Global Property CEO Florida Conference notes

Call it the sound of collective mourning. Throughout more than 60 roundtable discussions between analysts and real estate investment trust executives gathered this week at Citigroup’s three-day Global Property CEO Conference in Naples, FL, REIT management teams representing all U.S. asset types returned again and again to a now-familiar list of themes and concerns. Stalled transaction activity is inhibiting the market's ability to establish reliable property values, and vice versa. Occupancies, absorption, rents and other property fundamentals are weakening in tandem with the declining job market and shaky consumer confidence. REITs seek to preserve capital by cutting dividends, writing down investments, trimming costs and canceling development projects. And perhaps most urgently, highly leveraged firms are still trying, with limited success, to navigate the frozen flows of capital markets, refinance or retire debt -- and at the same time, try to predict when to make a well-timed re-entry into the acquisitions arena. Citigroup research analyst Michael Bilerman conjectured that the industry may have entered the last of the "five stages of grief" -- acceptance -- after the REIT sector's initial reactions of denial, anger, bargaining and then depression following the financial crisis that first gripped the industry last fall. "I think we’ve now gotten to the acceptance phase," he said. "There are more people who accept where things are now. Companies are focusing on what needs to get done, on their core business and balance sheet ... there's a little more hope than utter and complete chaos." Even so, it was challenging to detect hope among the veteran CEOs in attendance. Interest rate spreads are still way too high for the economy to recover quickly and property prices are at a 10-year low, stated Steven Roth, CEO of Vornado Realty Trust (NYSE: VNO), owner of a diverse mix of New York City office buildings and retail properties in the Northeast. "We’re in a period where asset values are deflated, and that has driven out all normal-course lending because nobody wants to make a loan; nobody knows the value of the collateral of what they’re lending against," he said. "We say frequently, one of the things that makes a bottom is stupid, stupid, stupid low [implied] asset values, and we’re getting to at least the first or second ‘stupid.’" Still, Roth predicts the "greatest opportunity in our lifetime to buy things extraordinarily cheap" will soon be within sight. "If people have the liquidity and the smarts and intelligence to navigate, I think there are going to be some incredible buys whether in the public or private markets. There’s going to be more good quality assets available than we all combined have the capital for. There’s going to be three or four years of investing -- there’s that much product available. There’s more product than there is capital now, and that will continue for years." For more information see: http://www.houstonrealtyadvisors.com/ or http://www.houstonrealtyadvisors.net/ or http://www.edayres.com/

New Food for Sugar Land Town Sq.

THREE RESTAURANTS OPENING AT SUGAR LAND TOWN SQUARESUGAR LAND, TEXAS — Three restaurants are opening new locations within Sugar Land Town Square, a 32-acre master-planned community located at the intersection of U.S. Highway 59 and Highway 6 in Sugar Land. Escalante’s has opened its fifth Mexican restaurant in the Houston area at 15933 City Walk. It is joined by frozen yogurt and smoothie shop Swirll, which is opening its fourth Houston location next door at 15955 City Walk. Finally, July will mark the opening of Japanese hibachi restaurant Taisho, which will open its sixth Houston-area location on the first floor of the recently completed Minute Maid corporate headquarters building.Phases I and II of Sugar Land Town Square are already complete. They include a 300-room, full-service Marriott hotel and conference center, the new 82,000-square-foot Sugar Land City Hall, 167 mid-rise residential condominiums, 208,000- square feet of office space, 182,000 square feet of Main Street-style retail and restaurant space, and a 1.4-acre pedestrian plaza. Upcoming phases of the project include an additional 357,000 square feet of Class A office space and 56,000 square feet of retail, both of which are scheduled for completion in 2010. For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net

Macy reopens in Houston!

Macy’s Inc. is planning to re-open its stores at Deerbrook Mall and Almeda Mall, both of which were severely damaged by Hurricane Ike.
The stores were closed last September after the hurricane blew through the Galveston/Houston area.
The Deerbrook Mall Macy’s is scheduled to re-open in August, and the Almeda Mall store is slated to re-open in September.
Upon reopening, the two stores will reinstate about 500 jobs.
Macy’s Deerbrook Mall, which opened in 1984, and Macy’s Almeda Mall, which opened in 1966, will both be stripped down to their bricks-and-mortar shells and completely remodeled.
The Deerbrook Mall store will span 161,00 square feet on three levels, and the Almeda Mall location will encompass 147,000 square feet on one level.
The stores will incorporate Macy’s “Reinvent” elements such as wider aisles, redesigned and spacious fitting rooms with seating areas and plasma screen televisions, as well as electronic price-checkers throughout the stores.
Macy’s Central, based in Atlanta, operates 234 stores in 18 states across the South, Southwest and Midwest. Sixteen of those stores are in the Greater Houston area. For more information see : www.houstonrealtyadvisors.com and www.houstonrealtyadvisors.net

