REDNews Digtal Media Advisory Board Back in Business!

(L to R) Sarah Huffman, REDNews; Coy Davidson, Colliers International; Meaghan Gallacher, Asset Plus Student Housing

REDNews held our Digital Media Advisory Board's first meeting of the year yesterday. Coy Davidson of Colliers International and Meaghan Gallacher of Asset Plus Student Housing are lending their social media expertise and advice to REDNews.

Coy and Meaghan shared helpful tips with Ginger and Sarah about creating successful marketing strategies via the various social media mediums. We are excited to have the Digital Media Board back up and running and want everyone to keep an eye out for the monthly columns and contributions from the board members.

Be sure to follow us on Twitter, like us on Facebook, and connect with us on LinkedIn for the latest CRE event photos and news stories.

Gainer. Donnelly, & Desroches - "Successful Real Estate Workouts - Do They Exist?"

(L to R) Patrick Hayes, Shareholder at Andrew Myers, David Donnelly, Partner/Leader of Real Estate Services at Gainer, Donnelly & Desroches, Bob Vestewig, Senior Managing Director, CBRE Capital Markets, Inc., and Ed Rothberg, Partner at Hoover Slovacek.

Today Gainer, Donnelly & Desroches hosted a luncheon at Tony’s for a group of their clients.  The luncheon included a presentation by a  group of panelists discussing “Real Estate Workout Plans – Do they Exist?”.  
 

The panel consisted of Bob Vestewig - Senior Managing Director, CBRE Capital Markets, Inc, Patrick Hayes - Shareholder at Andrews Myers, Ed Rothberg - Partner at Hoover Slovacek, and David Donnelly - Partner/Leader of Real Estate Services at Gainer, Donnelly & Desroches.

A few takeaways from today:

Patrick Hayes discussed Chapter 64 of the Texas Property code that was passed June 17^th, 2011. The new law allows for each of the following:

•  Lenders can collect rent from existing tenants without foreclosing on the commercial property – thus the rents being considered as some of loan’s collateral.
• After the borrower defaults on a loan and notice has been given by the lender to the borrower and each tenant, the lender may then collect rent from the tenants.
• If the borrower does not comply with the rules of Chapter 64 (and continues to collect rent from the tenants, etc.) it could be the basis for borrower to incur personal liability.

Patrick Hayes also gave tips to avoid foreclosure (excerpt from his presentation notes):

•  Set a goal - figure out what you want to accomplish from the workout.
• Openly communicate – Bob Vestewig and Patrick Hayes both agreed there is no need to burn bridges (in case you may want to borrow from the lender in the future“
• Figure the costs and property's cash needs for the workout
• Get an appraisal
• Familiarize yourself with the loan documents
• Put yourself in the lender's shoes
• Have a plan -  not a prayer!” joked Patrick Hayes.   Establish a workout plan to show the lender foreclosure or bankruptcy are defective solutions.

Ed Rothberg discussed bankruptcy in terms of real estate (taken from Ed Rothberg's summary).

• Bankruptcy can be used to stop a foreclosure in order to sell property.
• Bankruptcy can be used to restructure a matured or defaulted debt. The bankruptcy court can extend maturity, adjust the interest rate, and adjust the payments.
• Bankruptcy can be used to inject new equity into a debtor under favorable terms.
• Bankruptcy can convert a non-recourse debt to a recourse debt, so the documents must be carefully reviewed to avoid personal exposure.

David Donnelly discussed the taxation of the cancellation of debt and how COD differs from forgiveness of debt (excerpted from David Donnelly's presentation notes).

