• Signs of Inflation Starting to Appear
    • Many essential production materials remain in short supply due to pandemic driven slowdowns
    • The economic reopening unlocked pent-up disposable income to limited supply of products, pushing prices up
    • While rapid inflation is concerning, real estate investments have historically been strong hedges against inflation
  • Rising Rents Help Real Estate Stave Off Inflation
    • Long-term leases typically have inflation escalation clauses that lift rents based on an inflation measure
    • Apartment rent growth outpaced inflation the past 10 years as rents are typically realigned with lease renewals
  • Inflation Incited Appreciation Can Benefit Investors
    • Inflation drives up rents, which raises property values
    • Since real estate investors often use leverage, their return on the capital they put up is amplified
    • Real estate can serve as one of the better investments to ride the current bout of inflation

2003-2017 Broadway St

2003 Broadway St Blue Island, IL 60406

View Offering Memo

property details

Price:              $2.15M

Units:             27

SF:                  20,250

Built/Reno:  1970 / 2018

Occupancy:                  100%

NOI:                                $153,076

Cap Rate:                       7.1%

Cash-on-Cash:              13.6%

Investment Highlights

  • Fully Occupied 27-Unit Multifamily Offering
  • Updated Kitchens and Baths, Newer Windows, Roofs and Boilers
  • Very Well Maintained and Operated with Good Collection History
  • Upside in Rents Ranging from $50-$150 Per Unit

Investment Overview

Marcus & Millichap is pleased to present to market a well-maintained and fully occupied 27-unit multifamily offering in Blue Island, Illinois, a southern suburb of Chicago. The property consists of five contiguous five and six-unit apartment buildings with a total of 18 one-bedroom units and nine two-bedroom units.

Each unit has updated kitchens, baths, newer appliances, durable luxury vinyl wood plank flooring, and radiant baseboard heating; some of which are separately metered and tenant-paid. Each three-story brick building offers tenant storage, on-site owned coin-operated laundry, and off-street parking.

Each building has newer energy-efficient vinyl windows and roofs ranging in age from four to ten years and many newer boilers. The parking lot was completely replaced in 2018.

The property is very well run with many longer-term timely paying tenants. Each tenant is thoroughly screened and well documented with written lease agreements. There is market-supported upside in rents ranging from $50-$150 per unit many through simple renewal increases and some with modest unit renovations.

The property is located approximately 16 miles south of Chicago’s Loop just south of the Little Calumet River in a quiet park-like setting across from the forest preserve, but only minutes from Interstate 57, Blue Island Vermont Street train station, and the Vermont and Division Street bus station.

Map Overview

 

 


  • Video presentation covering the national economic and commercial real estate outlook
  • How shifting behaviors will impact the investment market landscape
  • Forward-looking insights for the Apartment, Retail, Office, Industrial, Hotel, and Self-Storage sectors
  • Key considerations for commercial real estate investors

 

 

As has been the case for much of the recent crisis,  borrowers are continuing to try to capitalize on favorable rates to refinance apartment properties—that is, when they can find lenders willing to close deals.

Long term interest rates—like the yield on 10-year Treasury bonds—fell below 1 percent at the start of the economic crisis caused by the spread of the coronavirus in March 2020 and stayed below 1 percent well into mid-summer.

Freddie Mac and Fannie Mae lenders have proven to be consistently willing to make loans to qualified apartment properties with interest rates fixed at a spread over these historically low-interest rates. Other types of lenders, including many banks and life insurance companies, have been more cautious.

Long-term interest rates fall to new historic lows

On July 28, the benchmark yield on 10-year U.S. Treasury bonds was 0.58 percent. It has hovered around 0.6 percent and 0.7 percent for several months. In comparison, in the months before the crisis, the benchmark yield hovered between 1.5 percent and 2 percent.

“The outlook is for a continuation of low rates through the end of the year,” says Tony Solomon, senior vice president, and national director of Marcus & Millichap Capital Corp. “Could rates fall even lower?  Sure, maybe a little, but they are very low now and we know that there is an ‘open window’ of various capital sources for the right asset and borrower.”

