The resort client Dart Realty (Cayman) is developing on Seven Mile Beach is coming along swimmingly. It's a sight - and site - to see. The resort will comprise hotel rooms, for-sale residences, beach bungalows, restaurants and more. Kimpton Hotels and Restaurants will be the operator. The resort is on track to open in November 2016.
Commercial real estate is at the center of the biggest U.S. business story of the day, week and probably month. GE Capital Real Estate confirmed plans to sell its massive commercial property portfolio to seven usual suspects in a deal valued at close to $30 billion.
GE has loved to blame its finance arms - particularly GE Capital Real Estate - for its woes sinc ethe September 2008 collapse of Lehman Bros. But now, GE is poised to sell its property portfolio at the height of the market, a move shareholders should like.
Chris Roush's Talking Biz News has a great post today about how the heavy-hitters covered this monster deal. Here's the story by Liz Hester.
BY LIZ HESTER · APRIL 10, 2015
The New York Times story by David Gelles had these details about the sale:
General Electric is poised to sell its enormous real estate portfolio in a sale that could fetch about $30 billion, according to people with knowledge of the matter who spoke on the condition of anonymity.
The move would be the biggest move yet for G.E.’s chief executive, Jeffrey R. Immelt, as he tries to refocus the company on its core industrial businesses and reduce its exposure to financial services.
Two financial institutions — Blackstone and Wells Fargo — are preparing to buy most of the portfolio, which includes office and apartment buildings as well as substantial loans, these people said. A deal could be announced as early as Friday.
Many details of the transaction were not immediately clear, including the price, which assets were being bought by Blackstone and Wells Fargo, and whether any other buyers were acquiring substantial assets from G.E.
Dana Mattioli, Eliot Brown and Ted Mann wrote for The Wall Street Journal that the move would likely be welcomed by investors:
The company’s real-estate business, run by its GE Capital unit, is at the heart of investors’ concerns that finance is too risky a business for an industrial company. Those concerns have weighed heavily on GE’s shares, which remain stuck well below the $30 mark where they traded before the financial crisis erupted in 2008. The stock’s weakness has been a source of frustration for GE executives, retirees and shareholders, tarnishing Mr. Immelt’s 13-year tenure at the company’s helm.
GE has been steadily paring its real-estate holdings since the financial crisis. But executives have recently concluded that they need to move more aggressively to scale down GE Capital amid persistent complaints from investors.
The company’s shares jumped 72 cents to $25.73 Thursday on news of the potential deal, which was first reported by The Wall Street Journal. The stock’s nearly 3% gain on the day was its largest since October 2013.
Real-estate investments aren’t an obvious fit with GE’s better-known businesses of building advanced aircraft engines, power turbines and medical devices. But real estate has been a big business for the company under Mr. Immelt, who plowed billions of dollars into property in search of profits.
The USA Today story by Kaja Whitehouse and Matt Krantz said that the company was refocusing on manufacturing:
An agreement on the transaction — part of GE’s bigger plan to return to basic manufacturing — could be reached as soon as Friday, said the person, who asked not to be identified because the deal is not yet public.
The sale, which includes warehouses, factories, malls, apartment buildings and other commercial properties spread across the globe, could mark the largest real estate sales since before the financial collapse. In 2007, Blackstone acquired Equity Office Properties Trust for $39 billion.
GE, known for lightbulbs and ovens, has been aggressively winding down its financial business, including loans and investments, in an effort to simplify its business and boost the stock price.
If the deal goes through, it will continue a period of dramatic change for GE. The company has been remaking itself for years to get out of banking and back into manufacturing. Along the way, its total assets, which include everything from cash and investments to plants and equipment, have fallen to $648.3 billion at the end of 2014 — down 19% from the peak as of the end of 2008, says S&P Capital IQ.
The Forbes story Erin Carlyle pointed out that GE isn’t the only company shedding assets:
If so, the company could become the latest in a string of firms to shed real estate assets and focus on their core businesses. Last week, Sears announced a plan to shed part of its real estate holdings and spin 254 stores off into a Sears-and-Kmart-only real estate investment trust, or REIT. Hudson’s Bay Co., the Canadian parent of Saks Fifth Avenue and Lord & Taylor, as well as casino operators Pinnacle Entertainment PNK -0.25% and Penn National Gaming have taken similar tactics. And activist investors at McDonald’s, Dillard’s, and casino operator MGM Resorts MGM +4.72% International have pushed for real estate spin-outs at those companies. Typically, these companies sell the assets and then lease them back from the new owner.
