Monday, November 24, 2014
A shuttered truck assembly plant in Garland has sold to a real estate investment company that plans to repurpose the property.
Navistar International Corp. last year closed its warehouse and manufacturing facility on 50 acres at 4030 Forest Lane.
The closing of the assembly plant put 900 people out of work.
Commercial real estate firm JLL has been marketing the 681,354-square-foot complex for sale.
JLL said Tuesday that Doillar-Flowers Realty Partners bought the industrial complex and plans to market the property for other uses.
“The D-FW industrial market continues to see a strong level of healthy demand, which is why our team opted to demise the property and create a new multitenant option at a prime in-fill location,” Dollar-Flowers partner Pete Flowers said in a statement.
JLL’s Terry Darrow, Daniel McGillicuddy and Larry McCorkle brokered the sale. Terms of the transaction were not reported.
Navistar since 1997 had produced commercial trucks and buses at the Garland plant.
Beacon Square will have six office buildings.
Developer Billingsley Co. is planning a Plano mixed-use project that would include a half-dozen office buildings, more than 1,000 apartments and townhomes, and retail space, all near Bush Turnpike.
The 86-acre Beacon Square project could kick off as early as next year at a site just west of Coit Road.
Billingsley received approval last week for the huge development from the Plano City Council.
The first phase of the project would include 482 apartments, Billingsley spokesman Steven Grant said Tuesday.
The developer has owned the vacant land north of Mapleshade Lane for more than 30 years and has been working for more than two years to get approvals for the development.
“We are bringing in major office — 800,000 square feet of office,” developer Lucy Billingsley told the Plano City Council. “The first building coming will be a speculative office building unless it is preleased.”
Six office buildings are planned at Beacon Square.
“We will be bringing in the retail — 60,000 square feet of retail in the first phase and 117,000 square feet overall,” Billingsley said. “We have mixed-use residential buildings, we have a townhome community and apartments.”
More than 1,100 residential units — mostly apartments — are ultimately planned at Beacon Square. There will also be 7.5 acres of open space.
The Beacon Square property is just south of Billingsley’s International Business Park.
The developer has built thousands of apartments in its Austin Ranch and Cypress Waters communities in Dallas’ northern suburbs.
Beacon Square is the latest in a series of major, mixed-use projects for sites along Bush Turnpike. Last month developer Rosewood Property Co. won approval from Plano for a 156-acre project at Bush Turnpike and Alma Road that will include homes, shops, apartments and office buildings.
Real Estate Editor
With North Texas in the midst of the biggest real estate boom in decades, it would be easy for property market players to just live for the moment and enjoy these really good times.
Still the question I get asked most often these days is, “This time will it last?”
The history of real estate in these parts is written with stories of spectacular building and investment rushes followed by staggering crashes.
So no wonder with soaring activity in virtually every property type in the Dallas-Fort Worth area, even the most optimistic industry members are looking over their shoulders a bit.
Folks who’ve been following this stuff as long as I have remember the fabled real estate bonanza in the 1980s that broke all our banks and left the property market here in shambles. Digging out of that hole took almost 10 years.
The factors that fueled the ’80s boom were much different — crooked savings and loan money, tax-driven speculation and the ability to finance more than 100 percent of a project with almost no personal liability.
The current building and leasing boom that stretches from Dallas’ Uptown to the far suburbs is riding a wave of fundamentals including the country’s greatest population and job gains.
That’s why I think the real estate cycle we’re in now will last awhile, and will eventually end with a sigh rather than a scream.
Real estate analysts are betting there are going to be several more years to enjoy the current prosperity.
Jeanette Rice, a researcher with CBRE Group, expects another two to three years of good times in the Dallas-Fort Worth property market.
“Of course, we always have the supply issues in Texas,” Rice said. “But every time I start worrying about oversupply I look at demand, which is phenomenal.
“What’s being built in the office market is being leased up,” she said. “Even the retail sector — which was pretty hard hit during the recession — is seeing opportunities.”
CBRE’s 2015 forecast calls for leasing of industrial and apartment buildings to soften a bit during the next few years while the market appetite for retail and office remains robust.
The commercial real estate firm says that since 2010, 106 companies — the highest number for any Texas office market — expanded or relocated into space in the D-FW area.
