CMBS – US Moody’s/RCA CPPI – Office and Industrial Prices Slip, Driving the First CPPI Decline Since the Trough

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“A Tiger doesn’t lose sleep over the opinion of sheep” – Zag

CMBS – US Moodys- RCA CPPI – Office and Industrial Prices Slip Driving the First CPPI Decline Since the Trough

 

SECTOR IN-DEPTH    7 March 2016

TABLE OF CONTENTS

Highlights 1

Moody’s/RCA CPPI 3

Overview: Sectors constituting the

national all-property index 3

Tiers 1 and 2: National, apartment

and core commercial 4

Tier 3: Core commercial sectors 5

Tier 5: Major and non-major markets 6

Spotlight: Change in LTV since

January 2007 based on CPPI

appreciation 7

Appendix 1: Appreciation Rankings of

Composite Indices 8

Appendix 2: Recovery Profile of CPPI

Indices 9

Appendix 3: Repeat-Sales Transaction

Volume 10

Appendix 4: Schedule of CPPI Report

Release 11

Appendix 5: Index Hierarchy 12

Construction of the CPPI suite 12

Appendix 6: Definitions 13

Moody’s Related Research 14

 Highlights

The Moody’s/RCA Commercial Property Price Indices (CPPI) national all-property composite index decreased 0.3% in January, led by a 0.8% decrease in core commercial prices, as Exhibit 1 shows. Apartment prices rose by 0.7%. Office and industrial prices each declined by more than 1% in January, driving the first monthly CPPI decline in six years and signaling a notable shift in investor sentiment.

CMBS – US Moodys- RCA CPPI – Office and Industrial Prices Slip Driving the First CPPI Decline Since the Trough

 

The Moody’s/RCA CPPI1 measures price changes in US commercial real estate based on completed sales of the same commercial properties over time, or the “repeat-sales” methodology.2 Below are the highlights of this month’s report, which we base on transaction data through the end of January 2016. Exhibit 2 shows these price changes by sector and market type. » The national all-property composite index decreased by 0.3% in January. Core commercial prices declined by 0.8%, while apartment prices gained 0.7%. » The price slippage in January follows flat performance in December. These results indicate that price growth has paused six years into the post-crisis recovery. This is a significant milestone that signals that a shift in sentiment among commercial property investors is underway. » Industrial and office prices each declined by more than 1% in January. Retail was the only core commercial sector to show a gain in January, up 1.1%. » Apartment price growth continued, up 0.7% over the last month and up by 2.7% over the last three months. » Price growth in major markets has begun to decelerate. Major market prices declined by 0.6% in January and have gained only 0.1% over the past three months. » In the spotlight we illustrate the CPPI-adjusted change in LTV ratios since January 2007, near the peak of the pre-crisis lending surge. On average, suburban office LTV’s are higher and retail and industrial LTVs are slightly lower. Apartment and central business district (CBD) offices prices had significant appreciation since January 2007 and show significant deleveraging based on current prices.

 

SEE IT ALL:

CMBS – US Moodys- RCA CPPI – Office and Industrial Prices Slip Driving the First CPPI Decline Since the Trough

 

 

 

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I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years.  If you have any questions about Commercial / Investment Properties in Phoenix or Commercial /  Investment Properties in Arizona,  I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us. 

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Kasten Long Commercial Group

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Phoenix , AZ 85016

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