Tag Archive for: capital investment

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Florida Land Sales Show No Sign Of Cooling Down

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Over the last few years, Florida has benefitted from tremendous in-migration, which equates to approximately 1,000 people per day moving to the state.

The trend includes not only the movement of individuals, but also employers, capital sources and developers who are expanding into the Florida market. For the first time in 65 years, Florida leads the nation in population growth.

This recent growth has been a catalyst for development, particularly in South Florida, Orlando and Tampa, which are some of the most active development markets in the U.S. In the last few years, development was primarily limited to residential and industrial, but there is renewed interest in office, hotel and retail projects. New residential developments extend beyond traditional multi-housing to build-for-rent communities, senior housing, student housing, affordable housing and manufactured housing.

As a result of the robust development pipeline, developable land is in high demand and selling at record prices. JLL’s Capital Markets team has sold more than $6 billion in land sites over the past 25 years in South Florida, $1.6 billion of which was sold in the last three years alone, demonstrating the sharp uptick in demand. In addition, compared to the broader U.S. market, South Florida / Miami land sales totaled $3.2 billion in 2022, up 49% year-over-year, while the U.S. land sale volume equaled $28 billion, down 10% year-over-year.

Some of the record setting JLL sales include the $363 million sale of 1201 Brickell Bay Dr., which is slated for Citadel’s new headquarters and 700 North Miami Avenue, a 4.7-acre site that sold for $94 million.

“We’ve really seen an uptick in non-traditional real estate owners monetizing their land holdings as well – groups such as schools, religious institutions and non-profits,” said Maurice Habif, Managing Director, JLL Capital Markets. “They see the record setting prices others are getting for their properties and realize they can fund more of their goals and missions by monetizing their land holdings. It’s been really fulfilling working on behalf of the non-profit organizations, and we look forward to seeing this trend continue in the near term. Land is only becoming more and more coveted throughout Florida and that demand should continue for the foreseeable future.”

“Florida really is experiencing phenomenal growth on all fronts,” added Simon Banke, Senior Director, JLL Capital Markets. “With more than 1,000 new residents moving to Florida every day, the state currently leads the country in population growth. Now, for the first time in forty years, Florida boasts more jobs than New York. Investors are acutely aware of these trends and hyper focused on investing in our market. In addition to a wealth of developers and capital providers that are already active in the state, we are speaking with new investors that want to be in Florida on a daily basis.”

 

Source: MarketScreener

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Industrial Cap Rates Expected To Rise But Outlook For Seasoned Investors Remains Strong

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Industrial has been on quite a tear over the past few years, as changes in consumer behavior have driven demand for more logistics and fulfillment facilities in key markets.

And according to one industry expert, the sector should stay a favored asset class for experienced investors, despite rising capital costs.

“Post-pandemic consumer behavior has changed and the rate of growth in ecommerce has slowed which has already led to pullbacks by some companies,” says Greg Burns, Managing Director at Stonebriar Commercial Finance, noting Amazon’s recent announcements regarding its industrial portfolio. “Demand for industrial though was driven by other factors as well including a move toward onshoring and the disruption of just in time supply chains.”

With that said, however, Burns said “depending on the what and the where, I would not be surprised to see cap rates widen another 50 to 100 basis points.”

“The cost of debt and equity capital have increased and cap rate hurdles have increased for institutional buyers,” Burns says, adding that he recently saw an increase of 100 basis points in an appraisal for a property in a market where his firm closed a deal six months ago.

Burns will discuss what’s happening in the capital markets in a session at next month’s GlobeSt Industrial conference in Scottsdale, Ariz. He says Stonebriar’s definition of industrial includes not just warehouse and distribution facilities, but manufacturing, life sciences, cold storage and data centers as well, and notes that “each of those sub-categories have their own dynamic and, broadly, all are growing.”

“We prefer properties with multi-modal access, especially those near ports, with most opportunities we’ve seen recently being to the southeast of a line drawn from Baltimore to Phoenix,” Burns says. “We also pay attention to outdoor storage capacity as that has become a greater consideration for tenants. There have been several announcements of new manufacturing sites relating to microchip and electric vehicles which should lead to demand for new logistics properties nearby.”

As the costs of debt capital rise, Burns says Stonebriar’s underwriting will continue to focus on the sponsor, asset and market and “that won’t change.”

“We do few spec development deals and will likely be more granular on understanding the demand/supply side of a respective market,” Burns says.

