Friday, January 31, 2014

The Case for Black Gentrification: Lessons from Brickton, Philadelphia

From: http://brooklynmovementcenter.org/post/case-black-gentrification-lessons-brickton-philadelphia/
Much of the discourse around gentrification centers on the displacement (or replacement) of low income people of color with white, middle to upper income gentrifiers. Rents increase, coffee shops and pet stores appear and long time residents are pushed out – either because we can no longer afford to live there or because we no longer see ourselves reflected and are too through with being imposed upon by white culture.
This article seeks to move past the usual positions of Black versus white, the conquered versus the conqueror and place Black people in a more active position within the discourse. The question facing many community organizers attempting to do anti-gentrification work is how to better their community without attracting gentrifiers that will eventually make it difficult for them to live there. Historically, governments in the US invest in neighborhoods deemed blighted only if they want to pursue urban renewal (aka negro removal) plans that will economically stimulate the city or once “pioneer” gentrifiers move in.
Revitalization in American cities, almost always leads to the displacement of Blacks by whites. This sends the message to communities of color interested in maintaining the cultural integrity of their neighborhoods that the only way to better the neighborhood is to attract white residents. Is it possible to revitalize a neighborhood of color in a way that is sustainable for the residents who live there? How can communities of color evolve without ultimately being replaced?
Black Gentrification
Based on field research done in Brickton, Philadelphia, Kesha Moore in, Gentrification in Black Face? The Return of the Black Middle Class to Urban Neighborhoods, marks the distinction between Black gentrification and white gentrification as motivation. Gentrification led by Black middle income residents has a social justice motivation based on the residents’ experiences of racial exclusion and an explicit desire for racial solidarity. Unlike traditional gentrification, the out-come of neighborhood change is not the creation of a wealthy neighborhood to replace a lower-income community (Moore, 2009).
The 2000 census revealed Brickton to be 92% Black, well above the city average of 44% (Moore, 2009). With hardly any white people, Brickton is unique in that it’s an intentionally racially homogenous yet economically integrated (Moore, 2009). This was not accidental. Activists and organizers in Brickton refer to pre civil rights era, forced segregation as their model for neighborhood development. Integrationist narratives as well as historical patterns of governmental investment in gentrifying neighborhoods, dictate that the presence of whiteness is what makes for a “good” neighborhood – by investing in their community and living alongside low income residents rather than trying to price them out, residents actively subvert this narrative.
Strategies from Brickton:
  1. Middle class, Black residents actively recruit other middle class, Black residents to move into the neighborhood drawing on shared experiences of racial discrimination in residential neighborhoods and the “ethos of racial uplift” (Moore, 2009). Residents move in because they want to “give back” and invest in a Black community.
  2. Middle to upper income residents who can afford a more expensive neighborhood, make the choice to remain in the community.
  3. Add middle and upper income Black residents to the neighborhood without promoting the displacement of current low income residents. Encouraging asset accumulation (e.g., homeownership, entrepreneurship) amongst low-income residents is considered critical component of community development and a crucial step towards creating an “economically and politically powerful Black neighborhood” (Moore, 2009).


What does this mean for Brooklyn?
It may be time to shift the conversation and redirect our focus. The gentrification discussion has become stale, we’ve become bitter, and meanwhile more and more Black people are being forced out of Brooklyn. Brickton is what happens when Black people come together and actively address the needs of our community. The work doesn’t have to be anti-change, anti-development, or even anti-white. But it can and should be pro-neighborhood improvement, pro-strategizing and organizing, and absolutely pro-Black. Rather than seeing ourselves as victims, let’s change the narrative and see ourselves as organizers, capable of intentionally strengthening our neighborhood for ourselves and future generations. And for those of us in the middle class, let’s drop the guilt and start using our class privilege to figure out ways to invest energy and resources into our community.

Sunday, January 26, 2014

JCP Closing 33 Stores

According to the WSJ, JCP is closing 33 Stores. I'll update this entry with CMBS exposures if/when I get a chance.



