Hallmark's Blog

Excellent to remember .......

2012-02-08T13:09:00.002-08:00

It's not your client's job to remember you. It's your obligation and responsibility to make sure they don't have a chance the forget you. by P. Fripp

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Google ME: Wes Hallmark
Find me on: Facebook, Linked In, Twitter

The Year Ahead - 2012

2012-02-02T07:40:00.000-08:00

Click on the link below for a good read from our President and Chief Executive Officer here at Sperry Van Ness!

The Year Ahead - 2012

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

3 SPACES STILL AVAILABLE - AMARILLO, TEXAS

2012-01-24T12:48:00.000-08:00

26 Mart Shopping Center located in Amarillo, Texas

3400 sf space now leased, 3 spaces still available:

2,000 to 6,078 sf spaces, $6-$9 sf/yr/nnn
Great location, minutes from I-40
Flex space

click here for listing website

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Sperry Van Ness / Hallmark & Associates, Inc.

2012-01-24T09:36:00.000-08:00

Why choose Sperry Van Ness? Click on the link below, read and stay informed!

The SVN Difference

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Google ME: Wes Hallmark
Find me on: Linkedin, Twitter, Facebook

Value Add Opportunity - Caprock Shopping Center NOW FOR SALE - Lubbock, TX

2012-01-19T08:22:00.000-08:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Caprock Shopping Center - Lubbock, Tx

11% CAP

National Anchor Tenants

65% Occupancy

Adjacent to successful Home Depot Store

click on link for Flyer and Confidentiality Agreement

Hallmark Newsletter January 2012

2012-01-17T07:40:00.000-08:00

Click on the link below to view this months newsletter.

Hallmark Newsletter January 2012

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Prime Junior Anchor Space For LEASE - HEREFORD, TEXAS

2011-12-29T07:34:00.000-08:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Former grocery store space, this 12,673 sf space works for a variety of retail uses!

Excellent customer draw from Tractor Supply

Competitive lease rate

Great store front visibility

click on link to view listing website

Are You Ready ....

2011-12-28T08:11:00.000-08:00

Just a few more days until we ring in 2012. Looking forward to a great New Year! Be sure and look me up in the coming year for all your commercial real estate needs.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.
8008 Slide Road, Suite 1
Lubbock, Texas 79424
806-797-2190 office
806-797-4160 fax

hallmarkw@svn.com
www.hallmark-associates.com

Google me: Wes Hallmark
Find me on: Linkedin, Twitter, Facebook

Hallmark & Associates, Inc. HOLIDAY HOURS

2011-12-21T12:45:00.000-08:00

REMINDER: Hallmark & Associates, Inc. office will be closed THURSDAY DECEMBER 22 - MONDAY DECEMBER 26.

Wishing You And Yours A Safe And Warm Holiday!

Wes Hallmark
Senior Invesment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Hallmark Newsletter December 2011

2011-12-20T08:39:00.001-08:00

Click on the link below to read my newsletter!

Hallmark Newsletter December 2011

Warmest wishes to you during this Holiday Season!

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Additional Lease Space NOW AVAILABLE - Plainview, Texas

2011-12-15T09:27:00.000-08:00

Presented by:
Wes Hallmark, CCIM
Sperry Van Ness / Hallmark & Associates, Inc.

Multiple spaces available for lease, excellent location, with 9282 sf space NOW AVAILABLE FOR LEASE too.

High traffic location

Ideal for Owner/User

Excellent customer draw from existing Dollar General & Goodwill Store

Competative lease rates!

click here to view listing website

Hallmark Newsletter November 2011

2011-11-18T12:44:00.000-08:00

Enjoy!

Hallmark Newsletter November 2011

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Google ME: Wes Hallmark
Follow ME: Facebook, Linkedin, Twitter

Seguin Crossroads Shopping Center - Seguin, TX - MULTIPLE SPACES FOR LEASE

2011-11-16T08:18:00.000-08:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Seguin Crossroads Shopping Center - Seguin, Texas

Flex space!

Competative lease rates.

Excellent customer draw from National retailers.

Easy access to/from Interstate 10

click here to view this listing website

Additional contact: Gloria Elder, CCIM - w/Karen McMillan Realtors - 830-386-0644 - gloriajane@hotmail.com

Cinemark-Tinseltown FOR SALE - San Angelo, Texas

2011-11-07T08:46:00.000-08:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Cinemark-Tinseltown - located in San Angelo, Texas

Eight years remaining on primary lease term

Four - 5 yr renewal options with increases

7.75% CAP rate

Rent bumps each five years

National retailers located in immediate area

click here to view this listings website

Additional contact: Jack Brower, CCIM - Sperry Van Ness - 775-883-3936 - browerj@svn.com

Taylor Warehouse FOR SALE - San Angelo, Texas

2011-11-04T11:54:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Taylor Warehouse - For Sale

Leased to 6/30/2018

55,000 sqft Office/Warehouse

Tax Abatements

100% Inventory Tax Exemptions

click here to view listing website

Additional contact: Jack Brower, CCIM - Sperry Van Ness, 775-883-3936, brownerj@svn.com

STILL AVAILABLE ... OFFICE / RETAIL / SERVICE CENTER - LUBBOCK, TEXAS

2011-11-03T13:00:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates

REDUCED !!! 4000 sf mixed use space for office / retail

Remodel allowance available

$1950 mo includes base yr. tax / insurance

click here to view listings website

Multiple Spaces For Lease - AMARILLO, TEXAS

2011-10-21T13:57:00.000-07:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Find the space that's right for you: 26 Mart / Southtree / Avondale II - Shopping Centers of Amarillo, Texas

Competative lease rates!

Flex Space

Excellent customer draw from existing Anchor / Shadow Anchor retailers

click here for 26 Mart

click here for Southtree

click here for Avondale II

Hallmark Newsletter October 2011

2011-10-20T11:03:00.000-07:00

Hallmark Newsletter October 2011

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Google ME: Wes Hallmark
Follow me on: Facebook, Linkedin, Twitter

Multiple Spaces Available For Lease

2011-10-13T14:33:00.000-07:00

Presented by:
Wes Hallmark, CCIM
Senior Invesment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Multiple spaces available for lease in STONEGATE SHOPPING CENTER - PLAINVIEW, TX

700 sf - anchor space of 60,643 sf

Regional customer draw as well as shopping center anchor draw from Tractor Supply

Free RENT - ask for details!

click here to view listing website

U.S Office Vacancy Rate Falls

2011-10-13T14:21:00.000-07:00

More updated commercial real estate news below:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

************************************************************************************

U.S. office vacancy rate falls
* Rents rise for fourth straight quarter

Oct 5 (Reuters) - The U.S. office vacancy rate fell in the third quarter and rent increased for the fourth straight quarter, but gridlock in Washington and economic uncertainty slowed tenants' desire for more office space as the quarter progressed, according to an widely followed industry report.
The U.S. vacancy rate slipped to 17.4 percent at the end of the third quarter from 17.5 percent in the prior quarter and from a cyclical high of 17.6 percent set at the end of last year, according to a quarterly report by real estate research firm Reis Inc.
"We're in the early innings of a recovery here," Reis economist Ryan Severino said.
The average U.S. asking rent grew by 0.4 percent to $27.85, Reis said. Factoring in months of free rent and other perks, effective rent rose 0.5 percent to $22.39, its highest since the fourth quarter 2009, Reis said. Effective rent was up 1.6 percent from a year earlier, Reis said.
Behind those figures were tenants' demand for space, as they rented 6.89 million square feet more than they gave up, the highest amount in nearly four years. That came despite the arrival of 3 million square feet of new space, Reis said.
That could be a good omen for some large real estate investment trusts such as Boston Properties Inc. But the appetite slowed month by month to about 1 million square feet in September from 2.1 million in August and 3 million in July, as the downgrade of U.S. debt and haggling over raising the debt ceiling spooked businesses, Reis said.
Although many recent economic indicators, such as an upward revision of second-quarter U.S. gross domestic product, do not point to a recession, optimism faded among fears of another recession spurred on by Europe's debt problems, the stalemate in Washington, stubbornly high U.S. unemployment and weak job growth, Severino said.
"I'm cautiously optimistic that negative sentiment and fear is ephemeral," Severino said. "I'm going to cross my fingers."
By area, vacancies in New York, by far the largest U.S. office market, fell 0.1 percentage point to 10.6 percent, while effect rent rose for a fifth consecutive quarter, increasing 1.3 percent to $45.82 per square foot, Reis said.
In another report, Eastern Consolidated said that sales of New York office buildings fell in the third quarter to $6.4 billion from $5.1 billion, with the average price declining to $490 per square foot from $505 per square foot.
Washington, D.C. was still the tightest market with a vacancy rate of 9.3 percent. But its lead over New York narrowed as New York continued to recover while Washington, D.C. is contending with a pullback in government leasing, Reis said.
On the other end of the spectrum, Detroit remained the bleakest market with a vacancy rate that was flat at 26.7 percent, as it still grapples with a weak manufacturing sector.
During the quarter, 10 out of 79 markets that Reis covers registered quarterly effective rent declines, down from 22 a year earlier. San Francisco saw the highest year-over-year effective rent increase, at 7.8 percent.

(Reporting by Ilaina Jonas in New York; Editing by Steve Orlofsky)

Retail Spaces For LEASE - Plainview, Texas

2011-10-13T10:00:00.000-07:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Located in Running Water Draw Shopping Center - Plainview, Texas

2,750 sf space, ideal shop space!

4,000 sf space, good street visibility!

Good customer draw from Dollar General & Goodwill

click here to view listing website

8008 Slide Road, Suite 1, Lubbock, Texas 79424

2011-10-10T07:43:00.000-07:00

You are cordially invited to stop by my office at the above address. I'm available to discuss all your commercial real estate needs. Whether your buying, selling, leasing, I can help you determine what makes the most sense for your commercial needs.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Google ME: Wes Hallmark
Follow me: Linked In, Facebook, Twitter

Investors Flocking to Safety of CRE

2011-10-05T12:07:00.000-07:00

Good information article to read below ...

Wes Hallmmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

******************************************************************************

Commerical real estate retained its first-place rating among institutional investors in the second quarter of 2011, as investors focused on safety, stability, and cash flow in their investment holdings. This is according to a new report from the Real Estate Research Corporation (RERC) based in Chicago.

Although investment survey respondents slightly lowered their rating of real estate to 6.2 (on a scale of 1 to 10, with 10 being high), the rating far outpaced those for the other asset classes, including stocks with a rating of 5.2, cash at 3.8, and bonds at 3.6.

As described in the recently-released summer 2011 issue of the RERC Real Estate Report, "Search for Safety," RERC's return versus rish rating for commercial real estate overall increased to 6.1 during second quarter. This is no surprise, given the recent volatility in the stock and bond markets and respondents' views that the return from commercial real estate easily outweighs the risk. However, it is important to note that this score is the highest that the return versus risk rating has been since the Great Recession began, and is a dramatic shift upward from the previous quarter when the rating had declined and the stock market was flying high.

The apartment sector is the only property type that has a higher return versus risk rating than commercial real estate overall. However, all property types have a higher rating than 5.0, which is a good indication that the returns are perceived to be greater than the risk associated with them, at least for the near term.

Actual returns for institutional real estate seem to support this view, with current 1-year trailing total returns at 16.7%, according to the NCREIF Property Index. This level of returns has not been seen since mid-2007 - before the credit crisis and Great Recession began. With respect to dividends, the current 1-year income return is 6.4%m while the average dividend over the past 10 years is 6.9%.

With a few exceptions, RERC's required going-in capitalization rates and required pre-tax yield/discount rates declined from 10 to 60 basis points during second quarter 2011, with the largest decrease noted in CBD office and regional retail mall properties. "Clearly, investors are bidding up properties as they flock to safety, thereby driving the required rates of return lower," notes the report.

Article provided by: Ben Johnson, Sept. 2011

Hallmark Newsletter September 2011

2011-09-20T12:29:00.000-07:00

Hallmark Newsletter September 2011

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

STILL AVAILABLE ... Happy Valley Ranch, Bradshaw Texas

2011-09-19T13:43:00.000-07:00

Presented by Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

1253 ac. hunting/recreational/party ranch

Excellent game cover for turkey, quail, deer

Includes historic rustic rock hunting lodge, bunk house

click here to view this listings website

From the words by Billy Graham .....

2011-09-12T09:27:00.000-07:00

"When wealth is lost, nothing is lost, when health is lost, something is lost, when character is lost, all is lost"

Certainly something to think about.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Commercial Real Estate Brokers/Advisors/Investors .. KNOW YOUR STUFF!

2011-09-08T13:14:00.000-07:00

Has any one ever experienced being in the middle of a commercial transaction to suddenly realize you're the one at the end of the walking plank about to go over? In the days/months working up to this moment that you're experiencing, you thought your best interest and your property was in the hands of a commerical real estate professional, only to find out that you're drowning and so are your assest(s).

Once you have the right property, whether your buying, selling, leasing, it's a must you are being represented by experience and led by knowledge. Being represented by someone who knows topics such as zoning, land use, title issues, appraisals, disclosures, etc., is imparative and could cost you thousands of dollars if your representation is lacking in any one of these areas.

