Tuesday, February 28, 2012

Home prices fell further than expected last year

U.S. home prices dropped further than expected last year, showing the housing industry remains significantly stressed despite recent reports suggesting otherwise.

The Standard & Poor's/Case-Shiller Home Price Index, which measures home prices in 20 cities, fell 3.8 percent in December from November and 4 percent from a year ago.

Prices in the Charlotte metropolitan area fell 2 percent from November and were down 2.3 percent from December 2010, according to the index, which tracks repeat sales.

Nineteen of 20 cities saw prices decline on a monthly basis, with Phoenix yet again being the only city to post an increase. On an annual basis, Detroit was the only city on the index to post a gain. Prices there nudged up .5 percent.  Atlanta continues to suffer among the most, posting a nearly 13 percent drop from December 2010, followed by Las Vegas with a 8.8 percent annual decline.

“In terms of pricing, the housing market ended 2011 on a very disappointing note, said David Blitzer, Chairman of the Index Committee at S&P Indices.”While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.”

The housing market had shown promising signs, according to a report by The National Association of Realtors. The group recently said its Pending Home Sales Index, based on contracts signed in January, increased 2 percent to 97.0 -- the highest reading since April 2010.

But Tuesday's gloomy report suggests the market may falter again this year.

Since housing prices began falling rapidly in 2006, the market has had two years of a market "that is bottoming out but not yet stabilized," Blitzer said. "Up until today's report we had believed the crisis lows for the composites were behind us."

But, he said, "The pick-up in the economy has simply not been enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012."

Wednesday, February 22, 2012

Visionary commercial real estate leaders being honored today

Some of the area's most innovative thinkers in commercial real estate will gather today to honor their peers for creativity and problem-solving when it comes to issues involving real estate.

The Counselors of Real Estate will hold its 4th annual Creative Thinkers Awards at Carmel Country Club. The group, which is an invitation-only group of real estate professionals, will be recognizing winners for their out-of-the-box thinking, treating obstacles and risks as opportunities for novel solutions, and making cutting-edge decisions.

Winners include: Philip Dubois, chancellor of the University of North Carolina at Charlotte; Ted Rollins and Mike Hartnett of Campus Crest Communities and Kyle and Pattie Petty for their work founding Victory Junction, a camp for children with chronic medical conditions or serious illness.

Past real estate visionaries honored include developer H.C. "Smoky" Bissell and Ned Curran of The Bissell Cos., Larry Wheeler of the North Carolina Museum of Art and John Kane of Kane Realty Corp.

Established in 1953, The Counselors of Real Estate is an international group whose members include professionals working in the real estate, finance, legal and accounting industries as well as leaders of government and academia who provide advice on real estate matters.

Tuesday, February 21, 2012

Career fair being held Wednesday for people interested in the apartment industry

The Greater Charlotte Apartment Association is hosting a career fair for college students Wednesday to share information about a future in the apartment industry.

While most of the commercial real estate industry has remained stagnant since the market weakened three years ago, the multifamily industry has soared. Investors are buying apartment complexes and developers are building new projects across Charlotte and the rest of the country. Occupancy rates have been rising and rents are expected to keep growing - good omens for building owners and managers.

At least 10 local apartment management firms are expected to be at the fair.

The industry employs more than 1 million people, according to a trade group. Typical salaries range from $20,000 for a leasing consultant to more than six figures for regional managers, according to the apartment association.

Typical positions include leasing manager, concierge, marketing manager, groundskeeper and maintenance technician. The industry tends to draw jobseekers with experience in the retail, sales, customer service, construction and hospitality industries.

The fair will run from 4 p.m. to 7 p.m. Wednesday at the William R. Davie Park's Conference Center at 4635 Pineville Matthews Road. For more information, go to http://www.greatercaa.org.

Wednesday, February 15, 2012

National Association of Home Builders names Charlottean as first vice chairman

Charlotte-based home builder Rick Judson was elected as the 2012 first vice chairman of the National Association of Home Builders during the association’s International Builders’ Show in Orlando.

Judson is the owner of Evergreen Development Group in Charlotte, and has worked for several decades in land development and construction of single-family, multifamily and commercial projects.

In a statement, he said the trade group's focus will be to help home buyers and home builders gain better access to credit.

