CCIM Feature

CCIMs’ Big-League Deals

CCIMs are hitting home runs in multiple sectors, but the office sector gets knocked out of the park.

CCIM designees completed an outstanding year in 2017, with plenty of big deals in office, multifamily, industrial, and retail. In fact, office aced multifamily for the top spot, while retail topped industrial for deal volume.

This reversal of fortunes among the big four sectors played out in a year of unpredictability and uncertainty in the political realm, but business remained solid for the commercial real estate industry. Several of those CCIMs who closed the biggest deals discuss the secrets of managing huge transactions and what the future holds for next year's deal-making.

CIRE: What recommendations do you have for CCIMs interested in developing and closing big deals in their market?

Tony Carlson, CCIM: It sounds counter intuitive, but do not be focused on the size of the deal. Be focused on developing relationships and working hard for your client. That hard work will be rewarded, and your transaction volume and deal size will grow.

Total Deals Reported in 2017 Deal Makers: There were 218 deals totaling $2,820.3 million

Larry Schedler, CCIM: The fundamentals of larger transactions involve the same skill set as smaller transactions. You need to understand the market, how to price the offering, and how to professionally expose it to your target market.

Christian Schedler, CCIM: I am a firm believer in specializing in a single property type and running with it. Become an expert on your market and know the inventory.

Neil Merin, CCIM: Be consistent and transparent in your delivery of service. Develop long-term relationships with key players, including owners, attorneys, accountants, and financial advisers.

Jill Rasmussen, CCIM: I believe the commercial real estate industry is still all about relationships and experience. Cultivate great partners and teams, as well as mentors.

Brett Olson, CCIM: You must identify and actively prospect to developers and owners who are consistently working on larger projects. You need to stay persistent and continue to provide a value proposition to those developers and owners.

CIRE: What is the greatest hurdle to overcome for closing big transactions?

Larry Schedler: As commercial real estate professionals, we have to use our time wisely. Generally, larger transactions take longer to close.

Christian Schedler: Every transaction has speedbumps. It is our job to think outside of the box and come up with a solution to any road block that may come up.

Rasmussen: You need to have enough experience and strong relationships to handle any deal challenges that come up during a project. Also, you need to have the control and understanding to know what to do to get deals closed.

Carlson: Closing a deal involves a lot of people, including third-party reports, title insurance, and legal teams. It can be a challenge to get everyone rowing in the same direction and working toward an agreed closing date. Constant communication and status updates keep everyone appraised and help to ensure a smooth closing.

Olson: From a mortgage banker's perspective, the biggest hurdle is identifying capital sources that are willing to lend on larger projects at the appropriate leverage levels for the borrowers.

Merin: Make sure that your property and market information are accurate and defensible.

CIRE: What market forces are propelling the opportunities for big deals?

Olson: The current low-interest rate environment and strong commercial real estate market fundamentals are the main drivers. Multifamily development projects generally are larger in scope compared to other property types.

Carlson: I believe the industry will continue to consolidate as large investors and institutional sponsors seek to expand their portfolios. Since economies of scale exist in larger transactions, I expect to see more portfolios trading on the market.

Merin: The current low-interest rate environment creates unusual leverage opportunities. These  circumstances allow owners to achieve maximum pricing, while still providing excellent returns  to buyers.

Rasmussen: In my market, corporate rightsizing, active capital markets, and REIT growth dominate.

Christian Schedler: Multifamily investors seek yield for both domestic and international equity partners. Their preference is to place equity dollars in large amounts.

Larry Schedler: Currently, multifamily has the highest availability of debt capital I have ever seen.

CIRE: What's the key to being involved in big deals?

Carlson: Focus on working hard and transacting deals of all sizes. Eventually, your business and deal size will grow together.

Larry Schedler: Be a team player, work hard, and work smart.

Merin: Establish an excellent reputation and always be consistent and truthful in your presentations and work. Don't be afraid to provide advice without compensation, but be sure you get paid for services that benefit a client.

Rasmussen: The primary qualities are experience and relationships, as well as a proven track record for closing all sizes of transactions and being a creative deal maker.

