Albuquerque loses a stately historic apartment community


Fire last night destroyed one of Albuquerque’s best loved medium sized apartment communities- the Castle Apartments. Located between downtown and old town at 1410 Central SW, the 20 unit apartment community caught fire around 8pm and continued to burn in the Wednesday morning.

Castle Apartments
Built in 1922, the 15,150 square foot apartments featured amazing built-ins and was considered by many of its former residents, some of the nicest apartments in the Duke City.
built ins at the Castle

Located just east of former mayor, Franz Huning’s estate, affectionally known as Huning Castle. The old Huning Castle estate was replaced in the a few years ago with the

As smoke blanketed downtown Albuquerque, News reports last night mistakenly indicated the newwer Huning Castle apartments were on fire, but later corrections indicated that residents from the Huning Castle apartments called in to the fire department about the fire at the Castle apartments.

Fortunatley no lives were lost, and our condolences go out to the families that own this historic gem and the residents who called it home.

Updated 8/6/2009

Channel 4 interviews the owner.

2nd Qtr Capital Markets Update by Jamie Dick


The commercial real estate capital markets continue to operate in a constricted manner as the 2nd quarter of 2009 draws to a close. With CMBS associated lending completely shutdown income property borrowers must continue to focus on the life insurance, bank, credit union and private capital lender sectors for any financing needs for the foreseeable future. I see this limited availability of debt capital continuing through 2009 and into 2010 though there are some interesting new lending initiatives underway that may help to “turn back on” the CMBS lending faucet…albeit initially at a very, very slow rate.

Macro capital market pressures (i.e. massive U.S. government deficit spending) is beginning to put upward pressure on key interest rate indexes (please note the attached 10-year Treasury history chart) which has negated recent lower pricing spreads from some lenders currently in the market.

Due to the current (and potential ongoing) dramatic imbalance between capital demand (existing and projected loan maturities) and capital supply (lenders/capital in the market) underwriting standards are and will continue to be very conservative. Maximum LTV’s (for the very best properties) top out at 65% of current value with minimum debt-service-coverage hovering in the 1.30 range.

In the multifamily property sector Fannie Mae and Freddie Mac continue to be the lender bright spot though underwriting parameters have tightened recently.

Banks continue to be under increasing regulatory pressure. In 2007 a total of 7 banks were taken over by the FDIC. This number increased to 23 in 2008. As of today the FDIC has taken over 40 banks already this year. Expect many more before 2009 is done.

The inclusion of newly issued CMBS as eligible collateral for the federal government’s TALF loan program will create an opportunity for some select borrowers to access the capital markets but ultimate loans terms will be very conservative and pricing will be at a premium. Also the long term viability of this program is in question as currently the program is scheduled to expire at the end of 2009. To date no new loans have been originated through this program.


The CMBS (conduit) lending window continues to be completely closed. To make the point of how important this is please note the following historical data. In 2007 $237 Billion in loans were funded to income property borrowers and then securitized through the Commercial Mortgage Backed Securities (CMBS) window. In 2008 this dropped to only $12.2 Billion. This year, 2009, the number is 0 (Zero) as of today. The last securitization of income property loans was completed in June 2008.

The closing of this “window” has resulted in a huge “hole” in the commercial real estate capital markets and the results have been predictable. Though college for me is a distant memory I do remember the basics of Econ 101 my 1st year at the University of Washington. If the supply of something goes down while the demand for it continues at the same pace the price and the difficulty of finding it will increase. This is what our industry is dealing with regarding debt.

The government, through providing the availability of TALF loan funds to buyers of newly issued CMBS, is hoping to jump-start this important source of funding for commercial real estate. Unfortunately I believe that the return of the CMBS lending will be a slow process.