However, GE’s real estate differs from these other deals because it is an investment portfolio, as opposed to company-owned locations. GE’s real estate portfolio primarily consists of debt issued by property owners, the WSJ reports.
But both the recent REIT spin-outs and GE’s potential move are taking advantage of increased appetite for real estate in an environment of low yield on bonds. Prices for commercial real estate are rising. An index tracking commercial property prices by Green Street Advisors is up 15% since the top of the real estate cycle in 2007. In January the MCSI US REIT Index, which covers about 85% of the US REIT market, hit a level of 1,222.6, less than 1% below its 2007 peak of 1,200.2.
The move is one that should help investors become more comfortable with GE’s business model moving forward. Because the portfolio was mostly debt issued by property owners, meaning that shedding it should free up some capital for other investments.
ATLANTA (April 9, 2015) - In the late 1960s, before mixed-use was cool and when hippies still ruled Midtown, Jim Cushman had a vision. He foresaw the need for a place where people could work, live, shop and play at 14th and Peachtree streets. He assembled a team and developed Colony Square, by far the first mixed-use development in the Southeast.
James Edward "Jim" Cushman, 84, died Wednesday in Atlanta. Born and raised in neighboring South Carolina, Cushman cut his teeth in commercial real estate by developing the original Lenox Towers in Buckhead and Paces Place, credited as the first condo in Atlanta.
For a great piece on Cushman, check out this new post from his daughter-in-law, Jackie Gingrich Cushman.
As a commercial real estate reporter, I often heard that Jim Cushman started the mixed-use movement 30 years ahead of his time. And though he's rarely mentioned with Atlanta real estate superstars such as Tom Cousins and John Portman, he should be. Imagine what Midtown would be without Colony Square. The development anchors what has become the highest-profile section of the city.
Cushman's legacy lives on through his children and friend Stuart Alston, a longtime Carter employee who joined Cassidy Turley when it bought Carter's brokerage division. Alston cites Cushman as one of his mentors for his "do it right the first time" philosophy, according to a 2002 Atlanta Business Chronicle article.
Cushman did just that with Colony Square, right in Regus photo, which stands tall amid the newer towers of Midtown proper. Here's the full obituary.
- See more at: http://www.legacy.com/obituaries/atlanta/obituary.aspx?n=james-cushman&pid=174591716&fhid=8926#sthash.XhKmSVps.dpuf
ATLANTA (April 8, 2015) - A just-posted DRI filing seems to show that the mystery project at Majestic Logistics Center at the Fulton County airport is moving closer to revealing itself.
Majestic Realty Co. of Los Angeles says it plans to develop 2.8 million square feet of industrial space at the park situated at 3945 Aviation Circle at the Fulton County Airport-Brown Field. Majestic will lease 341 acres for the development, according to the Development of Regional Impact filing.
This information jives with Bisnow Atlanta's year-old report that Majestic would lease about 300 acres from the county for 1 million-square-foot refrigerated warehouse for Kroger Co.
However, the location at "Charlie Brown" Field appears to be new info. Speaking of Charlie Brown the developer, his son Scott Brown is the project manager for Majestic on this huge deal, who some calle "Project Jasper." Had to happen.
We're hoping no one yanks this big football away from any one before its kicked through the goalposts.
Stay tuned (and check out the DRI filing below).
ATLANTA (April 8, 2015) - It's hard to believe Atlanta's rocking retail developer has been going at it for 30 years, but it's true. Buckhead's Charlie Hendon is prepping for his 30th Hendon Rocks party at ICSC's RECon show in Vegas.
The legendary Hendon Rocks party No. 30 is set for Tuesday, May 19th at (where else?) The Joint at the Hard Rock Cafe & Casino. This year's theme is "Rock Steady" to pay homage to Hendon Properties' steady performance in commercial real estate for three decades.
To put his steady staying power into perspective, realize that most commercial developers has a career that's only slightly longer than an NFL player. The cyclical nature of development means players come and go and switch careers and switch back (after realizing why they hated being attorneys).
