What I’m Reading
My Way or the Highway: The Kushner Companies declined to oppose its lenders’ bid to appoint a receiver to take control of a deeply distressed Times Square entertainment retail property that it purchased for $295.3MM back in 2015. The decline in value here is eye popping to say the least. The value of the 248,457 sq ft property appraised for $92.5 million in October, down sharply from $470 million when bankers securitized the debt in 2017, a decline of 80%.
What I found most interesting though is the fact that the loan has a springing recourse provision that kicks in if the borrower contests the lender’s receivership actions. CMBS lenders started adding this clause after 2008 in an effort to make it easier to salvage distressed properties without having to foreclose and go on title. Expect to see this come into play more frequently if/when we start seeing more distress. (h/t Taylor Grant) Forbes
Here to Stay: Drive-thru ordering surged over the last year as the pandemic shuttered indoor dining and made consumers wary of entering restaurants. Industry experts believe that drive-thru ordering will stay above pre-pandemic levels, even after everyone is vaccinated. As a result, chains are investing heavily in making lanes more efficient while fast-casual eateries are adding drive-through lanes for the first time. CNBC
Hot Spots: A new report summarizing the multifamily investment forecast from Marcus & Millichap highlights how the Sunbelt and Mountain West continue to experience the strongest multi-family tailwinds. The report cites Atlanta, Austin, Charlotte, Dallas-Fort Worth, Denver, Nashville, Phoenix, Raleigh, and Salt Lake City as the top markets benefiting from what it calls “in-migration momentum.” Globe Street
Side Effect: America’s major ports are backed up like never before as overwhelming volume has led to a shortage of containers. High demand means that shipping costs are soaring and that cost will eventually (probably) be passed on to consumers. I can’t imagine that a new round of stimulus checks will help with this situation but then again, things are opening up again so perhaps some of that windfall will be spent on experiences, rather than stuff? Axios
Blind Sided: FHFA (Fannie Mae’s and Freddie Mac’s conservator) announced March 10 that they are limiting new loans secured by second homes or investment properties to 7% of the overall loans they purchase (roughly half their historic levels), effective April 1. This is already sending a chill through second home markets as lenders quickly raised pricing by a substantial margin in order to account for the change. Prepare to see more cash buyers and less bidding wars in second home markets, at least until non-agency mortgage investors step in. (h/t Mark Foley) Mortgage News Daily
Chart of the Day
US household net worth as a percentage of disposable income is going HAM to the upside, outpacing gains during the housing bubble.
Source: The Daily Shot
WTF
Competitive Edge: A Girl Scout from San Diego sold over 300 boxes of cookies in just six hours by setting up shop outside of a recreational and medical marijuana dispensary called Urbn Leaf. (h/t Rob Chrisman) MSN
Hearing Aid: A man who originally claimed to have been acting in self defense was arrested for a stabbing a victim to death when he pulled said victim’s ears out of his pocked while being interviewed by officers because Florida. The Daily Beast
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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