Features

Company Profile: Grandbridge Real Estate Capital’s Relationship with BB&T Gives the Seniors Housing Lender a Leg Up

by John Nelson April 1, 2015

In early November of last year, ROC Seniors Housing Fund Manager, a subsidiary of Bridge Investment Group Partners, was looking to finance its acquisition of Thunderbird Retirement Resort before the end of the year. Fast-forward 43 days after applying for a loan with Grandbridge Real Estate Capital, ROC Seniors had $21.2 million in which to fund its purchase of the 345-unit seniors housing community in Phoenix. As a lender to the seniors housing industry, Richard Thomas is confident that his seniors housing and healthcare team at Grandbridge Real Estate Capital can quickly meet any demand from a qualified borrower. The Charlotte-based company is a wholly owned subsidiary of Branch Banking and Trust Co. (BB&T) and is fully integrated with the bank’s national footprint. Having access to the bank’s balance sheet is a nice chip to have for Grandbridge when looking to source deals for prospective borrowers. The balance sheet through BB&T Real Estate Funding’s structured loan program was instrumental for Thomas and his team to close on the Thunderbird Retirement Resort acquisition loan so quickly. “When we walk in the door, we do have a balance sheet behind us, which means we have money in our pockets so to speak,” …

April 1, 2015

Property Tax Assessments Are Spiraling Out of Control in New York City

by John Nelson March 31, 2015

Massive assessment hikes in New York City confirm that Mayor Bill de Blasio intends to extract as much revenue as possible from real estate, one of the city’s most important industries. This will kill the golden goose underlying New York City’s economic recovery. The city released its tentative assessment roll for the 2015-2016 tax year on Jan. 15, 2015, revealing painful and substantial increases in market value for both residential and commercial properties. The city pumped up the value of residential properties by almost 11 percent, while driving up commercial assessments by 12 percent over the prior tax year. These increases are nearly double the rate of increase affected by last year’s final assessment roll, where residential market values increased by 6.6 percent and commercial market values increased by 7 percent over the 2013-2014 roll. Owners’ Bottom Line Takes a Hit The compound effect of year-after-year increases is a crushing burden to owners and tenants, but the higher end of the commercial property spectrum was particularly hard hit in the latest assessment roll. Owners of trophy office buildings saw their market values spike by more than 31 percent over the prior year’s values. Even worse, owners saw the market value …

March 31, 2015

Features Top Stories Uncategorized

Hunter Hotel Panelists Mull Threat From Airbnb

by John Nelson March 26, 2015

ATLANTA — During the close of his presentation at the 27th Annual Hunter Hotel Investment Conference on Wednesday, Mark Woodworth of PKF Hospitality Research asked the hundreds of industry professionals in the audience if they were concerned from a competitive standpoint about Airbnb, the online service that lets people rent out their homes to travelers. Only five attendees raised their hand. Woodworth, who is president of Atlanta-based PKF, politely chided the group saying that Airbnb and similar room-sharing ventures are absolutely threatening the hotel industry. The San Francisco-based company is valued at approximately $20 billion, according to the latest report from Bloomberg. By comparison, hospitality giant InterContinental Hotel Group’s valuation currently stands at $9.3 billion. Woodworth reported that 76 percent of Airbnb’s 27,392 room listings in New York City are under $200 per night, a highly competitive rate given the industry’s low vacancy rate. Airbnb travelers don’t have to pay traditional occupancy taxes like hotel users do, although Airbnb travelers do have to pay “transient occupancy taxes” in select cities such as Portland, San Francisco, Amsterdam, Chicago and Washington, D.C. Airbnb has voluntarily rolled out the tax program in those markets and will likely roll out the tax collection initiative …

March 26, 2015

Features Texas Texas & Oklahoma Feature Archive Top Stories

How Will Low Oil Prices Affect Texas Commercial Real Estate?