Most of the leases were by companies in insurance (27 percent), financial services (15 percent) and technology (13 percent). Insurance is at the top of that list mainly because of State Farm’s new, 1.3 million-square-foot office complex being built in Richardson.
While Houston’s energy sector dominance and the high-tech emphasis in Austin have earned those cities high marks from investors and developers, Dallas’ diversified economy is catching everyone’s eye these days.
“We have this incredible job growth machine second to none,” said Kurt Day, regional director with MetLife Real Estate Investments. “We don’t have the risks of over-dependence on one sector.
“Houston has gotten a lot of interest and deserved it,” Day said. “But Dallas is poised to catch up.”
Because of North Texas’ broad economic base, D-FW will dominate with employment gains, predicts James Huckaby, managing director with Goldman Sachs.
“Dallas over time will garner more of the big corporate relocations,” Huckaby said at a recent meeting of local real estate execs.
And he agrees that the real estate market has some legs.
“If you are the believer that I am that interest rates aren’t going to move up, we are probably going to have a protracted cycle,” Huckaby said.
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Twitter at @SteveBrownDMN.
Thursday, November 20, 2014
Olympus Property, founded in 1992, is a fully integrated real estate investment firm, which is focused on the acquisition, management and timely disposition of high quality multi-family communities. Over its 22-year history, the company has become a successful and recognized name in the multifamily industry. Olympus currently owns and manages over 9,000 units across 8 states including Texas, Florida, Oklahoma, Arizona, South Carolina,Tennessee, Georgia, and California.
SAN FRANCISCO and DALLAS, Nov. 19, 2014 /PRNewswire/ -- Olympus Property is proud to announce the acquisition of The Mosaic, a 440-unit luxury urban high-rise apartment community located in downtown Dallas. The Mosaic is composed of two connected residential towers consisting of 21 and 32 stories respectively, with a nine-story parking structure attached.
The buildings were originally home to the Fidelity Union Life Insurance Company. The 21-story tower was built in 1952 and the 31 story second tower was added in 1962. In 2006 and 2007, Mosaic was completely renovated and redeveloped into 440 luxury apartment units and rechristened as The Mosaic in honor of the green tile overlaying the facade.
The development offers residents the highest quality amenities and features a 120-foot infinity pool and spa overlooking the Dallas cityscape, an outdoor movie theater, a gas fire pit with an outdoor kitchen, a fitness center, a lounge room, billiards area, and a cigar lounge/poker room.
The property's spacious floor plans include 285 one-bedroom one-bath units and 148 two-bedroom two-bath units. Additionally, it contains 7 penthouse units with one, two and three bedroom floor plans. Select units feature exposed brick and ceilings with polished concrete floors providing a modern loft-style aesthetic. Kitchen cabinets are stained wood with dark granite countertops and stainless steel Whirlpool appliances.
Olympus Property co-founder Anthony Wonderly is thrilled to be entering the downtownDallas market. He stated, "Mosaic is a huge milestone for Olympus Property. The Mosaic is our first high-rise and located close to our corporate headquarters. We know this market extremely well and feel strongly about the growth and revitilization in downtown Dallas."
Chandler Wonderly, co-founder and Anthony's brother commented further, "Mosaic is a top of the market asset and will be a shining star in our portfolio. With our multi-million dollar renovation package, Mosaic will shine even brighter."
The Mosaic is the second property to be added to Olympus Property's fourth fund, WW Olympus Property IV, LLC. The structure will offer investors an opportunity to diversify among five to six Class "A" multifamily assets in strong markets throughout the United States. The opportunity is available for new investors immediately and offers an attractive return with an experienced owner/operator.
Tuesday, November 18, 2014
The commercial real estate business will need low interest rates, eager lenders and strong property values over the next few years to handle all the loans that are about to come due. So far, prices keep rising and lenders keep lending. What could go wrong? Experts now worry the money might be too easy to obtain. If lenders make too many risky loans, they might pump a bubble in the property markets when the capital markets need continued stability for the next three years.
Moody’s warns on underwriting
That’s particularly true for conduit loans. The experts at Moody’s Investors Service track the size of CMBS loans compared to the income produced at the properties. The average CMBS loan was 112.2 percent of the value implied by that income in the third quarter, according to Moody’s. That’s up from 108.3 percent in the second quarter.
