The U.S. commercial real estate market is showing ever greater signs of stress, but there are still few deals to be had.
Transactions fell 68 per cent in the second quarter across all property types compared with 2019 as potential buyers and sellers remained far apart on the prices of buildings, according to data released Wednesday by Real Capital Analytics.
The paralysis set in despite near-record amounts of capital ready to be deployed by some of the world’s biggest real estate investors.
“The buyer and seller expectations are not aligned,” said Simon Mallinson, an executive managing director at RCA. “Sellers aren’t being forced to the market because there’s no realized distress and buyers are sitting on the sidelines thinking there’s going to be distress.”
Second-quarter sales plunged 70 per cent for apartments, 71 per cent for offices, 73 per cent for retail and 91 per cent for hotels, according to RCA. Industrial property transactions were a brighter spot. Sales dropped only 50 per cent in the second quarter, as online shopping thrived and manufacturers leased space to avoid supply chain disruptions.
For markets to function, there needs to be some agreement on what assets are worth. But the surging coronavirus outbreak is fueling uncertainty, making the outlook for commercial property just as cloudy as it was in March when lockdowns put the economy into deep freeze.
Whether investors will come off the sidelines any time soon remains to be seen. Private real estate funds had about US$273 billion for property purchases at the end of June, little changed from the record US$281 billion six months earlier, according to Preqin Ltd.
Blackstone Abandons US$20 Million Deposit on Scrapped Office Deal
With the economic fallout from the pandemic mounting, deals have fallen apart or are being reworked. The buyer of the iconic Transamerica pyramid in San Francisco is going forward with its deal — but at a 10 per cent price cut from what it negotiated at the beginning of the year, according to people familiar with the matter who asked not to be identified discussing private talks.
More than US$32 billion of hotel and retail real estate was newly distressed in the first half of 2020, as rent delinquencies soared and borrowers missed payments, according to RCA.
Approximately US$90 billion more of commercial real estate is “potentially troubled,” RCA reported, meaning it’s in a forbearance plan, suffering rent collection problems or early-stage delinquencies. That includes US$14.5 billion for offices and US$20 billion for apartments.
Still, delinquent borrowers don’t face pressure to sell yet. Lenders are focused on ways to buy time, delaying distressed property from coming to market, according to Lisa Pendergast, executive director of the CRE Finance Council, a commercial real estate trade group.
“It’s becoming clearer, especially with the resurgence in cases across the country, that a three-month forbearance is not really going to satisfy the situation,” she said. “So there are other things that can be done. A lot of that has to do with loan modifications.”
Prices have also been propped up by low interest rates. Low borrowing costs mean investors can expect higher returns on real estate than Treasury bonds, even if vacancy rates rise or tenant delinquencies increase, according to Michael Fascitelli, former chief executive officer of Vornado Realty Trust.
“The cost of money is one of the biggest costs of an asset for real estate,” Fascitelli said recently.
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Bridgemarq Real Estate Services Announces Voting Results from Annual Meeting of Shareholders – Canada NewsWire
TORONTO, Aug. 7, 2020 /CNW/ – Bridgemarq Real Estate Services Inc. (“Bridgemarq” or the “Company”) (TSX: BRE) announced the voting results for the directors elected at the Company’s annual meeting of shareholders held virtually on August 7, 2020.
Bridgemarq is pleased to announce that the holders of restricted voting shares have re-elected Mr. Colum Bastable, Ms. Lorraine Bell and Ms. Gail Kilgour to the board of directors. The results of the voting are summarized in the following table:
In addition, Brookfield BBP (Canada) Holdings LP, the owner of the Exchangeable Units issued by the Company and the holder of one special voting share, re-appointed Mr. Spencer Enright and Mr. Joe Freedman to the board.
The shareholders also approved the appointment of Deloitte LLP to act as the Company’s external auditors for the coming year, with 99.40% of those shareholders who voted approving the appointment.
About Bridgemarq Real Estate Services
Bridgemarq is a leading provider of services to residential real estate brokers and a network of approximately 19,000 REALTORS®1. We operate in Canada under the Royal LePage, Via Capitale and Johnston & Daniel brands. For more information, go to bridgemarq.com.
Bridgemarq is an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Further information is available at bbu.brookfield.com.
1 The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA.
SOURCE Bridgemarq Real Estate Services Inc.
For further information: Sarah Louise Gardiner, Director of Investor Relations, Bridgemarq Real Estate Services, [email protected], Tel: 416-510-5783
July Kootenay real estate sales at record high – Nelson Star – Nelson Star
Sales and prices of Kootenay real estate hit record highs in July.
The Kootenay Association of Realtors (KAR) reports that a total of 411 residential unit sales were recorded by the Multiple Listing Service (MLS) in July 2020, a rise of 19.4 per cent from July 2019.
The average MLS residential price in the region was $389,684, up 10.3 per cent from July of last year.
Total sales dollar volume in July was $160.1 million, a 31.8 per cent increase over July 2019, which saw $121.4 million in sales.
But KAR president Tyler Hancock doesn’t necessarily think the trend will continue.
“Though sales figures in the region have improved considerably this month, the market is still exhibiting signs of inconsistency,” said Hancock.
”The sharp spike in average prices and dollar volume can be attributed to the demand having sprung back while the supply is low. This dramatic sales growth is likely not a sign of normalcy in the Kootenay real estate market.”
Real estate sales have been steadily increasing over the last three months after taking a hard hit in the spring due to the COVID-19 pandemic.
May sales were down by more than 50 per cent compared to May of 2019.
Hancock says it is a demand for single-family homes that has been driving the market increase.
“We are anticipating this demand to continue as more home buyers are drawn to the Kootenays from larger, more densely populated regions,” said Hancock.
“Bringing equilibrium will largely depend on government policies and regulations, especially if we are hit by a second COVID-19 wave.”
While the monthly totals for July set records, year-to-date (YTD) sales dollar volume is actually down slightly at 1.4 per cent below the same period of 2019.
When broken down by sub-region, the West Kootenay accounts for the loss with a 3.7 per cent decrease while East Kootenay sales volume remained about the same as 2019.
YTD residential unit sales are also down by 7.1 per cent. The West Kootenay took the bigger hit with an 11.4 per cent decrease while the East Kootenay recorded a 4.1 per cent decrease.
But the numbers do reveal an improvement in the market compared to May when YTD figures showed a 24 per cent decrease in units sold.
However, the average MLS residential price for the year is up by six per cent at $362,332. For prices, it was the West Kootenay with the larger gain of 8.7 per cent and the East Kootenay with a 4.5 per cent gain.
The West Kootenay sub-region includes Castlegar, Castlegar rural, Grand Forks, Grand Forks rural, Nelson, Nelson rural, Rossland, Trail and Trail rural.
The East Kootenay sub-region includes Cranbrook, Cranbrook Lakes, Creston, Creston rural, Elkford, Fernie, Fernie rural, Invermere, Invermere rural, Sparwood, Radium, Kimberley, Kimberley/Cranbrook rural, Golden and Golden rural.
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