00:00
watch we speak with market leaders in
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commercial real estate and related
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services who have a close pulse on the
00:06
current market environment my name is
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anton mattli co-founder and ceo of peak
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financing and my co-host today is john
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martinez one of our great senior debt
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advisors at peak financing
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we are honored to welcome mark allen
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executive managing
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director
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with greystone investment sales group
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uh welcome mark it’s a pleasure to have
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you with us today
00:34
thanks anton yeah excited to be here and
00:36
uh thanks for having me yeah so why
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don’t you give us a brief background
00:40
about you
00:41
uh obviously you have a a very
00:44
interesting
00:45
uh career right
00:48
from
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uh from from a young age right out of
00:52
out of school
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you’re a west point graduate so thanks
00:56
for your service right so that’s uh i
00:59
would say it’s always important but i
01:00
think it’s uh
01:03
we all know it’s not that easy to be to
01:05
get into west point and uh
01:09
i’m sure it’s not that that easy to get
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through
01:13
through those years and uh graduate from
01:16
there so congrats on that
01:18
so why don’t you give us a little bit of
01:20
a background
01:22
yeah so they said if i can make it
01:24
through west point you know uh although
01:26
there’s going to be ups and downs but
01:28
the rest of the life should be you know
01:29
relatively easy
01:31
um yeah so i went to west point i played
01:34
football in college and that was kind of
01:36
my you know honestly it was my main
01:38
driver um although that you know there
01:40
was a service to the country aspect
01:42
there was a an aspect that it was
01:44
something a little bit different than
01:46
what the rest of my peers were doing
01:48
um so that you know that was enticing to
01:49
me at the time and uh you know at 18 you
01:52
really don’t know what you want to do um
01:54
so i was kind of figuring things out but
01:56
you know thankful that that i landed
01:58
there um just off the hudson river north
02:00
of of new york city at west point and uh
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graduated was in the army for some time
02:05
but but uh you know i started my real
02:07
estate
02:09
um
02:10
i don’t know if you want to call it
02:11
career but i bought my first property my
02:13
junior year in college at west point
02:15
they give us a career starter loan
02:18
knowing that you’re going to come out
02:19
you have a guaranteed job and you’re
02:20
going to pay back
02:23
you’re going to pay back that that debt
02:25
or that career started loan
02:27
through your military paycheck
02:29
so i got a 35 000 loan at a half a
02:31
percent interest and it was uh prime
02:34
time to buy real estate at the depth of
02:36
the the great recession in 2009 2010.
02:40
i ended up buying a foreclosed condo for
02:42
20 000 in florida
02:45
two bed two bath about four miles from
02:47
the coast
02:49
and um yeah i mean that kind of got me
02:51
going and i i said hey this cash flow
02:54
thing is cool and started to dive in
02:56
when i got into the military i did you
02:58
know i was a little more active doing uh
03:00
single-family uh fix and flips and
03:02
mortgage wraps and a bunch of creative
03:04
strategies anything i could do with
03:06
uh you know with with uh living kind of
03:09
um
03:10
a little side hustle with military pay
03:12
and then you know that that led me to
03:14
want to to want to do um you know bigger
03:16
and larger deals which which uh caught
03:18
my you know the multi-family industry
03:20
caught my interest um in in about 2000
03:24
uh maybe into 14 early 15
03:27
and then i started to get networked in
03:28
once i moved to dallas and long story
03:31
short and here i am today with uh with
03:33
grace stone um as an investment sales
03:36
broker
03:37
yeah great story uh
03:40
what you mentioned right that you were
03:42
able to get that loan i think that’s a
03:45
good message to all the other service
03:47
members right so
03:49
uh some of some of them are whatever
03:52
free cash flow they they have they they
03:55