Ultimately, a recession seems likely and Burns says the changing economic landscape will have “varying impacts” on investors and individual markets alike.

“From our perspective, there will be a premium on a sponsor’s experience and capacity,” Burns says. “I anticipate industrial will remain a favored asset class for investors although those with less experience in the sector could pull back until the economy recovers.”

 

Source: GlobeSt.

 

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Banks Get Company on the Commercial Real Estate Lending Front

Developer Graham Cos. wanted to have more time than the typical 10 years to repay a $120 million loan.

Property manager Cardinal Point Management LLC wanted to work with a flexible lender who can provide low interest for a $41 million loan.

And Vutec Corp. wanted a lender willing to issue $3.3 million after the electronics company filed for bankruptcy protection.

They all turned to alternative lenders rather than more heavily regulated banks.

“I think in this market, we are seeing a lot more of developers using alternative financing sources as opposed to going to the traditional banks because generally the alternative financing sources — private equity funds, for example — they don’t have to follow as many of the regulations as traditional banks do,” said Phillip Sosnow, a real estate partner at Bilzin Sumberg in Miami. “They have a little more flexibility in being able to lend.”

While national banks are the main player in South Florida commercial real estate lending, some alternative lenders are gaining ground. Life insurance companies set a record in 2017 when they issued $80 billion in commercial loans nationally, 4 percent more than in 2016, according to a Mortgage Bankers Association report.

In South Florida, borrowers are opting for alternative lenders because of the flexibility they provide, experts said. From offering more competitive interest rates and long repayment schedules to higher loan-to-value ratios, alternative lenders are less restrictive and increasingly becoming the choice for commercial borrowers.

Just ask Stuart Wyllie, head of Miami Lakes-based Graham Cos., which has developed much of the northwest Miami-Dade County town from its pioneer past as a family-owned dairy into an affluent suburb. The company closed June 21 on refinancing for a 29-property commercial portfolio, picking New York-based global insurer American International Group Inc. as the lender.

“We went with the life insurance company primarily because of the deal we were looking for. This is a 15-year deal. Your normal banks and those kinds of lenders don’t tend to go that long. Some do, but generally speaking they don’t,” Wyllie said. “These life insurance companies have long liabilities, and they look to match these mortgages up with those liabilities.”

Vutec, a video projection screen maker, needed to refinance its industrial owner-occupied building at 11711 W. Sample Road in Coral Springs about two years ago. But the was a year after its Chapter 11 bankruptcy filing, which likely reduced the pool of lenders willing to work with the company.

“A lot of banks won’t lend to companies that are either in bankruptcy or emerging from a bankruptcy,” said Brett Forman, president and CEO of commercial bridge lender Trez Forman Capital Group.

Trez Forman issued a nonrecourse loan with a 65 percent loan-to-value ratio. The 24-month financing allowed for a possible extension and had a 9 percent fixed interest rate.

“They had gone through a reorganization, and we gave them flexible terms so they can deploy more capital into their business,” Forman said. “We didn’t really look at the value of the business. We looked at the value of the real estate, and we made a loan based on the value of the real estate. Kind of a true asset-backed loan.”

Lending Overview

Despite the flexibility of alternative lenders, Federal Deposit Insurance Corp.-insured banks held 40 percent of the total $3.1 trillion outstanding debt, making them the largest single source for commercial and multifamily mortgage loans nationally in 2017, according to the Mortgage Bankers report.

But the report also showed banks had the lowest year-over-year increase at 6 percent in debt holdings in five years. At the same time, life insurance companies grew their portfolios by $40 billion, a 9 percent increase.

“The long-term nature of commercial and multifamily loans matches well with the long-term nature of many of the liabilities of these companies,” the  report said.

The Dodd-Frank Act implemented in 2010 added restrictions on banks, including their commercial real estate lending. The U.S. Senate in March and the House in May voted to relax some of the restrictions on lenders with less than $250 billion in assets.

“The search for alternatives might be a result of the stricter regulations imposed on banks following the 2008 financial crisis,” Sosnow said. “New regulations aside, banks became more cautious. The banks have learned their lesson, and they don’t want to be stuck with a bunch of failed projects. Traditional banks are being a lot more cautious in their lending. Regulations have changed. And so their requirements are definitely a little more stringent than what a private equity lender or some of these alternative sources may be required to do.”