Do your due diligence and take the time to confirm the experience and education of your repesentation. The CCIM Institute, www.ccim.com, awards the CCIM designation to commercial brokers that have satisfied rigid educational and transaction volume requirements. It's the highest level designation available in commercial real estate.

Know your stuff!

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Near Dallas, Texas - State Leased Bldg. FOR SALE

2011-09-08T11:25:00.000-07:00

STILL AVAILABLE !!!

Presented by:Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

Major Tenant - State Health Dept.; 10yr lease signed Aug. 2010

9% CAP - Annual Rent Increases

Tenant pays utilities & janitorial

Sperry Van Ness Investment Offering

(click on link above for additional property information)

Great Value Added Retail Property - Fort Smith, Arkansas

2011-09-07T08:34:00.000-07:00

Presented by
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Anchored by Hastings Books and Video

Across from St. Edwards Mercy Hospital

Solid asset with good upside

click here to view this listing website

Market News.

2011-09-06T14:15:00.000-07:00

To help keep you even more up to date with the latest market news / trends, visit my website and click on the new Market/Trends tab for RCA's reporting on Retail, Apartments, Hotels, Industrial and Office properties. Then give me a call for a free consultation on your commercial real estate property(s).

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Caprock Shopping Center - Spaces Available for LEASE - Retail or Office Use - Lubbock, Texas

2011-09-02T10:51:00.000-07:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

1,500 sf to 41,704 sf spaces available

Centrally located, convenient to Texas Tech University

High traffic counts on 50th Street shopping center location

click here to view listing website

Wall Street Journal talks about ....

2011-09-02T07:25:00.000-07:00

Check it out .. Wall Street Journal front page (online) this morning talking/prediciting about economy, job growth, full time work.

http://online.wsj.com/home-page

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

My Services Brochure

2011-08-31T13:09:00.000-07:00

Please click on the link below to review the variety of services I have to offer for all your commercial real estate needs. I look forward to hearing from you.

http://docs.svn.com/SperryVanNessHallmarkAssociatesSERVICESBROCHURE

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness/Hallmark & Associates, Inc.

Lubbock, Texas Economy.

2011-08-31T12:38:00.000-07:00

With a world class Univeristy at the heart of the city, Texas Tech University, this is only one reason why Lubbock is considered a stable place to live and work during our ever changing economic times. Lubbock also provides a diverse and still thriving manufacturing and agriculture environment. And is ranked as one of the top 12 mid-size cities that offers the lowest business related costs for utilities, property taxes, etc.

If you find yourself BUYING, SELLING, LEASING commercial real estate in Lubbock, Texas, I invite you to stop by my office at 8008 Slide Road, #1, let's visit and see what the best business decision is for you.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Donate Today !!

2011-08-30T13:05:00.000-07:00

If you have a favorite organization you typically donate to, I encourage you to do that today as that may be the next group called upon to help the Hurricane Irene victims that are in need!

Warmest Regards,
Wes Hallmark

Another good quote ....

2011-08-30T08:37:00.000-07:00

"Everyday I get up and look through the Forbes list of the riches people in America. If I'm not there, I go to work." by Robert Orben

Wes Hallmark, CCIM
Senior Invesment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Hallmark Newsletter

2011-08-30T08:18:00.001-07:00

Click on the link below to view my newsletter ....

http://docs.svn.com/HallmarkNewsletterAug2011

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Remember 9/11

2011-08-19T11:45:00.000-07:00

In the coming weeks there are several memorials and documentaries remembering 9/11. I encourage you to take some time and see how America has been rebuilt from that fateful day. I am pleasantly inspired by all the progress that has taken place, I hope you will be too.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Famous Quote.

2011-08-18T13:10:00.000-07:00

I, like everyone else enjoy a good quote. This particular one I came upon is exceptionally true in todays techy world ....

I do not fear computers. I fear the lack of them.
by Isaac Asimov

Something to ponder!

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

Visit My Website or Google Me !

2011-08-17T09:23:00.000-07:00

Please take a moment to visit my website at:

http://www.hallmark-associates.com/

or

Google me, Wes Hallmark

You will find a great number of resources on my website. Browse through the commercial listings I have that are available! Review my Services Brochure!

Wes Hallmark, CCIM
Sperry Van Ness / Hallmark & Associates, Inc.

State Leased - Olney, Texas - FOR SALE, 100% Occupied

2011-08-08T08:00:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

TX Dept. Health & Human Services leased through Aug. 2016

Long term tenant

Renovations completed include NEW a/c

click here to view listing website

AT&T Parking Lots FOR SALE, Lubbock, Texas

2011-08-04T14:32:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

AT&T leased through May 2016

Built to suit in 2001

Single Tenant - Absolute Net lease

click here to view listing website

4th & Valencia VACANT LAND - Lubbock, Texas

2011-07-21T09:44:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

$65,000 Price Reduction

4.77 acres Development Land for retail, office, shops, or storage

$1.32 sf

click here to view listing website

PRICE REDUCED - Microtel Hotel Development, Orange Texas

2011-07-14T09:43:00.000-07:00

Presented by:
Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Price Reduction to LIST PRICE and EXTRA Land price

Approved site for 74 room Microtel Hotel

Convenient to Interstate 10

Price includes all A&E and Hotel Franchise fee

click here to view this listings website

Investment Property Offering - State Leased Office Building - PETERSBURG VA

2011-07-13T13:17:00.001-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

3% annual rent increases

100% occupancy

Long term State of VA tenant

click here to view listing website

Investment Property Offering - State Leased Office Building - LAREDO TX

2011-07-13T13:12:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

100% occupancy

Long term State of Texas tenants

Functional interior office spaces

Detached storage/warehouse

click here to view listing website

Investment Property Offering - State Leased Office Building - GILMER TX

2011-07-13T13:07:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

100% occupancy

Long term State of Texas tenants

Functional interior office spaces

click here to view this listings website

Investment Property Offiering - State Leased Office Building - ALICE TX

2011-07-13T12:57:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

100% occupancy

Long term State of Texas tenants

Rennovations completed in 2003

Located in newer commercial area

click here to view listing website

Retail Space for SALE or LEASE - LUBBOCK TEXAS

2011-06-17T12:36:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc.

Vacant building ready for immediate use

Lease rate $4.00 NNN sf/yr

Excellent store front visibility, high traffic counts

Interior rennovations

click here to view this listings website

Lubbock, Texas Industrial Market

2011-05-25T07:58:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates

written for the May 2011 issue of TEXAS REAL ESTATE BUSINESS MAGAZINE

The Lubbock industrial real estate market continues to be very stable due to a fairly healthy local economy. With unemployment at only 5.8% employers have slowly been expanding their businesses and their facilities. While there isn't any speculative industrial construction ongoing occupancy rates are at multi-year highs and there has been some owner occupied new construction over the past year. Occupancy rates are estimated to be in the high 80's to low 90% range with most vacancies in older properties. A LoopNet search for industrial properties for lease only revealed one property over 50,000 sf available in the market. Industrial/warehouse space in the 5,000 to 25,000 sf range is readily available with lease rates for older properties with lower ceiling heights being in the $1.50 - $2.50 sf/yr nnn range. Newer buildings with better amenities are leasing at $3 - $4 sf/yr nnn. There are very few lease concessions available to tenants. There have been very few sales in the last year.

Most of the new industrial construction over the past several years has been build to suits for owner occupants in the 1,100 acre City of Lubbock Industrial Park and Rail Park located along Interstate 27 north of town by the Lubbock International Airport. The park is operated by the Lubbock Economic Development Alliance who reports that their $20 million investment in land and infrastructure has created over $124 million in private investment. It has been a particularly attractive area for new businesses relocating to the area. Employers bringing new jobs to the city are able to get fully developed, ready to build industrial sites for free along with employee training benefits and property tax abatements on new plant and equipment.

With last year being one of the better cotton crops in recent years and with record high cotton prices the trickle down effect through the local economy has meant improving business for many sectors. The outlook is for steady, continued growth in the industrial sector and improving market lease rates.

Burton Warehouse - Orange, TX - For SALE or LEASE

2011-05-24T12:38:00.001-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates

Vacant warehouse ready for immediate use

If lease - tenant pays tax / insurance

Ideal for dry storage, parts house

click here to view listings website

Burton Liquor Store - Orange, Tx FOR SALE/LEASE

2011-05-23T14:04:00.000-07:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates

Includes liquor license by purchasing LLC

NEW parking lot

Property is firehouse that was remodeled to liquor store

click here to view this listings website

Hallmark Newsletter May 2011

2011-05-16T11:41:00.000-07:00

Please click on the link below to read my May Newsletter.

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates

http://www.icontact-archive.com/qBrsGr8VFWdyW-p4X9iOhSMKw2hRufeE?w=1&sms_ss=blogger&at_xt=4dd16fc462dfa94e%2C0

Vacant Warehouse for SALE - Midland, Texas

2011-04-21T13:26:00.000-07:00

Present by:
Wes Hallmark, CCIM, Senior Invesment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

New Roof!

Ideal for Owner/User

Convenient access to Interstate 20

Located in Commerical & Industrial district

click here to view this listings website

Texecutive Plaza FOR SALE - Beaumont, Texas

2011-04-15T13:33:00.000-07:00

Presented by Wes Hallmark, CCIM Senior Investment Advisor Sperry Van Ness / Hallmark & Associates, Inc.

3 free standing buildings - one multi-tenant (( 50% leased to State of Texas Agencies ))

10.58% CAP @ 90% Occupancy - UPSIDE in Leasing

Close to large regional Parkdale Mall and next to Target anchored strip center

click here to view this listings website and for printable brochure

Office Building - For SALE or For LEASE

2011-04-14T11:16:00.000-07:00

Presented by Wes Hallmark, CCIM Senior Investment Advisor Sperry Van Ness / Hallmark & Associates, Inc.

ATTRACTIVE Lease Rate!

100% Occupancy - 3 State Leased Depts. leasing until Nov. 2011

Located in busy Midland, TX CBD with easy access to I-20

Remodel allowance available

click on link for additional info and for printable brochure

Accessories Store FOR SALE .. Ideal for Owner/User

2011-03-30T12:40:00.000-07:00

Presented by:Wes Hallmark, CCIM Senior Investment Advisor Sperry Van Ness / Hallmark & Associates, Inc

Includes Main Showroom

Steel Building located in rear

Only accessory store in immediate area

Will do short term Lease Back until new facility is built

http://sale.svn.com/messer.accessory.50th

click on link above for additional info and printable brochure

Ideal for Owner/User .. Dealership Lot for Sale ....

2011-03-28T11:27:00.000-07:00

Presented by:Wes Hallmark, CCIM Senior Investment Advisor Sperry Van Ness / Hallmark & Associates, Inc

Property/space can be used for a variety of uses

C-4 Zoning

High traffic counts

Short term lease back until/if new dealership built

http://sale.svn.com/messer.avenue.q

click on link above for additional info. and printable brochure

Office / Warehouse for Sale - LUBBOCK, TEXAS

2011-03-23T14:26:00.000-07:00

Presented by:Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

7111 & 7113 Santa Fe Drive
Must purchase both together
Ideal for Owner/User plus rental income

http://sale.svn.com/santa.fe.drive

click on link above for additional information and printable brochure

Happy Valley Ranch for Sale .......

2011-03-16T11:40:00.000-07:00

Presented by:Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

1253 ac. hunting/recreational/party ranch
Excellent game cover for turkey, quail, deer
Includes historic rustic rock hunting lodge, bunk house

Sperry Van Ness Investment Offering
click on link for additional information and printable brochure

The Climate for Group Investing

2011-03-15T13:17:00.000-07:00

You may recall in earlier months I reported that in 2011 the commercial real estate market and investing will have an upside and we will gradually dig out of the recession. Below is a great artcile elaborating on just one of the many ways 2011 is bouncing back.

Wes Hallmark, CCIM
Sperry Van Ness / Hallmark & Associates, Inc.

**********************************************************************************

Syndications offer a ray of sunshine for transaction brokers.

Today’s stormy real estate weather may be a good time for commercial real estate professionals to consider syndication as a way to expand their business opportunities. In particular, one of the dark clouds hovering over commercial real estate — less traditional debt financing — often encourages the growth of real estate syndication transactions.

Syndication is merely the pooling of resources from multiple investors rather than relying on one investor to complete a transaction. Today’s tight lending has created an environment where multiple investors are needed to pool their resources to purchase commercial real estate. This offers a chance to specialize as syndicators or to create a new business line providing group investing. For CCIMs who are willing to face a couple of challenging issues, the syndication business can be quite lucrative.

Selling the Sizzle
The current syndication market appears to be a direct result of the collapse of the commercial mortgage-backed securities financing market in August 2007 and the subsequent absence of traditional sources of debt for the purchase of commercial investment real estate. (See “Syndication History.”) But despite this opening created by tight credit markets and the potential to purchase properties at discounted prices, syndicators still face two main challenges today when talking to potential investors.

