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Show Real Estate SUNDAY, January 22, 1995 The Salt Lake Tribune CLASSIFIEDS Page K-5 Price of Limited Real-Estate Partnerships 4 4 Is Staging Comeback to Joy of Investors By Karen Damato or resumed the payment of distributions to THE WALLSTREET JOURNAL While 1994 was a lousyyear for manytypes of investments, there were some significant price increases in one battered groupof securities: old real-estate limited partnerships. Average resale prices of partnerships that own apartment buildings more than doubled last year in the informal, low-volume second- ary market, a new surveyshows. Averageprices for some othertypesofrealestate partnerships rose 20 percent to 40 percent, according to the survey conducted by a Dallas research firm, Partnership Profiles Inc Resale pricesarestill generally far below what investors paid when the partnerships were originally sold. But the price increases werestill good news for long-suffering partnership holders. “The market is telling you things are improving,” says Glen Bigelow, a NewYorkinvestment manager who buysold real-estate partnerships for private investment pools. The old partnerships “are not a black hole forever,” he says. Investors hold billions of dollars of limited partnerships that make them part owners of apartment andoffice buildings, shopping centers and a wide range ofother business ventures, from cable-television systems to oildrilling operations. Manypartnerships have performed dismally and dragged on for years longer than expected. Most partnerships were never designed to be traded, andonly a small minority of them change hands in the secondary market. Spencer Jefferies, president of Partnership Profiles, says the price increases reflect an improvementin real-estate market conditions and the fact that many partnerships increased investors. In addition, “there are a lot more people that are coming into the secondary market” as buyers, including someaffluent retirees and real-estate professionals looking to profit from a real-estate recovery, he says. Evenwith the rise in resale prices, though, partnership investors who do not have an urgent needfor cash should generally hang on to their securities, partnership specialists say. At current levels, pricesarestill almost al- ways belowthe value of the underlying assets, as estimated by partnership managers and independent appraisal firms. Consider,for instance, First Capital Institutional Real Estate 3, a 1985 commercial-prop- erty partnership that had a big distribution increase last year. The average secondarymarketprice for those partnershipunits nearly doubled to $268 in October and November 1994 from $137 in the year-earlier period, according to Partnership Profiles. The original unit price of $1,000 is ancient history, but the partnership appears to be changing handsata discountto its underlying assets. The most recent property appraisal made public by partnership sponsor First Capital Financial Corp., Chicago, valued the assets at $612 a unit as of year-end 1993. And Partnership Valuations Inc., an Annapolis, Md., firm that values partnerships for investors, put that figure at $510 as of the same date. Such seeming discounts have helped spur buying interest in the old real-estate parinerships. Another big draw has been income. Yields have drifted down during the past year, though, as prices have climbed Thesedays, individual investors are getting yields of 8 percentto 10 percent on manyreal- estate partnerships, says Eggert Dagbjartsson, senior vice president of Equity Resources Group, a Cambridge, Mass., firm that buys partnerships for investment pools. A yearago, he says, many partnerships were priced so thatdistributions provided an annual income stream equal to 10 percent or 11 percent of purchase price Some secondary-market offerings do not look like bargains, compared with comparable traded securities. Dagbjartsson says. For instance, he says, Summit Tax Exempt Bond Fund L.P., which trades on the American Stock Exchange, currently offers a slightly higher yield than either Summit Tax Exempt L.P. Il or III, which change handsin the secondary market. “In a rational marketplace,” he says, investors would get the higher yield on thelessliquid, nontraded partnerships. All three Summit Tax Exemptentities own municipal bonds backed by mortgages and were sponsored jointly by Related Capital Corp. and a unit of PrudentialBache Securities. Looking at 1994 resale-price increases by type of partnership, the strong gains for apartment programsreflect the fact that the multifamily sector has been amongthefirst to recover from the protracted real-estate reces- sion. Higher rents and occupancylevels have allowed manyof the partnerships to resume distributions after years of no payouts, Jefferies of Partnership Profiles explains. Meanwhile, prices were basically flat for “triple-net-lease’’ partnerships, those in QO David Williams has joined Mansell & Associates as a sales associate. He has beenin real estate for nine and one-half years. He holds a Graduate of RealtorInstitute designation and the National Association of Home Builder's Certified New HomeSales Professional designation. ta Chris Hobson has joined the residential real-estate division of Chapman-Richards. She has been Hobson Lowe in real estate for 15 years. Eisenmann She holds Graduate of Realtor Institute and Certified Residential Specialist designations, and is a memberof the Salt Lake Boardof Realtors’ Million Dollar Club o Frederick J. Lowe, a realtor with Wolcott & Dornbush Real Estate, has received his real-estate broker’s license. He will continuewith thefirm as an associate broker. He holds Certified Residential Specialist and Graduate of Realtor Institute designations, and is also a memberof the Salt Lake Board of Realtor’s Million Dollar Club. oO Beth Eisenmann has joined Positive Outlook for Utah Real Estate Seen for 1995 Utah continues to be REAL ESTATE economicperformer. Its an alemploymentgrowthrate, ex ceeding 6.0% during 1994. was the strongest in the nation and the unemployment e, con- tinuing below 4.0%, remains one of the lowest in the nation Employment growth for Utah last year in industries such as construction (up JAN LEATHAM 20.2%) and manufacturing (up 4.7%) has forced employers