“At the same time, an influx of alternative lenders means they are competing hard for borrowers,” said Brian Gaswirth, HFF director in Miami. “The debt markets in general are super-competitive right now just given the amount of liquidity in the marketplace, and there’s a lot of groups that are looking to put out money. In order for them to win deals, you are seeing more competitive spread. There’s a lot of supply, not as much demand. So when there is a good deal in the marketplace, you get a lot of great options. Some alternative lenders are willing to go as high as 85 percent on loan-to-value ratios and as long as 30 years on loan terms.”

The Projects

Still, brokers and borrowers said it comes down to matching a project to the right lender, bank or otherwise. Cardinal Point, a Tampa investor that paid $47.5 million in July for the 12-story Coastal Tower at 2400 E. Commercial Blvd. in Fort Lauderdale, considered both banks and alternative lenders when looking for a loan.

It picked New York Life Insurance Co. as the issuer of $41 million in financing, including $32.4 million was for acquisition and the rest for renovations of the office building, said Gaswirth, who was part of the HFF team that secured the loan. The decision to go with the third largest life insurance company in the U.S. was based on the type of financing it offered, although Gaswirth declined to disclose the terms.

“There’s also the nonmonetary benefit of being able to start a new relationship with one of the largest life insurance companies in the country,” Gaswirth said.

“The Graham Cos.’ pool of lenders includes banks and alternatives,” Wyllie said. “A lot of its $120 million loan will be used for new construction.”

This includes Graham Cos.’ nearly finished 40,000-square-foot, two-story office building southeast of Main Street and Ludlam Road in Miami Lakes’ Town Center; two nearly finished industrial buildings with a combined 76,000 square feet at Business Park West; and a planned 220-unit senior apartment community also at Business Park West.

“Every deal stands on its own,” Wyllie said. “When we decide to go on the market looking for capital, we will look at all the sources.”

 

Source: DBR

Greater Fort Lauderdale Alliance Touts New Jobs, Corporate Expansions At Annual Meeting

Thousands of high-paying jobs came to Broward County during the last fiscal year, and the county’s economic development agency projects that the future looks bright for continued job growth.

That was the message at the recent Greater Fort Lauderdale Alliance Annual Dinner held at the Signature Grand in Davie.

More than 750 people attended the event, where the economic engine reported it assisted businesses in creating 1,978 new high-value jobs, retaining 1,967 jobs and securing a total of $256 million in new capital investment during the 2016-17 fiscal year ended Sept. 30.

Like past years, the economic development agency offered insights into its gains and wins during the past fiscal year. One of the key accomplishments the Alliance touted in its annual report was the expansion of the Canadian pharmaceutical company Apotex in Miramar, which created 150 new jobs and brought in a capital investment of $184 million.

Another one of its key impact projects was announced just this week. Sixt Rent A Car, a luxury car rental service with more than 2,000 locations in over 100 countries established its North American headquarters in Fort Lauderdale. As a result of the local expansion, the company will be creating 300 new jobs and making a capital investment of $10.4 million to the county.

During the annual meeting, the Alliance welcomed Jennifer O’Flannery Anderson, vice president for advancement and community relations at Nova Southeastern University, as its 2017-18 Chair. She takes over for exiting chair Bill White, co-founder and principal of Compass Office Solutions.

One of the highlights of the annual event is the Alliance‘s Ray Ferrero, Jr. Economic Development Leadership Award, which honors those who have made extraordinary contributions to Broward County.

AutoNation Chairman and CEO Mike Jackson presented the award to this year’s honoree Nova Southeastern University President George L. Hanbury, who he lauded for expanding the university’s programs and elevating its national profile.

“We want this to be a destination not just for service and minimum wage jobs but for middle and upper class jobs,” Hanbury said, during his acceptance of the award.

The event’s keynote speaker Vincent “Vinnie” Viola, owner of the Florida Panthers and chairman emeritus of Virtu Financial, said that he believes the future of South Florida and Broward County looks bright.

“I want to dearly tell you how optimistic I am about South Florida and Greater Fort Lauderdale,” Viola said. “We [the Panthers] expect to be here for a long time.”

Over the past 11 years, the Alliance helped businesses create or retain more than 28,000 direct jobs, 62,000 indirect jobs, resulting in $2.4 billion in annual personal income and $12.3 billion in annual economic impact, it said.

 

Source: SFBJ