• Cancellation of debt allows the debtor deferral or relief from tax
• Forgiveness of debt is treated as a sale of the property which will create gain or loss depending on the basis.
• Cancellation of debt does not create current income if:
• Debtor is in bankruptcy or is insolvent.
• For S corporations, bankruptcy is at the S corporation level.
• For partnerships, bankruptcy is at the partnership level.
• The debt is a purchase money mortgage.
• The debtor has other real property and can reduce the basis of the other property.
• Other provisions for farm loans and principal residences.
• You only get COD for recourse debt; the COD income is the difference between the debt and the FMV of the property; the difference between the FMV and the basis is taxable gain/loss.
• UNLESS it is a reduction in NONRECOURSE debt when you retain the property, e.g., a workout:
• In a workout, where the taxpaper retails the property, the basis of the property can be reduced
• Differs according to the specific situation
• It is a complex law, obviously consult your tax advisor.

Ray Hankamer's Recap of the O'Connor & Associates Apartment Forecast Luncheon

O'Connor & Associates Hotel/Lodging Forecast Luncheon
by Ray Hankamer

(L to R) Sergio Pineda and Ray Hankamer both with Hankamer & Associates

O’Connor & Associates Apartment Forecast Luncheon featured speaker Jason Espejo, of Lynd Company.

Mr. Espejo had the following comments about the Texas multi-family market in general, and more specifically about Houston:

·         For several years before the recession, traditional renters came to believe they had a “right” to home ownership

·         Many good and bad renters alike became “bad” homeowners, which led to many problems which lenders are still dealing with

·         Hopefully it will be a long time before we return to loose lending standards which do not require prudent down payments and strong credit

·         Lenders nationwide are inundated with forbearance requests on many types of commercial real estate, including multi-family, and therefore are slow to respond

·         Jobs are key to a strong market in any city-Texas cities are among the strongest in job creation

·         We can expect growth in multi-family development in most Texas markets, especially Austin, which may risk going overboard, with 22,000 new units planned; Dallas: 8,200; Houston: 13,000. These latter two metros should be able to absorb growth without rental rates or occupancies weakening

·         The “stigma” of being a renter is abating, and we are returning toward normal percentages of 60% homeowners and 40% renters

·         Houston growth will come near Woodlands/Exxon Mobil campus; Cinco Ranch; Katy…lots of good sub-markets for multi-family here

·         Speaker’s company owns 35,000 units nationwide (7,000 in greater Houston) and is aggressively ramping up pricing on renewal rents, and giving incentives to longer term new tenants to encourage reduced turnover and stability

·         Renewal percentage has dropped from 70% to mid-60’s but speaker says it is worth it to drive rate, as demand for multi-family increases

·         Lower construction costs for stick-built enables apartment owners to demand lower insurance coverage and thus premiums

·         Multi-family should be most attractive real estate segment for coming few years

·         It is a good time to be a buyer of real estate assets now since capital costs are so low-“the stars are aligned”

·         Speaker is bullish on Houston but not so much on DFW Metroplex

Houston 1st in Growth!

RECON (HBJ) reported today that through analyzing the 2000 and 2010 Census Rice University's Kinder Institute revealed that Houston has grown by 1.23 million people in the last 10 years, topping the 366 other U.S. metropolitan areas in terms of city growth. Other Texas cities rounding out the top 20 were Dallas-Ft. Worth (#2) , Austin (#11), and San Antonio (#13).

HRBC Breakfast

by Sarah Huffman - REDNews Marketing Director

7 A.M. breakfasts are starting to become a routine for me. This time I attended the HRBC breakfast which featured The Honorable Jim Murphy, State Representative, District 133 discussing the latest Legislative session. Heads up for all you hunters out there -- it is now legal to hunt feral hogs from helicopters! On the topic of real estate, State Representative Murphy discussed how eminent domains will be stricter and protect private owner's property rights even more. Here are a couple of pictures from the event - for the rest that were taken check out Networking Photos on our website, http://www.rednews.com .

(L to R) Mary Lou Green - REALM Professionals with Fred Baca - Mason Partners

(L to R): The Honorable Mike Engelhart - Judge, 151st Civil District Court with Joseph O. Slovacek with Hoover Slovacek L.L.P.

