Browse Month: October 2013

REALTORS® Conference And Expo 2013: Repurposing Real Property To Reenergize A Community

David Lockwood, CCIM SIOR

Once again the 2013 REALTORS® Conference and Expo is just around the corner.  November 8-11 in San Francisco’s Moscone Center is where this year’s commercial real estate practice program is running to keep you up to date on the sector’s many trends, tools and tactics for success.

The role of commercial real estate professionals in the revitalization of communities is a constant.  Representing buyers and sellers of key vacant buildings is only where the task begins.  Agents, brokers, managers and others are in continual consultation with zoning authorities, community groups and many others to find the way forward to restoring buildings to productive use.  As long as repurposing remains on average less expensive than new construction, the eyes of the community looking for tomorrow’s success stories will turn to yesterday’s properties to house them.

Guiding a panel with deep experience in this area is David Lockwood CCIM, SIOR of Colliers.  Sharing their experience at this session will be a set of professionals on the front lines of community reinvigoration using repurposed property.  The ideas, stories, deal structures and more will be flying — don’t miss this one.

Saturday 11/09/2013   |  1:30 PM – 3:00 PM
Location: Moscone Center, Room 120

 

REIT Deal: American Realty Capital Acquires Cole In $7.2 Billion Acquisition

New Orleans: Canal Street, Central Business Di...

In a deal creating one of the largest commercial landlords in the US, real estate investment trusts American Realty Capital Properties and Cole Real Estate Investments have announced an acquisition agreement totaling $7.2 billion. American Realty Capital Properties did the buying, exchanging cash and stock for Cole, a REIT that went public earlier this year, listed on NYSE as COLE.

Included in the deal was about $4 billion in Cole’s debt, taken on by American Realty, who also paid a premium on Cole shares totaling 14% over the share closing price the day before the announcement.

Net Lease Consolidation

The deal is a major one in the triple net lease area, as tenants of the combined company now include net leasing national giants FedEx, Walgreen’s, and Home Depot.  The deal forms a pipeline of  lease payments almost directly to investors, as shareholders of REITs are paid usually 90% of earnings in the form of dividends.

Net leases leave maintenance and operations to the tenants.  The attraction to investors in trusts is double: first, lease payments under net terms have few or no offsetting costs, and second, the REIT rules compel earnings to show up as dividends.

According to NYT Dealbook, the acquisition is a second attempt on the part of American Realty this year to pull off the buy; a less friendly, unsolicited offer for Cole came from American Realty in March in the time leading up to Cole’s initial public offering.

The origins of the deal date to March, when American Realty made an unsolicited offer for Cole that would have derailed Cole’s move to go public. Cole rejected the offer and went on to list on the New York Stock Exchange. Since the listing in June, Cole shares have climbed more than 17 percent.

Nonetheless, American Realty still wanted to make a deal. It will pay 14 percent above Cole’s closing stock price on Tuesday of $12.82, and assume significant new debt in taking over the larger company.

“These two companies were meant to be together,” American Realty’s chief executive Nicholas S. Schorsch said in an interview. “This is a one plus one equals four or five scenario.”

Borders Ann Arbor HQ Books $10.5 Million Refinance

borders-hqNew York-based real estate investment banking firm Chesterfield Faring has announced a refinance of the Wickfield Center of Ann Arbor, MI, former corporate headquarters of the bankrupt and liquidated national bookseller chain Borders.

The refinance is in support of a bustling market in the former HQ’s space. The two-building complex, sporting a total of 330,000 square feet of rentable space, was sold to Hughes Properties earlier this year by Colliers International, who has been retained to list the available rental space.  The South Ann Arbor property has major tenants in Gold Star Mortgage, who is renting 68,000 sq. ft.  Colliers itself also rented 16,000 sq. ft to Prime Research, a strategic communication research firm.

The Prime Research lease appears to be part an parcel of a technology trend that some say felled Borders, a once mighty-bookseller.  In the Ann Arbor News, Brendan Cavender of Colliers International Ann Arbor who listed the building and represented PRIME in the deal said the new office’s footprint will cover about 85 percent of the second floor and Cavender said that another tenant is in final negotiations for the remaining office space.

