I have the chance to pay attention to the housing market's across California. I
obviously see other market s as well in my travels. I can tell you this specifically
across California, Nor Cal or So Cal, the homes that are correctly priced are selling. Even from an investment point of view, if we do loose a little more value, the probability to get interest rates this low next year are not likely.
Distressed properties in Phoenix, Ft. Myers/Naples, Fla., Las Vegas, Southern California, and Sacramento, Calif., spent 20% fewer days on the market in the first quarter compared with the first quarter of 2008, according to a recent report from ZipRealty. Distressed properties include foreclosures and short sales.
"Banks have sped up the process for getting foreclosed homes on the market, and continue to lower prices to sell them," said Leslie Tyler, vice president of ZipRealty, in a news release. "The drop in days on market versus last year highlights that distressed properties in these hard hit markets are starting to move, which is a hopeful sign."
The 25 U.S. cities most searched on ZipRealty.com were in the Sunbelt, including five in California, eight in Arizona, one in Texas, four in Las Vegas, six in Florida and one in Georgia, according to the news release.
Areas that were able to fetch the highest sales-to-list price ratios during the first quarter included Hesperia Calif, (ZIP code 92344), where buyers paid, on average, more than 15% higher than the listing price. Neighborhoods with the lowest sales-to-list price ratios included Fort Lauderdale, Fla., (ZIP code 33304), where homes are going for 30% or more below asking price. View the news release.
Read more real-estate news in this week's pages, including the best places to live in 2009. Plus, read why it's looking even more attractive to buy a home today.
It's looking especially attractive if you're a first-time buyer or investor.
I leave for Las Vegas tonight, I will keep you posted on the local market in Greater Las Vegas.
-Christopher Rockey
Tuesday, April 28, 2009
Saturday, April 25, 2009
What Does TARP Stand for Again?
To Assist and Repair Profits.
Thought you might like this:
Herb Allison, who has been chief executive of Fannie Mae since it was seized by the government last September, has been tapped to oversee the $700 billion financial rescue fund conceived to restore rattled markets, the White House said on Friday.
Allison must be confirmed by the Senate before he can succeed Neel Kashkari and become Treasury assistant secretary for financial stability. In that role, Allison will be charged with overseeing several federal programs meant to improve the availability of credit, aid major automakers and boost the housing market.
Allison was named CEO of mortgage finance company Fannie Mae (FNM, Fortune 500) in September as the housing market soured and pushed the company and its sibling agency, Freddie Mac (FRE, Fortune 500), to the brink of collapse.
He had spent more than 25 years with Merrill Lynch before becoming chairman and chief executive officer of pension fund giant TIAA-CREF.
After six years as the head of TIAA-CREF, Allison retired in 2008 and was asked by former Treasury Secretary Henry Paulson to become conservator of Fannie Mae, the nation's largest source of housing finance.
In early April, Allison defended Fannie Mae's bonus payments to several thousand employees as lawmakers on Capitol Hill were scrutinizing payments made to executives at failed insurance giant American International Group Inc; both companies received billions of dollars in government bailout funds.
Allison has told Fannie Mae colleagues that his long experience and personal wealth have given him valuable independence when it comes to managing the nation's largest source of mortgage finance.
Thought you might like this:
Herb Allison, who has been chief executive of Fannie Mae since it was seized by the government last September, has been tapped to oversee the $700 billion financial rescue fund conceived to restore rattled markets, the White House said on Friday.
Allison must be confirmed by the Senate before he can succeed Neel Kashkari and become Treasury assistant secretary for financial stability. In that role, Allison will be charged with overseeing several federal programs meant to improve the availability of credit, aid major automakers and boost the housing market.
Allison was named CEO of mortgage finance company Fannie Mae (FNM, Fortune 500) in September as the housing market soured and pushed the company and its sibling agency, Freddie Mac (FRE, Fortune 500), to the brink of collapse.
He had spent more than 25 years with Merrill Lynch before becoming chairman and chief executive officer of pension fund giant TIAA-CREF.