put in two toys right
03:58
and you did the right thing uh i think
04:01
uh
04:02
there are so many opportunities for
04:04
service members right to really take
04:06
advantage of
04:07
of where they are in life and buy
04:10
investment properties
04:12
uh so you you did you did that and uh
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uh so that’s that’s great to hear and
04:18
obviously you’ve uh you you got that
04:20
investment back from early on and that
04:23
certainly has helped you in in your
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career
04:27
so congrats
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do that now
04:31
obviously
04:33
even though you had that
04:35
initial interest
04:37
getting into investment sales
04:40
is not that easy uh so i think you you
04:43
were also very
04:44
very hard charging early on with uh uh
04:48
in in your career and that was really
04:51
helping you to get to to the position
04:53
where you’re in today
04:56
now
04:58
what we would like to do is
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you you’re in dallas fort worth
05:03
obviously you know the whole market but
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i think you have certainly a very strong
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uh
05:12
knowledge particularly fort worth and
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and the mid-city so maybe we can touch a
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little bit uh uh on that and go a little
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bit deeper
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uh what you see in uh in in that market
05:25
today
05:26
with corey 19 everyone uh was was scared
05:31
to death uh
05:33
when march 2020 hit and then four brief
05:36
period financing dried up uh other than
05:40
the agency financing and
05:43
a lot of people thought oh now we are
05:45
really in a in a massive amount of of
05:48
trouble going forward
05:50
and obviously that was just a very brief
05:53
period and
05:54
since then everything moved up so how
05:56
how did you experience that as a on the
05:59
sales
06:00
broker side that that period and how
06:03
quickly
06:04
did you realize that though this is just
06:06
a brief period of of concern and that
06:10
things go back up
06:12
i know i i mean there was a lot of
06:13
uncertainty i think you know brokers
06:15
were no different um
06:18
where i think you know i guess maybe
06:20
taking a step back so i’m i’m with
06:22
graystone investment sales group and we
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have a team of i think 12 brokers right
06:26
now but we’re bifurcated into teams so
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you know we’ve got a secondary markets
06:30
team what we call a small balance team
06:32
which would really be kind of 49 units
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and under and then uh you know i lead
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our dfw workforce housing team um so you
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know we we’ve got a we’ve got a larger
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team when you look at some of the other
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um you know brokerages across the dallas
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fort worth metroplex and we’d come
06:49
together you know through that time
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through through the end of march april
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um and even and even may we meet you
06:56
know three times a week and there was a
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lot of there was a lot of uncertainty
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and uh we were trying to stay you know
07:02
we made a commitment during that time
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where we thought
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and what we heard a lot of our
07:07
competition you know took it as a um
07:10
uh
07:11
took it as kind of a vacation time to go
07:13
out to you know lake houses or whatever
07:16
and just kind of enjoy the spring
07:17
weather
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um because you know the market was dead
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for the most part but we try to take
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advantage and try to update um you know
07:24
those in the market that own
07:25
multi-family on on uh you know best
07:27
practices and the challenges you know to
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understand the challenges they were
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facing um you know solutions or creative
07:34
um you know options that they were
07:36
