Feldman Equities, Inc. is the modern business entity that encompasses a century of success in commercial real estate development, management and ownership throughout the United States. In the last 20 years, Feldman Equities has developed or acquired over 10 million square feet of office and retail properties with an aggregate value in excess of $2 Billion.
Feldman Equities is a standout, recognized for its trademark adept hands-on approach to turning around distressed assets, combined with deep bricks-and-mortar sensibility. Finding success, time and time again, while remaining on the cutting edge of investment and development trends, Feldman Equities is marshaled by its visionary president and CEO, Larry Feldman.
Today, Feldman Equities owns a portfolio of office and retail properties and land for development in Arizona and Florida - and is keenly poised for a period of strong asset growth in these markets and others.
In the last several weeks, I’ve received a barrage of calls from potential investors or joint venture partners clamoring for investment opportunities. Although the market is "awash" with fresh capital to be put to work, there is no shortage of opportunities in today’s real estate market. Investors need to know that attractive "trophy" investments will garner tough competition, driving bids higher and causing some buyers to overpay for real estate. The new "opportunities" are the less visible ones, perhaps the not-so-pretty ones, where there is great value and growth potential to be found with the right turnaround strategy.
Smart investors need to take a sensible bricks-and-mortar approach to buying assets. The major source of an investor’s overall yield has to be from cash flow, as opposed to the projected exit price, and investors need to avoid buying real estate where the returns are dependent upon a "back-ended" pot of gold. Investors who chase high priced assets (i.e. above replacement cost) with financially engineered structures are likely to get burned if the economy falters.
The distressed market of a decade ago that gave rise to many opportunity funds doesn’t exist any longer. We recently completed a renovation and lease up of a grocery anchored neighborhood shopping center in Arizona and decided to market it for sale as a fully stabilized property. The sale drew 30 bidders and our overall returns exceeded an IRR of 35%. In this climate, investors need to look into assets that others may shy away from, possibly assets located in secondary or tertiary markets, which require less financial engineering to succeed.
Without question, the biggest mistake for investors to avoid is doing nothing at all. The real estate market continually offers opportunities to investors, and those who make sound decisions will consistently see returns, especially in the current state of the market.
Recently, Feldman Equities began a new acquisition campaign with the purchase of Foothills Mall in Tucson, Arizona, a 482,351-square-foot entertainment and retail center. This purchase is the continuation of an aggressive program to build the Feldman Equities portfolio, especially in the markets of Tucson and Phoenix, where the firm has long invested in commercial real estate. This acquisition also marks Feldman Equities’ return to significant real estate investment on the private level, following the formation, growth and successful disposition of Tower Realty Trust, a leading REIT.
We are confident that discount retail shopping centers such as the Foothills Mall will continue to be successful through a possible recession era, as tightened disposable personal income will migrate to these discount retailers vs. the high-end retailers. Our hands-on approach to turning around distressed assets, combined with deep bricks-and-mortar capability, have earned Feldman Equities a national reputation with investors for being ahead of the market and for producing overall returns averaging in excess of 20 percent.
In the current climate, such returns may not be as prevalent. Despite recessionary trends, sellers are not relaxing their demands significantly. Today’s investment market is similar to the period that we saw in the late 1980s, where there was a big "bid-ask spread". That cycle ended with the Savings & Loan crisis the gap closed to the downside. You won’t see a collapse in prices this time, because we don’t have the excessive building and we don’t have as much leverage as we had in the 80s. This time around, I think you will see the reverse; the bid ask spreads will close to the upside.
For the past several years, Feldman Equities has sat patiently on the sidelines with our cash. Only recently have we found some opportunities in niches that others are shying away from, like medium-sized retail malls. Recently we purchased a 482,000 square foot mall in Tucson, Arizona with a going in capitalization rate over 11 percent. With interest rates in the 7% percent range, we are experiencing extremely attractive cash on cash returns. As a matter of fact, the spread between going in cap rates and interest rates are at almost an all-time high, and that is keeping a lot of money interested in real estate.
Though it is not immune to the cycles of the economy, real estate is a sound, stable alternative to the Nasdaq and to Enron. As a result, there is strong renewed interest in this "old economy" business of real estate.
With REITs here to stay as major players and pension funds poised to allocate more dollars into real estate, this industry could get a major boost in the near future. For example, this year, REIT mutual funds have experienced a positive inflow of capital during every single weekly reporting period through April 2002, and most REIT stocks are hitting or exceeding all time highs.
The time to act is now.
Recommended Web Sites:
http://feldmanequitiesofaz.com
http://www.feldmanequitiesofny.com
http://www.shopfoothillsmall.com
http://feldmanequitieshistory.com
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