Category: News

Opportunity Update: As Major Deadlines in the Opportunity Zone Program Pass, We Dive into the Benefits that Still Exist

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Going into a new presidential administration, one of the big concerns in the investment community was the future of the Opportunity Zone (OZ) program. It was created by the 2017 Tax Cuts and Jobs Act, which was passed under a Republican administration. “These are uncertain times for any income tax laws. However, the OZ program was originally enacted with bipartisan support, and I’m not aware of any proposed discontinuation of the OZ program,” said Chris Goodrich, partner at Houston-based law firm Crady Jewett McCully & Houren. “There has been Democratic interest in imposing more stringent reporting requirements for OZ investments, but it’s not presently known what these more stringent requirements might be.” §§ 1400Z allows investors to defer, reduce, and in some cases, eliminate
capital gains tax by investing in specified low-income areas designated as qualified Opportunity Zones (OZs). They must do so by reinvesting their capital gains in Qualified Opportunity Zone funds (QOFs). State governors submitted their recommendations for OZ tracts, areas in need due to chronic unemployment, lower population density and economic disruptions, such as natural disasters. The result is more than 8,700 qualified tracts scattered around the country, including hundreds in Texas. A common question related to that list is whether it could change based on the results of the 2020 Census. “Technically, the designation of a census tract as an Opportunity Zone expires after 10 years,” said Goodrich. “But the final regulations provide that an investment in OZ property will retain its status through December 31, 2047, even though a census tract ceases to be classified as an OZ due to a future census.” Click to read more at www.rednews.com.

Pearlstone Partners Touts Natiivo Austin Condominium Project is Over 75% Complete and 85% Sold

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New Residential Condominiums in Austin’s Rainey Street District that Allow Owners to Live in or Rent Out Their Residences Via Any Rental Platform Announces Additional Units Available For Sale

AUSTIN, Texas—May 18, 2021. Austin-based Pearlstone Partners — a full-service real estate development firm with more than 100 years combined experience in the local real estate industry —today announced its development, Natiivo Austin, is now over 75 percent complete and over 85 percent sold. The new highrise condominium project is located at 48 East Avenue in the historic Rainey Street District at the edge of downtown Austin. Prospect Real Estate is the exclusive listing agent for the trendsetting new residential high-rise development. “This is an exciting time because construction of Natiivo Austin is over 75% complete,” said Bill Knaus, President of Pearlstone Partners, one of the developers of the innovative project. “The exterior of the building is beginning to undergo striking changes, as we begin installing the bronze and champagne metal panels with glass handrails that are so distinctive to our design. Equally as exciting, our team is working hard to complete the luxurious rooftop pool deck and preparing to install the imposing custom-rammed earthen panel that will frame the fireplace at the end of the pool, providing a dramatic focal point.” Due to the unprecedented market conditions, increasing demand for residential homes in the urban core and the extremely low single-family home inventory, the developer recently released the 14th floor, originally planned to encompass 11 hotel rooms, as additional residential units for sale. Already, four of the newly released units are under contract. Natiivo Austin has experienced a flurry of sales within the past 60 days, selling out all studio units, both penthouses, four-floor plans – A1, A5, A9, and B4 – and two full floors. Additionally, only 35 one- and four two-bedroom units remain available. “We are thrilled with the demand and interest in Natiivo Austin and are excited to be able to offer additional units to meet the needs of our buyer pool,” said Prospect Real Estate Vice President of Sales Denise Bodman. “We expect to have the first temporary certificates of occupancy (TCOs) in September, with the first move-ins likely in November.” Knaus said the building’s walls are dried in, allowing contractors to move forward with weather-sensitive interior materials and work. Sheetrocking has been completed through level 31 and is in progress on level 32. Elevators are in operation, and interior finishes are progressing from the ground upward, with the lower levels being prepped for final paint and appliance deliveries. Level 10 should be fully complete later this month and is nearing punch list status. Cabinets and countertops are being installed on level 15. Over the next 30-90 days, finishing work in individual residences will continue, the exterior metal siding will be completed, and work will be started on the project’s 33 amenity areas. Pearlstone Partners Touts Natiivo Austin is Over 75% Complete and 85% Sold Page 2 of 3 The first-of-its-kind concept in residential living, Natiivo Austin is a 33-story high-rise condominium tower that offers the benefits of ownership combined with the ease and service of a high-end hotel. Owners will enjoy 24-hour concierge service and valet parking, co-working spaces, a lobby coffee bar with the barista, a café lounge with grab-and-go options, and a wine and beer lounge. An 18,000 square-foot amenity area includes a terrace and garden on the tenth floor, an outdoor fitness lawn, dog park, and spa-inspired fitness center and yoga room. In addition to spectacular city views, the 33rd floor rooftop deck will boast a 60-foot resort-style pool with water lounge chairs, private cabanas and an outdoor fireplace. Natiivo owners will be only a short distance away from miles of hike-and-bike trails lining Lady Bird Lake. Natiivo Austin will now feature 248 residences, including studios and one- and two-bedroom units, available fully furnished and appointed with upscale amenities. Co-developed by Austin’s own Pearlstone Partners and Florida-based Newgard Development Group, the building’s architecture was conceived by STG Design and its interiors created by New York-based INC Architecture and Design. The development’s design will reflect its surroundings, with handpicked furnishings and native Austin design elements prominent in exteriors, common areas and interiors. Each residence will comfortably speak the language of Austin, built with premium materials, outfitted with upscale fixtures and characterized by locally sourced pieces. Owning a Natiivo Austin condominium will afford conventional ownership benefits, with the added ease of concierge bookings and hotel amenities. Owners and their renters will enjoy housekeeping, grocery delivery, on-site MasterHost, and laundry service. Natiivo owners will be able to list their apartment on any home-sharing platform of their choosing or through Natiivo Managed. With the second option, MasterHost handles all reservation requests, inquiries, check-ins and check-outs, making Natiivo Managed a great choice for owners with limited leisure time. “This ownership concept is a first for the downtown Austin area,” said Bodman. “We are finding our buyers like the flexibility Natiivo Austin offers—having the option of purchasing an unfurnished or fully furnished unit, either as a primary residence or investment. Many are drawn to the idea of living a concierge, resort lifestyle, knowing at any time they can choose to lease their residence and reap the benefits of a steady income stream to cover their investment.”

