George Smith, 70, chairman and founder of George Smith Partners, Inc., and a philanthropist, died in November after a long battle with cancer. His career in the real estate finance industry spanned four decades.
In 1992, he and six partners founded George Smith Partners, Inc., which has grown to become one of the leading commercial mortgage brokerage firms in the country.
McCleaf to lead Lane’s expansion
Steven McCleaf was named regional partner of the Lane Co.’s new office in Washington, D.C.
As part of Lane Northeast, McCleaf will oversee Lane’s operations throughout the greater Washington, D.C., metropolitan region, which includes the suburban Maryland and northern Virginia areas.
McCleaf has been active in this real estate market for 15 years, most recently as vice president for Gables Residential Trust.
Potomac hires new senior executive
Potomac Realty Capital, LLC, a provider of bridge, mezzanine and permanent commercial real estate loans, has appointed Robert Keeler senior vice president and chief operating officer. He was formerly vice president and director of asset management for Arbor Realty Trust and Arbor Commercial Mortgage.
IREM elects new officers
The Institute of Real Estate Management (IREM) elected its officers for 2006: Fred Prassas, president; Robert Toothaker, president-elect; and Regina Mullins, secretary-treasurer.
Prassas is a principal with PMC Management Group, which manages residential properties throughout western Wisconsin and eastern Minnesota. He’s been with the industry since 1973.
Toothaker is chairman of Real Estate Management Corp., as well as CB Richard Ellis South Bend; and Mullins is a senior portfolio manager in the asset services group of Cushman & Wakefield.
MF debt outstanding surpasses $641 billion
Washington, D.C. – Commercial banks are taking a bigger share of the market for multifamily lending, according to a Mortgage Bankers Association (MBA) analysis of Federal Reserve Board Flow of Funds data.
At the end of the third quarter, MBA counted a total of $641 billion in outstanding multifamily debt, an increase of $9.2 billion, or 1.5%, between the second and third quarter.
Commercial banks saw the largest increase in dollar terms: $6.5 billion, or 5%. Federally related mortgage pools saw an increase of $1.8 billion, or 1.4%. Savings institutions increased their holdings of multifamily mortgage debt by $1.6 billion, or 1.7%. Over the same period, the amount of multifamily mortgage debt held by state and local government retirement funds dropped by 64%.
“The commercial/multifamily mortgage market continues to be buoyed by modest long-term interest rates, improving property fundamentals and strong equity flows,” said Doug Duncan, MBA’s chief economist and senior vice president of research and business development. “The result is a quarter with record originations.”
Post-hurricane measure passes Senate
Washington, D.C. – Congress passed the Gulf Opportunity Zone Act of 2005, a bill to provide tax incentives to stimulate recovery in the Gulf Coast region, which was hammered by Hurricanes Katrina and Rita at the end of summer.
The legislation, H.R. 4440, also includes protections for landlords who have rented units to displaced tenants needing government assistance.
The bill provides $300 million in New Markets Tax Credits (NMTCs) in 2005 and 2006 and $400 million in 2007 for a region dubbed the Gulf Opportunity (GO) Zone, which includes the parts of Alabama, Louisiana and Mississippi that were hit hardest by the storms. NMTCs are used by qualifying community development entities to make investments in targeted areas.
The bill also authorizes an emergency allocation of low-income housing tax credits (LIHTCs) in 2006, 2007 and 2008 in the GO Zone. The allocation is set at $18 per capita for that region. An additional $3.5 million in LIHTC authority was granted to Texas and Florida, which were less damaged by the storms but which have housed many storm refugees.
H.R. 4440 includes a provision that allows rental providers “to rely on the representations of prospective tenants displaced by Hurricane Katrina to determine whether they satisfy the income limitations for qualified residential rental projects,” according to the National Multi Housing Council (NMHC), which had lobbied for the provision.
NMHC and the National Apartment Association have been vocal supporters of multifamily operators making their units – including tax-credit or tax-exempt bond-funded units – available to evacuees.
The House and the Senate passed the bill Dec. 16, and President Bush was expected to sign it. Congress had worked quickly to get a compromise bill approved before the end of the year in recognition of the political importance of the post-hurricane federal response.
“It’s a very sensitive issue,” said David Gasson, vice president of Boston Capital Corp. “The fact is that these [displaced] people are still down there with no real support from the government for rebuilding.”
In other hurricane-related news, the Federal Emergency Management Agency (FEMA) extended a deadline for moving displaced residents out of hotels and into permanent housing.
The move, which added two weeks to the original Dec. 1 deadline (and five weeks for the 10 states hosting the most refugees from Katrina and Rita) drew rare praise from NMHC and others for the embattled disaster-response organization.
FEMA also announced that it would continue to provide rental assistance to hurricane victims for up to 18 months without reducing their eligibility for other FEMA help.
HITS & MISSES
Assessor scam in Illinois
Property buyers and sellers have enough trouble with assessors without having to worry about property values being unfairly boosted by assessor fraud. But that’s the case in Illinois, where dishonest assessors have been stealing the identities of honest assessors and using them to file false assessments. The problem has been growing there for at least two years, but the state Department of Financial and Professional Regulation had only one full-time appraiser investigator – until November, when he retired, reported the Chicago Tribune. “The system is so broken that it may as [well] not exist,” said Robert Gorman, a member of the state’s Appraisal Advisory Board and the president of the Illinois chapter of the American Guild of Appraisers.
How rents could surge
“House values … rise periodically, but normally rents go up with sale prices. This time is different. … The ratio of the market value of the housing stock to its rental price for the country as a whole is now 33% above its historical norm. Eventually, the housing-rent ratio has to return to normal. Either housing prices will fall, or rents will rise. Regardless of which it is, the movements will have to be large. If market prices are the source of the entire adjustment, the value of residential real estate will have to decline by 25%, or $6 [trillion].”
– Stephen Cecchetti, professor of international economics and finance, Brandeis University, in the Financial Times