2022 – Page 64

ArborCrowd Launches Single-Family Build-to-Rent Investment Offering in Colorado Springs, CO

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Targeting 18% to 23% net internal rate of return over a two- to four-year hold period ArborCrowd, the first crowdfunding platform launched by a real estate institution, announced a new offering that allows investors to acquire equity interests in Selby Ranch, a single-family rental (SFR) and build-to-rent (BTR) development located in Colorado Springs, CO. with a total capitalization of $61.65 million. The offering enables individuals to invest in the SFR and BTR asset class, one of commercial real estate’s fastest growing and most in-demand sectors. Representing approximately 17 percent of the overall single-family housing market, the SFR asset class has seen significant institutional investment, driving increased competition and creating higher barriers to entry for individual investors. AHV Communities (AHV), a leading, vertically integrated developer and operator with extensive experience in the build-to-rent asset class, is part of the project’s sponsorship group. Affiliates of ArborCrowd, AHV and MDO Capital, a commercial real estate finance firm, have collectively funded 30 percent of the deal’s total equity. Arbor Commercial Mortgage, a national direct lender and member of The Arbor Family of Companies alongside ArborCrowd, provided a $46.24 million loan to finance the construction of the project. ArborCrowd now seeks to raise $10.79 million from investors for the remaining equity, which an ArborCrowd affiliate has prefunded into the transaction. The project is expected to break ground in 2022 and complete construction in 2024. The Selby Ranch deal is an especially attractive investment opportunity due to: The continued prominence and growth of the single-family build-to-rent asset class, which has seen more than $45 billion of institutional investment in 2021 and 14.7 percent year-over-year national rent growth ending in October 2021. Strong sponsorship in AHV, an experienced developer of build-to-rent communities having developed 13 communities containing over 2,200 homes since 2013. The Arbor Family of Companies’ unparalleled experience in single-family rentals, having pioneered a specific lending program for the asset class in 2019. The alignment of interests between ArborCrowd and investors in the deal’s capital stack, in which a member of its management team is also personally invested. Colorado Springs’ booming metro area, which has experienced population and employment growth far exceeding national rates over the past decade. “Our expansion into the single-family build-to-rent asset class represents a significant step in ArborCrowd’s broader evolution by enabling us to offer individual investors coveted access to a highly sought-after property type,” said Co-Founder and COO Adam Kaufman. “By breaking down the barriers to entry for investing in single-family rentals and capitalizing on the incredible demand for these communities across the nation – particularly in secondary and tertiary markets – we’re affording investors opportunities to generate the returns they seek. Moreover, as one of the first institutions to focus heavily in the space, our management team is uniquely positioned to evaluate and invest in single-family build-to-rent projects.” Mr. Kaufman continued, “Selby Ranch in particular is an ideal project to launch our first investment offering in the single-family rental space as it meets our rigorous underwriting requirements and provides exposure to the thriving Colorado Springs market, which features a distinct balance between suburban and urban lifestyles. As factors that include rising home prices, remote work trends, migration to suburban locations and an aging millennial population continue to drive interest in single-family rentals, we see significant growth for this asset class on the horizon.” Once completed, Selby Ranch will feature 163 three- and four-bedroom units with an average size of 1,310 square feet. Spanning roughly 13.2 acres, the townhome-style single-family units will be spread across 47 buildings and include attached two-car garages, stainless steel appliances, and central air conditioning. Proposed shared amenities consist of a community clubhouse, pool, fitness center and children’s play area. The Colorado Springs Metropolitan Statistical Area (“Colorado Springs MSA”) is the second largest in Colorado after Denver, with a population that’s expected to grow to nearly 770,500 residents by 2026. Its high quality of life, vibrant downtown, affordability and flourishing business climate, which is bolstered by major employers including Lockheed Martin, Boeing, Raytheon and L3 Harris Technologies, have contributed to population growth that has doubled the national average from 2010 to 2021. Additionally, Colorado Springs offers numerous highlights for residents, including more than 50 major outdoor attractions and parks, the U.S. Olympic & Paralympic Museum and Pike’s Peak, one of America’s most prominent mountains. To learn more about Selby Ranch and access the offering overview and private placement memorandum, which includes market reports, property details, risks, financial pro formas and more, please visit https://www.arborcrowd.com/selby-ranch-sfr-community. About ArborCrowdArborCrowd is the first real estate crowdfunding platform launched by a real estate institution, opening up an exclusive network to a new class of investors. As part of The Arbor Family of Companies, which includes Arbor Realty Trust, a leading publicly traded commercial mortgage real estate investment trust, ArborCrowd is backed by more than 30 years of leadership experience. ArborCrowd reviews more than 500 deals a year from its proprietary network and only chooses the ones that survive its rigorous underwriting process. ArborCrowd prefunds capital to a deal prior to launching the offering to investors. This ensures the deal closes and allows ArborCrowd to offer investors accurate and detailed information about the property. Additionally, ArborCrowd chooses to present one deal at a time, so there is no guessing what property investors will actually own.

