In his newest white paper, European Debt Crisis NAI Global Chief Economist, Dr. Peter Linneman, summarizes the origins of the European sovereign debt crises that have dominated the global financial headlines and analyzes the current status of debt in Greece, Portugal, Italy, Ireland and Spain in addition to assessing the impact that default will have on the European economy.
“Europe’s sovereign debt crises are changing daily, yet are making little progress toward long-term solutions. The only questions are when, how and who will be left holding the bag?” said Dr. Linneman. “The principal danger is that when Greece defaults, either voluntarily or involuntarily, there will be considerable capital market uncertainty and renewed rounds of government intervention to save local banks.”
The white paper examines strategies to minimize the impact from a Greek default on other European countries, the possibility of default in other Euro Zone countries and presents possible real estate investment opportunities that may arise as a result of distress in the European banking sector.
European Debt Crisis analyses the European sovereign debt crises and the impact of a default on the Euro Zone countries and banks.
This latest white paper follows Beware of Inflation, where Dr. Linneman assesses the potential destructive power of inflation and its impact on commercial real estate. NAI Global’s white papers and research resources are available for free download at www.naiglobal.com under Publications/Articles & White Papers.
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Thursday, October 13, 2011
NAI Global Chief Economist Analyzes the European Debt Crisis in Newest White Paper
Tuesday, October 11, 2011
BATA PLASTICS COMING INTO MCALLEN MARKETPLACE
BATA Plastics, Inc., a full-service plastics recycling company based out of Grand Rapids, Mich., had been surveying the Rio Grande Valley to set up a second operation to service a large client manufacturing truck components. Already familiar with the large number of manufacturing taking place in Reynosa, Mexico, BATA saw the value that the city of McAllen offered. While allowing BATA to service its established client on the U.S. side, McAllen's proximity to Reynosa presented them with the opportunity to offer its plastic recycling processes to other manufacturers south of the border. For over 20 years BATA has purchased surplus and rejected parts of post industrial plastics from manufacturers and scrap dealers. Services they offer include custom toll grinding, size reduction-shredding, pellatizing, baling, sorting, metal separation, fines separation and drop trailers, to name a few.
In their Michigan headquarters, BATA Plastics, Inc. has received LEED Silver certification. The U.S. Green Building Council defines LEED as an internationally-recognized green building certification system acknowledging projects that implement strategies which can improve environmental and health performance. BATA Plastics is the first plastic recycler in North America with this distinguished certification. While the City of McAllen has been actively promoting a 'go green' initiative with its residents, companies such as BATA Plastics certainly provide the city with a partner knowledgeable in environmental responsibility.
As they launch their operation in the McAllen Foreign Trade Zone with the assistance of the McAllen Economic Development Corp. and Lamar Lawson, a McAllen real estate broker, the workforce will begin with 10, and steadily increase as the list of clients grows. The McAllen operation will be approximately 50 percent of the Michigan operation in terms of square footage. Their workforce in Michigan consists of 95 employees, and the goal is to grow the McAllen operation to that same level. With the number of manufacturing plants across the border, it is quite possible to see this taking place in the near future.
-- Carlos Telles, Marketing Director, McAllen Economic Development Corporation
Monday, October 10, 2011
Don't Miss Out!
A few tips about buying commercial real estate
Posted: Saturday, October 8, 2011 6:28 pm
NEW BRAUNFELS — You’ve heard the old saying, real estate is about location, location, location. And it’s pretty much true regardless of the property type or owner.
Location is definitely important when it comes to commercial real estate. But once you get past this universal truth — that location is key — the differences between the residential and commercial varieties start to emerge.
Residential real estate is about your primary dwelling place. It’s about having a roof over your head for you and your family.
But commercial real estate is quite different. It’s usually about producing income for a business owner or investor. Which brings us to what I like to call the two types of commercial property owners:
1. Users
2. Investors
Users are typically business owners. They need commercial real estate space to house their business. It provides a place for them to sell their products or services. Issues like accessibility/parking, proximity to other businesses that create customer traffic (traffic counts), community demographics, applicable zoning, visibility and, of course, costs are all important. Users can buy or lease the commercial property space for their business.
Investors are a different breed. They’re looking for the commercial property itself to be their income-generator. They’ll buy commercial properties and lease them to others, eventually selling parts of their commercial property “portfolio” when it makes sense to do so.
Investors see real estate as a good alternative to some of the options available on Wall Street. Real estate is less volatile, a good long-term investment and, in Texas, very consistent. Commercial real estate provides two big advantages for investors:
1. Income production
2. Tax depreciation
Investors, typically on the advice of their accountant, will eventually sell a commercial property when its depreciation cycle is coming to an end, taking the profits from the sale and reinvesting in another property through a 1031 Exchange. This is why some large chains/franchises build new stores and retires others.
