REIT Markets Finding It's "Mojo" in Second Quarter After Historic First Quarter Selloffs

Globest.com is reporting that REIT equity shares increased 11.1% in the second quarter of 2018 after suffering historic selloffs in the first quarter that lent to a 10% decline in value for the period.  The report also indicates that shares increased another 3.6% in August as the sector is finding it's "mojo" according to Kroll Bond Rating Agency (KBRA).  The report covered 116 REITs that placed unsecured debt, including 66 REITs that issued notes in the public market, 28 REITs that issued unsecured notes but only via private placements and 22 REITs that borrowed via unsecured term loans but not unsecured notes.

According to KBRA  debt-to-market leverage for the REIT sector reached record lows by mid-year 2018, declining to a median of 30.2% for public and private note issuers. REITS have recovered all of their first quarter losses and are now high year-to-date as compared to the same period year over year.  Retail department stores as well as malls and shopping centers rebounded for the quarter.  Retail department stores are considered one of the strongest equity market groups.

Overall KBRA is confident in the overall REIT market stating “If REITS aren’t in the sweet spot for capital raising and allocation, they’re not far from it. Favorable borrowing costs and more agreeable equity valuations have become aligned with robust demand for properties and the backdrop of consistent economic and employment growth. The menu of REIT capital raising options has rarely, if ever, been broader.”

Other findings from the report according to the Globest.com article are the following:

• Alignment of shareholder and creditor interests is evident in the REIT sector, where lower-leverage REITs have substantially outperformed in the equity market, engendering a greater willingness to raise equity, expand portfolios and enhance diversification.
•  Lower borrowing costs for REIT unsecured debt than mortgage loans further align shareholder and bondholder interests, with unsecured borrowers prompted to avoid and retire mortgage debt.

Blue Harbour Property Management is a full service NYC property management company servicing the boroughs of Queens, Brooklyn, Manhattan and the Bronx.  Whether it be a 1 bedroom condo or multi-family building we are able to assist our clients maximize their investments.

http://www.blueharbourpropertymanagement.com/reit-markets-finding-its-mojo-in-second-quarter-after-historic-first-quarter-selloffs/

Violations of Loft Law Put Landlords In Jeopardy Throughout NYC

A new article by Real Estate Weekly highlights the jeopardy landlords are placed in by violating the Loft Laws.  As many as 339 buildings throughout the City are sanctioned as a result of the law and 264 buildings lack a Certificate of Occupancy meaning that tenants can withhold rent until the buildings are brought up to code.  This has led to many landlords not receiving rent for years resulting in bankruptcies, pre-emptive sales and buyouts by tenants.  It has also led to deteriorating conditions in the buildings due to revenue not being produced to fix repairs.

According to the article, the states interim multiple dwelling (IMD), has given tenants of illegally-converted lofts a tremendous amount of leverage over the process of getting the units compliant with the law.  Property owners have complained about renters not assisting with allowing access to the units for the necessary fixes.  Also tenants must agree to the improvements that must be made by the landlords.  Landlords have nine months to complete the first phase of compliance, which includes compiling reports about the present state of the building and how it will look once improvements are made.  Jason Frosch, a Loft Law specialist at the law firm Borah Goldstein says that a building owner on average will have a year to obtain a certificate of occupancy before tenants can go on perpetual rent strike. However, since most of them former factories and warehouses that’s nearly impossible to do. He states that “the requirements of the Loft Law are costly and time-consuming.  The law doesn’t acknowledge that reality and it requires owners to front those costs while allowing the tenants to deprive them of a revenue stream that is necessary to pay those costs by withholding rent. And it creates a perverse incentive for certain tenants to delay the process and obtain a windfall for doing so."

The IMD drafted in the 1980's was initially aimed warehouses in Soho, Chelsea and Tribeca.  The new updates to the IMD from 2010 also targets warehouses in what is deemed industrial sites located in Williamsburg, Dumbo, Bushwick, Bed-Stuy, Fort Greene, Park Slope and Long Island City.
Senator Martin Malavé Dilan, a Democrat from northern Brooklyn has introduced a bill allowing owners more time to make improvements before tenants could withhold rent. That bill was not voted for by the legislature and owners are hoping that they will open a special session to vote on it.  It is uncertain whether they would have the votes to have it pass at this time.