I believe when CMBS lending returns it will resemble the very first CMBS lending almost 20 years ago. Ultimately it is the bond buyers who control the future of CMBS and today they have a similar attitude toward buying CMBS securities as they did in the early 90’s when the CMBS industry was first established. Any buyers of newly originated loans (or bonds associated with loans) will have the same level of concern, skepticism and distrust as the original buyers of CMBS did immediately after the RTC dominated late 1980’s and early 1990’s.

Borrowers should expect CMBS lending parameters to be conservative, thoroughly reviewed and underwritten, highly documented and pricey. Those of you who were in our industry “back in the day” will remember how CMBS lenders only loaned on “B & C” properties while the life insurance industry dominated lending on “A” properties. It wasn’t that CMBS lenders didn’t want to loan money to “A” borrowers, it was just they could not compete with the life insurance companies. This of course changed over the years until ultimately, from approximately 2001-2008 CMBS lenders dominated due to lower pricing and more aggressive underwriting. I expect CMBS lending will return soon, perhaps as soon as this year, but will look very much like it did in the early days of the industry and not the go-go years of 2004-2007.

Life Insurance Companies

Of our 16 life insurance company correspondent relationships 11 are currently “in the market” and quoting new loans. No huge changes in this category of lenders since my April newsletter/email as underwriting standards continue to be tight. Spreads have actually fallen during the past 7 weeks with all-in rates being in the 6.50% – 7.50% range. LTV’s continue to top out at 65% of current value (for the very best properties & borrowers) but lenders are really looking for loans in the 50% – 60% range. 5,7 and 10 year terms are available with 30 years amortizations acceptable for lower LTV requests. I continue to expect that the life insurance companies that are currently in the market for new loans will continue to be through the end of the year though underwriting parameters will begin to tighten at the beginning of the 4th quarter.

Banks / Credit Unions

The banking industry continues to be under significant regulatory pressure as the FDIC pays more and more attention to medium and small bank balance sheets. With the stabilization of the top 20 banks (who hold 65% of all deposits!) near completion the FDIC now can focus on the remaining 8400 banks in the US. If the Top 20 fall in the category of “Too Big To Fail” the balance of the banks clearly do not! In the 7 weeks since my last Update 11 more banks have failed for a year-to-date total of 40. If this pace continues another 46 banks will be taken over by the FDIC this year! My personal guess is it will be an even larger number. Needless to say this results in a VERY conservative atmosphere in the lending departments of banks across the country.

Fannie Mae / Freddie Mac

The brightest spot in the income property lending industry continues to be Fannie Mae and Freddie Mac for multifamily properties. Since my last email spreads have actually come down a bit though underwriting parameters have tightened. All-in pricing for new loans is in the 5.75% – 6.25% range depending on loan term and requested LTV. Besides lending on multifamily properties both agencies have programs for affordable housing projects, mobile home parks and senior housing. Not surprisingly, due to this debt capital availability, values of multifamily properties have held up the best of all income property types during the last year.

Private Capital

Private debt providers continue to grow in importance as an alternative to the closed CMBS “window” and constrictive bank underwriting requirements. Pricing is steep and collateral requirements expansive but these lenders can provide borrowers, faced with a significant & immediate financing need, a welcome alternative to a more traditional lender.

Bottom Line

No change from my last email…but perhaps just a stronger tone to make sure borrowers are listening…

1. If you are going to have a financing or refinancing need during the last 6 months of this year start now. Given the environment everything is taking longer than has been the case the past 5 years. It takes longer to find the right lender…it will take longer for them to do their underwriting…it will take longer to get loan approval…it will take longer to document and close the loan. I can’t emphasize this too strongly. Start your loan search early.

2. There are lenders lending money. The underwriting is tighter…the price is higher…the terms are tougher…but there are lenders lending. But as the year goes on I expect that there will be fewer and fewer as they begin to run out of their 2009 allocations. This definitely impacted our business last year during the 4th quarter and I expect it to happen again this year.

3. If you are a buyer or owner of multifamily it is a great time to be a borrower. If your property qualifies Fannie Mae and Freddie Mac are funding loans at prices that continue to allow a buyer to achieve true positive leverage…something we haven’t seen for some time!

