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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
  16. bpe3
    Seprately, here is yet another development trying to steal some cache from River Oaks when they clearly ARE NOT located in River Oaks. What kind of name is "Willowick at River Oaks"???? If you lived here you'd never be able to tell people, "I have a house at Willowick at River Oaks". Half the people would think you lived on Willowick street, some of which runs through River Oaks. They'd get lost driving up and down Willowick looking for your house or an an intersection with Las Palmas. The other half might initially think you live in River Oaks, but would later conclude you were a Dallas-esque poser when they find out you actually live in Weslayan Plaza. There's nothing wrong with saying you live in Weslayan Plaza, ESPECIALLY if you actually live in Weslayan Plaza. If you're not happy with Welsayan Plaza, tell people you live in Highland Village, or Afton Oaks. You'd be much closer to the truth. bpe3
  17. bpe3
    On a separate note, the "de-densification" described by the OP only describes the number of households. The improvements constructed on the site will be considerably larger, denser and taller than the existing improvements. Fewer people living in more expensive homes. Little by little, those with limited incomes are being pushed out of the inner loop to make room for those with more resources. I'm a staunch supporter of Houston's "out with the old, in with the new" mentality, but this one hits a little close to home. I used to have a girlfriend that lived here. I spent a lot of time at this complex. The units were very large. The prices were quite affordable. There was no big gate limiting access. There was a nice "street like" driveway so guests could drive right up to your front door. Resident parking at the rear of every unit. This place was quite unique for a rental complex. The existing residents will have a hard time finding anything similar. This place has been owned for a very long time by a Saudi investor who lived overseas. I always thought his deep pockets would afford him the opportunity to ignore high dollar offers from would be developers. Business is business though. You can't go broke making a profit. More power to him. It hurts to see places like this disappear, but if that's the cost of Houston's ongoing inner loop renaissance, so be it. bpe3
  18. bpe3
    Right around the corner on Drexel Drive in Lynn Park, Lovett Homes is building a new 5,037 SF luxury home on a 8,890 SF lot. This is a top quality house with an asking price of $1,250,000. There is no way they'll get $900k to $1.5 million for empty lots in this location just because they are behind a gate. Sloppy reporting. HAR listing: link bpe3
  19. bpe3
    The parcel on the north side of Dallas Street has been heavily seeded with winter rye grass. I'm sure that's the site you saw. The parcel on the south side of Dallas Street has not been seeded at all. It's mostly dirt with a few scattered weeds. bpe3
  20. bpe3
    Separately, since we may in fact have the developer's eyes on his thread, is there anything we can do to change the silly name before it's too late. Who came up with "Regent Square"? Did someone just pull that out of a fish bowl filled with generic real estate development names? Is there a college nearby? Who are these Regents? How about we come up with a name that has at least some connection to the neighborhood or the city of Houston? The Allen Bros founded Houston. Allen's Landing, where it all started, is only a mile or so away. Allen Parkway follows the path of Buffalo Bayou straight upstream from Allen's Landing to the former site of Allen House Apartments. The Allen House name is familiar to many Houstonians. Why not call it Allen Square? Allen Center can be on one end of the street and Allen Square can be on the other end. Allen Parkway is one of the better known streets in the city. The name Allen Square would convey much more sense of place. Maybe call it Allen Square Park. Who was the genius at GID that came up with the name "Windsor at Siena" for the former Siena Apartments on Studemont? The original name never had any meaning to begin with. Now you just want to put your Windsor brand in front of a meaningless name? If you're going to change it, why not change it to Windsor at Memorial Heights? At least that would give SOME indication where the property is located. How about Windsor on Studemont? Someone has to stop these people. Who's idea was it to rename Westcreek Apartments to "Westcreek at River Oaks"? Does anyone know where these apartments are located? Hint: It's not in River Oaks. Same goes for the currently under construction Fairmont at the Museum District. Could they possibly be located in the Museum District? Unfortunately, No. If you really intend to to build this excellent project (or even something else), please put some more thought into the name. I know you guys are from Boston, but calling it Regent Square makes about as much sense as calling it Yankees Suck Square. bpe3
  21. bpe3
    I REALLY want this thing to happen. I hope to be proven wrong. I guess we'll wait and see what happens when the 3rd quarter rolls around. Statements like this don't make a lot of sense to me though. If you can build it faster, build it faster. Start now and finish sooner. If the plans are set, and the financing is set, pull the trigger. What benefit comes from waiting??? .....unless you're not really ready. It's great to know the design firms are still involved, but that really means very little at this point. Have they selected a GC? Is the contact signed? Who's making the contruction loan? Is the loan commitment signed? Are all the loan contingencies met? I assume GID is thowing in the land as their equity? Is that enough? Are there other equity partners? Who are they? How committed are they? For the record, I have no direct connection to this project at all. But I think my information (and speculation) is pretty good. We'll see. bpe3
  22. bpe3
    This isn't a rumor. I live near this project. I want it to work more than anyone. The numbers don't work though. The original assumptions were way off. They bid it to their GC's and the costs were too high to justify the project based on the rents or sales prices they think they can get. End of story. There wasn't much risk tearing down the existing buildings. They are going to build something here. It's just going to be different than what we've seen in the renderings to date. Note to readers: This is where the facts end and my personal speculation begins ---------------------- My guess is that they will shrink the size of the residential structures to the same four-story, podium-style construction we're seeing elsewhere. The cost difference between stick-built vs. mid-rise is substantial. It's very hard to justify mid-rise construction with rents where they currently stand. Yes, there are some condo deals getting done, but it's much harder to finance a condo deal than a rental deal. A deal this big would need a huge amount of pre-sales (time consuming and speculative) or a huge equity investment (expensive) to get financed. The project, as origianlly concived, doesn't work as a rental. The retail componenet will shrink. There was a lot more retail in this deal than the development itself could support. Retailers here would have to draw from a large area to be successful here. Yes, the surrounding area is fairly dense, affluent and growing. Yes, these are strong retail site characteristics. Accessability is a problem here though. Buffalo Bayou is a barrier to the north and northeast. River Oaks doesn't have enough rooftops. Memorial Park has no residents. The area to the south is fine. Without a doubt, this a fantastic neighborhood. You have to admit though, it's not exactly easy to get to, unless you're already in the neighborhood. There are also visibility issues. This isn't the Rice Village. This isn't Highland Village. This isn't the Galleria. There is clearly some retail demand, but it's much less than they drew into the original plans. The hotel portion will be axed. This isn't a hotel site. High end hotels in Houston need to be in the Galleria, Downtown or the Med Center. IF the rest of the project had penciled out as designed, the incredible development itself MAYBE could have made a hotel deal work. Maybe. Still a stretch though. A hotel will never happen here now. Forget about it. I think when it's all said and done, we'll get a very nice project here that will be welcome addition to the neighborhood. It's just going to look a lot more like Post Midtown and less like the drawings they've put forth to date.
  23. bpe3
    Bad news, folks. Forget everything you've seen, heard or read about this project. The developer has gone back to the drawing board. The numbers didn't work. We'll have to wait and see what they come up with next.
  24. bpe3
    The developers need to take the gloves off and come out swinging. Maybe it's time for a tortious interference lawsuit against every single contributor to the opposition's war chest. I'm not a lawyer, but I stayed a Holiday Inn Express last night.
  25. bpe3
    I've seen some discussion of the new condos planned a block away at the NEC of Bettis and Bancroft, but I haven't heard anything about this site yet. The adjacent mini-storage building on San Felipe is still standing. It would be a shame to hide a nice new development behind such an inferior land use. What's the scoop?
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