Ray’s Buzz: All Systems Go In The Industrial Market

United State Industrial Market-Takeaway:
All monitored US markets have industrial rates in the single digits, and occupancies are expected to remain high ongoing. E-commerce warehousing demand to accommodate sorting, distribution, and logistics is strong and we are seeing higher (even multi-story) warehouses as developers work with tenants to meet their evolving needs. Labor markets are tight and will get tighter, resulting in rising wages. Asked rents are rising and this may offset projected rising interest rates over time. Industrial remains the most attractive segment to lenders and investors alike. Click to read more at www.rednews.com.

HUD Secretary Ben Carson Wants More Cities to Ditch Single-Family Zoning

As cities across the U.S. grapple with severe housing shortages that send prices soaring and would-be buyers fleeing, Ben Carson said he’d like to see more cities address the zoning regulations that contribute to the problem. Carson — who leads the U.S. Department of Housing and Urban Development (HUD) — made his comments Tuesday during a visit to Minneapolis, where lawmakers voted last year to ditch single-family Zoning, which had previously dominated the city limits. Speaking to reporters, Carson suggested more cities should follow Minneapolis’ example and drew a connection between zoning and homelessness. Click to read more at www.inman.com.

Commercial Real Estate Crowdfunding Eyes ’18-Hour Cities’ for Small Investors

When Clear Point Gardens, a 604-unit apartment complex in Columbus, Ohio, recently changed hands, it produced a nearly 43% gain in 16 months, an amazing windfall for investors in the deal. All 68 of them. The sale of Clear Point, financed with help from investors on CrowdStreet’s online platform, is the latest example of how online syndication is revolutionizing the way deals are financed in the $6 trillion commercial real estate market. Online syndication is opening up potentially lucrative investment opportunities once the province of a privileged few. And deal choice has expanded beyond what even the wealthiest could have only dreamed back when real estate investing was solely a word-of-mouth game confined to the country-club elite. These days, the average investor can explore dozens of deals, from the ground-up development of new office buildings to the acquisition of apartment complexes. Click to read more at www.thestreet.com.

Dedicated IPSX Stock Exchange Will ‘Revolutionize ‘Commercial Real Estate Investment

International Property Securities Exchange (IPSX), the first stock exchange dedicated to companies owning and managing commercial real estate (CRE), is set to revolutionise the way CRE is valued, securitised and owned – according to in-depth research by Hardman & Co. IPSX gained regulatory approval from the Financial Conduct Authority to operate as a ‘Recognised Investment Exchange’ in January 2019 and is set to formally launch later this year. A ground-breaking platform, IPSX provides a regulated market for trading shares in management companies which own single buildings or homogeneous discrete portfolios of real estate with commonality – through Single Asset Real-estate Companies (SARCs).

IPSX gained regulatory approval from the Financial Conduct Authority to operate as a ‘Recognised Investment Exchange’ in January 2019 and is set to formally launch later this year. A ground-breaking platform, IPSX provides a regulated market for trading shares in management companies that own single buildings or homogeneous discrete portfolios of real estate with commonality – through Single Asset Real-estate Companies (SARCs).

Hardman & Co analyst Mike Foster argues IPSX will bring numerous improvements to commercial property markets. By focusing on companies holding single assets or multiple assets with commonality, SARCs will have lower operating costs than Real Estate Investment Trusts (REITs). Meanwhile, the SARC itself will own and manage the asset, enabling investors to invest in property quicker than buying the underlying asset directly, as well as at a lower transaction cost. Commonality covers single estates with homogeneous planning use, such as an office park, or a single type of asset – for example hotels – across a broad geography.

Hardman & Co research expects SARCs to attract investors with diverse strategies and time horizons, which means IPSX liquidity is likely to be high. Hardman anticipates a typical IPSX SARC of £300m may trade £230,000 per day on average. Moreover, as these investors will likely run pools of assets dedicated to property, and not comparing against other sectors, this should minimise volatility and lower correlations.

According to the research, the fractional ownership of ‘quasi-direct property’ should attract a wide range of investors – retail investors able to access a new asset class, family offices with a preference for direct property, and institutional investors seeking additional liquidity. It will also benefit landlords and drive cost efficiencies for asset management companies. Investment companies specialising in real estate can also reduce cash drag when raising new equity by temporarily investing in SARCs, while they wait for appropriate direct investments to complete.

The IPSX trading platform will give capital markets real-time share prices for SARCs, which will increase transparency around company valuations. The ability to use SARCs should avoid the marked divergence between share price and net asset value (NAV) that REITs can otherwise experience. This can occur due to lack of transparency around the value of the active management, as well as the fact REITs often conduct operational activities, such as real estate development. However, single asset companies, where valuations are updated in real time, should see minimal discrepancies between share price and NAV.

Mike Foster, analyst at Hardman & Co, says:

“IPSX truly reimagines real estate investing. By increasing transparency and enabling issuers to focus on cost-efficiency, it will appeal to investors and issuers alike. The number of narrowly focused specialist REITs has grown considerably in recent years and IPSX caters to this demand for tightly defined asset-class investing.”