Investor hesitation.
While abundant investment cash appears to be available, syndicators report that before they can present a particular offering to a potential investor they must take three steps. First, they must gauge the investor’s interest in the broad area of commercial and investment real estate. Not every investor is interested in investing in real estate during the current market, but those who are appear to be interested in current cash flow, upside potential through positioning a property, or buying a property at what they believe is a below-market price. They also see stability in the real estate market when compared to the uncertainty in other investments.

Once past that barrier, syndicators need to educate potential investors on the benefits of the syndicator’s particular property focus such as apartments, self-storage, or development. Syndicators must identify the economic benefits of their product niche and match them to the economic benefits the investors are looking for. For example, a single-tenant, net-leased property will appeal to security-minded investors, but a raw land speculative development appeals to a different investor group.In addition, the syndicator’s track record, educational background, and individual investment experience will be reviewed before the potential investor decides to invest with the syndicator.

Once those issues are resolved, investors are willing to look at a particular offering. But too often syndicators start by trying to sell the offering without first getting confirmation from the investor.

Securities regulation.
Real estate professionals themselves often are hesitant to get involved with the highly regulated area of securities, which includes group investing.

When a syndicator asks an individual to invest money in a common enterprise such as a limited liability company and the investor expects to make a profit, and the profit will happen as a result of the syndicator’s action, it is likely that the investment will be deemed a security — even if the investors are friends or family.Every security offered must be registered with the Securities and Exchange Commission unless it is exempt. The syndicator must employ a securities attorney to guide the offering through state and federal securities laws that cover everything from what an investor must be told, to how the syndication can attract investors without violating the available exemptions, to the expensive and time-consuming process of registration.

Even though a security is being offered, the syndicator rarely needs a securities license as there is an issuer exemption similar to the “for sale by owner” position in real estate. Syndicators can sell the securities they issue without a license, but they cannot sell anyone else’s and no one can sell theirs without a license.Every syndication offering has its own structure of investor returns and syndicator compensation. Syndicators should identify the fees and cash distributions they will take during the life of the project and then use a present-value approach to determine the compensation value in today’s dollars and balance the compensation against the perceived risk. Discount rates used by syndicators generally range from 15 percent on a relatively risk-free offering to 30 percent on a development project.

Inexperienced syndicators sometimes structure the transaction to maximize yield to the investor and then just take what is left over. This is the wrong approach. The syndicator must first determine the appropriate level of compensation for the risk taken. Then the syndicator should determine if the amount left for the investors is adequate to attract the necessary capital. If it is not, the offering should be abandoned. An inappropriate approach may leave syndicators in a position where they are assuming all of the risks with few rewards.

Syndication Basics
The predominant syndication vehicle today is the limited liability company. The LLC entity offers the manager and the investor limited liability, while allowing the investors to be involved in management, depending on the language of the operating agreement. Most investors choose not to be involved in the day-to-day management, but the LLC format provides the option, as opposed to the more restrictive limited partnership format. The LLC structure provides for three types of offerings.

Specific offering.
The syndicator identifies one or more specific properties to be acquired in the offering and raises the amount of money needed to acquire the identified properties. This allows the investors to examine each property and make a decision regarding the investment potential of each property before they invest. This is the structure most often used and many syndication sponsors report that it is easiest to raise money with this strategy.

Semi-specific offering.
The syndicator identifies one or more specific properties to acquire and presents a business plan to the investors to raise funds to purchase additional properties that have not yet been identified. This offering is popular for syndicators who want to provide diversification to their investors and raise larger amounts of money without multiple offerings.
Blind pools. The syndicator presents a business plan to the investors explaining how the syndicator will go about acquiring properties but does not identify specific properties. The investors must understand the business plan, see its value, and be convinced that the syndicator can succeed with the plan. Generally the syndicator must have a track record of doing specified or semi-specified offerings to be successful in raising capital for a blind pool.

REITs.
While not a vehicle every syndicator can tackle because of their complexity and cost, real estate investment trusts are very effective for pooling large amounts of debt or equity. In effect, a REIT is a corporation that issues shares to its investors. However, a REIT may avoid taxation at the corporate level under certain rules that include the requirement of having a minimum of 100 investors. The startup costs are substantial and the syndicator must deal with complex state and federal regulations. While the REIT may not pay taxes, the distributions to the shareholders may be taxable. There are non-traded REITs that are private offerings where the shares are not traded on any stock exchange and provide limited liquidity for investors. Publicly traded REITS listed on the various stock exchanges do provide transferability of the shares.

Investor profiles.
Individual investors have the most interest in syndications. These investors may not be interested in or capable of acquiring and managing commercial investment real estate by themselves. They are willing to pool their equity with others so that they can be part of an investment in a larger piece of property and take advantage of professional management. Many individual investors like the diversification available to them when they purchase interests in several syndications.

Some institutional investors also are actively investing in syndications, placing their clients’ funds into institutional-quality real estate managed by syndicators with professional management skills.

Syndication Financing.
Syndicators today face the same issues as any buyer when it comes to the availability of debt financing for commercial real estate. But syndications face additional hurdles in the underwriting process. The lender underwrites the property looking to see if the property can support the proposed loan. Lenders also underwrite the syndication group to determine creditworthiness, net worth, liquidity, and local property management expertise. They often require the group to personally guarantee a portion of or the entire loan.

Currently, multifamily appears to have the best financing potential through the government agencies. Regional banks where the syndicator has an established relationship also are a source for financing, and some life companies may finance other property types.

Depending on the particular transaction, it is not unusual for the lender to require that the syndicator have a net worth in an amount equal to or larger than the amount of the loan requested. The LLC often is required to have liquid cash equal to six months to 12 months of debt service. The lender also looks to see if there is local property management in place. These requirements often require the syndicator to involve sponsors or credit enhancers in the transaction, which usually increases the cost of the syndication.

Lenders also are interested in members of the investor group who are not going to take an active role in management. Generally a lender will want to underwrite any member of the group that has more than 15 percent to 20 percent ownership in the group. Members also may be asked to sign personally.

Today’s lack of available debt financing is driving investors to pool their resources to acquire commercial real estate. CCIMs considering the opportunity to provide services to these investors should make sure they understand all the issues involved.

Article provided by: Eugene Trowbridge, CCIM, JD

UPSCALE Multi-Family Investment Property Offering

2011-03-03T12:32:00.000-08:00

Presented by:Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

Assumable Financing Available
Prime Location ( NW medical sector/ new Westgate Mall area )
Property in excellent condition

http://sale.svn.com/chasewood

(( click on link for additional information, printable brochure available from download ))

Lease Offering - Lubbock TEXAS

2011-02-16T11:35:00.000-08:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

3 Private Offices
Coffee Bar
Private Restroom

Sperry Van Ness Lease Offering

(click on link for additional property information)

Top Three Things To Know When ......

2011-02-14T10:31:00.000-08:00

Top Three Things To Know When
Buying/Selling/Leasing Commerical Real Estate

1. Know the market you are buying/selling/leasing in.
2. If buying, get pre-approved
3. Know the Advisor/Agent you are working with to represent you in the transaction

Knowledge is key! And of course there are a number of other factors you should educate yourself on when going forward in the transcation, but keeping these three on TOP of your list will assuredly help provide a smooth and successful experience.

All contracts are the same, but every transaction is different because of the multiple people involved bringing different views, personalities, etc. to the table, which can sometimes be a distraction away from the actual business at hand. Keeping focused is also key.

Let me help take the worry out of your next transaction. Having 32 yrs. of experience in the commercial real estate business, I pride myself on getting you to the closing table or representation of a lease that works for you. Whatever the business is, I will ensure a successful transaction in the end.

I encourage you to view my video below, again or perhaps for the first time.

W. Wesley Hallmark , CCIM Senior Investment Advisor
Sperry Van Ness Hallmark & Assoc., Inc.
hallmarkw@svn.com www.svn.com

Click here to view my video and receive market reports

Google me: Wes Hallmark

This office independently owned and operated

Investment Property Offering

2011-02-08T13:38:00.000-08:00

Presented by:

Wes Hallmark, CCIM
Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates, Inc

North University Land, Lubbock TX - 15.625 Acres
Hard Corner Commerical Zoned Development

Sperry Van Ness Investment Offering

Counting Leases Before They Hatch

2011-01-18T10:17:00.000-08:00

Whether you decide to invest or lease, call me, I will help you find the right property that fits your business needs. I will ensure that the terms of the agreement are appropriate and within market rates. I'm ready to help you make a productive business move!

Wes Hallmark, CCIM, Senior Investment Advisor

Sperry Van Ness / Hallmark & Associates Inc.

A proposed accounting change will dramatically affect how landlords and tenants treat leases.

The accounting profession is currently evaluating a proposed new standard that promises to fundamentally change the ways landlords and tenants account for — and negotiate — leases.
Under review is a proposed rewriting of the Financial Standards Accounting Board’s Accounting Standards Codification Topic 840, which before 2009 was known as FAS 13. This topic, "Accounting for Leases," is one of many standards that together comprise generally accepted accounting principles, or GAAP, in the United States.

The draft standard has drawn much heated debate for its potential to fundamentally change the leasing market, likely shortening lease terms and dramatically reducing the apparent value of properties with traditionally long lease terms, such as office buildings.

What Is Being Proposed?
According to FASB, the proposed new rule responds to dissatisfaction with the way that operating leases are disclosed on companies’ financial statements. Current financial standards draw a distinction between operating leases — the standard landlord/tenant relationship — and capital leases, typically used as an alternative form of financing. Current rules effectively ignore the documented structure of capital leases, instead treating the leased property as if it were owned by the tenant and financed by the landlord.

FASB notes that many companies have carefully structured their leases in view of the current rules to achieve characterization as either operating leases or capital leases, resulting in strikingly different effects on the company’s financial statements. The proposed rules to a large degree would prevent this by treating all leases with a term over one year as capital leases.

The proposed new standard treats the execution of a lease as the conveyance to the tenant of an asset — the right to use the property — and the creation of a liability — the obligation to pay rent over the term. The standard creates one analysis for the inception of the transaction and a slightly different one for ongoing reporting. It also requires both landlord and tenant to adjust underlying assumptions about the future of the lease as facts that might affect those assumptions change.

Tenant Changes.
For the tenant the new standard would require the following considerations.
At the beginning of the lease, the tenant must recognize as a liability the present value of all lease payments it is obligated to make, taking into account any extension or termination options it is likely to exercise, and estimating any contingent rent or termination payments it expects to make. The discount rate to be used for the present value calculation is the interest rate the tenant would have to pay a lender for a comparable real estate secured loan.
The tenant recognizes the right to use the property for the term of the lease as an asset, measured, at the beginning of the lease, at the present value of the lease payments, plus the “initial direct costs” it incurs in negotiating the lease, for example, broker’s commissions and legal fees.

During the term of the lease, the tenant amortizes the right to use the property over the shorter of its remaining useful life or the term of the lease.
During the term of the lease, the tenant must reflect any changes as they occur. For example, if, a few years into the lease, a tenant’s business changes so as to make it likely that it will pay more contingent rent over the term of the lease, its financial statements must immediately reflect that change. Or, if a change in the tenant’s business makes it more likely that it will not exercise an extension option it previously expected to exercise, it may be required to adjust its financial statements to reflect that.

Landlord Changes.
For the landlord the situation is a bit more complex. The new standards call for the landlord to determine whether, given the term of the lease and the terms and conditions of the lease, it has retained “significant exposure to the risks and benefits” of the leased property. For example, if the rent is largely contingent rent or if the tenant has a kick-out option after just a few years, then the landlord is well exposed to the vagaries of performance of the tenant’s business. Or, if the lease is fixed rent but the term is only three years and the leased improvements have a much longer useful life, the landlord still retains most of the risks and benefits of ownership of the leased property.

If, under the soft tests proposed in the draft standard, the landlord determines that it does retain significant risks or benefits associated with the asset, then, at the inception of the lease, it will recognize the right to receive lease payments, by calculating the present value of the stream of expected lease payments using several possible discount rates, in particular, the yield that the rents represent on the value of the real property, which is the annual rents divided by the value of the property.

After inception, the landlord must continually evaluate the lease and leased property based on its amortized cost, and the corresponding lease liability based on the “pattern of use” of the property by the tenant. And, like the tenant, the landlord must adjust its financials to account for such items as changes in the tenant’s business, whether, in the landlord’s judgment that the tenant will or will not exercise any extension or termination options it may have or will pay more or less contingent rent.

If the landlord comes the conclusion that it does not retain significant exposure to the risks and benefits of the leased property, such as where it has leased the property for most of the improvements’ remaining useful life, then it may no longer recognize the property as its asset, but instead may recognize only the rental stream, calculated at present value as described above, plus a factor for the residual value of the property at the end of the lease. In making this calculation, the landlord must make various estimates of the probability of various lease terms where the tenant has options to extend or terminate the lease, as well as the probability of receiving various imagined levels of contingent rent.

Criticisms.
As noted, the proposed standard has come under a number of criticisms. For one thing, it assumes a level of information, certainty, or ability to calculate probability simply not present in the real world. Both landlords and tenants will be put the to burden of calculating probable future contingent rents and probabilities of exercising future options that real estate practitioners will recognize as at best wild guesses, not necessarily leading to more reliable financial statements.

