Upbeat NAIOP crowd convenes in Atlanta ATLANTA - Despite the gloomy present-day state of the capital markets, the National Association of Industrial and Office Properties (NAIOP) conference held October 21-23, and co-sponsored by NREI, had a record 1,100 attendees, a giant leap from 400 the last time the convention visited Atlanta in 1979.
Atlanta-based developer/architect John Portman gave the keynote address at the opening session and concentrated on the rebirth of many inner city urban locations.
Best known for his mega-urban projects including San Francisco's Embarcadero Center, Portman stressed the importance of people in urban development.
"A city is a living entity, changing all the time," Portman said. "It's about people and how they live, an environment that enhances life, where people as a total society come together. Think about this - you never see children in American cities." He sounded a more positive note for the future, saying factors are falling into place for a massive return to the city.
Judging by attendance at this year's "Gold Mine" sessions, participants were eager to hear the latestin the industry. The 18 simultaneous roundtables covered topics ranging from "The Office Market: Bull or Bear" to "REITs: How They Underwrite" and "Office Building Design: The Next Phase."
Another highlight of the NAIOP conference was the 1998 Developer of the Year Award, which was presented to the Estate of James Campbell for the creation of Kapolei, a new city on the Hawaiian island of Oahu. NAIOP President Terry Stiles presented the award.
Masterplanning for the city of Kapolei (pronounced kah-po-LAY) began in 1995. It is being developed by the James Campbell estate, created in 1900 and worth nearly $2 billion today. The 32,000-acre masterplanned region was designated as Oahu's secondary urban center in 1977. "They've created a city, but they've created more than a city," Stiles said. "They've created a city of honor and integrity."
Overall, the mood at this year's conference was far more upbeat than dour, with the much-needed industry shakeout happening in earnest and the credit squeeze in the capital markets easing its grip on the office and industrial real estate markets around the country.
Season's greetings? Tom Wolfe comes calling in Atlanta ATLANTA - While critics around the country agree that Atlanta receives a literary torching as the setting of Tom Wolfe's new novel, "A Man in Full," some local real estate developers are wondering if they, too, will feel the flames from Wolfe's first book since "Bonfire of the Vanities," written 11 years ago.
Dubbed a modern morality play, "A Man in Full" focuses on Charlie Croker, an aging Atlanta real estate developer and former Georgia Tech football star. Plagued by a slumping real estate market and nervous creditors, Croker struggles to hang on to Croker Concourse, a failing $1 billion mixed-use development in Cherokee County. (Atlanta's real Concourse development, a thriving office complex in North Fulton County, is actually the handiwork of The Landmarks Group).
Wolfe, a self-styled "new journalist," began his career as a newspaper reporter and dutifully researches real-life subjects for his fiction projects. He first came to Atlanta in the early '90s, a welcome guest of Mack and Mary Rose Taylor, Atlanta's first-couple of commercial real estate.
Mack Taylor, along with long-time partner Harvey Mathis, developed Perimeter Center, a 3.3 million sq. ft. office park that helped shift commerce from Atlanta's CBD to the suburbs. Mary Rose Taylor, a former television anchor woman, is credited with restoring and preserving "Gone With The Wind" novelist Margaret Mitchell's Atlanta home.
"I told Tom, if he was looking for real estate characters to write about he'd find more in Atlanta than any other city," said Mary Rose Taylor, speaking at a recent breakfast for Wolfe in Atlanta at the Four Seasons Hotel. The two first meet while working on a documentary about Canada.
Among those Wolfe met in Atlanta are natives Thomas Cousins, chairman of Cousins Properties Inc., and John Portman, chairman and CEO of The Portman Cos.
Cousins is responsible for two of the city's biggest landmarks, the NationsBank Plaza and 191 Peachtree. Portman, a graduate of Georgia Tech'sschool, has developed a host of projects including the Atlanta Merchandise Mart and the Hyatt Regency Hotel.