StateCityShopping Center
ALSelmaSelma Mall
CARancho CucamongaArrow Plaza
COColorado SpringsChapel Hills Mall
CTMeridenMeriden Square
FLLeesburgLake Square Mall
FLPort RicheyGulf View Square
IAMuscatineMuscatine Mall
ILBloomingdaleStratford Square Mall
ILForsythHickory Point Mall
INMarionFive Points Mall
INWarsawMarketplace Shopping Center
MDSalisburyThe Centre at Salisbury
MIMarquetteWestwood Plaza
MNWorthingtonNorthland Mall
MSGautierSinging River Mall
MSNatchezNatchez Mall
MTButteButte Plaza Shopping Center
MTCut Bank(N/A)
NCKinstonVernon Park Mall
NJBurlingtonBurlington Center
NJPhillipsburgPhillipsburg Mall
OHWoosterWayne Towne Plaza
PAExtonExton Square Mall
PAHazletonLaurel Mall
PAWashingtonWashington Mall
TNChattanoogaNorthgate Mall
VABristolBristol Mall
VANorfolkMilitary Circle Mall
WIFond Du LacForest Mall
WIJanesvilleJanesville Mall
WIRhinelanderLincoln Plaza Center
WIRice LakeCedar Mall
WIWausauWausau Mall

*UPDATE*
Deal Exposures:


Shopping CenterDealLoan PCT Deal
Military Circle MallGMACC 2004-C29.80%
The Centre at SalisburyJPMCC 2006-LDP73.70%
Hickory Point MallBSCMS 2006-PW111.90%
Laurel MallBSCMS 2007-PW171.70%
Wausau MallWFRBS 2011-C41.30%
Marketplace Shopping CenterCGCMT 2004-C20.90%
Bristol MallBACM 2006-50.90%
Wayne Towne PlazaMSC 2007-IQ150.60%
Natchez MallCGCMT 2006-C40.50%
Lincoln Plaza CenterGSMS 2006-GG60.10%

Source: Credit Suisse.

Housing Recovery Entering 2014, Local Market Performances Expected to Vary

Overview
Zillow’s fourth quarter Real Estate Market Reports show home values increased 1.4% from the third quarter of 2013 to the fourth quarter of 2014 to $169,100 (Figure 1). 2013 closed on a strong note with the Zillow Home Value Index (ZHVI) up 6.4% from December 2012 levels (Figure 2). On a monthly basis, home values are up 0.6% nationally. Overall, we are seeing a widening slow-down in home value appreciation with some markets showing more of a slow-down than other markets. In fact, of all metros 83% reported lower monthly appreciation in December than in November (seasonally adjusted), and of the top 35 metros, seven showed monthly home value depreciation. This slowdown was expected, and shouldn’t come as a surprise, as home values have been growing at an unsustainable pace in 2013, especially in many markets in California and the Southwest. Affordability had been decreasing in light of higher home values and rising mortgage rates and is now starting to put the brakes on these extremely high rates of appreciation.
Figure1 Figure2
 