“This is really a great development for the whole area,” Cavender said.

“The technology companies here are fueling growth in the retail and restaurant spaces as the new young employees move into the space. With Barracuda, Menlo, Google, and now Prime Research, you have a real density here of tech companies.”

Another Technology Vs. Traditional Retail Story?

The store closings of Borders in 2011 caused pain among fans of the bookstore business, a low-margin gentleman’s game that depends utterly on customer experience and a near-irrational expressions of customer loyalty.  The emotional investment of customers into Borders in its earliest days in Ann Arbor was the store-floor half of a love story that went all the way to the top management.  How did technology figure in its arc?

Technological innovation at Borders  – albeit of a decidedly pre-internet type – was strong.  Its inventory control system, developed in the 1970s and based on 3″ square cards was innovative and powerful enough to produce a spin-off business (Book Inventory Systems) that sold to independent bookstores around the world until 1994.

But it was a fateful decision about technology and internet retail in specific, some say, that sealed the fate of the global chain.

Most brick-and-mortar retailers had to make a decision in the very earliest part of the 21st century: was internet a distraction or was it a synergy?  Borders, like so many retail businesses faced a struggle with their own online presence, and in 2001 made the decision to outsource their online retail to Amazon.com.  That surrender to its most dangerous competitor was a disaster for Borders and a huge coup for Amazon. The highly personalized customer experience Amazon could deliver appealed to Borders customers far more than Borders expected.  The program would end in 2007 with Borders scrambling to reclaim their online heritage, but by then, industry observers say, it was too late.

 

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REALTORS® Conference And Expo 2013: Commercial Caffeinated Breakfast With Peter Kageyama

commercial-caffeinated-networking-breakfast

Once again the 2013 REALTORS® Conference and Expo is just around the corner.  November 8-11 in San Francisco’s Moscone Center is where this year’s commercial real estate practice program is running to keep you up to date on the sector’s many trends, tools and tactics for success.

This year sees another in the  Commercial Caffeinated Breakfast series at the Expo.  Gathering together commercial practitioners in the top morning networking event of the Expo has produced plenty of highlights in years past.  Extending the tradition this year, we welcome author and community development consultant Peter Kageyama to the lectern.

Peter is a community and economic development consultant based in St. Petersburg, FL. He’s got a unique background in creative arts that helps him demonstrate how innovation and creativity appear in property markets. He looks at what makes cities lovable, what motivates citizens to do extraordinary things for their places and how some cities use that energy to fill in the gaps that “official” city makers have left when resources disappear. Peter speaks about how we can turn peoples’ emotional engagement with their place into tangible action and use that excitement and energy as a much needed community development resource.

Tickets Are Limited!

Kageyama’s new book “For The Love Of Cities” uses economic, social and psychological perspectives to look at cities and property markets and to uncover the relationships that drive value and foster innovation.  Join Peter and our team at the Commercial Caffeinated Breakfast Saturday Morning Nov. 9th 7:30-8:45 at Moscone West, Room 2006.

Tickets are limited  and must be purchased in advance: If you’re already registered for the Conference, ordering tickets is easy!

  • Have your registration ID number and your credit card available
  • Then log in to the registration system under “Edit Existing Registration” with your conference ID.
  • Then click the “View/Modify” button (or simply purchase them during the registration process if you’re a new registrant).

If you do not have your registration ID number, contact Experient at [email protected] or 800-650-6893 (U.S/Canada)/847-996-5876 (outside U.S./Canada) to obtain it.

Register Now For The Expo!

3 reasons I Consider the IREM’s Fall Leadership a Can’t Miss Event

by Aaron Bosshardt

IREM Fall Leadership Conference
October 15-19, 2013
Westin Kierland Resort & Spa
Scottsdale, Arizona

IREM Fall Leadership Conference

This will be the fourth year in a row I have attended the IREM Fall leadership conference. Four years ago I went to the Orlando convention a new CPM, but I had more questions than a five year old on a road trip. Since then, I’ve learned a lot about property management and my company has grown accordingly. Knowledge is power and knowledge put to work is professionalism.

