Joseph L. Carter Executive Vice President November 2014

Transcription

1 Joseph L. Carter Executive Vice President November 2014

2 Trends In Banking The problems created by the financial down turn are in the rearview mirror. The national economy remains sluggish and loan growth is difficult Banks continue to focus on efficiencies and expense control

3 Deposits are high (approximate ratio of loan to deposit ratio: 2007 = 100% ; 2014 = 70%) Spreads are low (rising rates will improve this) Result: pressure to get more aggressive

4 Trends in Investment Sales In the past 20 years, real estate has become more institutional. 1 2 years ago, the Gateway Cities (NY, DC, SF, LA, BOS) received the most attention and aggressive cap rates & capital markets execution. Some shift to the next tier of cities to pursue higher returns (though perhaps higher risk)

5 Presence of Sovereign Wealth Funds and foreign pension fund money continues to invest in gateway cities Asset allocation model coupled with low rates continues to push cap rates to low levels.

6 Gen Y Boomers 2012 Size 77.1 million 72.5 million Birth years Age Now Hispanic 21% 10% Black 15% 11% Asian/Other 7% 4% Live to Work 16% 28% Work to Live 85% 72% Expect Never to Retire 10% 25% Source: ULI/Lachman Associates Survey, January 2013

7 YPO Southern 7 Economic Forum US Housing Market Overview November 12, 2014

8 YPO Southern 7 Economic Forum Cyclical Mortgage Demand/Supply : The dramatic lowering of Fed interest rates fueled years of record breaking mortgage origination volume and strong housing activity which led the economic growth : Mortgage lenders stretch credit guidelines to keep profits and volume demand strong setting stage for housing meltdown and Beyond: High uncertainty in consideration of: End of Fed s MBS purchase program: Will banks and investors pick up the slack? Potential for a protracted recession in the real economy; a slow recovery in jobs and consumer confidence Expected sharp declines in refinance volume with limited recovery in the purchase market

9 YPO Southern 7 Economic Forum 9 Slow Growth for Housing Pre Meltdown Growth 8% Baby boom(s) Strong economic growth Strong immigration Expansion of home ownership rate Creation of a vibrant secondary market Cheap credit Product innovation/ exotic loans/loose regulation After Meltdown Growth ~ 2% Weakening demographics Tight credit & tepid economic growth Uncertain immigration policy Reduced affordability Rising health care costs (?) Rising energy costs (?) Rising PC insurance costs Slow personal income growth Demand shift towards rental housing Increased regulatory costs/uncertainty

10 YPO Southern 7 Economic Forum Owner and Renter Occupied Households & Homeownership Rate 10

11 YPO Southern 7 Economic Forum Projected Changes in the Population by Age ( ) 11

12 YPO Southern 7 Economic Forum First Time Homebuyers Have Not Returned 12

13 YPO Southern 7 Economic Forum US Housing Market Overview November 12, 2014

14 YPO SOUTHERN 7 CHAPTER ECONOMIC FORUM Retail Market Overview

15 STATE OF THE UNION THE SUPPLY SIDE

16 U.S. SHOPPING CENTER DEVELOPMENT Millions, SF Shopping Center Development. Source: Reis

17 U.S. SHOPPING CENTERS 2013 YEAR END VACANCIES 12 Vacancy % Vacancy % 2 0 Community/ Neighborhood/ Strip Power Centers Malls Specialty Centers All Shopping Centers. Source: Cassidy Turley

18 RETAIL GLA PER CAPITA Retail GLA Per Capita has been flat since GLA Per Capita GLA Per Capita. Source: ICSC & RBC Capital Markets

19 STATE OF THE UNION THE DEMAND SIDE

20 MIDDLE CLASS SHOPPER IN HIDING

21 AND THE BAD NEWS Retailers Shrinking Footprints Sharp Contraction Among Segments With Heavy E-Commerce Competition Office Supplies Consumer Electronics Bookstores Negative to Flat Growth Mid-Priced Hard Goods Mid-Priced, Unionized Grocery (Especially Smaller & Regional)

22 2014 RETAILER GROWTH NOT! Bookstores Video Stores Do-It-Yourself Home Stores DECLINING Mid-priced apparel Mid-priced grocery (particularly unionized) Office Supplies Stationary/Gift Shops Shipping/Postal Stores And Casual Dining (Older, Struggling Concepts Shrinking) DECLINING

23 THE IMPACT OF KEY ECONOMIC INDICATORS 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Housing prices TAILWIND Fuel prices TAILWIND 20% Stock or Greater prices TAILWIND 5% 10% Nashville 4% San Francisco 15% Recession Job Loses Denver 9% Colorado Springs 4% San Jose 13% Public Policy Debates Create Consumer Uncertainty Recovery HEADWIND Job Gains Atlanta 33% Sacramento 29% Las Vegas 26% Employment NEUTRAL IMPACT Jacksonville 21% Phoenix 21% Interest Lower Wage RatesU.S. Mid Wage NEUTRAL 10% IMPACT Higher Wage Industries Industries Industries Los Angeles 20% 10% 20% Orlando 19% San Diego 17% Bismarck 13% St. Louis 11% Portland 10% Grand Rapids 10% Houston 8% Austin 8% Tucson 7% San Antonio 6% Raleigh 5% 5% or Less Providence 4% DC 4% Milwaukee 4% Tampa 3% Columbus 3% New York, NY 3%

24 AND NOW FOR THE GOOD NEWS Retail Closures Are Down Significantly 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 2014* *1,100 of the 2,192 are Radio Shacks Source: ICSC, PNC

25 RETAIL BANKRUPTCIES WAY DOWN

26 MORE GOOD NEWS 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Planned Openings Are At Historic Highs Source: ICSC, PNC

27 BUT DEMAND HAS SHIFTED Restaurant Other Apparel Dollar Home Grocery Drug. Source: ChainLinks Retail Advisors

28 SO WHO IS GROWING? Growth 2014 Retailers NOT Competing With Online Sales Restaurants Grocery/Food Related Service Related Entertainment Luxury Brands Discounters Off price apparel Specialty Retailers

29 2014 RETAILER GROWTH HOT Grocery (Smaller Format Concepts) Discount/Ethnic/Organic/Upscale Pet Supplies DECLINING Fast Food/Fast Casual Upscale Dining Fitness/Health/Spa Concepts Medical Automotive Parts & Services Thrift/Dollar Stores Arts and Crafts Stores Furniture/Mattress Stores Drug Stores Entertainment Specialty Retail Off-Price Apparel Luxury Apparel/Accessories Children s Apparel Sporting Goods Wireless Stores Banks. Source: ChainLinks Retail Advisors

30 WHO S HOT?

31 QUESTIONS & ANSWER SESSION