According to the Zillow Home Value Forecast (ZHVF), we expect national home values to increase 4.8% over the next year (December 2013 to December 2014). Of the 291 markets covered by the Zillow Home Value Forecast, 265 markets are expected to see increases in home values over the next year, with the largest increases expected in the Riverside metro (16.1%) and the Sacramento metro (11.6%). Many California markets follow closely at the top of the list of markets expected to see the highest home value appreciation over the next year. According to the ZHVF, 265 markets (91%) have already hit a bottom in home values, another 25 are expected to hit a bottom by December 2014. 2014 will bring more for-sale supply to the market, as homeowners are freed from being underwater and demand will be a bit more muted as investors are decelerating their buying activity and rising mortgage rates are putting a damper on consumer demand.
 _MapGraphic_01-20-14_a_01
Home Values
The Zillow Real Estate Market Reports cover 473 metropolitan and micropolitan areas (metros) of which 316 showed quarterly home value appreciation. Eight metros remained flat, while 149 metros show home values losses. Approximately 82% of the metros covered by the Real Estate Market Reports posted annual increases in home values. Among the largest metros, Las Vegas showed the largest annual increase with home values rising 28.1% from the fourth quarter of 2012 to the fourth quarter of 2013. Las Vegas was one of the metros hardest hit during the housing recession and home values are still down 45.3% from their May 2006 peak, despite the recent extreme increases in home values. Overall, national home values are back to November 2004 levels, down 13.9% since their peak in April 2007.  Also notable is that home values in two of the top 35 metros, Denver and Pittsburgh ended 2013 above their pre-recession peaks. This is in addition to many cities (versus the larger metropolitan regions), like San Francisco, Washington and Boston that have also surpassed their 2006 peaks.
Rents Figure3
The Zillow Rent Index (ZRI) covers 521 metro areas, and 73% of those metros reported annual increases in rents in December. As a point of comparison, approximately 82% of the metro areas covered by the ZHVI experienced annual home value increases. Nationally, rents increased 2.4% in December from year-ago levels. We expect rents to continue with this growth trend as many households are still unraveling from being doubled up and many of those new households will choose to rent instead of buy. Markets that continue to see extremely strong year-over-year rent increases include Cincinnati (9.2%), Denver (8.4%), Pittsburgh (8.3%) and Seattle (8.1%).

Foreclosures
Figure4
The rate of homes foreclosed continued to decline in December with 4.84 out of every 10,000 homes in the country being liquidated through foreclosure. With home values having appreciated for almost two years, foreclosures are naturally becoming less and less common. Nationally, foreclosure re-sales ticked up slightly, making up 9.3% of all sales in December, down 0.5 percentage points from the fourth quarter of 2012. The absolute number of foreclosure re-sales continues to drop, but this measure is a percentage of REO sales to all sales and given that during the winter months the number of sales decline, foreclosure re-sales are taking up a larger portion on those sales – increasing this seasonal measure. For-sale inventory levels remain tight in many markets; although constraints have been easing as negative equity rates decrease. The national negative equity rate stood at 21% in the third quarter of 2013 with only 8% (down from 9.7% a year ago) of underwater homeowners being delinquent.
Outlook
Nationally home values have started to slow since the breakneck pace of this summer. We expect this slowdown to carry into 2014, although some volatility in home values will accompany this slowdown. Nationwide, home values are expected to rise another 4.8% through December 2014, according to the Zillow Home Value Forecast. But local market conditions will not necessarily follow national conditions, a trend that may cause confusion and uncertainty among homebuyers and sellers. And while Zillow expects all but one of the nation’s 35 largest metro areas (St. Louis, -3.1%) to show appreciation this year, the expected annual appreciation (depreciation) rates vary from -3.1% in St. Louis to 16.1% in Riverside among the top 30 metros. None will approach the often breakneck pace set in 2013. 2014 will also see rising mortgage rates. However, there is a silver lining to this development, as rising mortgage rates will hopefully also encourage banks to make more credit available.
Data Resources

Wells Fargo Sells Servicing Rights on $39 Billion in Mortgages



In another sign of the banking industry’s retreat from the mortgage market, Wells Fargo is selling servicing rights on $39 billion of home loans to a nonbanking firm.

Wells Fargo said on Wednesday that it sold the rights to service 184,000 mortgages to the Ocwen Financial Corporation, a rapidly expanding company known for its expertise in dealing with subprime borrowers.

The deal represents about 2 percent of all the mortgages that Wells Fargo services, and comes as other banks have been selling this business to specialty servicers like Ocwen, which is based in Atlanta.

Last week, Citigroup announced that it had transferring servicing rights for 64,000 mortgages to Fannie Mae, which, in turn, plans to pay an outside firm to service the loans.

The deals represent a significant shift for homeowners, whose mortgages are increasingly being serviced by firms outside the traditional banking system.

Industry officials estimate as much as $1 trillion of mortgages could be transferred to specialty servicers over the next two to three years.

Large banks are looking to trim their servicing activities, particularly of subprime loans, because the costs and regulatory headaches are too high. New banking rules will require banks to set aside more capital against the loans they service, further weighing on profits. The value of the servicing rights can also fluctuate based on shifting interest rates, causing unwanted volatility for the banks’ balance sheets.