implementing operationally to help and
07:38
and so we really took the time to
07:41
you know make a lot of phone calls and
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just try to get educated and just pass
07:45
on you know best practices
07:48
and honestly you know we had one of our
07:50
better years last year and i think part
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of it was
07:53
um you know not not vacationing during
07:57
q2 and and stay in place in the pandemic
07:59
and and i think ultimately it really
08:02
paid off to
08:03
um you know just help our clients out in
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general and ultimately lead to you know
08:09
helping out on the sales side
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yeah that’s great um great to hear
08:17
uh have you seen a lot of buyers walking
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away from
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i deals at the time we had 13 deals
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under contract we ended up losing three
08:31
um
08:32
and you know i i had i had one in
08:35
particular that i lost and it was a
08:38
syndication private syndicator you know
08:40
local syndicator
08:42
um who just didn’t think he could raise
08:44
the money because there was so much
08:46
uncertainty
08:48
and that deal is actually about to come
08:50
back to market about
08:52
i’m going gonna say 15 000 a unit higher
08:55
uh it was a property in waco so we’re
08:57
about to bring that back out to market
08:58
but i mean if you think about it i mean
09:00
it was a great buy then i think it was
09:03
on an assumption
09:04
and i was over a seven cap at the time
09:07
and it’s just you know
09:08
over north of a seven cap is unheard of
09:10
with interest rates around you know
09:12
three percent today
09:14
um but yeah we had three properties fall
09:16
out of escrow and uh i think all of
09:19
those for the most part were just those
09:21
that were either you know fearful scared
09:23
of what’s to come um didn’t want to ride
09:26
through the uncertainty or or two they
09:28
just
09:28
they would have purchased the property
09:30
they just didn’t feel like they could
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raise the equity
09:33
yeah yeah
09:35
uh right john we have seen a number of
09:38
situations uh back then obviously bowers
09:41
were
09:42
pretty uh scared
09:44
uh message uh from from some of the
09:47
landers also was
09:49
we we need to take a break
09:52
on the agency side it wasn’t such an
09:54
issue but it’s only on the bridge side a
09:57
lot of bridge lenders
09:59
virtually stopped overnight so it’s
10:02
understandable right when you have
10:04
a lot of equity at
10:06
stake and hard money at stake that you
10:08
that you get scared right yeah it ends
10:11
up being what you see i think in many
10:13
crisis anton’s is
10:15
um you know solvency may not be your
10:18
issue it’s it’s often times you have to
10:20
solve for liquidity
10:22
and you know some of these deals you
10:24
know had varying success funding
10:25
liquidity but you know it’s great to
10:27
hear that most of your deals
10:29
were able to close their market
10:45
or or save a deal from falling apart for
10:47
those two months and uh you know we
10:50
for i mean we have we have a lot of
10:52
young brokers that have been in the
10:53
market for less than 10 years
10:55
um and you know many of those under five
10:57
years
10:58
but but todd franks uh is
11:01
uh you know my business partner and and
11:03
has
11:04
22 years of experience so
11:07
um you know he went through the great
11:08
recession and and uh you know had some
11:10
valuable insight and we were able to get
11:12
creative on a handful of deals and keep
11:13
those together so
11:15
yeah that’s great to hear
11:18
so now
11:19
uh
11:20
running it forward to today
11:23
i’m sure that
11:25
that prospective buy who walked away is
11:28
now sorry that they didn’t pick it up
11:30
yeah at that point right but uh
11:32
hindsight is always 20 20. right so
11:35
that’s just a reality so how how do you
11:38
see the the
11:41
the market today from a seller’s
11:44
perspective as well as buyer perspective
11:46
what are sellers and buyers
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telling you when you talk to them
11:51
um yeah i mean so the market is is just
11:54
on fire right now you know both you know
11:57
operational perspective and sales
11:58
velocity and volume in dallas fort worth
12:01
is you know unparalleled across the
12:03
country rent growth i think we we
12:04
actually lag according to yardy we’re
12:07
roughly about 46 out of i think
12:10
almost 100 markets
12:12
um and and we’re you know
12:14
at least according to costar we’re
12:16
roughly about 13 rent growth
12:19
so that tells you you know rents across
12:21