However, many lenders have become much more selective about the loans they are willing to make—even though the number of potential borrowers has shrunk sharply in the crisis caused by the COVID-19 pandemic. Relatively few investors are eager to borrow money to buy apartment properties at the high prices sellers still expect. And though low-interest rates create a huge motive to refinance, many properties still have years left before they can prepay their old loans without expensive defeasance or yield maintenance arrangements.

“Most lenders really heightened their inspection of an applicant’s creditworthiness and liquidity,” says Solomon. Those lenders that did stay in the market also increased their ‘insurance’ by requiring various escrowed reserves of approximately six to eighteen months of principal, interest, property taxes, and insurance, many requiring add equity to cover those reserves.”

Agencies still rule

Lenders of all types are likely to make fewer loans to apartment properties in 2020 than they did the year before—but for  Freddie Mac and Fannie Mae lenders, the decline in lending volume is likely to be less dramatic.

“Freddie Mac and Fannie Mae have been very supportive of the market,” says Mitchell Kiffe, senior managing director and co-head of national production for debt and structured finance for CBRE Capital Markets, based in McLean, Va. That’s partly because of Freddie Mac and Fannie Mae’s mission to provide capital at all stages of the real estate cycle. “They are designed to be countercyclical.”

Apartment borrowers still get the lowest interest rates on permanent loans from these agency lenders. “We have seen some rates from the agencies over the past few weeks for well-located, well sponsored multifamily properties even dip into the sub-3 percent range,” says M&M’s Solomon.

In select cases for low-leverage loans,  Fannie Mae and Freddie Mac are both offering interest rates as low as 2.5 percent. They set higher interest rates of 2.75 percent to 3.25 percent for loans that cover more of the value of a property, according to CBRE.

“If you are a long-term holder, that is pretty hard to decline, even if you have to pay a pre-payment penalty,” says Dave Borsos, vice president of capital markets for the National Multifamily Housing Council.

Life companies struggle to make deals

These low-interest rates are a burden to life insurance companies. “The life companies are back on a conservative basis,” says Kiffe. “However, they cannot generally bear loans at those very low-interest rates… 2.75 percent is about as low a coupon rates as they can offer.”

Life companies have also developed a habit of lending to apartment properties. They made more permanent loans to multifamily properties than any other type of commercial real estate, over the past few years according to the American Council of Life Insurers. They keep returning to apartments, even though they can get much higher interest rates by making loans to other kinds of commercial real estate, like grocery-anchored shopping centers.

Banks fall behind

Banks generally prefer to make loans with shorter terms and floating rates. Some make longer-term loans to apartment properties—but even that has become less common in the crisis caused by the coronavirus.

“Big banks, by and large, are not making loans to apartment properties,” says Kiffe. “They are only making capital available to their best customers.” That’s partly because of capital requirements that force them to keep billions of dollars in reserves as the economy weakens, to cover risks including loans made under the federal stimulus program.

“Local and regional banks are still lending, though spreads have widened and the leverage is down,” says Kiffe.

Source: National Real Estate Investor Bendix Anderson | Jul 29, 2020


About Marcus & Millichap Capital Corp.

Marcus & Millichap Capital Corporation (MMCC) is a leading source of real estate capital nationally. In 2019, the firm sourced and closed $7.8 billion in commercial debt and equity structures through 1,944 capital markets transactions across the U.S.

Our team of experienced professionals provides financing for a full range of property types and loan amounts. We position each property optimally to source capital and leverage state-of-the-art systems to execute with maximum reliability.

Refinancing

Whether you are seeking to pull cash out of an asset, reduce monthly payments, or secure better loan terms, our capital sources can provide the optimal refinancing package in both loan terms and loan proceeds. By aggressively sourcing funds through our network of different types of lending institutions, we are able to obtain the best capital fit to meet clients’ objectives.

