H.
Ross Ford
In 1991, I was hired by a Dallas-based company to open, staff and manage
an office in New Jersey to service two large contracts with the Resolution
Trust Corporation. “The Resolution Trust Corporation (RTC) was a U.S.
government owned asset management company charged with liquidating assets,
primarily real estate-related assets such as mortgage
loans, that had been assets of savings and loan associations declared
insolvent by the Office of Thrift Supervision as a
consequence of the savings and loan crisis of the
1980s. Between 1989 and mid-1995, the RTC closed or otherwise
resolved 747 thrifts with total assets of $394 billion.” (Source:
Wikipedia)
I hired 55 people, in short order, right after the two contracts were
signed. The team we built was comprised of top-notch commercial real
estate professionals – virtually all of whom were ‘in between
jobs.’ One of my roles was the lead interface with the heads of two
RTC field offices – one in Somerset, NJ and the other in Valley Forge,
PA. A fellow named Ross Ford headed the NJ RTC office.
Until that time, Ross and I had not crossed paths but soon found that we
knew a number of real estate people in common – that kind of stuff always makes
for a good start. There was a lot of pressure on the RTC and on it’s
contractors (us). Nevertheless, I found Ross to be a fair guy and a
truly decent human being. While he could have made life very
difficult for my team and me his style was truly collaborative - something we
really appreciated.
I lost track of Ross shortly after the RTC assignment
ended. But, lo and behold, some 13 years later, at an industry
event, I run into a guy whose name badge says, “Ross Ford” – but it’s not the
Ross I knew – it was a much younger version. With a clear opening I
introduced myself and in short order found out that the Ross Ford that I was
talking to was the son of the RTC Ross Ford!
H. Ross Ford III was then, and still is
the President and CEO of TCN Worldwide, a global commercial real estate
services network headquartered in Dallas, TX. He has been the catalyst
behind the strategic direction of TCN since 1998. He's a visionary and
enthusiastic advocate for the industry. From that point until today, Ross and I
have been good friends.
On January 25, Ross’s Dad, H. Ross Ford
died. My condolences my friend Ross III and his
family. Ross, a veteran of the Korean War, will be buried at
Arlington National Cemetery.
China
Property Outlook – Real Estate Foresight
My good friend Robert Ciemniak runs a Hong Kong-based firm called Real
Estate Foresight (REF). On January 22, REF hosted it’s 3rd Annual
China Property Outlook Seminar Hong Kong. Included in presentations
were the annual forecast for the China residential sector for 2015 and the
latest insights and market conditions based on both quantitative and
on-the-ground research in China.
With REF’s kind permission, here are some of the information highlights
presented at that event:
REF expects housing prices to correct further in Q1 2015, before
starting to gradually rebound in Q2, based on a set of leading indicators.
- The sentiment survey of over 50 fund managers, advisors, investors
and independent research firms participating in the event pointed at the
mood becoming slightly more negative and more divided compared to last
year.
- A prevailing top-of-mind question a year ago was about the
‘bubble’, but this year participants were thinking more about ‘supply’.
This was likely a reflection of the strong 2013 in price growth, and now
2014 declines, with concerns now focused on how significant the
oversupply really is.
- There is greater attention being paid to the policies – hukou
reform and urbanization drive, land transaction reform, property
registration and subsidized housing reforms.
- While short-term downward pressures on volumes and prices may
persist in 2015, the fundamental demand is still robust, driven by
upgrade demand, urbanization and house depreciation – replacement demand.
I looked up ‘Hoku Reform’ and found this definition:
A hukou is a record in the system of
household registration required by law in the People's Republic of China (Mainland China).
A household registration record officially identifies a person as a resident of
an area and includes identifying information such as name, parents, spouse, and
date of birth. Because of its entrenchment of social strata, especially as
between rural and urban residency status, the hukou system is often regarded as
a caste system of
China.
For more information on the China real estate market check out Real
Estate Foresights’ website.
Valentine’s
Day 2015
Since 1959, Valentine’s Day has had additional meaning to me – it’s my
brother Gregg’s birthday. Today, I’m publishing from Voorhees, New
Jersey (Southern New Jersey, close to Philadelphia, PA). Gregg and I
will have our usual visit – bowling, lunch and ice cream. But,
reserved for birthday visits are shopping for his gift.
He has a job at an occupational therapy center, attends dances, bowls
and sings in a church choir. As you may remember, Gregg lives in a group
home. He was brain damaged at birth and is mentally
retarded. But that isn’t something to feel sorry
about. Gregg leads a full, though supervised, life. While he can’t
manage his own affairs he’s a happy guy, with big laugh, who has an uncanny
memory for the long-ago past.
Happy Valentine’s Day to all of you celebrating the romance of the
day. And, for anyone whose birthday, like my brother Gregg, is
today…Happy Birthday!
Commercial
Mortgage Update
John Oharenko, a friend with Berkadia Commercial Mortgage in Chicago
generously shared his notes from the Commercial
Real Estate Forum conference he attended recently in San Diego.
A few of John’s highlights:
- Loan underwriting is mostly
driven by debt yields of 7.5% to 9%, as extremely low capitalization and
interest rates distort debt coverage ratios.
- “Ditching Double Digits” -
Hitting returns in the teens remains extremely challenging.
Mezz/pref equity funds struggle to reach above 9% for parts of the capital
stack reaching 80% LTV. High-teens targeted for JV funds up to 100%
funding with a 50/50 structure or better for the developer. However,
most investors want to see about 10% equity from the sponsorship.
- “Rubber Band Man” - Everyone
is stretching to make deals, including term, leverage and prepayment
options.
- “Need for Speed” - Loans must
be securitized quicker than ever. Balance-sheet securitization risks
based upon bond market volatility forces conduit lenders to reduce loan
warehousing exposure to minimize any trading losses.
If you attend an industry event and would care to
share a few of your takeaways with our OTR community, please send them to me at felix.steve@gmail.com. Thanks.
|
Congratulations…
Justin Mallis now Principal at First Avenue Partners in NYC
On
the Road...
Feb. 19 - 20: University of North Carolina, Kenan-Flagler Real
Estate Challenge (I've been invited to be a judge!), Chapel Hill, NC.
Invitation only. Learn more here
Feb. 21-23: Family visit – Asheville, NC
Feb. 26: Commercial / Institutional Real Estate Women's
Leadership Workshop, New York City. Learn more and register here
March 6: Commercial / Institutional Real Estate Women's
Leadership Workshop, Los Angeles. Learn more and register here
Mar. 16 - 17: NAREIM Executive Officers Spring Meeting,
Miami, FL. Learn more and register here
Mar. 18: Commercial / Institutional Real Estate Women's Leadership
Workshop, Miami, FL. Learn more and register here
Mar. 26 - 27: PREA (Pension Real Estate Association) Spring
Conference, Washington, DC. Learn more and register here
Apr. 29 – 30: PERE Global Investors Forum, Los Angeles, CA.
Learn more and register here
May 5: Commercial / Institutional Real Estate Women's
Leadership Workshop, Chicago, IL. Learn more and register here
May 6 - 7: NAREIM Accounting and IT Meeting, Chicago, IL.
Learn more and register here
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