HOUSTON-AREA MORTGAGE STORM SURGE: NOW A QUARTER UNDER WATER Another few months, another one of those studies from research firm First American CoreLogic — this one using data from the end of June. By that date, the firm says, 26.15 percent of all Houston-Sugar Land- Baytown-area mortgages were in a “negative equity” position. Add in the “up to their eyeballs” crowd of mortgage-holders who are within 5 percentage points of owing more than their homes are worth, and the figure rises to 33.86 percent. That’s a marked increase from the figures in the firm’s March study, which used data from September 2008. [First American CoreLogic; previously on Swamplot]
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Tag: Financing
High-stakes real estate swindler Edward H. Okun was sentenced last week in a Virginia courtroom to 100 years in prison for absconding with about $126 million in funds entrusted to his qualified intermediary company by 1031 exchange investors. Meanwhile, back on the corner of Westheimer and Highway 6, one of his former properties went up for sale.
Okun’s Investment Properties of America bought the West Oaks Mall for $110 million in 2005. The sellers of the bankrupt property might expect to get $20 million for the million-sq.-ft. mall today, reports Globe St.‘s Amy Wolff Sorter:
The mall’s anchors include Dillard’s and Macy’s, which own their own space, and Sears, which is on a lease. [Holliday Fenoglio Fowler’s Robert] Williamson says the Sears lease is up in 2010, but negotiations are underway to keep the retailer in place.
When Okun bought the mall from Somera Capital and CoastWood Capital a little less than four years ago, the asset was 95% leased, and sported $10 million worth of exterior and interior improvements. IPA had even larger plans for even more renovations on the 33-acre site, Williamson says.
Less than a year later, the owner was able to secure $86 million of permanent financing for the mall. Yet by late 2007, IPA had filed for bankruptcy protection to stave off foreclosure. Okun’s troubles and a failing economy dropped the mall’s occupancy to a little less than 70%.
How’s the mall looking these days?
COMMENT OF THE DAY: ANOTHER GRAND PARKWAY REVENUE STUDY “I think it’s time to feature just which entities have acquired land adjacent to this boondoggle. List which individuals hold controlling interest and then we can discuss interesting sidelights like contributions to various elected officials.” [devans, commenting on Investing in the Grand Parkway]
INVESTING IN THE GRAND PARKWAY Commuters struggling to cross the Katy Prairie on congested House Hahl Rd. will be happy to learn that traffic relief is on the way: Harris County’s commissioners voted yesterday to apply for $181 million in federal stimulus money for the Segment E marshland cut-through of the Grand Parkway, which will connect major employment and shopping centers in Katy and Cypress. $20 million in engineering and other contracts for the project were awarded a few months ago, but the commissioners yesterday approved a “comprehensive traffic and revenue study” for the segment. The study, which won’t be complete before construction begins in February, will help support claims that the road will be able to pay for itself, with tolls. [Houston Chronicle; more from Houston Tomorrow, both via Off the Kuff]
There’s a new $2 million bed and breakfast going up in Midtown? The Chronicle‘s Nancy Sarnoff reports that the project’s developers were “able to persuade a lender” to finance construction of their 3-story “New Orleans-style” B&B, which has already broken ground at 2800 Brazos, at the corner of Drew St.:
“It was a little challenging early on in the process,†[developer Genora] Boykins said. “The thing that made the difference is we really didn’t give up on the vision we have.†. . .
That sort of positive thinking is apparently nothing new for Boykins, an attorney for Reliant Energy who serves on the Downtown Management District board of directors — along with her La Maison partner, Centerpoint Energy community relations VP Sharon Owens.
Kirbyjon Caldwell, the pastor of 14,000-member Windsor Village United Methodist Church, provides more insight into Boykins’s real-estate techniques in Chapter 3 of his now-decade-old bestseller, The Gospel of Good Success: A Road Map to Spiritual, Emotional and Financial Wholeness:
FIGHTING THE NEW APPRAISAL RULES A Swamplot reader draws attention to a “rumored email” purporting to show that the National Association of Realtors is gearing up for a campaign against the Housing Valuation Code of Conduct that went into effect at the beginning of May. The HVCC was meant to safeguard the independence of appraisals — in part by prohibiting loan officers, mortgage brokers, and real estate agents from selecting the appraiser for a particular property. The email, posted on a San Fernando Valley real-estate blog, indicates that the NAR is pushing Congress to impose an 18-month moratorium on the new code. Our reader wonders if recent stories of “unfair appraisals” — such as this one — are the result of a larger “orchestrated campaign” against the new rules. [Effective Demand; Swamplot inbox]
THE FEDERAL RESERVE’S EXTENDED STAY IN HOUSTON Extended Stay Hotels, which operates 21 extended-stay hotels in Houston under the Homestead Studio Suites, StudioPLUS Deluxe Studios, Extended Stay America, and Crossland Economy Studios brands, declared Chapter 11 bankruptcy earlier this week. How is the Fed involved? “The Federal Reserve holds $744 million of various junior classes of debt and $153 million in the senior debt that the central bank assumed after the collapse of Bear Stearns, which held a sizable amount of the hotel chain’s debt. The losses are mounting for the Fed on those Bear Stearns assets, which continue to sour. Extended Stay loans were held on the Fed’s balance sheet via a company called Maiden Lane that the central bank lent $29 billion in June 2008 to purchase $30 billion of Bears’ assets.” [Deal Journal; more at Calculated Risk]
COMMENT OF THE DAY: THE UPPER LIMITS OF INNER LOOP RENTS “The reason the inner loop is ‘soft’ is simple math. A tiny apartment is now something like $1,200 per month. Meanwhile, my mortgage on my inner-loop house is just over $1,300.” [me, commenting on Where Rents Have Dropped]
The giant inflatable-boat-like structure shown here afloat in an otherwise-empty East Downtown six-pack superblock is the latest rendition of . . . the new Houston Dynamo soccer stadium! The Houston Chronicle‘s Bernardo Fallas has details:
The Dynamo want to have the roughly $85 million, 22,000-seat stadium ready for opening day 2011. They envision an all-round two-level, all-seater venue with 34 suites, 86 concession point-of-sales, a 3,000 square-foot club level and a party deck on the southeast corner.