Contact Us

 

 

In April 1031 exchange buyers were given an extension. The Internal Revenue Service issued guidance that said anyone who closed on a sale on or after April 1 would be granted an extension until July 15 to identify their replacement properties.

When that happened, Chris Pappas, associate director with Marcus & Millichap’s Net Lease Division, thinks the typical timeline for investing in 1031 exchange was relaxed.

“They didn’t have that urgency to move as quickly,” Pappas says. “Then, once they began to understand the market post-lockdown, then they started moving and closing transactions.”

As the July 15 deadline approached, 1031 investors started identifying deals. That showed up in June’s transaction number, according to the NNN Market Intelligence Report for June 2020 from Pappas. In the month, single-tenant sales jumped 67 percent compared to May. In all, 271 transactions were completed in June compared to 162 in May.

 

Going forward, Pappas wonders how much 1031 capital will be left. He says that 1031 exchange buyers only need to identify the property they’re buying by July 15. They still have 135 days to close.

With due diligence taking 30 days and closing taking 30 days, Pappas thinks most 1031 capital will be out of the market 60 days after July 15 (September 13). “Generally. you don’t see people taking that entire timeline to close their transactions,” he says. “They typically close well in advance of the 180 total days.”

Right now, Pappas says there is still a critical mass of people that are processing their transactions. But once September arrives, there could be a lull. Going forward, he thinks investors should be cautious until the exchange buyer pool benefitting from the July 15, 1031 extensions are entirely removed from the market.

In addition to an increase in transactions, June also saw the resurgence of activity in Florida. After tallying $18.7 million in May in May, dollar volume rebounded 267 percent to $88 million in June, according to the NNN Market Intelligence Report for June 2020. June’s total transaction velocity fell just short of April’s 280 transactions.

Overall, the South attracted 40 percent of all investment. The Texas/Oklahoma and West regions dropped in dollar volume for the second straight month, while the Mountain region jumped from $52 million in May to $120 million in June.

Despite those increases, COVID-19 continues to weigh on the sector. “With respect to demand for net lease real estate, there has also been a huge decrease in transactions across all product types nationally,” Pappas says.

Investors continue to prefer quick-service restaurants (69 transactions), dollar stores (61 transactions), and pharmacies (45 transactions). Those properties made up 64 percent of all June transactions. Pharmacies accounted for 29 percent of total dollar volume in single-tenant net lease, while quick-service restaurants came in second at 19 percent of dollar volume in the sector.

“The market also experienced an uptick in sales tenanted by automobile and gas/convenience tenants and a decline in bank tenanted assets,” according to the NNN Market Intelligence Report for June 2020.

 

Source: GlobeSt By Les Shaver | July 21, 2020 at 02:51 PM

 

Join the Marcus & Millichap Multifamily Forum Chicago & the Midwest in a re-imagined, all-digital, online conference format.

About this Event

>> Conference website: greenpearl.com/multifamily/chicago/

Global pandemic, massive unemployment, nationwide social unrest. 2020’s free trial period has expired, and we are stuck with this lemon. How do we make lemonade out of it?

Join the Marcus & Millichap Multifamily Forum: Chicago & the Midwest in a re-imagined, all-digital, online conference format. Spanning ten days from July 21 through July 30, the conference has been organized in brief, easy-to-consume portions to minimize disruption to your work and personal life. Join live to interact directly with speakers through the Q&A feature, or view the recordings on your own time. Either way, don’t miss the group networking discussions that will allow you to connect with your peers directly to forge new connections and reestablish existing relationships.

