Median Number of Days to Sell Commercial/ Business/ Agricultural/ Industrial Land within Miami-Dade County MLS January 2010 to September 2015
The median number of days to sell commercial/ business/ agricultural/ industrial land dropped to a near term low in September and is firmly in the low end of a range of the past few years, as can be see in the accompanying chart. This favorable metric is in line with generally favorable trends in area commercial real estate.
The National Association of Realtors has released its 2015 Q4 Commercial Real Estate Outlook report, offering overall projections for the four major commercial property sectors, office, industrial, retail, and multifamily, and analyzing quarterly data for the same.
Highlights of this report include:
Chart of the Weekend: Commercial Real Estate Lending on Verge of All-Time Peak http://t.co/ffSJuYOgWw pic.twitter.com/aFfB2p24nL
— Mark Brian (@markbrian) October 10, 2015
Apparently, the Miami Seahawks were a professional American football team. Based in Miami, Florida, they played in the All-America Football Conference in 1946, the league’s inaugural season. They subsequently folded under mounting debt. They are notable not only as the first major league sports franchise in Miami but also as the state of Florida’s first professional football team.
The screenshot from the video at right apparently displays the logo. For those ever frustrated with the friendliness of Miami’s chosen “Dolphins” mascot, it begs the question of how we let “Seahawks” get away from us.
More on the Miami Seahawks:
Median Days to Sell Commercial Improved Property in Miami-Dade County (MLS) January 2010 to September 2015
Days to sell commercial improved property in Miami-Dade, where recorded in MLS, dropped in September as it dipped from an already low 104 to under 100. This is not as low as the 79 level reached years prior, or the 83 days reached this past June, but nevertheless remains near the low for the past five years and eight months.
When evaluating the financials of properties there are a couple of important ratios for you to consider, and one you will likely want to know for your bank.
Cap Rate: The cap rate, calculated by dividing NOI (net operating income) into the price, is somewhat like an interest rate for a CD or yield on a bond. As an example, if you buy a property for $3 million and the cap rate is 6.1, it would indicate your net operating income (NOI) is $183,000 ($3,000,000 x 6.1%).
Cash on Cash Return: Although a simple concept, this one is slightly more involved. Assume we are working with this same $3 million property at a 6.1% cap rate, but that we borrow 60% of the purchase price, $1.8 million, at 4.5% interest with a 25-year amortization. In this case, you borrowed $1.8 million, thus your out of pocket investment is now $1.2 million. The payment on this mortgage would be $10,004.98 monthly, $120,059.82 per year. Cash flow would then be equal to the net operating income of $183,000 ($3 million x 6.1% given cap rate of 6.1) reduced for this $120,059,82 in annual debt service, or $62,940.18. The cash on cash return is obtained by dividing this $62,940.18 cash flow number into the $1.2 million investment, which in this case arrives at 5% ($62.940.18 / $1,200,000).
Debt Service Coverage Ratio (DSCR): Banks want to know that you are generating a surplus of cash in order to service their loan. to gauge this, among other things, they evaluate the ratio of NOI to debt service on the requested loan, generally seeking a ratio of 1.25 or better. Using this same example of a $3 million property at a 6.1% cap rate, borrowing 60% ($1.8 million) at 4.5% with a 25 year amortization, one calculates a debt service coverage ratio of 1.52, arrived at by dividing NOI of $183,000 by the debt service calculated above of $120,059.82. As long as nothing else is amiss, in normal environments most banks would likely approve this loan.
Considering
Although enticing, the cash on cash return is far from the complete story. First, with each payment, a part of debt service given some amortization goes to principal, which fattens an owners balance sheet. Thus to net this out does not give credit to this benefit. An even bigger consideration, however, comes in the form of rent growth (or decline) and change in value over time. Properties with higher cash on cash returns may score poorly in this area, while those with lower may be accompanied by more optimistic expectations.
Debt service coverage ratios, although generally discussed for loan qualification purposes, also are a useful risk metric for investors. All else being equal, if the debt service coverage ratio is higher, risk may be considered lower. There are countless stories of real estate investment success, but there are also numbers of tragic failures. Allowing some consideration of risk helps to assure one’s long-term sustainability.
Monthly New MLS Commercial Land Listings within Miami-Dade County January 2010 to September 2015
The number of new commercial land MLS listings in Miami-Dade County edged hit a 5 year high in September of about 120 versus just under 100 in the prior month. As can be seen in the accompanying chart, this new high further extends a general upward trend in this metric over the past 5 years and 8 months.
Unity on the Bay Church in Miami’s Edgewater asks $40M for sale by Oct 21
With high-rise residential sprouting all around it, the Unity on the Bay Church in Miami’s Edgewater neighborhood hopes to land a buyer in the coming weeks. NGKF Capital Markets brokers Michael Lapointe, Adam Greenberg and Michael Lohmann sent out a filer proclaiming offers are due by Oct. 21 with an asking price of $39.75 million.
Univision expands with large lease in Doral
Univision will expand its operations in Miami-Dade County with a 40,000-square-foot office lease at 9250 Doral. Taylor & Mathis’ Brian Gale and Andrew Trench represented landlord Delma Properties while NGKF’s Mitchell Millowitz and Lance Benson represented the Spanish language TV network. Univision also has offices across…
Florida Real Estate Case Law Updates
Lenders Standing at Foreclosure. Creadon v. U.S. Bank N.A. 166 So.3d 952 (Fla. 2nd DCA 2015). The circuit court entered final judgment in favor of U.S. Bank N.A., foreclosing a mortgage encumbering property. The owners assert that U.S. Bank did not prove its standing to…
Retail center near Miami Dade College campus sells for $6 million
The Shoppes of Killian, a retail center across from Miami Dade College’s Kendall campus, sold for $6.03 million, or $178 per square foot. The seller was Wood Stone Kendall LLC, a company affiliated with New York-based investment fund Parkstone Capital Partners. The company was represented by Drew Kristol and Kirk Olson…
Overtown Wins Zoning Battle
After Overtown activists and old-timers slammed a plan to create a zoning map that brings Wynwood to Northwest 20th Street, commissioners voted 5-0 to amend the rezoning to exclude the part that infringes on the historic city.
D.R. Horton sells 313 acres in west Miami-Dade at loss
D.R. Horton took a loss on the sale of 313.4 acres of agricultural land in western Miami-Dade County. The national homebuilder (NYSE: DHI) sold the property on the east side of Krome Avenue at Southwest 104th Street for $18 million to Krome Avenue (Miami) ASLI VIII. The buyer is part of Winter Park-based Avanti Properties’ strategic…
Commercial Improved New MLS Miami-Dade County January 2010 to September 2015
The number of new commercial improved property listings in September dipped a bit from the prior month to around 320, as can be seen in the accompanying chart This level, however, remains fairly consistent with a general upward trend in this metric, as levels of such new listings have steadily risen from just over 200 monthly in early 2010 to around 300 a couple of years later and today to near or more than 400 in many months.
