ben loughry forecast 2010
TRANSCRIPT
-
8/14/2019 Ben Loughry Forecast 2010
1/60
Integra Realty Resources DFW1
Economic & Commercial Real Estate Outlook
-
8/14/2019 Ben Loughry Forecast 2010
2/60
Integra Realty Resources DFW2
Peace is that brief,glorious moment in history
when everybody stands around,
and the smart people are reloading.
-
8/14/2019 Ben Loughry Forecast 2010
3/60
Integra Realty Resources DFW3
Economic Conditionsand the
Capital Markets
-
8/14/2019 Ben Loughry Forecast 2010
4/60
Integra Realty Resources DFW4
GDP Declines Appear to Have Ended
REAL GDP OVER THE PAST DECADE
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
Q1'0
0
Q3'0
0
Q1'0
1
Q3'0
1
Q1'0
2
Q3'0
2
Q1'0
3
Q3'0
3
Q1'0
4
Q3'0
4
Q1'05
Q3'05
Q1'0
6
Q3'0
6
Q1'07
Q3'07
Q1'0
8
Q3'0
8
Q1'0
9
Q3'0
9
Billionsin200
5Dollars
-
8/14/2019 Ben Loughry Forecast 2010
5/60
Integra Realty Resources DFW5
Future of US Dollar is Uncertain
US Dollar vs. Major Currencies
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Chang
e
JPY/$ AUD/$ CHF/$ EUR/$ GBP/$
Japanese Yen British Pound
AustralianDollar
Swissfranc
Euro
-
8/14/2019 Ben Loughry Forecast 2010
6/60
Integra Realty Resources DFW6
National Employment Losses Increased
-
8/14/2019 Ben Loughry Forecast 2010
7/60Integra Realty Resources DFW
7
Local Employment Rates
2008 2009
66,800 66,400
Fort Worth- Arlington
1%
DeclineVS.
Dallas- Plano-Irving
9% Decline
-
8/14/2019 Ben Loughry Forecast 2010
8/60Integra Realty Resources DFW
8
Consumer Confidence is Up Slightly in December
2008 2009
Seasonally adjusted
1985=100
Source: The Conference Board
Dec. 52.9
Consumer Confidence Board
-
8/14/2019 Ben Loughry Forecast 2010
9/60Integra Realty Resources DFW
9Integra Realty Resources 9
-
8/14/2019 Ben Loughry Forecast 2010
10/60Integra Realty Resources DFW
10
Biggest Worry:Home Foreclosures
-
8/14/2019 Ben Loughry Forecast 2010
11/60
Integra Realty Resources DFW11
U.S. Home Prices Ended Free Fall
S&P/Case-Shiller Home Price Index20-City Composite
100
120
140
160
180
200
220
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
-
8/14/2019 Ben Loughry Forecast 2010
12/60
Integra Realty Resources DFW12
Bank Failures Reached Historic Levels
FDIC Bank Failures by Month
0
5
10
15
20
25
30
Jan-04
May
-04
Sep-04
Jan-05
May
-05
Sep-05
Jan-06
May
-06
Sep-06
Jan-07
May
-07
Sep-07
Jan-08
May
-08
Sep-08
Jan-09
May
-09
Sep-09
-
8/14/2019 Ben Loughry Forecast 2010
13/60
Integra Realty Resources DFW13
Commercial Real Estate Markets
-
8/14/2019 Ben Loughry Forecast 2010
14/60
Integra Realty Resources DFW14
Aggressive Use of Leverage
Has Been the Primary Catalystof the Downturn
-
8/14/2019 Ben Loughry Forecast 2010
15/60
Integra Realty Resources DFW15
1stLien 80/85%
Mezzanine 10/15%True Equity 0/5/10%
-
8/14/2019 Ben Loughry Forecast 2010
16/60
Integra Realty Resources DFW16
February 2009 SaleProperty Size - 906,287 SFSale Price - $355 MillionPrice/SF - $391.71 per square foot
Buyer - CBRE Investors
No Room for Error
Decrease in Value 63.0%!
