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Equity Rich U.S. Properties Increase To New High In 2018

Zoltán Tűndik

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Equity Rich Properties Represent 25.6 Percent of U.S. Properties; Share of Seriously Underwater Properties Drops to 8.8 Percent; Report Includes Home Equity Breakdown by Zip Code

ATTOM Data Solutions, curator of the nation’s premier property database, today released its Year-End 2018 U.S. Home Equity & Underwater Report, which shows that in the fourth quarter of 2018, over 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.

The 14.5 million equity rich properties in Q4 2018 represented 25.6 percent of all properties with a mortgage, down slightly from 25.7 percent in the previous quarter but up from 25.4 percent in Q4 2017.

The report also shows more than 5 million U.S. properties were seriously underwater — where the combined estimated balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value, representing 8.8 percent of all U.S. properties with a mortgage. That 8.8 percent share of seriously underwater homes remained unchanged from the previous quarter and down from 9.3 percent in Q4 2017.

“With homeowners staying put longer, homeownership equity will most likely continue to strengthen. Those that are seriously underwater may find themselves coming up for air as they continue to pay off excessive legacy mortgages or sell,” said Todd Teta, chief product officer with ATTOM Data Solutions. “This report helps to showcase a story of the West coast markets having the highest share of equity rich homeowners versus the South and Midwest markets, who continue to have stubbornly high rates of seriously underwater homeowners.”

Historical U.S. Underwater & Equity Rich Trends
Qtr-Yr U.S. Properties
Seriously
Underwater
%
Seriously
Underwater
U.S.
Properties
Equity Rich
%
Equity
Rich
Q1 2012 12,533,155 27.8%
Q2 2012 12,824,279 28.6%
Q3 2012 12,472,262 27.6%
Q1 2013 10,894,743 25.8%
Q2 2013 11,336,033 25.7%
Q3 2013 10,714,924 23.2%
Q4 2013 9,274,126 18.8% 9,097,325 18.5%
Q1 2014 9,065,741 17.5% 9,935,939 19.1%
Q2 2014 9,074,449 17.2% 9,945,646 18.9%
Q3 2014 8,135,648 15.0% 10,812,968 20.1%
Q4 2014 7,052,570 12.7% 11,249,646 20.3%
Q1 2015 7,341,922 13.2% 11,053,055 19.8%
Q2 2015 7,443,580 13.3% 10,963,041 19.6%
Q3 2015 6,917,673 12.7% 10,476,259 19.2%
Q4 2015 6,436,381 11.5% 12,621,274 22.5%
Q1 2016 6,703,857 12.0% 12,335,651 22.0%
Q2 2016 6,666,622 11.9% 12,383,345 22.1%
Q3 2016 6,063,326 10.8% 13,125,367 23.4%
Q4 2016 5,408,323 9.6% 13,877,315 24.6%
Q1 2017 5,497,771 9.7% 13,718,473 24.3%
Q2 2017 5,433,684 9.5% 14,038,372 24.6%
Q3 2017 4,628,408 8.7% 14,030,394 26.4%
Q4 2017 5,032,185 9.3% 13,731,767 25.4%
Q1 2018 5,206,446 9.5% 13,841,082 25.3%
Q2 2018 5,181,467 9.3% 13,907,758 24.9%
Q3 2018 4,940,724 8.8% 14,464,379 25.7%
Q4 2018 5,001,482 8.8% 14,566,363 25.6%

Highest seriously underwater share in Louisiana, Mississippi, Arkansas, Illinois, Iowa
States with the highest share of mortgages that were seriously underwater included; Louisiana (20.8 percent); Mississippi (16.9 percent); Arkansas (15.9 percent); Illinois (15.6 percent); and Iowa (15.2 percent).

Among 98 metropolitan statistical areas analyzed in the report, those with the highest share of mortgages that were seriously underwater included; Baton Rouge, Louisiana (20.7 percent); Youngstown, Ohio (19.0 percent); New Orleans, Louisiana (19.0 percent); Toledo, Ohio (18.0 percent); and Scranton, Pennsylvania (17.7 percent).