The standard in many respects converts operating lease rentals, which are based on very specific and changing supply and demand factors relating to local real estate conditions, into fictional interest rates, likely to lead to some very apples to oranges comparisons.
Many commentors believe that the proposed standard would create strong incentives for tenants to prefer shorter leases, with more options, which they already prefer for business flexibility. Property types with traditionally long leases, which are therefore viewed as stable and good investments and good collateral for loans, will thus become substantially more volatile, negatively affecting value and financeability — and just at a time when values are starting to recover.

In corporate real estate, the trend over the past decade has been to move real estate off the books so as to enhance return on assets. If the new guidance requires that a leasehold interest be on the books, this trend may reverse.

One highly predictable result of implementation of the new standard is that there is going to be a lot more accounting work. The proposed guidance calls for substantially more data management, complexity, guesswork and analysis than the existing standards for leases. For that reason, one can expect strong support for the new standards from manufacturers of lease management software, and, of course, accountants.

Article provided by: Tom Muller, CIRE Magazine

Is 2011 Going to be the Year of "Modify and Pacify"?

2011-01-05T10:58:00.000-08:00

As in previous months mentioned, the outlook for commercial real estate looks promising but the recovery will still be slow. Below is a great share from Sperry Van Ness President/CEO Kevin Maggiacomo regarding a panel compiled of professionals in their given field confirming again their thoughts on the forecast of commercial real estate.

Wes Hallmark, CCIM, Senior Investment Advisor

Sperry Van Ness / Hallmark & Associates Inc.

I attended the Interface Distressed Asset Conference last month in Miami with our Loan Sales team leader, Pat Blount. I facilitated one of the panels on the topic of “Value, who knows”? Not only was the temperature abnormally cold, so was the outlook for commercial real estate values as we head in to 2011. The most popular panel was named “Cracking the Vault, doing business with the FDIC and Special Servicers”. The room was packed as it was evident that brokers want to know ”how to do business with” and have been frustrated by the system in place but the panelists simply said “don’t call me, I’ll call you”. I didn’t see anyone in the audience satisfied with that answer.

I thought Pat Blount’s observation as a “Loan Sales advisor” versus mine as a real estate advisor was interesting so I am sharing his comments with you on my blog today. Pat is CEO of http://www.benewolf.com/ a loan advisory firm out of Oklahoma that handles our SVN Asset Recovery Team loan sales. I had him participate on my “Value . . . who knows” panel.
“There were forty-five (45) panelists and speakers with various backgrounds including loan sale advisors, appraisers, CMBS special servicers, commercial real estate brokers, receivers and lenders. The consensus was that we have likely hit bottom in the residential markets (excluding land) but “not” yet hit bottom in the commercial real estate world. This is due to two major factors (1) the massive number of CMBS maturities looming for 2011 and 2012 and (2) the off market or “shadow inventory” of bank held delinquent CRE loans that are a result of the “delay and pray” or “extend and pretend” strategy employed by most lenders during the period from 2008-2010.

As a matter of fact, one moderator asked the blunt question; “Are we passed the “extend and pretend” cycle?” and most panelists answered “yes.” My opinion and comment is that we may be past “the pretend” period but we are now in the “modify and pacify” period meaning the lenders are continuing to modify loans to pacify regulators.

Another overall consensus was that both investors and lenders believe most appraisals are “absolutely worthless.” All believe that you can still get an appraisal at “any value” you wish. But since the regulators continue to accept the appraisals, “game on.” It was interesting to note that although appraisers are the value experts in the market, Broker’s Opinion of Value (BOV’s) are considered quite valuable, extremely reliable and very necessary when determining current market value. This may be something real estate brokers might consider the next time they provide a BOV for $150.00 or free of charge for a lender.

I find it interesting that when an appraisal is considered too high that “nobody” believes it, but when one is clearly too low that “everybody” believes it.

In summary the mood was predominately upbeat, this could be because the speakers largely consisted of advisors, brokers and receivers but it appears that the transaction gridlock between lenders and investors has broken for now. As a result commercial real estate values are expected to stay flat at best for the near term but clearly the purging of the massive inventories of nonperforming loans and lender owned distressed assets is necessary for a fluid marketplace and to create an opportunity for value to return to the commercial real estate market. It does appear as one speaker said; “2011 will be the year of the loan sale.”

For information on loans we currently have for sale and how you can bid on them visit. http://www.svnart.com/

article by: Kevin Maggiacomo, SVN

Store Openings to Increase in 2011, While Pace of Store Closings Will Decrease Slightly

2010-12-28T13:06:00.001-08:00

As most have predicted, commercial real estate markets are expected to recover in 2011. But the recovery will be slow and gradual, including that of the retail market as well. Below are numbers reported by research analysts for the retail market.
Wes Hallmark CCIM, Senior Investment Advisor
Sperry Van Ness / Hallmark & Associates Inc.

The retail real estate industry will face another slow growth year in 2011, though the pace of store openings will gradually improve throughout the coming months, industry insiders predict.

Given the current brisk pace of holiday sales and availability of vacant store fronts at affordable rents, retailers with cash in their coffers will step up expansion announcements in 2011, says John Bemis, executive vice president and director of leasing and development with Jones Lang LaSalle Retail, an Atlanta-based third party property manager. In 2009 and 2010, store openings decreased slightly year-over-year for both the Jones Lang LaSalle portfolio and the U.S. retail sector overall, he notes. But starting next year, many discretionary retailers will finally be in a position to open new stores.

Ann Taylor, for instance, plans to open 40 new stores in 2011, compared to only five in 2010. Sterling Jewelers expects to open 25 new stores—the “first real expansion in the jewelry segment” since the recession struck, Bemis says. Other retailers that plan to step up expansion campaigns in 2011 include Family Dollar, Dollar General and Uniqlo.

Overall, U.S. retailers plan to open more than 65,000 new stores in the next two years, according to research by Retail Lease Trac and RBC Capital Markets. The Retail Lease Trac and RBC numbers are based on a database of 2,000 retailers (although it excludes some larger chains like Walmart and Target).

That means in 2011, retailers will open approximately 35,000 new stores, estimates Rich Moore, an analyst with RBC Capital Markets who helps compile the report. Michael Wiener, president and CEO of Excess Space Retail Services Inc., a real estate disposition and lease restructuring firm, expects retailers to expand as well, but not as quickly. Weiner says retailers are likely to expand gradually, with about 20,000 new stores in 2011 and another 40,000 to 50,000 in 2012.

“I think people are just getting back into the marketplace and trying to understand what kinds of deals they can get,” Wiener says. “We still think things will be on a very slow upswing, but we do think that there will hopefully be at a minimum a slow and steady recovery in retail.”

Store closure projections.
At the same time, Wiener expects that next year retailers will continue to shutter stores at roughly the same pace as in 2010, or that store closings will decrease only slightly year-over-year. Through the third quarter of 2010, retailers closed approximately 4,680 stores, according to ICSC statistics. That puts the industry on pace to surpass 2009’s total of 4,811, but finish below the 2008 peak of 6,913 closings.

The figure for 2010, however, should come in below predictions offered at the beginning of the year, when many in the retail industry thought retailers might close up to 8,000 stores this year. Even if store closures remain at the same level in 2011 as this year, it could still be a positive trend for retailers, notes Andy Graiser, co-president of DJM Realty, a Gordon Brothers Group company which specializes in strategic real estate solutions, dispositions and valuations.

Most of the closings will likely involve underperforming stores that have failed to meet retailers’ return hurdles and so dropping them will contribute to the companies’ financial health. In addition, some retailers might shutter new concept divisions that haven’t performed to expectations, returning instead to their core brands.

“I don’t see chains closing down, I just think you will see a lot more pruning,” Graiser says. “Pruning is helpful because companies are being disciplined on what their hurdle rates need to be and that makes them much healthier and stronger.” Graiser predicts that store closings in 2011 will total about the same as in 2010. Bemis, on the other hand, thinks closings might return to 2005 levels, when the industry closed 4,269 stores.

Path to recovery?
There is greater consensus around the notion that the recovery in the leasing market will be a slow, labored one, with retailers no longer beholden to the whims of Wall Street. Instead, even publicly traded chains will open only as many locations as they consider prudent for their bottom line, only in those centers they feel they can afford.

“There is a general feeling that the market has stabilized, but the recovery is going to drag on for a reasonable amount of time,” says Matthew Bordwin, principal and managing member of Keen Consultants, a Melville, N.Y.-based real estate consulting and restructuring firm. “Most retailers don’t have significant store opening plans and those that do are being very conservative. And so there still remains a large amount of empty space on the market and few retailers that are expanding at a meaningful pace.”

Article by: Elaine Misonzhnik

How To Be An Unstoppable Commercial Real Estate Owner And Investor

2010-11-30T11:50:00.000-08:00

Encouraging story below to share. Enjoy.

Wes Hallmark, CCIM, Senior Investment Advisor

Sperry Van Ness / Hallmark & Associates, Inc.

"No man is ever whipped, until he quits — in his own mind.” — Napoleon Hill

Earlier this year I was coaching one of my son’s 1st and 2nd grade flag football game. It was the first game of the year and despite a great effort our team, the ‘Hurricanes’, got beat 28 – 21. However, we were down early in this game 14 -0.

It would have been easy for these kids to hang up the towel and head to the juice boxes at the 14-0 score. Some of the kids started to get down. However, some of the kids kept encouraging the team and told them if ‘we keep running our good plays and keep trying we will beat these guys.’ Well, the kids came back and tied the score and it was 21 – 21 late in the 4th quarter when the other team scored a touchdown. Right after the other team scored a touchdown time ran out… We got beat by 7.

After the game I half way expected the kids to feel down and dejected. At our ‘team meeting’ over juice boxes after the game the kids had already forgotten that loss and wanted to know about the next game – they were ready for the next game! They just got done with this setback and they were ready for the next opportunity.

The same goes for you and commercial real estate. Not every property is going to be the one. There will be times were you put in a great effort but maybe lose out on that apartment or office building. The property you currently own may have a few bad months.

To really be unstoppable in commercial real estate, you must have to 2 key ingredients:
1. Taking ActionA lot of investors will take the time to write out their goals and focus on them. Yet, they fail when it comes to taking action. What I mean is that they have written out their goals, but many are not taking daily action steps to move them toward the goal. You cannot win with simply focusing and thinking about your goals. You must back it with massive action.
2. TenacityWhat separates the boys from the men is really an unshakable tenacity. Expect road blocks. Expect complications. Expect problems. This is true in commercial real estate, and is in fact true in everyday life. You will have problems and setbacks in your commercial real estate business, and the person that loses is the person that simply gives up when the problems arise.

Do not give up – “Think Trump” when the lender says “no”, or the public officials attempt to block your development, and so on. What I mean is every single investor will face adversity. Expect this, and also expect that you will face that adversity head on and win.

To be unstoppable is to take the bumps in the road as a sign of success being much closer to you NOT as a reason to give up. You almost want the attitude of a 10 year old flag football player that I described above. Most people do not get to success in commercial investment real estate because they stop when a problem comes up.

Like these kids, deal with the problem the best you can and move on to the next opportunity. This attitude more than anything else will get you want you want as an owner and an investor.

Provided by, David Garman, CCIM

Credit Still Hurts Commercial; 2011 Looks Brighter

2010-11-11T10:28:00.000-08:00

Thought you might be interested in this commercial economic update from the National Association of Realtors. Wes Hallmark, Sperry Van Ness /Hallmark & Assoc. hallmarkw@svn.com

Lack of financing will continue to hamper commercial real estate transactions going into 2011 but there are some positive signs on the horizon, NAR Chief Economist Lawrence Yun told REALTORS® last week at the NAR Conference & Expo in New Orleans.

Right now there is a lack of buyers for commercial properties in all sectors but that’s a function of the tight lending environment, not of a lack of interest in deals, he said. With cap rates on properties in the different sectors averaging about 9 percent, there will be no shortage of buyers once lenders start easing credit availability, he said.

Yun thinks that could happen as soon as next year, because lenders are sitting on plenty of cash from strong profits and pressure could be building for them to start deploying that cash. At some point, he said “they must get back into the business for which they were created, and that’s making loans.”

Separately, Hugh Kelly of the University of New York said later in the same session at which Yun spoke that the commercial mortgage-backed securities (CMBS) market is making a small but steady comeback, and appeared poised to reach a significant amount soon, suggesting a growing appetite among investors for higher-yield investments. “Investors want to get back into riskier investments,” he said.

Yun said if buyer activity does pick up, commercial prices stand to rise, which will lower cap rates, but the rates will remain far above Treasury bonds and stay attractive to investors.
Of the major commercial sectors, multifamily is showing the strongest fundamentals. It’s benefiting from the slack in home sales and is the one sector that could see a drop in vacancy rates in 2011, Yun said. Based on data from major metro markets NAR tracks, NAR is forecasting net absorption of units to increase to almost 140,000 from about 120,000 and vacancies to ease to about 5.5 percent from about 6 percent in mid-2010. Rental rates will stay about the same.

