Pru Mortgage Capital Launches MF Program

Prudential Mortgage Capital Co. has launched a new short-term loan program for multifamily property owners seeking to refinance or acquire properties that do not currently qualify for a Fannie Mae or Freddie Mac permanent loan.
Under the new “Agency Gateway” program, the company will target loans of $5 million to $25 million secured by fully-constructed or renovated multifamily properties that are well-located but have not yet reached stabilized occupancy levels.
Prudential Mortgage Capital is the commercial mortgage lending business of Prudential Financial, Inc. (NYSE: PRU).

To read the full story, click here.
>>Ben Johnson l 5.02.10

OKC’s Apartment Market Holding Up Amid Downturn

Oklahoma City’s apartment market has not completely escaped the broader U.S. economic downturn, but continues to post strong occupancy and rental rate numbers. This according to the “Mid-Year 2009 Oklahoma City Apartment Market Overview” study just released by William T. Forrest and Eva M. Wills, first vice presidents of Multi-Housing Properties at CB Richard Ellis/Oklahoma.
Here are the key takeaways from the new study.
The average occupancy for the metropolitan Oklahoma City area is 90.5% which is a decrease of 150 basis points since mid-year 2008.
Average occupancies for each submarket included:
– Northwest Oklahoma City (south half) stayed the same at 89%
– Northwest Oklahoma City (north half) decreased from 92% to 91%
– Southwest Oklahoma City decreased from 94% to 92%
– Edmond decreased from 95% to 92%
– Norman increased from 91% to 92%
– Midwest City/Del City decreased from 91% to 90%.
Age of Properties
A broader study was also conducted, of average occupancies by age category. For the properties built prior to 1980, the average occupancy was 88%. For properties built in the 1980’s, the average occupancy is 93%, and for properties built since 1995, the average occupancy is also 93%.
Homebuyer Impact
Another factor affecting the multifamily market has been residents moving out to take advantage of the low interest rate environment and first time home buyer tax credit. According to Forrest and Wills, one year ago, all six of the submarkets covered in this survey experienced rental rate increases in every floor plantype, which was the first survey during this decade that had rental rate increases in every floor plan type in every submarket. In this survey, half of the submarkets experienced rental rate increases in all floor plan types while the other half experienced mixed results.
Sales activity for the first half of 2009 is similar to the first half of 2008. Through the first half of the year, there were nine sales of properties over 50 units in size. Although transaction activity is similar to last year, it is half of the same period from 2007. The continued decline in sales activity is caused by the difficult capital markets and the economic recession. The declining national economy and lack of financing also creates a disconnect between buyer and seller expectations.
According to the study, average sale prices will show a slight decline by year-end 2009, as distressed assets will make up a significant number of sales this year. The 1970’s class will be most affected. The average prices for “A” and “B” quality assets will show slight decreases as investors change their acquisition criteria based on the difficulties in the capital markets and uncertainty relative to the economy.
The Oklahoma City area continues to experience new construction of multifamily properties. However, the future pipeline of new construction is minimal at this time. Areas of focus are still downtown Oklahoma City and Edmond including north Oklahoma City locations with Edmond or Deer Creek public schools. The second phase of Lincoln at Central Park consisting of 432 units is in the final stages of construction. In the Edmond area, the 302 unit phase one of Fountain Lake was recently completed near the northwest corner of Boulevard and Memorial. Also in Edmond, the Enclave (150 units) is under construction near the southwest corner of Covell and Kelly, as well as the Summit Groves Apartments just northwest of Edmond Road and Western Avenue.

For more information on the report, contact William T. Forrest at william.forrest@cbreok.com or 405-272-5357.
>>Ben Johnson l 7.02.09

Energy, utility industries propping up OKC Apartment Market

According to a recent report by Marcus & Millichap, the Oklahoma City apartment market will not be immune to broader economic conditions this year but should post a healthier performance than many regional markets due to a strong energy and utility base.

The metro was one of only a few in the nation to add jobs last year, with gains largely driven by gas and oil companies, and while local payrolls are forecast to contract in 2009, losses will be relatively modest.

“Investors remain attracted to apartment properties in Oklahoma City for the metro’s long-term stability,” says Gary Lucas, regional manager of the Oklahoma City office of Marcus & Millichap. “Buying trends have shifted, however, with many investors now focusing on smaller complexes located along key arterial routes.”

While the level of new supply on in the pipeline is troubling, demand is projected to ease the pain. Projections for healthy growth in the 25- to 34-year-old group, a key renter base, is forecast to expand at nearly two times the national average over the next five years. What’s more, the growth will be strongest close to universities in the Norman and Edmond submarkets, as well as downtown, where young professionals have been migrating in recent years.

Here are a few of the report’s major findings:

After adding 3,700 jobs in 2008, employers are expected to cut 5,000 positions this year, or 0.9% of total employment, as a result of ongoing weakness in the financial activities and manufacturing sectors.

Even though no apartments were delivered last year, completions in 2009 are set to be more than twice the metro’s five-year annual average. Nearly 650 units are slated to come online this year, expanding metro stock by 0.8%.

Following a 20 basis point uptick in vacancy in 2008, increased supply-side pressure is forecast to contribute to raising vacancy by 90 basis points this year to 9.5%.

A decrease in employment is expected to yield slowing demand for apartments. As such, owners are projected to lower asking rents by 0.4% in 2009 to $541 per month. Increased concessions, meanwhile, will lead to a 0.8% retreat in effective rents to $515 per month.

For a copy of the Oklahoma City Apartment Research Report, as well as reports on other markets nationwide, go toMarcusMillichap.com.
>> Ben Johnson l 6.08.09