If you’re thinking of buying commercial property, whether for its direct use (from which to run a business) or as an investment, it’s important to hire a Texas Realtor experienced in commercial real estate. Realtors with the CCIM (Certified Commercial Investment Member) designation have undergone specialized training in commercial real estate.
Also, realize that financing the purchase of a commercial property is different from obtaining a home mortgage loan. Commercial real estate loans usually require at least a 20 percent downpayment, are traditionally amortized over 20 years, and have a three- to five-year balloon. Meaning they reset after 3 or 5 years with a new rate depending on the market.
In Texas, a large share of state and local revenues — particularly those that fund public schools — comes from property taxes. In local communities, it’s advantageous to have a good mix of residential and commercial properties in order to have a broad tax base. That way, individual homeowners aren’t overburdened with an unfair share of the tax load.
Commercial real estate has similarities to residential real estate. But whether you’re considering being a user or investor, you can see there’s more to finding the right space than just location, location, location.
Saturday, October 8, 2011
Retail Rebounds Worldwide
CCIM.com Newscenter
Posted October 6th 2011
Many markets around the globe are seeing an increase in retail property investment, according to Winning in Growth Cities, a recent report from Cushman & Wakefield. Thanks in part to the $2.4 billion sale of upmarket shopping center Festival Walk, Hong Kong led the pack with more than $6.9 billion in estimated retail transaction volume from 4Q10 through 3Q11. London, Paris, Milan, and several German cities also made strong showings. Despite continued challenges to the global economy, Asia Pacific and South America are expected to remain attractive to global retail property investors searching for strong economic fundamentals and healthy demand. Rio de Janeiro, for example, saw more than 2,900 percent growth in retail transaction volume year over year.
Click here to read more
Friday, October 7, 2011
Commercial Real Estate Withstands Weakening Economy
Posted October 5th 2011
CCIM.com Newscenter
CCIM.com Newscenter
“Operation Twist.” The measure will “keep long-term Treasuries at record lows and to spur lending, a plan that could offer commercial real estate investors unique opportunities,”
It seems unlikely that the U.S. will face another recession, according to a recent research brief by Hessam Nadji, managing director of research services at Marcus & Millichap. The U.S. gross domestic product grew 1.3 percent in 2Q11, and new claims for unemployment dropped to 391,000.
Despite the positive signs, “caution and uncertainty [remain] elevated as stock market volatility, yet flattened job growth and GDP trends have largely disappointed,” Nadji says. This will present challenges to the office sector, which saw only 1.2 million sf of absorption in 2Q11. However, primary markets such as Seattle, Chicago, and Washington, D.C., will continue to experience demand, and corporate expansions in major gateway cities are expected to contribute to increased absorption in 2H11.
The Federal Reserve, anticipating further stagnation, has launched “Operation Twist.” The measure will “keep long-term Treasuries at record lows and to spur lending, a plan that could offer commercial real estate investors unique opportunities,” Nadji notes. In 3Q11, overall commercial capitalization rates surpassed the 10-year Treasury by 600 basis points on average, encouraging increased risk tolerance among long-term investors.
The multifamily sector will continue to benefit from slow home sales. Nadji predicts that the supply/demand balance will remain favorable through year-end, as the vacancy rate is expected to fall to 5.6 percent in 4Q11.
NAI Rio Grande Valley is a focused commercial real estate brokerage, consulting, development and syndication firm serving the Rio Grande Valley and based in McAllen, Texas. Our mission is to transform real estate opportunities into profits for owners, users and investors.
NAI Rio Grande Valley advises it's customers and clients on how to maximize the value of their assets and utilize real estate to their long term advantage through comprehensive and strategic planning, execution and management.
NAI Rio Grande Valley advises it's customers and clients on how to maximize the value of their assets and utilize real estate to their long term advantage through comprehensive and strategic planning, execution and management.
Thursday, October 6, 2011
Wednesday, October 5, 2011
Green Card for Mexican investors program approved in McAllen
by Erika Flores
ValleyCentral.com
Click here to view
The City of McAllen has been approved to participate in the EB-5 program that would allow foreigners to invest in Hidalgo County and receive a Green Card in exchange.
City officials said it will be a boost to the economy.
The McAllen EB-5 Regional Center was awarded approval last week to start the program.
“The United States is pushing hard and have made it a priority project for the United States in reference to invite investors from other countries to invest in projects in US and establish jobs in the United States,” said Roy Cantu, director of McAllen EB-5 Regional Center.
There are EB-5 centers across the country and at least on other center in Hidalgo County that acquires foreign investors to bring jobs and money to the county.
