Tetherow resort lodge construction underway. Lot sales pick up

            Portland developer Joe Weston and Netherlands-headquartered Velocity Capital BV have broken ground for a two-building, 41,000 square foot, 50 room lodging complex at the Tetherow golf resort and residential community on Bend’s southwest boundary.

Tetherow Lodges illustration



            The long-delayed lodge construction comes after Tetherow’s initial developers ran headlong into the real estate recession wall, triggering a number of loan defaults and ownership changes. Weston remained with the project and then teamed with Velocity.

            Located within Deschutes county adjacent to Bend, developers were able to complete a 18-hole links style golf course and clubhouse as lot sales sagged closing years of the past decade. 

            County officials agreed three times to extend deadlines for construction of overnight lodging and some infrastructure as required in the project’s original master plan. A new plan requires lodging to be completed by 2017.            

The great room of Tetherow clubhouse



In an April 11 announcement by the developers,  interim county planning director Nick Lelack said the county is, “pleased to see Tetherow begin construction of its first class overnight accommodations.....Tetherow Lodge will make a significant contribution to the success of this resort.”

84 lot sales-$775,000 high 2008 to $125,200 at bottom

            Statistics from the Multiple Listing Service of Central Oregon show there have been 84 total lot sales at Tetherow, out of approximately 370 lots in the 700-acre project master plan, with 49 sales in 2007 and 2008. The top priced sale in that period was a 0.610 acre lot at $775,000 in April of 2008. 

            There were only two sales in 2009, at $225,000 and $474,000, and none in 2010 during a period of shifting ownership. In 2011 there were seven sales in a range of $131,000 to $300,000. Since January of 2012 through mid April 2013 there have been 25 sales from $125,200 to $400,000.

            Altogether there have been 10 sales of custom homes and townhomes, the first in July of 2010 at  $845,000. The remaining nine were all in 2012, ranging from $565,000 to a high of $1,100,000 in October of 2012.

(An earlier post with a chart of resort land sales)

Resorts: Adjusting the "Vision" to meet Economic Reality

Free money in commercial lending? Haven't we been there before?

            At  first glance a recent report by CoStar Group raises the prospect that commercial lending is experiencing an unsettling “been there, done that” phase.

            CoStar reports that Bank of America and Morgan Stanley are launching a

a collaterized mortgage backed security (CMBS) that is reminiscent of the bubble days of 2007 in commercial real estate.

            CoStar says that the Kroll Bond Rating Agency estimates the banks’ MSBAM 2013-C9 offering will have a 98.8% loan to value ratio. In fact, the Kroll analysis says that nearly 43% (or 29) of the pooled loans in the portfolio have LTVs of more than 100%.

            Among other points in the CoStar report:

·        Commecial lending was up 40% in 2012 concurrent with relaxed underwriting standards.

·        The 2013 lending pace through Q1 is running ahead of the full first half of the previous year.

But CoStar notes that some industry professionals, while acknowledging that low interest rates make leverage attractive, also emphasize that cap rates have  remained high--thereby resulting in sustainable investments keyed more to income than betting on future appreciation.

CoStar quotes, Patrick Gates,  a principal of Cincinnati-based Matrix Holdings, who observes that, “The low cost of debt helps sweeten the deal, but the ‘story’ related to the asset is far more important. In regards to debt, if (or when) rates increase in the coming years, those increases will be integrated into the deal.”

Fasten your seat belts and turn off those electronic devices...

            The seat belt sign has been turned on, so to speak,  and American Airlines’ inaugural nonstop flight to and from Redmond’s Roberts Field and Los Angeles is set for takeoff the second week of June.      

            The official word came from the airline on April 4, after an intensive effort by economic development, business and other groups to raise $350,000 required by the airline to offset intitial costs of the service. The funds are part of an overall $1.2 million package that also includes a federal grant.

            Scheduled service will begin on Monday, June 12, with daily flights leaving Redmond at 8:10 am, landing in Los Angeles at 10:25, then departing at 6:50 pm to arrive in Redmond by 8:55 pm.

            As of April 10 American’s online reservation system showed that a roundtrip flight on June 19 was available for a total cost of $219.80.  There were 30 of 50 maximum seats available by late afternoon.

However, the online system did not indicate any flights available the first day of initially-announced service on June 12.

            The American service will be under the banner of American Eagle, operated by Skywest Airlines, which also supplies flights for Delta and United Airlines out of Redmond to Salt Lake City and Denver, respectively.

            Skywest will fly the Canadian manufactured Bombardier CRJ, a  50-seat regional jet that is  a mainstay of short haul jet service often connecting smaller regional markets to major hubs.

           

Market snaphot: Bend single family sales continue rise as inventory tightens

            Heading into the typically active Spring and Summer real estate sales cycle the Bend single family market continues to improve over the previous year.

            A regional housing recovery begin to pull out of the doldrums in 2012 and seemed to pick up steam after moving beyond the uncertainty of the November election and the drudgery of federal budget and deficit discussions.

            Now, it appears that many buyers are returning to real estate after apparently deciding that low interest rates, an improving economy -- even though erratic -- and a recently buoyant stock market are sufficient reasons to get off the fence.

            And, inline with reported national trends, inventory of single family homes has contracted to the point of stimulating new construction activity.

            As of mid-April 2012 sales of Bend single family homes were up 10.5% to 2219 units, 10.5% over the 2008 homes sold in the comparable 12 months of April 2011 to April 2012.

            Median prices for the period rose 21.46% from $205,000 to $249,000 and sales volume by 27.7%--from $509,242,770 to $650,317,396.

            Bend single family homes accounted for more than 55% of all regional sales from January 1, 2012 through mid-April, followed by Redmond at 18%. 

            As of mid-April there was only a 2.64 months supply of actively listed Bend single family homes, as calculated by averaging the previous 12-month sales. At the depth of the housing recession Bend had a supply of more than 13 months.