Don't forget to look at the rest! (CCIM pics will be up soon as well)

CRERF Luncheon at Central Houston

Today I made my first drive (alone!) to downtown since moving to Houston for the CRERF luncheon at Central Houston, Inc. Laura Van Ness, director of Central Houston's business development program, shared what's new downtown along with the latest proprietary office market research and developments news. I've decided to share a few of the most interesting tid bits of information shared.

• There are roughly 140,000 employees condensed within the 1.8 square miles and 44,000,000 square feet of office space downtown.
• 48% of those employees drive alone to work and park in the 100,000 parking spaces available while 29% utilize Park & Ride.
• The Downtown District developed the Downtown Public Safety Guide Program to focus on hospitality and safety solutions and ensure that residents, workers, and visitors feel safe and have an enjoyable downtown experience. Guides focus on (excerpted from the DPSG brochure):
• Deterring crime by reporting problems to the proper authorities
• Discouraging aggressive panhandling
• Assisting the homeless population in distress by connecting them with social services
• Checking in on businesses
• On-street concierge services, assisting visitors, residents and workers with maps, directions and information on where to go, what to do and how to get there. (wish I'd known to look for the teal and yellow uniforms while trying to navigate my way around downtown)
• The Six in the City program offers $6 cab rides anywhere downtown.
• For $4.50 one-way, you can utilize the Airport Direct route system downtown to travel to George Bush Intercontinental Airport (IAH) Terminal C.

Tomorrow I'll be attending the HRBC Breakfast as well as the CCIM Luncheon so keep a look out for me and jump in front of the REDNews camera to be included in our Networking Photos on our website and in an issue of REDNews.

Fort Bend Society of Commercial Realtors

(L to R) County Comission James Patterson with Bob Graf, Economic Development Coordinator for Missouri City, TX

County Commission, Precint 4, James Patterson presented The Ft. Bend County Commercial Real Estate group with an update on the economic development programs and goals the County has been working on in 2011. Commissioner Patterson discussed how the County has received state funding to support the transportation programs they have partnered with Sugarland to provide.

Ft. Bend County Transportation:
- Ft. Bend County and Sugarland’s Galleria shuttle service gave over 10,000 rides last month. These rides are NOT to ensure riders are able to go shop, they are solely transportation to and from work only.
- Recently, Ft. Bend County opened a new route to the Texas Medical Center due to the large population of veterans residing in Ft. Bend County. The program went from 0 ridership to giving 3,000 rides last month.

Ft. Bend County Marketing
- Another goal the County is working on achieving concerns bringing new businesses to Ft. Bend County. Right now Ft. Bend County has a budget that ranges from $250,000 to $500,000 and has employed marketing strategies through Continental Airlines as well as putting up numerous billboards all over the Southeast Texas area.

Statistics
- Commissioner Patterson discussed how the population increased 354,000 in 2000 to 585,000 in 2010.

ULI Luncheon

June 16, 2011

 

ULI’s sold out luncheon event, Growing North: Opportunities and Challenges on the Expanding Northern Edge of Houston, had us buzzing over here at REDNews after hearing what each speaker had to say. Jon Lindsay, President of the North Houston Association, moderated the event

Charles Savino, Executive Vice President of CDS Market Research, spoke first. Savino discussed his forecast predictions regarding the Houston area’s projected population and employment growth. Overall, he believes that the North, West, Southwest, South, East, and Central areas will all see an increase in population and employment. Savino believes that the area will grow from a current population of 5.5-6 million residents to a staggering 10 million by 2030.

David Gornet, Executive Director of the Grand Parkway Association, outlined details concerning two major construction projects. The Grand Parkway Association is currently taking bids for their first project, a $350 task with a projected completion date of 2013 which will connect I10 to 290, allowing drivers to drive from 59 to 290. The 2^nd project, a whopping $1.6 billion venture, will connect 290 West of Fairfield to 249 to I45 N to 59N and is slated for completion in 2015. TXDOT is currently looking for private investors to partner with them in funding the $1.6 billion project.

