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Monthly Archive for: ‘July, 2012’

  • APJ Morning Links 7.31.12

    Buckhead has a plan for the next twenty years. Here are building blocks of Buckhead.

    Today is the day! T-SPLOST votes will be cast today, here are some last minute thoughts to consider.

    T-SPLOST closing arguments make good points on both sides.

    BrookhavenYES gives ten reasons to vote YES to a new city.

    The landscape of the workplace is changing, and real estate may have to change with it.

  • TSPLOST Videos

    In case you’re late to the polls today (polling ends at 7pm in most areas), here are a few more opinions via videos on TSPLOST –

  • T-SPLOST Vote is Tomorrow, How Will You Be Voting?

    For those in the Atlanta area, there may not be a single issue more important than the T-SPLOST vote on tomorrow’s ballot. Here are some great links to help you decide how you will be voting.

    Both sides weigh in on this AJC blog.

    Here are the facts as laid out on the T-SPLOST website.

    Those that oppose T-SPLOST have a very detailed blog that will include updates on voting throughout the day. Visit them for info on why they say to vote NO!

    Here are some of the T-SPLOST claims and why this writer thinks they are unfounded.

    T-SPLOST pros and cons is a quick overview of both sides of the fence.

    Untie Atlanta wants voters to vote YES to T-Splost!

    Creative Loafing shares pros and cons on the proposed tax.

    And of course, our own Atlanta Property Journal has been on the T-SPLOST debate for a while now. Take a look at these past posts for some helpful info:

    Can We Trust the DOT?

    Rounding Up T-SPLOST

    Questions on T-SPLOST

    APJ Quick Guide To T-SPLOST

     

     

     

     

     

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  • APJ Morning Links 7.30.12

    What does it mean for Atlanta if T-SPLOST is not passed? Here is one point of view.

    Want to know how commercial real estate is represented in Washington? Take a look at the Real Estate Roundtable.

    999 Peachtree is for sale. Asking price is a mere $160 million.

    To attract investors to cities, you have to ask what do the investors want? Here are 4 things investors look for.

    Here are some videos on the outlook of healthcare, hospitality, and the troubled real estate markets.

  • Weekly Financial Markets Update – July 27th

    Equity markets: The S&P 500 rose 1.7% on the week to close at its highest level since early May. Somewhat surprising given the weakness in the highest profile earnings of the week — Apple and Facebook. On Friday word came out that Europe is talking about new steps to fix their ailing financial system. These rumors have become commonplace but for whatever reason the markets bought this one, sending markets soaring.

    Bond markets: The European news was bad news for safe haven assets, with treasuries getting whacked hard. Because of Friday’s move the 10-year treasury yield finished the week at 1.54%, up 0.08% on the week.

    Currency markets: The dollar fell 1% on the week — the bulk of the move happened on Thursday, not Friday, as the head of the European Central Bank eased concern over Spain’s finances, which led to a euro rally and dollar selloff.

    Interbank markets: 12-month LIBOR was unchanged on the week at 1.06%.

    Summary and next week: This week was the epitome of how short-term investors are struggling this year. The two big earnings data points, Apple and Facebook, were weak. The first reading of Q2 GDP came in at 1.5%, in-line with expectations. Yet an unexpected European headline on a quiet summer Friday afternoon led to a market surge.

    Next week is a big data week, with the key ISM manufacturing survey as well as the July nonfarm payrolls report. After that it gets really quiet until Labor Day.

    -Earl

  • TSPLOST – Can We Trust the DOT?

    Gotta get downtown . . . .

    Our second question about TSPLOST is whether the DOT can get the job done on time and on budget.

    If I were hiring a contractor for a job, I would obviously want to do some background checking, get references, and see past work. If I am going to decide that Atlanta should spend several billion dollars on 150 projects around the city, I want to do the same diligence on the Department of Transportation.

    Is the DOT going to get job done on time and on budget?

    Well, I have watched this project improving the Peachtree Rd corridor from Piedmont to Peachtree Dunwoody. They seem to be doing fine, but doesn’t it seem like it has taken about twice as long as it should? I don’t remember the exact timeline for the project, but it has been several years to add a simple median with some plants.