Slow down seen for 2009 by REIT index

Investment Notes:U.S. REITs down 37% in '08Similar to the broader market, the U.S. REIT market was down in 2008 as all sectors of the economy were affected by the credit crisis and global economic struggles. This year, the REIT market will continue to face the same challenges as other industries: the need to revitalize the frozen credit markets enabling companies to refinance debt coming due, and weathering the uncertain and challenging economy, according to the National Association of Real Estate Investment Trusts (NAREIT).The FTSE NAREIT All REIT Index was down 37.34 percent for 2008, following a near 16 percent rebound in December. The FTSE NAREIT Equity REIT Index was down 37.73 percent for the year after gaining 16.39 percent in December.The broader market indexes also struggled in 2008. For the year, the NASDAQ Composite was down 40.54 percent, the Dow Jones Industrial was down 33.84 percent, the S&P 500 was down 37.00 percent, and the Russell 2000 was down 33.79 percent.Broader market fundamentals had a strong impact on how insulated or how badly hit specific REIT sectors were in 2008. On the positive side, self storage REITs were up 5.05 percent in 2008. The relatively small sector is comprised of four companies that operate with very low leverage, a factor investors favored in the current credit climate. Healthcare REITs, down 11.98 percent for the year, fared better than most other sectors as investors sought the positive, long-term fundamentals of companies catering to the country’s aging population.On the flip side, the slowdown in global manufacturing and decreased wholesale activity depressed the industrial REIT sector (down 67.47 percent for the year), while regional mall REITs (down 60.60 percent) were affected by investors responding to the fear of a consumer spending shutdown and increasing retail store closings. Lodging/resort REITs (down 59.67 percent) faced the challenge of both vacationers and business customers curtailing travel plans due to the economy.In spite of the fact that some REITs cut dividends in the second half of the year, both the All REIT and Equity REIT indexes posted their highest year-end dividend yields in nearly a decade. The FTSE NAREIT All REIT Index dividend yield was 8.37 percent as of Dec. 31, 2008 (the highest since its 8.98 percent level of December 1999). The FTSE NAREIT Equity REIT Index dividend yield was 7.56 percent at the end of 2008 (the highest since its 8.70 percent level of December 1999). For more information see : www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net

Texas still kicking butt and feels good about it!

Texas isn’t letting the economy ruin its state of mind, a new Everest College survey finds.
Ninety-five percent of those who participated in the Texas college’s survey said they consider themselves independent despite the difficult economic outlook.
Meanwhile, more than half — 55 percent — said they would get a new job, start a new career or go back to school in an effort to counteract recession efforts.
“Texans have always been known for having an independent spirit, meeting the challenges of difficult times with courage and resourcefulness,” said Hershell Ernest Jr., a career and education expert with Everest College. “Those who can use that spirit to adapt to the times, leveraging and increasing their marketability in occupations faring well despite the tough economy, position themselves to come out on top.”
Compared to the rest of the nation, Texans also think they are doing better, the survey found. Fifty-four percent of respondents said they don’t feel as affected by the recession because they live in Texas.
Although the state has seen an increase in unemployment figures, Texas is faring better than the nation, according to the college. Texas Workforce Commission statistics show that unemployment figures were at 6 percent in December, more than a full percentage point below the nationwide rate of 7.2 percent.
Certain fields, like health care and social assistance, added more than 28,000 jobs in Texas during 2008.
Everest College’s survey was conducted by Promark Research Corp., a public opinion research firm. For more information see ; www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net

From HBJ:

Minute Maid makes move to Sugarland

Minute Maid employees reported to work at the company’s new headquarters building in Sugar Land on Monday.
More than 300 employees have moved into the recently completed Minute Maid Building at 2150 Town Square Place in Sugar Land Town Square.
Minute Maid, a division of Atlanta-based Coca-Cola Co., moved from 2000 St. James Place in Houston into 115,000 square feet of leased office space in the Sugar Land building, which was developed by Planned Community Developers Ltd. The mixed-use Sugar Land Town Square is located at the southwest corner of Highway 59 and Highway 6.
As a tenant in Town Square, Minute Maid will benefit from a 100 percent tax abatement on real property improvements for seven and a half years from the City of Sugar Land, Fort Bend County and the levee improvement district.
The City of Sugar Land also gave a $2.4 million direct incentive to Minute Maid to relocate from the Galleria area, where it had operated for more than 25 years. However, the company had to agree to two conditions: Put its name on the outside of the office building and refer to Sugar Land as its headquarters location in all corporate materials.
Minute Maid will eventually employ as many as 400 people in Sugar Land.

For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net

Bonnie Kelly named HOLBA Landlord Rep. of the YEAR!

Bonnie Kelley of CB Richard Ellis Inc. has been named Landlord Representative of the Year by the Houston Office Leasing Brokers Association.
The award is given annually to a professional who epitomizes Holba’s core values of respect, integrity, service and excellence. The organization honored Kelley Feb. 5 during an evening reception at Hotel ZaZa.
The CBRE senior vice president was recently responsible for leasing 287,000 square feet to Dow Chemical Co., 247,000 square feet to WorleyParsons Group Inc. and 174,000 square feet to Mustang Engineering Inc. The leasing activity also earned Kelley the title of top producer in CBRE’s Houston office.
Rob Neblett, Holba’s board president, says Kelley’s level of professionalism and enthusiasm has resulted in an outstanding level of production.
Established in 1987, Holba is a local organization that has a total of 70 members. Ed A. Ayres, www.edayres.com was also elected to the Board of Dirctors of HOLBA. For more information see; www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net