Archive for September, 2010

 After sleepless nights and days filled with nail biting, Lee Davies Real Estate was thrilled to successfully obtain a building permit for our new downtown office.  Located at 1211 SW Broadway, the new office is now under construction.  Demolition began 4am the day after we received the permit. Since then, walls have been framed, electricians have run wires, and the new office is beginning to take shape!

Question: How many electricians does it take to open a Lee Davies office? 

LDRE is proud to announce the opening of it’s new downtown Portland office at 1211 SW Broadway next to the Arlene Schnitzer Performing Arts Center.   This exciting move is the first of its kind in Portland Oregon whereby a residential real estate firm resides in the downtown Central Business District (CBD).  Lee Davies believes that services of a residential real estate company will be welcomed by the 80,000 workers who put in a full work day in the city.   We believe that our clientele will love the convenience of walking to our office over their coffee break, lunch, or shortly after work, to tackle their real estate needs.       

In addition to our individual clientele, our downtown office will further expand our corporate concierge services to insure that whether a company is recruiting, transferring, or relocating an employee, LDRE will be able to personally provide the warm transition to and/or from Portland with our extensive service offerings.  Besides being ambassadors to our beautiful city, we strive to be a welcomed extension of every company’s human resources department.

Our new office will Open on Monday October 11, 2010 and will replace our office in the Uptown Shopping Center.    The office will be in the ground floor of the Gorgeous Historic Sovereign Hotel  Building which is owned by the Oregon Historical Society.

from Northwest Mortgage Group 

As of September 21, 2010 (1% loan fee applies)

Rates shown above are based on transactions with a 20% down payment, 1% loan origination fee, 740 credit scores, impounds for property taxes and insurance and 30-day rate lock.  Contact Jeanine Roe or Brian Page of NW Mortgage Group for more information at 503.439.9191.

Showhomes – a home staging company – allows a hired home manager to live within vacant homes for sale with the intent of making the environment more welcoming to potential buyers.  View full article from the West Linn Tidings:  Making a Showhome

  Bloomberg – Sep 1, 2010 10:15 AM ET
 
 U.S. commercial real estate yields are near the highest level relative to
 Treasury bonds on record, a signal to some investors it’s time to buy property.
 
 Capitalization rates, a measure of real estate yields, averaged 7.22 percent in
 the second quarter, based on an index calculated by the National Council of Real
 Estate Investment Fiduciaries. That was 429 basis points, or 4.29 percentage
 points, higher than the yield on 10-year government bonds as of June 30,
 according to data compiled by Bloomberg. It’s about 475 basis points higher than
 Treasury yields as of yesterday.
 
 That spread is near the record 539 basis points in the first quarter of 2009,
 when the U.S. was mired in the worst of the financial crisis and property prices
 sank. Risk-averse investors are seeking the highest-quality office towers,
 hotels and apartments as the gap widens, according to Nori Gerardo Lietz,
 partner and chief strategist for private real estate at Partners Group AG in San
 Francisco.
 
 “The data indicate that real estate is poised for a rebound,” said Gerardo
 Lietz, who advises pension funds on property investments.
 
 Some buyers already are acquiring buildings at lower cap rates, which move
 inversely to price. In June, a group of South Korean pension fund investors
 bought the 33-story Wells Fargo Building in San Francisco for $333 million from
 Principal Financial Group Inc. in one of the largest transactions in the second
 quarter, according to Real Capital Analytics Inc., a property research firm. The
 office tower sold at a cap rate of about 7 percent, said Goodwin Gaw, the
 developer who helped broker on the deal.
 
 New York Rates
 
 In Manhattan, RXR Realty LLC bought a stake in 340 Madison Ave., a 22-story
 office building, at a cap rate of 6 percent, according to New York-based Real
 Capital. Cap rates are calculated by dividing net operating income by purchase
 price, so the lower the rate, the higher the value of the property, and vice
 versa.
 
 The NCREIF index measures 6,066 U.S. properties with a market value of $234.5
 billion. The spread over Treasury yields was calculated using transaction cap
 rates, which are based on actual sales — 48 in the second quarter — and are
 usually more reliable than appraised values, according to Chicago-based NCREIF.
 The organization’s measure, which it began publishing in 1982, represents
 current yield before any price appreciation.
 
 Comparing Yields
 
 Investors compare property yields with Treasuries to determine how much
 potential profit real estate offers relative to an investment that’s considered
 low-risk. The spread shrank to less than 80 basis points, the narrowest in 16
 years, when commercial real estate prices peaked in 2007. Property values have
 dropped more than 40 percent since the October 2007 top of the market, according
 to Moody’s Investors Service.
 
 The gap’s widening follows a plunge in bond yields after the global financial
 crisis spurred a flight to safety and the Federal Reserve slashed interest rates
 to a record low. Treasury bonds yesterday completed the biggest monthly rally
 since the end of 2008 amid signs economic growth is faltering, with the
 benchmark 10-year note yielding 2.47 percent.
 
 “Property is attractively priced versus the fixed-income market,” said Ritson
 Ferguson, chief investment officer of ING Clarion Real Estate Securities in
 Radnor, Pennsylvania, which manages about $12 billion.
 
 The wide spread carries a warning signal to some investors because the economy
 remains weak, hurting commercial rents and occupancy.
 
 Being ‘Picky’
 
 “It’s questionable how much growth you’re going to get,” said James S. Corl,
 managing director for distressed real estate investments at Siguler Guff & Co.,
 a New York-based private- equity firm. “Yes, there is value in real estate but
 you’ve got to be very picky. If you pay up for existing leases, it’s very hard
 to manage your way out of that situation.”
 
 For much of the past two decades, institutional real estate was valued at about
 a 9 percent cap rate, according to Jeffrey D. Fisher, a consultant to NCREIF and
 a real estate professor at Indiana University in Bloomington, Indiana. Cap rates
 on some commercial deals fell to less than 4 percent during the peak.
 
 The rate declined in the second quarter as transactions began to increase, he
 said.
 
 “What I’m seeing is a two-tiered market right now,” Fisher said. “For properties
 that have high occupancy, that’s where you really have seen the price
 appreciation and cap rates falling.” For buildings with low occupancy rates,
 “there is very little interest,” he said.
 
 Sales Rebound
 
 U.S. sales of office, retail, industrial, apartment and hotel properties totaled
 $20.7 billion in the second quarter, according to Real Capital. That was up 86
 percent from $11.1 billion a year earlier.
 
 The deals were still 85 percent below the peak of $135.7 billion in the second
 quarter of 2007, Real Capital data show.
 
 Corporate bond yields are a better comparison than Treasuries and also indicate
 that properties are undervalued, said Michael Knott, managing director at Green
 Street Advisors Inc., a Newport Beach, California-based company that specializes
 in analyzing real estate investment trusts. Bonds rated Baa by Moody’s are
 perceived as investments with moderate risk, similar to commercial real estate,
 said Knott.
 
 The spread between NCREIF real estate cap rates and Baa- rated corporate bonds
 is more than 200 basis points, Knott said. The average during the past 25 years
 is about 140 basis points.
 
 “Underlying real estate looks cheap to us relative to where moderate-risk
 corporate bond yields are priced,” Knott said in a telephone interview. The
 exception is publicly traded REITs, which trade at a premium to asset values, he
 said.
 
 “Smart managers today are being very selective because they realize a lot more
 property has to clear the market,” said Corl of Siguler Guff. “The volume of
 deals is definitely going to go up.”