Loving that subtle “soccer fans on a life raft” imagery? It gets better: The open-air stadium’s playing surface will be a full story underground!
A financial blogger going by the overused name of Tyler Durden points to some fishy behavior on the part of banks promoting a new stock offering by troubled Weingarten Realty. Writes the reader who alerted Swamplot to the story:
This may be a bit too finance-y for you, but apparently a recent Weingarten equity offering is being used to pay down debt to banks, which the author of this post (and me) find a bit suspicious. Further shenanigans? Analyst recommendations changing for the better just before the tender.
Is this too finance-y for Swamplot? Let’s find out!
COMMENT OF THE DAY: WILSHIRE VILLAGE PAYMENT DUE “I forgot to mention that with regard to the loan Dilick took out to pay for taxes on the property four years ago, sources have reported that the bank set a deadline of early April 2009 for him to take steps toward paying back that loan. In demolishing the apartments and selling the land, Dilick would be able to pay back the loan and make a profit as well. . . . As to the comment, ‘This is private property. The owner should be able to do with it as he sees fit,’ the problem is that Jay Cohen, who inherited the property from his parents, still holds 80 percent ownership. Sadly, he was duped or forced by circumstance into signing over managing control to Dilick. . . .” [dredger, commenting on Comment of the Day: Grand Unified Wilshire Village Conspiracy Theory]
The reader who provided this “tip” wouldn’t or couldn’t tell us where the information came from, so there’s no particular reason to take it seriously. But it raises a few interesting questions about the future of the 8-acre property at W. Alabama and Dunlavy that’s apparently soon to be the former site of the Wilshire Village apartments.
. . . So here it is:
The buzz in the air over the demolition of Wilshire Village is Mr. Dilick plans to try to sell the property soon after the demolition, word is he hasn’t the funding to develop this tract.
- Wilshire Village coverage [Swamplot]
Photo: Swamplot inbox
COMMENT OF THE DAY: PRESSURE TO CONFORM “The maximum conforming loan at an 80% LTV translates to a selling price of just over $520k. Given the current interest rate premium on jumbo mortgages, new-builds that are just a little over this amount are tending to languish on the market, whereas those in the sub-$500k range seem to still be selling briskly. If I were a developer planning on putting up some $600k+ houses, I might re-think my plans and target buyers who can take advantage of the current low rates for conforming loans.” [Angostura, commenting on Latest Greenwood King Report: On the Double!]
COMMENT OF THE DAY: DOWNTOWN HILTON GARDEN INN FURNITURE PLAN “Financing? WEDGE’s principal can find the money for this project in his couch cushions. According to ArabianBusiness.com, Issam Fares is currently the 32nd richest Arab on the planet with a net worth of $2.4 Billion.” [Bernard, commenting on Downtown Wallflower: A New Hilton Garden Inn?]
COMMENT OF THE DAY: WELCOME TO WESTWOOD GARDENS “The neighbors are starting to join together to remove the graffiti. Not many kids are on the blocks but they do range in age from babies to happy teens. You can see them outside at times with their parents, riding scooters, riding bikes or just playing around. The neighbors even have indoor small pups, not those that you see on the news that maul on people or those that are seen used to fight. They are small well cared for happy dogs. Never without being on a leash when they are outside. A few neighbors have been seen flying small model airplanes. Everyone is friendly. Try it, if you see any one of the neighbors outside just wave and you will get a smile and a wave back. Hopefully one day we see you, if so Welcome to Westwood Gardens where you are Not just a Neighbor, Your Family!” [We Are Family!, commenting on Westwood Gardens Still Life: A Photo Tour of Half-Built Houston Homes]