mcarristo

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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In just one year, online financing has become an important feature of the commercial real estate scene.

Crowdfunding, or using the Internet to solicit funding from online investors, “has grown from a very new concept to a business strategy that is already producing success stories,” says Darren Powderly, CCIM, cofounder of the real estate crowdfunding platform Crowdstreet. In 2014, the first full year that real estate deal sponsors were able to conduct general solicitations of investors, U.S. real estate crowdfunding raised $565 million in debt and equity, according to the 2015 Crowdfunding in Real Estate report, published by Massolution. The crowdsourcing advisory firm estimates that amount could increase to $1.42 billion this year. That number is still small compared to the $399.8 billion the Mortgage Bankers Association reported in commercial and multifamily loans originated in 2014. But it’s no longer just a blip either.

New Tech Meets Old Play

In part, the rapid acceptance of crowdfunding by the real estate industry is a function of the never-ending need for funding. But there’s also a more subtle reason that crowdfunding has taken off so rapidly. Take out the Internet piece, and the idea of syndicating loans or preferred equity to a group of investors has been around since the ’80s. Real estate syndication, “is easy for investors to wrap their heads around,” says Jason Fritton, CEO of Patch of Land, a real estate crowdfunding platform. All crowdfunding has done is add technology and the ability to solicit nationwide to that old-school model.
And while crowdfunding may still be in its infancy, the speed of capital formation and the transparency of online investing have already caught the attention of deal-hungry investors, both individuals and institutions. Institutional interest brings more funds for bigger deals, as well as sophisticated improvements to metrics and underwriting that benefit all investors, says Fritton.
The expansion of property options is contributing to the crowdfunding boom. “The biggest transition in crowdfunding financing today is from residential fix-and-flip to commercial assets,” says William Skelley, CEO of New York City’s iFunding, a debt-focused crowdfunding site. The shift reflects changing opportunities in the real estate market, as well as the efforts of many crowdfunding platforms to carve out a niche amid the approximately 75 real estate crowdfunding sites worldwide.
The amounts raised per deal are also growing and may expand even more once new SEC regulations take effect this summer. Crowdfunding lenders are also expanding their options. Mezzanine debt to bridge amounts borrowed from conventional lenders and sponsor equity and short-term, fix-and-flip loans still dominate, but several platforms are starting to offer 3- to 5-year low-balance loans on terms comparable to other forms of nonbank financing, says Skelley

Crowdfunding at Work

Funding speed and favorable terms are what attracted Sayam Ibrahim, president of Hero Homes Inc. in Florida. “I was looking for hard-money lenders online to cover the purchase and renovation of single-family homes when I found RealtyMogul,” he says. “I’d never really considered crowdfunding, but their terms were better than I could have gotten from traditional sources.” It took about two weeks for RealtyMogul to evaluate his credit and make sure that he had deal experience. But after the initial review, “the purchase of my second crowdfunded home was completed in two weeks,” says Ibrahim.
Most platforms require sponsors to have either several years’ experience in real estate development or a certain number or dollar amount of transactions. As the demand for crowdfunding has grown, most platforms have maintained their standards or become even more selective.
Times to complete a crowdfunding transaction also vary by platform from a few weeks to a few months, depending on the time needed to complete the offering and its appeal to investors. Platforms like Realty Mogul, which fund transactions themselves and then crowdsource the deal, will generally be able to fund transactions more quickly.
“The ability to fund the project up front and then fill in with investors later is invaluable because it allows you to close in a reasonable amount of time,” agrees Gabriel Silverstein, SIOR, president of Angelic Real Estate in New York. Another benefit, says Silverstein, is that crowdfunding adapts to unique properties that may not fit into the parameters of the private equity firms. Case in point: Angelic recently acquired the master lease on a 25-acre retail site within the grounds of the Redstone Arsenal in Huntsville, Ala. About 40,000 people work or visit the Arsenal every day, and Silverstein plans to tap that community investor pool through crowdfunding. “The project isn’t going to appeal to most institutions, but the people in Huntsville get it and understand that there is a real demand,” he explains. He expects to fund most of the capital stack—both debt and equity—through the crowd.

The Rise of Private Branding

The improving real estate market was major reason that David Bleznak, director of business development for the Bleznak Investment Group, turned to crowdfunding. The company began purchasing distressed multifamily properties with company money in 2008 and 2009, then stabilizing and managing the assets. But when the buying opportunities in real estate shifted to commercial and light industrial and prices rose, “we realized we had to create a tranche of money to buy properties in the higher $10 million to $20 million range,” he says.
And while Bleznak embraces the concept of crowdfunding, he doesn’t plan on using a third-party platform. Instead, he’s following another crowdfunding trend—private branding. “We want to keep control of our offerings and create a pool of investors for future deals by taking out the middleman,” says Bleznak. To create a branded portal, Bleznak turned to Groundbreaker. The company provides a range of customized software products that allow real estate owner-operators to post deals, accredit investors, and distribute profits, says CEO Joey Jelinek. “It gives real estate companies full control over their deals,” he says. Groundbreaker also offers its own platform where clients can post deals that did not garner enough support on a company’s own site.
The bottom line: Crowdfunding is probably here to stay. Its democratic underpinnings open up real estate investing to more people. True, there are risks. “Many crowdfunding deals haven’t gone full cycle, and the regulatory environment is still evolving,” cautions Silverstein. Still, money talks, and crowdfunding offers an innovative new way to fund properties.
How to Win at Crowdfunding

• Pick an existing property with cash flow
• Choose properties that offer options to improve value
• Have a business plan and active management in place
• Tell a story that’s compelling to investors
• Use lots of photos, not just numbers
• Offer short time horizons. Loans are best at 18 months or less
• Keep senior debt to more than 65 percent LTV

By: Mariwyn Evans (National Association of REALTORS®)
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Check out the new Winter issue of Terra Firma online from the REALTORS® Land Institute. In the Winter 2015 Edition: Articles on riparian rights, the economic outlook for 2015, easement valuation, and more.
Click here to view the Winter 2015 Edition of Terra Firma
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