February 2007 SaleProperty Size - 906,287 SFSale Price - $967.5 MillionPrice/SF - $1,067.60 per square foot
Buyer - Macklowe Properties
The Bertelsmann Building
1540 Broadway New York, NY
-
8/14/2019 Ben Loughry Forecast 2010
17/60
Integra Realty Resources DFW 17
CMBS Market Is Yet to Return
16 26
37
74
5749
74
52
7893
169
203
230
122
$0
$75
$150
$225
$300
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Billions
-
8/14/2019 Ben Loughry Forecast 2010
18/60
Integra Realty Resources DFW 18
Maturities LoomApprox. $300 million Annually
COMMERCIAL MORTGAGE MATURITIES
$0
$50
$100
$150
$200
$250
$300
$350
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Billions
Banks CMBS Life Companies Other
Source: Foresight Analytics, LLC
-
8/14/2019 Ben Loughry Forecast 2010
19/60
Integra Realty Resources DFW 19
Cap Rates Needed for
Aggressive Buying
Property Type Top-Tier Mid-Tier Low-Tier
Apartment 8.2% 9.3% 11.0%
Industrial 9.0% 10.2% 12.2%
Office- Downtown 9.0% 10.0% 11.6%
Retail- grocery/drug center 9.1% 10.2% 11.7%
-
8/14/2019 Ben Loughry Forecast 2010
20/60
Integra Realty Resources DFW 20
-
8/14/2019 Ben Loughry Forecast 2010
21/60
Integra Realty Resources DFW 21
Industrial
Top Markets By Vacancy
1. Los Angeles, CA 4.92%2. Orange County, CA 6.58%3. Seattle, WA 6.70%4. Long Island, NY 4.3%
Local MarketFort Worth, TX 10.72%
Bottom Three Markets
54. Austin, TX 18.40%55. Boston, MA 24.76%56. Louisville, KY 26.01%
-
8/14/2019 Ben Loughry Forecast 2010
22/60
Integra Realty Resources DFW 22
U.S. Industrial Market Pricing
Moodys/REAL Commercial Property Price Index - Industrial
1.0
1.3
1.5
1.8
2.0
Q4'00
Q2'01
Q4'01
Q2'02
Q4'02
Q2'03
Q4'03
Q2'04
Q4'04
Q2'05
Q4'05
Q2'06
Q4'06
Q2'07
Q4'07
Q2'08
Q4'08
Q2'09
Index
-
8/14/2019 Ben Loughry Forecast 2010
23/60
Integra Realty Resources DFW 23
Despite increases, Industrial cap rates arenot yet back to the levels of ten years ago
0
2
4
6
8
10
12
90-91
199
3
1995
1997
199
9
200
1
200
3
2005
2007
200
9
Year
Perc
entage
Manufacturing
Bulk
Office/Warehouse
R&D
10 Year Treasury(September Avg.)
10-Year Treasury(Annual Avg.)
-
8/14/2019 Ben Loughry Forecast 2010
24/60
Integra Realty Resources DFW 24
-
8/14/2019 Ben Loughry Forecast 2010
25/60
Integra Realty Resources DFW 25
Biggest Rent Declines in 2009
San Jose, CA -6.7%
Seattle -6.3
San Francisco -5.9
Las Vegas -5.7
New York -5.6
Los Angeles -5.0
Orange County, CA -4.9
Oakland East Bay -4.9
-
8/14/2019 Ben Loughry Forecast 2010
26/60
Integra Realty Resources DFW 26
Apartment
Top Three Markets By Vacancy
1. San Francisco, CA 3.59%%2. Syracuse 3.94%
3. New York City 4.80%
Local MarketFort Worth, TX 10.42%
Bottom Three Markets
54. Phoenix 12.97%
55. Naples/Ft. Myers 13.37%56. Providence 14.11%
-
8/14/2019 Ben Loughry Forecast 2010
27/60
Integra Realty Resources DFW 27
U.S. Apartment Market Pricing
Moodys/REAL Commercial Property Price Index - Apartments
1.0
1.3
1.5
1.8
2.0
Q4'00
Q2'01
Q4'01
Q2'02
Q4'02
Q2'03
Q4'03
Q2'04
Q4'04
Q2'05
Q4'05
Q2'06
Q4'06
Q2'07
Q4'07
Q2'08
Q4'08
Q2'09
Index
-
8/14/2019 Ben Loughry Forecast 2010
28/60
Integra Realty Resources DFW 28
Apartment Cap Rates UpAlmost 150 bps From Lows,
But Still Below Historical Averages
0
2
4
6
8
10
12
90-91
1993
1995
1997
1999
2001
2003
2005
2007
2009
Year
Percentag
e
Urban Multi-Family
Suburban Multi-Family
10 Year Treasury(September Avg.)
10-Year Treasury(Annual Avg.)