Reasons to Attend:

  • Find out what top multifamily owners, managers, developers, and investors are thinking and doing in the Midwest markets
  • Get the latest information on equity and debt financing for multifamily properties
  • Learn how the pandemic has affected your peers’ business and what they are doing about it
  • Pool your ideas on reopening plans and social amenity usage best practices
  • Discover the current thinking regarding future distressed buying opportunities
  • Explore how multifamily value add rehab is changing in light of the public health crisis
  • Identify new technology that is now suddenly more useful and relevant
  • Connect directly through one or more of the group networking discussions or the happy hour

What You Get:

  • 6 panels organized on different days to minimize the disruption to your schedule
  • Links to recordings of each panel to allow you to view or review when you like
  • Access to online group networking discussions (sessions are limited in size)
  • Access to the online group happy hour (limited in size, first come first serve)

 

REGISTER

 

 

 

 

 

 

 

 

Private money lenders offer viable solutions for the CRE market to get deals done quickly and efficiently.

 

Undeniable COVID-created inertia is driving the commercial real estate market today, with innovative approaches surfacing to consummate transactions.

The fear and anxiety, hope and fulfillment of dreams, and confusion and uncertainty being felt by society as a whole are certainly impacting those invested in the commercial real estate life cycle.

Sellers, buyers, lenders, and borrowers all are experiencing the impact of the worldwide pandemic pause. It’s impossible to escape.

On one hand, sellers fear that the longer their properties are on the market, and as the pandemic and recessionary economy linger, values will decline.

On the other hand, for many sellers who see the glass as half full, they hope and envision values quickly will increase, as the pandemic wanes and the US economy fully reopens.

Buyers want the economy to reopen quickly, yet they hope the stalled economy will give them leverage to negotiate lower pricing on transactions.

Borrowers wish they will be able to secure forbearances from their lenders, but fear that this relief may be short-lived. If the economic impact lingers, even when businesses fully reopen, many tenants – especially retailers selling to consumers – may still be unable to pay rent for several months. This, in turn, will negatively impact a given property’s net income, and ultimately, its short-term resale value.

Fully aware and fearing that time kills deals, lenders, and mortgage brokers are mediating between countervailing forces and the immediate, innate need to keep transactions moving forward.

At the same time, many lenders have put deals on hold, grinding to a halt promising transactions in a not-that-long-ago flourishing landscape. Lenders that have chosen to remain active have been overwhelmed with bottlenecks, as their production pipelines crawl through obstacles created by current market dynamics.

So, where does this leave everyone? Confused for sure, and in many cases, paralyzed by the unexpected and far-reaching nature of current events.

Despite this confusion and paralysis, options abound for the market to move forward.

This is where private debt comes in. Private money lenders offer viable solutions for the commercial real estate market – for borrowers and brokers, lenders, and investors – to get deals done quickly and efficiently.

 

Why private debt?

Private money lending has always thrived during economic downturns.

While the coronavirus pandemic and its widespread economic effects are historically unprecedented, tightening standards and restricted liquidity in the conventional lending space are not new. During cycles when conventional lending opportunities contract, private lending expands, as borrowers and investors alike look for new options.

It’s important to note, however, that private debt is not fully immune to the damage caused by the severe economic impact of COVID-19. In the last couple of months, a number of private debt funds and capital providers either temporarily or permanently shuttered their operations due to a freeze of their capital sources, poor underwriting practices, and/or non-performing loans, resulting from a coronavirus-related forbearance or default.

For those that are fortunate to be actively lending today in the private debt environment, the landscape is riddled with market delays, stemming from rate renegotiations, expanded due diligence, short- term extensions on maturing debt, re-underwriting loans, and arbitraging greater spreads for investors. In addition, since private money – perhaps wrongfully so – tends to be the choice of last resort, there’s the perennial shopping for cheaper debt by traditional lenders.

Despite those unavoidable delays, most purchases and refinances currently in the market require the execution speed that only private lending can deliver— agility that is proving quite beneficial.

For example, we are seeing a significant number of cash-out transactions, as some borrowers seek to inoculate their operating businesses with cash infusions to get them through the current economic hurdle.

Some borrowers are looking at this time to expand their financial coffers in anticipation of ready-made, perhaps even unprecedented, shopping spree opportunities of distressed, but quality, real estate assets.

Other borrowers may be preparing for what they believe could be a slow reopening and reintegration process, or the second wave of reinfection and more closures in the coming fall or winter seasons.