27 zip codes where more than half of all properties are seriously underwater
Among 7,590 U.S. zip codes with at least 2,500 properties with mortgages, there were 27 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Chicago, Cleveland, Saint Louis, Atlantic City, Detroit and Virginia Beach metropolitan statistical areas.

The top five zip codes with the highest share of seriously underwater properties were 08611 in Trenton, New Jersey (70.3 percent seriously underwater); 63137 in Saint Louis, Missouri (64.8 percent); 60426 in Harvey, Illinois (62.3 percent); 38106 in Memphis, Tennessee (60.5 percent); and 61104 in Rockford, Illinois (59.6 percent).

Q4 2018 Underwater Properties Heat Map by ZIP

Highest equity rich share in California, Hawaii, New York, Washington, Oregon
States with the highest share of equity rich properties were California (43.6 percent); Hawaii (39.3 percent); New York(34.2 percent); Washington (34.2 percent); and Oregon (32.9 percent).

Among 98 metropolitan statistical areas analyzed in the report, those with the highest share of equity rich properties were San Jose, California (72.0 percent); San Francisco, California (60.7 percent); Los Angeles, California (48.5 percent); Honolulu, Hawaii (40.2 percent); and Oxnard, California (39.2 percent).

7 Out of the top 10 equity rich counties resided in California
Among the 1,479 counties with at least 2,500 properties with mortgages, those top 10 counties with the highest percent of equity rich properties resided mainly in California counties.

The top five counties with the highest share of equity rich properties were San Mateo, California (75.9 percent); Santa Clara, California (73.0 percent); San Francisco, California (71.4 percent); Pasquotank, North Carolina (65.7 percent); and Alameda, California (62.7 percent).

427 zip codes where more than half of all properties are equity rich
Among 7,590 U.S. zip codes with at least 2,500 properties with mortgages, there were 427 zip codes where more than half of all properties with a mortgage were equity rich.

The top five zip codes with the highest share of equity rich properties were all in the California Bay area: 94116 in San Francisco (85.0 percent); 94087 in Sunnyvale (84.6 percent equity rich); 94040 in Mountain View (83.5 percent equity rich); 94043 in Mountain View (83.0 percent equity rich); and 95051 in Santa Clara (82.7 percent equity rich).

Q4 2018 Equity Rich Properties Heat Map by ZIP

Report methodology
The ATTOM Data Solutions U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and amount of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide for more than 155 million U.S. properties.

Definitions
Seriously underwater: Loan to value ratio of 125 percent or above, meaning the property owner owed at least 25 percent more than the estimated market value of the property.

Equity rich: Loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity.

SOURCE ATTOM Data Solutions

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Banking/Financial Services

Partners Capital Opens Paris Office

Vlad Poptamas

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Photo source: VRBO.com
Reading Time: 2 minutes

 

Following the recent announcement of its West Coast Office, Partners Capital announces the addition of a European base to be opened in March 2019 in Paris, France. Partners Capital currently manages $4 billion of European assets which includes some of the company’s largest charitable foundation clients and several senior partners at leading global investment firms.

The office will be headed by Edmondo Barletta, who has been based at the firm’s London office since 2013 and is the client CIO for many of Partners Capital’s largest private investors. Previously, Barletta worked at Bain Capital Private Equity in London and was a consultant at Bain & Company in Paris. He will be joined by a senior associate from the Londonteam, a new senior investment professional and additional hires, as well as being supported by the 91-person London office.

The decision to open a European office was initially in anticipation of Brexit however it has since become a strategic priority of the firm given the opportunity set in Europe. The Paris office will support any service requirements to Partners Capital’s European clients which may result from Brexit. Additionally, it will be a research and sourcing base for European asset managers across asset classes. Stan Miranda, Partners Capital founder and CEO, said: “This is a long overdue move to be closer to our existing clients, attractive investment opportunities and many new client opportunities on both the private client and institutional investor side.” John Collis, Head of Partners Capital’s European business, added: “Edmondo is ideally suited to drive this important growth initiative for Partners Capital based on his truly ‘pan-European’ character and experience in working with a diverse set of nationalities and investment approaches.”

