Archive for the ‘Uncategorized’ Category
Wednesday, February 16th, 2011
 Greed is good, eh? You sure? Greed is Good? I Disagree!
by Bo Barron, CCIM
Most brokers love Gordon Gekko. How could you not? He swings for the fences and rarely misses. He lives on the edge, bends the rules, and does the deals. One word, though, is synonymous with Gordon Gekko, and that word is Greed. Brokers love Gordon Gekko because he made this phrase famous - “Greed is good.”
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Friday, December 3rd, 2010
Sherwin-Williams stores have long been considered desirable real estate investments–and for good reason. The company has been around since the conclusion of the Civil War. Since then, it has grown to become one of the largest chemical, paint and coatings companies in the world. Besides its longevity, Sherwin-Williams’ debt is rated “A” (recently upgraded from “A-”) by Standard and Poors (S & P). As a real estate investment, Sherwin-Williams retail properties possess many attractive qualities. They are viewed as very stable assets and are generally available at attractive price points–many under $1 Million. Further, the stores are typically located in stable markets at strong locations.
Despite these positives, Sherwin-Williams stores, as a real estate investment commodity, are somewhat difficult to quantify. If currently shopping for a Sherwin-Williams store to add as a last minute stocking stuffer, one might find offering capitalization rates in a range of anywhere from 6% to 10%. This wide range creates somewhat of a schizophrenic trading environment if trying to accurately value a Sherwin-Williams asset. It then becomes somewhat difficult for buyers and sellers to agree upon fair prices and capitalization rates for the investments.
“The stores have a very high lease renewal rate,” said one investor, justifying the lower cap rates observed in the marketplace. “I’ve been told that Sherwin-Williams renews something like 97-98% of store leases,” he said. Another factor that seems to drive Sherwin-Williams cap rates lower is the overall scarcity of product. The company does not operate as many stores as many retailers so the universe of potentially available properties is somewhat smaller. Beyond this factor, relatively few of the stores in existence ever come to the market.
While these factors might explain the low end of the cap rate spectrum, they do little to explain the higher end. After all, the lease renewal rates of the stores, very favorable S & P rating, and product scarcity should keep the cap rates of Sherwin-Williams stores down in the 6-8% range. But what explains those stores offered at 8%+?
“I think the (cap rate) diversity can be explained by looking at the wide range of real estate choices found among Sherwin-Williams properties,” said another Sherwin-Williams investor. Indeed, this may explain much. It is estimated that approximately 2/3 of the business done in a typical Sherwin-Williams is from contractor sales. Consequently, some Sherwin-Williams stores may not be located at “Main and Main.” Since for many Sherwin-Williams is a destination, in some cases the company’s stores may thrive in convenient but not necessarily first tier locations. Some of these stores may be located in even what would be considered quasi-industrial locations, rather than trophy retail locations. Whereas retailers such as Walgreen’s, Wal-Mart, etc. have no room for error in their real estate decision-making, Sherwin-Williams may in fact be able to survive and thrive with some sub-standard locations due to their reliance on contractor and other non-impulse customers. Such locations, however, may end up being penalized in the net lease marketplace from investors unwilling to buy what they would consider to be inferior locations at low cap rates.
Other factors that might balance out the favorable investor sentiment for Sherwin-Williams properties are the shorter-term and double-net nature of the company’s leases. Typically the base term on the company’s leases are 10 years and typically the landlord with have modest responsibilities with grounds maintenance, roof, and structural. These factors undoubtedly scare off some investors which might pay lower cap rates otherwise. It has undoubtedly kept many institutional investors away from the product.
Although difficult to pigeon hole as an investment commodity, Sherwin-Williams stores still provide an excellent investment choice for the smaller commercial real estate investor. Many can be purchased at excellent costs per square foot and at reasonable capitalization rates. Although one must evaluate the real-estate specific characteristics of each offering carefully, the eventual Sherwin-Williams investor should be rewarded with a long-term, stable tenant for years to come.
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Friday, December 3rd, 2010
During another Q3 briefing by Reis, Ryan Severino, CFA, illustrated how the in-quarter mean cap rate for offices has been extremely volatile over the last two years due to the still limited and selective transaction market. <Click here to read article>
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Tuesday, November 9th, 2010
The United States Army has given Actus Lend Lease the go-ahead to implement the $600 million second phase of a three-phase project involving the renovation and development of on-post hotels through the Privatization of Army Lodging program. Phase two of the behemoth undertaking encompasses an aggregate 5,000 rooms at 11 installations.