the country are just booming i was on an
12:23
nmhc
12:25
uh panel yesterday with the morgans were
12:28
on there who you know i think they own
12:30
and operate
12:31
um getting pretty close i want to say
12:33
there were 80 000 units but you know he
12:35
said in his 40-year career he’s never
12:36
seen uh lease tradeouts and and and uh
12:40
you know the revenue growth on on
12:43
uh renewals and new leases you know
12:45
where it’s at today so from a seller
12:47
perspective i mean you got a couple of
12:49
different challenges
12:50
there’s obviously some tailwinds behind
12:52
you with rent growth but challenges
12:54
are um
12:56
you know the the big topic the last
12:58
couple of months are or the biden
13:00
administration um tax changes so you
13:03
know increased capital gains there’s
13:05
been talk that 1031 exchange is going
13:07
away
13:08
um so i think the expectation is as
13:10
taxes are going up uh it’s a question of
13:12
how much are they going to go up
13:14
and you know i think i think with um you
13:17
know that coupled with you know really
13:20
strong pricing right now as far as price
13:22
appreciation cap rate compression um
13:25
which are really frankly due to
13:27
low interest rates uh historically low
13:29
at you know like i said around i would
13:32
say they range and you would know better
13:34
than i but two and a half percent
13:36
all the way to you know maybe maybe four
13:39
um um on you know more of a traditional
13:42
loan whether it’s whether it’s hud
13:43
financing agency or bridge
13:45
um
13:47
so record low interest rates incredible
13:49
rent growth and then you know just just
13:51
an insane amount of liquidity that’s
13:53
been sitting on the sidelines a lot of
13:55
people need to put money to work so with
13:57
those forces prices are going up and i
13:59
would say in dallas fort worth i mean
14:01
year over year we’re probably seeing 15
14:03
to 20
14:04
you know price appreciation which is
14:06
which is just crazy um so you know you
14:09
got this the price increases and then
14:11
you kind of have um
14:13
potential tax changes on the horizon
14:16
so i think there’s a lot of owners that
14:18
you know haven’t been thinking about
14:20
selling for for a long time
14:22
and are now starting to consider are
14:24
definitely changing their mind so we’re
14:26
seeing you know a lot of sellers in
14:28
today’s market it’s a true seller’s
14:30
market
14:32
from a buyer’s perspective it’s very
14:34
competitive in dallas fort worth and
14:36
probably even the surrounding secondary
14:38
markets too speaking to our secondary
14:39
markets team i mean the terms the terms
14:42
are you know as aggressive as ever
14:44
from a buyer perspective and they’re
14:46
they’re seeing more bids and more more
14:48
tour activity
14:49
on those secondary market steel some of
14:51
the smaller markets in texas
14:53
um
14:55
but you know the same in the same um you
14:57
know respect for buyers i think we see a
14:59
little bit of buyer fatigue you know at
15:02
the end of the year um
15:04
you know it’s just prices are going up
15:05
they’re spending a lot of time they’re
15:07
getting outbid on on properties you know
15:09
the off market deals which it’s still a
15:12
big part of our market you know i don’t
15:14
know the percentage but um here at our
15:17
shop probably half of our deals are off
15:19
market so still a lot of off market
15:21
inventory happening so
15:22
um you know those that are missing out
15:25
on marketed and off market deals it’s
15:27
just you know spend a lot of time and
15:28
it’s frustrating
15:30
to get you know to get outbid um in
15:32
those scenarios and
15:35
uh there’s there’s been a lot of
15:37
inventory on market frankly as a as a
15:39
broker here we’ve seen less over the
15:41
last really two months
15:43
and it really started to happen over the
15:45
summer and i thought it was just because
15:47
you know summer travel people are
15:49
vaccinated
15:50
um and i think that was a little bit of
15:53
an aspect but you know talking to my
15:54
competitors as well it’s been tough to
15:56
get buyers focused on deals
15:58
because a little bit of buyer fatigue
16:00
but also just the amount of inventory on
16:02
the market
16:03
um
16:04
so you know
16:06
whereas it really depends on the asset
16:08
like you know an 80s vintage asset that
16:10
has been held for 20 years and has you
16:13
know 200 units is going to see a heck of
16:15
a lot more tours
16:17
than a 1970 chiller boiler property and
16:21
a c location uh that is traded three
16:24
times a cycle
16:26
um so you know it’s all about i think
16:28
the deal story and how how the assets
16:30
priced too as far as how much attention
16:32
it’s going to get but you know i’d say
16:34
our tours and offers have probably
16:35
decreased you know i’m going to say 30
16:38
40 percent um in the past couple of
16:40
months
16:41
