PATTERSON REAL ESTATE ADVISORY GROUP | CAPITAL VIEWS | WINTER 2021 CAPITAL VIEWS PAT TERSON PERSPECTIVE LANCE PATTERSON, Chief Executive Officer [email protected] 2020 - well, that’s over with. Maybe that’s about as much as I can or should write as the preamble to the sixth and winter 2020/21 edition of our company’s newsletter. I don’t know what I could add to everything people have gone through – personal health issues, home schooling, quarantining, not seeing family, boredom, loss of jobs, etc. And in our industry, a mixed-bag of performance, some things popular, some things not, some lenders/investors active, others not, some properties performing well, others suffering. And of course a presidential election to top it off. “The good news So then, I come back to this – what can or should I write about? Probably like is this: overall the most of you, I’ve wondered where our world has been heading and what we’ll capital markets look like on the other side. I’ve questioned things quite a bit the past year, and while I’ve sometimes been swayed by the worst of my emotions, my faith and my are performing, heart always lead me back to this: good deals are getting done America is a great, great country, the best that’s ever been. and most capital As Americans, we’re fortunate to live here. providers are back We’ve never been, and we’re not now perfect. in the game.” But we’ve done great things for the world and for ourselves, and our promise – freedom, equality, opportunity – remains a beacon for humanity. And now, the newsletter. US transactions. So while there was no rushing herd heading toward other product types, there clearly was a “loosening” We all know of Dickens’ classic A Tale of Two Cities. For of thought – or said differently a willingness, if not a us, 2020 was A Tale of Three Years and of Five Cities. desire/need, to pursue other things. The most popular The three years being January 1st through mid-March, alternatives now seem to be single-family-for-rent, self- which was the best 10-week stretch we’ve ever had as storage, even for-sale housing. Still on the “we don’t know a firm, followed by mid-March through mid-summer, for sure how to underwrite” list is office (although opening which was, well you know. Followed by the final half of up), with very little focus on retail, and a widely-held belief the year, which allowed us to finish the full year having that hotels are troubled. closed more transactions than in any year in our 11-year history. As to the cities, we now have a physical presence And debt – a mixed-bag. As has been the case throughout in Atlanta, Charlotte, Charleston, Nashville, and as of my career, lenders of all stripes have tended to move October 2020, Tampa, where we are thrilled that Lauren more slowly than equity investors. So while both lenders Hanley joined our firm as Director of the Tampa office. and equity investors immediately pulled back their efforts when COVID emerged mid-March of 2020, equity came Otherwise, I can only describe our 2020 as great – everyone back almost as a whole pretty quickly vs. the lending healthy, including our employees but also families. And community, which has come back in a much more business-wise, we had a very strong year, highlights “spotty” fashion. Some banks and debt funds remain including: on the sidelines even now vs. the life companies which for traditional permanent debt have all been active • Closed 46 transactions, a record year; throughout the latter part of 2020. The debt funds that • Closed transactions in 10 states, including firsts for us, are still not lending are largely challenged with troubled Texas, Ohio and Colorado; portfolios and tripped covenants within their own lines • Heavy focus on new development, including multi- of credit, which has left them with a timid view of the family, condominiums, hotel, senior housing, retail and markets. On the other hand, the banks that aren’t active industrial; are not having substantial challenges in their portfolios, • As fore-mentioned, opened a Tampa office, something it’s more just their uncertainty of how real estate is now that had long been a goal; and will continue to perform. • Fourth quarter was the strongest quarter in our company’s history; and The good news is this: overall the capital markets are • Closed with our 100th customer. performing, good deals are getting done and most capital Although COVID scuttled most of the great personal providers are back in the game. interaction we usually have with clients, capital providers, friends and even ourselves, we’ll be back doing all of these things this year. So get ready for us! THE END And finally, as I have done in each of our five previous REAL ESTATE newsletters, I’ll end with something personal. In the past, I have written about my sons, and while I could do that I don’t read a lot of industry data, but I don’t think I need proudly for many, many paragraphs, I wanted instead to to have read much to conclude that there is a lot of write something that I believe is a good reminder for all