Like Croker, Portman suffered his own serious credit collapse in the early '90s, but has since rebounded, thanks in part to several well-timed Asian investments. His most recent development is a $70 million, 360-room, four-star hotel in Warsaw, Poland.
"I think the novel is good for Atlanta, just as 'Gone With The Wind' was good for Atlanta in its own particular way," Portman says. Wolfe's book is particularly good to Portman, calling the developer "smart" in the early pages.
Despite the fears of Atlanta's real estate community, many of whom refused to comment for NREI because they hadn't read the book, Wolfe's novel is hardly a villainous expose. As Atlanta writer John Huey noted, "Maybe the problem is that Wolfe simply picked the wrong place to write about at the wrong time."
Another reason Atlanta real estate developers can relax is because much of the book takes place outside of the city at Croker's fictional plantation, Turpmtine in Southwest Georgia. It's there, along the Flint River, that Wolfe lets loose with his most memorable jabs, slyly lampooning Croker's plantation life for its excess and good-ole boy grandstanding.
"There's something in the plantation culture about being a man," Wolfe said last month while visiting Atlanta. "It's not enough that you've got the money to own a plantation, you've also got to be able to handle it all - other humans beings, the animals - and do it all with your bare hands or maybe a shotgun. It may seem out of date, but there's is a culture of manhood there."
If Wolfe's book has opened hunting season on machismo and bravado, real estate developers everywhere, not just in Atlanta, need to run for cover. Or at that very least, heed Croker's words: "That was what a real estate developer was, a one-man band! You had to sell the world on . . . yourself! They had to think you were some kind of omnipotent, flaw-free genius. His mistake was that he had started believing it himself, hadn't he . . ." -Cheri Thompson
Cousins sells $284M interest to Prudential ATLANTA - In a move designed to fund several planned developments over the next year, Cousins Properties Inc. sold $284 million worth of existing and planned properties to pension fund clients of Prudential Insurance Co. of America. Part of the proceeds will help fund the company's newest project, a $150 million tower in downtown Atlanta.
Cousins plans to use $230 million it receives in cash toward funding $600 million of proposed developments. The nine existing properties involved in the sale have mortgage debt totaling $54 million and contain 796,000 sq. ft. of office space and 1.1 million sq. ft. of retail.
Over the next several months, Prudential will acquire an 88.5% stake in each of the existing projects and an 11.5% interest in the properties Cousins develops with the funds. Cousins will get an 88.5% stake in the new development while retaining an 11.5% interest in existing projects. Cousins will continue to manage and lease the properties.
Mills Corp. hooks Houston rival with cold, hard cash ARLINGTON, VA. - Proving the old adage you can catch more bees with honey than with vinegar, the Mills Corp. has settled a Texas lawsuit with the sweetest weapon of them all - cold, hard cash.
The Mills Corp., based here, originally filed suit against Indianapolis-based Simon Property Group and New Jersey-based Chelsea GCA Realty over the pair's development of Houston Premium Outlets, a planned retail project located just two miles from Mills' $250 million Katy Mills development, a 1.4 million sq. ft. project on 640 acres 20 miles west of Houston.
Under terms of the settlement, Chelsea will receive $21.4 million over the next four years for terminating the project, plus the company will be reimbursed for any related fees so long as it agrees not to compete with Mills in Houston through the year 2002.
Meanwhile, Simon Property Group, perhaps looking for something more permanent than Chelsea's one-time score, has decided to join forces with Mills Corp. The two companies are now co-partners in the development of the former 150-acre Premium Outlet site, which they will develop as a masterplanned retail, office and hotel complex.
Tower takes aim at Crescent in NYC merger mess NEW YORK - In July, former pals Tower Realty Trust and Metropolitan Partners, a joint venture between Reckson Associates Realty Corp. and Crescent Real Estate Equities Co., were busy touting each other and their proposed $734 million merger.
By November, however, thewas off and the name calling had begun in earnest, with Tower filing a $75 million lawsuit against Metropolitan for willfully breaching the merger agreement.