“Transactions in our Q4 transaction pipeline signal that credit quality is likely to slip further, to an average Moody’s loan-to-value in excess of 113 percent,” according to Moody’s. “At the rate that conduit loan leverage is increasing, Moody’s loan-to-value will exceed its pre-crisis peak of 118 percent well before its 10th anniversary in Q3 2017.”
However, not all the underwriting news is bad. Bond rating agencies are also demanding that fewer CMBS bonds get the highest AAA rating. Credit enhancement levels for AAA-rated CMBS bonds are nearly double those in 2006 and 2007, which means they are more protected from potential losses, according to Fitch Rating, Inc. “CMBS originators on the whole are using more sensible assumptions… a positive development compared to what took place between 2006 and 2008,” said Huxley Somerville, managing director for Fitch.
Watching the delinquency rate
CMBS borrowers largely continue to pay their loans on time—especially compared to earlier in the recovery. That’s because property fundamentals continue to strengthen as the overall economy catches up to the recovery in commercial real estate.
The delinquency rate for CMBS loans was 6.14 percent in October, according to Trepp. Those delinquent loans include all the loans that are more than 30 days late, including loans in foreclosure and bank-owned properties. That’s down 129 basis points from 7.43 percent at the end of December 2013 and down 184 basis points from 12 months ago.
The delinquency rate has wavered just above 6 percent for the last five months. Still, experts are jittery. When the October rate came in at 6.14 percent, many worried because the rate was up 11 basis points from 6.03 percent in September. Experts will keep watching the default rate, particularly if any surprises damage the recovery in the larger economy (for example, a possible battle over the debt ceiling in Washington, D.C., or the specter of deflation in Europe).
Over the last year, CMBS delinquency rates for most property types have improved substantially, though most gave up some of that improvement in October. The multifamily delinquency rate had the worst month, increasing 81 basis points to 9.80 percent in October. A year ago that rate was 11.02 percent. Multifamily loans remain the worst performing among the major property types. Lodging loans have performed the best, with a delinquency rate of 5.35 percent. Retail loans have proven the most stable, moving to 5.88 percent in October from 6.34 percent the year before.
Maturing CMBS loans
The credit markets need to keep improving so that they handle some of the last, leftover wreckage from the financial crisis—hundreds of billions of dollars in CMBS loans made during the previous boom that will hit their 10-year terms in 2015, 2016 and 2017. Over the next three years, more than $300 billion in CMBS loan balances will mature. That’s more than 2.5 times the amount that matured from 2012 to 2014, according to Trepp.
Right now, capital markets and property prices seem to be healing just in time for borrowers to refinance these loans, provided nothing terrible happens over the next few years.
At current rates and prices, most (but not all) of these loans would be able to simply refinance. Assuming lenders require at least a 1.50x debt service coverage ratio on new loans, 82 percent of loans maturing between 2015 and 2017 would be eligible to refinance at current debt and income levels, according to an analysis by Trepp. That leaves 18 percent of these expiring loans potentially in trouble.
Underwriting is tougher now on the latest generation of CMBS loans, but the difference is not enough to create an impossible challenge for most loans needing to refinance. The average loan-to-value ratio was 59.09 percent for CMBS loans made in 2014, according to Trepp, compared to 65.36 percent for loans coming due in 2017. Office and retail loans make up 63 percent of the loan balance maturing in the next three years, with multifamily loans at 14 percent.
Experts continue to hope for no surprises as these loans come due. “All of this will have to happen in an environment of uncertainty in terms of interest rates, property values, and a shifting landscape in office and retail property usage,” according to Trepp.
Wednesday, November 12, 2014
Developers of the new Preston Hollow Village on North Central Expressway have already leased more than half of the North Dallas mixed-use project.
The first phase of the project under construction at Walnut Hill Lane and North Central opens in February with a 14,000-square-foot Trader Joe’s grocery store.
Also, 75,000 square feet of retail space and a 60,000-square-foot office building will be ready early next year.
“It’s been well-received,” said Leon Backes, CEO of developer Provident Realty Advisors. “If we had just taken anybody, we could have filled it up four times over.
“We are trying to get the right mix,” Backes said. “We have some other tenants we’re close on; we’ve held out some of the prime space.”
The new shopping center has landed restaurants including Blue Sushi Sake Grill, Modmarket, Pakpao Thai and Verts Kebap. Retail tenants so far include Tangerine Salons, Orangetheory Fitness and Eighteen Eight Fine Men’s Salons.
