The Deal Sheet
Neither hell, nor high water, nor rising interest rates will stop them. (But how about another polar vortex?) Investor confidence continues to float around record high levels, according to Marcus & Millichap’s latest investor sentiment survey.
The firm’s Investor Sentiment Index registered 176 in Q4 ‘13, down four points from the peak reached in the second quarter. Marcus & Millichap CSO Hessam Nadji would’ve expected a bigger drop considering the government shutdown and a 100 bps spike in interest rates. (To be fair, our confidence always drops in Q4, right around 11:59pm on December 31.) According to the investor sentiment survey, 72% of investors agree that commercial real estate offers favorable returns compared to other investment classes, and 59% plan to increase their investment activity this year. (Those respondents projected their portfolios would grow by an average of 13%.)
Marcus & Millichap regional manager Dave Luther says Houston has enthusiasm across all investor segments. Beyond our hot job market, incomes have risen 10% here, driving retail sales growth and tenant demand. He's watching for out-of-area capital to play a bigger role in acquisitions. Nationwide, apartments are still in the forefront of investors’ minds. 51% of survey respondents expect the sector will be the best performing in 2014, and 76% of current multifamily investors predict its values will rise this year. (Respondents predict a 6.1% increase in values, largely thanks to significant rent bumps.)
Lori Snider joined Innovative Real Estate Cos as VP. She was previously with Lincoln Property Co and co-founded Creativity For Rent (a multifamily marketing and design firm).
Levey Group’s Chris Marten was promoted to director of construction. He has been with the firm since September 2012 and has 14 years of commercial construction experience. He was formerly with JE Dunn and Satterfield & Pontikes.
Duke Realty’s Jeff Thornton was promoted to regional SVP. He will oversee leasing and management of the firm’s 17M SF industrial and office portfolio in Texas. He has been with Duke since 2001 and has overseen its Dallas operations since ’07.
Tripathi Holdings purchased an 18k SF office/warehouse building at 5930 Thomas Rd. NAI Houston’s Michael Keegan and Darren O’Conor repped seller Jimmy Ballowe. Champions RE Group’s Stuart Scholer repped the buyer.
Figure Four Partners purchased 46 acres in Brazos Town Center (Highway 59 and FM 762 in Rosenberg). NewQuest repped seller Brazos TC Partnership.
MAS RAM Mechanical purchased a 10k SF warehouse in Campbell Road Industrial Park from NSA Chicago. Southwest Realty’s Jonathan McDaniel, Steven O’Connor, and Marc Drumwright repped both parties.
Golfcrest Investments purchased a 65k SF tiltwall facility at 8363 Market St. Finial Group’s Reed Vestal and Ross Thomas repped the buyer and Cushman & Wakefield’s Beau Kaleel and Jim Foreman repped the seller.
An undisclosed buyer purchased a 14k SF industrial building at 1717 West 34th St. Heins Properties’ Anthony Heins repped seller West 34th Street Properties.
IDI purchased 10.7 acres at the southeast corner of West Little York and North Houston Rosslyn. NAI Houston’s John Ferruzzo and Chris Kugle repped seller B&H Bingle Road Partnership, and IDI’s Ben Newell repped the buyer in-house.
Montana Furniture leased the 25k SF former Conn’s building at 10900 Gulf Fwy. NewQuest’s Bob Conwell and David Meyers repped the landlord and Investar Real Estate’s Gary Warner repped the tenant.
Wilson Elser has moved into its new 14k SF office on the 33rd floor of Two Houston Center. The firm relocated into the CBD from the Galleria, where it had been located for over 10 years. Studley’s Chris Tarzon and David Endelman repped the tenant and CBRE’s Debbie Wilson repped landlord Crescent HC Investors. Wilson Elser signed a long-term lease and has the option to take the entire floor.
Hubbell Electrical Products renewed 16k SF of warehouse/distribution space at 4140 World Houston Pkwy. NAI Houston’s John Ferruzzo repped the tenant and InSite Realty’s Rives Nolan repped landlord EastGroup Properties.
Edgen Group renewed 16k SF at the Towers at Westchase I. NAI Houston’s Jon Silberman and Griff Bandy repped the tenant, and Stream’s Stewart Lyman repped the landlord.
NorthMarq’s Warren Hitchcock arranged $6M in acquisition financing for Park Row Plaza, a 70k SF office property. The loan received a seven-year term and 25-year amo and was placed with MidFirst Bank. The financing was closed in less than 45 days.
LMI Capital’s Chris Pollard arranged $86M in debt across eight Texas multifamily properties for Ascension CRE and Moriah Partners. The loans included funds for the acquisition of one property ($19M loan with five years I/O and 75% LTV) and the refinance of seven properties totaling over 2,300 units. The latter properties were acquired in 2011 as part of a distressed portfolio. The JV spent an average of $5,300 per unit to improve the communities, and occupancy has increased from 70% at TOS to over 93%. It was challenging for LMI to cash out all the owner’s equity in the refis only two years after acquisition; it arranged conduit loans for six of the properties and a non-recourse bank loan for the seventh.
CBRE’s Aron Will arranged financing for The Village at The Woodlands Waterway, a JV between Bridgewood Property and Harrison Street RE Capital. The $38M floating-rate loan was placed through a regional bank. The mortgage has a five-year term at an all-in interest rate of 2.35% and 36 months of I/O. The property is a 207-unit, Class-A seniors housing facility operated by Brookdale Senior Living.
CONSTRUCTION & DEVELOPMENT
D’Agostino Cos broke ground on Greenhouse at Park Row, a 120k SF office development in the Energy Corridor. CBRE’s Steve Rocher, Kristen Rabel, and Parker Duffie are handling leasing. It’s already 20% leased with 93k SF remaining. It will deliver this October. Metzger Construction is GC and Browne McGregor Architects is handling design.
McCann Realty Partners started construction of 350-unit Radius at Shadow Creek Ranch Apartments in Pearland. It sits in Shadow Creek Ranch master-planned community. It will begin leaseup in Q4 ’14 and will be managed by Pegasus Residential. The construction loan was funded by Regions Bank, and McCann is its own GC. The firm has developed and sold three projects in Houston to date.
THIS AND THAT
Hotel Sorella and Hotel Granduca were named to the Conde Nast Traveler Gold List for 2014; Hotel Sorella was ranked second of Texas hotels. This is the fourth consecutive year Hotel Sorella, which opened in ’09, attained Gold List status.
Newcor CRE opened its office in The Woodlands. It is led by managing principal Rob Banzhaf, David Alexander, Krissie Vanyo, and Ryan Dierker.