November 23rd, 2009, 1:00 pm by Jeff Collins
Stewart
Pacific Property Assets CEO Michael Stewart said his company didn’t realize it would default on interest payments to investors until four or five days beforehand.
The Irvine-based real estate firm had been raising money since January for a new Opportunity Fund to invest in distressed property at bargain prices. Investors who got into the fund by April 30 would get double interest through June.
But a few days after that April 30 cutoff, PPA announced that it would suspend paying about $500,000 in interest payments to 674 investors who had entrusted $90 million to the firm.
Some investors questioned the timing of PPA’s efforts to raise fresh cash for its Opportunity Fund, with fund-raisers calling investors just two weeks before that default. The company, which invests in apartment buildings in Arizona and Southern California, is now in Chapter 11 bankruptcy.
Jebb Harris/The Register
But Stewart emphatically denied knowing that his firm faced default while raising money for the Opportunity Fund.
The company took in $7 million for that offering. Although returns of 12% to 15% were promised, investors have received nothing since April.
Stewart noted that $300,000 to $400,000 that arrived for the Opportunity Fund after the defaults became inevitable were returned.
“We had absolutely no clue (we faced default) until minutes before the payments were suspended,” he said. “At that point, we stopped raising money.”
The Opportunity Fund never did buy any buildings, although bids were made on three or four properties with 700 to 800 units combined. The $7 million raised was applied to other PPA expenses. The firm now has about $4 million in cash, he said.
Stewart said it’s likely that company investors will end up with equity positions in PPA under the reorganization. If so, he maintains, they will benefit from the upside from rising asset values once the market bounces back.
Big real estate woes:
Posted in: Commercial property • Top tale • industry • Pacific Property Assets | 3 Comments »
November 23rd, 2009, 9:57 am by Jon Lansner
Garden Grove 92844 had Orange County’s weakest housing market in the third quarter.
| WHAT’S A ZIPPY? |
| • WHO? Columnist Jon Lansner’s ranking of O.C.’s 83 ZIP codes. |
| • WHAT? Tally of 3 key home-market performance benchmarks: Pricing and sales momentum (year-over-year change) plus foreclosure density (per homes in neighborhood). |
| • WHY? All rankings need a nickname, thus, “Zippys.” |
| • HOW? Using DataQuick data for most recent quarter we rank the 83 ZIPs by price, sales and foreclosure — then determine overall ranking by each ZIP’s average ranking. |
And that slice of the city had plenty of local company in our Zippy rankings that weigh pricing and sales momentum plus foreclosure frequency as measured by DataQuick stats.
How’d Garden Grove 92844 do so poorly? It ranked 82nd of 83 for pricing; 67th for sales; and 69th in terms of foreclosures frequency in the community. In the previous quarter, this ZIP ranked 56 of 83 overall. Also ..
- Second worst Zippy was Rancho Santa Margarita 92688 followed by Santa Ana 92701 as third weakest.
- Two other Garden Grove ZIPs made the Zippy Bottom 10, too: 92841 and 92840.
TOMORROW: BEST ZIPS!
Some noteworthy trends emerge when you look at the 83 major ZIPs in the county and their Zippy rankings and then ponder the worst-performing communities:
- Cheap may not be better. The Zippy Bottom 25 had a median selling price of $353,500 – that’s -21% vs. the middle of the pack.
- Price momentum of the Bottom 25 — activity vs. a year ago — was -13% compared to -6% for the Zippy middle of the pack. Still, lots of discounting at lower end.
- Sales momentum of the Bottom 25 — activity vs. a year ago was -8% compared to -4% for the middle of the pack. Agents and house shopper complain for a shortage of lower-priced residences for sale, though.
- Foreclosures occurred in the Bottom 25 ZIP at a rate of 13.4 homes per 1,000 vs. 9.8 for the middle of the pack.
- However, foreclosures momentum in the Bottom 25 ZIP — change vs. a year ago — was 23% compared to 38% for the middle of the pack. Has the worst of the storm passed for the bottom of the market?