by Haisten Willis March 24, 2015

The rapid decline in oil prices brought good news for most Americans, who saw lower prices at their local gas station for the past several months. For those in the oil industry, particularly in energy hot spots like Texas, the news was not as well-received. The price drop has led to layoffs and uncertainty over the potential effect on new construction. “Right now we don’t know how long it’s going to last,” says Patrick Jankowski, senior vice president of research at the Greater Houston Partnership (GHP), an economic development group serving the Houston area. “It looks like we’re in for 12 to 24 months with uncertainty and unease. But by 2017 we should be in good shape.” According to a report from GHP, the spot price for West Texas Intermediate, the U.S. benchmark for light sweet crude oil, peaked at $107.95 a barrel on June 20, 2014. The price was $47.53 on March 24 of this year, which represents a decline of 56 percent. In January, crude traded as low as $44.45 a barrel. Jankowski says prices on both ends of the extreme are unsustainable. Oil prices under $45 per barrel can’t and won’t last; at the same time, neither …

March 24, 2015

Features Office Top Stories

U.S. Claims 7 of 10 Most Expensive Office Markets in the Americas, Says Cushman & Wakefield

by John Nelson March 19, 2015

NEW YORK — Led by Manhattan, the United States occupies seven of the 10 most expensive office markets in the Americas region as determined by Cushman & Wakefield’s annual Office Space Across the World report. The Americas region is defined as North and South America. The top three — Manhattan, Rio de Janeiro’s Zona Sul and Sao Paolo’s Faria Lima — were unchanged from the 2013 report. Worldwide, Manhattan came in at No. 3 following London’s West End and Hong Kong’s central business district (CBD). New York City’s Manhattan market continued to post employment growth in 2014, much of which is office-using jobs in the technology, advertising, media and information industries. Leasing activity in Manhattan totaled roughly 32.8 million square feet in 2014, which is the highest net absorption in the market in the past 15 years, according to the report. Leasing was bolstered by 28 leases in excess of 100,000 square feet. The market’s vacancy rate dipped into the single digits in December 2014 for the first time since July 2012. The market fundamentals pushed rates to $130 per square foot in Manhattan, barely edging out Rio de Janiero. “The U.S. economic recovery is quickly propelling the Manhattan office …

March 19, 2015

Features Top Stories

JLL: Rising Cost of Raw Materials, Labor Temper Profit Expectations for Construction Industry

by Jeff Shaw March 17, 2015

CHICAGO — Building revenue and demand for new commercial construction may be rising fast, but so are costs. Profitability for new commercial building projects will be tricky in 2015, as soaring demand may not lead to soaring profits, according to a new JLL report on U.S. non-residential construction activity. “Leasing momentum is boosting construction demand across multiple commercial property sectors — but raw material and labor costs are making it more expensive to get out of the ground than ever before,” says Todd Burns, president of JLL Project and Development Services for the Americas. “Demand is exploding, but demand isn’t everything. You have to consider the bottom line of every project to make sure it makes economic sense short- and long-term.” Affirming rising demand, the consensus forecast of the American Institute of Architects calls for spending on non-residential construction to rise 7.7 percent in every commercial property sector this year. Likewise, the Construction Backlog Indicator, which tracks non-residential construction, hit a post-downturn high of 8.8 months in the third quarter of 2014. The JLL report highlights several trends to watch this year on the construction front: • Recovery Continues, Backlog Builds — The overall value of buildings constructed has continued …

March 17, 2015

Features Top Stories

Lodging Econometrics: Average Sales Price Per Room Soared Nearly 21 Percent in 2014

by Danielle Everson March 12, 2015

PORTSMOUTH, N.H. — The average sales price per room for U.S. hotels in 2014 was $156,002, up a whopping 20.6 percent on a year-over-year basis. According to Lodging Econometrics (LE), the healthy increase stems from record-setting hotel revenues and profits, low interest rates and the availability of attractive financing terms. LE reports that the total investment in the U.S. lodging industry was an estimated $30.8 billion last year. In 2014, of the 1,292 total hotel assets that transacted or transferred ownership, 935 reported a sales price. The Portsmouth, N.H-based firm anticipates that hotel prices will accelerate for the next several years as hotel performance continues to shine in the absence of any significant new supply. A critical part of the equation is that interest rates, although expected to rise, still remain attractive causing competition to intensify for prized single assets and portfolios. Since the market bottomed out in 2009 with 528 total transactions, deal volume over the last five years has ranged between 1,261 and 1,457 transactions. It is a narrow range far distant from the 3,218 transactions and transfers reported in 2007, according to LE. There were 799 single-asset transactions and another 481 hotels that changed ownership as part …