uh so it’s it’s a challenging time you
16:44
know it’s a good time to be a an
16:46
investment sales broker but at the same
16:48
time it’s um you know it’s uh
16:51
challenging depending on the deal
16:53
yeah
16:54
that’s very interesting that you see
16:56
that the buyer fatigue uh
16:59
obviously from from our side we work
17:02
with with a lot of
17:06
various buyers from syndicators to
17:08
private buyers
17:11
and
17:13
we only see the frustration on a daily
17:16
basis right so
17:18
they there are strong teams that have
17:21
enough
17:23
cash that they can put in for earnest
17:25
money they are willing to close fast
17:29
and they’re willing to underwrite
17:30
aggressively but
17:32
they’re usually still being outbid right
17:36
so that
17:37
at some point
17:39
that frustration uh turns it into a bio
17:42
fatigue
17:44
so uh it will be interesting to see how
17:47
how it evolves over over the next uh few
17:50
months and how we enter into 2022
17:55
so how do you see the uh how that is
17:58
going to evolve again also obviously we
18:01
do not know where the tax
18:03
taxes ultimately will end up right we i
18:06
think as you said we can all agree that
18:09
they will go up in one form or another
18:12
how exactly real estate investors will
18:15
be affected still remains to be seen
18:19
uh in uh
18:21
to the full extent of it but how do you
18:24
see
18:25
how it will impact the sales side and
18:29
the seller positioning
18:31
uh and how buyers will react next year
18:36
um i think you know what we’re seeing at
18:38
the end of this year is probably going
18:40
to be pretty similar in the next year i
18:42
think i think the expectation for most
18:44
is interest rates are going to stay low
18:46
um rent growth is going to continue and
18:49
like i said i mean we’re at 13
18:51
year-over-year i think you know if you
18:53
look back four months ago we were
18:55
roughly
18:56
you know three four months ago ten
18:57
percent so you know we may even see in
19:00
dallas fort worth a little bit higher
19:01
rent growth through through the end of
19:03
the year although you know coming up on
19:04
the holidays um but you know rent growth
19:07
will be strong next year so i think
19:09
it’ll continue to be a seller’s market
19:10
there’ll be a lot of sales activity
19:13
um from a buyer perspective at the end
19:14
of this year we’re
19:16
i mean a lot more people are asking hey
19:18
are the sellers well you know open to a
19:20
preemptive offer um there are some
19:22
buyers that are just like i said the
19:24
buyer fatigue they’re not uh they’re
19:26
very they’re being much more selective
19:29
on where they spend their time
19:31
um and i think some of the more
19:33
sophisticated buyers are really trying
19:34
to spend their time on
19:36
you know preemptive offers if the
19:38
seller’s willing to engage and then you
19:39
know off-market deals
19:41
um
19:42
so i think we’ll see probably a little
19:44
bit more of that as well
19:47
that’s a good point uh
19:49
and that really points to towards the
19:52
the expertise that is required by buyers
19:55
right with preemptive offers you know
19:57
your market you know the property
19:59
already you may not have toured it but
20:01
you know the sub market really well
20:04
so you can make up your mind
20:06
uh well ahead of time which obviously
20:09
helps you to come in with that
20:10
preemptive uh
20:12
offer approach
20:14
uh and i think that’s it makes sense
20:17
right for someone who has a who has a
20:19
high level of expertise in a in a
20:22
particular sub market
20:24
yeah and from a broker’s perspective i
20:26
mean there’s a lot of different buyers
20:28
who um you know ask hey is the seller
20:30
willing or open to a preemptive offer
20:33
and you know that really just depends
20:35
because at the end of the day it’s you
20:37
know we’re all about probability
20:39
of closing um it’s our reputation on the
20:41
line so you know if it if it is a
20:44
preemptive offer and the seller’s open
20:45
to that it’s going to be someone that uh
20:48
you know has has a lot of experiences
20:50
you know is a sure deal and you know
20:53
what
20:53
the other big thing is obviously price
20:55
you know can they get to the price and
20:56
are the terms you know market terms or
20:58
strong terms
21:01
yeah
21:04
that makes sense uh
21:06
now what uh what we see on our end uh on
21:09
the financing side uh a lot of buyers
21:13
obviously are uh
21:15
see a challenge getting infor stabilized
21:18
properties getting
21:19
uh the leverage that they need
21:22
uh right sean we see that essentially
21:25
with every single deal right
21:27
when we look back a few years
21:30
particularly with any loans it was
21:32
normal to get 80
21:34
financing plus the rehab was closing
21:37
cost
21:38
baked in
21:40
and today one can be lucky in in dfw for
21:45
stabilized asset to get to 70 percent of
21:48
of leverage
21:51
so
