Behind the Parkway-CALSTRS Deal
Avison Young is sponsoring the "Future of Downtown Austin" on Dec. 17 (register here). It is a full service CRE firm that has quickly grown to 1700+ professionals with 62 offices in 51 markets throughout the US & Canada. Click here to learn more.
Parkway Properties and The California State Teachers' Retirement System made one of the biggest deals in the Austin CBD this year when they unwound a JV that changed the ownership of five of Austin's high-profile downtown buildings. It's one reason we're excited to bring you the Next Big Thing event focusing on Austin's downtown on Dec. 17 (8am start) at the Hyatt Regency Austin.
 Parkway Properties VP and managing director Mike Fransen (here with his family) tells us since acquiring initial interest in the Austin portfolio as part of the merger with Thomas Properties Group in December 2013, Parkway has completed 373k SF of leasing at these five assets (San Jacinto Center, One Congress Plaza, Frost Bank Tower, 300 West 6th Street and One American Center) at some of the highest rental rates in Parkway's portfolio. As part of the deal with CALSTRS, the two parties essentially sold each other its shares in the various assets: Parkway takes over full ownership of San Jacinto Center and One Congress Plaza (totaling 926k SF, which is 81% leased) and CALSTRS will have full ownership of Frost Bank Tower, 300 West 6th Street and One American Center.  Parkway's strategy is to maximize an asset's value, simplifying ownership and decision-making and improve the bottom line for both tenants and the asset, Mike tells us. Parkway was able to extract the value created in 2014 and streamline the platform with full control of the two assets. Mike says the company is bullish on Austin and the CBD, in particular, and is always looking for opportunities. Downtown's appeal is varied from good proximity to the workforce to its appeal to the creative class. Tech groups, for example, like downtown for its live, work, play atmosphere.
 Parkway, as a whole, is primarily focused on the Sun Belt region from Florida to Phoenix, Mike (left, with with colleagues Mark Miller and Andy Smith) tells us with an eye on the markets with the most job growth and Austin fits that profile extremely well. The firm identifies a handful of submarkets (like the Austin CBD) that outperform within those markets. The Thomas Properties transaction gave Parkway a big entry into the market, he tells us. “Part of our strength is our operational platform and with that scale, we could make it happen,” Mike says. Growing up in Southern Oregon and spending his summers in Colorado, Mike likes to appease his mountain withdrawals from time to time with his wife and daughters. Save your spot at the Next Big Thing event focusing on Austin's downtown on Dec. 17 (8am start) at the Hyatt Regency Austin by buying your tickets here.
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Public Improvement Districts Catch On in Texas
If you need help getting infrastructure and public improvements on the ground, consider a Public Improvement District (PID). DPFG managing principal Rick Rosenberg just helped close a $5.2M financing in Leander using a PID, and tells us the mechanism is being used more often across Texas. PIDs are created by cities or counties (at no risk/exposure to them) and use bond proceeds to deploy non-recourse funds to developers on the front end, as opposed to other tools (like 380 agreements) that make developers pay up front and get reimbursed through incremental tax revenues as the project develops. PIDs also cover a broader range of improvements, from roads and water to landscaping and public art.
 PIDs have been on the books in Texas since 1987, Rick tells us, but have become more common since 2011 as banks have stepped back from lending for upfront infrastructure, especially on a non-recourse basis. PIDs are typically used for infrastructure costs topping $5M and are repaid by assessments on the property (similar to ad valorem taxes), but aren't variable with property value. They're very secure loans (the appraised value is three times the value of the bond, Rick says), and the financing is tax-exempt and long-term. That means developers may be able to pass on the cost of repayment of the assessments to end users. And the interest rates are pretty reasonable—the Leander deal was a 5.74% average rate for 30 years.  More on the Leander closing: Sentinel/Cotter is developing 151 acres into primarily single-family homes with some multifamily or townhomes. It's in a transit-oriented-development zone in Leander, and the City (including city manager Kent Cagle) was happy to facilitate the PID funding to ensure the developer would build better amenities and public space. Besides the $5.2M PID, Sentinel/Cotter negotiated a $4M tax increment rebate. Rick's working a number of other PIDs around Central Texas, including a 2,000-acre mixed-use project called La Cima in Hays County. (That'll include 2,000 residential units and 200 acres of commercial development.) The PID is approved there, and the first bonds will be issued in a few months, Rick tells us. |
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Calling All Moderators!
We're looking for a moderator to host a discussion with Austin's CRE market superstars. The event: Downtown Austin: Texas' Next Big Thing? It happens on Wednesday, Dec. 17 at the Hyatt Regency Austin and features Manchester Financial Group president Doug Manchester and Riverside Resources partner John Needham, among others. With you as the moderator, the panel will identify, discuss and dissect hot Austin issues, such as how the city is priming itself to become the next creative office mecca and how development is evolving. Also in the mix: The Fairmount Austin Development and 5th & West Condos, among other existing and future hot spots. For moderator consideration, contact Tyler Fisher, and to register to attend the event, click here. |
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We're Building the Funniest Holiday Playlist Ever
Now that Thanksgiving is past, we're ready to embrace the Christmas season. First up: Great tunes to get us in the mood. We're compiling the preeminent list of funny holiday songs over on Spotify (Silent Night and What Child is This would just put us to sleep at our desk), and we hope you'll help. We've got a few songs in there already (including one of our favorites, Robert Earl Keen's Merry Christmas From the Family), and as you send suggestions to catie@bisnow.com, we'll add to the playlist and share it with everyone next week. The two people who make us laugh the most with their holiday spirit get free tickets to Bisnow's Downtown Austin event! |
Real Estate Jargon Explained
The commercial real estate business contains cool shorthand to make us sound smart, savvy and “inside.” However, we'll bet that there are many critical terms you still may not know, or want to know more about (but are afraid to ask). Bisnow Education's latest video gives you the glossary, and a clear explanation of each buzzword/term that will make you sound awesome at your next meeting. From LTV to NOI and all the alphabet soup in between, Peter Linneman, Wharton's Real Estate program founder and chairman, shares his extensive experience in easy-to-understand segments, term by term. This video is available to you for just $99, or purchase the entire Bisnow Education library for only $449. Watch a sample here, and order yours for personal enrichment or staff training. For group licenses, contact Will Friend at will@bisnow.com. Don't nod and pretend to understand when you really don't – get this video today.
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Have Some More Thanksgiving Leftovers
We asked you how you celebrated Thanksgiving and ECR's tenant rep specialist David Dawkins shared this pic of him leading the team in its annual Thanksgiving potluck lunch last week. The ECR team has started a tradition of gathering together as a work family every year to share some homemade dishes and reflect on how thankful they are across the company. "This year," he tells us "we are thankful to have a fun and cohesive work culture, to live in the best city in Texas and to continue helping our clients grow." |
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Don't Miss Bisnow's Look at Downtown Austin's ‘Next Big Thing' Event
Austin is full of big projects, but we pulled out some of the biggest stories right now from the Fairmont Austin development, the 5th & West condos (pictured) and creative offices' impact to bring you the Downtown Austin Next Big Thing event on Dec. 17 (8am start) at Hyatt Regency Austin. We are excited to bring you the dealmakers you want to hear discuss the latest and greatest projects. Come hear Manchester Financial Group president Doug Manchester, Avison Young managing director Mike Kennedy, Parkway Properties managing director Mike Fransen and Riverside Resources partners John Needham, among others. Get your ticket here. |
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