and founded by seasoned technology company executives, Legacy Investing focuses on mission critical real estate impacted by new technologies: digital and physical supply chains, future workplaces, and life sciences. Legacy’s principals have leveraged this platform and their public company C-level experience across the past two decades to complete more than $2.75 billion in transactions across 19 million square feet of data centers, e-commerce distribution centers, modern office buildings, and life sciences facilities on behalf of select family office and institutional investors. Legacy leverages its expertise on technology’s impact on tenant demand, site selection, and leasing to target and position properties to meet those needs and create long-term real estate value.

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MORTGAGE AND LENDING

First Street Foundation Finds Over 30.4 Million Properties Have a 1% or Greater Chance of Experiencing a Wildfire During the Course of a Mortgage

First Street Foundation | May 16, 2022

First Street Foundation released the First Street Foundation Wildfire Model, the only nationwide, probabilistic, climate adjusted, peer reviewed, property specific wildfire risk model for properties in the contiguous United States. Detailed in the 5th National Risk Assessment: Fueling the Flames, the model provides a first of its kind analysis of the risk individual properties face from damaging wildfires, and up to 30 years in the future as a result of climate changes. Nationwide, the report finds nearly 20 million properties face "Moderate" risk, (up to a 6% chance of experiencing a wildfire over 30 years); 6 million properties face "Major" risk (up to 14% risk over 30 years); nearly 3 million face "Severe" risk (up to 26% over 30 years); and approximately 1.5 million face "Extreme" risk (greater than 26% risk over 30 years). Over 49 million properties face less than 1% chance of experiencing a wildfire over a 30-year period, or "Minor" risk in the model. Wildfire has become one of the most common and dangerous climate perils, increasingly spreading from heavily forested areas to more populous urban and suburban environments. According to NOAA, damage associated with wildfires has grown substantially, with $81.7 billion, or 66% of all direct losses since 1980, occurring in the last five years. Yet today, neither the public nor private sector have developed a simple methodology or tool to help homeowners, buyers or renters understand a property's wildfire risk, and make informed decisions to protect them. Existing tools like USDA Forest Service's wildfire risk assessment are designed to help fire officials understand how risk varies across a state, region, or county; it is explicitly not meant to help homeowners understand their personal risk. To address this gap, First Street Foundation will make this critical wildfire risk information available to users for free through Risk FactorTM, where Fire FactorTM data will be presented alongside Flood Factor and other future perils, giving users a comprehensive understanding of their homes from physical climate risk today and 30 years into the future. Like Flood Factor, Fire Factor data will be integrated into Realtor.com, providing visitors to the site a property-level wildfire risk assessment in the form of a risk ranking from 1 (Minimal) to 10 (Extreme) for each property on the site. Users interested in commercial real estate can also find this data integrated with Crexi. "The lack of a property specific, climate adjusted wildfire risk for individual properties has severely hindered everyone from the federal government to your average American," said Matthew Eby, Founder and Executive Director of First Street Foundation. "As a changing climate drives more frequent and severe wildfire events, Fire Factor will prove critical in ensuring everyone has the insights they need to understand their personal risk to avoid and protect against the devastating impact of a wildfire." According to a recent Realtor.com survey, seven out of ten recent homebuyers considered the risk of natural disasters when deciding where to live. Realtor.com is adding Fire Factor to maps and properties to help home shoppers and homeowners make informed decisions. Wildfire risk information empowers consumers to protect their homes against the increasing threat of wildfire damage." Sara Brinton, Lead Product Manager, Realtor.com Building the model brought together top climate and data scientists, technologists, and modelers from other leading organizations; the Spatial Informatics Group, Reax Engineering, and Eagle Rock Analytics who are members of the Pyregrence Consortium as well as the USGS, and architectural design & engineering consulting group Arup. This group combined decades of peer reviewed research and expertise in next-generation modeling techniques to create an open source, freely available wildfire model that accounts for current and future climate conditions.

