CREW Charlotte November 2016 Luncheon – Commercial Mortgage Back Securities (CMBS) Loans

Submitted by Virginia Luther and Nichole Kelley

What You Missed: Commercial Mortgage Back Securities (CMBS) Loans

Next month there is a new rule coming to the structure of CMBS loans.  But, how with this affect us?
 
CMBS loans are a type of mortgage-backed security backed by commercial mortgages rather than residential real estate.  CMBS tend to be more complex and volatile than residential mortgage-backed securities due to the unique nature of the underlying property assets.  CMBS are bonds created from pools of loans secured by commercial real estate mortgages; each pool of loans is aggregated into a single trust or securitization.  The securitizations are diversified by geography, property type, borrowers and tenant exposure.  Most of these loans have 10 year terms meaning there is a large group of loans that were originated in 2007 and are maturing in 2017. Now that commercial real estate is back up and interest rates are low, there is a healthy amount of capital available to invest.  80-85% of these loans that are maturing are able to refinance successfully.
 
Why might borrowers migrate to other sources other than CMBS loans?
1.      The market was artificially overstated and distorted in 2007
2.      Regulations are now making CBMS loans less cost effective
 
What happens when a borrower defaults and there is a foreclosure due to breach of contract?
–        A receiver comes in to stabilize the asset. Through utilization of the lender’s funds, the receiver reports directly on his/her progress to the court system. Loans rarely go back to the initial borrower and often have complicated maintenance structures, which makes the process of maintaining an asset challenging with layered approvals.
 
On December 24, 2016, Risk Retention occurs for CMBS loans. How does that impact borrowers?
–        Requires a 5% credit risk retention on the sponsor of the securities.
–        Positives: Everyone wants a good experience so sponsors work hard to keep those loans beneficial for all parties. Heavy regulations mean focus on security of all parties and keeps things honest (i.e. airlines, telecom, etc.)
–        Negative: Lose some competitive leverage due to the regulations. More regulations = more expense. Therefore, borrowers will likely pay a higher interest rate.
 
Does the election affect this?
–        It can. As government increases, so does its role in regulations. As well, change in power causes market volatility. If one party holds all the power, change can be more easily put into effect.

CREW Charlotte October 2016 Luncheon – Recent Developments in Charlotte

Submitted by Kathleen Chambers

Who You Missed:
    Chris Daly, Childress Klein
    Kristy Venning, Beacon Partners
    Brendan Pierce, Keith Corp
    Moderator: Allen Clark, Charlotte Business Journal

What You Missed:
Program focused on recent significant commercial real estate developments in Charlotte:

Industrial space – Childress Klein:
•    Examples
Jordan Food Service. 360,000 sq ft distribution center with 150,000 sq ft of refrigerated storage
Afton Ridge.  Started as 125,000 sq ft but is now 300,000 sq ft. 
•    Changes in industrial warehouse development. The facilities are much larger now to allow for larger trucks, significant need for onsite storage. Facilities require lots of land and lots of paving. 
•    Incentives for industrial are different between NC and SC. In SC, the tax rate is higher and so incentives are needed to build on that side of the border. Challenge in NC is lack of space in the Greater Charlotte area.
•    Daly has seen the turn towards larger spaces and longer term leases and so they develop to meet the need
    
Office Space in NC – Beacon Partners
•    Example – 1616 Camden, South End
•    Big changes in demographics going forward brought big changes in needs
•    The millennial work force favors the urban infill experience
•    Less square footage per person required 
•    Explosive demand for open office with exposed structural elements: less me, more we
•    More interest in creating the customer experience
•    Venning predicts that they will not do spec building in the near future

Office Space in SC – Keith Corporation
•    Example: Mortgage Company in Lancaster County. Aided in consolidating the company to one space requiring development of a 100,000 sq ft facility that was augmented during the consolidation
•    Spaces are now amenity driven. Their experience is that the amenities can come to the employees when you build them in to the facility. 
•    Benefits to building in SC because land is available.
•    Lower square footage per employee with new construction. 
•    Noted that rates in SouthPark have increased and new construction is finally underway.
•    Pierce noted that NC has a problem with incentives. There is no cohesiveness to attracting companies to NC. Our competitor states are much better at attracting business through economic incentives.

Owning Air – Air Rights 101

Who You Missed:

Moderator – David Jones – Partner at Troutman Sanders

Panelists – Fred Klein III – Partner at Childress Klein, Laura Smith – Executive Vice President at Foundation of the Carolinas & Doug Stephan – Principal at Vision Ventures

What You Missed:

• FAST FACTS

  • Air Rights Transactions have gone on in Charlotte for at least 25 years

  • Air Rights Transactions are vertical subdivisions, dividing properties up and down instead of from right to left.

