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bpe3

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  1. bpe3
    For the record, my primary business is brokering commercial real estate loans. I've closed over $2 billion in CMBS and life company loans in the last 5 years alone. At least 75% of those have been multi-family. Earlier in my career I worked for a Fannie Mae DUS shop doing nothing but underwriting multi-family loans. I think I know a thing or two about underwriting. I wasn't underwriting the deal. That's why it called it some "quick math". It nothing more than a back of the envelope estimate of what this deal might be throwing off. If anyone really wants to know how a deal like this really underwrites, I'd be happy explain it. Did I miss something? I don't recall getting an economics lesson from you at all. bpe3
  2. bpe3
    Well... It looks like the "renovation" is "complete". The fence has come down and now there are For Lease signs in each and every window. I assume that means they don't have a single tenant lined up. There's nothing like undertaking a muti-year renovation of a consistently 100% occupied property only to end up with a property that looks nearly identical, yet has 0% occupancy. Now that they are "done", they get to enjoy a few years of rail construction that will forever ruin Richmond for vehicle (read: customer) traffic. Somebody really dropped the ball on this deal. bpe3
  3. bpe3
    Here's some quick math: 900 units @ $90,000/unit = $81,000,000 value X 5.5% cap rate = $4,455,000 NOI/year = $371,250/month. Assuming they tore down 2/3rds of the units, the early demolition is costing them $245,045/month in foregone cash flow. It's not the kind of money that will make or break this project. At the same time, it's enough to get someone's attention. No smart delevoper would just leave this much sitting on the table. Clearly they thought they'd be going vertical by now. bpe3
  4. bpe3
    Standard Operating Procedure is to keep the tenants as long as you can by converting leases to month-to-month as they roll. When you're ready build, you give them 30-days notice to vacate and the bulldozers come in a week later. The Regent Square developers told the tenants to get out because they thought they were ready to build. They weren't. They had to go back to the drawing board because their previous plan didn't work. They left a lot of money on the table with their hasty demolition. I'm curious to see how their scaled down project works out. Only time will tell. bpe3
  5. bpe3
    You need to make one more change. The thread is now called "Highland Tower Not High Street", but the thread description still says, "Former car dealership on Westheimer" which is not where Highland Tower is going to be built. Highland Tower will be north of the former car dealership at the NEC of Bancroft at Bettis. bpe3
  6. bpe3
    Whether the tenants want or need nearby retail matters little. The question is, can they support it? I'm sure everyone at Post Midtown is happy to have Farrago, The Fish, Christian's Tailgate, Cyclone Anaya's, etc. right outside their front door, but the bottom line is that ALL of these businesses rely on MUCH MORE than the residents of Post Midtown, AMLI Midtown (old name), and that other place next door (Oakwood?) to stay in business. These businesses draw from a much larger trade area than just Midtown. Equinox is was it is. It's workforce housing for the Texas Medical Center and to a lesser extent, downtown. This is not a strong retail location. The demographics to the east are weak. The bayou and the Med Center are huge access barriers to anyone trying to travel to the site from the west. HAIF is like a broken record sometimes. Every time a project is announced, about 10 posters want to know it there will be street level retail and then lament the fact that it doesn't materialize. I'm not here to stifle anyone's enthusiasm. We all want Houston's core to be as great as it possibly can be. At the end of the day though, each new project needs to stand on its own two feet economically. Retail just isn't feasible everywhere. bpe3
  7. bpe3
    THAT is the key. It's just like the suburbs. You have to build the homes first. The retail will follow the rooftops. A 300-unit apartment complex cannot support ground level retail on it own, but if you build 7-8 complexes in close proximity, the 9th and 10th complexes can have a healthy retail component. bpe3
  8. bpe3