“As the housing industry begins to gradually emerge from its worst downturn since the Great Depression, our focus this election year will be to ensure that housing and homeownership remain a national priority,” Judson said. “We will be urging policymakers to restore the flow of credit to home buyers and home builders alike, to resolve a faulty appraisal process that has negatively affected property values and to maintain a federal backstop for housing to keep homeownership affordable.”

Judson has been active in the group's leadership structure at the local, state and national levels. He has served on NAHB’s Board of Directors since 1979 and has been a member of the NAHB Executive Board since 2002. He has twice served as NAHB State Representative from North Carolina and is a two-time NAHB national area chairman representing North Carolina, South Carolina and Georgia. In 2008, he chaired the NAHB Housing Finance Task Force, which developed association policy relating to Fannie Mae and Freddie Mac.

Judson served as 2004 president of the North Carolina Home Builders Association and was named its associate of the year in 1988.

The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the new housing units this year.

S.C. home prices up in January, Realtors group says

South Carolina Realtors reported Wednesday that home prices have started the year on an "up note."

The median sales price in South Carolina rose to $145,000 in January, up 3.4 percent compared to last year, according to the trade group.

Pending sales rose 19.7 percent to 4,024 and the number of days a home was on the market fell .6 percent to 143 days versus the same time last year.

Inventory levels shrank 15.2 percent to 47,916 housing units, and months of supply of inventory fell 16.9 percent to 11.7 months during the same time. A healthy housing market is thought to have six months of inventory.

"The media sometimes obsesses over the negatives, but last year brought several important improvements in key metrics that should not be brushed aside, such as an improved inventory picture," the group wrote in its report. "As we delve into a new year, we're seeing mostly positive signs."

The statistics do not include shadow inventory, distressed homes that aren't yet on the market. Shadow inventory includes homes that are crawling through the foreclosure process, properties that have been foreclosed on but not put up for sale, or houses whose borrowers are so delinquent they are unlikely to recover. Such homes are typically excluded from monthly sales statistics compiled by trade groups.

An Observer analysis found the seven counties surrounding Mecklenburg had more than 17,300 homes in shadow inventory at the end of last year. In contrast, the seven counties had 8,636 homes listed for sale.

Lancaster County in South Carolina led the region with nearly four times the amount of shadow inventory as for-sale listings.

Shadow inventory is not a new phenomenon. But because of the housing meltdown and recession, banks are taking back a record number of homes. The foreclosure pipeline is also swelling as banks take longer to complete foreclosures and more borrowers fall behind on their loans. When shadow inventory comes on the market, it typically sells at a steep discount, depressing values.

Monday, February 13, 2012

Southeastern buys Joe Mann, plus two other real estate veterans make career moves

Southeastern Construction and Development has bought Joe Mann Builders. Both Charlotte companies specialize in commercial construction.

Five employees of Joe Mann Builders will join Southeastern, whose clients include Bank of America, Sedexo, Inc. and Morehead Properties.

“We’re seeing a good market now for our interior upfit business, both office and retail,” said Kevan Smith, a partner in Southeastern. “We’re also seeing more activity in new construction.”

Joe Mann Builders had been looking for new leadership following the death of founder Joe Mann in July. Southeastern Construction and Development was founded by president David Fry in 1997.

Other changes occurring in the commercial real estate world:

Ron Lordo is joining Cresa as a Senior Vice President focusing on the healthcare industry.
Lordo, who has more than 22 years of real estate experience, will represent those who use the space and advise clients with strategic and financial planning, new leases, renewals, expansions and disposing of surplus space.

Most recently Lordo served as AVP of Real Estate Services for Charlotte, Carolinas HealthCare System. He directed leasing and property management activities for CHS’s portfolio of over 5 million square feet.

Cresa is an international corporate real estate advisory firm that exclusively represents tenants.
With more than 55 offices, Cresa is the largest tenant representation firm in North America.

And last week, Jim Gambrell joined Trinity Partners to lead the firm's tenant representation team. Gambrell has more than 28 years of experience and most recently managed his own commercial real estate firm, Oakway Properties.

"Operating my own brokerage business has been enjoyable, but an opportunity to team up with a group like Trinity Partnes, people I have known and admired for years, was too good to pass up," Gambrell said.