Hendon Rocks marks the firm's main marketing push of the year.
This year's party will include performances from soap-star turned Jessie'sgirl lover Rick Springfield and Bad Company frontman Paul Rodgers, who undoubtedly will play the band's 1974 hit "Rock Steady."
ATLANTA (April 7, 2015) - The Atlanta Journal-Constitution went looking for a new breaking news reporter, and it found one with a nice mix of old and new media experience. But I bet it was the reporter's new media experience that won him the job.
The newest Breaking News Reporter at the AJC is Tyler Estep, who left the Gwinnett Daily Post where he served as "Multimedia Journalist" - after five years. With all due respect (which usually means the exact opposite) to the Gwinnett paper, I'm sure Tyler's experience breaking news for Curbed Atlanta played a larger role in the Atlanta paper's decision to hire him.
Curbed Atlanta, led by Editor Josh Green and part of the Vox new media empire, aggressively covers entitlement and development stories across the metro. In fact, Curbed often breaks big stories about when and why new dirt will be moved.
As a breaking news reporter, Estep has been writing a lot of crime stories, something he did well at the Gwinnett daily. But the AJC is savvy enough to know that as commercial real estate continues to be a huge story here, they have a breaking news reporter who can pitch in.
It All Starts With Real Estate.
- Tony Wilbert, The Wilbert Group
ATLANTA (April 5, 2015) - Don't count on starting your July 4th holiday with an all- American meal at OK Cafe after all.
The Buckhead restaurant, badly damaged in a December 2014 fire, seemed poised to reopen June 1. But a delay in obtaining permits (which finally are in hand) has forced owners to push back the opening once more - this time till Aug. 1.
In today's Atlanta Journal-Constitution, a reader asked the question we've all been asking and Googling - "When Will OK Cafe Reopen?" The paper's answer, based on permits and OK Cafe's website is this summer. Looks like they meant August.
We'll see you there.
Dateline BUCKHEAD ATLANTA (The community, not the MXD by OliverMcMillan)
By Tony Wilbert
April 3, 2015 - Having covered and/or followed Atlanta commercial real estate since former Mayor Sam Massell carried the Centennial Olympic torch past the old Buckhead bar district, I'm used to seeing buildings scraped to make way for new development.
The more I see, the more I like because it means new jobs, new workplaces, new residents. That said, when I drove past this pile of rubble across from Frankie Allen Park, it struck a chord with the nostalgic side of me. It hit me that my first Atlanta apartment was in there somewhere.
Having just moved from Savannah to Atlanta to start work at Atlanta Business Chronicle in May 1996, I needed to find a place to live fast, because the pending Summer Olympics Games resulted in constricted supply. (Recall that Muhammad Ali and others rented out Gables Over Peachtree near the North Avenue MARTA station.)
I found a too-big, too expensive two-bedroom apartment at Gables' property at 475 Buckhead Ave., adjacent to the old Oxford Books location. (I did hate to see that structure torn down.) It was a primo location. I walked to the bar district and local restaurants to watch Redskins games.
I lived there two years and loved it. Now, it's gone. But that's OK.
Hanover of Houston soon will start construction on Hanover Park Place, a 335,062-square-foot apartment community with 375 luxury units. (Check out Buckhead View's story for a rendering.) Hanover made a splash in Atlanta when it confirmed plans in December 2001 that it would erect a 39-story apartment tower with the city's highest monthly rents. "The Hanover" at Alliance Center was built and now is The Paramount condo tower.
So, my old apartment is gone, but good things will rise in its place (though I no longer can point out my former balcony to our kids and say, "I used to live there" without getting weird stares.
CHARLOTTE, N.C. (March 25, 2015) - Former Atlantan Brian Leary is doing exactly what Crescent Communities hired him to do - lead its charge into new urban commercial and mixed-use developments.
Or, as the Charlotte Observer puts it, "Crescent Dives Head First into Urban Development." That's the headline of a story based on an interview of Brian by Observer's correspondent Ely Portillo. Click here to read the story.
Portillo asked to interview Brian, a client of The Wilbert Group, after reading this thought-leadership piece Brian wrote about why Charlotte has emerged as a favorite market for investors, developers and people and businesses seeking a new home.