This is a preview of Actus Moves Forward with $600M Second Phase of Army Lodging Privatization Program . Read the full post (203 words, estimated 49 secs reading time)
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Thursday, November 4th, 2010
Recently, I was asked to give a social media presentation to the Counselors of Real Estate of the National Association of Realtors at their national convention held in Philadelphia. The topic: Social Media - Identifying the Opportunities! This was to a group of very experienced real estate professionals who were questioning the benefits to them if they got involved. Attendees were highly complimentary, commenting on the program’s relevance and content.
Attached below is my outline which may be helpful to you on your decisions on how much time you should spend in social media and the rate of return for your time spent. Your only real cost is your time. The presentation primarily focused on three social media venues – LinkedIn, Twitter and Facebook.
This is a preview of Social Media - Identifying the Opportunities! . Read the full post (321 words, estimated 1:17 mins reading time)
Tags: Commercial Real Estate, marketing, public relations, real estate, residential real estate, seo, social media
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Saturday, July 17th, 2010
From Robert J. Pliska, CRE, CPA Birmingham (Detroit), Michigan - Investment, residential and commercial real estate has been very trying in the last few years. An area that may help you as a real estate owner, investor and/or broker/advisor is to improve your attitude and your mental psych. A way to do this is to latch on to a few quotes that you feel appropriate to keep your enthusiasm up, provide momentum to get through a crisis, add a little humor to a difficult situation, use to close the next deal, provide impetus for a good return on your investment and any other way you see appropriate.. This has helped many as investment and commercial real estate advisors and owners. After all, history has shown that many have gone through worse battles than we are experiencing and they found a way to be positive and have the will and perseverance to continue forward and eventually achieve success.
This is a preview of Using Quotes to Achieve Success in Investment, Residential and Commercial Real Estate - Part II . Read the full post (1164 words, estimated 4:39 mins reading time)
Tags: commercial, investment, motivational, quotes, real estate, residential, success
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Tuesday, June 29th, 2010
From John Johnson, CCIM | Atlanta, GA - What does it mean to accelerate? Sperry Van Ness Accelerated Marketing Advisors are America’s leading providers for special asset solutions. Our team is fully integrated with Sperry Van Ness International which enables our clients to capitalize on local market knowledge with product specialists who augment our commercial auctions and sealed bid initiatives. The team is designed for:
- speed
- transparency
- maximizing valuation
- open competition
- shorter transaction lifecycle
- accelerated closing
To learn more visit www.SVNauctions.com or email your questions to john.johnson@svn.com.
Click HERE to read my other blog posts.
Permanent link to this post (94 words, 2 images, estimated 23 secs reading time)
Tags: absolute auction, asset class, assets, atlanta, auction, buyer, CCIM, commercial, Commercial Real Estate, cre, deals, John Johnson, market value, minimum bid, national, properties, real estate, sales, sealed-bid, seller, sperry van ness, SVNAM, valuation, video
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Wednesday, May 19th, 2010
By: Robert J. Pliska, CRE, CPA, Birmingham (Detroit), Michigan
In these more difficult times in investment, residential and commercial real estate, we continually try to find ways to obtain additional income. This income can be received differently than our typical core business. One approach being used is to refer business to others and get actual cash referral fees or at minimum a pat on the back where the referring beneficiary will feel obligated to pay you back in some way.
This is a preview of Referral Rewards - They’re Yours For the Advice! . Read the full post (494 words, estimated 1:59 mins reading time)
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Tuesday, May 18th, 2010
By: Robert J. Pliska, CRE, CPA, Birmingham (Detroit), Michigan
Investment, residential and commercial real estate has been very trying in the last few years. An area that may help you as a real estate owner, investor and/or broker/advisor is to improve your attitude and your mental psych. A way to do this is to latch on to a few quotes that you feel appropriate to keep your enthusiasm up, provide momentum to get through a crisis, add a little humor to a difficult situation, use to close the next deal, provide impetus for a good return on your investment and any other way you see appropriate.. This has helped me as an investment and commercial real estate advisor and helped many of my clients get through these trying times. After all, history has shown that many have gone through worse battles than we are experiencing and they found a way to be positive and have the will and perseverance to continue forward and eventually achieve success.
This is a preview of Using Quotes to Achieve Success In Investment, Residential and Commercial Real Estate . Read the full post (952 words, estimated 3:48 mins reading time)
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