    I also remember the project at Roxboro and E Paces. What did that take? Like 10 years?

    Or the widening of Abernathy from Roswell to Johnson Ferry? That’s been about 5 years and I still see orange cones.

    400 was supposed to stop tolling me when it was paid for. It got paid off a couple years ago . . . . I still pay. (I know Governor Deal claimed this would stop at the end of next year, but I am still paying right now.)

    I guess the moral is that I trust the DOT about as far as I can throw them. I know there are thousands of reasons for delays, setbacks, and cost overruns and maybe my expectations are too high. But I work in the CRE business. Construction is a little hobby of mine. We seem to get our stuff done on time and on budget.

    Having said all that, this TSPLOST vote is supposed to keep the money with the Georgia State Financing and Investment Commission and is also requiring the creation of a Citizen Review Panel to oversee progress of the projects. (Scott Selig wrote a decent article including these two entities here.) I have no idea who is selected to be on these two special groups or what “power” they will have.

    For example, if the DOT runs late on improving the 400 and 285 interchange, what will the Citizen Review Panel do about it? Will they write scathing letter?

    Good . . . now I feel better about the hundreds of millions of dollars we allocated there.

    Do you see what I’m getting at?

    The DOT’s track record is against it.

    Fine, then they are doing something to increase the accountability.

    Good idea. Did they go far enough?

    Meh . . . . maybe.

    I’d call this one a wash. I think they are trying to do more to hold the DOT to budgets and timelines, but decades of history are working against them.

    So let’s call this is solid “Maybe”.

    On to our final thoughts on TSPLOST Monday before the big vote Tuesday.

    – Duke

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  • APJ Morning Links 7.27.12

    Not sure how to vote on T-SPLOST? Learn more about the history, impact, and politics before making a decision.

    Voters will have to decide if Brookhaven should be a city. Debate over commercial tax base is a major issue.

    More information to help you make a decision on Brookhaven. The group that says YES tells you why.

    Project Renaissance in Dunwoody is moving at a fast pace.

    Apps for CRE make the job much easier. An electronic confidentiality agreement app is ready just minutes after downloading.

     

  • Franklin St Capital Markets Update

    Franklin Street has started putting out a cool weekly update on financial markets that I found pretty interesting.

    I am inserting it below for you to see. Right-click and select “View Image” to make it bigger.

    Take a look and let me know what you think. Maybe I can get these guys to be a part of our Friday financial market’s update  . . .

    For more info, contact Greg Ford at Franklin Street (404-832-1250, )

  • Bisnow Capital Markets Summit

    I think they put on a pretty solid event.

    Just got back from the Bisnow Capital Markets Summit at the Westin in Buckhead.

    Say what you will about the Bisnow guys, they can get a crowd together. All in all, I thought it was an interesting session with more optimism from the equity panel than the debt panel (surprise!!!). Bronfman of Jamestown had some interesting comments on the traditional fund model and I was surprised how much deal flow Cantor Fitzgerald claims to have closed.

    My quick and dirty notes are below. Feel free to add anything you noticed in the comments below.

    If you want to go to the next Bisnow event or subscribe to their newsletter (which I do), then check them out at Bisnow.com.

    – Duke

    DEBT PANEL

    Brad Watkins of State Bank
    Can look at recourse and non-recourse. Can go as high as 85% of cost if the cash flow validates it. Just closed on 3rd Whole Foods-anchored development. Also closed on the Hyatt deal in Midtown. May help a borrower look for capital partners on refinancing if property is under-water. Don’t see anything to give a significant uplift to the CRE community. Big concern about Atlanta is job growth.