21:52
have you have you’ve seen uh that with
21:55
with your clients
21:57
too and what was what approach are they
22:00
taking to take down these deals despite
22:03
that challenge
22:04
yeah i think we have i want to relook
22:07
the data i know this summer we had 17
22:09
escrows back in like
22:11
july time frame um so 17 properties
22:14
under contract and uh two of them
22:17
were under contract with agency debt uh
22:20
the rest bridge and that you know that’s
22:22
just because the you know dscr
22:24
challenges and and uh one of them was in
22:26
dallas fort worth the other one was in a
22:28
secondary market
22:29
in uh
22:30
wichita falls
22:32
north texas far north texas
22:34
and the one that was in dallas fort
22:36
worth was you know a buyer willing to uh
22:39
accept just lower leverage i think it
22:40
was 66 percent ltv
22:43
you know it was a freddie floater and uh
22:45
you know they wanted to take they wanted
22:47
to take uh you know i guess the the
22:50
short-term
22:51
debt risk off the table they bought you
22:53
know caps interest rate caps and um so
22:56
anyways that’s probably very similar to
22:58
what what you’re seeing i think you know
23:00
that’s that’s what i’m hearing really
23:01
across the nation speaking with some of
23:03
our investment sales teams you know in
23:05
atlanta or other markets like houston so
23:12
yeah
23:13
same here right so the advantage of all
23:16
this with all these bridge loans is
23:18
obviously
23:19
either to go into a permanent financing
23:22
two to three years from now
23:25
or if the market is doing really well
23:28
then you get you get an all around to
23:31
sell the same property again right so
23:34
so for you guys it’s
23:36
it’s it’s potentially is a it’s a
23:40
providing additional uh tailwind to to
23:44
your sales activities right right
23:48
yeah yeah i don’t think i don’t think
23:50
either of us on the transactional side
23:52
are are complaining but um
23:55
um yeah and i mean and a lot of these
23:57
deals are
23:59
um
24:00
you know some of the deals i don’t even
24:01
think are really bridge deals but
24:03
they’re they’re going bridge um and i
24:05
think there’s been so much bridge loan
24:07
activity and just hearing from uh
24:09
recently in the past two weeks hearing
24:11
from some of the active buyers and i’d
24:13
be interested to hear your take on this
24:15
but um i think maybe even the bridge
24:18
lenders are pulling back um on terms in
24:21
some cases or it’s becoming a little bit
24:24
of a harder market towards the end of
24:25
the year uh what are you seeing out
24:27
there in the with with some of the debt
24:29
funds or other bridge lenders
24:31
yeah generally we really haven’t seen
24:34
much of a of a pullback from from
24:37
for decent assets in good locations
24:42
the only time when we see that is when
24:44
the story just doesn’t make sense right
24:47
if you buy a property that is stabilized
24:51
and there is not really much of a of an
24:54
upside that that can be argued for
24:58
some bridge lenders are a little bit
25:00
more suspicious of of ongoing rank
25:03
growth right so if you buy it
25:06
and you still have projections of 10 15
25:10
rank growth
25:11
to make that bridge loan work
25:14
then that’s where where bridge lenders
25:17
are are pulling back so
25:20
we that we only see where in the past it
25:23
was at 80 percent virtually for all of
25:26
the deals
25:27
now we see that some of them are from a
25:30
debt deal perspective are coming in
25:33
more in that 75 mark
25:37
and 70
25:39
percent at stabilized value uh just to
25:43
be to be on the on the safe side so they
25:46
are they may not be as aggressive in in
25:50
in their view of of the of the sponsors
25:53
uh proforma as they were in the past so
25:57
that we we solely have seen but the
26:00
appetite itself
26:02
uh to do bridge loans i think is still
26:05
at record level right
26:08
yeah right
26:10
yeah right john i mean there is
26:13
there is no uh
26:16
no limitation you you can really find
26:19
financing for virtually any deal out
26:21
there it’s really only a question of
26:23
where you can push the leverage all the
26:26
way up
26:28
yeah yeah i think you know our challenge
26:30
sometimes mark is um we will interact
26:33
and advise you know varying degrees of
26:36
sophistication with regard to the buyers
26:38
and we’re having to kind of sometimes
26:40
educate them to understand um you know
26:43
out in the market just because you think
26:45
you’ve got a debt quote maybe it’s a
26:47
bridge quote you know do they understand
26:49
the moving parts and you know does it
26:51
pencil out on the back end to be able to
26:53
hit their exit hurdles and so um you
26:56
know it is a little bit tough sometimes
26:58
to communicate that but if we can get
27:00
those that leverage expectations baked
27:02
right
27:03
it gives them a better line of sight of
27:04