New construction sprouting in South Park

Drivers along Fairview Road soon will be seeing something this region hasn't seen much of in a while: New construction.

Work has begun on the new southern regional headquarters for the Bank of North Carolina and steel is scheduled to rise out of the ground next week, according to J.D. Goodrum Co. Inc., the project's general contractor.

The bank is building its 13,000-square-foot headquarters at 5980 Fairview Road. Construction is expected to take 10 months.

When finished, Bank of North Carolina customers will be banking at new 2-story steel structure wrapped in a glass curtain wall system, according to the contractor. The interior will feature a lounge with a fireplace. There will also be a drive-through teller option.

Cranes and construction crews were common place around the Charlotte area in the 2000s, until the recession began in late 2007 and new construction ground to halt.

Established in 1991, the Bank of North Carolina has roughly $2.2 billion in assets and offices in North Carolina and South Carolina.

Thursday, February 9, 2012

Alert readers clarify origins of the Belvedere Theater

Some confusion has arisen regarding the origins of the Belvedere Theater in west Charlotte since the Observer wrote about the building in December.

The theater, at 2734 Rozzelles Ferry Road, is part of a revitalization project underway by the Charlotte Mecklenburg Development Corp. The art deco building, once crumbling and near ruin, was restored and converted into a dental practice this fall. The building is part of the Greenway Business Center.

Officials with the project had said the theater was built to serve African Americans only. This was something previous Observer articles had mentioned. A website dedicated to movie theaters, http://www.cinematreasures.org, also talks about such a history.

Tom Hanchett, staff historian with the Levine Museum of the New South, told the Observer the theater represented the strength of the neighborhood's black middle class at the time.

After the story ran, however, three alert readers contacted the newspaper to share their stories and memories about the cinema. They also said that the neighborhood, and cinema-goers, during the early 1950s were white.

The newspaper dug deeper, and thanks to help from a friendly researcher at the public library, it has confirmed that the theater served white patrons in the early 1950s. The answer lay in the 1952 Charlotte City Directory, where businesses were labeled with the letter "c" if they served African Americans. The Belvedere Theater did not have such a label.

"I should have remembered that memories are always colored by whatever we've known more recently," Hanchett said. "Since the area has been African American as long as most people can remember, it's easy to assume that it was always African American. But in this case, the truth is different from the assumptions."

Hanchett said the neighborhood surrounding the Belvedere was developed as a white community. He said he's unsure when black families started moving in. The three readers who contacted the Observer say it happened in the 1960s.

Alert Observer reader Steven Cansler saw movies at the complex in the early 1950s. He recalled how parents would drop off their children around mid-morning on Saturdays to watch a double feature, some cartoons and "coming attractions thrown in for good measure."

"When the children left the theater in the late afternoon, it took a few minutes for their eyes to adjust to the sunlight again," he wrote. He also remembered how theater management maintained order and kids who misbehaved were asked to leave.

Paula Melvin Leonard of Charlotte wrote the Observer to say she was glad to see something good happen to the theater.

She said she met her husband, Robert Leonard, while working as a cashier in the ticket window. Leonard was a friend of the theater manager's son, with whom he had served in the Air National Guard. Leonard came to the theater to fix an electrical problem and, as Paula says, "he started coming every night after that."

The couple dated for five years and were married for 43 years before Robert died.

Wednesday, February 8, 2012

EpiCentre's unsecured creditors appeal ruling

The committee of unsecured creditors in the EpiCentre's bankruptcy case has appealed a judge's decision to disband the committee.

In January, U.S. Bankruptcy Judge George Hodges approved a motion by the EpiCentre's trustee to disband the committee. In his order filed with the court, Hodges said he approved the trustee's motion because the committee "is no longer necessary to protect the interests of its constituency; the administrative expense of the Committee is not justified; and the Committee has appeared to be counter-productive to the process of this case."

The decision came as the uptown complex's developers, lenders and bankruptcy trustee argue over whether millions of dollars in parking revenues and other money was wrongfully diverted from the project so they wouldn't have to be paid out to creditors.

The committee's attorney, Dennis O'Dea, has told the Observer such a move was unprecedented. Unsecured creditors are among the last to be repaid in a bankruptcy case, with secured creditors and administrative expense claims being paid first.

The project's bankruptcy trustee, Elaine Rudisill, managing director of The Finley Group, is investigating the EpiCentre's finances, looking for money and property that should be recovered to pay off the project's debts.

In an order explaining his decision, Hodges said the trustee "is capable of and required to adequately represent the interests of unsecured creditors in these cases."

So far, more than $220,500 has been paid in legal fees and expenses for the committee, court filings say. This money comes from cash generated by the EpiCentre.

"In these cases the secured creditor has a lien on the cash generated by the debtors' operations. Consequently, the Committee's fees are paid out of cash collateral of that creditor," the order says. "This continued free ride for one group of creditors at the expense of another is an administrative burden that is no longer merited.

At stake in the bankruptcy case is the future of the prominent, 302,000-square-foot retail and entertainment complex, which has been mired in court battles since holding companies Pacific Avenue and Pacific Avenue II filed for Chapter 11 bankruptcy protection in 2010.

The EpiCentre's owners filed for bankruptcy protection after Regions Bank started to foreclose after a $93.9 million loan came due.

Regions later sold the construction note to Blue Air 2010, a limited liability company. Since then, a new company has been hired to manage and operate the complex at Trade and College.

Rudisill has sued EpiCentre developers Afshin Ghazi and George Cornelson III contending that the men "fraudulently, intentionally and knowingly caused the Debtors to transfer millions of dollars in parking revenues to affiliated entities for the benefit of Ghazi and Cornelson personally." The court filings allege the men used shell companies to hide the revenues, and that they did not disclose the companies or the transfer to the bankruptcy court.

Home to restaurants, bars, an art gallery, movie theater and offices, the complex at Trade and College streets sits across from Time Warner Cable Arena, site of the upcoming Democratic National Convention, which will attract tens of thousands of visitors.

Thursday, February 2, 2012

Attorney for EpiCentre developer Afshin Ghazi withdraws citing litigation's ongoing cost

An attorney representing EpiCentre developer Afshin Ghazi in bankruptcy court has withdrawn from the case saying the long-running, contentious court proceedings are draining Ghazi financially.

"I have thought for years that money is what controls politics," attorney David Badger told the court Thursday afternoon, when U.S. Bankruptcy Court Judge George Hodges approved Badger's request. "Money is what controls the outcome of litigation as well. You can outspend (a defendant) until they are defenseless."

"I'm in a position where they, quite frankly, don't have the finances to stay in," Badger said referring to Ghazi and fellow developer George Cornelson III. Badger also said he had "considerable accounts receivable."

Ghazi and Cornelson have been involved in heavy court battle since July 2010, when their two limited liability companies that own the EpiCentre, Pacific Avenue and Pacific Avenue II, filed for Chapter 11 bankruptcy protection to avoid foreclosure.

The uptown entertainment project's original lender, Regions Bank, had recently started foreclosure proceedings when a $93.9 million loan came due.

Since then, Regions Bank has sued the developers, questioning how Ghazi and Cornelson spent their loan money and kept records. Ghazi and Cornelson denied claims of self-dealing.

That case was dropped after Regions in November 2010 sold the construction note to Blue Air 2010, a limited liability company. Since then, a new company has been hired to manage and operate the 302,000-square-foot entertainment complex at Trade and College streets.

Things seemed to progress more smoothly until October, when the EpiCentre's new lender sued the project's developers, accusing them of wrongfully diverting money from the troubled entertainment complex before filing for bankruptcy protection.

Blue Air's lawsuit claims Ghazi, Cornelson and others "manipulated and falsified" bookkeeping records and transferred assets to "various insider companies" before the project filed for Chapter 11 last year.

The lawsuit also claims the debtors made "numerous false statements" in their pleadings and court filings. Blue Air is arguing that Ghazi and Cornelson are responsible for returning the EpiCentre's assets, according to court documents.

Blue Air and the EpiCentre's owners have said they were close to agreeing to a reorganization plan this fall. The plan would have released the project from bankruptcy protection.

But the plan fell apart in October when Blue Air changed its terms, according to the court filing by 210 Trade, a Ghazi-affiliated company. 210 Trade owns valuable air rights above the EpiCentre. These air rights, which are connected to potentially millions of dollars in parking revenues, are currently being examined by the bankruptcy trustee appointed to investigate the case.

"Blue Air thereupon proceeded to wrest control ... and began what is a transparent effort to obtain what it could not obtain through negotiation or blackmail ... parking revenue associated with the Air Rights Tract, " the documents say. "Whether due to lack of due diligence or otherwise, it is clear that Blue Air has buyer's remorse and that it does not like the deal it negotiated."

Currently, attorneys in the case are doing discovery and conducting numerous depositions.

A confirmation hearing on the reorganization plan is expected to be held later this month.

Members of The Point Lake and Golf Club "overwhelmingly" want to sell to Trump, developer says

Members of The Point Lake and Golf Club near Mooresville voted Wednesday to sell the luxury club to the Trump Organization, according to Eric Trump, resurrecting a deal that had been killed because of what the developer had called "a lack of direction at the club."

Trump, son of real-estate mogul Donald Trump, told the Observer Thursday that members during a straw poll had voted "overwhelmingly" in favor of the sale, which he called "good news."

The Trumps had been talking for more than a year with the Point's nine-member advisory board of governors and developer Crescent Communities about purchasing the luxury golf club near Mooresville.

But the Trumps cancelled negotiations amid rising concern among club members.

Crescent developed the exclusive community on Lake Norman in the late 1990s. Members own the golf club but Crescent controlled it until early this year. Crescent was scheduled to transfer control of The Point to members, on Jan. 1, in exchange for $3 million.

The Observer wasn't able to reach board members immediately this morning.

Trump has said he and his father planned to put tens of millions of dollars into The Point to make it "amazing" and the best course in the state. The golf business is a passion of the father-son duo, Trump said.

Some club members, however, feared the deal was happening too quickly. They worried about possible side effects, such as Trump raising fees or changing the intimate feel of the quaint, Nantucket-style community.

In light of the tension, the Trump Organization in December said it no longer wanted to buy the club, citing a lack of direction and indecision from club members and Crescent Communities as the reason.

"There's a lot of confusion at the club. A lack of direction, " Trump told the Observer. "It's a great asset, and with a lot of capital could have been terrific. But we don't want to get bogged down with a deal that has a lot of different parties all moving in different directions at the same time."

Later that month, Trump came back to say he may reconsider, depending on the results of a community straw vote.

The Point could hold a formal vote on a Trump sale by the end of February or beginning of March.

With a reputation for being lavish and high-end, Trump golf clubs often feature bright, open floor plans, ornate decorations and massive chandeliers. Equally upscale are the prices and fees the clubs charge, say people who have visited the property.

The Point's 900-lot golf course community was built by Crescent Resources in the late 1990s and has attracted NASCAR drivers, sports figures, medical professionals and executives from the nearby Lowe's Cos. headquarters. The median house size is 4,500 to 5,000 square feet, and the average lot size is an acre. In 2006, the average home price was more than $1 million.

With gray, Cape Cod-style buildings and streets named Easton and Moor's End, the community offers club facilities, a tavern, a general store, a cobbler, a village green and a meeting house connected by a cobblestone road.

All homeowners must be club members and pay annual dues ranging from $2,100 to $6,600in addition to initiation costs and other fees. More than 60 percent of club members hold an equity stake.

Trump has said he and his father are not looking to buy development rights at The Point. The sale would be a strict golf play, he said.

Wednesday, February 1, 2012

Wells Fargo economists less bullish on housing market gains this year

The housing gurus at Wells Fargo say while 2011 ended on a "fairly solid note," the latest data for 2012 is a "little less heartening."

By the end of last year, sales were appearing to improve, inventories appeared to be declining and builder optimism had posted four increases in a row, according to Well's Fargo Economic Commentary, released Wednesday.

But cracks are now appearing in that rosy picture.

New home sales for December showed sales weakening somewhat, the commentary says. And the S&P/Case-Shiller Home Price Index, released Tuesday, showed a larger-than expected decline in November.

Still, the analysts expect sales of both new and existing homes to improve this year. New home construction will also post its first meaningful gain since the home-buyer tax credit frenzy, the report says.

"We remain somewhat optimistic about the outlook for 2012, but we generally see less improvement than does the consensus," the commentary says. "Unfortunately, there is still much work to be completed before a self-sustaining recovery in housing can take place."