Mall Owner Simon’s CEO Sees Shopper ‘Euphoria’ as People Return to Stores

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The biggest U.S. mall owner Simon Property Group says shoppers are getting back to malls, but that it’s hard to predict what traffic trends are going to look like one year from now. Simon Property CEO David Simon said Monday that sales and shopper visits are improving week over week, but it is still being conservative in its outlook because it’s difficult to know what’s going to stick versus what’s a short-term boost, he said. “Between being cooped up, between being locked down, between the stimulus, between celebrating that the country is still around … there’s clearly some level of euphoria around that,” David Simon said during an earnings conference call Monday. “It would be impossible for me to tell you what percent that is. … On the other hand, we’re still seeing pockets of the country that haven’t really seen that yet,” David Simon added. He cited California and New York as two examples where store traffic remains suppressed by Covid-related restrictions. International tourism has also yet to return to malls and outlet centers, he said. Click to read more at www.cnbc.com.

Carr Properties Expands Into Austin, Texas with Acquisition of 100 Congress

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Carr Properties, a leading owner, operator, developer, and acquiror of high-quality commercial properties in the Washington, D.C. and Boston markets, is pleased to announce the purchase of 100 Congress Avenue (“100 Congress”), a 22-story, 419,785 square foot, Class A office tower, located in the heart of downtown Austin, Texas. This acquisition marks Carr Properties’ entry into the Austin market, reflecting the company’s continued focus on strategic growth and investment in innovation markets. 100 Congress is one of Austin’s best and most prominent downtown office towers. Situated on over an acre of land on the corner of Congress Avenue and Cesar Chavez, Austin’s two most sought-after throughfares, 100 Congress overlooks Lady Bird Lake and is within walking distance of local attractions, such as Austin City Hall and ACL Live. This central location immerses customer workplaces in the life, energy, and entrepreneurial vibrancy of downtown Austin. “We are very excited to expand into Austin, a vibrant innovative market poised for long-term growth with rapid demographic, economic, and market momentum,” said Oliver Carr, CEO of Carr Properties. “Austin’s economic drivers of tech, government, and education will be a strong strategic complement to our existing portfolio in Washington, D.C. and Boston.” Click to read more at www.carpropp.com.

Distressed Real Estate Debt Doubles

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Green Street’s Real Estate Alert reports that nonperforming commercial real estate debt on the biggest banks’ balance sheets doubled last year but remains a sliver of total holdings — dashing hopes of a buying spree for opportunistic investors, at least for now. Amid the downturn sparked by the pandemic last year, non-performing loans made up 0.86% of the commercial mortgages on the balance sheets of the 325 largest U.S. banks at yearend, up from 0.41% a year earlier, according to regulatory data compiled by Trepp Bank Navigator. The figure has remained below 1% since 2015 and is a fraction of the all-time peak of 8.6% hit in 2010. The low levels of bad debt are due in part to a host of forbearance measures implemented to assuage the effects of shutdowns enacted to curb the virus’s spread. As those accommodations expire, however, the level of troubled debt is expected to tick higher, stoking optimism that more distressed opportunities could shake loose down the road. All told, the top banks have just $15.4 billion of nonperforming loans on their books. There is another $2.1 billion of foreclosed properties, but 20% of that total belongs to just one regional bank in Texas focused on distressed loans. Meanwhile, hundreds of billions of dollars have been raised for opportunistic and distressed investing — drastically skewing the supply-demand curve and helping support property values. Click to read more at www.greenstreet.com.

Family Offices Continue to Increase CRE Allocations

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Family offices control a staggering amount of wealth globally, and they have a strong appetite for commercial real estate. And although a growing number of private equity funds and sponsors are counting family offices among their investor bases, getting a foot through the door to reach those investors remains no easy task. Family offices have become a popular catchphrase over the last few years, notes DJ Van Keuren, co-managing member of Evergreen Property Partners, a private real estate investment platform created for family offices to invest together. Definitions of a “true” family office vary with the minimum threshold for wealth between $100 million and $250 million depending on the source. According to the Global Family Office Report 2019, published by Campden Research, there are 7,300 families globally and 3,100 in North America with estimated wealth greater than $150 million. “As funny as it sounds, if you get a family that is worth $50 million or $100 million, they are really just ultra-high net worth. So, it has become a bit of a loose phrase, but everyone wants to find those big whales,” says Van Keuren. “There also is a misperception on how much a family office will invest. Everyone thinks they are going to write a $15-million to $25-million check. It does happen, but it is not the norm,” he adds. Click to read more at www.wealthmanagement.com.