Christian Schedler: Teamwork is essential because every party in the transaction plays a critical role getting the deal across the finish line.

Olson: Stay persistent in your marketing and networking efforts, so you are front of mind with your clients.

CIRE:What does the future look like in closing large transactions?

Rasmussen: We have several large lease and development transactions in the pipeline. The market is active and interest rates are still low, so the next several years look active in many industry sectors.

Olson: With the amount of new development, the low interest rate, and strong commercial real estate fundamentals, the future is bright for large transactions.

Merin: Rising replacement costs and the role of commercial real estate in a diversified portfolio will continue to fuel a robust investment market for the near term. However, real estate is cyclical. Plan for the long term by being an adviser, not a transaction player.

Christian Schedler: I think it depends on asset class. The multifamily sector looks promising, but the retail and office sectors look challenging in the years ahead.

Carlson: I believe the pace of larger transactions will continue to climb as the industry experiences more consolidations and mergers.

Larry Schedler: As long as the fundamentals of the multifamily sector stay strong, I expect the need for larger and multiple assets to continue.

CIRE: How has your CCIM training prepared you for closing big deals?

Larry Schedler: Becoming a CCIM designee 25 years ago was one of the best investments I made in myself and my career. The CCIM training crystalized financial underwriting and gave me a real-world application for concepts that I learned in school. The skills I have acquired through CCIM have been a major factor in every transaction I have closed.

Christian Schedler: My father, Larry, strongly encouraged me to pursue the CCIM designation after my college graduation. It was a great way to complement my real estate studies. CCIM training has helped me fine-tune my underwriting skills, understand market trends, and discover value in networking.

Carlson: Particularly the CCIM courses in financial analysis and modeling have been helpful in underwriting transactions of all sizes. Also, the CCIM community has been critical in expanding my professional network.

Rasmussen: The CCIM designation program helped me to understand investment decision-making  on both sides of a transaction. This is crucial in  leading the process and ending up with a deal that benefits all parties.

Olson: Training through CCIM Institute assisted me in analyzing transactions from both a mortgage banker's and a developer's perspective. This knowledge has helped me to articulate my client's  objectives and enhance how I manage the borrower's and lender's expectations.

Merin: Through CCIM courses, I can analyze market conditions, understand the fundamentals that drive investment, and effectively communicate with buyers and sellers of large properties.

2017’s Biggest Deals

Larry G. Schedler, CCIM, and Christian J. Schedler, CCIM, and a partner 
Larry Schedler & Associates, Metairie, La. 
$250 million nine-property multifamily portfolio sale
 
Tony Carlson, CCIM, and two partners 
Grandbridge Real Estate Capital, Minneapolis
$71.8 million refinancing of six manufactured home communities
 
Neil Merin, CCIM
NAI Merin Hunter Codman, West Palm Beach, Fla.
$71.5 million office purchase
 
Jill K. Rasmussen, CCIM
The Davis Group, Minneapolis
$60 million medical office purchase
 
Michael Nevis, CCIM, Dave Simonsen, CCIM,  Steve Kucera, CCIM, and a partner
Kidder Matthews, Reno, Nev.
$55.3 million sale of an industrial park and business center and
$54.5 million sale of 12 industrial buildings
 
A. Scott Henry, CCIM
Dalfen America Corp., Dallas
$55.3 million industrial purchase
 
Brett Olson, CCIM, and a partner
Grandbridge Real Estate Capital, Minneapolis
$43.7 million student housing purchase
 
Russell T. Noll, CCIM
Transwestern, San Antonio, Texas
$39 million lease of office space
 
John Edwards, CCIM
Carolina Apartment Advisors, Myrtle Beach, S.C.
$34.2 million sale of a student housing community
 
Glenn Dulaine, CCIM
Realty Executives of Nevada, Las Vegas
$34 million multifamily sale

Continue Reading

Sara S. Patterson

Sara S. Patterson is former executive editor of Commercial Investment Real Estate.

CIRE Nov/Dec 2017 Issue Cover

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