Category: US/Texas CRE News

The Sale of this Massive Warehouse Adds to Hugely Impressive First Quarter

Posted on by Sarah

Interstate Crossing, a newly constructed, 1,023,488 square foot distribution facility in Fort Worth, has sold. According to CBRE’s U.S. Industrial & Logistics Figures for Q1 2021, the industrial market shows no signs of slowing down. Companies are leasing space at a historically robust pace to accommodate the large increase in e-commerce sales. Nearly 100 million square feet was absorbed in Q1, the third-highest mark on record.

CBRE’s Jack Fraker, Randy Baird, Jonathan Bryan, Ryan Thornton, and Eliza Bachhuber with CBRE National Partners represented the seller, Hunt Southwest Real Estate Development, in the transaction. A publicly traded REIT purchased the long-term leased fulfillment center for an undisclosed purchase price.

INDUSTRIAL

Pennsylvania-based builder Exeter Property Group has filed plans for the largest Denton business park yet. The company plans to build an almost 1.5 million-square-foot warehouse project in the Exeter Westpark business park west of I-35. Construction is set to start in June, according to planning documents filed with the state. Richardson-based Alliance Architects is designing the new $60 million industrial park. Exeter Property Group recently leased an about 650,000-square-foot industrial building in the same area as Lowe’s. The company is also building in its Exeter Buckner business park off Buckner Boulevard.

Click to read more at www.dmagazine.com.

Commercial Real Estate Won’t Fully Rebound Until 2023, at Earliest, Says American Ventures’ Philip Blumberg

Posted on by Sarah

MIAMI, May 24, 2021 (GLOBE NEWSWIRE) — Despite signs of a quicker-than-expected return to the office in the United States, the commercial real estate sector likely won’t rebound for another two to three years, says Philip Blumberg, the CEO of American Ventures who recently launched his fifth real estate fund since 1992. Perceived risk is the key and the reason why it typically takes much longer to recover from down real estate markets than it takes to get into them, he says. “Return to ‘normalcy’ will be dependent on how quickly tenants feel confident enough to renew or expand space,” said Mr. Blumberg. “Tenant uncertainty likely will take a while longer to sort out, tamping down rents and valuations for some time. It’ll take at least 24 months for companies to fully decide what they want to do.” Based on past commercial real estate troughs, Mr. Blumberg expects office investment to surge in 2023 or 2024 – in turn, inflating prices and drawing even more capital. In such a scenario, he envisions unwinding his portfolio – now being built – starting in 2026 or 2027. Mr. Blumberg’s American Ventures funds have performed well acquiring class A office assets in distressed markets. Over 16 years, their average annual return to investors, net of fees and costs, is approximately 18% (based on fund audits). Click to read more at www.globenewswire.com.

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

Posted on by Sarah

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.

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

Posted on by Sarah

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.

Distressed Real Estate Debt Doubles

Posted on by Sarah

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

Posted on by Sarah

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.