where the returns might really be
27:08
yeah
27:10
so
27:10
i would say what we have seen is that
27:13
obviously you always need an appraiser
27:15
supporting your performer right and
27:20
we have certainly seen some cases where
27:22
the appraisers are not as bullish and
27:24
that then translates also into the
27:26
underwriting by the by the bridge
27:28
lenders
27:31
what we also have seen is that it’s only
27:34
depending on the market
27:36
there are wide ranges of debt deals
27:40
stabilize that deals that they are
27:42
accepting
27:43
right in some of the markets we are in
27:45
the in the sixes six percent that yield
27:48
of stabilized
27:50
uh
27:51
noi
27:53
where whereas in some of the the tougher
27:55
markets they still want to be in the
27:58
upper sevens so and that is a challenge
28:01
for buyers right so they they look at
28:04
what they are able to get for a perfect
28:06
property in a perfect sub market
28:09
and they apply that same principle in
28:11
their underwriting for another property
28:13
that is is a
28:15
is in a lesser uh market
28:19
and they make that offer and then they
28:21
soon realize that in for a bridge they
28:23
may not get to that aggressive level
28:28
yeah that makes a lot of sense
28:30
yeah
28:31
what um
28:33
have you
28:34
where are you looking where are you
28:35
financing most of your deals in today’s
28:37
market and in the metroplex at all or
28:39
are you looking um in secondary markets
28:42
or
28:42
atlanta or other other
28:45
big active markets
28:46
uh yes some of them are only in in the
28:50
metroplex but a lot of our clients have
28:53
have
28:54
and you talked about the bio fatigue
28:56
right
28:57
they have decided that it’s just not
29:00
worth
29:01
their time to
29:03
uh
29:04
to compete in in a dfw market so they
29:08
they have moved
29:10
into into orders i would say
29:13
houston is only
29:15
uh the darling for for a lot of people
29:18
that were active
29:20
and have a strong interest in dfw but
29:22
just felt that
29:24
it’s not going to work right and i think
29:27
that’s probably also a function of
29:30
again of the leverage that you’re
29:32
actually able to get right as you may
29:34
know
29:35
uh for for feni houston msa is still a
29:39
so-called preview view so you uh you do
29:41
not get the high leverage on the on the
29:44
agency side there to begin with
29:47
so that was a disadvantage there but now
29:50
with with a stabilized uh
29:53
property in dfw you probably will end up
29:56
at 65 to 70 max anyhow for for an agency
30:01
loan so now
30:03
the attraction
30:04
is no longer really there for to go into
30:07
dfw
30:08
when that leverage is is not higher and
30:11
i think that’s why a lot of people have
30:12
picked up in in texas have picked up
30:15
houston
30:16
uh as well as
30:18
san antonio
30:20
naturally all the other markets across
30:22
the country they’re all
30:24
they’re all on fire right
30:26
i think a lot of
30:28
buyers we see the loft atlanta but when
30:32
we look at the price increases in
30:35
atlanta they were actually crazier than
30:37
than dfw
30:39
so a lot of buyers moved out of there
30:41
too right so
30:44
florida i think is still
30:47
even though the prices are are very high
30:50
the price increases have not been as
30:52
severe as as in atlanta and dfw
30:56
probably the worst what we have seen
30:57
right now with phoenix the phoenix msa
31:01
right
31:02
so
31:03
so you uh i think you also have a
31:04
property
31:06
listed in el paso right now right uh
31:10
or have it close on to the market so how
31:14
uh how do you see it there uh in terms
31:17
of of price increases and how how it
31:20
would compete with a market like maybe
31:23
san antonio
31:25
yeah um
31:27
i mean i really like el paso we we sold
31:30
a property 188 units there a little bit
31:32
earlier this year
31:34
and i mean when you look at the market
31:36
um i don’t know how many units are there
31:39
you know offhand i’m going to say it’s
31:41
somewhere around 10 000 units
31:43
but you know a good majority of the
31:45
market is owned by just a couple of
31:47
players
31:48
um and there’s there’s still uh i think
31:51
the challenge in the past has been third
31:53
party management you know going in there
31:56
with kind of limited uh you know third
31:58
party management and it seems like it’s
32:00
opened up you know a little bit over the
32:02
past two three years
32:03
um you know we’ve seen some some other
32:06
you know uh private syndication groups
32:09
uh that you know who we all probably
32:10
know you know going there and i think
32:12
they’ve done really well um you’ve got
32:14
two and a half million people between el
32:16
paso and and uh juarez they’re
32:20
they juarez um as uh
32:24
many call it but um anyways you know
32:26
huge trade and logistics hub and and uh
32:30
um you know it’s been it’s been strong i
32:32
think you know deals that were trading
