Archives for May 2015

According to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, first quarter 2015 commercial and multifamily mortgage loan originations were 49 percent higher than during the same period last year. Following the usual seasonal pattern, first quarter 2015 originations saw a 26 percent decrease from the fourth quarter of 2014.
“The year-end momentum from 2014 carried into the first quarter of 2015, with year-over-year growth in lending for every major property type,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Multifamily lending was a key driver of first quarter originations and the GSEs drove multifamily. The GSEs’ multifamily originations increased by 306 percent compared to Q1 2014, marking their second highest quarter on record, while multifamily originations for other capital sources appear to have remained flat or declined.”
Q1, 2015 Originations 49 Percent Higher Than Q1, 2014
Increases in originations for industrial and multifamily properties led the overall increase in commercial/multifamily lending volumes when compared to the first quarter of 2014. The increase included a 269 percent increase in the dollar volume of loans for industrial properties, a 71 percent increase for multifamily properties, a 53 percent increase for office properties, a 51 percent increase for hotel properties, and a five percent increase in retail property loans. Health care property loans were essentially unchanged year-over-year.
Among investor types, the dollar volume of loans originated for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased by 306 percent from last year’s first quarter. There was a 113 percent increase for Commercial Mortgage Backed Securities (CMBS) loans, a 51 percent increase for life insurance company loans, and a one percent decrease in dollar volume for commercial bank portfolio loans.
Q1, 2015 Originations Down 26 Percent from Q4, 2014
First quarter 2015 originations for health care properties decreased 62 percent compared to the fourth quarter 2014. There was a 57 percent decrease in originations for retail properties, a 33 percent decrease for hotel properties, a 31 percent decrease for multifamily properties, a 25 percent decrease for office properties, and a 127 percent increase for industrial properties from the fourth quarter 2014.
Among investor types, between the fourth quarter of 2014 and first quarter of 2015, the dollar volume of loans for commercial bank portfolios decreased 23 percent, loans for life insurance companies decreased 18 percent, originations for CMBS decreased 14 percent, and loans for GSEs decreased by 13 percent.
By: Michael Gerrity (World Property Journal)
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SEE CORRECTION AT THE END OF THIS ARTICLE
Gary Tonjes has hired John Rocca of Los Angeles to recruit West Coast businesses to New Mexico.
Albuquerque Economic Development has received $80,000 from the city that will go toward hiring a California-based site selector to recruit businesses here.
AED is entering into a marketing agreement with John Rocca, a Los Angeles site selector, who will now be AED’s West Coast-based business development representative, said Gary Tonjes, the president and CEO of AED.
“One part of [Rocca’s] assignment is to identify 50 qualified companies interested in expansion or relocation, and to arrange for AED to be in one-on-one meetings with those firms,” Tonjes said. The Albuquerque City Council approved the marketing contract last week. The one time contract comes with targets for Rocca to meet, Tonjes said.
Rocca was previously a consultant with CBRE Consulting and started his own solo firm recently. AED had worked with Rocca during the recruitment process of PRNewswire to Albuquerque — which happened in 2006.
“Mr. Rocca will also perform competitor benchmarking with regard to targeted geographic economic development strategies; develop a list of qualified companies for business attraction outreach; and perform company due diligence,” Tonjes added. “We will use part of the resources to complement the work that [Rocca] is doing, and that could include a special event or other specific marketing activities in California or other West Coast markets.”
Tonjes said the ultimate goal is to get companies to visit Albuquerque, choose to invest here and put people to work.
CORRECTION
This story has been updated to clarify information in the photo caption about how AED will use the city funding.
By: Dan Mayfield (Albuquerque Business First)
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Historically, the price of West Texas Intermediate Crude (WTI) has always been slightly higher than the price of North Sea Brent Crude, the major benchmark off which two-thirds of the world’s internationally traded crude oil is priced. WTI has historically been more expensive because it is “light sweet crude,” meaning it contains less than 0.5% of sulfur and is considerably lighter than water and lighter than any other crude oil, and therefore the world’s most valuable oil.
