Market Insights

Everything we do is underpinned by proprietary analytical tools and methodologies – then battletested by an in-house team of research analysts and real estate capital market experts. We believe that this combination provides Amherst Capital with an information advantage and differentiated perspective into the fundamentals driving performance. 

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  • “Stuck in the Middle: Smaller Boutique Hotels Are the Odd Ones Out”

    Commercial Observer – February 2019

    Boutique hotels have a Goldilocks problem.

    Hotel financiers must decide whether a lending opportunity is too big, too small or just right.

    For many, boutique and independent hotels in the $30 million and under range are firmly on the “too small” side and are viewed as riskier investments. For others, this creates a unique lending niche where the risk-return reward is . . . juuuuust right.

    With the market slowing and hotel room supply outpacing demand in some of the country’s major markets, it’s more costly to be a boutique borrower today. That’s coupled with the fact that lenders are shying away from non-branded hotels or ones that don’t demonstrate a surefire record of success.

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  • “Finance Market Realigns as Rates Rise and CMBS Loses Share”

    Commercial Observer – November 2018
    Abbe Franchot Borok, managing director and head of originations for commercial real estate lending speaks at Commercial Observer’s 3rd Annual Fall Financing Commercial Real Estate Forum in New York

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  • “Why Grocery-Anchored Retail Holds Just About the Only Appeal to Investors”

    Commercial Observer – May 2018
    Looking at recent past performance, grocery-anchored retail has held up better than big-box retail, primarily due to lower online adoption,” said Abbe Franchot Borok, managing director and head of originations for commercial real estate lending at Amherst Capital Management.

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  • “Everything’s Pretty Rosy, but a Wee Correction Could Be Coming”

    Commercial Observer – April 2018
    There’s also some misconceptions around the number of alternative lenders in the market right now, and not enough appreciation for groups’ individual niches, Abbe Franchot, head of originations for Amherst Capital Management said. For Amherst, that niche is heavy value-add lending opportunities led by sophisticated sponsors.

    Franchot has seen an increase in the number of mid-business plan refinances in transitional loans, where sponsors’ business plans are taking longer than expected and they’re circling back to the debt markets to take advantage of cheaper capital. She noted that she’s seen more spread compression in light-transitional than heavy value-add transactions, however, with some lenders shying away from the deals that require heavy lifting.

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  • Single-Family Rentals Growing as an Institution-Owned Asset Class

    Institutional ownership of single-family rental (SFR) homes in the United States has surpassed 240,000 homes owned, totaling nearly $40 billion of investment in the sector. In 2017, the number of SFR homes purchased by institutional investors increased year-over-year for the first time since 2013, and 2018 year-to-date purchases have thus far sustained the same pace as 2017, according to Amherst data. In our view positive macro tailwinds, supportive demographics and economies of scale have created an established foothold for institutional SFR operators to expand further in 2019.
    National Real Estate Investor – December 2018

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  • 2019 Market Outlook – U.S. Real Estate

    Market Update – December 2018
    This paper examines real estate market fundamentals and key themes to watch in 2019.

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  • Stabilized top tier office most exposed to a potential slowdown in Manhattan

    Commentary – October 2018
      o Manhattan and surrounding New York City metro employment is growing and office absorption has been positive – but at a weaker pace than a few years back
      o Shifting trends in co-working are reducing office space needed per employee and potentially increasing risk to the market
      o Significant supply on the horizon with the addition of Hudson Yards and other projects may exceed demand
      o Rents are showing signs of recent declines, and concessions are increasing
      o With tight cap rates, and less steady demand, equity investments in stabilized top tier office is exposed to a potential slowdown

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  • Home prices growing slowly in high tax East Coast cities - is tax reform to blame?

    Commentary – July 2018
      o The 2018 Tax Reform Act passed in Dec 2017 included a cap on the State and Local Income Tax (SALT) deduction of $10k while raising the standard deduction.
      o This SALT deduction limit marginally disincentives buying-versus-renting for high-priced homes in areas with high taxes as homeowners are less likely to benefit from deducting local property taxes.

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  • National single-family home prices maintain solid growth: Las Vegas is heating up, while Dallas is cooling down

    Commentary – June 2018
      o US housing market grew at a solid 5.3% Y-o-Y in April 2018 according to Amherst Home Price Index.
      o Overall, US single family price growth has significantly lagged the post-crisis recoveries witnessed in equities and commercial real estate. The pace of new single family housing construction remains anemic by historical norms even as we expect greater demand from more millennials entering family formation ages in the coming years. We remain optimistic on the US home price growth for the foreseeable future.

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  • Rising rates unlikely to be the death knell for commercial real estate growth

    Commentary – May 2018
      o Despite a steadily growing economy, commercial real estate (“CRE”) investors cannot ignore rising interest rates and their effect on CRE
      o Higher interest rates not only increase borrowing costs and return hurdles, but could potentially also reduce property values
      o Historically however, rising rate environments have coincided with higher economic growth and less restrictive lending conditions and therefore higher CRE prices
      o In addition, capitalization rate (“cap-rate”) spreads have room to compress in some markets, and net-operating income (“NOI”) growth can offset the effects of rising cap- rates on CRE prices
      o Long-term leased, stabilized property valuations are most exposed to rising rates, particularly in expensive regions
      o Rising rates may also slow equity returns, but we believe senior debt should be protected as long as steady growth continues concurrently. In particular, senior debt backed by transitional properties may hold up better in a rising rent and rate environment
      o While higher rates may slow returns, particularly for CRE equity investors, a change in underlying market fundamentals would be a greater concern for the overall market

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Research and Analytics Team

 

1. Provided through a consulting agreement with Amherst Capital

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