Here’s last quarter’s 10 weakest ZIPs, as measured by Zippy math, and their respective rankings (1 best; 83 worst) in terms of pricing and sales momentum and foreclosure frequency …
| Rank |
Prev. |
Town |
ZIP |
Price |
Pricing |
Sales |
Foreclose |
| 83 |
56 |
Garden Grove |
92844 |
$247,500 |
82 |
67 |
69 |
| 82 |
74 |
Rancho Santa Margarita |
92688 |
$380,000 |
72 |
64 |
79 |
| 81 |
43 |
Santa Ana |
92701 |
$130,000 |
83 |
45 |
81 |
| 80 |
83 |
Buena Park |
90621 |
$309,750 |
69 |
75 |
64 |
| 79 |
48 |
Garden Grove |
92841 |
$353,500 |
50 |
83 |
72 |
| 78 |
18 |
Garden Grove |
92840 |
$325,750 |
65 |
77 |
62 |
| 77 |
74 |
La Habra |
90631 |
$300,000 |
68 |
78 |
54 |
| 76 |
80 |
Anaheim |
92808 |
$485,500 |
70 |
73 |
56 |
| 75 |
52 |
Santa Ana |
92704 |
$275,000 |
52 |
61 |
78 |
| 74 |
7 |
Dana Point |
92629 |
$587,500 |
80 |
81 |
28 |
Posted in: O.C. Zippy rankings • Selling patterns • Garden Grove • numbers • Zippys | 7 Comments »
November 23rd, 2009, 12:01 am by Jon Lansner
Click to enlarge
Orange County housing affordability was 3rd worst in the nation in the third quarter, according to the latest National Association of Home Builders/Wells Fargo “Housing Opportunity Index.”
HOI showed that 37.6% of all new and existing Orange County homes sold in the third quarter of 2009 were affordable to families earning the local median income of $86,100. How’d that rank?
- That’s the second consecutive drop in local affordability after three years on the upswing.
- 3rd worst among the major markets followed.
- Prime reason for falling local affordability? Rising prices! By the HOI math, local prices were up 5% in the quarter and 3% higher that a year ago.
- And local incomes, by the way, haven’t budged in six months!
- Worst than us? New York and San Francisco.
- Most affordable? Indianapolis, for the 17 consecutive quarter.
Nationally? HOI showed 70.1% new and existing homes sold in Q3 were affordable to families earning national median income of $64,000 vs. near-record 72.3 percent in q2.
FYI: HOI measures percentage of homes sold in an area that are affordable to families earning that area’s median income during a quarter using data from, among others, First American Real Estate Solutions and Federal Housing Finance Board.
Real estate outlooks:
Posted in: Affordability • Home prices • National Association of Home Builders/Wells Fargo Housing Market Index • numbers | 18 Comments »
November 22nd, 2009, 1:00 pm by Jeff Collins
Jebb Harris/The Register
An Irvine-based apartment investor offered to pay up to 30% in interest to investors just weeks before it suspended monthly payments on about $90 million.
Pacific Property Assets, which owns nearly 50 small to medium apartment buildings, ultimately ended up seeking Chapter 11 bankruptcy protection in July.
But some of the firm’s investors now question its actions earlier in the year, when PPA, as it’s called, tried to raise cash for an “Opportunity Fund” so it could buy distressed properties at bargain prices.
Interest rates of 12% to 15% would be doubled for the first few months for those investing by April 30. On May 4, the company suspended interest payments to all its investors, including those investing in the Opportunity Fund.
Gene Stewart
“They cut everything off on April 30,” said investor Gene Stewart of Yorba Linda. “Then, all of a sudden on May 1, they were broke.”
But company CEO Michael Stewart, no relation to Gene, denied that the company knew it would halt interest payments to 674 investors at the time it was seeking a fresh infusion of cash.
“I can tell you unequivocally on a stack of Bibles that there’s no way that would have ever occurred,” Michael Stewart said. “We had absolutely no clue until minutes before the payments were suspended. And at that point, we stopped raising money.”