After six years as the head of TIAA-CREF, Allison retired in 2008 and was asked by former Treasury Secretary Henry Paulson to become conservator of Fannie Mae, the nation's largest source of housing finance.
In early April, Allison defended Fannie Mae's bonus payments to several thousand employees as lawmakers on Capitol Hill were scrutinizing payments made to executives at failed insurance giant American International Group Inc; both companies received billions of dollars in government bailout funds.
Allison has told Fannie Mae colleagues that his long experience and personal wealth have given him valuable independence when it comes to managing the nation's largest source of mortgage finance.
Wednesday, April 8, 2009
High Yield REIT's Come With Warning
I was just about to announce to the world the new securitization platform that I have been able to create through Joint Venture. Commercial Property can be a risky bet in this economy, businesses closing doors and unable to pay rents are sticking the landlords with payments. Myself an my partner have identified four property's in California that have strong tenant balance sheets, and a lease for a minimum of another 10 years. We are able to offer a twenty percent annual return on funds with a one year commitment. I am proud to have been part of the forming of this JV, I am excited to bring the offer to my investors on a national level... Then I read this:
Many investors looking for safe havens in a rough market are latching onto double-digit dividend yields offered by real estate investment trusts.
"Equity REITs absolutely are a place for an investor to get a very meaningful spread versus treasurys," says Ritson Ferguson, chief investment officer at ING Clarion Real Estate Securities, an investment management firm.
Typically, investors seek out REITS for their stable, predictable cash flows and above-average dividend yields. Under REIT rules, companies avoid paying most corporate taxes as long as they distribute at least 90% of their taxable income to shareholders as dividends. And with the past year's market selloff, those dividends, which are typically paid quarterly, have become even more attractive.
0:00 /3:29Has the market hit bottom?
Equity REITs (which own brick-and-mortar properties) currently offer average dividend yields of 7.7%, while mortgage REITs (which hold mortgage securities on properties) yield an average of 15.5%, according to the National Association of Real Estate Investment Trusts. That far outpaces the S&P 500 index (SPX), where stocks currently average a dividend yield of about 3%.
Some individual REITs offer far loftier yields: Sunstone Hotel Investors Inc., CBL & Associates Properties Inc., Macerich Co., Hersha Hospitality Trust, and Apartment Investment & Management Co., all exceed 30%, while the yields at several mortgage REITs - Newscastle Investment Corp, Arbor Realty Trust, and RAIT Financial Trust - top the 100% mark.
But industry experts caution investors to beware of REITs offering the frothiest yields. "A dividend that high indicates ... the market doesn't believe that dividend is sustainable," says Steven Marks, a managing director at Fitch Ratings.
"Yields in the 20s and 30s (and higher) often reflect a view by the market that this dividend is likely to be cut," Ferguson concurs. When investors get jittery about a REIT's ability to cover its dividend, they tend to sell shares, which causes the yields to jump.
About 40 REITs have already cut their dividends in the past six months, notes Tom Bohjalian, senior vice president and portfolio manager at Cohen & Steers Inc. Some have suspended their dividends, while others have either trimmed them or opted to pay a portion of them in stock. He says investors looking at REITs with yields north of 15% need to "do a deep dive into the balance sheet" to assess if a company will need to trim or scrap its dividend to meet debt obligations.
Indeed, industry analysts say debt is the biggest threat facing REITs and their dividends in today's seized-up credit markets, and it must be carefully considered before buying a stock.
Two blue chip names show what can happen when debt problems can lead to dividend cuts and then panic. Last year, mall-owner General Growth Properties Inc. (GGP) and industrial warehouse giant ProLogis (PLD, Fortune 500) were trying to dig themselves out from under a mountain of debt accumulated during the real estate boom of the past five years. Like just about every other business, REITs have had a tough time finding lenders who are willing to refinance their debt in today's frozen credit markets.
