NAREIT has provided an infographic for the top ten things to watch in commercial real estate for 2022.
Birmingham-based Premium Property Trust acquired seven properties in a package deal from its founder and various joint partners.
Premium Property added 63,000 square feet of combined office, retail and medical space as part of the $24.7 million deal, it said. The assets were previously jointly owned by founder Chris Reebals and various investment partners.
“While Reebals founded Premium Property and is still its chairman, the company is now made up of independent investors,” said CEO Burke Cox. The plan right now is to use these in-service properties to launch an investment fund and eventually elect as a real estate investment trust. “Longer term, the company would seek a public offering,” Cox said.
“It is an exciting time for us as we have spent over two years raising capital and negotiating this deal with several partners across the properties,” Cox said.
The properties the company acquired as part of the deal were:
• 2601 Highland Ave., Birmingham: 13,190 square feet
• 3040 Independence Drive, Birmingham: 5,000 square feet
• 2913 Linden Ave., Homewood: 7,500 square feet
• 2915 Linden Ave., Homewood: 1,300 square feet
• 324 Commons Drive, Birmingham: 15,030 square feet
• 2081 Columbiana Road, Vestavia Hills: 14,130 square feet
• 4213 Dolly Ridge Road, Vestavia Hills: 2,800 square feet
Premium Property also consolidated a refinancing deal for one of its existing properties, the 5,000-square-foot 1920 Huntington Road, as part of the transaction.
“Premium Property is also in the midst of a 60,000-square-foot mixed-use development project on Morris Avenue called the Armour Building,” Cox said.
Dev Ashsish explains why real estate investment trusts are not proxies for equity, but are assets that can deliver better returns than debt instruments over the long term.
Over the past several years, I have read extensively regarding the concept of “New Urbanism” – an over thirty-year old approach to rethinking how we live, work, and play. Simply put, up until the 1950s we built communities where people could easily walk to needed destinations (the store, the theatre, school) right out their front door. Following that, a trend towards sub-urbanism emerged, where people sought lower housing prices by moving out of town into newly developing communities.
Eventually, enough people move into these sub-urban communities that various retail stores begin to emerge (sometimes as a part of a thoughtful plan, sometimes not). These often evolve into “power centers,” which I’m sure you’ve seen: a grocery store and drug store combination, some national chains like Panera Bread, Starbucks, and Taco Bell. Surely there will be a Michaels, Wal-Mart, and Home Depot nearby. Maybe an IHOP for the weekend family pancake stuff-yourself-a-thon.
Regardless, there will be one inescapable feature: asphalt, and lots of it. You will find yourself driving to one destination (“Best Buy”) to pick up a new case for your iPhone, then reenter your car to drive less than a mile to fight the parking lot struggle again…this time for a brief stop into a trendy sports store (“REI”) to get some new hiking shoes. You’ll need them, but not for scenic walks. Rather, for regular treks across pavement as you drive between unremarkably designed storefronts every weekend.
These power centers differ little from town to town and have homogenized our lives into a shared experience that many find unsatisfying. Enter the concept of “New Urbanism.” Like any transformational idea, New Urbanism attracts cult-like apostles, rabid naysayers, and about everything in between.
Given the limits of space in this article, I cannot begin to address all of the positive aspects and negative criticisms of the New Urbanism movement. Some good starting points on that are in the book, “Community by Design” by Hall & Porterfield and many resources at the Congress for New Urbanism website (www.cnu.org).
But for me, creating town centers with parking on the periphery, walkable streets, and mixed-use commercial centers can accomplish many admirable goals:
- It invites the inclusion of green spaces and gathering places in the center of town.
- It prioritizes interesting architecture that gives a community its own sense of being.
- It “feeds itself” as retail and commercial spaces co-mingle with residential spaces, providing a ready consumer market.
- It promotes smaller, locally-owned businesses that become an integral part of emerging, dynamic communities.
- It increases market values (especially compared to traditional development) and maintains valuations over time.
Recently, I observed the purchase of an older commercial complex with the announcement, “Dollar General and Sally Beauty to Anchor New Commercial Development.” I am not trying to belittle either of those businesses, but the mental picture of what this development would look like was crystal clear long before opening the article. I think we can do better with just a little extra effort and that is core to my belief in New Urbanism. It is also the mission of our company, Premium Property Trust, as we find ways to use good design and New Urbanism principles to positively affect the lives of communities.
If you have time, you may want to sign up with the public link for KC Conway’s Friday Economist Forecast. KC Conway is a top real estate economist and very familiar with the markets in which Premium Property Trust operates. The update is free and will be live-streamed on YouTube. You should sign up at least five minutes early as it will start promptly at 3:30 pm EST (2:30 pm CST).
Once again, Jussi Askola highlights the strengths of owning REIT securities. Some interesting performance statistics and observations in the linked article.
Brad Thomas contributing to Forbes about the “Flight-to-Quality” where investors sell what they perceive to be higher risk investments and purchase safer investments. In this case, he’s seeing REITs as the beneficiary.
Jussi Askola writes about why REITs outperform stocks over the long run, noting “Any asset class can outperform over a 1-year or even 5-year time period, but you don’t come ahead for decades and decades by pure luck.”
Joel Beam notes that REITs have outperformed “meaningfully” versus the broader market since April 30. He continues with, “The opportunity to earn consistent, high-single or low double-digit returns from a low volatility asset like real estate, with an important income component as a part of that total return calculus, is very, very attractive for long term investors…” as a potential result from trade tensions.
This is an interesting article by Stephen McBride about how STORE Capital targets a market that is difficult for Amazon to disrupt and how Warren Buffett’s only real estate stock is found in his 10% stake in them. We also have eschewed the conventional wisdom that REITs should focus on a single property type. If diversity is a strength in your stock portfolio, shouldn’t it also be a strength of your real estate portfolio? Our focus on effective new urbanism and multi-use properties reflects our belief in an awakening desire to escape the gridlock of crowded highways and return to a simpler lifestyle.