32:33
for 30s 40s you know four years ago two
32:36
you know two years ago they were up in
32:38
the 50s and 60s and now
32:40
you know those workforce housing deals
32:42
are up in the 70s and 80s the door there
32:45
um we you know we traded the deal at
32:48
77 uh
32:50
thousand a unit roughly and uh i think
32:53
on a price per square foot there were
32:54
large units on a price per square foot a
32:56
little bit lower but you know had to be
32:58
you know roughly around 80 80 cents uh
33:01
or 80 a foot
33:03
um but uh the cap rate on that was
33:07
you know
33:08
when you looked at it from a tax
33:09
adjusted basis it was really no
33:11
different than probably what you get in
33:13
in dallas fort worth or
33:15
or uh houston you know there there was a
33:17
value-add component to it but i mean the
33:19
tax-adjusted cap rate was down into the
33:21
three percent range
33:22
i think the t3 t12 was right around four
33:25
and a half percent
33:26
um
33:28
so anyways i mean there are def i mean
33:31
that that was uh
33:33
maybe a little bit different case but
33:35
you know there are deals trading there
33:37
for you know i think probably today it
33:39
may be tough to find north with six cap
33:41
i mean they’re they’re definitely there
33:42
in el paso um but i’d say probably you
33:45
know it’d be in the higher mid to higher
33:47
five range as as you know cap rates have
33:50
continued to compress across the country
33:53
but
33:53
um yeah not as a lot of you know not a a
33:56
ton of uh you know buyer demand like you
33:58
would see in and you know some of the
34:00
other major metros but i think the
34:02
fundamentals are really good when you
34:04
look at kind of the vacancy and rent
34:06
growth um you know amazon adding 750
34:09
jobs at the end of this year with with a
34:11
new distribution center
34:13
so you know continued job growth
34:15
although it’s not a dallas fort worth
34:17
houston or austin job growth um but you
34:20
know i think the fundamentals are there
34:23
have you seen uh similar rank growth
34:26
there too
34:28
yeah i think they’re lagging behind i
34:29
want to say
34:30
the last i checked was somewhere sub 10
34:33
maybe maybe nine percent
34:36
so not like um
34:38
and honestly i i mean i stay i’m into
34:40
the really focus in dfw so that’s where
34:43
my focus is um i couldn’t tell you what
34:46
san antonio rent growth is off the top
34:47
of my head or houston but i i know
34:50
they’re north of 10 or at least i think
34:52
they’re north of 10 percent so um being
34:55
you know el paso probably the fifth
34:57
largest msa in texas it probably lags a
35:00
little bit behind on rent growth um than
35:02
some of the other major metros but you
35:04
know it’s still strong
35:06
yeah
35:08
yeah very good uh thanks for all your
35:10
insight uh john do you have any uh any
35:13
other common or
35:16
question that you want to bring up
35:19
no i’m i’m good i mean i think so thanks
35:21
again for your time mark it’s been great
35:23
and pleasure visiting with you
35:25
yeah yeah so yeah so really thanks again
35:28
mark
35:29
how can our
35:32
listeners reach you obviously or
35:34
a well-known
35:36
uh broker in in dfw so most people will
35:39
know you but there are always
35:42
orders that may not so how how can they
35:45
reach you
35:46
yeah um best is probably through
35:49
linkedin or email you know i try to stay
35:51
active on on linkedin um posting content
35:54
uh
35:55
so linkedin my email is mark.allen
36:01
greystoneisg.com which stands for
36:03
investment sales group our website is
36:05
www.graystoneisg.com
36:10
and um
36:12
i don’t know if this will air but if you
36:14
guys would love to have you there next
36:15
week we’re having uh our multi-family
36:18
forum just be a half day event
36:20
um
36:21
a lot of owners uh we’re gonna have an
36:23
owner panel and equity panel and dr dot
36:25
tower will speak in the morning i think
36:27
he’s the first speaker so we’ll speak
36:29
about the current economy
36:30
and uh you know his projections for the
36:32
future and if you haven’t seen him you
36:34
know he’s a really great speaker
36:35
um
36:36
you know he’s uh he’s humorous so i
36:39
would love to have you both there if you
36:41
can make it next friday and that’s a
36:42
free event
36:43
and um
36:45
yeah
36:46
yeah
36:47
great appreciate it again congrats on
36:50
all the
36:51
all your success and
36:53
so you’re the only the person to know uh
36:56
in in dfw for anyone who
36:59
who wants to sell or buy your property
37:02
so uh all the best to you
37:05
thanks no thanks for having me on and
37:07
you know same with you it’s it’s been
37:08
great to see you know
37:10
your your trajectory coming off and
37:12
starting peak financing which is awesome
37:15
um and would love to do another deal
37:16
with you again soon yeah same here
37:19
thanks mark thanks mark thanks guys