“The investor must invest 500 thousand dollars and that 500 thousand dollars that the investor invests must create 10 new jobs," said Cantu.
After two years if the investor meets the requirements, he will be granted residency, but before investors are chosen, they are investigated to make sure the money they have to invest is legitimate.
Tuesday, September 27, 2011
After Repairing CRE Damage, Many Banks Re-Entering Lending Arena
More Than Half U.S. Banks Posting Noteworthy Increases in Nonresidential, Multifamily Lending
While commercial real estate continues to burden the nation's 7,522 banks and thrifts that reported results to the FDIC as of June 30, the severity of the CRE-related impairment is gradually decreasing and lending is on the increase.
Overall, banks continued to scale back the total amount of commercial real estate loans on their books. However, most of the drop came from loans for construction and development activities. Banks actually increased lending for multifamily projects over the first quarter by about $1.4 billion.
Significantly too, half the nation's banks boosted their lending on nonresidential and multifamily properties by $50 million or more in the second quarter of the year.
Five banks did so by more than $1 billion.
* Manufacturers and Traders Trust Co., $3.36 bl
* Hancock Bank of Louisiana, $2.58 bl
* First Niagara Bank, $1.55 bl
* NAFH National Bank, $1.35 bl
* Wells Fargo Bank, $1.13 bl
All but Wells Fargo of that group increased commercial real estate lending across the board, including construction and development loans. Wells Fargo's construction and development loan portfolio dropped by $2.2 billion.
Banks continued to increase their own holdings in real estate as well in the form of bank buildings and fixed assets with the amount increasing from $120.7 billion to $121.2 billion first quarter to second quarter. The number of full-time equivalent employees reported by insured institutions - 2,104,698 - was 12,124 (0.6%) higher than in first quarter 2011.
Overall, banks continued to scale back the total amount of commercial real estate loans on their books. However, most of the drop came from loans for construction and development activities. Banks actually increased lending for multifamily projects over the first quarter by about $1.4 billion.
Significantly too, half the nation's banks boosted their lending on nonresidential and multifamily properties by $50 million or more in the second quarter of the year.
Five banks did so by more than $1 billion.
* Manufacturers and Traders Trust Co., $3.36 bl
* Hancock Bank of Louisiana, $2.58 bl
* First Niagara Bank, $1.55 bl
* NAFH National Bank, $1.35 bl
* Wells Fargo Bank, $1.13 bl
All but Wells Fargo of that group increased commercial real estate lending across the board, including construction and development loans. Wells Fargo's construction and development loan portfolio dropped by $2.2 billion.
Banks continued to increase their own holdings in real estate as well in the form of bank buildings and fixed assets with the amount increasing from $120.7 billion to $121.2 billion first quarter to second quarter. The number of full-time equivalent employees reported by insured institutions - 2,104,698 - was 12,124 (0.6%) higher than in first quarter 2011.
Impairments on the Mend
The total amount of foreclosed commercial real estate and delinquent or restructured CRE loans for the nation's banks dropped 7.5% from $187.7 billion to $173.6 billion at the end of the second from the first quarter.
Most of the recuperation is stemming from write-downs and attrition in construction and development loans, and the lack of new lending in that area.
Of the 7,522 insured reporting banks in the country as of June 30, distressed commercial real estate assets made up 1% or less of total assets at 4,177 banks -- 56% of the banks in the country. That was down from 4,298 banks in the first quarter.
As deteriorating conditions lessen, the amount of capital that banks have available to loan should increase. Banks are already setting aside fewer dollars to deal with the losses, according to the FDIC. Loan-loss provisions totaled $19 billion, a decline of $21.4 billion (53%) from second quarter 2010. This is the seventh consecutive quarter that provisions have declined from year-earlier levels.
The nation's banks have also been whittling away at the amount of assets held for sale.
Foreclosed real estate holdings including single-family dropped from $52.5 billion in the first quarter of this year to $51.4 billion as of June 30. The commercial real estate portion of that stood at $31 billion down slightly from the first quarter. Multifamily was up from $2.48 billion to $2.67 billion. Nonresidential was basically unchanged at $10.7 billion. Construction and development projects property holdings dropped from $18 billion to $17.7 billion.
The total amount of loans and leases banks held for sale also declined significantly from the first quarter - dropping from $121.2 billion to $108.6 billion.
The amount of commercial real estate loans delinquent more than 30 days also showed significant improvement dropping 12% in the second quarter from the first quarter. The amount dropped from $121.6 billion in the first quarter to $107 billion at the end of June. The biggest improvement came from construction and development loan category dropping from $53.8 billion to $45.8 billion - a 15% decline. Multifamily dropped from $10 billion to $8.8 billion - a 12% decline. Delinquent nonresidential loans dropped from $57.8 billion to $52.4 billion - a 9% decline.