Edmondo Barletta, Head of the European office, said: “The addition of our Paris office is a logical investment to better serve the existing $4 billion of continental European clients and to prepare for our continued penetration of that market. It is a privilege to lead our European activities, and to work with some of the most sophisticated clients and investors in the industry. European investors increasingly realise the need for the most advanced institutional investment approach, and we are well poised to deliver this.”

 

Source: markets.businessinsider.com

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Acquisitions

NorthWest announces the acquisition of an 11 property, $1.2BN Australian hospital portfolio from Healthscope

Vlad Poptamas

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Photo source: ama.com.au
Reading Time: 4 minutes

 

All dollar values herein are in Canadian dollars. Australian dollar values have been converted into Canadian dollars using an illustrative exchange rate of $1.00CAD = $1.05AUD.

TORONTO, Jan. 31, 2019 /CNW/ – NWH Australia AssetCo Pty Ltd as trustee for NWH Australia Asset Trust (“NorthWest Australia”), a controlled entity of NorthWest Healthcare Properties Real Estate Investment Trust (“NorthWest” or the “REIT”) (TSX:NWH.UN) announced today that it has entered into definitive agreements to acquire 11 freehold hospital property assets (the “Portfolio”) from ASX-listed Healthscope Limited and its affiliates (“Healthscope”) for approximately $1.2 billion as part of a sale and leaseback transaction (the “Property Transaction”). Through leveraging its capital relationships, NorthWest intends to structure the Property Transaction such that it will manage the Portfolio and ultimately maintain an approximately 25% – 30% ownership interest.

The Property Transaction follows NorthWest Australia’s previously disclosed acquisition of a strategic interest in Healthscope and today’s announcement by Healthscope that it has entered into a binding agreement with Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) together with its institutional partners (collectively “Brookfield”) to acquire up to 100% of Healthscope shares (the “Healthscope Acquisition”). The Property Transaction is conditional on Brookfield’s completion of the Healthscope Acquisition and NorthWest and its affiliates obtaining approval under the Foreign Acquisitions and Takeovers Act 1975 (“FIRB”), both of which are expected to occur in Q2-2019.

Acquisition of $1.2BN Australian Hospital Portfolio

The Property Transaction represents a rare opportunity to partner with Healthscope – one of Australia’s leading private hospital operators with a portfolio of 43 private hospitals concentrated in large metropolitan centers throughout Australia, and to acquire a high-quality portfolio of 11 Australian healthcare real estate properties. By value, the Portfolio represents approximately 51% of Healthscope’s total freehold property portfolio being sold, with the remainder being acquired by a third party investor, on the same terms.

The Portfolio is expected to generate initial annual rental income of approximately $60 million resulting in a weighted average capitalization rate of 5.0%. The Portfolio is 100% occupied by Healthscope on an absolute quadruple net lease basis with the tenant responsible for all property costs including maintenance capital expenditures. The leases have a weighted average expiry of 20 years and are subject to fixed annual rent increases of 2.5% per annum. The rents payable under the leases are market based, representing portfolio EBITDAR coverage for the Portfolio of approximately 2.2x, providing the REIT with a durable cash flow stream as well as built-in organic growth.

In addition, the Portfolio comes with an initial brownfield development and capex opportunity of up to approximately $525 million over 10 years, of which approximately $50 million relates to capital projects to be completed within 3 years. This pipeline, subject to business case approvals, is forecast to yield approximately 6% on completion representing a 100 basis point premium to the stabilized asset yields and providing an attractive and low risk way to accretively deploy capital to drive earnings growth over time whilst improving asset performance and quality.

Commenting on the Property Transaction, NorthWest Chairman and CEO, Paul Dalla Lana, said:

“The portfolio includes some of the highest quality healthcare real estate assets in Australia. With the portfolio including a diversified mix of acute, rehabilitation and psychiatric hospital facilities primarily located in major metropolitan centers of Melbourne, Sydney, and Brisbane, Australia is a core market for NorthWest and this transaction enhances our market leading position as the real estate partner of choice for Australian hospital operators. The scale and strategic nature of the acquisition also positions the REIT to leverage its existing global platform and capital relationships.”