IPSX head of capital markets Roger Clarke adds:

“IPSX will usher in the democratisation of real assets. As a regulated exchange, investors will have the comfort of duly mandated processes for publication of information. This transparency around valuation and risk will provide more focused data than is the case for the wide range of assets in traditional REITs.

“IPSX encourages the broadest possible investor universe to participate in the real estate sector. IPSX companies are structured to provide a more direct connection between owners and assets, while providing liquidity and protections on a regulated exchange.”

Cerberus, Hines JV Buys Texas’ Tallest Tower for $627M: Report


Hariri Interests sold JP Morgan Chase Tower in downtown Houston, a 1.6 million-square-foot skyscraper designed by the late I.M. Pei, along with an adjacent 407,000-square-foot property.

by Dolly Dutton

A joint venture of Cerberus Capital and Hines has acquired Houston’s JPMorgan Chase Tower, the tallest building in Texas, for approximately $627 million, according to a report from Real Estate Alert. The seller, Hariri Interests, had owned the skyscraper since 1981, according to Yardi Matrix data. Also included in the deal was an adjacent property, the 407,000-square-foot Chase Center. The 75-story JPMorgan Chase Tower is situated at 600 Travis St., in the heart of downtown. Built in 1981, the Class A office property was designed by the late famed architect I.M. Pei. Hariri Interests purchased the property in 1985 through its investment vehicle Prime Asset Management in a joint venture with Hines and later acquired full ownership.

A joint venture of Cerberus Capital and Hines has acquired Houston’s JPMorgan Chase Tower, the tallest building in Texas, for approximately $627 million, according to a report from Real Estate Alert. The seller, Hariri Interests, had owned the skyscraper since 1981, according to Yardi Matrix data. Also included in the deal was an adjacent property, the 407,000-square-foot Chase Center.

The 75-story JPMorgan Chase Tower is situated at 600 Travis St., in the heart of downtown. Built in 1981, the Class A office property was designed by the late famed architect I.M. Pei. Hariri Interests purchased the property in 1985 through its investment vehicle Prime Asset Management in a joint venture with Hines and later acquired full ownership. Formerly known as the Texas Commerce Center, the LEED Gold building houses tenants including Merrill Lynch, Willkie Farr & Gallagher, KeyBank and the Buzbee Law Firm. JPMorgan Chase moved its offices from the building more than a decade ago.

The property has 22,000 square feet of underground retail and tenant amenities including a fitness center and 1,657 parking spaces. In 2008, the building’s façade was damaged during Hurricane Ike, when hundreds of windows blew out and littered the streets below with glass and tangled window blinds.

Hines declined to comment and a spokesperson for Cerberus did not respond to a request for comment.

The Houston office market has been experiencing strong market fundamentals over the past year, with 18,600 office jobs added from March 2018 to February 2019, according to a recent Yardi Matrix report. Traditionally a strong energy market, the biggest city in Texas has been diversifying its economy and growing its tech, innovation, and health-care sectors.

A joint venture of Cerberus Capital and Hines has acquired Houston’s JPMorgan Chase Tower, the tallest building in Texas, for approximately $627 million, according to a report from Real Estate Alert. The seller, Hariri Interests, had owned the skyscraper since 1981, according to Yardi Matrix data. Also included in the deal was an adjacent property, the 407,000-square-foot Chase Center.

The 75-story JPMorgan Chase Tower is situated at 600 Travis St., in the heart of downtown. Built in 1981, the Class A office property was designed by the late famed architect I.M. Pei. Hariri Interests purchased the property in 1985 through its investment vehicle Prime Asset Management in a joint venture with Hines and later acquired full ownership. Formerly known as the Texas Commerce Center, the LEED Gold building houses tenants including Merrill Lynch, Willkie Farr & Gallagher, KeyBank and the Buzbee Law Firm. JPMorgan Chase moved its offices from the building more than a decade ago.

The property has 22,000 square feet of underground retail and tenant amenities including a fitness center and 1,657 parking spaces. In 2008, the building’s façade was damaged during Hurricane Ike, when hundreds of windows blew out and littered the streets below with glass and tangled window blinds.

Hines declined to comment and a spokesperson for Cerberus did not respond to a request for comment.

The Houston office market has been experiencing strong market fundamentals over the past year, with 18,600 office jobs added from March 2018 to February 2019, according to a recent Yardi Matrix report. Traditionally a strong energy market, the biggest city in Texas has been diversifying its economy and growing its tech, innovation and health-care sectors.

The Commercial Real Estate Industry Needs to Get Closer to Its Customer

The best selling business book in the modern era did not start out as a book. It was given as a two-day, 700 slide presentation. It was presented to German manufacturing giant Siemens in 1979 by a junior McKinsey consultant named Tom Peters. He had just spent months conducting interviews with executives at some of the world’s biggest conglomerates to try to understand some of the commonalities of their success. After word got out about his findings he was flown all over the world to deliver the presentation to executive boards large and small. Later, he decided to turn his findings into a book called In Search of Excellence, which went on to hit number one on the New York Time’s best seller list and sell over 3 million copies worldwide. Click to read more at www.propmodo.com.