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REAL ESTATE ADVICE

Anywhere-Affiliated Agents Again Lead NAHREP Top 250 Latino Agents Report

Anywhere Real Estate Inc. | June 16, 2022

Anywhere Real Estate Inc., a global leader in residential real estate services (formerly known as Realogy Holdings Corp.), announced that its affiliated agents lead the National Association of Hispanic Real Estate Professionals (NAHREP) 2022 Top 250 Latino Agents Report, which recognizes the top producing Latino agents across the United States, including Puerto Rico. With 50 independent agents included – more than any other company – Anywhere-affiliated agents comprise 20 percent of the list. All six leading residential real estate brands in the Anywhere portfolio, including Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran, ERA®, and Sotheby's International Realty®, are represented in the report's rankings. According to NAHREP's 2021 State of Hispanic Homeownership Report, the Latino homeownership rate continued to increase in 2021 for the seventh consecutive year. While the report also notes that a dearth of housing supply and rising price points remain a significant barrier to many homebuyers, the Urban Institute predicts that Latinos will account for 70 percent of homeownership growth over the next 20 years. We are incredibly proud that the Anywhere family of brands is home to so many of the top-producing agents that represent the nation's expanding community of Latino homebuyers. As Hispanic household formation continues to drive significant homeownership growth in the coming years, we remain committed to creating professional opportunities for diverse and representative professionals that can help to empower everyone's next move." Ivonne Furneaux, vice president of diversity, equity, and inclusion for Anywhere As the one of the largest full service residential real estate services companies in the U.S., Anywhere is dedicated to creating a culture of diversity, equity, and inclusion, and is a vocal advocate for equal opportunity and fair housing. The Company's renowned brands also offer a number of initiatives focused on driving diversity, such as CENTURY 21's Empowering Latinas program, which helps Latina entrepreneurs obtain their real estate license and prepares them for success in the real estate industry through a network of support. Read more about Anywhere and its commitment to diversity, equity and inclusion in its 2021 CSR Report. According to NAHREP, this year's report ranks individual agents and teams based on transactions and sales volume, and represents a total of 39,804 transactions and $13.8 billion in combined sales volume in 2021. Anywhere affiliated agents featured in the top 10 of Top 250 Latino Agents Report include Wilfredo Alfaro, Coldwell Banker Realty in Clifton, NJ and Johnny Rojas, Century 21 JR Gold Team Realty in Garfield, NJ. Additionally, Anywhere agents on the list represent: One quarter of the Top 100 agents by sale volume, including Coldwell Banker Real Estate (14), CENTURY 21 (6), Sotheby's International Realty (3), and Corcoran (2). Almost half of the Top 25 'Rookies', including Coldwell Banker (6), CENTURY 21 (2), Better Homes and Gardens (1), and ERA (1). 46% of the top 100 agents in the Northeast, 43% of the top 100 agents in the Northwest, 38% of the top 100 agents in the Southwest, 27% of top 100 agents in the Southeast, 20% of top 100 agents in the Midwest, and 13% of the top 100 agents in the Mountain region. As of June 9, 2022, Realogy completed its corporate rebrand to Anywhere. Home to renowned real estate brands as well as national title, settlement, and relocation companies and scaled mortgage origination and underwriting joint ventures, the Anywhere rebrand reflects a strategic shift for the company. Leveraging its leading position in business segments that comprise nearly every aspect of the real estate transaction, the company has placed a strong emphasis on building a more simplified, digitized, and integrated home buying and selling experience for any consumer, anywhere. About Anywhere Anywhere Real Estate Inc. is on a mission to empower everyone's next move. Home to some of the most recognized brands in real estate – Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran®, ERA®, and Sotheby's International Realty® – the AnywhereSM portfolio includes franchise and brokerage operations as well as national title, settlement, and relocation companies and nationally scaled mortgage origination and underwriting joint ventures. Supporting approximately 1.5 million home transactions in 2021, Anywhere is focused on simplifying, digitizing, and integrating the real estate transaction for all consumers, no matter where they may be in their home buying and selling journey. With innovative products and technology, Anywhere fuels the productivity of its approximately 196,200 independent sales agents in the U.S. and approximately 136,400 independent sales agents in 118 other countries and territories. Recognized for eleven consecutive years as one of the World's Most Ethical Companies, Anywhere has also been designated a Great Place to Work four years in a row, named one of LinkedIn's 2022 Top Companies in the U.S., and honored by Forbes as one of the World's Best Employers 2021.

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REAL ESTATE INVESTMENT

Taconic Capital Advisors Closes $500M Distressed and Opportunistic Real Estate Fund

Taconic Capital Advisors | May 23, 2022

Taconic Capital Advisors, a global institutional investment firm, announced that it has closed its third real estate fund, Taconic CRE Dislocation Onshore Fund lll (TCREDF III), with $500 million in capital commitments. The fund comprises investments from a diverse group of existing and new investors with flexibility to tap into an overflow vehicle for more concentrated transactions. One year into its investment period, TCREDF III has already committed or closed on $300 million of investments across 15 distinct transactions. Taconic believes the COVID pandemic accelerated pre-existing trends and distress in the CRE market. A combination of aggressive pre-COVID financing and transaction assumptions, oversupply in specific markets and COVID-related societal and demographic shifts should continue to apply significant pressure on the CRE market providing ample investment opportunities. Taconic anticipates that hotel and office assets will comprise the majority of the fund’s investments. We are pleased to build on the performance of Funds l and ll with the close of our third real estate fund, TCREDF III. Our team has a proven ability to identify inefficiencies and dislocated investment opportunities across a host of market sectors, positioning our funds to maximize value for new and existing investors." James Jordan, principal and portfolio manager of Taconic Capital Advisors’ CRE investments About Taconic Capital Advisors Taconic Capital Advisors is a global institutional investment firm that pursues an event-driven, multi-strategy investment approach designed to generate strong, risk-adjusted returns over multiple market cycles. Taconic was founded in 1999 by former Goldman Sachs partners Frank Brosens and Ken Brody. The company has roughly $8 billion of total assets under management with offices in New York, London, and Hong Kong, and more than 100 employees worldwide. Taconic’s full-service commercial real estate platform invests in all asset classes and across the capital structure in both public and private markets. The strategy’s broad mandate offers flexibility to capitalize on shifting market opportunities, creating uncorrelated risk-adjusted return profiles for investors. Rooted in distressed and opportunistic investing, the team applies high-touch asset management capabilities to drive strong asset-level performance and capital market executions. Well-established relationships drive Taconic’s unique and diverse transaction sourcing channels which including local operating partners, investor partners and a broad network of lenders, CMBS special servicers, trading desks and brokerage houses. Taconic’s series of closed-ended real estate funds are fully discretionary and have received over $1 billion in capital commitments. Investments to date across all Taconic funds total over $3 billion of gross asset value across roughly 165 distinct transactions.

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Spotlight

Magellan Development is proud to present The Parkhomes at Lakeshore East. These exquisite homes are your opportunity to own a private town home by the lakefront in downtown Chicago. The new Lakeshore East development is located where Lake Michigan meets the Chicago River adjacent to Millennium Park.

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