Banks continued to work with commercial real estate borrowers in restructuring their loans. The total amount of restructured CRE loans went up from $34.9 billion to $35.7 billion. Of the total amount of CRE loans restructured, $16.7 billion was classified as delinquent more than 30 days as of June 30.
Six banks decreased their total CRE lending by more than $1 billion.
* Wilmington Trust Co., -$3.42 bl
* Bank of America, -$3.1 bl
* Regions Bank, -$1.34 bl
* JPMorgan Chase Bank, -$1.31 bl
* Branch Banking and Trust Co., -$1.12 bl
* KeyBank, -$1.05 bl
The 10 largest banks in the country hold $35.5 billion in delinquent, foreclosed or restructured assets (20% of the total in the country), down significantly from $41.6 billion at the end of the first quarter.
Distressed commercial real estate assets made up 30% or more of total assets at four banks closed since June 30, 2011. Three existing banks had ratios of more than 40% as of June 30.
Name, Location, Total Assets
* SunBank, Phoenix, AZ, $31.8 ml
* The First State Bank, Stockbridge, GA, $564.2 ml
* Builders Bank, Chicago, IL, $301.5 ml
Officially, the number of institutions on the FDIC's "Problem List" declined for the first time since third quarter 2006. At the end of the second quarter, there were 865 "problem" institutions, down from 888 at the end of the first quarter. The total assets of so-called "problem" institutions declined from $397 billion to $372 billion.
Most of the recuperation is stemming from write-downs and attrition in construction and development loans, and the lack of new lending in that area.
Of the 7,522 insured reporting banks in the country as of June 30, distressed commercial real estate assets made up 1% or less of total assets at 4,177 banks -- 56% of the banks in the country. That was down from 4,298 banks in the first quarter.
As deteriorating conditions lessen, the amount of capital that banks have available to loan should increase. Banks are already setting aside fewer dollars to deal with the losses, according to the FDIC. Loan-loss provisions totaled $19 billion, a decline of $21.4 billion (53%) from second quarter 2010. This is the seventh consecutive quarter that provisions have declined from year-earlier levels.
The nation's banks have also been whittling away at the amount of assets held for sale.
Foreclosed real estate holdings including single-family dropped from $52.5 billion in the first quarter of this year to $51.4 billion as of June 30. The commercial real estate portion of that stood at $31 billion down slightly from the first quarter. Multifamily was up from $2.48 billion to $2.67 billion. Nonresidential was basically unchanged at $10.7 billion. Construction and development projects property holdings dropped from $18 billion to $17.7 billion.
The total amount of loans and leases banks held for sale also declined significantly from the first quarter - dropping from $121.2 billion to $108.6 billion.
Delinquencies
The amount of commercial real estate loans delinquent more than 30 days also showed significant improvement dropping 12% in the second quarter from the first quarter. The amount dropped from $121.6 billion in the first quarter to $107 billion at the end of June. The biggest improvement came from construction and development loan category dropping from $53.8 billion to $45.8 billion - a 15% decline. Multifamily dropped from $10 billion to $8.8 billion - a 12% decline. Delinquent nonresidential loans dropped from $57.8 billion to $52.4 billion - a 9% decline.
Restructurings
Banks continued to work with commercial real estate borrowers in restructuring their loans. The total amount of restructured CRE loans went up from $34.9 billion to $35.7 billion. Of the total amount of CRE loans restructured, $16.7 billion was classified as delinquent more than 30 days as of June 30.
Individual Bank Distress
Six banks decreased their total CRE lending by more than $1 billion.
* Wilmington Trust Co., -$3.42 bl
* Bank of America, -$3.1 bl
* Regions Bank, -$1.34 bl
* JPMorgan Chase Bank, -$1.31 bl
* Branch Banking and Trust Co., -$1.12 bl
* KeyBank, -$1.05 bl
The 10 largest banks in the country hold $35.5 billion in delinquent, foreclosed or restructured assets (20% of the total in the country), down significantly from $41.6 billion at the end of the first quarter.
Distressed commercial real estate assets made up 30% or more of total assets at four banks closed since June 30, 2011. Three existing banks had ratios of more than 40% as of June 30.
Name, Location, Total Assets
* SunBank, Phoenix, AZ, $31.8 ml
* The First State Bank, Stockbridge, GA, $564.2 ml
* Builders Bank, Chicago, IL, $301.5 ml
Officially, the number of institutions on the FDIC's "Problem List" declined for the first time since third quarter 2006. At the end of the second quarter, there were 865 "problem" institutions, down from 888 at the end of the first quarter. The total assets of so-called "problem" institutions declined from $397 billion to $372 billion.
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