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Author Archive for: ‘The Duke’

  • 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.

  • Rounding Up TSPLOST

    I guess this is what rush hour will look like if we pass TSPLOST . . .

    As part of our ongoing discussion on the Transportation Special Purpose Local-Option Sales Tax, or TSPLOST, referendum up for vote on July 31, let’s take a minuet to dig a little deeper into these projects on the proposed list.

    We previously looked at a list of the projects proposed based on a map found at UntieAtlanta.com. Using that map, I counted 147 projects (some of the literature claims 157, but we are cloe enough to make some generalizations) spread across 10 metro counties. I am fully admitting that I may not have ALL of the information on this referendum, but I think I have MOST of it and that should be good enough to get a general sense of what is being proposed. If anyone knows of a more comprehensive or accurate resource than the ones I have used for my data-gathering, please let me know in the comments and I can update!

    So, as we are trying to figure out whether this initiative will actually alleviate some of the traffic burdens of the metro area, let’s take a deeper look at the projects, their budgets, and noticeable trends.

     

    The firs thing I notice is how spread out these projects are. I was under the impression that this was an Atlanta initiative. This looks more to me like an Atlanta MSA initiative with projects in every major suburban area (except the Panthersville/SE Atlanta corridor, interestingly).

    This handy pdf from Georgia Trend shows a quick breakout of the projects by region as follows:

    North Fulton – $384,900,000

    Northeast – $898,950,000

    East – $67,300,000

    Henry County & Southeast – $213,000,000

    Clayton County & South – $313,170,000

    Southwest – $196,860,000

    Douglas & Westside – $332,860,000

    Downtown & Midtown – $601,892,477

    City of Atlanta – $134,332,592

    Dekalb Projects – $185,250,000

    Total – $3,328,515,069

     

    A few things that stand out when looking at these numbers.

    The City of Atlanta is getting about $740 Million. That’s about $140 Million less than Gwinnett County.

    Is anyone else surprised that the largest number is going to Gwinnett? What does that say about our transportation priorities?

    Having said that, our last post had $112 Million going toward improving MARTA, so I suppose that could be counted toward in-town funds. But that is STILL less than is being spent in Gwinnett.

    Gimme more stop lights!

    While we are on the topic, why am I paying for upgrades to MARTA? I don’t see any new branches being developed or neighborhoods being reached by our rapid transit. So why am I sending money to MARTA to update their elevators, ventilation , passenger notifications, etc? Doesn’t MARTA have it’s own budget?

    Am I paying to bail out MARTA?

    As far as the in-town stuff goes, you know I love the Beltline and think it’s a great draw for bringing people to the city.

    I notice we are fixing some bridges downtown. Hmmmm. I also notice that our road projects in town seem to be cheaper than the suburban surface road improvements. Maybe that’s because some of those suburban improvements are widenings, but it seems odd that most of our road improvements are a couple hundred thousand dollars and most of the suburban deals are a couple million.

    From my list, I counted a total of 82 projects that I opposed and 65 projects that I supported. That’s closer than I expected, but I still oppose more than I support.

    All told, we are proposing to spend approximately $2,407,040,000 in the suburbs and $1,033,475,069 in town (I am including the Dekalb and MARTA stuff as in town).

    So, in a city whose culture has been decimated by sprawl, we are proposing to fix our transportation issues by spending more than twice as much money on suburban projects as in town projects?

    Hmmmmm . . . . maybe I am missing something.

     

    What else did you readers notice? Any trends or special projects of interest that stood out as you were trying to wrap your head around this massive proposition?

    Now that we have gone through what is in this deal, check back this week for an analysis of whether the DOT can pull this off.

    – Duke

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  • APJ Morning Links 7.25.12

    A year ago, the commercial real estate market was more optimistic. Now, a survey finds that caution has returned to the market.

    Managers of shopping malls may find use in a platform for running shopping malls effectively.

    Past mistakes may haunt Atlanta’s traffic.

    Steve Little of Brasfield & Gorrie answers some questions on construction changes in the last year.

    Does Loopnet have competition? Here are some updates on what the others are up to.

  • APJ Morning Links 7.24.12

    How do we get lots and lots of money for real estate ventures? REIT’s may be the answer.

    Urban developments can benefit from tax incentives in many ways, here are just a few.

    What will Buckhead look like in 20 years? Buckhead CID has a vision.

    The Master of the Real Estate Game answers your questions on the book, the market, and real estate.

    Although all predictions were against it, the net lease cap rates continue falling.

  • APJ Morning Links 7.23.12

    While many still say that commercial real estate is making a slow comeback, some say that it is “solid and healthy” .

    Dallas has a lot of similarities to Atlanta. Looking at how they do some things better can help Atlanta to become a greater city.

    TSPLOST voting still dominates the headlines. Here are some things to consider before you make the vote.

    Does Portland hold the answer to Atlanta traffic? Some residents of Portland say YES!

    Downtown Atlanta transit hub may get some much needed help from the OBAMA administration.

     

  • APJ Morning Links 7.20.12

    CRE is taken to a new level with Top 3D viewers for iPad/ iPhone.

    Commercial Real Estate is slowly improving, but still down from 1st quarter.

    Brookhaven’s chance to become their own city is quickly approaching. If they don’t do it now, it may not happen.

    Want to know what the best infrastructures look like? Now there is a book that showcases the World’s best.

    Cities are struggling to attract new talent. The solution? Paying off student loans to keep graduates.

  • Questions on TSPLOST

    Underground transit will cure what ails you!

    Now that we have a quick guide to the projects proposed on TSPLOST, let’s take a couple posts to answer the basic questions on TSPLOST that will help us figure out exactly what we are voting for on July 31st.

    Specifically, let’s try to answer these:

    What is it? – What projects are involved and what money is being allocated where? (This will be a follow up to our Quick Guide)

    How Realistic Is it? – Can the DOT pull this huge project off in the timeline? It doesn’t matter how cool it sounds if the DOT can’t pull it off . . .

    What specific problems will be solved? – I know we all want to Untie Atlanta. How will these projects do that?

    What happens if it doesn’t pass? – Do we sink into a traffic-choked oblivion? Can we try again next year?

    Given our future hope and dreams for the city, is this the best course of action?

     

    Alright. That seems like a decent road map (pun!) that should get us to a “yes” or “no.” Check back over the next week or two as we will try to answer these questions as thoroughly as possible and get some debate moving on whether TSPLOST will truly untie Atlanta traffic.

    – Duke

  • APJ Morning Links 7.19.12

    Where does state transportation funds go? The STIP tells us how each state is supposed to spend its money.

    Need an Investmest Manager? Here are the Top 10 Alternatives for Commercial Real Estate.

    Falling gas prices can sometimes link to falling retail. Track sales month by month on this website.

    Cities need wealth, any kind of wealth. For some, like Birmingham, this means a search for soveriegn funds.

    CRE data can be disorganized and confusing. Here is a Nerd Guide to prepping your CRE data.

  • APJ Morning Links 7.18.12

    A major issue up for voting in a few weeks is the T-SPLOST vote. Here is a list of the Pros and Cons.

    CRE investors are eager to see commercial mortgage-backed securities back on its feet.

    Urban growth is happening everywhere. New markets are to be found all over the world, not just in our own country.

    A new apartment complex in Brookhaven offers proximity to MARTA and walking distance to retail shops.

    Public Transport can be done right, as in Singapore. Here are some reasons how it can be cost effective and highly efficient.

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