INDUSTRY NEWS

 

HUD Proposes Changes to Methodology for Estimating Fair Market Rents

HUD published a notice in the federal register last week announcing proposed changes to the methodology for estimating Fair Market Rents (FMRs). FMRs are published, according to statute, a minimum of once per year. They are utilized for determining payments for Housing Choice Vouchers and determining renewal rents for some expiring project-based Section 8 contracts among other items.

HUD is proposing two general changes to calculation methods to be incorporated for 2018 FMRs and also one change specific to Small Area FMRs:

  • ACS: Currently, HUD uses American Community Survey (ACS) estimates if the error of the estimate is less than half the size of the estimate itself. HUD is now proposing an additional requirement, that all ACS estimates used must be based on at least 100 survey responses. If the estimate fails to meet either criteria, HUD will instead use an average of the past three years.
  • Recent Mover Factor: Currently, when two-bedroom recent mover rents are not statistically reliable, HUD will use a geographic area sometimes larger than the FMR area. HUD’s new proposal for this scenario is to instead use all-bedroom recent mover rents to determine the recent mover factor.
  • Small Area FMRs: HUD is proposing to replace the current ratio methodology for determining small area FMR gross rent estimates with Zip Code Tabulation Areas (ZCTAs) if statistically reliable data is available.

HUD is seeking public comment on these changes which is due by June 26, 2017.*

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Mortgage Rates Hit Lowest Point Since Mid-November

Mortgage rates fell for the third week in a row, with the benchmark 30-year fixed mortgage rate falling to the lowest level in more than six months, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has a rate of 4.09 percent, the lowest since November 16, 2016, and an average of 0.25 discount and origination points.

The larger jumbo 30-year fixed slid to 4.02 percent, and the average 15-year fixed mortgage rate dropped to 3.31 percent, also the lowest since mid-November. Adjustable mortgage rates were mixed, with the 5-year ARM inching down to 3.41 percent while the 7-year ARM nosed higher to 3.60 percent.  

Between inflation rates stalling out, consumer spending softening and ongoing questions about a White House scandal and its implications for policy initiatives, there is just enough uncertainty to keep bond yields and mortgage rates on a downward trajectory. Mortgage rates are closely related to yields on long-term government bonds, which appeal to investors any time uncertainty, or low inflation, is in the air. With a looming employment report for the month of May, investors will be looking for some confirmation of more robust economic activity in the current quarter than the anemic 1.2 percent annualized pace of growth in the first three months of the year.

At the current average 30-year fixed mortgage rate of 4.09 percent, the monthly payment for a $200,000 loan is $965.24.

SURVEY RESULTS 
30-year fixed: 4.09% -- down from 4.13% last week (avg. points: 0.23)
15-year fixed: 3.31% -- down from 3.32% last week (avg. points: 0.22)
5/1 ARM: 3.41% -- down from 3.42% last week (avg. points: 0.30)**

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Mapletree Investments Acquires 3,751-Unit Student Housing Portfolio for $1.6 Billion

Singapore-based Mapletree Investments Pte Ltd. announced the acquisition of a second portfolio of student housing assets from Kayne Anderson Real Estate Advisors. 
Mapletree listed the purchase price for the portfolio at about $1.6 billion. 

The transaction includes eight student housing assets containing 3,611 beds, including properties located in Fort Collins, CO, near Colorado State University; in Miami near Florida International University; in Minneapolis near the University of Minnesota; in Columbia, MO, near the University of Missouri; in Pittsburgh's medical and university district; and in Charleston, SC, near The Citadel. 

The purchase also includes four multifamily assets with 1,388 units in the Denver, Miami and Decatur, IL markets; and one 140-bed student housing property in Canada. 

This is Mapletree’s second transaction with Boca Raton-based Kayne Real Estate. Mapletree acquired seven US student housing properties from Kayne Real Estate in November 2016. Kayne now owns 17 assets with 12,000 beds across 16 cities in the U.S. 

Mapletree’s total student housing portfolio now consists of 43 assets with 18,024 beds located across 29 cities in the US, Canada and the UK, including assets held by its sponsored Mapletree Global Student Accommodation Private Trust. 

“Since 2016, Mapletree has expanded into the student housing asset class on a global scale as it generates stable and consistent earnings,” said Hiew Yoon Khong, Group CEO of Mapletree. “We see opportunities as there is a gap between enrollment and total supply of purpose-built student housing. We intend to scale up in this sector globally including in Australia and continental Europe, aside from the UK and the US, Khong added. 

Citigroup Global Markets Inc. acted as exclusive financial adviser to Kayne Real Estate on the entirety of the sale transactions with Mapletree. 
***

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Tips for Smarter Bridge Financing in Senior Housing

Senior living providers who need to grow to stay competitive but do not want to wait for FHA financing should consider a bridge loan. However, there are some caveats to keep in mind.

That was a big takeaway from a May 24th webinar hosted by Senior Housing News and Arbor Realty Trust, a direct lender with 13 branches across the U.S. The webinar, called “Financing Trends for the Changing Senior Housing Landscape in 2017,” aimed to equip providers with advice for getting ahead of an expected wave of demand for senior housing.

It’s no secret that the demand wave is looming, professor and economist Sam Chandan said during the webinar.

Assisted living, independent living, and skilled nursing providers in markets across the U.S. should see a significant spike in demand over the next decade mostly due to aging baby boomers, he noted.

Though the demand boom is still a decade or more away, some providers might consider bulking up their senior housing supply before then. One common strategy for providers that want to do that is to buy up a struggling or mismanaged asset in a strong market and then flip it to turn a profit.

And there are several ways to accomplish that, including securing cash through a loan backed by the Federal Housing Administration (FHA). These are especially popular among senior living companies these days.  FHA loans are non-recourse, fixed-interest and can be used to acquire all senior living property types.