March 12, 2015

Conference Coverage Features Top Stories

Healthcare Moves Out of Hospitals Into Communities, Say Industry Experts

by Jeff Shaw March 10, 2015

By Nellie Day LOS ANGELES — The days of large hospitals and medical campuses may be numbered, according to panelists at InterFace’s Healthcare Real Estate West 2015, which was held Feb. 25 at the Omni Hotel in downtown Los Angeles. The sixth-annual event drew more than 220 attendees. The panel discussion topics ranged from the Affordable Care Act to cutting-edge technologies to the next big plays for healthcare REITs. While the topics were varied and expansive, all roads led to a central issue: the decentralization of patient care. “The days of providers or healthcare systems thinking they can control patient movement are gone,” said Dr. Setul Patel, CEO of Texas-based Neighbors Health System and a “Hospital and Healthcare System Perspective” panelist. “It’s absurd. Patients nowadays can go where they get good care at a good price. The biggest frustration is how inefficient big healthcare systems are. They need to provide a better quality of care at a cheaper rate and in a better fashion.” That’s what Patel and his healthcare system are attempting to do. Neighbors Health System is a regional emergency medicine healthcare delivery model that provides care through free-standing emergency facilities. Most of its centers are located in …

March 10, 2015

Conference Coverage Features Top Stories

How Technology Is Reshaping the Seniors Housing Landscape

by Jeff Shaw March 5, 2015

By Nellie Day Technological advancements in healthcare and daily living are having a profound impact on the seniors housing industry but not without some growing pains, panelists asserted at InterFace’s Seniors Housing West conference, held Feb. 26 at the Omni Hotel in Los Angeles. On the healthcare side, providers and family members want to do what they can to keep their loved ones active and well. On the entertainment side, many seniors want the comforts of home — and Wi-FI is one of them. “I love the idea of technology in healthcare for our clients,” said Dana Wollschlager, vice president of senior living consulting firm Plante Moran Living Forward headquartered in Southfield, Mich., and a speaker on the “Technology and Operations” panel. “I love it most importantly because we’re able to drive better outcomes for the residents we’re serving, but it does bring additional revenue and cut costs. It results in 25 percent fewer turnover in our communities. That equates to revenue not lost. These are huge numbers as we work to drive net operating income and make these numbers work even better. This is the low-hanging fruit.” The technology affecting seniors includes everything from surveillance cameras and sensors mounted …

March 5, 2015

Conference Coverage Features Top Stories

Seniors Housing Is Much More Than Real Estate, Margaret Wylde Reminds Conference Attendees

by Jeff Shaw March 3, 2015

LOS ANGELES — The seniors housing industry needs to focus more on the health and happiness of residents and less on the real estate aspect of the business if profits are going to be sustained for the long term, said Maragret Wylde, president and CEO of research and advisory firm ProMatura Group and keynote speaker at last Thursday’s InterFace Seniors Housing West conference. Approximately 250 industry professionals attended the event held Feb. 26 at the Omni Hotel in Los Angeles. “We really don’t need to be selling the real estate,” said Wylde, whose Oxford, Miss.-based research firm specializes in understanding what consumers want and are willing to pay for, specifically persons age 50 and above. “We don’t need to put any more into our communities. We don’t need any more amenities.” From Wylde’s point of view, the importance of a quality operator can’t be overstated. Bidding Frenzy Continues Many of the day’s panelists agreed that real estate aspect of senior care has gotten a bit out of control recently, creating prime conditions for a seller’s market ripe with hungry institutional investors. Some also wondered if this flurry of activity might soon lead to overbuilding in many of the nation’s hottest …

March 3, 2015

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