In the other sectors, vacancies are expected to remain elevated and rental rates to keep slipping, but there are some bright spots. In the office sector, absorption is expected to move into positive territory, to some 20 million square feet, up from a negative absorption this year. But that won’t translate into improvements in vacancies or rental rates. Vacancies are expected to continue rising, at least slightly, to about 17 percent, and rental rates will drop by about 2 percent.

Net absorption among industrial properties is expected to move out of negative and into positive territory, to about 160 million square feet, and vacancies are expected to ease, to under 14 percent. Rental rates will continue dropping. In the retail sector, net absorption is also expected to turn positive, to something over 6 million square feet, and vacancies will hold steady.

Against this backdrop, commercial real estate could start to show a sustained recovery in another 12 to 18 months, sad Yun.

article provided by Robert Freedman

OFFICE MARKETS VIEW BETTER 2011

2010-10-26T13:35:00.000-07:00

Austin, Dallas and Lubbock report on their local markets.

Compiled by Daniel Beaird & Jon Ross

As Texas office markets look to a better 2011, the key, in good times and bad, still remains tenant appreciation. Brokers from the Austin, Dallas and Lubbock markets share strategies for attracting and retaining tenants, and the future of their office markets.

Austin
Austin’s 39.5 million-square-foot office market consists of three main submarkets: CBD, Southwest and Northwest/Far Northwest. Citywide, the vacancy rate sits at 21.5 percent and average quoted rates are at $25.87 per square foot full service, a slight decrease from 2009. Most landlords are offering free rent and generous tenant improvement packages to remain competitive, all subject to credit.
Downtown continues to be the strongest submarket due to its status as the best location for law firms and its continued attractiveness to hip/young companies such as Cirrus Logic, which plans to build and occupy 135,000 square feet in one of the limited office sites downtown. The CBD consists of 8.5 million square feet and is 15.7 percent vacant with an average quoted full service rental rate of $33.12 per square foot. With no new office construction immediately eminent, rates are expected to maintain subject to increasing vacancy in the Southwest sector, particularly in South Mopac. The combination of rental rate differential, higher operating expenses and parking costs will continue to put pressure on downtown tenants forcing many to consider relocating to the suburbs.
Generally speaking, 2010 has seen more activity than 2009 as tenants, who have adjusted to the economic climate, are beginning to feel increased confidence in their businesses and can see recovery on the horizon. An increase in activity has occurred in each of the main submarkets and is likely to further increase based on lower rates on troubled assets.
Traffic is also a factor that will potentially have a significant impact in the market during the next three years. Decisions to relocate further out and closer to cheaper housing will continue to be made incrementally, and will likely instigate the segmentation of Austin.
Bottom line: it’s good to be in Austin, Texas. Austin has fared the recession better than most though still impacted. It’s all part of the cycle. Stay tuned.
— Chrissy Cornelius works in the Austin office of Commercial Texas.

Dallas/Fort Worth
The Dallas/Fort Worth (DFW) office market ended the second quarter of 2010 with an overall vacancy rate of approximately 18 percent across all classes, an increase in vacancy from the previous quarter. The net absorption for the quarter was 42,402 square feet of Class A office space, while both the Class B and Class C office sectors experienced negative absorption. Rental rates averaged $19.54 per square foot, representing a decrease from the previous quarter. Seventeen new buildings totaling 554,384 square feet were delivered in the first half of 2010, and there is approximately 2 million square feet of new office space under construction.
Landlords are constantly challenged to attract new tenants while existing ones are either exiting or downsizing. Tenants survey the market and use this as leverage with their own landlord, who will renew and restructure their lease early in an effort to maintain their tenancy. Free rent, often in excess of one-month per year, and lowered rental rates are also prevalent in the market.
An example of how landlords are reacting to this challenging leasing environment is found in the reaction of KBS Realty Advisors. Earlier this year they reduced their rental rates across the board by 23 percent in an effort to increase occupancy. Additionally they offer brokers an over-market commission of 8 percent as well as providing high-end spec suites ready for immediate occupancy. This strategy has served them well and delivered increased occupancy.
The next 6 months should be very positive for the DFW office market. The Texas economy, while not exempt from the recent recession, appears to have stabilized to the degree that positive office absorption is more likely for the final few months of the year, leaving the market in position for a more productive 2011.
Some of the largest office leases already signed in 2010 in the DFW market include Blue Cross Blue Shield’s 1 million square feet, Denbury Resources’ 325,000 square feet, Quicksilver Resources’ 115,000 square feet and Rexel’s 94,000 square feet.
— Sharon Friedberg is senior vice president of Bradford Real Estate Service/CORFAC International in Dallas.

Lubbock
The Lubbock office leasing market has remained fairly stable during the past year, as has the local Lubbock economy. Occupancy rates in the southwest suburban market have held steady in the mid- to upper-90 percent range. Full-service lease rates are running $15 to $20 per square foot per year for existing Class A and B buildings. Single-story and low-rise smaller suite garden office space is available in the suburban areas in the $9 to $13 per square foot per year on a modified gross basis (utilities and janitorial extra). With rates holding fairly level, Class B and C tenants have taken the opportunity to move up to Class A and B space.
Another trend has tenants building their own buildings for owner occupy. Several newly constructed office buildings that were build-to-suits for the primary tenants/owners have excess space available for $18 to $20 per square foot per year modified gross. Outside of these buildings, however, there has been very little speculative office development.
Lubbock’s central business district (CBD) has seen a decline in occupancies as tenants migrate to the suburban areas to be closer their customer bases. With the exception of several mothballed downtown buildings, occupancy is running in the high 80 to mid 90 percent range. CBD lease rates are generally being quoted in the $12 to $15 per square foot per year full-service.
Due to little construction in the past several years, LEED-certified buildings are virtually non-existent in the Lubbock market and it doesn’t seem to be an important issue for owners or tenants. Given the fairly stable market, there are few concessions being offered beyond a couple months of free rent or painting and carpet allowances on tenant turnover.
— Wes Hallmark is managing director at SVN/Hallmark & Associates.

Remainder of Year Seen Busy for Loan-Sales Market

2010-10-12T11:15:00.000-07:00

It will be interesting to see if the current "freeze on foreclosures" will affect the flow of mortgage sales as detailed in the article below. Wes Hallmark, Senior Advisor - Sperry Van Ness Commercial Real Estate Advisors. hallmarkw@svn.com

The final months of the year are shaping up to be among the busiest for the loan-sales market in years.

Since the beginning of September, loan-sales advisers have taken offers on some $1.5 billion of loans that they have been marketing on behalf of their bank, special servicer and government-agency clients. And the expectation is that substantially more loans - as much as $3 billion or more - will be offered in the coming weeks.

Driving the barrage is the belief, among investors and sellers, that the worst is past in the current market cycle. Property values have bounced off their lows and lending is no longer as constrained as it had been. So buyers are now more willing to incrementally increase the amount they'll pay for soured loans. Instead of offering prices that would provide them with internal rates of return in the mid- to high-20 percent range as they had last year, they're now pricing nonperforming assets to provide them with returns in the mid- to upper teens. That generally has translated to prices of 45-55 cents on the dollar, depending on the asset. As a result, sellers have become more willing to sell.

CMBS special servicers, some of which have long relied on the sales market to liquidate problem loans, appear to be the dominant sellers. They're motivated by the fact that their portfolios continue to grow. In addition, the sales proceeds that have been achieved through loan sales matches up well when compared with other, more labor intensive resolution strategies.

And banks are finally seeing some moderation in the growth of their problem loan portfolios. What's more, low interest rates have given them the ability to beef up the reserves they hold against their problem loans. That has allowed them to be more proactive in addressing their balance sheets.

"Everyone is selling," said one long-time participant in the loan-sales market. Another added, "From a structural standpoint, we've hit bottom." On the buy side, he said, "they're not worried about future downsides."

Among special servicers, LNR Partners, CWCapital Asset Management, C-III Asset Management and Midland Loan Services are each said to be preparing the sale of loans. LNR will be offering $200 million of hotel loans through Jones Lang LaSalle and another $100 million of small-balance hotel loans through an auction venture of JLL and REDC. It will also be offering roughly $150 million of additional loans through DebtX. Earlier this year, it orchestrated the sale of a $1 billion portfolio that was comprised largely of small-balance loans. Those loans were sold through Eastdil Secured to four investor groups. But instead of going the bulk-sales route this time around, the Miami company is looking to sell loans individually.

CW Capital, meanwhile, will take bids for $207 million of loans later this month through Mission Capital. It has also offered loans through CB Richard Ellis and Eastdil. And a number of banks are moving forward or have with offerings. Among them M&I Bank and Associated Bank, which have tapped Mission Capital to handle sales, and BB&T Corp., which had planned, then aborted a proposed $1 billion offering. The company's chairman and chief executive recently said it would be selling $1 billion of loans in the coming months. In addition, Keefe, Bruyette & Woods, which recently launched a $137 million loan offering for a bank client, is said to be gearing up the sale of at least three additional portfolios totaling at least $300 million.

While the thinking is that investors have piled up plenty of opportunistic capital to take advantage of just such sales activity, some caution that the heavy supply will likely lead to a softening of prices.

Article provided by, Orest Mandzy - Commercial Real Estate Direct Staff

CCIM Mail Bridge Marketplace Message

2010-10-05T10:16:00.000-07:00

I came across this article on the CCIM Mailbridge service on the new financing help for commercial real estate buyers that are owner - users. Now, if we just new what's going to happen on tax rates maybe buyers could decide what to do. Wes Hallmark, Senior Advisor - Sperry Van Ness Commercial Real Estate Advisors.

The Small Business Jobs & Credit Bill cleared the House of Representatives last week and was signed into law Monday by President Obama. The bill has many benefits for small business and particularly to the SBA 504 program. These enhancements will provide greater access to credit for small business owners to finance commercial real estate.

As a reminder, the SBA 504 program provides up to 90% financing at 20 year below market fixed rate, (4.67% for September, 2010), for small business owners to purchase commercial real estate for business use.

Below is a short recap of the enhancements and benefits for your small business clients:
Fee Reductions – The bill extends the authority for the SBA fee reductions through December 31st , 2010. Benefit – reduces cost of borrowing to borrower and should serve as an incentive for potential buyers to act quickly to take advantage of this stimulus that will end by the end of this year.
Maximum Loan Amounts – The maximum size of the SBA 504 loan is permanently increased from $1.5 million to $5 million. This is the SBA portion only. Benefit - this will allow up to 90% financing for purchase transactions up to $12 million, allowing the SBA program to be used by more buyers on larger deals. Another benefit is that it will allow businesses that had previously used the SBA program and maxed out their availability, to once again access the program for additional purchase or expansion.
Increased Business Size Standard – The SBA has increased the definition of what is considered a “small business”. The old standard was business net worth of $8.5 million or less and average business net income less than $3 million. The new standard is net worth less than $15 million and average net income of $5 million or less. Benefit - This will allow the SBA 504 program to be utilized by larger companies. This increase will allow the program to become a very viable option for middle market companies
Debt Refinancing - Established a 2 year window for the SBA 504 program to be utilized by creditworthy borrowers for refinance of eligible business debt. Benefit – Allows existing small business property owners to have access to 20 year below market fixed rates offered by the SBA program. With declining real estate values, the 90% financing program provides a solution for a customer with a maturing conventional loan which has a LTV that exceeds bank guidelines (75-80%).

Affordable access to credit is a key element for buyers of commercial real estate. The enhancements outlined above are some of the most significant improvements made to the SBA 504 program in the past decade and are considered my many industry experts to be “game changers” for buyers and real estate professionals.

A Lease is just a Lease? Yeah, right.

2010-09-28T13:44:00.000-07:00

Wes Hallmark of Sperry Van Ness / Hallmark & Associates has over 30 years negotiating commercial leases of all kinds. If he can help you as a tenant or landlord, give him a call. Below is an articile we came accross of how knowing your client's leasing needs are important depending on the type of business they are in. Here's why....

I love it when people -- usually ones not too experienced in the industry -- tell me, "Oh, leases are all pretty much the same. You have a landlord, a tenant, a building and a term. Just plug in the magic words and off you go."In a word, wrong. In fact, this is wrong on so many levels that I felt I needed to write about it.

First of all, who is the tenant and what is the building? Different buildings and different tenants require completely different types of leases. Yes, some of the language can be the same but the needs are completely different between, for example, office and industrial and retail uses.

Here is just one example.

Most commercial leases contain a clause requiring the tenant to use and occupy the premises throughout the term of the lease. Now, many of my landlord clients really do not give a hoot whether an office or industrial tenant actually uses the premises, so long as it keeps writing that rent check every month. But retail? BIG no-no. And that is why so many retail leases have very heavily negotiated "go dark" clauses. The reason? Landlords want to make sure a retail space is full and vibrant and has foot traffic, and even more so if there is a percentage rent component to the deal. Tenants, on the other hand, want flexibility in the event a particular location is not working out. Another really important reason you want tenants up and running is to prevent violating any co-tenancy clauses. But that is another time, another post. There are exceptions to this, of course, which is why I said "most."