Keith Simon, SVP and Director of Development for CDC Houston, a subsidiary of Coventry Development Corporation New York, gave a detailed breakdown of the development of a new, master planned community, Springwoods Village, on 1,800 acres located along Interstate 45 approximately 30 miles north of downtown Houston and adjacent to the new Exxon site. The land, which was purchased in the 1960s, has been being developed with 6 principles in mind.

1)    Create a vision for a mixed use, master planned community

2)    Launch when anchored for employment use

a.       They start with the residential, then expand when able to employ and create office and retail spaces.

3)    Implement an infrastructure with a tax-exempt public use vehicle, i.e. a management district

4)    Connect with high quality land builders who are willing to build specific projects within specific time frames in order to enhance the value of remaining land

5)    Establish many public and private partnerships.

6)    90% of the community is built by land sells to others. 10% of the community will be built by the developers or through land donations specifically for civic facilities.

Simon also outlined 3 main reasons as to why the land is just now being developed.

1)    It is an in-fill site

2)    The Grand Parkway is moving forward, providing excellent regional connections.

3)    The area growth is strong and there are high demographics which support the decision for now being the time to develop the land.

Springwoods Village is expecting 12-15,000 residents to live in the 4.5-5000 proposed residences. 35-50,000 people are also envisioned to work in the proposed 8.5 million square feet of office space within Springwoods Village boundaries. Springwoods Village falls within Spring ISD & Klein ISD; conversations with the 2 school districts has resulted in Spring expressing that they would need to build a school within Springwoods Village and Klein saying they don’t see the need to construct a school just yet. Coventry has also worked with the City of Houston on designating certain areas for fire/police/and EMT stations for Springwoods Village. Coventry has also said they will set 150 acres specifically for a nature preserve.

Several statistics detailing the economic impact of Springwoods Village were also presented by Simon.

-       The build out will last 15-20 years and during these years there will be:

o   $10 billion produced in gross products

o   Creation of 100,000 construction jobs

o   $143 generated in local revenues

-       After Springwoods Village is built up there will be:

o   $7.5 billion produced in gross products

o   Creation of 50-80,000 jobs

o   $4 billion in property value

o   $450 million in local revenues

o   $600 million in total state revenues

 

Ray Hankamer's Recap of the O'Connor & Associates Hotel/Lodging Forecast Luncheon

O'Connor & Associates Hotel/Lodging Forecast Luncheon
by Ray Hankamer

(L to R) President of O'Connor & Associates, Pat O'Connor and Bruce Walker, President of Source Strategies of San Antonio

Here is a recap of BruceWalker’s (President-Source Strategies of San Antonio) comments at the O’Connor & Associates Hotel Forecast Luncheon:
• The bottom of the hotel recession in Houston was Q3 2009

• We have had 11% growth of rate and occupancy in last 12 months

• It will be 2013 however, before we are back to the twenty year room nights sold growth trend line

• Texas, with 8 % of US population, is creating 37% of new jobs

• As hotel projects started before the recession are completed, and few new ones are started, supply is not keeping up with this new demand, which will lead to further growth in occupancy and rate

• Growth in Odessa up 58%; Midland up 39%; Laredo up 35%, and some projects on the boards for the Brush Country and other areas where there is a pickup in oil and gas activity

• In Houston, room nights sold up 9% and revenue up 12% over last 12 months, and this trend is expected to continue

(L to R) Lyla Talbot with Old Republic National Title Insurance Company, Ray Hankamer with Hankamer Commercial Brokers, and Robyn Drago with Texas Capital Bank.

New Marketing Director!