WORD OF THE DAY: Advert

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[ad-VERT] Part of speech: Verb Origin: Late Middle English, 12th to 14th century Definition: Refer to in speaking or writing Examples of Advert in a sentence “My brother awkwardly adverted to Mom’s new boyfriend in front of our dad.” “The car’s previous owner did not advert to the vehicle’s history of accidents and repairs.” About Advert The basis of “advert” is the Latin “advertere,” meaning to direct one’s senses or attention, but the word itself draws directly on the Middle French “avertir,” which meant “to take note of.” Initially, “advert” meant “turn one’s attention to,” but later it broadened to mean “to bring to another person’s attention.” It is the root of modern “advertising,” of which the goal is to capture the audience’s attention. Did you Know? The British use “advert” as a shortened slang noun for “advertisement,” but the word’s history extends 400 years before that usage. At its beginning, the term (similar to “divert”) meant “to turn one’s attention toward.” Over time this definition evolved to mean “making reference to a subject in speech or writing.”

WORD OF THE DAY: Couchsurfing

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[/kouCHˈsərfiNG/] Part of speech: Verb Origin: English Definitions: 1. Sleeping on strangers’ couches while on vacation 2. Staying at a series of different places Examples of Couchsurfing in a sentence “Many college students go couchsurfing while studying abroad.” “With an adventurous spirit and a tight budget, she was no stranger to couchsurfing.” About Couchsurfing Originating with the company of the same name, couchsurfing is a free alternative to hotels and hostels that’s especially popular among younger travelers. Hosts allow guests to sleep on their couch (or, in some cases, guest room) for free, all in the name of kindness. Did you Know? The term “couchsurfing” was coined by the founders of the company of the same name, which formed in 2003.

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Rising Mortgage Rates and Even Higher Home Prices Projected to Limit Affordability With inflation at its highest level in four decades, the Federal Reserve is expected to enact a more aggressive course of monetary policy tightening than previously forecast, with a 50-basis-point increase to the federal funds rate in March now predicted to be the first in a series of interest rate hikes through 2023, according to the February 2022 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The combination of a less accommodative interest rate environment and an increasingly worker-scarce labor market led the ESR Group to downgrade its expectations for 2022 real GDP growth from 3.1 percent to 2.8 percent; however, its expectations for 2023 headline growth remained unchanged at 2.2 percent, a pace that approaches the long-run trend. Risks to the forecast include uncertainty over the future course of inflation, potential geopolitical developments in Eastern Europe, and currently unforeseen COVID-related disruptions to consumer behavior and the labor market. In addition to a slowdown in economic activity, the ESR Group expects housing activity to moderate from 2021’s highs. Single-family home sales are expected to decline 2.4 percent in 2022 – a slightly steeper drop than the previously anticipated 1.2 percent dip – due to increasing affordability constraints associated with rising mortgage rates. As measured by the FHFA Purchase-Only Index, the ESR Group currently projects home price growth of 7.6 percent in 2022 and 3.3 percent in 2023, down from last year’s record-setting 17.3 percent. With the 30-year fixed mortgage rate now projected to close the year at 3.7 percent, refinance activity, as a share of total single-family mortgage originations, is expected to decline to 36 percent in 2022 from 58 percent in 2021 and could move even lower if rates move further upward. “Challenges to macroeconomic forecasting have grown not only because of inflation’s largely unexpected persistence but also because of its outsized and broad-based impact on the U.S. economy and global economic growth,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Headline inflation will likely decline from year-ago levels as price pressures ease, but upward price pressures are not expected to be as fleeting as initially thought – and it’s likely that the period of time required for inflation to be reversed has been extended significantly,” said Duncan. “Compared to a few months ago, financial markets now expect a substantially more aggressive monetary posture from the nation’s central bank, which is likely to result in heightened volatility as the Fed retains the optionality necessary to engineer a non-inflationary soft landing. We currently forecast the Consumer Price Index closing 2022 and 2023 at 4.4 percent and 2.5 percent, respectively, down from a peak of 7.6 percent in the current quarter. If correct, inflation will still be above the Fed’s 2-percent target at the end of next year, despite our expectation of more aggressive Fed action.” Duncan continued: “For homebuyers, we believe that borrowing costs will likely rise with the increase in mortgage rates, further eroding affordability. At the same time, we expect demographic factors and a shortage of housing supply to be supportive of housing activity. What remains unknown is how higher mortgage rates and tighter monetary policy – through expected interest rate hikes and changes to the makeup of the Fed’s portfolio – will impact home prices.” Visit the Economic & Strategic Research site at fanniemae.com to read the full February 2022 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