Stunned investors watched General Growth suspend its dividend, replace its management team, and sell off some of its crown jewel properties to meet debt calls and stave off bankruptcy. Its stock lost more than 98% of its value in the last year, leading to its ouster from the S&P 500 index.
Similarly, ProLogis slashed its dividend by 52% to shore up cash to cover debt maturities, and 85% of its share value disappeared. General Growth's dividend yield was 37%, and Prologis' yield was 46% when they changed their dividend policies.
Spooked investors responded by dumping REITs in droves: The group's total returns, which include dividends, fell 37% in 2008 and are off another 20% so far in 2009, according to NAREIT. But as share prices have fallen, dividend yields have risen - even for companies that face little debt risk, and this is where cherry-picking becomes key.
Industry analysts caution investors to be wary of equity REITs with debt levels that exceed 70% of total market cap and - more importantly - those with a significant amount of debt rolling over in the next two years.
"A company needs to have dealt with or presented a credible plan for dealing with maturities in 2009 and 2010 to get out of the penalty box," says Ferguson.
Among the equity REITs with leverage exceeding 70% and who have at least 39% of their debt expiring in 2009 and 2010 are General Growth, CBL & Associates Properties Inc., Ramco-Gershenson Properties Trust, Developers Diversified Realty Corp., U-Store-It Trust, and Strategic Hotels & Resorts Inc., according to SNL Financial LC.
"When you get to those levels, you have to question the company's ability to continue to fund that (dividend)," says Bohjalian, although he does emphasize that dividend yield isn't the only factor to consider when looking at a company's overall story and growth outlook.
0:00 /4:50First inning of recovery?
Healthcare and apartment REITS offer the safest bets, with average dividend yields of 8.6% and 9.8% respectively, says Richard Anderson, a senior analyst at BMO Capital Markets.
Healthcare REITs have been largely unscathed in the economic downturn as demand for nursing homes and doctors continues in good economic times and bad, Anderson notes. As a result, most have the cash flow to cover their debt maturities and pay their dividends.
In the apartment sector, REITs are reaping the benefits of the battered housing market as foreclosed homeowners turn to rental units to live while fewer renters are venturing into homeownership until they're certain the market has bottomed. Apartment REITs and certain healthcare REITs also have access to cheap debt from mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), says Anderson.
"If you've got access to Fannie and Freddie, and you're an apartment company or a healthcare company, you're in pretty solid shape," says Bohjalian
Well how about if your a mid level Joint Venture that has always offered the highest yield to investors, with a capitalization maximization vision? WITH TESTIMONIALS
-Christopher Rockey
Many investors looking for safe havens in a rough market are latching onto double-digit dividend yields offered by real estate investment trusts.
"Equity REITs absolutely are a place for an investor to get a very meaningful spread versus treasurys," says Ritson Ferguson, chief investment officer at ING Clarion Real Estate Securities, an investment management firm.
Typically, investors seek out REITS for their stable, predictable cash flows and above-average dividend yields. Under REIT rules, companies avoid paying most corporate taxes as long as they distribute at least 90% of their taxable income to shareholders as dividends. And with the past year's market selloff, those dividends, which are typically paid quarterly, have become even more attractive.
0:00 /3:29Has the market hit bottom?
Equity REITs (which own brick-and-mortar properties) currently offer average dividend yields of 7.7%, while mortgage REITs (which hold mortgage securities on properties) yield an average of 15.5%, according to the National Association of Real Estate Investment Trusts. That far outpaces the S&P 500 index (SPX), where stocks currently average a dividend yield of about 3%.
Some individual REITs offer far loftier yields: Sunstone Hotel Investors Inc., CBL & Associates Properties Inc., Macerich Co., Hersha Hospitality Trust, and Apartment Investment & Management Co., all exceed 30%, while the yields at several mortgage REITs - Newscastle Investment Corp, Arbor Realty Trust, and RAIT Financial Trust - top the 100% mark.
But industry experts caution investors to beware of REITs offering the frothiest yields. "A dividend that high indicates ... the market doesn't believe that dividend is sustainable," says Steven Marks, a managing director at Fitch Ratings.