Frost Bank will also have a location in the project, which is being built in partnership with Kroenke Holdings.
“We will be finished with construction of this phase by the end of the month,” Backes said. “Hopefully sometime in December we will start the second phase.”
The next section to be built in the 42-acre project will include three seven-story apartment buildings constructed just north of the shopping center, which will house 513 rental units.
“The next phase will be close to $150 million in development,” he said.
Along with some retail space on the ground floors of the apartment buildings, Provident is also planning an elaborate signature fountain at the center of the urban village.
Retail Street Advisors is renting the retail space, and Stream Realty Partners has been hired to market the office building.
Monday, November 10, 2014
A group of investors headed by Dallas real estate firm Dunhill Partners that includes oilman Tim Headington and Highland Park Village’s owners has bought a big chunk of Dallas’ Design District.
The partners acquired 33 acres and about 700,000 square feet in buildings along Hi Line Drive, Oak Lawn Avenue and Stemmons Freeway, just northwest of downtown.
The new owners plan to market the buildings that form the heart of the district to high-end designers and other tenants and eventually redevelop some of the property for high-rise construction.
The neighborhood, which got its start as a scruffy business district in the 1950s, is seeing a huge real estate boom, with new restaurants, apartment towers and retail.
“We are going to take what’s there and reinvigorate it and keep it going,” said Dunhill CEO Bill Hutchinson.
“Look at Uptown and all the high-rises over there,” Hutchinson said. “Where’s it going to go next? The Design District is a natural evolution.”
Dunhill purchased the more than one dozen properties from Houston investor Lionstone Group, which bought the real estate in 2007. Lionstone and its Dallas partner, Mike Ablon, were successful in transforming the former industrial and commercial neighborhood with a mix of expensive apartments, trendy restaurants and new retail.
At least three large new apartment developments are in the works for the area.
“It’s now cool, it’s trendy and it’s got great restaurants,” Hutchinson said. “And it’s still got the designers and the showrooms.
“There are designers who aren’t in the district that should be there, and I plan on attracting them,” he said.
At the same time, Hutchinson said the new owners will be looking for ways to upgrade existing properties and to make plans for further construction.
“I’ve got some of the biggest names in Dallas behind me to help me strategize for development,” he said. “We have over 100,000 square feet of vacancy down there we can immediately lease up.”
The biggest portions of Dunhill’s purchase includes the 110,000-square-foot Decorative Center complex at the corner of Oak Lawn and Hi Line and the 370,000-square-foot Dallas Design Center at 1025 N. Stemmons Freeway.
Smaller buildings that are part of the acquisition house popular restaurants including the Meddlesome Moth, Pakpao and Oak.
Dunhill and his partners bought the property after the prime real estate came on the market this summer.
“We had a lot of interest from around the country and a lot of offers,” said commercial real estate executive Jack Crews of JLL, who marketed the property along with Evan Stone. “It was very competitive.”
Headington, who is one of the investors with Dunhill, is a major player in the downtown Dallas property market, with projects along Main Street including the popular Joule Hotel.
Highland Park Village’s owners, which also are part of the new ownership, include Dallas businessman Ray Washburne and family members of the late Margaret Hunt Hill.
Longtime Dallas real estate broker Newt Walker is also an investor, Hutchinson said.
“It says Dallas people are investing in Dallas,” said Ablon. “It’s great when something works out that way.”
Ablon said he and the previous owners are “terribly sad to see it go” but it was the right time to sell.
Ablon and Lionstone probably more than any other group helped shape the district into its current form.
“This neighborhood has morphed itself,” Ablon said. “We tried to keep the fabric of the Design District and honor its history and bring in other pieces that make it interesting.”
Along with the Design District, Lionstone has been an investor in the Dallas office market along with Ablon.
“The Dallas Design District has been a solid investment for Lionstone,” Lionstone chief investment officer Glenn Lowenstein said. “We are thrilled with the development, and we wish Dunhill the best as they take the helm.”
Lionstone’s original purchase was from Dallas’ Trammell Crow family, which owned the properties for decades.
Some buildings were sold to developers and razed for apartments and retail projects.
More than 1,000 additional apartments are now in the planning stages in the area on sites near the real estate Dunhill just purchased.
Developers including Trammell Crow Residential, PM Realty and Harwood International all have major projects in the works between Stemmons Freeway and the Trinity River.