4. If you have a problem with an existing property you own due to the properties debt do not hesitate calling in outside, expert help. We as a company and me personally are working with owners, on a consulting basis, to help them restructure their debt. Lenders, though no push-over, are open to discussions about restructuring debt. The sooner you get in front of your lenders the better if you think this is necessary. But go prepared and think about bringing an outside advisor. Not only will an advisor help you with identifying creative solutions but many lenders like having a 3rd party advisor involved in the process. It brings a dose of objectivity to the situation.

Please give me a call if I can be of any assistance with your financing needs. With the resources of Newmark Realty Capital, the #1 West Coast based commercial real estate mortgage banking firm, I know my colleagues and I can help you solve your issues. I hope this email finds you and your family healthy and look forward to working with you as we move through these interesting economic times.

Best Wishes!


858.735.5963 DIRECT
949.419.3808 IRVINE OFFICE
949.777.9040 FAX

part II: Over Reaching Legislation – Seller financing update – how smart do you need to seller finance?

From fellow Realtor Ric Thom – Property Transfer Could Hinge on IQ and Net Worth If HR 1728 Passes As Is.

On May 26, 2009 I wrote about Congress restricting owner financing and how HR 1728 limits a property owner to selling only 1 property every 36 months if offering owner financing (HR 1728, see 101 definition (3)(E). This is just one more taking from our bundle of property rights. A copy of that letter is attached below.
In response, a group in DC pointed out that you could still use owner financing if you want to sell more than 1 property in a 3 year period if you register as a mortgage originator under the act.


To register as a mortgage loan originator you have to do the following:
1. Put up a $50,000 surety bond or meet minimum net worth requirements
2. Complete 20 hours of education on federal law, state law, and mortgage products
3. Pass a test with 75% proficiency
4. Pay an application fee
5. Prove you have not been foreclosed on in the last 3 years
6. Submit to a criminal background check
7. Supply a credit report
8. Demonstrate financial responsibility
9. Prove you have no outstanding judgments
10. That you have no tax liens
11. That you have not had a seriously delinquent account within the past 3 years.
12. Satisfy annual continuing education while selling your property
13. Pay a renewal fee if your property has not sold by Dec. 31st

These requirements are listed in the Housing and Recovery Act of 2008.


So now you must pass a test to be able to transfer property. This is a slippery slope. It’s taking away our right to dispose of property as we see fit. What’s next? If you can’t pass the test you can only transfer private property every 3 years using owner financing. If you have a nonconforming property for which you cannot get conventional financing, you are in deep trouble.


So now you must prove a net worth, credit worthiness, or put up a surety bond of at least $50,000 in some states in order to sell your property. How does this help the consumer or property owner? If you have a poor credit history, you will not be able to become a mortgage originator in order to transfer your property using owner financing.


The cost of continuing education, test fees, registration fees (paid to the government), surety bond fees, etc. would be oppressive on lower income families. I’ve been told this could range from $1,500 to $2,500. All this because you own property and want to offer owner finance terms. If the value of your property is $20,000 you just paid a 10% tax.

This is a non-partisan issue. This is about the government taking and limiting our ability to transfer or dispose of our real property as we see fit as granted under the 5th Amendment of the United States Constitution.

Owner finance, also called seller finance, is not a loan. It is an installment sale. The owners agree to receive their equity in the property from the buyer over time on terms negotiated between the two of them. No points are charged by the owner. There is no loan. There is no third party lending involved.

This bill passed in the House and is in the Senate. Its intent was to create standard practices and a national registry for mortgage brokers who originate home loans for the masses. The private property owner who wants to sell their vacant land, farm, ranch, land and mobile home, residence, rental house, etc. using owner financing should not be regulated and restricted by this bill.