-
8/14/2019 Ben Loughry Forecast 2010
29/60
Integra Realty Resources DFW 29
Office Market Cycle
-
8/14/2019 Ben Loughry Forecast 2010
30/60
Integra Realty Resources DFW 30
Office CBDTop Three Markets By Vacancy
1. Charlotte, NC 6.43%
2. Boise, ID 8.10%
3. Memphis, TN 8.70%
Local Market
Fort Worth, TX 10.70%*
Bottom Three Markets
54. San Jose, CA 23.90%
55. Detroit, MI 25.00%
56. Dayton, OH 26.00%
-
8/14/2019 Ben Loughry Forecast 2010
31/60
Integra Realty Resources DFW 31
Office Rents
Average effective
rent for the 4thquarter 2009:
vs. Fort Worth $24-25Source: Reis.com
-
8/14/2019 Ben Loughry Forecast 2010
32/60
Integra Realty Resources DFW 32
U.S. Office Market PricingMoodys/REAL Commercial Property Price Index - Office
1.0
1.3
1.5
1.8
2.0
Q4'00
Q2'01
Q4'01
Q2'02
Q4'02
Q2'03
Q4'03
Q2'04
Q4'04
Q2'05
Q4'05
Q2'06
Q4'06
Q2'07
Q4'07
Q2'08
Q4'08
Q2'09
Index
-
8/14/2019 Ben Loughry Forecast 2010
33/60
Integra Realty Resources DFW 33
Office Cap Rates On the Rise, ButStill Below 2003 Levels
0
2
46
8
10
12
90-91
1993
1995
1997
1999
2001
2003
2005
2007
2009
Year
Percentage
Office CBD
Office SUB
10 Year Treasury
(September Avg.)
10-Year Treasury
(Annual Avg.)
-
8/14/2019 Ben Loughry Forecast 2010
34/60
Integra Realty Resources DFW 34
Retail Market Cycle
-
8/14/2019 Ben Loughry Forecast 2010
35/60
Integra Realty Resources DFW 35
Retail
Top Three Markets By Vacancy
1. San Francisco, CA 3.08%
2. Los Angeles, CA 4.87%
3. San Jose, CA 5.03%
Local Market
Fort Worth, TX 8.61 %
Bottom Three Markets
54. Providence, RI 17.00%
55. Dayton, OH 17.30%
56. Detroit, MI 17.35%
-
8/14/2019 Ben Loughry Forecast 2010
36/60
Integra Realty Resources DFW 36
U.S. Retail Market Pricing
Moodys/REAL Commercial Property Price Index - Retail
1.0
1.3
1.5
1.8
2.0
Q4'00
Q2'01
Q4'01
Q2'02
Q4'02
Q2'03
Q4'03
Q2'04
Q4'04
Q2'05
Q4'05
Q2'06
Q4'06
Q2'07
Q4'07
Q2'08
Q4'08
Q2'09
Index
-
8/14/2019 Ben Loughry Forecast 2010
37/60
Integra Realty Resources DFW 37
Despite Upward Movement, Retail CapRates Not to Levels Prior to 2004
0
2
4
68
10
12
90-91
1993
1995
1997
1999
2001
2003
2005
2007
Year
Percenta
ge
Regional Mall
Community Mall
Neighborhood Strip
10 Year Treasury
(September Avg.)10-Year Treasury(Annual Avg.)