Despite possessing these very desirable physical characteristics, for the last several years WTI has regularly traded for less, sometimes much less, than Brent. This situation is not only detrimental to American oil exploration and production firms but also US households. Interestingly, this situation can be easily righted if only Congress would pass legislation. Let me explain.
Until 1973, US oil, like all other goods and services, could be easily exported. However, an export ban was imposed after the 1973 Arab oil embargo in an attempt to prevent future oil shortages and arguably to help the US gain energy independence.  For decades the ban had no obvious impact as the US was a huge oil importer. But now due to hydraulic fracturing and horizontal drilling, the US now produces about twice as much oil as it did a few short years ago and is now the world’s second largest oil producer.
Because the US used to import large quantities of oil, and because due to geography and politics the imported oil was primarily “heavy sour crude,” most American refineries are ill equipped to refine the high quality WTI coming from the new and newly-invigorated US oil fields. As a result, US crude oil is quickly filing up storage tanks and in the process driving down the price as domestic supply vastly exceeds refiner demand.
If Congress were to lift the export ban, the price of WTI would rise to the world price, which would expand domestic oil exploration and production and increase rig counts and employment in the oil patch. Counterintuitively, it would also reduce the retail price of gasoline. This is because gasoline is tied to the price of Brent, since all refiners except American ones distill crude into gasoline from oil priced off of Brent.
Because the export ban does not cover distilled products like diesel, gasoline and jet fuel, the price American refiners charge for distillates is the world price, even though the crude they purchase is cheaper due to the export ban on domestic crude. Gasoline here and abroad would thus be cheaper because the release of more US crude onto the world market that is now bottled up onshore due to the export ban, would reduce, albeit slightly, the price of Brent, and in the process slightly reduce the price of distillates including gasoline.
Of course there is never a free lunch in economics. Were the export ban lifted, the losers would include domestic refiners as they would pay more for crude, and foreign oil producers such as the Saudis, Russians, Canadians and others as they would receive slightly less for theirs. That said, repealing the ban makes sense. It would save US consumers money and slightly increase returns to investors in the oil patch. And if the Saudis are unhappy, they can recall that the export ban only exists because they embargoed us 40 years ago!
By: Elliot Eisenberg (GraphsandLaughs)
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First things first: Gary Goodman isn’t just building a shopping mall.

Yes, the major earth-moving underway now at Winrock Town Center will yield the state’s first Nordstrom Rack and DSW, other still-unannounced retailers and a two-level underground parking garage. When fully developed, Winrock will comprise an estimated 1.5 million square feet of retail – nearly three times what it had when the original Winrock opened to great fanfare more than 50 years ago.
But Goodman – whose Goodman Realty Group is behind Winrock’s current renaissance – never set out to build a run-of-the-mill shopping center. He has a vision for a mixed-use development unlike anything the city has seen. As evidence, consider the fact that he has a farmer on the payroll.
That’s right. A farmer.
“We just harvested about 3,000 garlic bulbs,” Goodman said proudly of the plants used as part of a new landscaping strategy at the 83-acre Uptown property.
While the 16-screen Regal Cinemas multiplex might stand as one of the flashiest additions to date in Winrock’s ongoing redevelopment, it’s the peach, apple, and other fruit and nut trees surrounding the theater that truly speak to Goodman’s larger goals for the project. More than 200 such trees already have been planted around the cinema and the new Dave & Buster’s. Their fruit will ultimately stock Winrock’s planned on-site farm store – just one component of what Goodman calls a “uniquely 21st century” development.

Designs call for a live-work-play-shop community built with millennials in mind. Goodman, a veteran developer, envisions the new Winrock having the same kind of game-changing effect on Albuquerque that the original Winrock had when it opened in 1961.
“We really wanted to be a 21st century version of what that was to the 20th century,” Goodman said.