    No. I don't think we are in agreement. Houston-development said... I think there are buyers out there for $100 million dirt, even in these uncertain times. I'm not sayinging Archstone's tract is worth $100 million. I am saying that a $100 million price tag won't scare everyone away. Getting back to OP's topic though, at least we all seem to agree that Archstone's plan for this redevelopment is not the best option for this site. We are witnessing a possibly once in a lifetime opportunity to build something really special for the Washington corridor and make money at the same time. A generic gated apartment complex on this site is a waste. Assembling a similar tract anywhere in this submarket is next to impossible. bpe3
  9. bpe3
    On the subject of $100 million land plays, all I can say for sure is that I'm working on a $90+ million land deal right now (not in Houston) and there is a LOT of interest from a variety of developers. I can't quantify how many potential buyers may have passed on the deal becasue it was just too big for them to swallow. I can say that there are enough players at the table to make for a very competitive process. Off the top of my head: Angel/McIver scratched a check for $77 million to buy the Astroworld site without a development plan in place. The Rouse Company paid $82 million for the land that is now becoming Bridgelands. Maybe this dirt is worth $80 PSF, maybe not. We'll have to agree to disagree however, that a $100 million land deal is too big to make sense. bpe3
  10. bpe3
    It doesn't matter what Archstone's (or anyone else's) basis is this property. If they develop this dirt, their investment inlcudes the value of the dirt, not what they paid for it. If they develop the property, they are foregoing the opportunity to sell the property and collect the value. Example: Let's say you have a rich uncle. He dies and leaves you a beautiful 2-acre lot in River Oaks. Your cost basis in the lot is zero, although the market value of the lot is $1.5 million. You decide you'd love to live in River Oaks so you go out hire a builder and he builds you a 3,000 SF house on the lot. The cost to construct the house is $400k. If you short sightedly ignore the opportunity cost of selling the land, you may kick back in your house and think, "This is awesome, I have a brand new 3,000 SF house in River Oaks in River Oaks that only cost me $400k. This is a homebuyer's wet dream!" The fact of the matter is that that house actually cost you $1,900,000. If you hadn't built on that lot, you could have sold the lot for $1.5 million, chipped in $400k in cash and bought a different house for $1.9 million. At the end of the day, you've invested $1.9 million in either house. We can debate the value of the land all we want. The fact is that if Archstone redevelops this site, they are foregoing the opportunity to sell the land to someone else. By forgoing the sale, they are actually investing that forgone profit into their new development. bpe3
  11. bpe3
    Archstone is not blind to opportunity cost. Although their cost basis in the land is far less, they know damn well that if they redevelop this land, they are, in fact, paying the market price for the dirt. The Bayou Park site and the Deyaar site have both sold in the last 60 days for $50+ million at land value. There were 29 bidders for Bayou Park. I don't think it's that big a jump to $100 million. There are a lot of deep pocketed investors out there who see Houston as a very attractive place to invest. bpe3
  12. bpe3
    Didn't the Bayou Park Apartments just sell for around $80 PSF on the dirt? The Archstone tract seems superior given the tremendous amount of street frontage on three main thouroghfares. A $160,000/unit price tag for Memorial Heights equals $81 PSF for the dirt. If someone will pay $80 PSF for Bayou Park dirt, then $80 PSF for Memorial Heights dirt should be a no-brainer. Whoever redevelops this dirt has a chance to do something really special. This property could be a trophy asset that anchors Washington Ave as it transforms into one the finest corridors in Houston. Instead, we get the same generic stuff that Archstone and everyone else is building all over town. It will certainly be an improvement over what there now, but an incredible missed opportunity none the less. bpe3
  13. bpe3
    If you want to go straight, stay in the right lane. Seems pretty simple.
  14. bpe3
    The website is still up: http://www.sanfelipecourt.com/ but the apartments have been gone for a few months. Yesterday I noticed a variance request sign placed on the chain link fence surrounding the dirt. What's going up in its place? Taller, denser, nicer apartments or condos seem like a natural fit. The nearby Roll-N Saloon is a unique amenity. Unfortuantely, it doesn't appear that the redevelopment plan inlcudes the mid-rise mini-storage building that claims much of the frontage on and visibilty from San Felipe. bpe3
  15. bpe3
    It makes me feel better. Fred McCord lives on Chevy Chase in River Oaks. He should know the boundaries of his own nieghborhood. bpe3
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