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.