"Yields in the 20s and 30s (and higher) often reflect a view by the market that this dividend is likely to be cut," Ferguson concurs. When investors get jittery about a REIT's ability to cover its dividend, they tend to sell shares, which causes the yields to jump.
About 40 REITs have already cut their dividends in the past six months, notes Tom Bohjalian, senior vice president and portfolio manager at Cohen & Steers Inc. Some have suspended their dividends, while others have either trimmed them or opted to pay a portion of them in stock. He says investors looking at REITs with yields north of 15% need to "do a deep dive into the balance sheet" to assess if a company will need to trim or scrap its dividend to meet debt obligations.
Indeed, industry analysts say debt is the biggest threat facing REITs and their dividends in today's seized-up credit markets, and it must be carefully considered before buying a stock.
Two blue chip names show what can happen when debt problems can lead to dividend cuts and then panic. Last year, mall-owner General Growth Properties Inc. (GGP) and industrial warehouse giant ProLogis (PLD, Fortune 500) were trying to dig themselves out from under a mountain of debt accumulated during the real estate boom of the past five years. Like just about every other business, REITs have had a tough time finding lenders who are willing to refinance their debt in today's frozen credit markets.
Stunned investors watched General Growth suspend its dividend, replace its management team, and sell off some of its crown jewel properties to meet debt calls and stave off bankruptcy. Its stock lost more than 98% of its value in the last year, leading to its ouster from the S&P 500 index.
Similarly, ProLogis slashed its dividend by 52% to shore up cash to cover debt maturities, and 85% of its share value disappeared. General Growth's dividend yield was 37%, and Prologis' yield was 46% when they changed their dividend policies.
Spooked investors responded by dumping REITs in droves: The group's total returns, which include dividends, fell 37% in 2008 and are off another 20% so far in 2009, according to NAREIT. But as share prices have fallen, dividend yields have risen - even for companies that face little debt risk, and this is where cherry-picking becomes key.
Industry analysts caution investors to be wary of equity REITs with debt levels that exceed 70% of total market cap and - more importantly - those with a significant amount of debt rolling over in the next two years.
"A company needs to have dealt with or presented a credible plan for dealing with maturities in 2009 and 2010 to get out of the penalty box," says Ferguson.
Among the equity REITs with leverage exceeding 70% and who have at least 39% of their debt expiring in 2009 and 2010 are General Growth, CBL & Associates Properties Inc., Ramco-Gershenson Properties Trust, Developers Diversified Realty Corp., U-Store-It Trust, and Strategic Hotels & Resorts Inc., according to SNL Financial LC.
"When you get to those levels, you have to question the company's ability to continue to fund that (dividend)," says Bohjalian, although he does emphasize that dividend yield isn't the only factor to consider when looking at a company's overall story and growth outlook.
0:00 /4:50First inning of recovery?
Healthcare and apartment REITS offer the safest bets, with average dividend yields of 8.6% and 9.8% respectively, says Richard Anderson, a senior analyst at BMO Capital Markets.
Healthcare REITs have been largely unscathed in the economic downturn as demand for nursing homes and doctors continues in good economic times and bad, Anderson notes. As a result, most have the cash flow to cover their debt maturities and pay their dividends.
In the apartment sector, REITs are reaping the benefits of the battered housing market as foreclosed homeowners turn to rental units to live while fewer renters are venturing into homeownership until they're certain the market has bottomed. Apartment REITs and certain healthcare REITs also have access to cheap debt from mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), says Anderson.
"If you've got access to Fannie and Freddie, and you're an apartment company or a healthcare company, you're in pretty solid shape," says Bohjalian
Well how about if your a mid level Joint Venture that has always offered the highest yield to investors, with a capitalization maximization vision? WITH TESTIMONIALS
-Christopher Rockey
Tuesday, April 7, 2009
When I Grow Up I Wanna Be A CEO
This is that 'Good ol Boys Club' I have been talking about that I am not a part of.
