News

Family Office Risk Appetite

We frequently speak with sponsors about family offices as equity capital sources. There is a common misconception that family office decisions are grounded in capital preservation, and therefore, should be interested in core / core+ investment opportunities. While capital preservation is an investment objective, it is important for us in the real estate industry to […]

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Show Me The Money

It is becoming readily apparent that the Banks, in general, are pulling back from ground-up construction. As we are in the market sourcing debt, we are hearing from our Bank contacts that: 1. “Our construction “bucket” is full for the year”; 2. “We are reserving our construction lending funds for existing clients”; 3. “We are […]

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HUD needs to take a new look at the FHA limits in Southern California

A key headwind in many parts of the Inland Empire, especially those cities near the border of the Coastal Counties (Orange, LA and SD) is the low SFR FHA limit. Currently, the FHA limit in Orange County is $625,500 while the FHA limit in Riverside County is $356,500, or 43% lower. As prices have escalated […]

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Spread…And More Spread, Please

One topic we discuss internally quite a bit is the idea of “reasonable” return expectations for value-add and opportunistic real estate investments.  Looking back to the days of 10.0% cap rates and the risk free rate averaging north of 5.0%, the aforementioned return profiles were driven by the infamous 20.0% IRR and 2.0 multiple test. […]

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Regulation Nightmare

Like many of you, perhaps, the term “regulation” has traditionally made my eyes roll into the back of my head. While the political and illogical nature of regulation remains a turn-off, no longer is it advisable to turn attention the other way. With increased regulation for the real estate finance industry being developed over the […]

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The Current Financial Model for A&D Finance Costs Needs Recalibrating.

Accessing residential A&D financing continues to face headwinds. These winds have strengthened with the implementation of Basel III, more specifically HVCRE (“high volatility commercial real estate”). Development loans are now assigned a 150% risk rating for risk-based capital purposes versus the 100% formerly assigned. This makes it more expensive for regulated lenders to hold development […]

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The Real Reason Millennials Aren’t Buying Homes

NEWPORT BEACH, CA—In reaction to a recent CNBC article “Millennial homebuyers: Go Big, or Go Home,” Landmark Capital Advisors’ managing director Adam Deermount tells GlobeSt.com that Millennials are holding off on buying homes, in part, because many of them want more than just a starter home. We spoke exclusively with Deermount about how the American […]

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Is the Housing Market Going in the Wrong Direction?

The most recent new home sales report was concerning assales and prices are decreasing and inventory is rising. However, as the OC Housing News pointed out in an article earlier this week, if we look at those numbers more in-depth, builders may actually be doing exactly what we were hoping they would do for a long time; making […]

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Sponsor Trumps Project

While elementary in concept, the market is reminding us that an “A” sponsor and a “B” project overrides an “A” project and a “B” sponsor.  In search of investment volume over recent years, the first round of questions probed by capital generally focused more on deals and less about sponsors. More recently, we have been […]

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Are land-use restrictions impairing economic growth?

To continue on the topic of the consequences and negative impact of too many land-use restrictions from our last month’s edition, Justin Fox, author of the Myth Rational Market, presented in Bloomberg View a catching point of view on zoning regulation’s impact in San Francisco. He notes that despite San Francisco being arguably the largest center […]

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