-
8/14/2019 Ben Loughry Forecast 2010
38/60
Integra Realty Resources DFW 38
Retail Rally
-
8/14/2019 Ben Loughry Forecast 2010
39/60
Integra Realty Resources DFW 39
Decent Christmas for Most Retailers
8.6%
7.4%
9.9%
4.5%
0.7%
3.8%
1.8%
9.2%
December Sales:
http://images.google.com/imgres?imgurl=http://upload.wikimedia.org/wikipedia/en/3/33/Zale_Corporation_Logo.png&imgrefurl=http://en.wikipedia.org/wiki/File:Zale_Corporation_Logo.png&usg=__Uff8r2VLYDiWdaZdCrZBOEj72Lo=&h=150&w=343&sz=8&hl=en&start=2&sig2=5APc7yc0SgzSDtTdF2ThPA&tbnid=ET0-WzrcAusWUM:&tbnh=52&tbnw=120&prev=/images%3Fq%3Dzales%2Bcorp%2Blogo%26gbv%3D2%26hl%3Den&ei=w4FHS737JYSwMr236I8Jhttp://images.google.com/imgres?imgurl=http://www.blogcdn.com/www.bloggingstocks.com/media/2008/03/jcp-jc-penney-logo.jpg&imgrefurl=http://kss.bloggingstocks.com/category/kss/page/2/&usg=__kEVvD4Ix2wckUZnE23ncCyMJT8E=&h=144&w=156&sz=7&hl=en&start=7&sig2=swSXNe2dVN-eh6ckPNDZJA&tbnid=cWC-4j5o1owmZM:&tbnh=90&tbnw=97&prev=/images%3Fq%3Djc%2Bpenny%2Blogo%26gbv%3D2%26hl%3Den&ei=sIFHS-vUHp6ONYOjxJAJhttp://images.google.com/imgres?imgurl=http://www.bilerico.com/2009/09/macys_logo.png&imgrefurl=http://www.bilerico.com/2009/09/top_10_stores_to_pick_up_gay_men.php&usg=__0kZDFUSNweFT9RW6T6PdJaG-SKg=&h=504&w=419&sz=17&hl=en&start=1&sig2=RIGkL7_lTfi2_4r3-TR_Qw&tbnid=WcMEsXnEiMutfM:&tbnh=130&tbnw=108&prev=/images%3Fq%3Dmacy%253Bs%2Blogo%26gbv%3D2%26hl%3Den&ei=m4FHS63cLYz8NbvwxY8Jhttp://images.google.com/imgres?imgurl=http://www.starchildrens.com/starweb2007/DNN/Portals/0/Neiman%2520Marcus%2520Logo.JPG&imgrefurl=http://www.starchildrens.com/SponsoranEvent/StarFashionEvent2008/tabid/78/Default.aspx&usg=__xebR2bG72pNzYcet3dG35BS-vSU=&h=139&w=362&sz=35&hl=en&start=11&sig2=fsgeqpVDuKUczXYC5p-z6g&tbnid=J7JXBeuImOMC3M:&tbnh=46&tbnw=121&prev=/images%3Fq%3Dneiman%2Bmarcus%2Blogo%26gbv%3D2%26hl%3Den&ei=i4FHS_DRC6HUNO-CtZEJhttp://images.google.com/imgres?imgurl=http://www.hakeindustries.com/images/logo_pier1.gif&imgrefurl=http://www.hakeindustries.com/clients.html&usg=__cxVQAhIKbFBO0tJ7B5XK294WbbU=&h=127&w=204&sz=6&hl=en&start=9&sig2=W7-Mf8Vhos5wkM0dNmqfMA&tbnid=c9lmRE9HO7pgYM:&tbnh=65&tbnw=105&prev=/images%3Fq%3Dpier%2B1%2Blogo%26gbv%3D2%26hl%3Den%26sa%3DX&ei=doFHS7KpH43CNdinsJAJhttp://images.google.com/imgres?imgurl=http://www.boston.com/ae/music/blog/target400.jpg&imgrefurl=http://www.boston.com/ae/music/blog/2009/03/prince_marks_th.html&usg=__0qa_hWbU4T0UEQBkVapLz_n3ROY=&h=400&w=400&sz=28&hl=en&start=3&sig2=ea83q4HkCsKj2nntbOF3MA&tbnid=vcynPRx5_1j40M:&tbnh=124&tbnw=124&prev=/images%3Fq%3Dtarget%26gbv%3D2%26hl%3Den&ei=XIFHS8ngFJTEM6aR3Y8J -
8/14/2019 Ben Loughry Forecast 2010
40/60
Integra Realty Resources DFW 40
Secondary Property Types
Medical Office
Lodging
Senior Housing
Gaming
Self-Storage
-
8/14/2019 Ben Loughry Forecast 2010
41/60
Integra Realty Resources DFW 41
Good News!
-
8/14/2019 Ben Loughry Forecast 2010
42/60
Integra Realty Resources DFW42
Texas Growth Rate RemainsHighest in U.S.
-
8/14/2019 Ben Loughry Forecast 2010
43/60
Integra Realty Resources DFW43
DFW Area Unemployment Rate
-
8/14/2019 Ben Loughry Forecast 2010
44/60
Integra Realty Resources DFW44
Integra Realty Resources 44
OIL,Black Gold
-
8/14/2019 Ben Loughry Forecast 2010
45/60
Integra Realty Resources DFW45
2008-2009 Fort Worth Highlights
-
8/14/2019 Ben Loughry Forecast 2010
46/60
Integra Realty Resources DFW46
1. Q-Edge
- Leased 365,000 sq.ft. at the Alliance Global Logistics Hubas its new strategic assembly and distribution center.