The nation's CEOs see their company's sales, spending and employment falling over the next six months, and project an overall decline for the economy this year, according to a survey released Tuesday.
The Business Roundtable, an association of CEOs, said 67% of its members expect sales to decline, 66% project a drop in capital spending and 71% see a decrease in employment over the next half-year.
Overall, the group said CEOs expect a 1.9% decline in 2009 gross domestic product (GDP), compared with a projection of no change in GDP three months earlier. The government said last month that GDP declined at a 6.3% annual rate in the fourth quarter of 2008.
The Business Roundtable's CEO Economic Outlook Index fell to negative 5 from a positive reading of 16 in the previous quarter. The index ranges from 150 to negative 50, with a reading below positive 50 signaling economic contraction.
The group said the index's decline was less dramatic than the plunge from 78 in the third quarter of last year.
Business Roundtable chairman Harold McGraw III, the head of publisher McGraw-Hill Cos., saw some signs of promise in the stimulus being made by the U.S. and other governments.
"Improving consumer confidence and demand, both in the United States and abroad, is the key to jump-starting the economy," said McGraw, in a written statement.
While "recently implemented administration policies will take time to have an impact, they already have begun to restore confidence in our markets, which is a critical first step," he added.
The Business Roundtable consists of executives whose companies represent 10 million workers and more than $5 trillion in yearly revenue.
So here's the deal, if our adjustable rate mortgages are not the only issue causing foreclosures in the US, but it's actually the economy itself, then people now no longer even qualify for 'Loan Modifications.'
That just leaves a Short Sale, if you do not have a full understanding of the lenders language, I would suggest getting yourself educated ASAP.
The nation's CEOs see their company's sales, spending and employment falling over the next six months, and project an overall decline for the economy this year, according to a survey released Tuesday.
The Business Roundtable, an association of CEOs, said 67% of its members expect sales to decline, 66% project a drop in capital spending and 71% see a decrease in employment over the next half-year.
Overall, the group said CEOs expect a 1.9% decline in 2009 gross domestic product (GDP), compared with a projection of no change in GDP three months earlier. The government said last month that GDP declined at a 6.3% annual rate in the fourth quarter of 2008.
The Business Roundtable's CEO Economic Outlook Index fell to negative 5 from a positive reading of 16 in the previous quarter. The index ranges from 150 to negative 50, with a reading below positive 50 signaling economic contraction.
The group said the index's decline was less dramatic than the plunge from 78 in the third quarter of last year.
Business Roundtable chairman Harold McGraw III, the head of publisher McGraw-Hill Cos., saw some signs of promise in the stimulus being made by the U.S. and other governments.
"Improving consumer confidence and demand, both in the United States and abroad, is the key to jump-starting the economy," said McGraw, in a written statement.
While "recently implemented administration policies will take time to have an impact, they already have begun to restore confidence in our markets, which is a critical first step," he added.
The Business Roundtable consists of executives whose companies represent 10 million workers and more than $5 trillion in yearly revenue.
So here's the deal, if our adjustable rate mortgages are not the only issue causing foreclosures in the US, but it's actually the economy itself, then people now no longer even qualify for 'Loan Modifications.'
That just leaves a Short Sale, if you do not have a full understanding of the lenders language, I would suggest getting yourself educated ASAP.
Friday, April 3, 2009
Back to God's Country
I think I made my position perfectly clear on my last visit to the 'High Desert.' The surrounding area was absolutely beautiful. The drive from Ontario was full of
green scenery. The overall atmosphere of the local people in Victorville was intellectual. Not much to report, better than average room, dinner the night I landed, better than average audience. The feedback has been excellent thank you Victorville very much for your hospitality.
On another note I took some notes today I thought you might find interesting:
In a wide-ranging TV interview on CNBC, CEO Ken Lewis -- who spearheaded Bank of America's controversial acquisitions of Countrywide Financial and Merrill Lynch at the height of the recent credit crisis -- also said that the Charlotte, N.C.-based company (BAC:bank of America corporation)says they remain willing to work with customers to avoid mortgage foreclosure and that tens of billions of dollars of the bank's capital remains tied up in reserves for losses on consumer loans such as mortgages and credit cards. Although they rarely seem to give 'Full Settlement Language' if ever?