Blue Harbour Property Management is a full service NYC property management company servicing the boroughs of Queens, Brooklyn, Manhattan and the Bronx.  Whether it be a 1 bedroom condo or multi-family building we are able to assist our clients maximize their investments.

http://www.blueharbourpropertymanagement.com/violations-of-loft-law-put-landlords-in-jeopardy-throughout-nyc/

NYC Broker Confidence Declines Entering Into The Slower Fall Season

The Real Estate Board of New York (REBNY) published their broker confidence index for the 2nd quarter of the year and it shows a decline from first quarter results.  REBNY which surveys its residential and commercial brokerage division members to measure their confidence in the New York City real estate market publishes their results quarterly with the top index being a 10.  The index shows that broker confidence decreased in the second quarter of 2018 to 5.53 out of 10.  This is a decrease of 0.25 from the first quarter of 2018.  Residential broker confidence levels hit a record low of  of 4.63 in the second quarter of 2018.

The report indicates that the main factors for the decreasing optimism with broker circles are political uncertainty, the expectation of rising interest rates, how the tariffs will affect investments, concerns about the implications of tax reform.  John Banks, President of the REBNY states "As federal policies have taken effect, local real estate markets have been seeing their impact on buyer hesitancy and seller uncertainty.  Despite these conditions, New York City real estate brokers remain positive overall about the present situation and future real estate market."

Some brokers believe that pricing and the lack of housing remains a major concern in the residential market.  One broker states "The biggest issue is still pricing, but a close second place is condition of the apartment," said a residential broker. "Buyers are slower to purchase an apartment that needs a good deal of work."  All of these concerns are affecting future confidence in the market as well.  The Residential Broker Future Confidence Index  which is an outlook on the future market six months from the date the survey was completed hit a number of 4.46.  This is 1.18 decrease from the first quarter of 2018.

Blue Harbour Property Management is a full service NYC property management company servicing the boroughs of Queens, Brooklyn, Manhattan and the Bronx.  Whether it be a 1 bedroom condo or multi-family building we are able to assist our clients maximize their investments.

http://www.blueharbourpropertymanagement.com/nyc-broker-confidence-declines-entering-into-the-slower-fall-season/

Two Queens Neighborhoods Score High in Rentlogic Survey of Best Multi-Family Rental Buildings

The New York Post recently published an article on areas renters should avoid because of failing grades.  The Post used a survey by Rentlogic, a real estate data firm which hands out grades to New York City's multi-family rental buildings.  The company uses public information from the city on building violations and tenant complaints and then assigns properties a score of A (excellent), B (good), C (needs improvement) or F (unacceptable).   The survey gave high grades to two Queens neighborhoods of Floral Park and Elmhurst.  Areas in Manhattan and the Bronx scored at the bottom end of the grading.

According to the article, Rentlogic was able to review data on more than 1 million buildings from roughly 300 neighborhoods throughout New York City.  An analysis of the data, Rentlogic was able to determine what were the best and the worst neighborhoods throughout NYC.   The Post reports "The most surprising result: Prices aren’t always a proxy for quality. For instance, the city’s best-graded neighborhoods include workaday spots like Great Kills, Staten Island; Floral Park, Queens and City Island in the Bronx. (There, 99 percent or more of buildings received an A grade.) In the West Village, on the other hand, 76 percent of properties scored an A rating. In the East Village, only 52 percent of properties got an A."  Another area that was highlighted is Elmhurst which received a 92 percent (92%) score and an A.

The worst neighborhoods according to the data was Tremont (Bronx) and Inwood (Manhattan). Nine percent (9%) of buildings in these areas scored an F.  This was followed by West Harlem (Manhattan) with 7.6% of their buildings scoring an F grade.

Blue Harbour Property Management is a full service NYC property management company servicing the boroughs of Queens, Brooklyn, Manhattan and the Bronx.  Whether it be a 1 bedroom condo or multi-family building we are able to assist our clients maximize their investments.

http://www.blueharbourpropertymanagement.com/two-queens-neighborhoods-score-high-in-rentlogic-survey-of-best-multi-family-rental-buildings/