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Caldera Newsletter • August 2010

Featured Professional

What Does the Future Hold for
1031 Exchange Transactions?


Marc Perusse
Principal oo RSS Advisors
Denver, CO

Like all the commercial real estate businesses, Tenant-In-Common ("TIC") transaction volume has plummeted from the height of the market in 2006. However, the TIC market faces even broader challenges than the market in general. While there is anecdotal evidence of an increase in TIC transaction volume, a closer look shows that transaction volume is not only well off its peak, but also continuing to decrease. According to Omni Brokerage, $3.7 billion of TIC equity was raised in 2006 alone. By 2009, it dropped by a stunning 94%, to just $228.7 million.



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A Tale of Two Cities:
Primary versus Tertiary Markets

Karsang Sherpa
Senior Vice President, Caldera Asset Management

The bidding-frenzy and resulting low cap rates on institutional products in primary and secondary cities are reminiscent of the volatile markets in 2007 and 2008. During the second quarter of 2010, cap rates were below 6% not only in the coastal markets such as New York, San Francisco, and Washington DC, but also in markets with good fundamentals, including Houston, Charlotte, and Denver. This has even resulted in many owners rethinking their hold-strategy. They are reconsidering putting their assets on the market...

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The New Debt Environment

By Michael Kelly
President of Caldera Asset Management

As we roll into the second half of 2010, apartment owners are trying to fully understand the changing dynamics of sales and debt markets. Due to our reorganization effort nationwide, we have been able to observe some details and trends on a large swath of apartment assets.

Looking Back at the First Half of 2010

• There was a low supply of quality assets in any of the primary markets. Institutional assets in urban markets achieved cap rates similar to the ones seen in 2007.

• Occupancy rebounded quicker than most apartment analysts predicted. Most high quality assets picked up 200 to 400 basis points in occupancy during the first half of 2010.

• The federal housing agencies were the dominant lender in the market. Freddie Mac gained the most market share as Delegated Underwriting and Servicing (“DUS”) lenders slowed down. Life companies slowly come out of hibernation, but the absolute number of new loans originated was still low.

• Concessions flattened, and even shrunk, in several markets.

• CMBS servicers extended more loans and took back the assets with either poor financial records, or fundamentals, or both. The time taken to solve CMBS issues was long but is beginning to improve.


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Caldera in the News:


All Eyes Ahead



Outlook for Distress
Access Denied

The Health of
Commercial Real Estate

More Losses on Multi-Family
Home Investments


Recovery Rates on
Distressed Assets Vary