Read the rest of this entry »
Posted in: Commercial property • Top tale • industry • Pacific Property Assets • troubled | 9 Comments »
November 22nd, 2009, 10:00 am by Jon Lansner
In the spirit of the holiday, we asked 11 active local Social Media participants said their were thankful for from this brave new world …
- EDUCATION: “I’m incredibly thankful that Social Media opened me up to national connections and conversations in the real estate industry. The industry is on the brink of significant change. To be able to engage with some of the people that are at the forefront of some of these changes is exciting. Without my involvement on Twitter and Facebook, I never would have known these fascinating people.” – Linsey Planeta (@linsey)
- SANITY: “My life is one crazy balancing act that takes up 30 hours of my 24-hour day. You can imagine how far down the list networking, being involved with the community, and doing extracurricular activities has to be. Social Media allowed me to stay connected to my interest groups, news that are relevant to me, stay involved with the non-profit work that mean a lot to me, and my clients in a harmonious fashion so that I don’t feel like I have to live many different lives, and I can maintain sanity.” – Paul Tran (@paulttran)
- TWEETUPS: “I have met some fantastic people that I respect, appreciate, and genuinely like. Recently I was devastated to find out that a friend and client had lost a young child. I remembered that I had met an amazing floral designer, the owner of Avante Gardens in Brea, at an Irvine tweetup. I sent her a message asking for help. Her genuine concern gave me great comfort and peace. She personally handled creating a beautiful floral arrangement. Words cannot accommodate my gratitude to her.” – Carolynn Santaniello (@ocrealtress)
- CONNECTIONS: “I am grateful for a very powerful platform to connect, engage, give, help and learn from the most amazing people! Virtual connections have become a valuable part of my life. Then then having the opportunity to elevate this connection in real life is a most extraordinary and enriching experience! Social Media is a 24/7 free buffet fulfilling everyone’s palette!” – Henie Reisinger (@hennartonline)
- DEALS: “I am thankful Twitter! I get tons of stuff for free and lots of coupons which saves me money.” – Rhonda Burgin (@burginco)
- CONFIDENCE: “I am extremely thankful for the contacts. Twitter, blogging and Facebook have changed my career. I have been able to grow a large connection of virtual and real life friends. The creation of that community allowed me the faith to take the risk and start my business in blog management and web design this year. Without the strength of my social network, and the support of my followers I would have never taken the risk.” – Kirsten Wright (@kirstenwright)
- FREEDOM: “I’m thankful for the freedom as a content creator. I am both writer and publisher. Although I don’t answer to an editor, I answer to people much more important: My readers, who’ll ultimately determine the value of what I produce. Their comments — whether supportive or tough-love — crystalize my ideas. Without access to New/Social Media channels, I wouldn’t have the opportunity to carry on this vital dialog, and for that, I am truly thankful.” – Ron Ploof (@ronploof)
- GIVING: “My first temptation was gratitude for the ability to connect with so many outside of my usual spheres of influence. Taking another second to ponder brought me to a more humanitarian conclusion. I’m perhaps most grateful for the culture of support and helpfulness from the community. Yeah, there are those who take, take, take. But, by and large, the “wisdom of the crowd” tends to be spring loaded for give, give, give.” – Mel Aclaro (@melaclaro)
- BRIDGES: “I’m thankful the wonderful connections. It has opened up doors and brought in tons of people that I may have never had the chance to meet. It has built bridges for me across states, provided the opportunity to learn how to engage more people, given me a new avenue with which to help people. I wouldn’t even be writing this paragraph for this article if it wasn’t for Social Media.” – Justin Moore-Brown (@bigheadasian)
- FRIENDS 1: “I am most thankful for Social Media in enrinching my personal and professional life from all of the wonderful people that I have connected with virtually and had the chance to personally meet. I owe who I am today to all of you.” – Neil Schaffer (@nealschaffer)
- FRIENDS 2: @sashakane @davidmoyle @suzbroughton @vbesack @remarx @sendchocolate @barbatsea @josephaldrich @queenofspain @shannatrenholm @technosailor @irreverentwidow @rachyrach1 @adrigonzo @anaperiodista @daNanner @DavidKirlew @Dawn_Abraham @g33kski11z @KatieKrafka @MiaChambers @mousewords @nobodys_girl @oakmonster @techbabe @wenditv and, of course, @jonlan” – Gregg Gallagher (@fstop23)
[ Social media tips by email? CLICK HERE! ]
Posted in: Social Media • wisdom | 5 Comments »
November 21st, 2009, 4:00 pm by Jeff Collins
It’s that time of year … One of the many commercial real estate forecasts that coming our as 2009 ends …
Jeffrey Ingham, a Jones Lang LaSalle executive vice president in charge of the firm’s Orange County office in Irvine, says commercial real estate will undergo a painful “cleansing process” in Orange County next year in which more buildings will be lost, then resold by as much as 40% to 50% off.