The moral of the story? Any good real estate lawyer absolutely HAS to know his or her client. Each one has different so-called "hot buttons." We already mentioned one of many, many retail hot buttons. Sometimes the hot button is environmental issues. Other times it is parking. Often opportunistic investors concentrate on clauses such as the estoppel and SNDA sections that some other clients don't even think about much. Why? Because they are thinking ahead to refinancing or sale. Issues can be building specific, based on past problems the client has had to address or just a client's own personal preferences. Furthermore, each lease has a certain objective, which may lead to negotiating or even drafting a lease one way or another. I'm not going to elaborate on that there, but it is important to remember, as a good real estate lawyer can help a client work through those issues and turn a proposed lease into reality faster.

article provided by: David

Commercial Real Estate in Texas

2010-09-22T11:21:00.000-07:00

Good article below! Let me help you do the legwork in finding the right Commercial Property for you to invest in.

Wes Hallmark, Senior Investment Advisor, Sperry Van Ness-Hallmark & Associates.

Turn a profit by building equity in commercial real estate in Texas. Commercial real estate in Texas is a great place to invest your money. An investor usually purchases commercial property either for his own business, or to rent out and earn extra income. Whatever the motive, investing in a commercial property is a great decision because it builds equity over time.

Real estate value usually grows at a slow pace. However, you can buy a fixer-upper, make the necessary renovations and resell it at a higher price. Take the time to plan your longterm goals before putting your money into a large investment like commercial real TX estate. Consider the following before contacting TX commercial real estate firms:

1. Research the market rates of other retail space leases in the same location, and the length of those leases.

2. Evaluate the growth of the economy in your chosen location. Commercial real estate firms in Texas can assist with this.

3. Calculate the profit you wish you make and decide if the property can feasibly meet that goal.

Figure out how big a piece of Texas commercial real estate you wish to invest in. When deciding what type of commercial property you wish to invest in, you must be honest with yourself about the size of property you are willing and able to cope with. If you cannot invest time in a property that exceeds 4 units, purchase something smaller. The better you service your property and the tenants that occupy it, the longer they are likely to rent your property

Decide if you want your Texas commercial real estate in pristine condition, or in need of some work. You may decide you want to purchase a property that requires a lot of work. This would make sense if you are able to do most of the work or, have the finances to hire someone else. Either way, make sure that the cost of fixing up the property, plus the cost of the property itself, does not far exceed the value to the property after the work is done. Work with any number of commercial real estate firms in Texas to find the right balance

Look into foreclosures as an option for your commercial real estate in TexasPurchasing a foreclosed property usually guarantees a deal in the price, since the bank owning the property has a vested interest in liquidating it. Foreclosed properties always make a great investment, assuming the condition of the property is not in too dire of a state. Just be prepared that in many cases a foreclosed property needs some work.

article provided by; Tai G.

Hotels Lure Investors as Lodging Surpasses U.S. Offices, Retail

2010-09-10T12:09:00.000-07:00

Good article from Bloomberg, and a good sign. Hotels are the first type of commercial real estate to recover from a slump because they rent day to day whereas office, retail & industrial real estate is typically leased for multi-year leases. Wes Hallmark - Senior Investment Advisor, Sperry Van Ness /Hallmark & Associates, Inc.

Hotel purchases are increasing faster than deals for office buildings, shopping centers or any other type of U.S. commercial property as rising occupancies and room rates boost the lodging industry.
Sales of hotels jumped 136 percent in the first half of 2010 from a year earlier, the biggest gain among five commercial real estate categories tracked by New York-based Real Capital Analytics Inc. Those deals were based on transactions of at least $5 million and exclude hotels attached to casinos.
A rebound in business and leisure travel is helping the U.S. lodging industry recover after last year’s recession sent occupancies to a 30-year low. Hotels can boost rates quickly to take advantage of economic growth, while tenants at offices and retail properties tend to sign multiyear leases.
“Hotels have already absorbed the downturn,” said Richard Jones, executive vice president of acquisitions and operations at Atlanta-based developer Portman Holdings LLC. “It’s not as evident what exactly the impact of this downturn is going to be for other commercial real estate.”
Owners of offices, shopping centers and other buildings with pre-recession leases are now signing agreements that will result in “significant cuts in rental income” said Jones, whose company develops lodging, office and retail properties.
Income for hotels, meanwhile, is rising. Revenue per available room, or revpar, in the top 25 U.S. markets rose to $73.87 during the first half from $71.08 a year earlier, according to Smith Travel Research Inc. of Hendersonville, Tennessee. Occupancies climbed to 63 percent from 59 percent during the period, while remaining below 2008’s 66 percent.
Host Hotels, Pebblebrook
Host Hotels & Resorts Inc., the owner of Ritz-Carltons in San Francisco and Phoenix, in July agreed to buy the W New York Union Square with partners including Istithmar World PJSC, and said it will purchase the Westin Chicago River North for about $165 million. The same month, Pebblebrook Hotel Trust bought the InterContinental Buckhead Atlanta hotel for $105 million in cash from InterContinental Hotels Group Plc.
Pebblebrook today said it purchased the 183-room Hotel Monaco Washington D.C. for $74 million. The property will continue to be managed by Kimpton Hotel & Restaurant Group LLC.
Hotels are inherently different from apartment buildings or other types of commercial real estate, said Lewis Wolff, co- chairman of Sunstone Hotel Investors Inc., an Aliso Viejo, California-based real estate investment trust. Because their space is rented by the night, not the month or year, hotels are a better investment than other properties during a boom and worse during a bust, he said.
‘Operating Business’
“It’s not really real estate,” Wolff said. “It’s an operating business that’s immediately affected by any economic change. Apartments are not daily operations. They are much closer to being actual real estate than hotels are.”
The vacancy rate at U.S. shopping centers rose to 10.9 percent in the second quarter from 10 percent a year earlier and near a record 11.1 percent set in 1990, Reis Inc. said in July. Office vacancies increased to 17.4 percent during the period, the highest level since 1993, according to the New York-based real estate research firm.
Hotel occupancies and rates still have a long way go before recovering to their peak levels, said James Tisch, president and chief executive officer of New York-based Loews Corp., which operated 19 high-end hotels as of June.
“Now we’re obviously in a recovery, but in terms of revpar, we’re still at 75 or 85 percent of the revpar of ‘07,” Tisch said during an interview at Bloomberg’s New York offices last month. “While the business has improved, it still has a long way to go before it gets back to where it was.”
Rising Profits
Lodging companies have reported higher earnings, buoyed by rising demand in cities. Starwood Hotels & Resorts Worldwide Inc., the White Plains, New York-based owner of luxury brands including the St. Regis and W hotels, in July reported earnings that beat analysts’ estimates and raised its revpar forecast. Marriott International Inc. of Bethesda, Maryland, the largest U.S. hotel chain, said second-quarter profit more than tripled and increased its full-year earnings forecast.
In the meantime, profits are still falling for some retail and office landlords. General Growth Properties Inc., the Chicago-based U.S. mall owner planning to exit bankruptcy in October, said last month that second-quarter core funds from operations declined 17 percent after store rents dropped.
Boston Properties
Boston Properties Inc., the biggest U.S. office landlord by market value, said in July that second-quarter FFO slid 5.9 percent as rental revenue fell. The same month, SL Green Realty Corp., Manhattan’s largest office owner, reported a slump in second-quarter FFO after New York tenants signed leases for an average of 4.4 percent less than previous rents.
FFO is a measure of cash flow used by REITs and excludes interest, depreciation and other gains and losses.
Sales of hotels totaled $3.19 billion in the first six months of 2010, up from $1.36 billion a year earlier, according to Real Capital Analytics. The 136 percent increase compares with an 82 percent gain in office transactions, a 51 percent advance in apartment deals, a 37 percent climb for retail properties and a 22 percent rise in industrial property sales.
By dollar volume, hotel sales trailed other property types because they are a smaller portion of the market. Office transactions, totaling $11.9 billion, led deals by value, Real Capital data show.
The volume of lodging transactions remains below the record reached in 2007. A total of $78.6 billion of hotels sold that year, Real Capital said.
REIT Demand
REITs may be the primary buyers of hotels as they come on the market because “they are fairly well capitalized and have access to attractively priced capital,” said John Arabia, managing director at Green Street Advisors, a Newport Beach, California-based real estate research company.
Sunstone last month acquired Miami Beach’s Royal Palm hotel in a foreclosure auction for about $117 million. LaSalle Hotel Properties, a REIT that focuses on upscale lodging, last week said it bought its first hotel in San Francisco as well as two in Philadelphia for a total of $292.5 million. DiamondRock Hospitality Co. in May agreed to buy the 821-room Hilton Minneapolis for about $155.5 million, and Host Hotels said in July it’s seeking deals in the U.S., Europe and Asia.
“Publicly traded REITs will be a significant buyer of hotels over the next few years,” Arabia said. “It’s now REITs that will have their day in sun.”

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.

The Lubbock, Tx Economic Index / June - 2nd Quarter 2010

2010-08-31T14:53:00.000-07:00

For those of you who follow me locally, here is some good reads ... check out this link provided by Lubbock National Bank.

https://www.lubbocknational.com/a/Lubbock_Economic_Index_

Regards,

Wes Hallmark

Real Money: Investors Raised $3.85 Bil. Last Month for Real Estate Acquisitions

2010-08-23T13:35:00.000-07:00

Good and informational reading below. The takeaway is that the big disconnect in the commercial real estate industry is that all of this cash is sitting on the sidelines waiting to pounce on bargains & steals but the banks and CMBS lenders aren't foreclosing on problem loans in any volume yet. They can't afford the write down until they rebuild their reserves and the government can't afford the bailout. So, there's going to be a protracted and long drawn out recovery process probably through most of 2011. Wes Hallmark - Senior Investment Advisor- Sperry Van Ness / Hallmark & Associates, Inc.

Real estate companies and funds reported raising $3.85 billion in July for real estate-related acquisitions. Almost half of the total raised ($1.85 billion) was by commercial real estate-related firms and funds, while pooled investment funds including private equity and hedge funds raised $1.8 billion, according to data compiled by CoStar Group. Vornado Realty Trust in Paramus, NJ, reported raising the largest amount during the month. The fully integrated equity real estate investment trust announced that it completed the first closing of its real estate investment fund with initial equity commitments of $550 million (including $200 million from Vornado). Vornado said it expects to raise total commitments of $1 billion. The fund is Vornado’s exclusive investment vehicle for all real estate and real estate-related investments over the next three years. Cedar Fair Entertainment Co., a theme parks operator in Sandusky, OH, completed the issuance of $405 million aggregate principal amount senior unsecured notes. Concurrently with the closing, Cedar Fair entered into a new $1.175 million senior secured term loan facility and a new $260 million senior secured revolving credit facility. Cedar Fair used the net proceeds to repay outstanding debt under its previous credit facilities. Teachers Insurance and Annuity Association, College Retirement Equities Fund (TIAA-CREF) reported raising $396 million in the past year for its TIAA-CREF Asset Management Core Property Fund. 10 Largest Amounts Reported Raised in July

Sponsor Amount
Vornado Realty Trust $550,000,000
Cedar Fair Entertainment Co. $405,000,000
TIAA-CREF $396,249,116
Brookfield Asset Management $315,000,000
Invesco Realty $289,600,000
Douglas Emmett $249,250,000
Madison International Realty $187,575,000
Prosperitas Investimentos S.A. $165,000,000

Green Courte Partners $119,625,000
Garrison Investment Management $103,000,000On a monthly basis, the group having the most fund-raising success was a Brazilian fund raising money in the United States for commercial property investments in Brazil. Prosperitas Investimentos S.A. raised $165 million between the end of June and mid July. Cole Real Estate Investments also continued to raise approximately $100 million per month through its ongoing offering for shares in Cole Credit Property Trust III Inc. Last month, Cole Credit Property Trust III also completed the $310 million purchase the 583,000-square-foot City Center at 555 110th St. in Bellevue, WA. The building is 99.6% occupied, of which approximately 96.3% is subject to a net lease with Microsoft Corp. that expires in June 2024. Apple REIT Nine in Richmond, VA, netted raising almost $69 million between mid June and mid July. The hotel REIT, had acquired 11 hotels through the first six months of 2010. Its largest purchase came in January when it purchased a newly constructed Marriott hotel in Houston with 206 rooms for $50.75 million. Most Money Reported Raised on a Per Month Basis in July

Sponsor Amount
Prosperitas Investimentos S.A. $165,000,000
Cole Credit Property Trust $100,000,000
Apple REIT Nine Inc. $68,947,933
Ohio Equity Fund Inc. $57,000,000
Hines $45,900,000
American Realty Capital Partners $45,700,000
TIAA-CREF $33,020,760
Angelo, Gordon & Co. $30,116,667
Inland Real Estate Investment Corp. $20,732,513
Invesco Realty $12,591,304

Chase Purchases $3.5 Billion of Performing Multifamily and CRE Loans from CitibankJPMorgan Chase has purchased a $3.5 billion portfolio of multifamily and commercial real estate loans from Citibank. Terms were not disclosed. The portfolio, which includes approximately 3,800 loans, is primarily multifamily real estate loans for properties in California, New York and Illinois. The purchased loan portfolio contains only performing loans on properties that have shown strong credit performance, according to the buyer. Chase’s Commercial Term Lending business is part of Chase Commercial Banking and specializes in providing loans for moderately priced apartment buildings in stable markets. About 80% of Commercial Term Lending’s existing $36 billion portfolio is multifamily loans. “This highly desirable loan portfolio adds strong earning assets in markets we currently serve and valuable relationships that will provide new origination opportunities,” said Al Brooks, head of Commercial Term Lending. The transaction will reduce GAAP assets by $3.5 billion in Citi Holdings, Citigroup’s portfolio of non-core operating businesses and assets. Citi has been attempting to reduce assets in Citi Holdings. As of the end of the second quarter, Citi Holdings assets were less than 25% of Citi’s total balance sheet. Citi said it will continue to pursue divestiture opportunities.