That’s where Ocwen and other large nonbank mortgage servicers come in. Banks and investors in mortgage-backed securities pay Ocwen fees for servicing the loans they own. In exchange, the firms communicate with borrowers who fall behind on their mortgage payments and try to get them back on track. Servicers are also typically paid extra for getting delinquent homeowners caught up on their payments. Specialty servicers usually don’t hold the loans.

Analysts say Ocwen has been able to keep its costs low by operating call centers in places like India. The company also boasts about using “artificial intelligence, designed and tested by Ph.D.’s in psychology and statistics to develop dialogues with the homeowner,’’ according to a recent investor presentation.

“They have two decades of experience and are second to none in efficiency,’’ said Daniel Furtado, an analyst at Jefferies.

In some cases, housing advocates say Ocwen has been more responsive to homeowners than the large banks, which had to pay billions to settle regulatory issues related to servicing problems. The company has earned plaudits for working with homeowners to make principal reductions for underwater loans, which are for more than the house is worth.

But Ocwen’s track record is far from perfect. Last month, Ocwen agreed in a consent order with the Consumer Financial Protection Bureau, various state attorneys general and other regulators to provide $2 billion in mortgage principal reductions to underwater borrowers and refund $125 million to borrowers who had already been foreclosed on. The federal agency said, “Ocwen took advantage of borrowers at every stage of the process.”

The company said in a statement at the time that that the agreement “is in alignment with the same ultimate goals that we share with the regulators — to prevent foreclosures and help struggling families keep their homes.”

A Wells Fargo spokesman declined to comment on how much Ocwen paid for the bank’s servicing rights.

In the Citigroup deal, the bank paid Fannie Mae to settle outstanding fees it owed to the government-sponsored enterprise. The sale included nearly 20 percent of the total loans serviced by Citigroup that are 60 days or more past due.

American Realty Capital Properties Wraps Up $1 Billion Recap

Deutsche Bank and Cantor Real Estate are marketing a new commercial mortgage backed securities (CMBS) offering that will complete the final leg of a $980 million recapitalization of American Realty Capital Properties’ (ARCP) recently acquired net lease properties.

DBCCRE 2014-ARCP is a CMBS single borrower transaction that is collateralized by a $620 million first mortgage, 10-year, fixed rate loan originated by Cantor Commercial Real Estate Lending and German American Capital Corp.

ARCP purchased all of the assets backing the new CMBS offering over the last 20 months using equity and existing unsecured credit facilities.

The loan is secured by the fee and leasehold interests in 82 single-tenant retail (37.3% of allocated loan amount), office (35.6%), and industrial (27.1%) properties comprising approximately 7.2 million square feet.

The properties in the collateral pool are in 30 states and Puerto Rico, with three states representing more than 10.0% of the pool: Illinois (15.7%), Florida (11.0%), and Massachusetts (10.2%).

Six properties totaling 44.4% of total portfolio value are either headquarters office locations or industrial properties located in the same market as the tenant’s headquarters. These six properties represent 69.3% of the total office and industrial portfolio value.

CVS Caremark represents 18.3% of the aggregate trust balance serving as a tenant for 31 of the retail properties within the portfolio. It has a weighted average remaining lease term of 23 years.

The second largest tenant, Aon Corp. represents 14.9% of the aggregate trust balance. The tenant occupies a suburban office building in Lincolnshire, IL, pursuant to lease that extends one year beyond the loan term.

The third largest tenant, Bi-Lo, LLC (Winn Dixie) represents 10.2% of the aggregate trust balance. Bi-Lo occupies a warehouse/distribution facility in Jacksonville, FL, pursuant to a lease that extends nine years beyond the loan term.

This past October, ARCP announced it would merge with Cole Real Estate Investments Inc.
in an $11.2 billion deal, creating the world’s largest net lease REIT. The combined company will be comprised of more than 3,700 properties with a market capitalization of approximately $21.5 billion.