  • Air Rights Transactions are extremely complex not only from a legal perspective, but also when it comes to structure and engineering.

• Projects

  • Carolina Theatre at Tryon and Sixth Streets (Laura Smith)

    • Requires four elements of condominium rights for uses within the project above the planned restoration of the 36,000 square foot theater.

  • The Mint Museum at 500 South Tryon Street (Fred Klein III)

    • Next phase of development that has happened over the last decade

    • Foresight of Wachovia/Wells Fargo was enormously helpful in helping this project come to fruition.

    • Air Rights above the Mint were purchased for $18.1M

    • Great lengths were gone to, including agreeing to not swing cranes over the trading floors at Wells Fargo during the building process.

  • The Epicentre (Doug Stephan)

    • Legal Battles over Air Rights went on for a lengthy period.

    • Separate development rights were created for condominium agreements

    • The economy and lack of parking were major roadblocks in this project.

    • Eventually the project became two limited service hotels, under construction now.

Charlotte Douglas International Airpot – An Economic Engine Of The Carolinas: Planning For The Future

Charlotte Douglas International Airpot – An Economic Engine Of The Carolinas: Planning For The Future – Submitted by Dave Rushing

Who You Missed:

• Jeff McSwain – Assistant Aviation Director of Development for CLT

In this capacity, McSwain is responsible for the planning, design and construction of Airport projects. He also oversees land acquisition and the Part 150 Airport Noise Compatibility Program.

McSwain holds a Master of Business Administration from Pfeiffer University and a Bachelor of Science in Civil Engineering from North Carolina State University.

​​Professional affiliations:
Professional Engineer (PE), North Carolina
Certified Member (CM), American Association of Airport Executives (AAAE)√¢‚Ǩ‚Äπ

• Stuart Hair – Economic Affairs Manager for CLT

In this capacity, Hair plans, directs, manages, and oversees the activities and operations regarding economic development. Identify corporations and business facilities that are targets for recruitment to locate on, or near, Charlotte Douglas International Airport (CLT) and market the Airport to identified targets.

Hair holds a Masters degree in Geography from the University of North Carolina at Charlotte and a Bachelor of Arts in History from Queens University of Charlotte.

What You Missed:

• FAST FACTS
  • Charlotte Douglas International Airport (CLT) is ranked 5^th nationwide in Operations, 9^th in passengers and 29^th in Cargo.
  • CLT handled over 44M passengers in 2015
  • CLT has approximately 700 departures daily and Nonstop service to 155 destinations.
  • $10-12B annual economic impact to the Carolinas
  • 100,000 jobs directly or indirectly related to the Airport and the businesses that serve it.
• Projects Underway
  • Elevated Terminal Roadway
  • East Terminal Phase II – Food Court
  • Concourse A North Expansion
  • Terminal Concourse Renovations
  • Regional Concourse Projects (Concourse E)
• Future Project
  • Terminal Lobby Expansion (Perhaps to include Queen Charlotte Statue)
  • Future Gate Expansions
  • 4^th Parallel Runway

“District 6: Sub √¢‚Ǩ≈ìUrban√¢‚Ǩ¬ù The Evolution of a Dynamic Market Place with Councilman Kenny Smith

The March CREW meeting featured Council Member Kenny Smith.   Councilman Smith’s topic “District 6: Sub “Urban” The Evolution of a Dynamic Market Place” provided an update on one of the busiest districts in the City – the SouthPark area.  He told us there is close to a billion dollars’ worth of development in SouthPark and along the Park Road corridor and discussed the recent and active rezoning petitions, trends, city vision, demographic trends, infrastructure and how Charlotte is impacted.  The SouthPark area is clearly one of the faster growing areas in both the state and the country as Charlotte continues to be a leader in job growth.  Councilman Smith’s knowledge as a commercial broker gives him a unique understanding and appreciation for his district’s direction.  

“District 6: Sub √¢‚Ǩ≈ìUrban√¢‚Ǩ¬ù The Evolution of a Dynamic Market Place with Councilman Kenny Smith

The March CREW meeting featured Council Member Kenny Smith.   Councilman Smith’s topic “District 6: Sub “Urban” The Evolution of a Dynamic Market Place” provided an update on one of the busiest districts in the City – the SouthPark area.  He told us there is close to a billion dollars’ worth of development in SouthPark and along the Park Road corridor and discussed the recent and active rezoning petitions, trends, city vision, demographic trends, infrastructure and how Charlotte is impacted.  The SouthPark area is clearly one of the faster growing areas in both the state and the country as Charlotte continues to be a leader in job growth.  Councilman Smith’s knowledge as a commercial broker gives him a unique understanding and appreciation for his district’s direction.  

