Trends in Property Capital Markets and Richmond s Position In It

Transcription

1 Trends in Property Capital Markets and Richmond s Position In It Robert M. White Jr., CRE, FRICS October 14, 2008 Richmond 2008 Real Capital Analytics, Inc. All rights reserved Real Capital Analytics, Inc. All rights reserved. Data believed to Data be believed accurate to but be not accurate guaranteed; but not subject guaranteed; to future subject revision; to future analyses revision; based based on properties on properties & portfolios & portfolios $10 million $5 million and and greater. greater.

2 2007 Billion Dollar Property Markets

3 Global Property Sales Quarterly Sales Volume in billions USD $150 $148 $145 Americas EMEA Asia Pacific $125 $131 $127 $100 $100 $112 $75 $84 $87 $83 $66 $64 $50 $56 $52 $55 $54 $40 $41 $40 $25 $0 Q1 '07 Q2 Q3 Q4 Q1 '08 Q2

4 US Property Sales 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% Change in US Commercial Property Sales Office, industrial, retail, apartment properties $5 mil+ J FMAMJ J ASOND J FMAMJ J A

5 US Property Sales $80 Billions Monthly Sales Volume Office, industrial, retail, apartment properties $5 mil+ $70 $60 $50 $40 $30 $20 $10 $

6 Virginia Property Sales Year-over-Year Change in Sales (9 mos) US Total -74% Virginia Total -84% DC VA burbs -86% Norfolk -66% Richmond -80% VA Other -61%

7 Market Overview Sales Volume 7.50% Cap Rates 1h '08 v 1h '07 Q2 '08 v Q2'07 industrial 7.25% -56% -45% Apartment 7.00% Strip Office - Sub -66% -50% Indus trial 6.75% Garden apts 6.50% NNN retail -73% -68% Off ice 6.25% 6.00% -63% -64% Retail 5.75% 07Q2 Office - CBD 08Q2

8 Flight to Quality as Prices Fall 200 US Commercial Property Price Appreciation Moody/Real CPPI National, All Properties, Monthly Changes in Sales Prices over Past Year Moodys/REAL CPPI (Q3'07 to Q2'08) national top 10 MSAs apartments -10.3% -5.1% office -8.0% -2.9% retail -7.8% -0.6% industrial -7.6% -2.9%

9 apartments top 10 MSAs apartments national All core national Apartments Moody/Real CPPI '01 '02 '03 '04 '05 '06 '07 '08

10 office t op 10 MSAs office national All c o re nat io nal Office Moody/Real CPPI '01 '02 '03 '04 '05 '06 '07 '08

11 Office Cap Rates Office - CBD Office - Sub 7.75% 7.50% 7.25% 7.00% 6.75% 6.50% 6.25% 6.00% 5.75% 5.50% % primary secondary tertiary 7.50% 7.25% 7.00% 6.75% 6.50% 6.25% 6.00% 5.75% 5.50% Core/Stabilized Value-add 7.75% 7.50% 7.25% 7.00% 6.75% 6.50% 6.25% 6.00% 5.75% 5.50% % $5-$15 $15-$50 $50 mil % 7.25% 7.00% 6.75% 6.50% 6.25% 6.00% 5.75% 5.50%

12 ret ail t op 10 MSAs ret ail nat ional All c o re nat io nal Retail Moody/Real CPPI '01 '02 '03 '04 '05 '06 '07 '08

13 industrial top 10 MSAs industrial national All core national Industrial Moody/Real CPPI '01 '02 '03 '04 '05 '06 '07 '08

14 More Sellers Than Buyers Apartment $50 $40 $30 $20 $10 $0 Office $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 closed offered Jan to July 2007 Jan to July 2008 Jan to July 2007 closed offered Jan to July 2008 Industrial $35 closed offered $30 $25 $20 $15 $10 $5 $0 Jan to July 2007 Jan to July 2008 Retail $60 closed offered $50 $40 $30 $20 $10 $0 Jan to July 2007 Jan to July 2008

15 Distress Among Sellers Rising Quickly 10.0% Forced & Distressed Sellers office, industrial, retail and apartments $5mil+ CLOSINGS by $ by # 4.0% 10.0% OFFERINGS by $ by # 4.0% 7.5% 3.0% 7.5% 3.0% 5.0% 2.0% 5.0% 2.0% 2.5% 1.0% 2.5% 1.0% 0.0% * '06 '07 '08 0.0% 0.0% * '06 '07 '08 0.0% *partial sales forced by lenders or sellers financial problems, REO sales, failed conversions and defaulted first mortgages

16 Distress In CMBS Still Low

17 Dramatic Changes in Debt Capital SOURCES OF ACQUISITION FINANCING IN THE US THEN: Jan '06 - June '07 NOW: 2008 ytd insurance co reg'l bnk /savings finance/ mtg co gov't agency int'l bank seller financed int'l bank wall street national bank assumed reg'l bnk /savings national bank wall street insurance co finance/ mtg gov't agency co

18 Who is Still Buying? Change in Acquisitions 2007 (8 mos) v 2008 (8mos) -56% -57% -66% -74% -75% -88% private syndicator reit/public foreign inst'l fund

19 Has Equity Dried Up Like Debt Capital?

20 Thank You