Headlines – Week of February 28, 2010
March 8, 2010
Jones Lang Predicts Increased Hotel Lending (from the Jones Lang LaSalle Hotels Debt Capital Markets Update)
A recent edition of the Jones Lang LaSalle Hotels Debt Capital Markets Update predicted that a broader recovery in the debt capital markets has begun and it is extending into hospitality assets. The update noted that hotels have been blacklisted by many lenders over the past 18 months but have recently drawn the attention of the more traditional lending institutions.
They note that hospitality lending now offers better locations, coverage and pricing than most other asset classes. Hotels have caught the attention of both foreign and domestic lenders looking to deploy capital early in the year.
Similar to other recent publications, they note that pent-up equity capital is geared to return to the market and these providers are turning to creative hospitality structures. They note the increase in “rescue capital'” wherein a new equity provider injects fresh capital into a deal in conjunction with the lender agreeing to re-balance the debt and the borrower agreeing to subordinate their returns.
They note these recapitalizations as being a win-win-win situation for the borrower, lender and new equity provider. Distressed borrowers are able to live to fight another day, lenders are able to pay down their exposure while re-structuring the remaining debt according to today’s underwriting, and the new equity gets to deploy capital at attractive returns. Rescue equity recapitalizations have the effect of removing the hotel from the distressed asset list while keeping both the borrower and the new equity motivated to perform at a high level.
Florida Expected to Grow Again (from the University of Florida – Bureau of Economic and Business Research)
A new estimate from the University of Florida indicates that Florida’s population should rebound this year from its first loss in more than half a century.
Florida is expected to add about 23,000 residents between April 1, 2009, and April 1, 2010, following a loss of almost 57,000 residents the previous year, according to projections released by the University’s Bureau of Economic and Business Research.
Despite these gains, the report states Florida will not return to its average annual increase of 300,000 until 2014 or 2015. The state’s population grew by more than 400,000 residents a year during the housing boom between 2003 and 2006.
Due to the bursting of the housing bubble and the severe national recession, Florida lost more than 800,000 jobs between the fall of 2007 and the fall of 2009, and the state unemployment rate rose from about 4 to 11 percent. The declining economy led to a huge slowdown in population growth between 2007 and 2008 and a population loss between 2008 and 2009. The loss was the first since military personnel left the state at the end of World War II.
The study estimates the total number of state residents will grow from 18,750,000 to 18,773,000 between April 2009 and April 2010. According to long-term projections, state population is expected to reach approximately 21,247,000 in 2020, 22,574,000 in 2025, 23,821,000 in 2030, and 24,971,000 in 2035.
The biggest numerical increases forecast between 2010 and 2035 are in large counties. Orange County is projected to add the most new residents, 512,200; followed by Hillsborough, 471,800; and Miami-Dade, 457,200.
In terms of percentage increases, the biggest leaders over the next quarter century are projected to be Sumter and Flagler counties, growing by 111 percent and 109 percent, respectively.
The Villages, a huge retirement community in Sumter County will be one of the biggest factors in this growth.
Monroe is the only county projected to lose population over the next 25 years, declining by about 4 percent.
Top 10 Cities with Climbing Home Prices (from Forbes.com)
Home prices aren’t tanking everywhere. In some cities they have bounced pretty high off the bottom, according to a report in Forbes magazine.
For the report, Forbes used the research firm, Altos Research. Altos Research pulled data for every U.S. city with at least 100 homes on the market (roughly 8,000 cities), and found those with the biggest price jumps from the previous year. Altos produced data on an individual city level, rather than using Metropolitan Statistical Areas. Altos used median asking prices based on a 90-day-rolling average as of Feb. 12, 2010 and tracked asking prices for single-family homes but not condominiums.
1. Lexington, Mass., +36 percent
2. Bay Village, Ohio, +32 percent
3. Sunnyvale, Calif., +32 percent
4. Poway, Calif., +27 percent
5. University City, Mo., +28 percent
6. Ambler, Pa., +26 percent
7. Allison Park, Pa. , +25 percent
8. New Braunfels, Texas, +25 percent
9. Kemp, Texas, +24 percent
10. Arcadia, Calif., +24 percent