CREW February 2016 Luncheon – Eye on the Economy: An Economic Update with Spencer Levy of CBRE

Who You Missed: Spencer Levy is Americas Head of Research for CBRE and serves as principal external spokesperson on real estate issues in the Americas region. He oversees the analytical activities of the CBRE research community within the Americas region and is responsible for the management of hundreds of professionals who are focused on producing market-leading insight and interpretative analysis on the latest real estate trends. As a senior member of the company’s global research team, he plays an integral role in the development and implementation of the global research strategy and business plan and is a frequent speaker before industry groups, including NAIOP, ICSC and CREW.

He is a graduate of Cornell University and Harvard Law School, and currently serves on the Board of Directors of the Baltimore Leadership School for Young Women.

What You Missed: Come on down……..Spencer Levy discussed the global economy and its impact on commercial real estate in the United States with a focus on the “Unusual Suspects,” those factors that move beyond the standard analysis that can help you and your clients better understand (and be successful) in today’s volatile markets, including China’s impact on the world economy.

Mr. Levy accentuated a top concern across industries relates to talent – finding talent, keeping talent and developing talent….so much so that in a recent survey, six of the top eight issues listed related to talent.

CREW January Luncheon – Overcoming Transportation Infrastructure Challenges in NC

Overcoming Transportation Infrastructure Challenges in NC submitted by Sarah Hopfer

Who You Missed:

• Warren Cooksey – NCDOT Director of Outreach and Community Affairs/Division 10
• Ned Curran – Board of Transportation – Chairman
• Tracy Dodson – Board of Transportation – Member/Division 10

What You Missed:

Charlotte is expected to grow by 400,000 people by 2040 and keeping up with the city’s infrastructure needs is critical.  Maintaining and improving our level of mobility is key for continued economic and land development success and competitiveness. “Optional toll lanes work by changing price per mile every five minutes,” said Ned Curran, Board of Transportation Chairman.  “The toll rate is going to be what people are willing to pay – it’s that simple,” he stated. 

Curran also discussed the legislation that was passed modernizing the way NC’s transportation network is built, maintained and funded and how this will impact commercial real estate and the future of our city.

To see the full presentation, please click here.
 

CREW Charlotte December Luncheon – CREW Excellence Awards

CREW Charlotte Excellence Awards submitted by Emily Buehrer

CREW Charlotte celebrated an exciting and accomplished 25^th Anniversary year at the final luncheon of 2015. We spent the afternoon recapping the successes and honoring our members and sponsors. Six members were presented awards for their outstanding contributions. The awards spanned from “Member of the Year” to “Networker of the Year” to highlighting two new CREW Charlotte members being inducted in the CREW Network Foundation’s Women of Vision program. The afternoon’s highlights are as follows:

• Rising Star Award : Jenn Stuart with Holder Construction received the Rising Star award for her extraordinary contributions through her involvement in the Programs Committee and taking on the challenge of planning the 25^th Anniversary Event, as well as attending the annual CREW Convention in Seattle this year.

• Member of the Year : Nichole Kelley with Wells Fargo was awarded the Member of the Year Award. Nichole embodies the underlying spirit of our Chapter and made multiple significant contributions this year. She led the efforts to bring in the first ever Diamond Sponsor, as well as multiple new sponsors, while also recruiting several new members. She was also instrumental in furthering our Queen City in Pink event and leading the efforts of teaming up with Wells Fargo for the Women’s Habitat Build in the spring and fall this year.

• Networker of the Year Award : This award was presented to Jean Russell with Interface, for her demonstrated efforts as a master networker actively sending referrals and business to other CREW members on top of offering her own networking class she offers to clients and connections.

• Outreach Award: Sallie Jarosz with Home Trust Banking received the Outreach award due to her dedication of taking on co-chairing the Leadership Development committee and restructuring it to be much more successful in 2015. She has also taken time to serve as an informal mentor to two different CREW members and has agreed to become a formal mentor in 2016.

• President’s Choice Award : This CREW member or company made contributions throughout the year that were vital to the ongoing success of the chapter. It was presented to Past President Holly Alexander with New South Properties for her work spearheading the new Mentor Program, along with her continued dedication to serving on the board and multiple committees throughout her membership over the last ten years.