“Over the next six to 12 months, there will be more defaults,” Ingham said.
“It’s a cleansing process,” he added. “It’s painful to go through, but once we go through it, the better off we’ll be.”
Ingham delivered his Orange County outlook two days after researchers for his international brokerage made their 2010 forecast predicting falling commercial building rents and rising vacancies. The picture is similar in Orange County, Ingham said. Specifically:
- Office vacancies will get as high as 25% to 30%. Currently the vacancy rate is just under 20%, but another 5% to 10% of “shadow space” — offices that are vacant but not yet on the market — will soon become available for rent.
- As much as 4.5 million square feet — the equivalent of 16 to 18 high rises — will come back on the market.
- More tenants will move up from lower-rent, “Class B” properties to “Class A” properties at virtually the same lease rates.
- Sales activity will increase. Orange County has been a focus of investors interested in distressed assets at lower prices.
- Building values have dropped as much as 40% to 50% from market peaks because of increased vacancies.
The outlook for 2010 …
Posted in: Commercial property • Outlooks • industry • Jones Lang LaSalle | 50 Comments »
November 21st, 2009, 12:01 am by Jon Lansner
The federal tax credit extension, lower foreclosure rates, rising home prices, increased revenue and some rosy forecasts. Has real estate — after four years of slumping sales and prices – hit bottom? These thoughts may be some of the things evoking smiles on the recession-weary faces of real estate types this year. Insider Q&A asked some real estate insiders what is there is to be thankful for this in the real estate business this Thanksgiving …
“We are thankful for the message the consumer has provided to us as an industry and as a company. As a 33-year-old company, we have been witness to several business cycles, but nothing like we have experienced in the last four years. The devastation to home values, to people’s lives and to their finances has humbled our industry and our firm. The consumer has drawn the proverbial line in the sand and is demanding much more from us an industry and as a company. It is no longer, get a license, sell a home. It is now, understand the very client you serve, meet their needs and most of all, with education and integrity. I am thankful for the line in the sand and those companies in our industry that miss this wonderful opportunity to assist buyers and sellers of real estate in a new and meaningful way, will not survive the current market. As we look to the future, there is an end to every cycle and we believe that the end to the current cycle is in site.” – Michael Hickman, Seven Gables Real Estate
“I’m thankful that housing in Orange County has become affordable again to first-time homebuyers. After being priced out of the market for so long, prices have dipped to a level that people can again afford to buy their first home and building for the future. Many Realtors have re-discovered the simple joy of handing a first-time homebuyer the keys to their first home and to the American Dream.” – Tom Pelton, Prudential California Realty
“This year gave hope to many folks priced out of the housing market, from the artificial price run up back to the beginning of this century. Some families are grateful they can now qualify for a home in more realistic price ranges. Government intervention with their loan modification efforts have saved thousands of borrowers homes from foreclosure, giving them a chance to preserve their home ownership.” – Tom Moon, Pacific Moon Real Estate Read the rest of this entry »
Posted in: Brokers, builders, etc. • Insider Q&A • industry • Thanksgiving | 38 Comments »