Hello all! My name is Sarah Huffman and I’m the new Marketing Director for REDNews. Before I start with blog updates, Twitter posts, Facebook updates, etc I thought it’d be best to introduce myself. I recently graduated from Texas A&M University with a degree in Communications and a minor in Business Administration. I grew up in a small town located just south of Waco and this is my first experience with big city living  and already I’m probably prematurely designating myself as a Houston driving pro. I’m really excited about working with REDNews and the Houston commercial real estate community. I look forward to meeting many of you at upcoming real estate events and if you see me out, feel free to jump in front of my camera for a chance to be featured on the blog and/or REDNews website!

Ed Wulfe Retail Forecast at O'Connor & Associates March 23rd, 2011

Ed Wulfe could not remember a worse time in real estate than 2008 - 2010. All the negative factors lined up for that perfect storm. But today the corner has turned and positive signs are showing up with population growth being the key factor.
 Other key factors are an occupancy rate of 86% and  stable rental rates. New retail being built and opened in 2011 will hit around 1 M Sq Ft. a huge drop from 6M in 2008 and 3M in 2009. Less space being built should push up rental and occupancy rates. Anchor tenants will play a major role with HEB, Walmart, Phoenicia and Whole Foods leading the way.
Another standout has been Restaurants. Everyone thinks they are a chef. Some well funded ones are even anchor tennants.

Shadow Inventory Keeping Transactions Down

According to Dr Mark Dotsour, Chief Economist, Real Estate Center at Texas A&M University; commercial real estate transactions are down 80% over the last three years and no relief in sight till banks get rid of their "Shadow Inventory". Dr. Dotsour spoke to this at both the CCIM CRE Forecast in February and First American Title Multi Family Forecast March 4th both in Houston. This "Shadow Inventory", with no known value, is being held by banks with the OK of the Federal Government. It seems that there could be 700 to 1,000 bank failures if this inventory was marked to market. But until that happens transactions will remain low.

ULI Houston Development of Distinction Awards

The Urban Land Institute (ULI) Houston Chapter announced its 2011 Houston Development of Distinction Awards last night in the Cystal Ballroom of the Rice Hotel.

“The awards program is the centerpiece of ULI’s efforts to identify and promote


best practices in all types of real estate development,” said ULI Houston Executive

Director, Ann Taylor. “The finalists were all worthy of recognition, and we hope

the winners will move on to the ULI Americas competition, held annually in

Washington, DC.”

This year’s Development of Distinction Award winners are:

Capitol Oaks – developed by Lovett and nominated by InTownHomes, in the forprofit category

Children’s Museum of Houston – developed by Children’s Museum of Houston

and nominated by Jackson & Ryan Architects, in the not-for-profit category

Brays Crossing – developed and nominated by New Hope Housing, in the not-forprofit category

Greenway Plaza – developed by Century Development, owned by Crescent, and

nominated by Ziegler Cooper Architects, in the heritage category.
 
Award Finalists also included: BP Helios Plaza – developed by BP America,


nominated by Gensler; Houston Museum of Natural Science at Sugar Land –

developed by the City of Sugar Land, nominated by Newland Communities; and Monarch School’s Chrysalis Building – developed by The Monarch School,

nominated by Momentum Bay.

Two developments were also given Honorable Mentions: The Terraces –

developed and nominated by Kaldis Development Interests; and Memorial Park,

Living Bridge – owned by the City of Houston Parks and Recreation Department,

nominated by Clark Condon & Associates.

SIOR Luncheon Jan 11th, 2011

Norm Adams President of Adams Insurance Service was guest speaker today at SIOR and was garnering financial support to repeal Houston's Prop 1. Known as the "Rain Tax" Norm believes that the Houston ballot last November was illegal in 4 ways and feels that the pending lawsuit can win on any one of the 4 points. They are looking to raise $150,000 to support the lawsuit.

The Pastors Council is one of the groups supporting this repeal and lawsuit. They feel that if the "Rain Tax" goes through that it will spell the end of tax exempt status for Churches.