Property FinancingsCole Credit Property Trust III, through Cole MT Bellevue WA LLC, entered into a mortgage loan agreement with Wells Fargo Bank as lender, administrative agent, sole book runner and lead arranger in the principal amount of $156 million. The loan is secured by an approximately 583,000-square-foot office building, constructed in 2008 in Bellevue, WA, which is 99.6% occupied, of which approximately 96.3% is subject to a net lease with Microsoft Corp. that expires in June 2024. CCPT III OP executed a swap agreement, which fixed the interest rate at 3.99% per annum through the maturity date of the loan, Aug. 5, 2015. The loan is an interest-only loan. Berkadia Commercial Mortgage originated $10.6 million in permanent, fixed-rate first mortgage financing through the Freddie Mac Capital Markets Execution (CME) program for Summerchase at Riverchase Apartments. The property is owned by an affiliate of Birmingham, AL- based Engel Realty Company Inc. The 75% LTV loan, which refinanced an existing Freddie Mac loan, has a 10-year term and a 30-year amortization schedule. The all-in interest rate was 4.96% for the term of the loan. Summerchase at Riverchase at 100 Summerchase Drive is a 240-unit, Class-A garden apartment community. CB Richard Ellis Capital Markets Group arranged financing for multiple properties in several markets. * Acquisition financing was arranged for two apartment properties in Orlando, FL. The transactions represented two separate 10-year loans totaling approximately $13.35 million. Waterways and Silver Oaks, 320-unit and 360-unit communities in Orlando, FL, respectively. The transactions were financed via Freddie Mac's Capital Markets Execution (CME) Program at approximately 80% of total cost including portions planned upgrades and renovations. The loans were each based on a 30-year amortization and were rate locked in the low 5% range. * Refinancing was arranged for Park Place Apartments in Tampa, FL on behalf of NPV Realty Corp. in the amount of $4.7 million via Freddie Mac's CME program. Park Place Apartments is a 120-unit apartment community in Orlando. Terms of financing included a 1O-year loan term, 30-year amortization, 75% LTV, debt service ratio of 1.47x and a rate in the low 5% range. * Refinancing for two apartment properties on behalf of SMG Property Management Inc. based in Lakewood Ranch, FL. The properties, Greenland Village Apartments in Lancaster, PA, and Royal Glen Apartments in Comstock Park, MI, represent two separate loans totaling $13.2 million. Greenland Village is a 180-unit two-story garden-style property in above-average condition consisting of 19 buildings on 15.7 acres. Financing for Greenland Village was provided via Freddie Mac's CME and consists of a 7-year fixed rate in the low 5% range, 73% LT'I, and a debt service ratio of 1.53x. Royal Glen, a single-story well stabilized garden complex in good condition was closed as part of Freddie Mac's portfolio execution. Perry Ellis International Inc. completed the refinancing of its Miami, FL, headquarters facility as well as secured a fixed interest rate reduction on the mortgage of its Tampa, FL, distribution facility. The refinancing secures a $13 million mortgage on the Miami facility and results in additional gross proceeds of approximately $2.1 million. The terms are secured for 10 years with a fixed interest rate of 5.8%, which replaces the previous rate of 7.12%, and has a maturity of August 2020. For the Tampa distribution facility, a new rate of 5.75%, which represents a 50 basis point interest rate reduction, was secured for the remainder of the term loan, which matures in June 2016. These reductions represent an annual interest savings of approximately $215,000. Arbor Commercial Funding funded the following deals. * A $6 million loan under the Fannie Mae DUS Coop product line for the 300-unit complex known as Three Fountains West Cooperative in Indianapolis, IN. The 10-year loan amortizes on a 30-year schedule and carries a note rate of 5.31%. * A $1.5 million loan under the Fannie Mae DUS Small Loan product line for the 48-unit complex known as Villa Serena Apartments in Pittsburg, CA. The 10-year loan amortizes on a 20-year schedule and carries a note rate of 5.56%. * A $1.5 million loan under the Fannie Mae DUS Small Loan product line for the 19-unit complex known as 800 Traction Apartments in Los Angeles, CA. The 10-year loan amortizes on a 30-year schedule and carries a note rate of 5.50%. * A $1.465 million loan under the Fannie Mae DUS Small Loan product line for the 12-unit complex known as 509 East 12th Street in New York, NY. The 15-year loan amortizes on a 15-year schedule and carries a note rate of 5.88%. * A $1 million loan under the Fannie Mae DUS Multifamily Affordable Housing Coop product line for the 111-unit complex known as Birch Run Cooperative in Romulus, MI. The 30-year loan amortizes on a 30-year schedule and carries a note rate of 7.41%. Article Provided By Mark Heschmeyer

Lubbock Texas Industrial Market

2010-08-19T11:09:00.000-07:00

For Texas Real Estate Business Magazine - August 2010 Issue

The good news for the Lubbock, TX industrial real estate market is that Lubbock’s primarily agricultural based economy is somewhat insulated from the problems of the national economy and the city remains healthier than most areas of the country. Unemployment is still running a little below 7% and industrial property occupancies are in the 80- 85% range with occupancy trending up, mostly from business expansions. The market is stable but there is not enough new demand to justify speculative development. Concerns about the national economy, national government, health care costs, and pending tax increases have most developers and property owners on the side lines. New construction has been limited to mostly owner – user properties and very few sales have been reported over the past year. Appraisers are having to go to larger Texas markets to find recent comparable sales. Most of the vacancy is in older functionally obsolete properties with lower ceiling heights or limited land area. Rents for existing industrial lease space (10% office and the balance metal building warehouse) are holding steady in the $2.75 to $3.25 sf / yr range on a NNN basis with older properties having to cover base year tax & insurance expenses to achieve those lease rates. Otherwise, tenant lease concessions are practically non-existent.

The one hot spot in the industrial market is the relatively new “Lubbock Business Park” and the “Lubbock Rail Port” which have been developed over the past four years by the Lubbock Economic Development Alliance (LEDA), the business attraction and retention arm of the City of Lubbock. The business park consists of 586 acres of land just off I- 27, south of the Lubbock International Airport and the Rail Port is situated on 526 acres of land just north of the airport on I-27. In the past three years LEDA has attracted a 225,000 sf O’Reilly Auto Parts distribution center, a 75,000 sf West Texas Packaging plant, a 112,000 sf distribution center for Standard Sales (Budweiser distributor), a new State of Texas Dept. of Public Safety regional office and forensics lab, a new 60,000 sf Monsanto plant and labs, a 30,000 sf Verizon Wireless data center and the Mexico based Molinos Anahuac (MACSA) 40,000 sf flour mill and labs. LEDA reportedly has two other big box users on the back burner that will take up the balance of the currently developed phase of the park. LEDA has invested approximately $20 million in land and infrastructure that in turn has stimulated $124 million in private investment in the park and rail port. For companies willing to commit to certain levels of new jobs created at certain salary ranges they are able to get free, fully developed, site ready land for their new facility and get work force training grants in some instances. It’s hard to compete with free but perhaps enough trickle- down demand from suppliers and service providers will increase private sector demand in the future.

New Lenders Fill Commercial Void

2010-08-13T13:04:00.000-07:00

Perhaps some good news for CRE .. A replacement market for maturing commercial mortgage backed securities (CMBS) loans. Until now, the CMBS market had all but evaporated in 2008 & 2009. Read below. Wes Hallmark, Senior Investment Advisor - Sperry Van Ness /Hallmark & Assoc.

Cantor and CIM Team Up to Originate Mortgages For Eventual Bond Sales

Many traditional banks are still skittish about commercial-property lending. But other financial-services companies are stepping into the breach.
The latest example: Cantor Fitzgerald, best known for bond trading, is getting into the business of originating commercial mortgages. The New York-based firm has teamed up with CIM Group, a Los Angeles real-estate fund manager, to form a venture with the goal of making some $5 billion in commercial-property loans over the next 12 months with the intention of selling them off as bonds.
Anthony Orso, a former real-estate banker at Credit Suisse Group who joined Cantor about a year ago, says "the timing is perfect" for the firm to enter the business. Property values have started to stabilize after plunging more than 40% from the peak in 2007, limiting lenders' risks. And commercial real-estate debt is drawing interest from yield-hunting investors world-wide.
Demand for fresh funds is likely to be enormous. Already, financing challenges have contributed to a spike in loans being transferred to debt specialists responsible for dealing with soured loans. About 15% of outstanding commercial mortgages bundled into bonds, or about $110 billion, is expected to be in "special servicing" by year's end due to default or imminent default, according to a study to be released by Fitch Ratings on Wednesday.—Lingling Wei

Illiquidity Risk

2010-08-10T10:28:00.000-07:00

I came across this interesting article pointing out why now is a good time to buy commercial real estate investments.

Posted on August 10th, 2010 by John Reeder

If commercial real estate investing were easy, everyone would do it.
It’s not easy. It’s difficult to the point that CRE investors should really have their sanity checked. If I said I have an investment to show you that is going to be generally illiquid, has potential unforeseen costs of ownership, is subject to pressure from external macroeconomic forces, and offers a relatively modest yield, you would not think that people would be rushing to buy in. And yet they do.
CRE investors put their money in the market because the very difficulty of investing in real estate offers pricing inefficiencies that favor the experienced investor. In such a difficult business, others will screw up, and there’s the opportunity.
Just the illiquid nature of real estate creates opportunity on its own. If you’re a real estate owner, there’s about a 90% chance that the time that you will most need to sell your asset will be the very worst time to do so. If you’re a real estate buyer, there’s your opportunity.
Buyers have no greater thrill than to get the call on the deal that has an owner that absolutely has to get out. That’s when you get the “I can’t walk away from it at this price”. One of my clients absolutely loves that deal. It’s August now, but every time I talk to him he recounts his end of year deal from last year when he got the call on December 26th for a deal that needed to close by the end of the year. He basically got to name his own price. I’m not kidding when I say that he gets giddy about it.
Illiquidity in real estate can be a killer, or a career maker, depending on which side of the deal you position yourself on.

An economist’s opinion on the financial reform act

2010-08-10T10:16:00.000-07:00

I came across this interesting article by Dr. Sam Chandon. He has been right-on with his predictions over the past several years. Wes Hallmark.

Dr. Sam Chandon, Chief International Economist for Real Capital Analytics, suggests that our congressional lawmakers may have been short-sighted in the newly passed and signed financial reform act. The act does not seem to consider the fact that we are a part of a global economy. Dr. Chandon states that “A problem for the domestic financial system is that cross-country imbalances in the strength of regulatory oversight will, all things being equal, drive capital to less costly havens.”

For all of Dr. Chandon’s articles please refer to “The Commerical Observer”.

House Talk by June Fletcher Wall Street Journal

2010-06-16T11:42:00.000-07:00

Found this article below helpful to the consumer in today's current Real Estate Market .. enjoy.
Wes Hallmark

The Wall Street Journal Real Estate
HOUSE TALK
JUNE 11, 2010, 4:03 P.M. ET
Is It Better to Buy New Home or 'Used'?
By JUNE FLETCHER
Q. I am home-shopping, and have narrowed down my options to a 12-year old resale home at $547,500, and a new home at $549,000. They're similar in size, about 2,500 square feet, though the new home is on a much smaller lot, and the older house needs some minor repairs, as well as new carpeting and appliances. I could be happy in either home, so I'll let price determine my choice. Is it true that you can negotiate more on a used house than a new one? Which house would be most likely to hold its value?
—Baltimore
A. To answer your first question: It's impossible to know how much negotiating power you'll have with each of these sellers until you know how desperate each is to sell. So the first thing you should do is to ask your agent to find out as much as possible about what's motivating each: Is the resale seller just testing the market, or going through a divorce? Is the builder opening up new projects or has he been sitting for months on stale inventory? You should find out how long each house has been on the market, whether there have been price drops, how often these have occurred and how deep they were. This will give you a sense of how eager each party is to deal with you.
Then ask your agent to provide you with a list of recently sold comparable properties, both new and resale, with their asking and selling prices. From that, you'll be able to tell what sort of deals people have been negotiating in each neighborhood, and what the overall discount is for each type of home.
Next, factor in what it would cost to bring each home into roughly comparable condition over, say, the next five years. You know that you will have to re-carpet and buy appliances, but you may also have to replace major systems soon, including the roof, water heater and heating, ventilation and cooling system. With a new home, you won't have to do much replacement, but you likely will have to pay for upgrades that builders often skimp on, particularly outside, such as landscaping, fences, patios, decks, gazebos and built-in barbecues.
Now to your second question about resale value: Houses are a lot like cars. From my father, a car dealer who sold both new and used cars, I learned that most people vastly prefer that "new car smell." So do new home buyers. Under normal market conditions, home buyers are willing to a premium of 5% to 10% over the price of a comparably-sized resale; in buyer's markets, the premium may be reduced through limited-time discounts or incentives like finished basements, but is rarely completely eliminated. If you buy the new home, you will never recapture this premium, because once you own it, it is a resale. Even if you sell your "used" home it a year or two after you buy it, you won't ever be able to capture that subset of buyers who only want something that's brand new and fresh and are willing to pay extra for it.
So I urge you not to make your decision motivated just by price or resale value. Older houses may be smaller, but they'll always be appealing to those who put more stock in mature landscaping, bigger yards, established parks, stores and other amenities, and often, more favorable commuting times. Those who want up-to-date floor plans and less maintenance will always go for newer homes. Whichever house you buy, there will always be a market for it. The only question that really matters is, which house suits you more?