    Melissa Frawley of Wells Fargo
    Banks have adjusted loan terms from the typical 5 year term to 10 years. working on balance sheet debt and have provided construction debt on multifamily. Can do recourse and non-recourse. Average deal is $15 – $20 M but can go as high as $100. Rates have been LIBOR plus 3%. Banks are coming back into thee market and are able to pick up some of the refinancings coming to market. Market feels choppy and sentiment can change from week to week. South Florida has shown better activity. Hot markets in the southeast are Nashville, Raleigh, and Charlotte. Borrowers need to tell a compelling story and be transparent about deal and deal structure. No surprises! Keep your bankers close.

    Sam Kupersmith of Cantor Fitzgerald
    CMBS rates are 4.5-5.0%. Closing loans between $1.8M – $230M. T12 numbers in multifamily are going up across the board. CF has the flexibility to do deals that the agencies and life companies can’t do. Has even closed on 60% occupied retail deal in Cumming. Prefer non-recourse. Closed a loan with a borrower with 16 defaulted or foreclosed debt. Just because rates are low doesn’t mean values are just as high. Cap rates are compressing, but appraiser are struggling to get to the value necessary for some of these deals.

    John Beam of Centerline
    Agency lender. 85% of deal flow last year was acquisitions. With low rates in the market, refinancing is popular. Average deal is $10 Million. Freddie did $20B in deals last year and Fannie did $25B. They have staffed up and seem poised to grow business this year. 10 year rates are at 3.5%. FHA mortgages are as low as 2.24%. Loans are required to have at least 5 years of amortization to have interest-only. Good developers who have weathered the storm have been coming back to the table for debt financing. Agencies have begun to look at equity sponsors with an open mind. Need to see that the borrower “did the right thing.” when looking for debt, you have to address everything upfront. No one is lending on trending or projections. What is the cash flow today?

    Rick Booth of First Fidelity
    Provided ground-up construction-perm. Primary focus is hospitality. Closed $240M retail deal. Office, Retail, and hospitality are well-received in LifeCos. LifeCos are being selective in their deals because of their competitiveness on rates.

    EQUITY PANEL

    Matt Bronfman of Jamestown
    US benefits from being one of the taller midgets in the circus. Still a better place to invest than most places in the world. Certain markets are more favored than others, DC, San Fran, and NYC. San Fran is the hottest office market right now. Since they raise foreign capital, they are highly sensitive to ForEx rates. Tend to look at core with 10% IRR and opportunity deals in the mid-teens. Unique properties in unique locations have really weathered the storm better than almost anything else.

    Jim Shelton of Carter
    Value-add office seems appealing in most SE markets other than south FL. Approach is generally price per pound rather than a direct cap. Only significant office acquisition has been a FCL of the old Silverton building. Capital has high expectations with returns looking in the low-20s. LPs are looking for returns in the 20s as well. Eternal hunt for cheaper capital. Debt community has adjusted to new criteria and underwriting and have done a good job of staying in the market.

    Andrew Trotter with Centennial Holding
    Uncertainty abroad and in the election does affect each property type. It affects the overall prognosis of the economy, but apartment demand has been high because the supply was so low. They have experienced 4.5% rent growth and have trouble believing that there has been NO job growth. When cap rates start dropping, seasoned acquisition guys have to start looking for other metrics to value and justify purchases. Because of cheap debt, buyers can pay much lower cap rates and still hit the double-digit returns required by investors.
    Acquire on a fund model rather than deal-by-deal basis. Tend to look for core deals rather value-add or opportunity.

    Tim Perry of NAP
    NAP is in many of the same markets as Carter, but return on costs are at least in the double-digits. NAP is not in the fund model. So needs to finance each deal individually. Plays exclusively in the opportunistic space looking for returns in the 20s plus. The most difficult piece of the capital stack is the construction lender.

  • APJ Morning Links 7.26.12

    Banks are getting back into CRE Lending, and multifamily properties are leading the comeback.

    Commercial real estate did not suffer quite as much as residential in the past. Now the forecast for 2012-2013 looks promising as well.

    TSPLOST still dominates the headlines. Here, a bicyclist advocates for the project.

    Presidential memorandum adds Atlanta’s Multi-Modal Passenger Terminal to list of projects that will be expedited.

    Urban investment has suffered, but some places have found ways to work with pension fund investments to support growth.

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