to call upon virtually all available skilled labor resources. Utah's service sector employment, ac counting for 72% of new jobs in the state, added 36,300positions over the past 12 months. said Jeff Threadgold, chief economist at Key Bank Small businessesare playing on increasingly important role in the Utah economy. The Utah State Small Business Advisory Council estimates that 80% of all newjobs in Utaharecreated by small business Residential construction activity was widespread throughout the state but demand was stronger along the Wasatch Front (including Summit County) and in the St. George area during 1994 State-wide new dwelling units may decrease to 16,500 in 1995. Newsingle- family homes may be around 11,000, positive note, the scenario of over-building which caused key factors to continued strong such dramatic decreases in construction in the late 1980s has not repeated itself in the current market The surge in residential activity will have peaked in 1994, Maintaining a favorable en- vironment for small business and the state’s number one national ranking as a “hotbed of entrepreneurial activity” are but all signs are pointing to a tenant undera long-term arrangement. These conservative, state's strongest sector in the solid 1995; not recessionary. not inflationary — just solid. The supplyof housing is much more in balance with the demand for housing and this bodes well for the long-term health and vitality of residential construction and real estate, Predictions are also a re- income-oriented partnerships offer only limited potential for future capital gains, Jefferies says, and in recent years have traded at smaller discounts to underlying value than otherreal-estate programs. Payne Stonebrook Realty. She has been a licensed agent for a year and previously wasan office manager at NobelIne. a Ted Dee Payne of RE/MAX Brokers L.C. has been awarded the Certified Residential Special- ist designation awarded by the Residential Sales Council, which is affiliated with the National Association of Realtors. He has been a licensed agent since 1979, and has sold more than 250 homes. o Carrie Johnson, Krista Dahl, Marci Arnett, Rick Mortensen, Sam Murphy and Tom Wood are new sales associates with ERACarlsonRealtors. small business arena. Of the 1,500 firms in Utah's information technologyindustry, ¢ have fewer than 100 employ- Location Decides Price of Home ees. A survey by the Utah Information TechnologyAssociation estimates that this industry will add 13,500 additional employees over the next three years. Utah ranks 33rdin terms of USA TODAY “doing business’ compared to well Banker Corp, The firm surveyed more than 280 ofits real-estate offices to determinethe averagesalesprice of a typical corporate transferee home. The 2,200-square-foot “subject” home evaluated is a sin- gle-family dwelling with four bedrooms, two and one-half baths, family room and two-car garage The average price for such a home in Salt Lake City was $165,000. Accordingto the survey,the top five most affordable U.S. markets are: Fort Worth, Texas, ($92,125); Syracuse, N.Y., ($101,725); Corpus Christi, Texas, ($103,125); Pensacola, Fla., ($104,666), and the national average, meaning 32 states are more expensive and 17 states are less expen- The top 5 most expensive U.S markets are: Beverly Hills, Calif., ($886,000); Greenwich, Conn., ($575,000); San Francisco, Calif., ($566,000); Honolulu, Hawaii, ($556,333), and Newport Beach, Calif., ($541,667). Federal Reserve Bank for the past two years, and more directly the recent action of Fed Chairman Alan Greenspan sis that Greenspan. regardless of outside pressure. will do what he has to do to keep long-term interest rates as stable as possible. Investors can be assurethat future inflation is being watchedcarefully and will have more confidence Recent actions to restrict Greenspan's moves are having high. growth or attempts to discour- age new development by imposing impact fees or other special tax assessments add to the cost of doing business. Such actions, intended to discourage undesirable growth, mayalso discouragethose indi- viduals and entities whose presenceis desired. Utah’s future depends on following a balanced development path, attracting a diverse set of business and maintaining a lowcost of doing busines The rate of net in-migration Tulsa, Okla., ($106,350). sult of reviewing moves of the sive. Both labor and energy costs in Utah are relatively low,but the state’s tax burden as a cost of doing business, is for 1995 is expected to decline, slowing slightly the demand for housing. Economic and job growth should moderate in 1995 also causing some re- duced demand 1994 in long-terminvestments, spe- cifically mortgage loans a long-rangepositive effect on mortgage rates. Look for a 30- year fixed rate to remain around 9.5%. I might note that in the summer of 1974 rates were alsoat the 9.5%rate, according to Republic Mortgage. For all buyers considering the purchase of a home, nowis a good timeto buy. Overall, the economic and real-estate outlook remains positive, and as with other Rocky Mountain States, Utah should experience a year of strong, balanced performance in 1995 Jan Leathamis leader ofthe public relations and community services committee of the Salt Lake Board of Realtors. ESTATE Tuxury, in 1993, 3 fireplaces ‘Over 8500 sq M, Indsepg., hrdwd firs, 3 bdr, guest house,8 $400,000, Secrist vue Sheila TOP TEN AGENTS while multi-family units will be about 4,300. On a state economic performance to a comparison survey by Cold- Williams Page K-11 The information technology sector, which generated $6billion in revenues in 1993. is the A 2,200-square-foot home can Marquez CROSSWORD which entire buildings are leased to a single be purchased for as little as $92,125 in Texas, or as much as $886,000 in California, according Victor Marquez has been cited as Paragon Properties’ top proaucing agent for 1994in bothlistings taken and transactions clused. He has been a sales agent with Paragon Properties for six years. SECTION K Gelman Fran Fleischer #3 Salt Lake Division ofGump& Ayers Je Ch: loater Claire McHugh #6 Secrist #1 Nina Akbavan #7 Bernstein #10 GUMP &A\ REAL (STATE Wwe 2402 E, Walker Lane ‘ON WALKER 10M ost sis 96 mast!wicreek ns her8 orewood the volleyshor most $649,000. lor : pen | |