Metropolitan contends that, in the process of due diligence, it found possible problems with Tower's income stream, which, if true, could jeopardize the company's REIT status. But Metropolitan insists it is not terminating the merger agreement - at least not for now.
Tower, meanwhile, refutes Metropolitan's claim, maintaining that the company has "unequivocally said they will not proceed with the current transaction."
Tower saved its most stinging criticism for Crescent, calling the company's latest move just another "desperate attempt" in a string of broken deals, an allusion to a Wall Street Journal story that labeled the Dallas-based company a "serial balker."
According to the Journal article, Crescent has backed out of at least two separate deals this year, one in San Diego for several downtown office buildings, and another in Las Vegas for Station Casinos Inc., for a combined total of nearly $2 billion.
"I think everyone involved would just as soon avoid going to the courthouse," says Jim Grissett III, a principal with DGHM/Parthenon REIT Management. "My sense is that Crescent absolutely wants out of this deal, for whatever reason. I'd be surprised if there weren't negotiations going on right now to reprice the deal or find somebody to step in and take Crescent's place." Grissett predicts that another company could be named to replace Crescent within the next 60 days. - Cheri Thompson
Capital America names new CEO NEW YORK - Nomura Holding America Inc. announced Nov. 20 that The Capital Co. of America, its wholly owned real estate lending subsidiary, appointed Michael L. Hurdelbrink its new chief executive officer. Hurdelbrink, most recently COO of Nomura International's Principal Finance Group in London, will be based in New York and replaces Boyd Fellows and Brian Pilcher, Capital America's former co-CEOs, who resigned to pursue other interests.
WMF Capital's president quits CHARLOTTE, N.C. - The end may be near for WMF Capital Corp.
In early November, Charlotte real estate insiders told NREI that WMF Capital, part of Vienna, Va.-based WMF Group, may not be able to withstand the current turmoil in the capital markets. A week later, the company announced that company President Lawrence A. Brown quit for personal reasons and to pursue other opportunities.
WMF Capital CEO Michael H. Greco, who left First Union to start the company in February, will take over Brown's presidential duties. "We are disappointed to see Larry go," he says. "Fortunately, WMF Capital Corp. has the management depth to continue forward. I am committed to rebuilding this franchise."
If Greco and WMF Capital fail, it is unlikely First Union would take him back.
Acadia loses $10 million in 3rd Q NEW YORK - Maybe the newly formed Acadia Realty Trust, formerly Mark Centers Trust (MCT), simply went public at the wrong time.
At press time, the Long Island, N.Y.-based REIT reported a net loss of $10.8 million - or 60 cents per share - during the third quarter. On the year, Acadia reports a loss $12.9 million - or $1.10 per share.
Acadia executives say they know something must be done to turn around their company. "We are poised to reposition the former MCT portfolio and take full advantage of the company's ample internal growth opportunities and to achieve external FFO growth through well-conceived acquisitions and strong redevelopment.
ProLogis soaks up Meridian DENVER - By the second quarter of next year, ProLogis will be a $6.4 billion global industrial REIT.
The company will grow thanks to its pending merger with Meridian Industrial Trust. On Nov. 17, the companies announced that Meridian will merge into ProLogis in a $1.5 billion transaction. The new company will have a market cap of about $6.4 million and will have 163.4 million sq. ft. of distribution facilities operating or under development.
The merger should be closed by March 31, 1999. Under the transaction's terms, each common share of Meridian will be exchanged for 1.1 shares of ProLogis, which would have a value of about $25.
ProLogis says the merger should pay off for shareholders in the first year and expects that the combined company will provide significant growth potential. "Meridian provides an exceptional strategic fit that strengthens ProLogis' positions in key logistics markets and expands our operating platform to better serve our global customers," ProLogis Co-chairman K. Dane Brooksher says. "Specifically ... we achieve superior market positions in Los Angeles and Dallas, while strengthening our position in."