dennis doyle mn banker's presentation oct 2010

8/8/2019 Dennis Doyle MN Banker's Presentation Oct 2010

1/17

Twin Cities Real Estate Update


2/17

Who is W els h?


3/17

S pecial Assets


4/17

Twin Cities Market Update

Residential

7,904 Homes in

foreclosure in Q1 &Q2 2010 (MN H om eOwners h ip Center)

Home prices have

decreased 22-24% in

the Twin Cities since

2006

Retail*

YTD Absorption =

-151,527 SFVacancy = 7.3%

Multi-Fa m ily**

YTD Absorption =

3,500 units absorbedVacancy = 5.0%

Industrial*

Absorption =

593,200 SFVacancy = 11.2%

Office*

Absorption =

-437,777 SFVacancy = 15.5%

Minneapolis Stats

S o urces:

*Stats from Welsh Q3 2010 Market Reports

** Stats from GVA Marquette Advisors Apartment Trends


5/17


Multi-Fa m ily

$122,000/unit; 7.3% Cap

Market Rent = $902 / unit

Retail

$95 PSF; 8.1% Cap Asking Rent = $13.80 PSF net

S o urce: Real Capital Analytics August 2010


6/17


Industrial

$43 PSF or 8.5% Cap

Market Rent = $8.96 PSF net

office and $4.46 PSF netwarehouse

Office

$104 PSF or 9.7% Cap

Market Rent = $12.47 PSF

net



7/17

D istributi o n Centers


8/17

Nati o nal Net Abs o rpti o n

S o urce: 2010 CoStar Group


9/17

Nati o nal Pr o perty S ales



10/17

Nati o nal Cap Rates



11/17

Nati o nal Real Estate L o ans Outstanding

As of 1 st Quarter 2010

S o urce: MBA of America

Quarterly Data Book

S avingsInstituti o ns5.6%

S tate and L o calGo vern m ent 2.8%


12/17

Nati o nal CMB S Maturities

$185 billion of vintage 05-07 loans come due in 2010-2012.

S o urce: JCR Capital www.jcrcapital.com


13/17

W els h Rules: Keep Real Estate S im ple

Purchase/Development 50%

Management/Ownership 30%

Financing 10%

Sale 10%

1. Owners h ip

2. Expenditures

5 Fact o rs affecting Real Estate Invest m ents

3. Land

4. Rec o very Cycle

Housing Apartments Retail Industrial Office

5. Market Cycles


14/17

W els h Rules: Keep Real Estate S im ple

Assess t h e value o f real estate1. Location

2. Function

3. N.O.I. (1 st 3 yr.) / cash flow inds. / value add office

4. Credit of Tenants

5. Price/ SF

Valuing Commercial Real Estate is an art, not a science.


15/17

To p Negatives in t h e Market T o day

1. Deleveraging: No man left behind

2. High vacancy rates, falling rents, fewer deals

3. Values are down 20-40% overall

4. Financing is very tough

5. Government angst and uncertainty


16/17

To p P o sitives in t h e Market T o day

1. Low interest rates

2. Few new developments

3. Market appraisals on real estate

4. Minneapolis real estate market has reached bottom

Recent Minneapolis Sales


17/17

Twin Cities Real Estate Update

dennis doyle mn banker's presentation oct 2010

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