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January 14, 2010 
 
 
YESTERDAY'S PREMIERE RERALLIANCE EVENT

 
A baby’s first steps. College graduation. Marriage. Yesterday, we were part of real estate equivalent. At CityCentre, we checked out the Real Estate Resources Alliance’s first public event. Are we using hyperbole? Sure. But a 225-person crowd isn't too shabby.
 
RERAlliance president Philip Lewis

RERAlliance president Philip Lewis (also prez of Swan Point Landing) tells us the Alliance was formed last year because hard times are the right time for real estate professionals to share resources. He says they chose speakers who are out making deals (rather than researchers and economists), so they could share their tried and true techniques.

StanCorp Mortgage Investors Mark Fisher (at the podium) oversees a $7B mortgage portfolio, and his department originated $700M in new loans in ’09. Texas is StanCorp’s #2 concentration (behind California). He says Texas does well in CRE because it's pro-business, open to newcomers, and has decent job growth compared to the nation. The lack of transactions, he says, is due to destroyed equity and a large bid/ask spread. As short term loan rates go up, there’s more pressure on mortgage, and there will be more activity. Mark suggests that if anyone wants to be an 80% lender, now is the time.

Aviva Investors’ Dale Helling flew in from Des Moines, where it’s negative 30 degrees, making this his “Spring Break.” His department closed $550M in commercial loans in ’09, with Houston comprising 31% of its Texas business—next closest is DFW with 26%—which means 33 loans totaling $85M, mostly in office and industrial properties. A recent loan in Houston was $9M for a 212-acre garden style apartment complex, with 64% LTV and 10/30 structure. Dale believes the problem with CRE right now is largely psychological: There is enough equity waiting but “no one wants to catch a falling knife”; everyone is waiting for the economy to rebound.

Midland Loan Services SVP Greg McFarland says a plethora of CMBS loans will mature soon: $60B in 2010, peaking at $130B in 2016. Near term, he believes companies will look to extend loans by a couple years, often through special servicers. Greg explains that from ’05-’07, CMBS loans were way overleveraged and now are the bulk of the $77B in loans with special servicers. All of these will need to be repositioned, whether through renegotiations or foreclosure; special servicers will be exceptionally busy. Greg predicts that less than 50% of loans coming to maturity now are capable of being refinanced and that only a small percentage will actually do so.


RETAIL READY
 

Ostensibly, we stopped by Grubb & Ellis to talk retail. But secretly, we just wanted to see how many VPs could fit in a room. Here's four: Keith Lloyd, Ace Schlameus, Wendy Vandeventer, and Ken Page. They tell us retail is one the hardest-hit markets in Houston, but Wendy and her partner George Cushing have two new investment sales listings: a 10k SF construction deal in Atascocita, and Cornerstone Market in Austin, which includes retail, medical, and office tenants. Cornerstone is about to go on the market and is encapsulated by trees and near a high-end residential area. Both projects are 100% leased. We won’t spill what Keith told us because he’s speaking at G&E’s forecast next week.

 
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