 

Normally after four years of any one venue you get a little tired and feel a little stale. But, there are three reasons I’m more excited than ever about this event.

 

IREM created an executive edge program this year. I’ll get one whole day to learn and network with other property management firm owners and executives. This is invaluable in a competitive field like commercial property management.

 

Now there is IREM’s members only Shared Interest Community. These are the LinkedIn groups by property type. We share ideas, problems, best practices and innovations on LinkedIn, but when we get together that’s when sparks fly! My only regret as the owner of a diverse firm is that I can’t get to all the different property types.

 

Finally, the IREM Foundation is having another super cool event “Boots and Buckles” The foundation provides scholarships for property managers to advance their education through IREM when they can’t afford to do it on their own. I know that getting a CPM isn’t cheap- but as someone who took that leap of faith in 2008 and was able to pay my own way, I can safely say that my CPM has earned me a return far greater than any other investment I’ve ever made in my career.

Did I forget to mention that the Foundation is also having a golf tournament?  Oh the sacrifices I have to make in the name of professionalism and education. See you in Scottsdale!

 

Aaron Bosshardt currently serves as the Chairperson of the Children’s Home Society of Mid Florida and the President of the Institute of Real Estate Management (IREM) Chapter 60. You can read the most recent coverage about him in the Gainesville Sun by clicking http://bit.ly/XybpaO

REALTORS® Conference And Expo 2013: Commercial Property Auctions

Jon Hjelm, ALC

Once again the 2013 REALTORS® Conference and Expo is right around the corner.  November 8-11 in San Francisco’s Moscone Center is where this year’s commercial real estate practice program is running to keep you up to date on the sector’s many trends, tools and tactics for success.

This year includes a session on auctions featuring a very unique pair of perspectives.  It can pay off to go beyond the usual listings and put in the work to find jaw-dropping bargains on all kinds of commercial property in all its sectors – land, office, retail, industrial, multifamily and specialty.  All find themselves on the auction block, and most are priced to move.  But finding the information about auctions in the commercial sectors is comparatively more difficult than in residential real estate.  Unique processes, customs and law apply, and all the  complicating factors that come with commercial property transactions aren’t any less prevalent in the auction arena.

Quentin Killian

Tapped to talk about this at the Expo are Jon Hjelm , ALC and Quentin Kilian in their talk “Real Estate Auctions: The Real Deal”.

Real Estate Auctions: The Real Deal

11/09/2013   |  09:00 AM – 10:00 AM
Location: Moscone Center, Rom 305

Property packaging and target marketing are key to both sides of the auction deal table, and Jon and Quentin have been there.  Don’t miss this unique and global perspective (Jon’s firm is based in Iowa and Quentin’s in Australia) at the Expo!

 

Register Now for the Expo

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REALTORS® Conference And Expo 2013: Richard Muhlebach

Rich Muhlebach
Rich Muhlebach

It’s that time again: the 2013 REALTORS® Conference and Expo is right around the corner.  November 8-11 in Moscone Center in beautiful San Francisco is were the action is and where this year’s commercial practice program is running to keep you up to date on the commercial real estate sector’s many trends, tools and tactics for success.

Register Now for the Expo

We’ll be taking a look at selected speakers in the commercial track over the next few days here at The Source.

Negotiating the Commercial Lease
Monday 11/10 11:00 AM – 12:30 PM
Location: Moscone Center, Room 305

The esteemed Richard Muhlebach, CCIM, CPM, CRE will tackle the commercial and legal issues in the negotiation of commercial leases. A 40-year veteran of the industry with a special touch for retail and tenant representation, Richard’s decades of experience on both sides of the landlord and tenant representation picture show the way to add value to your client no matter the position you find yourself in.

No stranger to the commercial program at the Expo, Rich’s recent Expo presentations have included Preparing To Lease And Represent Tenants and Renegotiating Leases And Representing Tenants In A Recession.   Rich is a sharp, approachable professional with the deep experience few in this business can claim — a can’t-miss at the Expo.