Ask that owner financing be exempt from HR 1728. No compromises. We pay the people we trust to represent us. Let them know this is not right. Protect our basic right to transfer property we own. You know who to write. Please pass this on.

Thank you,

Ric Thom
Security Escrow Corporation
Albuquerque, NM

Copyright 2009

Property Tax update on Ministorage buildings in the Albuquerque MSA

Operations focus – are your property taxes to high?

With the changing economy, many owners are focusing their efforts on reducing operational expenses.  One often overlooked item on the expense list is property taxes.  The right of the local county to tax your property is embedded in New Mexico’s constitution which also spells out the valuation process and how your property tax bill is calculated.  Understanding these state statutes allows an owner, or their tax protest agent, to minimize the property’s potential tax value and thus its value.


Understanding property tax value vs. market value

According to the state statutes, your property tax value is based on its “market” value from two years prior to the current tax year and they should revalue every property in the county every two years.  In many counties it is common to find a small staff that is required to value hundreds of thousands of different parcels and property’s – an herculean task if approached individually.  Lacking the staff to delve into the specific detail about your property, the assessor’s are allowed to do “bulk appraisals” of all similar property’s.  For example, if a mini-storage property sold down the way for $5,000 a unit, and the assessor had knowledge of that sale, they might apply that value to all mini-storages in their county.   This bulk appraisal methodology gives the assessor a wide scope of power to impact your property tax value and its eventually property tax bill.


The checks and balances in the system

To balance the assessor’s power, the state constitution provides two different mechanisms to the tax payer.  Both of these mechanisms involve filing a protest of value.   The primary protest mechanism is to file a protest of value within 30 days of receiving a notice of value.  Typically, notices of value are mailed out no later than April 1st, of every year.  The property tax owner can file a protest by mailing a letter, but most assessors prefer that the protest be filed by using their forms, which can be found online or at the county offices.


The protest process

Once a protest has been filed, it is incumbent upon the owner, or their tax protesting agent, to prove their new value is more accurate than the assessor’s value.  Typically that process is done by completing a report that demonstrates the value of the property using income approach, comparable sales, and replication costs.  Savvy owners and agents will have a plethora of other valuation methodologies and market information that they can include in their report.  Sympathetic assessor’s will take this information into account and negotiate with the owner/agent to a new value.  Hardnosed assessor’s will dial up the “pressure” on the owner using legal maneuvers such as filing subpoenas and interrogatories, as well as taking depositions from the owner, their managers and staff.  In the event that a value cannot be agreed upon, the owner/agent will be called before a formal hearing board that will rule in favor of the assessor’s value or the owner’s value.


Key dates

The following is a rough timeline of the dates that must be tracked by the owner/agent as it relates to the property tax protest process:



Ideally before 4/1

Consultant and Owner sign contract for representation of owner during the property tax protest process

No later than 4/1

Assessor’s sends out notice of value

30 days of contract signing

Owner provides information to consultant on property for Consultant’s analysis

Usually no later than 4/30

Consultant files tax protest, provides copy owner

Usually no later than 6/30

Consultant compiles report on property and delivers to Assessor’s office

Usually no later than 8/30

Consultant and Appraisers in Assessor’s office meet and share information on property.  Negotiations ad possible resolution of value often occur.

Usually no later than 9/15

Assessor and Consultant meet at Formal Hearing

Usually no later than 9/30

Formal Board mails results


Assessor provide Treasurer with net value of portfolio, Treasurer calculates mill levy


Treasurer sends out invoice for current calendar year, ½ due by 12/10, ½ due by  5/10 of following year


Representing yourself vs. hiring a tax protest expert

If you have an interest in representing yourself, I would highly recommend taking a property tax course such as offered by our firm, or the local Realtors Associations.  These day long courses run about $100 and provide you the detailed information you may need to win your case. Our firm is offering this course on April 28th, 2009 and more details can be found at . 


If you prefer to hire a tax protest agent, there are a number of local, regional and national choices – whose services can be purchased for a onetime fee, or on a contingency basis.