Get Ahead of Important Home Renovation Projects in 2022

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The Appraisal Institute, the nation’s largest professional association of real estate appraisers, encouraged homeowners to focus on energy-efficient, safety-oriented and work-accessible improvement projects when seeking to potentially improve their property’s value. “In today’s competitive real estate market, the Appraisal Institute believes home remodeling and renovation projects are important and sometimes necessary aspects of homeownership when undertaken properly,” said Appraisal Institute President Jody Bishop, MAI, SRA, AI-GRS, “However, not all home improvement projects offer a full return on investment – cost doesn’t necessarily equal value.” According to Architecture Digest’s, “10 Renovation Trends You’ll be Seeing a Lot of in 2022,” digital interior design was on the rise even before social distancing and working from home became the norm after the surge of the COVID-19 pandemic in 2020. In 2022, the industry is shifting towards newer technologies such as virtual staging, furniture shopping with 3D models and implementing artificial intelligence products for school, work and to make our homes smarter. In addition, the article notes that green homes are a trend to be on the watch for. The onset of the pandemic has made the importance of health and environmental awareness top of mind. Reusing furniture, repurposing flooring and adopting sustainable materials and lighting that consumes less energy will be popular in the upcoming year. Expect to see landscaping that is eye-catching yet protects, especially in areas prone to wildfire or flood, as well as exterior walls of brick or stone. There is an ever-increasing attention to sustainable options like bamboo or cork. Solar panels on the roof that take eco-friendliness even further may also bring added value. The concerns from the pandemic led to realizations about safety and storage in the home, according to Bob Vila’s remodeling trends for 2022 predictions. HVAC units with “whole house” air filtration systems or anti-microbial tile could also become more common. “Many households now have several generations under one roof, and that means accommodating the difficulties the elderly might have with their day-to-day lives. To that end, expect to see many people renovating their homes for aging in place, complete with roll-in showers, grab bars, and nonslip flooring.” The pandemic has allowed many people to work from home. Although normal life is slowly returning, many still have the option to work remotely. Owners interested in remodeling or selling should consider the use of multifunctional rooms and updating spaces that can serve as study halls and work zones, complete with fast Wi-Fi connections, virtual meeting setups, comfortable seating and plenty of charging stations, according to another 2022 trend prediction. It is essential that the office space is organized, functional and bright. Homeowners should consider simple updates like paint or lighting changes. Instead of using the dining room table or corner of your bedroom as a space to focus, expect the trend to move toward carving out dedicated spaces for functionality. “In today’s competitive marketplace, professional appraisers provide homeowners with the confidence to make practical remodeling and renovation decisions that likely will be smart choices financially,” Bishop said. Homeowners may find it best to hold off on big renovations if they’re unsure how long they will be in their property. The longer a homeowner stays, the greater the opportunity for a potential return on investment. However, regardless of cost, some home improvement projects can be worthwhile simply because they improve the owner’s quality of life, Bishop added. For an unbiased analysis of what their home would be worth both before and after an improvement project, a homeowner can work with a highly qualified real estate appraiser – such as a Designated Member of the Appraisal Institute – to conduct a feasibility study. Learn more at www.appraisalinstitute.org.

WORD OF THE DAY: Rigmarole

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[ri-gə-mə-ˌrōl] Part of speech: Noun Origin: English, mid-18th century Definitions: 1. Incoherent or nonsensical chatter 2. A long, complex procedure, sometimes designed to confuse Examples of Rigmarole in a sentence “The senator, during the filibuster, went on and on with his rambling rigmarole.” “The rigmarole involved with becoming a certified pilot is complicated, but it’s worthwhile.” About Rigmarole During the Middle Ages, a “ragman roll” was a collection of documents that Scottish nobles used to declare their loyalty to King Edward I of England. The documents were long and complex — similar in meaning to the modern word they became: rigmarole. Did you Know? Rigmarole has been so often misused with an extra a, as rigamarole, that both forms are now accepted in English.