Welcome Columbus Investor Forum. May 11, 2017

Transcription

1 Welcome Columbus Investor Forum May 11, 2017

2 Columbus Investor Forum Market of Focus: Columbus, Ohio Presented by: Doug Wilson SVN, Managing Director, Columbus Kristen Wilson Asman SVN, Senior Advisor Maximum Competition = Maximum Value

3 Columbus Investor Forum Jason Wells Thank You to our Sponsors: Chip Holcombe Jennifer Alvarez

4 What to expect Commercial Real Estate Market Overview What is the SVN Difference Expansion of Columbus SVN Presentation of Forum Sponsors: Chip Holcomb, Columbus 2020 Jason Wells, Vice President, Business Banking, Columbus Jim Havens, Owner & Esquire, Cardinal Title

5 US Commercial Real Estate Capital Markets Update April 5, 2017 Robert M. White Jr., CRE, FRICS

6 Billions US CRE TRENDS - ANNUAL $600 Individual Portfolio Entity CRE Prices* 225 $ $ $ $ $ $0 150% 100% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Year-Over-Year Change 0 50% 0% -50% -8% -100% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

7 MOST OF INTEREST INCREASE ABSORBED IN SPREAD 8% Equity spread Debt spread 10yr UST 7% 6% 5% 4% 3% 2% 1% 0% '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

8 CAP RATES SLIGHTLY LOWER FOR YEAR, BUT UP IN Q4 9% Off Ret Ind Apt Htl 8% 7% 6% 5% '11 '12 '13 '14 '15 '16

9 Cap Rates, Columbus Source: Real Capital Analytics

10 MACRO: US GDP, Jobs & Money US GDP IS 70% CONSUMER DEMAND 2016 GDP 1.5% - 2.0% 2017 GDP Growth, likely in same range as Political uncertainties = The Trump Thesis 200K/month Consumer debt is declining Consumers spending is soft. Corporate profits: softening Investment markets still flooded with capital Expect little inflation + only modest interest rate change

11 CRE OVERVIEW Many Strengths in Mature Market vs 2008 Slight Sales Volume Decline: Just a Pause; Still lots of Capital, Confidence. Industrial: Last Mile to Repurpose Retail Office: Suburban Office, Breakout Sector, w/self storage, SFR Portfolio & NNN s. Retail: Lifestyle services, & retail. Apts: The New Demographics, Europe Best Return without Risk: smaller markets

12 CRE OVERVIEW NMM, Secondary, Tertiary: more growth, sales, pricing of assets; more investment. Bank Restraint in Sales and Construction. Private Sector Shows most Confidence Volume: down 10% from 2016, but shows strong activity

13

14 CAN CHEAP DEBT PUSH FURTHER PRICE GROWTH? DESPITE THE RISING RATE ENVIRONMENT, MORTGAGE RATES ARE STILL LOW 7 / 10 yr Fixed Commercial Mortgage Rate 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% US Presidential Election '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

15 HEADWIND: MORE CAPITAL FLOWING TO DEVELOPMENT HOWEVER NEW FED SCRUTINY AND REGS ON CONSTRUCTION LOANS SHOULD KEEP BANKS DISCIPLINED Dollars Invested in Construction

16 CONSTRUCTION LENDING PULLING BACK BUT A SLIGHTLY EASIER TO GET A LOAN INTO Q4 16: SITE SALES RESPONDED Net % of Respondents Reporting Tightening Standards Development Site Sales, $B Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'14 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4' Change in Lending Standards Development Site Sales Sources: RCA, Federal Reserve Bank, Senior Loan Officer Survey

17 CPPI Change '16 vs '15 INVESTORS CHASED HIGHER YIELDS IN SECONDARY MARKETS 20% PRICE AND VOLUME TRENDS BY PROPERTY SECTOR 15% 6MM Industrial NMM CBD Office 10% NMM Industrial 6MM CBD Office 6MM Apartment NMM Suburban Office NMM Apartment 5% Hotel 6MM Retail NMM Retail 6MM Suburban Office 0% -40% -30% -20% -10% 0% 10% 20% Volume Change '16 vs '15