What to look for in a tax protest agent

As you interview property tax agents you should:

          Ask to see copies of their most recent reports – a protestor who doesn’t file a report, is not likely to get you the lowest possible valuation.

          Fully understand how their pricing for their services work – some have little incentive to do a thorough job to protest your taxes because they charge you a low monthly or annual fee to monitor your values.

          Ask for a copy of their contract – make sure you understand how you pay them and when. For example, some tax consultants charge just for the first years savings while other charge you for every year that value remains in place (it would be better to pay a 35% contingency fee on only the first year savings, than pay a 25% contingency fee on two years savings which would effectively cost you 50% of the savings).

          Ask for a summary report of their average track record for clients.   We’ve seen tax consultants who average as little as 8% average reductions, and others that are in the double digits (our firm averages 24%).  Don’t fall into the trap of being “sold” on their services when they tell you about their “best” case.  For example, our firm lowered a valuation from $9M to $1M last year, an 89% reduction, which hardly represents our average of 24%.

          Discuss with them the process and how hands on they are

          Ask them what documentation they will need from you as owner.  While it may be a chore to dig up old paperwork, if they don’t ask you for copies of old appraisals, surveys, phase I environmental audits, then they are not likely to be extremely diligent in obtaining the lowest value.

          Ask what experience the consultant has in your particular property niche – don’t for example, hire someone who specializes in office buildings and has never done a ministorage protest.

          Ask for testimonial letters from former clients and request their contact info to followup.

          If the tax consultant demands an upfront fee to analyze your property, move on as there are many other tax consultants who are glad to review your property and tell you if they think you have a case or not.

          Beware of consultants who imply they have a political “in” with an assessor.  The state of New Mexico Tax and Revenue department has an auditing process to smoke out cases that were settled without merit.

          Ask for their resume and look for their additional experience in the market – a tax consultant who has been an active in the real estate community is likely to command more respect at a formal hearing, than an tax consultant who is a virtually an unknown entity  in the market.

          Remember – the person you hire is your advocate, if you don’t have warm fuzzy feelings with them, move on to the next tax consultant.


Rule of thumb valuation benchmark for ministorage in the Albuquerque MSA

Although there are always unusual exceptions to every rule of thumb, in Sandoval County, the average property tax value per ministorage unit is $3,802, and in Bernalillo County it is $4,308.  If you take your property’s value, divide it by the number of units you have, and your value is higher than either of these benchmarks, you might have a case to protest your value.  If you are not sure, call your tax consultant and ask for a free review.


Impact on future value

If your property’s property tax bill is decreased by 24%, that increases the value a buyer will pay for your property in the future.  For example, if your property tax bill is $40,000 a year before the protest and the tax consultant obtains a 24% reduction that would increase in your net operating income by $9,600.  By applying a CAP rate of 7% against the $9,600 increases the property’s value by $137,142.


In short, by hiring a tax consultant to review and protest your property tax valuations, today’s ministorage owner can minimize operational expenses and maximize their long term value.


Todd Clarke CCIM is CEO of Cantera Consultants & Advisors Inc. 

As a 4th generation commercial real estate professional, he has protested over 1,000 property tax valuation cases in New Mexico for 18 years, winning 99% of the cases with an average reduction of 24%.  Todd is the author of the “Understanding NM’s property tax system”.


Todd also maintains a commercial real estate blog at He can be reached at 440-TODD or



Suncal goes on the offensive and promotes TIDDs

Suncal, the recent buyer of Westland’s 64,000 acres, originally known as the Atrisco Land grant, has started promoting the benefits of Tax Increment Development Districts or TIDDS as it continues to seek the City’s approval of its development plan.

TIDDS are also in the works for the redevelopment of the Winrock shopping center (named for one of its original developers, Winthrop Rockfeller) and for the Quorum (ABQ Uptown Phase III).