 

How private lenders are navigating the landscape

Private lenders are approaching the new market challenges in new and different ways.

Some private lenders are pressing the pause button to focus on managing their existing portfolios and negotiating workouts on any non-performing loans.

Others are actively transacting, but they are implementing modifications to their existing guidelines. Today’s “new normal” in commercial real estate may include all or a combination of the following:

  • Price increases
  • Reduced loan-to-value thresholds
  • Removal of vulnerable property types, such as retail and hospitality from their pipelines
  • Reduced or eliminated subordinate financing
  • Requiring or increasing interest reserves
  • Applying full recourse in instances where non-recourse was the normal

Another group of lenders is choosing to not make any changes. They continue with business as usual mentality, enduring the delays and disruption, and not adjusting for any perceived new market risks.

 

The impact on underwriting

For mortgage investors, the risk lies squarely within valuation. Without an accurate determination of value, lenders cannot assess how much coverage exists to protect their investments.

The pandemic and its ensuing uncertainty have put that age-old instinct of preservation of capital to the test.

Prudent private lenders aren’t standing by to see what happens. They are adjusting their valuation methodologies and underwriting standards to ensure that there is ample equity coverage to account for the new economic, political, and societal stresses on property values.

These risk-based adjustments include, singularly or in combination:

  • A blanket 20% discount on pre-COVID-19 values as a basis for as-is valuation
  • Increasing underwriting assumptions, including vacancy rates and expense ratios
  • Making cap rate adjustments

How long these pandemic-induced changes to underwriting practices and lending guidelines will continue remains to be seen.

 

The private money advantage

Unlike traditional lenders who are hampered by the burdens of federal regulations, private lenders are nimble and can pivot to meet a range of market demands and unique circumstances.

Whether a borrower is seeking speed of execution, a short-term bridge to traditional financing, creative loan terms, or a solution for personal hurdles, such as foreign national status, limited liquidity, bankruptcy, or a low credit score, private money always has served and will continue to meet, specific needs in the market.

During COVID-19 and the ensuing period of economic recovery, private lending for the commercial real estate market will continue to further solidify its position in the capital markets as an irreplaceable, solutions-focused financing strategy.

With the inertia-busting agility of private debt, along with the guidance of experienced, trusted mortgage brokers and advisors, commercial real estate investors and developers can continue to move forward and thrive, even in the midst of a global pandemic.

Source: GlobeSt By Elliot Shirwo | June 16, 2020, at 07:20 

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About Marcus & Millichap Capital Corp.

Marcus & Millichap Capital Corporation (MMCC) is a leading source of real estate capital nationally. In 2019, the firm sourced and closed $7.8 billion in commercial debt and equity structures through 1,944 capital markets transactions across the U.S.

 Contact Us for your Commercial Real Estate Financing & Refinancing needs. 

 

 

 

GLEN ELLYN, ILJune 16, 2020 –  Marcus & Millichap (NYSE: MMI), a leading commercial real estate brokerage firm specializing in investment sales, financing, research, and advisory services, announced today the sale of a 12-unit apartment property located in Glen Ellyn, IL, according to Steven D. Weinstock, regional manager and first vice president of the firm’s Chicago Oak Brook office. The asset sold for $1,060,000.

The buyer, a private investor, was secured and represented by Randolph Taylor, associate, and multifamily investment specialist in Marcus & Millichap’s Chicago Oak Brook office.

The property is located at 30 Briar St in Glen Ellyn, Illinois with easy access to Interstate 355. The property is a well-maintained, fully-occupied, 12 unit multifamily property consisting of all two-bedroom, one-bath units. The property was sold to a repeat buyer for the agent and the firm in an all-cash transaction.

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About Marcus & Millichap (NYSE: MMI)

With over 2,000 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research, and advisory services. Founded in 1971, the firm closed 9,726 transactions in 2019 with a value of approximately $50 billion. Marcus & Millichap has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors.