VOL. 127 | NO. 200 | Friday, October 12, 2012
Commercial Advisors Capital Markets to Zero In on ‘Untapped Segment’
By Sarah Baker
Cushman & Wakefield/Commercial Advisors Asset Services LLC has launched a Capital Markets Group, a new service line to complement the firm’s tenant representation and third-party leasing and management businesses.
Capital Markets is led by principal Shane Soefker, a Memphis native and former senior managing director of Cushman & Wakefield’s South Florida offices. Soefker will work closely with Kemp Conrad, principal of Commercial Advisors’ Asset Services division, as well as Jacob Biddle on the tenant advisory side, on directing sales and investment activity, strategic planning and client relationship management.
“We’re really good at tenant rep, property management and construction management, leasing, and the execution side on investment sales, but where that gap was on development services,” Conrad said. “With Shane, it allows us … more sophisticated analysis that affects building valuation at exit, or how a lease deal changes the value.”
Conrad said there is a “whole of strata of opportunities in the market,” especially with private client deals from $5 million to $20 million.
“That’s kind of an untapped segment for us from a business development standpoint,” Conrad said. “In bigger deals, there’s a whole debt/equity component, which we really have even not done much of here at all.”
And because lender parameters are requiring more equity, now is the time to act. Soefker said as all of the 2006 and 2007 loans start to mature, sponsors deleveraging are poised to be a big part of the investment sales business going forward.
“There are plenty of sponsors and owners out there, whether they have needs to refinance or new debt – there are limited opportunities,” Soefker said. “There’s nobody here really focusing on the smaller deals, the middle-market, private-client type of opportunities.”
For years, capital markets have been common in the major markets like Atlanta and Tampa, where brokers focus on deals in the $20 million-plus range. Soefker said secondary markets like Memphis are well positioned to benefit from private dollars moving forward.
“We will always see institutional ownership in this market, especially on the industrial side, but you’re going to see more and more private money to be spent in this market,” Soefker said. “You’ve got so much capital out there right now and it’s just looking for opportunities.”
Examples of that activity in the past 24 months include Raleigh, N.C.-based In-Rel Properties Inc. and Santa Monica, Calif.-based Hertz Investment Group LLC in the office sector and Loeb Properties Inc. on the retail front.
Soefker said development deals can run the gamut, from more “cookie cutter” type projects to extremely complex with multiple variables. Capital Markets will be selective about the deals it gets involved in, and the majority will be fee-based starting off.
“They have a project, they need some sort of advisory service to help them execute,” Soefker said. “We can step in and provide that link from design to pre-construction to development to lease up and stabilization.”
Collectively, Commercial Advisors currently leases and/or manages more than 20 million square feet of office, retail and industrial properties. About 4 million square feet of that has been awarded to the firm in the last six months with special servicers like MIAC Owner Corp.’s Memphis International Airport Center, CWCapital’s Willow Lake Business Park and Corporate Park and Lenox Office Park A and B.
Conrad attributed a lot of that growth to Joey Bland, a court-appointed receiver who joined Commercial Advisors Asset Services in 2009 to oversee distressed assets.
Over the next year, Soefker said special servicers could account to up to 10 percent of the Capital Markets Groups’ bottom line.
“Special servicers are really just now getting active,” Soefker said. “They want to make sure they can reposition and add value.”
Commercial Advisors Asset Services has entertained the idea of a Capital Markets Group for quite some time, but Conrad said it boiled down to securing the right candidate with a specific skill set.
“It was really fortuitous that Shane was running South Florida for Cushman and … coming back here to work in the summer with his family,” Conrad said. “You rarely find someone with that kind of track record that understands the services business, understands development, especially in a market like this.”
And having a “symbiotic relationship” between Capital Markets and Asset Services is imperative to staying in the asset’s life cycle for as long as possible, Soefker said.
“It’s a performance-based business and it’s competitive market share,” Soefker said.