SCOTUS Turns Again To Takings And Land Use

U.S. Supreme Court building.

The Supreme Court gets to pick what cases it hears — and land is on the court’s mind lately.

Thousands of requests for cases are received every year by the Supreme Court. Each sitting justice has a crew of law clerks reading each request (called a petition or writ of certiorari) and these clerks compile memos about each case.  The justices read these memos, meet and vote, and if four of the nine agree to hear a case, then it is placed on the docket.   If enough justices don’t feel particularly compelled to hear a case, then the lower court’s judgement stands.

For whatever reasons, the pattern for the Roberts-led Supreme Court has been heavy on the land use and eminent domain related cases under the Fifth Amendment’s clause ” nor shall private property be taken for public use, without just compensation”.

Recent SCOTUS decisions in this area have gone against government and for land owners, including:

  • Koontz vs. St. Johns River Water Management District (as I wrote about at The Source here and here):  A Florida land owner was ordered as a condition of development of land he owned to improve drainage on an unconnected land parcel owned by the state and managed by the Management District.  SCOTUS eventually ruled in favor of the land owner.  The decision’s effect in other states is likely to handcuff local governments / permit-issuing authorities in what conditions they can attach to land development permits.
  • Arkansas Game And Fish Commission vs. United States:  SCOTUS ruled that seasonally recurring, temporary flooding of land can constitute a taking entitled to just compensation.
  • Horne vs. Dept of Agriculture:  Where the court affirmed the right of California raisin growers to claim a taking as a defense to enforcement action made by the government due to alleged non-compliance with regulatory efforts.  This case reversed a long-standing  lower court case from the 1980s that has stood in the way of takings claims. The reversal has also shown that “just compensation” is no longer the only remedy a party claiming a taking can request.

Before the court now is Marvin M. Brandt Irrevocable Trust vs. United States, a land use case that will be of interest to any broker, owner or developer of land with railroad right-of-ways.  While complex, the case will decide issues concerning whether interest in land with such right of ways is held as fee simple or as an easement, and what happens when railroad use is discontinued.

The ramifications of Brandt will likely touch all 137,000(!) miles of railroad crisscrossing the US, meaning it’s a good idea to stop, look and listen for the decision in the spring.

Broadstone Real Estate CEO Amy Tait Talks Reg D Solicitation Rules

no-soliciting

 

In this week’s video from The Street, Broadstone Real Estate CEO Amy Tait talks about the new Reg D solicitation rules under the JOBS act from the perspective of a leader of a company in the REIT and commercial property management spaces.

As written here before, recent deregulation of SEC rules concerning the raising of capital for investments including commercial real estate aim to make it easier for sponsors of investments to pitch those investments to more people.  Recent passage of the Jumpstart Our Business Startups Act (JOBS) signed by President Obama has done away with older barriers to those kinds of solicitations.

New Rules, New Processes

According to Amy Tait, under the previous Reg D regime, sponsors of an investments were prohibited from public pitches including web communications, or any interviews concerning offerings.  That’s over now, and a wave of crowdsourcing for commercial real estate investment is intensifying.

Reading of the SEC regs  also shows their intent was to ensure that investors meet certain criteria of sophistication and wealth, which tended to limit the population to institutional investors or high net worth individuals.

It’s interesting to listen to Tait, a REIT assembler and manager discuss what has and hasn’t changed.  The vetting of investors hasn’t changed — high net worth and institutional savvy are still highly sought after — but what has changes is the process of verification of the facts about the prospective investor.

Down To Brass Tacks

With a twinkle in her eye, Tait then does what couldn’t be done before, at least on-camera: pitches a pair of private non-traded REITs, one in triple-net retail, industrial and medical office properties, the other in residential.  Of the net lease product, she announces the dividend is paying 6.6% , then touts a climbing share price and dividend sheltered from depreciation expense, plus happy investors.

One thing’s for sure: we can expect a great deal more communications from sponsors of REITs and other platforms/deals in the coming years under the new, more lax solicitation rules.