As 2003 came to a close, Southeast Real Estate Business spoke with several executives — Chris Dyson, senior vice president of Collateral Mortgage Capital; Jim Ledbetter, president of Transwestern Commercial Services’ Southeast region; Steve Goldstein, senior executive vice president of Julien J. Studley Inc.; and Bruce Williams, senior vice president and district sales manager for the Tampa office of KeyBank Real Estate Capital — to learn how their companies fared in 2003, how their business strategies have evolved and what they have in store for the new year.

SREB: How did your company as a whole fare during 2003?

Ledbetter

Ledbetter: We’re starting to see the markets recover. You’re not only hearing talk of recovery, you’re starting to see some signs that tenants are looking to expand or relocate and to do the sort of things that go along with businesses expanding rather than contracting. Transwestern, I think as a whole — presuming the next couple months go as projected — will have a better year this year than last year.

Dyson: 2003 was even better than we expected. [Collateral Mortgage Capital] set a goal of $1.6 billion in commercial multifamily financing and it was a pretty ambitious goal. We surpassed that goal in October 2003. [Editor’s note: At press time, Collateral expected to close $2 billion in multifamily financing in 2003.] So obviously it was a great year for us. We still have soft markets, particularly in the multifamily sector, that we’ve got to be careful about. The greatest external factor that’s contributed to our production volume increase would have to be low interest rates. That’s very definitely boosted the refinance volumes.

Goldstein

Goldstein: It was a really terrific year for [Julien J. Studley Inc.]. I think that we are well positioned in all of our markets and the Washington metropolitan area had a great year, probably record-breaking for us. Our Florida office, which is a relatively new office, is doing better each year. In Atlanta, we’re rebuilding and doing very well considering what happened to that market. We’re very enthusiastic about our future in the whole Southeast region.

SREB: How has your company adapted its business lines to meet the challenges of the current economy? Has there been any change in strategy, in terms of how you serve your clients?

Ledbetter: I think there has been some refinement of business strategies and some efficiency that has been brought to bear, but I think, overall, perhaps the markets are a little bit better this year than last year. I think the main thing [Transwestern has] done is expanded the intellectual resources in Atlanta. We’ve added not only talent, but also depth to this office.

Goldstein: Julien J. Studley as a company did a management transition last year and brought on the next generation of management when we brought on almost 25 lateral people around the country and opened two new offices in Houston and Palo Alto, California. This was a strategic move to be able to serve our customers better. We’ve also become more aggressive in our strategy to deal with the investment sales arena by hiring some very high level professionals to help us build a base in that area. Our strategy is to be able to accommodate the needs of our clients, which traditionally require long-term solutions. We’re not in it for the quick transaction, but we’re in it to work and serve our clients for the long run.

Williams

Williams: While there have not been the greatest opportunities for new ground-up construction development, [KeyBank has] been very active in the rehabilitation and repositioning of various product types. The benefit that we have is being able to move in a case of lower opportunity level for construction to focus our energies on trying to do long-term debt because of our resources in that field. So we’re really able to move seamlessly through the product mix depending on where the market’s telling us that we can be the most effective.

SREB: What new projects or business ventures have you recently completed or do you have in the works?

Ledbetter: From an investment sales standpoint, [Transwestern] used to have little or no investment sales capabilities and today we do. We recently closed on a more than $25 million mall in Victoria, Texas. We’ve got a pipeline full of ideas that we are going to market from an investment sales standpoint.

Dyson

Dyson: We did a master credit facility financing with a New York-based pension fund advisor. This is a facility that allows for expansion, substitution. The initial funding was secured by a couple of properties in North Carolina. We also recently added properties in Memphis. We are a big manufactured home community lender. The largest manufactured home community REIT in the country was actually acquired by a smaller, privately held entity: Hometown Communities bought out Chateau. We had a $177 million master credit facility with Chateau. Simultaneously with assuming that credit facility, [Hometown Communities] took down additional funds. That was a major transaction for [Collateral] this year.

Goldstein: There are two notable transactions in the D.C. area: the future 520,000-square-foot home of major law firm Wilmer, Cutler and Pickering in Washington and the negotiations [Studley] completed on behalf of the Department of Transportation for its new headquarters of 1.4 million square feet of office space in the D.C. area.

Williams: Here in Florida we have done a couple of large apartment deals. One is a rehabilitation and repositioning opportunity down in South Florida. We have also done and are working on some large retail deals. One is a grocery-anchored center in Jacksonville, Florida, and one is a power center in Destin, Florida.

SREB: What areas of the Southeast do you think will be hot in 2004?

Ledbetter: I think Washington will continue to be hot. It’s probably held up better during this recession than any market in the country. I don’t see that changing. The government is going to grow every year. If the government grows, then other businesses that need to be near government are going to grow as well. This creates housing and retail needs. I think Atlanta’s going to rebound pretty strongly and southeast Florida is going to continue to be strong as well.

Goldstein: Washington is one of the strongest commercial real estate markets in the country. It’s got the stability of the federal government and it leads to a lot of opportunity for our core group of clients, which is primarily law firms and government contracting firms in the suburbs. Washington continues to be a hot spot and a desirable location for foreign money, investment purposes and development purposes.

Atlanta is still coming out of a fairly tough time with overbuilding, and I think the same is the case for Florida. I don’t think you’re going to see any great changes in occupancy or demand over the next 12 months. I think there will be gradual changes in the Southeast, generally speaking. I think the only place you’re going to see any speculative development at all is in the Washington area.

Williams: We still believe that South Florida presents a lot of great opportunities for multifamily. There’s still continued population growth and job growth is starting to come back. There has been a change in the markets where they have taken certain apartment complexes offline to convert them to condominiums, so that has helped on the supply side. We think that Orlando is starting to turn the corner. That is certainly one of the multifamily markets that we have our eye on. We’ve also seen good retail opportunities in Jacksonville and in South Florida.

SREB: What’s in store for your company in 2004?

Ledbetter: We see expansion both in Transwestern corporately as well as Transwestern in the Southeast. Our focus is expanding our presence in Atlanta and opening an office in southeast Florida. We are national — in more than 20 cities — and looking at other markets to enter. We’re looking to also expand our presence in markets like Atlanta, Chicago and Southern California.

Dyson: We’ll definitely go over $2 billion in 2004. I see a better economy and better multifamily markets and better markets all around in every product type. We’re also going to see interest rates that could be 125 basis points higher than the average for 2003. Hopefully any cutback that could be attributed to higher interest rates will be mitigated substantially by the overall improvement of the economy and the markets.

Williams: Everybody believes that ‘04 will be the time when the market improves more significantly and we’re starting to feel already some of the job growth coming back. We are hoping that it will continue to improve. I don’t think that we have rose-colored glasses on; [I don’t think] that it’s going to go back to the go-go days of the late ‘90s but we certainly see an improved marketplace. We sense that there are good opportunities out there for multifamily and retail.

Goldstein: We firmly believe that this year is going to be better than last year. But, the fact of the matter is that we don’t allow the economy to get in the way of our business. We deal with our clients on a long-term basis. We could be dealing with a 10-year problem and the resolution may come in a down economy, but that’s the best time for a client to make a move.

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