• Women of Vision : The CREW Network Foundation Women of Vision program was established in 2007 to recognize donors for their cumulative giving to CREW Network Foundation. Participation in the program acknowledges an individual’s commitment to support CREW Network Foundation’s mission – to advance women in the commercial real estate industry through scholarships, industry research, and career outreach. Our chapter is very proud to say we have two members who have been inducted into the Women of Vision program – Nancy Olah with Nancy Olah Law and Angie Dugick, with Dugick Consulting.

November Luncheon Summary: The Evolving Story of Center City Retail with Chris Hemans of Charlotte Center City Partners

Center City Charlotte has experienced significant growth over the past five years. Yet, retail has continued to lag behind the office and residential development. Chris Hemans, Director of Retail of Charlotte Center City Partners, discussed the past, present and future of retail in Charlotte Center City.

Chris Hemans, Director of Retail

As Director of Retail, Christopher Hemans is responsible for collaborating with local and state partners to attract new retail to Uptown and South End. He brings over a decade of experience working in economic development, public policy, and community development. Hemans has extensive experience in working closely with public officials, private sector leaders, commercial real estate brokers and community stakeholders.

Most recently, Hemans led business recruitment efforts within the City of Charlotte’s business corridor geography. Before moving to Charlotte, Hemans was an Assistant Commissioner with the City of Chicago where he managed the Retail Chicago program.

A native of Evanston, Illinois, Chris holds an M.S. degree from the Newhouse School of Broadcast Journalism at Syracuse University and an undergraduate degree from the University of Illinois Urbana-Champaign.

Chris is a member of ULI, ICSC, IEDC and 100 Black Men of Charlotte and recently served on the board of the Stratford Richardson YMCA. Chris also is the newest member of CREW!

Charlotte Center City Partners

Our vision is for Charlotte’s Center City to be viable, livable, memorable, and sustainable, with modern infrastructure, a tapestry of unique neighborhoods, and a diversity of thriving businesses. We envision and implement strategies and actions to drive the economic, social and cultural development of Charlotte’s Center City.

The vision is the continuation of the growth of our city as pedestrian-friendly and walkable, with comfortable and interesting neighborhoods. It must have mixed growth, with balanced initiatives that are leveraged by public and private investment.

Retail: The Past

The corner of Trade and Tryon was a busy marketplace in the early part of the 20^th Century with Belk opening in 1910 and Ivey’s following in 1924, growing to a total of five department stores by the 1950s.

With Independence Boulevard’s opening in 1947 Charlotte became a vehicle dominant city with housing moving out into the suburbs and shopping soon followed. Park Road Shopping Center opened in 1955, followed by South Park and Eastland in the early 1970s. Downtown lost retail during this period and street parking in the downtown area became a thing of the past.

Retail: The Present

Retail is thriving in Charlotte with strong expansion in SouthEnd, but remains limited uptown. While there is just over two million square feet of retail space, half of that is made up of bars and restaurants.

Drivers of retail are:

• Location (with ground floor space being the predominant requirement)

  • Which is lacking in the uptown market

• Income

  • $75,000 is the average household income in the uptown market

• Density

  • 13,500 residents in the uptown market

  • 100,000 employees within the I-277 loop

  • 12 million visitors annual

• Co-Tenancy

  • There is a need for pioneers in the market

• Retail-Oriented Parking

  • Seen or perceived as lacking in the uptown market
  • Adding SouthEnd into the numbers brings another 1.4 million square feet, an additional 12,800 employees, and an additional 6,300 residents with a slightly higher average income of $78,000.

Retail: The Future

There is a push to celebrate our existing retailers – those in Overstreet Mall, Latta Arcade and sprinkled throughout uptown http://files.charlottecentercity.org/ShopUptown-Q315.pdf

Additional pop up shopping programs are underway including “werkinprogress” November 30^th through December 6^th at Epicenter and “Tinsel Box” December 2^nd through the 4^th. A third event is in the planning stages for Latta Arcade (CREW Member Jackie Sherard mentioned her retail store, Canvas, located in Latta Arcade.)

Vintage Charlotte, a marketplace for retailers operates twice per year in uptown as well.

Atherton Mills has announced a $100 million project and Whole Foods on Stonewall will be a reality in coming months. Independence Center is in talks regarding expanded retail area and the Levine project in First Ward is expected to drive more development in the area.

Chris closed letting everyone know that Charlotte Center City Partners will continue its efforts to provide proof of concepts for retail, assist in creating space, identify and recruit retailers to uptown and undertake the research necessary to grow the retail presence.