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 firstname.lastname@example.org. Thanks.
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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