Goodman Realty Group bought Winrock in 2007 with plans for a massive, mixed-use redevelopment. The project saw little visible movement during the ensuing recession. However, signs of new life started cropping up in 2012 with the arrival of two new eateries, BJ’s Restaurant and Brewhouse and Genghis Grill. They were followed by the new movie theater in 2013 and Dave & Buster’s last fall.
But some of the most visible progress began earlier this year when crews demolished part of the existing mall structure. Jaynes Corp. began work on a $120 million construction phase that will bring the new parking garage and 200,000 square feet of retail space along the southern side of the property. The new stores – Nordstrom Rack, DSW and Ulta among them – should open by fall of 2016. Goodman said the Winrock leasing effort, led by Pegasus Retail’s Anthony Johnson, should generate some other big announcements soon.
A massive construction project has commenced at the southwestern edge of Winrock Town Center that will create a two-level underground parking garage and retail space for stores such as Nordstrom Rack, DSW and Ulta. (Roberto E. Rosales/Albuquerque Journal)
But retail is just one part of the Winrock equation.
The current outline for the village-like development includes an estimated 1,000 residential units. Construction on the first group – which will be part of the same southern edge block as the new retail, a 60,000-square-foot gym, and other health and wellness offices – could begin later this year, Goodman said.
Much of the housing will surround a centralized, two-acre park, although plans call for about 250 units on the empty site at the far northeast corner of the property.
Winrock also has a 150-room hotel in the works. Goodman said his company will work with a partner to operate the hotel.
“It’s going to be like a sister hotel to the Andaluz,” said Goodman, referring to the historic Hilton in Downtown Albuquerque that Goodman relaunched in 2009 as Hotel Andaluz after a $30 million renovation.
Winrock could also accommodate a couple of office towers.
“It’s going to be something very different for the city,” Goodman said.
Gilbert Montaño, chief of staff to Albuquerque Mayor Richard Berry, said the development will have a major impact on the city, citing the expected gross receipts tax expansion, job opportunities and the hundreds of millions of dollars in investment it will take to get it going.
“This is truly one of the most catalytic projects that Albuquerque has ever seen,” Montaño said.
The specific plans for Winrock reflect a cultural shift toward denser, more walkable communities, Montaño said. Younger workers especially value the opportunity to easily get from their office to a restaurant to a park to walk their dogs, he said.
That idea isn’t exactly new. Such live-work-play developments already are popular around the country, and Goodman said it’s vital to Albuquerque’s future that the city have something similar to offer young people who might want to make Duke City their home.
“People will be considering their move here and saying, ‘OK this is something I understand. This is something I’m used to seeing in Dallas or Denver or wherever I’ve come from,’” he said.
It’s a familiar concept, but Goodman expects Winrock to stand out even from similar projects because of its focus on water, energy and natural resource management. In addition to growing food on site, Winrock will incorporate some solar power, use a biodigester to turn agricultural and restaurant waste products into fertilizer and energy, and take various water conservation measures. Winrock already has a small water treatment system that takes the movie theater’s sink water and purifies it for irrigating the surrounding trees. Goodman’s ultimate goal is for Winrock to use all water three times before it leaves the property – first for hygiene and cooking, second (after purification) for water features and toilets, and lastly for irrigation.
Goodman also wants to create an on-site transportation network that will keep residents and visitors alike from needing their cars to move around. That will mean trolley service across the property and perhaps into neighboring developments, a bike-share system and a “receiving room” in the underground parking garage. After making a purchase at any store, shoppers can have their bags sent to the receiving room for pickup once they’re finally ready to call it a day.
“What it does is discourage people from continually getting into their car and driving,” he said.
All of that, Goodman hopes, will appeal to a workforce that Albuquerque wants – even needs – to attract.
“This is what the millennials are looking for,” he said. “When you put together the combination of the tenants, the principles of the property, the things we’re doing with water, energy, transportation and agriculture, (it) makes it a unique place to live.”
The project could be fully complete in the next three years, Goodman said.
By: Jessica Dyer (Albuquerque Journal)
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