There’s a downside, however: The FHA loan application process could take a year or more. An opportunistic operator looking for a quick turnaround might think about getting a bridge loan, Arbor Realty Trust Regional Managing Director Brian Jones tells Senior Housing News, expanding on the webinar’s message.

The loans are “a great option for borrowers that are acquiring an underperforming facility where the performance is not market driven,” he adds.

As an example, Jones points to a hypothetical community in a strong market that has low occupancy and high expenses due to mismanagement.

“In these situations, a borrower who has a proven track record of profitably operating comparable facilities, and who presents a sound business plan to turnaround a facility, is a great candidate for a bridge loan,” he says. “Because FHA and agency lenders will only underwrite to historical operations, owners use our bridge loan to acquire and reposition the facility before seeking a long-term permanent financing solution.”

As an added bonus, bridge loans can be closed within months, not years.

But there are some things providers should keep in mind:

  • Make certain that the market itself is strong, with healthy demand, available workforce, and other key indicators in place.
  • Determine why the asset is underperforming. Is it mismanaged? Is it physically obsolete? Is it in an undesirable location relative to competitors?
  • Establish a plan to turn around the performance and secure long-term financing.

And the process of converting bridge financing to FHA loans might soon get even faster thanks to recent changes the U.S. Department of Housing and Urban Development (HUD) has proposed. ****

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COMPANY NEWS:

Events (2017)

  • Cash Gill plans to attend the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting June 12th – 13th in Jefferson City, MO.
  • Gill Group plans to attend CARH’s Annual Meeting June 19 - 21st in Washington, DC.
  • Gill Group plans to attend NCSHA’s Housing Credit Connect Conference and Tradeshow June 21st – 23rd in Atlanta, GA.
    • Cash Gill, of Gill Group, will be speaking on a panel June 22nd entitled Using Market Studies for Site Selection
  • Gill Group attended the 2017 PK Management Trade Show and Awards Dinner May 16th – 17th in Cleveland, OH.
  • Gill Group attended AHF Live’s Housing Developer’s Forum April 26th – 28th in New Orleans, LA.
  • Cash Gill, of Gill Group, gave a training session to the staff at MFA (New Mexico’s HFA) to further their knowledge on appraisal and market study processes April 20th in Albuquerque, NM.
  • Gill Group attended MHC’s Annual Meeting April 11th – 13th in Biloxi, MS.
  • Gill Group attended the Crittenden Multifamily Conference March 15th – 17th in Dallas, TX.
  • Gill Group attended the MACO Companies’ Annual Meeting March 16th – 19th in Biloxi, MS.
  • Gill Group attended the Bank of Advance’s Annual Meeting March 16th – 19th in Norfork, AR.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting March 7th in Jefferson City, MO.
  • Gill Group attended National Housing & Rehabilitation Association’s Annual Meeting February 22nd – 26th in Bonita Springs, FL.
  • Gill Group attended the National Leased Housing Associations’ Mid-Year Meeting February 1st – 3rd in Naples, FL.
  • Gill Group and National Title & Escrow attended the Council for Affordable Rural Housing’s (CARH’s) Midyear Meeting (Strengthening Rural Housing with Valued Partnerships) January 23rd – 25th in Sarasota, FL.

Events (2016)

  • In 2016, Gill Group attended over 75 meetings and conferences across the entire United States.

GROWTH (2016 - Highlights):

  • Gill Group added over 20 staff members throughout our 15 national and regional offices including MAIs, General Certified Appraisers, PE Engineers and AIA Architects.
  • Gill Group’s subsidiary, National Title & Escrow (NTE), added two new underwriters: Fidelity National Title Insurance Company and Stewart Title Guaranty Company.
  • NTE also added a new sales representative, Jimmy Crace, bringing 20+ years of experience and well over 100 national relationships in commercial and multifamily title.

Events (2015)

  • In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.

GROWTH (2015 - Highlights):

  • Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
  • Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
  • Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.

Events (2014)

  • Gill Group attended 40+ meetings and conferences throughout the United States in 2014.

GROWTH (2014 - Highlights):

  • Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
  • Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff. 

  Gill Group has published the following:

  • New York Real Estate Journal - How can low-income housing facilities translate into high profits?
  • New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
  • Tax Credit Advisor - Boston MSA Market Snapshot
  • Tax Credit Advisor - Seattle MSA Market Snapshot
  • Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
  • Affordable Housing Finance – Urban and Rural Market Studies.
  • Tax Credit Advisor – LIHTC Appraisals 101
  • Affordable Housing Finance – Five Ways to Optimize a Market Study

Cash Gill, MAI has had the opportunity to speak on the following topics:

  • (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
  • (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
  • (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
  • (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
  • (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
  • (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
  • (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
  • (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
  • (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
  • (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
  • (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
  • (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
  • (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
  • (Chicago, IL) AHF Live – Strategies for Rural Deals.
  • (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
  • (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
  • (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
  • (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
  • (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
  • (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
  • (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
  • (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
  • (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
  •  (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
  • (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
  • (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
  • (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
  • (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
  • (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
  • (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
  • (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
  • (Seattle, WA) NCSHA – Rural and Native American Development Strategies
  • (French Lick, IN) AHAIN – Appraisals and CNAs
  • (French Lick, IN) AHAIN – Pulling it All Together
  • (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
  • (Albuquerque, NM) MFA – Appraisals 101 (personal training for HFA staff)
  • (Atlanta, GA) NCSHA – Using Market Studies to Inform Site Selection (upcoming in June)

*as seen on housingonline.com

**as seen on multifamilybiz.com

***as seen on costar.com

****as seen on seniorhousingnews.com

 

 

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