NorthWest’s Ownership Level and Management of the Portfolio

NorthWest is ultimately targeting an effective ownership level in the Portfolio of approximately 25% -30%, which is consistent with its existing ownership levels in other Australian/New Zealand platforms. NorthWest will provide management services for the entire Portfolio, and expects to generate initial base asset management fees of approximately $4 million – $7 million (relating to the portion of the Portfolio that NorthWest is not expected to own) (the “Management Arrangements”).

Portfolio Financing

In order to finance the Property Transaction, the REIT has arranged a property-level debt facility for approximately $710M (with an initial interest rate of approximately 4.3%). This results in an aggregate equity requirement of approximately $490 million for the Portfolio.

The REIT will fund its expected equity requirement of approximately $125 million to $150 million for its targeted 25% – 30% ownership level in the Portfolio with a combination of the proceeds from the sale of its existing investment in Healthscope and previously funded deposits.

Portfolio Metrics and Financial Impact

The Property Transaction is expected to enhance both the REIT’s current portfolio operating metrics as well as financial profile.

The fully occupied, long-term indexed, quadruple net lease structure embedded in the Portfolio Transaction is expected to further improve the REIT’s industry-leading portfolio metrics as follows:

  • Consolidated NOI contribution from Australasia increases from 43% to 53%;
  • Consolidated occupancy is expected to increase by 40bps to 96.7%;
  • Weighted average lease expiry is expected to increase by 0.8 years to 13.5 years;
  • The percentage of leases with annual rent indexation is expected to increase to 85.9%; and,
  • Portfolio diversification is expected to increase with the addition of Healthscope as one of the REIT’s top 10 tenants, representing 15.6% of consolidated Gross Rent.

The REIT currently manages a $4.0 billion ANZ1 platform with $2.5 billion1 of committed fee bearing capital across two separate and distinct capital pools with current un-deployed capital of ~$1.3 billion. As a result of the Property Transaction the REIT’s ANZ platform is expected to increase to approximately $5.2 billion1 with $3.4 billion1 of committed fee bearing capital.

Subject to final funding allocations, the REIT expects the Property Transaction and other publicly announced events subsequent to Q3 20182, will increase its Q3 2018 reported annualized AFFO per unit by approximately $0.06 per unit.

While the terms and structure have not been finalized, NorthWest expects to maintain consolidated leverage below 60% post completion of the Property Transaction and reiterates its medium-term leverage target of 50% as it sees opportunity to strengthen its balance sheet and capital structure through the repayment of high-cost corporate debt with continued capital recycling activities.

Further Information

An investor presentation with further information on the Property Transaction is available on the REIT’s website (www.nwhreit.com).

Deutsche Bank acted as the REIT’s financial advisor with Ashurst providing legal counsel to NorthWest Australia.

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Commercial Real Estate

Castellum invites the media to a press report at Stockholm Waterfront

Vlad Poptamas

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Photo source: whitearkitekter.com
Reading Time: 1 minute

Today, Tuesday, January 29th, at 10 a.m. Castellum is announcing a significant strategic investment. Members of the media are invited to participate in a press briefing at the Stockholm Waterfront Conference Centre, at 10 o’clock today.

During the press briefing, Henrik Saxborn, Castellum CEO, will present a strategic acquisition that will play a significant role in Castellum’s initiatives toward creating the workplace of the future. Time has been set aside for private interviews and photos, in connection with the press briefing.

Time and place
Time:
Tuesday, January 29, at 10 a.m. (CET)
Place: Stockholm Waterfront Building, Klarabergsviadukten 63

Registration is mandatory, to Castellum Communications Director, Anna-Karin Nyman:

anna-karin.nyman – by 9:30 a.m. Tuesday, January 29

For registration and further information, contact:

Anna-Karin Nyman, Communications Director, Castellum, +46-702-06-75-62

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