Regarding the government's recent investment in the company under the Troubled Asset Relief Program stabilization plan, Lewis said that he regretted taking a larger piece of government money than the company needed, adding that he's "anxious" to return at least some of those funds to the government.
Lewis said that the company is continuing to make "every good loan we can make," despite a continuing rise in consumer loan delinquencies.
He said that the next six months will be tough but that the current economic downturn is beginning to feel to him more like a typical recession than a freefall.
'Mixed signals'
Asked about the current state of the economy, Lewis said he sees mixed indications with some housing sales data coming in better than expected, and some auto sales not quite as bad as forecasted.
"When you see mixed signals, I think it signals that you're getting close to the bottom," the chief executive told CNBC.
He said he shares the consensus view that can have things moderate in terms of the declines and that the economy hits bottom in the second half 2009, with a recovery in the first part of next year.
"You can't throw as many things as we're throwing at it and not break the back of this thing," Lewis said.
He said the recent wave of mortgage refinancing will reduce monthly payments for many borrowers and help kick-start the economy.
Lewis said Bank of America is working on modifying home loans for strapped borrowers.
"Nobody wants to foreclose," he said. "It's bad for everybody, and it's particularly devastating for communities."
TARP regrets
Lewis said he erred by taking the second round of TARP capital from the government when it was closing the controversial acquisition of Merrill Lynch.
B. of A. took another $20 billion after earlier accepting $25 billion.
"That was my mistake," he said. "We took more than we needed. I regret having taken that much. That's why I'm so anxious to pay at least some of it back."
Lewis explained he didn't take the second capital infusion solely because of Merrill Lynch, but also to protect the bank from the economy worsening more than it actually did. He said the government didn't force the company to complete the Merrill Lynch deal, and that it was "the right thing to do" for both B. of A. and the American financial system. Lewis lauded the Merrill acquisition, saying the brokers have more banking products to sell now.
He said the purchases of Merrill and mortgage giant Countrywide "will prove to be two of the best acquisitions we've ever made if you judge us over two or three years, rather than two or three months."
'Earnings power'
When asked about B. of A. shares still trading below $8, the CEO said the stock price reflects "fear of the unknown," as well as questions over the economy and further write-downs.
"This is going to be a tough year for all institutions," Lewis said.
Yet a year from now, "we'll be coming out of this, and you'll be able to see a lot of the earnings power of the financial institutions and the unemployment rate should at least be holding steady if not starting to improve slightly."
Lewis is also optimistic the bank will pass the so-called stress tests being conducted by the government.
"The bad news is it creates a lot of uncertainty," he remarked. "The good news is we will get through it now and hopefully get that uncertainty behind us and get some closure."
He said he doesn't expect the government will ask B. of A. to raise additional capital.
Finally, he acknowledged the compensation system in the banking business is changing during the financial crisis. He expects salaries will represent a greater percentage of overall compensation relative to incentives, which can encourage too much risk-taking.
May I have my 100 million dollars now please. I deserve some kind of bonus right? Everyone else seems to get one?
-Christopher Rockey
Thank You Temecula
I had such a great time in Temecula. Everyone participated in our seminar and
we all got through the six hours of talking together. Thank you to Chicago Title for
having the foresight to see a need for education in the market place. Thank you PRMG
Lending for sponsoring the event. I can tell you I had no interest in leaving to catch a flight to go to Sacramento.
By the way, whoever that guy was that said the Southwest Airlines flight to Northern California a few hours before mine had crashed, your evil plan worked. Thank you
for scaring me to death. I'm glad it wasn't someone in the audience saying such harsh cruelties.
If I could ask one favor it would be to just let me come back.
-Christopher Rockey
Subscribe to:
Posts (Atom)
Posts
