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StoneBridge Real Estate Development & Investments. O’Connor & Associates Industrial Forecast Event September 23, 2009. Houston’s Industrial Market Vacancy. What’s going on?. New industrial development has stopped Only build-to-suits are being built and those are rare

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stonebridge real estate development investments

StoneBridge Real Estate Development & Investments

O’Connor & Associates Industrial Forecast Event

September 23, 2009

what s going on
What’s going on?
  • New industrial development has stopped
  • Only build-to-suits are being built and those are rare
  • Second generation space is active due to cheaper rents
  • New building rents are too high for many tenants
  • Tenants are looking for deals
  • Tenant’s credit ratings are declining
what does this mean
What does this mean?
  • The development cycle is over
  • Lenders will continue to work with good customers to extend the terms of their loans
  • Banks want to make sure the mortgage is paid every month
  • Banks do not want to take back properties, what will they do with them?
what will happen
What will happen?
  • Downward pressure on rental rates will continue
  • Loans are/will be underwater
  • Non-recourse borrowers will start to give properties back to lenders
  • Banks will foreclose on other borrowers
market opportunities
Market Opportunities
  • Lower rents, higher vacancies, lack of credit from lenders = Distressed Properties
  • Landlords will reduce ask prices to sell their properties, especially if there is a personal guarantee
  • Too many properties are over-leveraged, just ask the California buyer from a few years ago who was paying 6%-7% cap rates
  • Too much debt is coming due and bankers will not extend all of the loans. Especially, if the asset’s loan balance is underwater
  • Note sales and foreclosures are increasing
cash is king
Cash is King
  • Real Estate Funds are springing up in anticipation of the Distressed Property Sales
  • The FDIC will need to establish another “RTC” to flush all of the problem real estate loans out of the system
  • Cash buyers will be able to seize the opportunities
what is stonebridge to do
What is StoneBridge to Do?
  • Acquisitions of distressed real estate
  • Purchase assets from $3.0-$10.0 million range of multi-tenant industrial, office and retail
  • Goal is to purchase $50.0 million per year
  • Buy in cash to reduce risk exposure
  • Buy in the greater Houston area