• Wednesday, July 20, 2011 
• Guest: Brad Inglesby, Stream Realty Partners 
• Listen to show.

Today’s guest is Brad Inglesby, VP of Capital Markets for Stream Realty Partners.  Brad brings extensive experience to the real estate finance space, with successful fund raising and project finance experience in numerous projects in the Southeast and otherwise.  We will talk today about the state of finance in the real estate world and what we should look ahead to as the “new normal” in finance. 

But, first we start today with our Business Tip of the week – Opportunities in today’s real estate markets 

In our 2007-2010 financial meltdown, real estate in all categories suffered: 

1.  Residential homes – bubble burst – values have declined 25-50% depending on market.
2. Commercial buildings – declined, as well as values declined:
   1. Cap rates moved from 4.5 – 7.5
   2. Refinancing was shut off
   3. Owners forced to sell at big discounts
   4. Banks foreclosed n defaults
   5. Economy changed occupancy rates – income couldn’t support debts 

After three years – real estate dynamics have changed 

1. Foreclosures have swamped residential markets
2. Refinancing is difficult with lower values in appraisals
3. 20-30% down now required
4. Many commercial building taken back by lenders
5. Assets starting to change hands 

State of the market – moving forward 

1.  Owners (banks, equity sources, crippled owners) are ready to sell
   1.  Very flexible deals available
   2. Owner financing may be available
   3. At lower prices, therefore lower rents – tenants can be found at below market rates
   4. Banks want to lend, if they can get:
      1. 30-40% equity
      2. Credit worthy borrower
      3. Asset purchased at new lower value
   5.  Banks as sellers
      1. Land & houses – will take significant discounts on O.R.E.O. to clean up their books
      2. Commercial buildings – will finance build to suits; will sell loans at discount to get off balance sheet.

   6. New owners are sellers

      1.  Bought very low – can resell low or rent and hold at discount rate.
      2. Many have bought to resell – lease/purchase agreements available. 

       2.    Land is extra cheap - As always – location, location, location; expect to hold 5-10 yrs. 

       3.  Buildings (offices) with empty space – is selling at a significant discount.  Plan is buy low and fill building at lower rates then competition.

 Inflation, bargain hunting and foreign buyers will help market recover. 

• Dollar devaluation (printing money) will raise values.
• Bargain hunting will reduce, then eliminate inventory in best areas.
• Cash strong investors from overseas still see us as best market to invest. 

The Good 

1. Atlanta has announced major investors coming into Atlanta to find acquisitions and development of new projects.
2. Once stalled projects are getting second life.
3. Existing assets are being sold to new buyers indicating an improving climate for real estate.
4. A new “multi-mobile” transportation hub (called the Gulch) will be an energizer for downtown.
5. Streetcar transportation also announced for downtown increasing value of downtown corridor 

The Bad 

1. These projects conceived or built in 2005-2009 time period will wipe out a lot of local equity invested by Atlanta companies.
2. Mass number of community bank failures also has eliminated net worth in Southeast.
3. Sense of caution in local economy waiting for job growth to restart. 

The Ugly – Washington, D.C. 

1. Impasse over budget has spooked debt markets.
2. Discussion of “U.S. default” is occurring over the world.  Spooking financial markets.
3. Platinum “AAA” ranking of U.S. debt, now doubted.
4. Will accelerate financial decline of the dollar as world currency.
5. Will exaggerate financial volatility of U.S. 

Our guest this week is Brad Inglesby, a financial resources and investment banker in the real estate market.  You can view Brad’s bio here. 

1. Tell us about your background in real estate
2. Give a brief summary of what has happened over the past year or so.
3. What is your perspective on the market today?
4. What are some of the hurdles we are still facing with refinancing?
5. What are some of the new developments and opportunities to refinance?
6. What should people be looking at when considering whether they should/can refinance real estate?
7. How do you see things improving over the next few years?
8. What do you think the future looks like in real estate and refinancing and how have we had to adapt?