Like a Nimble Boxer, Charlotte Has Right Mix to Compete for Titles in Several Weight Classes
By Brian Leary, President, Crescent Commercial/Mixed-Use
When I think of Charlotte these days, the image that often comes to mind, believe it or not, is that of legendary fighter Sugar Ray Leonard. Lean, fleet of foot and possessing a seemingly bottomless supply of energy, the North Carolina-born boxer used those attributes to scale the heights of the boxing world.
Similarly, the Queen City is emerging as a championship economic player through a potent combination of a nimble, business-friendly environment and a vibrant financial and millennial scene, and the rest of the world is taking notice.
Earlier this month, a Bloomberg News article detailed how commercial real estate developers and investors from across the globe are betting on Charlotte and a handful of other “secondary markets” across the U.S. because their long-term job markets, and thus the demand for commercial space, look so promising. Indeed, the reasons for optimism about Charlotte’s ability to maintain and expand its economic momentum are ample and include the following:
• Ongoing Appeal to the Financial Sector. Charlotte rode to economic prominence because of the banking industry and, with approximately $2.2 trillion in assets under control, remains the second-largest banking center in the U.S., behind only New York City. Looking ahead, Charlotte figures to remain a hotbed for the financial services sector. Its warm weather and low cost of doing business — only 86 percent of the national average according to a recent report — offer a appealing alternative to firms considering space in the Northeast, and its location in the Eastern time zone gives it a big leg up on the West Coast, where financial workers have to be on the job well before dawn to be ready when the markets open.
Furthermore, the top-notch talent produced by the many colleges and universities in Charlotte and the Triangle area offers an additional lure to financial firms contemplating relocations, and much of that talent is also fueling an energetic startup scene related to the financial services sector.
• High in the Sky. The second-largest hub for American Airlines, now the world’s largest airline after its merger with US Airways, Charlotte Douglas International Airport is a major boon to the city’s economic development efforts and has the lowest landing fees of any major U.S. airport. The airport offers non-stop service to more than 150 destinations, nearly 40 of which are international — tantalizing numbers for the business community. Put another way, the Queen City offers nearly unbeatable and affordable access to the rest of the globe.
• A Hearty Embrace of Transit. Although it resides in the very heart of the car-centric Southeast, Charlotte has been progressive in its adoption of commuting options in the form of light-rail and streetcar transit. The nearly 10-mile light-rail line that connects Uptown and the burgeoning South End neighborhood, the just-begun network of streetcar lines, and the expansion of the Lynx light-rail system to University Park to the north signal to companies — and to young workers that crave a location in which they are not completely reliant on cars — that Charlotte is dedicated to offering the best quality of life possible.
• Millennial Growth. According to a recent report by PricewaterhouseCoopers and the Urban Land Institute, Charlotte’s number of millennial residents (those ages 20-35) has grown by 23.4 percent over the past half decade. That’s the highest increase of the major U.S. metro areas and means the city can offer employers a large supply of the tech-savvy workers they desire.
• A Good Bargain. As noted above, the cost of doing business in Charlotte is well below the national average, and residents of the city also benefit from a relatively inexpensive cost of living and high quality of life. Similarly, real estate investors are attracted to the comparatively low prices of commercial properties in Charlotte, which offer them the prospect of greater returns than comparable assets in gateway markets such as New York or San Francisco.
Simply put, Charlotte’s affordability will continue to serve as a magnet for both businesses and residents, as well as the investors needed for a strong commercial real estate sector.
• Location, Location, Location. Charlotte itself is a beautiful city, but its appeal grows even more when you consider the easy access it offers to both the mountains and the ocean. Again, this dynamic is bound to exert a powerful influence when businesses are considering locations that will cultivate a happy workforce and young college graduates are contemplating where they would like to move.
Add these factors up, and it’s easy to conclude that the Queen City is at the beginning of a long, sustainable period of serious economic expansion. Companies will locate and grow here; construction cranes will dot the skyline; and, just as Sugar Ray was in the 1980s, Charlotte will be in championship form for a long time to come.
Brian Leary is president of Crescent Communities’ commercial and mixed-use business unit.
Former real estate reporter turned real estate PR person, social networker.