Group Investing is now Hip!

2010-01-11T12:33:00.001-08:00

Group Investing is now Hip!

Posted using ShareThis

2009-12-04T09:54:00.001-08:00

new video on www.hallmark-associates.com

2009-10-27T12:21:00.001-07:00

sharing RE ideas with Lubbock Chamber of Commerce

Great Developments All Begin with Great Dirt…

2009-09-22T08:30:00.000-07:00

...Don't Forget About the Dirt!

It’s been said that commercial real estate is a ground-up business. The simple truth of the matter is that at some point in time every real estate project started with a piece of land and a vision. If fact, the success of any development project will largely hinge on how astutely you can finance the land component of your transaction. The good news is that as sophisticated as the commercial capital markets have become, not a lot has changed with respect to how land is treated. In the text that follows, I’ll share some basic thoughts on how to use land to drive project returns.

As I alluded to in the opening paragraph, the one clear exception to the advancement of real estate capital markets has been in the arena of land financing. Land is the one asset class that is lagging the balance of the market as far as the number and sophistication of new financing options. Furthermore, even in today’s constrained market, land is the one asset class whose underwriting guidelines have remained fairly constant. Land is, by and large, financed today in the same fashion as it has been throughout recent history.
Given that in the majority of circumstances the largest impact on the profit margin in a real estate project is made based upon how well the land is acquired and financed, it seems somewhat odd that the options for financing land have not advanced at the same pace as that of the other asset classes. In order to understand why land seems to be the asset class exception when it comes to aggressive and favorable financing options, it is important to understand the two main underlying characteristics of land as an asset that taints its appeal to lenders:

1. Timing: By its nature, land is financed at the beginning of a project lifecycle making it the most speculative stage of project capitalization. Early stage investments (debt or equity) in any industry are the most costly to fund due to the increased risk profile. Adding to the complexity of the risk profile, land is often unentitled at the point initial funding is sought, and thereby requires some form of municipal cooperation in order for the project to be successful. Complicating matters further, is that depending on the specifics of the project, it can take several years to secure the necessary entitlements which will be needed to insure that the project is viable, and during that time there is often no assurance that said entitlements can be procured.

2. Lack of Income: Unlike stabilized operating properties, in most cases land is not an income producing asset, and therefore cannot carry itself by servicing underlying debt. Without income, land must be underwritten solely upon its current value and/or that of other collateral or guarantees that can be provided.
While the two characteristics of land identified above cause lenders and investors to treat land conservatively, the good news is that the often mentioned quote that “land is a great investment because they’re not making any more of it” is one of the great universal truisms in the development world.

Over the years I have seen land financed very astutely and I have also seen financing cobbled together in ways that cripple a project from the outset. The key to understanding how to maximize the financing on your next land transaction is to adhere to the following best practices which will in turn help you realize a more successful project:

1. Closing: Close as slowly as the market and/or the seller will allow for: In a perfect world, every transaction would afford you a cooperative seller and little market pressure. This would afford you the opportunity to complete the entitlement work before you close on the land such that you could be fully entitled and permit ready closing the land with your construction loan. The reality is that this is often not the case. Nonetheless, you should structure as much of a delayed or phased closing as possible to generate maximum leverage with the capital markets.

2. Use of Debt: If possible, resist the temptation to bring in third party equity to finance the acquisition of the land. Bringing in a partner at the early stages of a project will dilute the internal rates on return available to the investor and require you to give up a greater participation in the project. Whether you use seller financing, bridge financing, letters or lines of credit, collateral pools, tax credits, municipal assistance, a traditional acquisition loan or any combination thereof, do everything possible to maintain 100 percent of the ownership in a project at the initial stages. This will allow you to complete the entitlement work and book the land-lift prior to seeking your equity partner thereby allowing you to reduce the amount of outside equity needed and increasing overall project profit.

3. Capital Structure: Use all levels of the capital structure to move up the leverage curve.Once you have secured entitlements and booked your land-lift continue to use as much leverage as possible throughout the balance of the project. By using the proper combination of senior debt, subordinated debt, and third party equity, even in today’s market it is possible to realize leverage well in excess of market norms in terms of the percent of the total project cost or value while maintaining control of the investment.

4. Dilution: You can also use different levels of the capital structure to prevent project ownership dilution. By using seller carry, second mortgages, bond issues or mezzanine financing to fill as much of the equity gap as possible, you will lower your overall cost of capital while not being forced to give up as much ownership in the project as you would by closing the entire equity gap with an equity joint venture (JV) partner.

5. Equity: Negotiating the proper type of equity joint venture can be critical to the financial success of a project is critical. If you move up the leverage curve with the proper combination of senior and subordinate debt, the amount of equity needed from outside investors is minimized. Using the right JV or preferred equity investment structure can leverage the sponsor co-invest to as little as 2 percent to 5 percent of the project equity requirement while still leaving the sponsor with the majority of project ownership.Selecting Equity Partners: The decision to select an Individual Investor vs. an Institutional Investor is critical to your capital formation plan. Decide early where you choose to seek your capital partners and investors and be willing to live with your decision. With rare exception, if a sponsor can meet institutional suitability tests, they will be better served by accessing commercial capital markets rather than dealing with individual investors. Institutional investors have more knowledge and flexibility when structuring transactions, giving owners more operating flexibility. Institutional investors have deep pockets and can provide the appropriate level of financing to allow sponsors to engage multiple projects at one time thereby creating the ability to grow their business with greater velocity when contrasted to the leverage provided by individual investors. Additionally most institutional investors prefer passive investments and will only exercise dilution or control provisions in the rarest of circumstances. Lastly, institutional investors often times can provide tremendous non-financial value adds in the form of knowledge base, intellectual capital, market contacts, and the like.

Understanding how to access and maneuver within the commercial capital markets and effectively leveraging the savvy land financing techniques can be the defining difference in optimizing the scalability and efficiency of your development efforts.

Finding the Bottom vs Finding Value

2009-08-05T12:43:00.000-07:00

Finding the Bottom vs. Finding Value
There is a Difference
by Wes Hallmark

Arriving at a decision on the best strategy for how to successfully navigate the commercial real estate market during these challenging economic times is vexing to many an investor. Do I, or don’t I??? That is the conundrum facing most commercial real estate investors in today’s market. Do I, or don’t I liquidate my portfolio (or at least my non-performing assets)? Do I, or don’t I stand on the sidelines and wait-out these turbulent times? Do I, or don’t’ I get aggressive and take advantage of the decline in property values and the spike in acquisition cap rates? In the text that follows I’ll put forth counsel based not upon the emotions of the times, but rather the forthcoming advice is based upon my years of experience in successfully advising clients in both advancing and declining commercial real estate markets.

It is often said that you can only count on two things in life: death and taxes. There is a third thing that is often overlooked…market volatility. Whether markets are moving up or down isn’t really the issue. The issue is whether or not value can be added or created in the investment being considered. What tends to happen to the non-sophisticated commercial real estate investor is that they rely on upward moving markets to create value for them. If the market happens to move in your favor that is a plus, but it should not be the sole basis upon which your investment decision is made. You need to be able to add value to an asset through operational improvements, repositioning, restructuring, recapitalizing, re-tenanting, or other proactive strategic or tactical value enhancements. This is the mark of a savvy investor.

It doesn’t really matter whether you’re looking at the equity market, commodities market, bond market, the commercial real estate market, or any other investment market, as all investment markets have certain similarities…It is my hope that the following five points will be useful in refining your investment philosophy moving forward:

1. Market Timing: Let me be very blunt right from the outset…not only is it an exercise in frivolity to try and time a market bottom, but many significant investment opportunities will simply pass you by as you stand on the sidelines waiting for that almighty market bottom to occur. I know…smart investors buy low and sell high right? Sure, but there is a difference between recognizing value and opportunity that lead to superior investment returns, and trying to wait for that ethereal moment in time that represents the exact bottom of a market. Put simply, one in a million will correctly time a market bottom, while many investors will generate significant returns by exploiting the opportunities that a declining market provides.

2. Professional vs. Amateur Investors: Tough times tend to separate the wheat from the chaff. The challenge facing most commercial real estate investors today is to become honest with themselves in determining whether they are in fact astute commercial real estate professionals, or whether they were among the masses just riding a wave while it lasted. You see professional investors are always in the market…during good times and bad. They understand that more “lasting wealth” is created in declining markets than in overheated advancing markets. You see it’s the non-professional investor (stupid money) that is both late to the market, and then overstays their welcome by holding on too long. In point number 1 above I mentioned it is difficult to find the bottom of a market, but the same is not true with the top of the market…Whenever you reach a point in the market where everyone (even your cab driver) is a “real estate investor” you know you’ve found the top of the market.
3. Invest in Opportunities not Asset Classes: The most successful investors are fluid in their approach…they see changes in the market as being synonymous with the creation of new opportunities. While I certainly understand the synergies that come from developing a niche focus, I don’t believe they can make-up for the increase in diversification and scale that comes by exploiting opportunities across asset classes. Are you a retail investor, or a commercial real estate investor? Are you a multifamily investor or a commercial real estate investor? You see it is my belief that the core of sound commercial real estate investing is present across asset classes. The same characteristics that make an investment attractive in one asset class are ostensibly the same in others. Location, current market dynamics, tenant mix and quality, entitlement and construction risk, absorption and vacancy (supply and demand), age and construction quality, micro and macro economics, NOI and valuation drivers, etc. are relevant regardless of whether you’re investing in industrial or office assets. Furthermore, it’s important to be flexible in the structuring of your investment opportunities. As an example as long as the risk/reward ration falls within your investment guidelines it shouldn’t matter whether you are a principal in entirety, have a limited ownership interest, where you investment falls in the capital structure or any number of other considerations. You either like the opportunity or you don’t…the rest of the issues are just details to be worked out at the negotiating table.

4. Understanding Opportunity: Rarely will you come across a static opportunity in the sense that it will stand idle and wait for you to act…Significant opportunities are not only scarce, but they typically operate on the principal of diminishing returns. The longer you wait to seize the opportunity the smaller the return typically is. In fact, more likely is the case that the opportunity will completely evaporate if you wait too long to seize it. Keep this thought in mind; when opportunity knocks…answer the door. I can’t even begin to count the number of times I watched people miss great opportunities due to a poor sense of timing. Not too surprisingly, people who possess a poor sense of timing usually don’t even understand timing is an issue. How many times have you witnessed someone holding-out for a higher price, better valuation, evolving markets, technology advances, or any number of other circumstances that either never transpires, or by the time they do, the opportunistic advantage had disappeared? I’ve observed the risk adverse take due diligence one step too far, the greedy negotiate too long, the impulsive jump the gun, and the plodders move to slow. As the saying goes “timing is everything.” The proverbial window closes on every opportunity at some point in time. As you approach each day I would challenge you to consistently evaluate the landscape and seize the opportunities that come your way. Better to be the one who catches the fish than the one who tells the story of the big one who got away…
5. Seeking Sound Counsel: The smartest commercial real estate investors surround themselves with professional advisors who extend their strengths, shore up their weakness, improve their access to market knowledge, and provide more visibility and broader access to investment opportunities. What really separates the successful investor from the average investor is that the successful investor has a broader sphere of influence and a larger network helping them to be successful than the novice investor. If you ever wonder why certain investors seem to get access to the best deals, it is usually because the professional investor simply enlists more resources working on their behalf.
My advice is this…don’t let the current market conditions intimidate you. Rather create an opportunistic approach to commercial real estate investment that will simply adapt your investment guidelines to the current market dynamics. There is every reason to get into the market and take advantage of once in a generation opportunities that exist now.

Copyright © 2008 – Wes Hallmark
This Office Independently Owned and Operated
All information presented by Sperry Van Ness (SVN) has been obtained from sources deemed reliable. SVN makes no representation with regard to the accuracy of the information contained herein.