equity in the commercial real estate markets. My sense of us and especially important at this time. While written is at least as much as, likely more than, at any other time over 240 years ago, you’ll recognize it, as it is the First in my career. For the latter half of 2020, this equity was Amendment to the United States Constitution: focused mainly on two things – industrial and multifamily, and within multifamily largely on “workforce housing” – not properties that receive government subsidies, but Congress shall make no law respecting an establishment less expensive, suburban properties targeted toward that of religion, or prohibiting the free exercise thereof; or large class of American workers who have largely been abridging the freedom of speech, or of the press; or ignored by our development boom of the past 10 years. the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. As the year wound to a close, we were clearly sensing a Freedom - let’s go out there and enjoy it, practice it and desire among equity capital to find something more, as preach it. It’s both our right and responsibility. Happy 2021! it had become extremely, brutally competitive for this type of money to be chosen on industrial and apartment 2020 SELECT TRANSACTIONS CLIENT WEAVER CAPITAL PARTNERS & THE SENG COMPANY PROJECT SEABOARD PARK MARKET ATLANTA, GA TYPE OFFICE AND INDUSTRIAL RECAPITALIZATION ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES RENASANT BANK CLIENT SPECTRUM COMPANIES & BATSON-COOK DEVELOPMENT COMPANY PROJECT CAROLYN UNIVERSITY MARKET CHARLOTTE, NC TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION EQUITY CAPITAL SOURCES HEITMAN CLIENT CORE5 INDUSTRIAL PARTNERS PROJECT C5 SOUTHGATE MARKET COLUMBUS, OH TYPE INDUSTRIAL DEVELOPMENT ASSIGNMENT CONSTRUCTION DEBT CAPITAL SOURCES SERVISFIRST BANK CLIENT GATEWAY VENTURES & ATLANTIC CAPITAL PROJECT 111 JOHN WESLEY DOBBS MARKET ATLANTA, GA TYPE STUDENT HOUSING DEVELOPMENT ASSIGNMENT CONSTRUCTION DEBT CAPITAL SOURCES ARVEST BANK 2020 SELECT TRANSACTIONS CLIENT ACKERMAN & CO. & ARTEMIS PROJECT SAN ANTONIO MEDICAL OFFICE MARKET SAN ANTONIO, TX TYPE MEDICAL OFFICE RECAPITALIZATION ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES CROSSHARBOR CAPITAL CLIENT KAUFMAN CAPITAL PARTNERS & ATLANTIC RESIDENTIAL PROJECT LUMEN DORAVILLE MARKET ATLANTA, GA TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION EQUITY CAPITAL SOURCES FCA PARTNERS CLIENT ACKERMAN & CO. & MDH PARTNERS PROJECT LEE & WHITE MARKET ATLANTA, GA TYPE ADAPTIVE RE-USE ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES METLIFE CLIENT ALBANY ROAD REAL ESTATE PARTNERS PROJECT CENTER POINT BUSINESS PARK MARKET TAMPA, FL TYPE FLEX OFFICE ACQUISITION ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES RENASANT BANK CLIENT SHELTON MCNALLY PROJECT NOVO JACKSONVILLE MARKET JACKSONVILLE, FL TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION DEBT AND EQUITY CAPITAL SOURCES PCCP & SYNOVUS CLIENT DREVER CAPITAL MANAGEMENT PROJECT LARKSPUR CREEKSIDE MARKET NEW BRAUNFELS, TX TYPE SENIOR HOUSING DEVELOPMENT ASSIGNMENT CONSTRUCTION EQUITY CAPITAL SOURCES BATSON-COOK DEVELOPMENT COMPANY & FAST PREFERRED EQUITY 2020 SELECT TRANSACTIONS CLIENT ALBANY ROAD REAL ESTATE PARTNERS PROJECT 120 INTERSTATE NORTHWEST MARKET ATLANTA, GA TYPE FLEX OFFICE ACQUISITION ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES DELTA COMMUNITY CREDIT UNION CLIENT MADISON CAPITAL GROUP PROJECT HARPER PLACE PHASE II MARKET CHARLESTON, SC TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION LOAN CAPITAL SOURCES PRIVATE LENDER CLIENT THE LOUDERMILK COMPANIES PROJECT THE CHARLES OFFICE & PARKING MARKET ATLANTA, GA TYPE OFFICE AND PARKING RECAPITALIZATION ASSIGNMENT BRIDGE DEBT CAPITAL SOURCES FIRST CAROLINA BANK CLIENT MAB AMERICAN PROJECT MONROE PAVILIAN SHOPPING CENTER MARKET MONROE, GA TYPE RETAIL DEVELOPMENT ASSIGNMENT CONSTRUCTION DEBT CAPITAL SOURCES AMERIS BANK CLIENT HAVEN COMMUNITIES PROJECT HAVEN SOUTH END MARKET CHARLOTTE, NC TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION EQUITY CAPITAL SOURCES WHEELOCK STREET CAPITAL CLIENT 360 RESIDENTIAL PROJECT 360 PANAMA FLATS MARKET PANAMA CITY, FL TYPE MULTIFAMILY DEVELOPMENT ASSIGNMENT CONSTRUCTION EQUITY CAPITAL SOURCES STOCKBRIDGE CAPITAL GROUP A FLORIDA FOCUS - PATTERSON EXPANSION AND TAMPA MARKET BRIEF LAUREN HANLEY, Director [email protected] As 2020 began to wind down, things were ramping up for In ULI’s most recent Patterson here in the Sunshine State. report, Tampa/St. Petersburg took While last year was full of many unprecedented challenges the #6 spot among for us all, Patterson’s expansion into Tampa was a highlight top markets in as we continue to grow our geographic footprint and the nation for real build on the company’s success here in Florida and the estate investors Southeast. and developers. As the area’s highest With this expansion, we’ll continue to provide local insight ULI ranking to to serve current and future clients from our locations in date, Tampa joins Atlanta, Charleston, Charlotte, Nashville and Tampa.