18 CMBS LENDING LOST MARKET SHARE IN 2016 AND BANKS OF ALL SORTS GAINED GROUND 2016 Thru Q3 12% 8% 21% 12% 7% 18% 20% % 8% 20% 12% 7% 16% 16% % 9% 19% 10% 7% 13% 12% % 7% 18% 11% 10% 17% 11% % 5% 27% 13% 7% 14% 9%

19 US EQUITY CAPITAL SOURCES Composition of Buyers

20 BUT CROSS-BORDER FLOWS HIGH AND DIVERSE CROSS-BORDER ACQUISITIONS Europe Canada Middle East & Africa Asia Australia Latin America $120 billions $100 $80 $60 $40 $20 $0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 TRAILING 12 MONTH TOTAL

21 Columbus Apartments-Price Per Square Foot and Number of Sale Transactions Source: Xceligent

22 APARTMENT OVERVIEW: Strong Demand vs. Bubble Market? Growth of Households still outpacing new construction Fundamentals Still Strengthening: Vacancy 4%, Rent Growth 3.5% Population Growth: 22,000/yr in the Columbus MSA Millennial Population exceeds Baby Boomer Population New Construction mostly single bedroom Only entry level housing boom slows apartments Large quantities of affordable capital driving investment market Columbus Pricing is VERY attractive compared to US average. Columbus apartments are on the radar of National Investors

23 Completed Projects Under Construction Planned/Proposed Columbus Submarkets 1 University/Downtown 2 Bexley 3 Sharon/Worthington 4 Dublin/Powell 5 Hilliard 6 Grove City 7 Whitehall/Gahanna/Reynoldsburg 8 Northeast/Minerva Park 9 Westerville 10 Southeast 11 Groveport/Canal Winchester 12 Upper Arlington/North Columbus

24 Columbus Retail Sales Volume and Number of Transactions Source: Xceligent

25 RETAIL OVERVIEW: Construction Levels Slowing What to do with Big Box, Malls? Occupancy high with destination, service and food tenants. Cap Rates Falling: Dearth of New Construction combined with Job Growth Local Market is Strong Fundamentally.

26 Columbus Office Sales Volume and Number of Transactions Source: Xceligent

27 OFFICE OVERVIEW: Fundamentals Improving, Finally Vacancy Beginning to Wane, especially CBD Mixed Use Transactions Increasing, Especially CBD Suburban Transactions Increase, very little construction Cap Rates high and Prices very competitive Locally Institutional Buyers Active in Columbus hyper markets Now Grandview Yard Easton Polaris

28 Columbus Industrial Sales Volume and Number of Transactions Source: Xceligent

29 INDUSTRIAL OVERVIEW: 1 st quarter 2017 shows strong sales of portfolios CAP Rate reflects compression pricing from low vacancy and little speculative construction. Amazon Fullfillment centers spur growth in Industrial sector.

30 So What?... The Near Future and you Cap Rate Compression: Less with Multifamily, but more compression otherwise But with high BPS spreads vs. T-Bills Affordable capital still available Record number of investors Low capital gain rate unchanged for <$450k Income, 15% Vacancy % moving in right direction Supply and demand always in play Lack of alternative asset investments

31 Real Estate National Outlook Real estate remain asset class of choice for at least next decade:.5%: Savings Accounts %: CD S %: Corporate Bonds 5%: Stock Market 7% - 10%: Investment Real Estate (REAL ASSETS!).

32 The bottom line Buy product you understand Buy in a market you understand Tolerate RISK on your terms Don t buy and sell the same way Sell to outside capital Do not try to finitely time the market Diversify

33 GROWING TO MEET THE NEEDS OF CLIENTS AND THE COMMUNITY Wilson Commercial Group Doug Wilson, Managing Director Kristen Asman, Senior Advisor Jack Turner, Senior Advisor Nail Dawaher, Senior Advisor Rick Bergman, Advisor Toyia Devine, Advisor Joe Smiley, Advisor Tim Treasure, Managing Broker Steven Heiser, Senior Advisor Chris Salomone, Senior Advisor Mike Bockbrader, Advisor Beth Long, Advisor Michele Reynolds, Advisor Ann Lhota, Advisor 240 Offices Nationally, 1500 Advisors Local Listings with World Class Marketing 4200 Regent Drive, Suite 200, Columbus, Ohio, 43219,