- Bringing in 1,400 direct or indirect jobs
- Economic impact expected to be $700 million for theregion over the next decade
http://www.vetoquinol.com/eng/index.php -
8/14/2019 Ben Loughry Forecast 2010
47/60
Integra Realty Resources DFW47
-Leased 31,000 sq.ft. at the CentrePort BusinessPark as its newest call center-Bringing 250 jobs with a $7 million capital
investment & $7.5 million in annual payroll
- Chose Fort Worth as New Headquarters
- Bringing 100 jobs to our community
3. DT Credit Corporation
2. Vetoquinol
http://www.vetoquinol.com/eng/index.php -
8/14/2019 Ben Loughry Forecast 2010
48/60
Integra Realty Resources DFW48
4. Coaire Corporation
Selected Fort Worth to serve as its central andMidwest distribution center and leased 64,000sq.ft. at the Northern Crossing Business Park
Coaire will have over 75 jobs in 2010
-
8/14/2019 Ben Loughry Forecast 2010
49/60
Integra Realty Resources DFW49
New Cowboys Stadium Opens
-
8/14/2019 Ben Loughry Forecast 2010
50/60
Integra Realty Resources DFW50
Home Construction RisingDallas- Fort Worth annual total of
Single-family home starts:
-
8/14/2019 Ben Loughry Forecast 2010
51/60
Integra Realty Resources DFW51
Berkshire Hathaway acquires BNSF
-
8/14/2019 Ben Loughry Forecast 2010
52/60
Integra Realty Resources DFW52
Record Season For Horned Frogs
-
8/14/2019 Ben Loughry Forecast 2010
53/60
Integra Realty Resources DFW53
Recognition!
http://www.siteselection.com/issues/2010/jan/cover/ -
8/14/2019 Ben Loughry Forecast 2010
54/60
Integra Realty Resources DFW54
National Recognition
ForbesMagazine name Fort Worth/Arlington as themost cost-efficient region in which to live
The Milken Institute Best Performing Cities Indexnamed Fort Worth/Arlington area sub-market as the12th best*
Newgeographynamed us 4th best place for jobgrowth
-
8/14/2019 Ben Loughry Forecast 2010
55/60
Integra Realty Resources DFW55
Relocation.com recognized FW as one of the
best cites for a fresh start
Builder Magazinenames the city as the 3rd
healthiest metropolitan area for housing
The Kosmont-Rose Institute 2009 Cost ofDoing Business Survey listed FW as one of thetop 10 least expensive U.S. cites in which to live
Summary of the Commercial
-
8/14/2019 Ben Loughry Forecast 2010
56/60
Integra Realty Resources DFW56
Summary of the Commercial
Real Estate Markets
Credit and liquidity concerns take center-stage
Depressed job markets have hurt all commercialreal estate sectors
Full effects not yet completely realized
Development is rare; market prices dropped belowreplacement cost in many markets
Safe havens remain, though due diligence is key Lenders shifting from pretend and extend to
equity infusion, stonewall and workout
A L k I t 2010 d B d
-
8/14/2019 Ben Loughry Forecast 2010
57/60
Integra Realty Resources DFW57
A Look Into 2010 and Beyond
Cash is KingAgain
Maturities Mount
Focus on Asset Management
Look for infill opportunities
Economy deals with current problems and faces new
challenges
Upwards of 300 banks will likely fail over the next 24-36 months
-
8/14/2019 Ben Loughry Forecast 2010
58/60
Integra Realty Resources DFW58
CONCLUSION
- Commercial real estate marketremains volatile; theopportunities for
advantageous acquisitionsare present
- Todays discounted prices will likely represent the
best window for investingin commercial realestate that will occur in our careers
-
8/14/2019 Ben Loughry Forecast 2010
59/60
Integra Realty Resources DFW59
59
Times are tough,But there aint no place that Id rather be...
-
8/14/2019 Ben Loughry Forecast 2010
60/60
60
- 59 Offices in 33 states, plus DC and Mexico
- Over 800 Consultants & Advisors
- 150+ MAIs company-wide
Integra Realty Resources
Nations Largest Valuation
& Counseling Firm