CarterBlog

Carter Pursuing $500 Million in Development, Investments

Firm’s Focus Centers on Multifamily, Student Housing Projects and Office Investments

ATLANTA (Dec. 8, 2011) - With the sale of its brokerage and property management groups complete, Carter is focusing on new investment and development opportunities as well as growing its program management and strategic consulting groups.

Moving forward, Carter will leverage its 54-year-old brand to create value through its strong relationships. Specifically, Carter is focusing its efforts on the:

• Development of mixed-use and for-rent multifamily projects in urban infill locations.
• Equity development of student housing.
• Acquisition of opportunistic and value-add investments in office.
• Growing its well-established project management and strategic consulting businesses.

The firm’s more than 100 high-caliber associates will serve clients using a high-performance team-based approach that results in delivering maximum value for our clients and investors. This approach allows Carter to leverage the firm’s strong expertise and deep knowledge base in a wide variety of markets and product types.

“The sale of our brokerage services and property management businesses marks a milestone for Carter,” Chairman and CEO Bob Peterson said. “This transaction was a major step for us in executing our strategy to narrow Carter’s focus on building high-quality projects, investing in real estate and providing strategic solutions to our clients.”

Carter’s development business expects new opportunities to emerge as corporate and educational development begins to rebound. Carter is the No. 3 commercial developer in the United States, as ranked by National Real Estate Investor, and currently is overseeing The Banks, one of the largest mixed-use projects in the Midwest. Carter is master developer of The Banks, a $600 million development on the Ohio River in Downtown Cincinnati, Ohio. Late last month, Carter announced plans to double the size of the retail and multifamily components along with new marketing efforts for the proposed office component.

In the K-12 education realm, Carter is currently overseeing a $107 million public school building program in Enid, Okla.

The firm’s Interiors group continues to be a leading third-party provider to top law and financial firms and grown its business well beyond Atlanta. The Interiors group currently has more than 500,000 square feet under construction for clients such as AT&T, RockTenn and Starwood Vacation Ownership.

Carter’s Higher Education and Campus Innovation team is currently leading a $100 million program at the University of Louisiana Lafayette that comprises 2,000 beds and 900 structured parking spaces.

“Our 54-year history of development across the Southeast and beyond positions Carter to take full advantage of new development opportunities,” said Carter President Scott Taylor. “Our Development group is well positioned when it comes to developing and building out corporate, institutional and educational buildings and facilities.”

Carter’s Investments group is actively seeking new opportunities across the country. Vice Chairman Jim Shelton, who leads Carter’s Investments group, said he expects to see more high-quality assets to come to the market at distressed prices. Carter recently invested in City Federal condominiums in Birmingham, Ala., and Valencia condominiums in Ponte Vedra, Fla., and played a key role on Piedmont Office Realty Trust’s acquisition of The Medici office building in Atlanta.

The firm also serves as a service provider to Carter Validus Mission Critical REIT, which is focused on acquiring mission critical facilities such as data centers and healthcare facilities. John Carter, a Carter vice chairman, serves as CEO of Carter Validus Mission Critical REIT.

In other areas, Carter’s strategic consulting group has performed advisory assignments for seven major clients in 2011 alone. Carter will continue to deliver high-quality service and results from its asset management division, which oversees more than $2.5 billion of third-party and Carter-owned properties.

“Moving forward, you will see Carter aggressively leveraging our thought leadership and experience to pursue and participate in high-quality developments and investments on behalf of our firm and our clients,” Carter’s Peterson said. “We will do this while continuing to build on our core values of integrity, commitment and excellence.”

About Carter

Founded in 1958, Carter is one of the country's leading real estate development, investment, and advisory firms. The firm has headquarters in Atlanta and operations across the country. Carter focuses on development of mixed-use and multifamily projects in urban infill locations, equity development of student housing, acquisition of opportunistic office, project management and strategic consulting. Carter’s high-caliber associates create value for clients using a team-based approach that leverages strong expertise and a deep knowledge base in a wide variety of markets. Carter is the country’s third-largest commercial developer, according to National Real Estate Investor, with strong higher education, k-12, interiors, and corporate specialty practices. Carter also focuses on value-add real estate investment opportunities, currently overseeing a $550 million portfolio. Carter’s asset management division manages more than $2.5 billion of third-party and Carter-owned assets. Its strategic consulting practice provides clients with customized real estate solutions. As it has for 54 years, Carter will continue to build on the firm’s core values of integrity, commitment and excellence and strive for a culture based on trust and candor. For additional information on Carter, please visit http://www.carterusa.com.

 

Carter Invests in Class A Apartment Community in Jacksonville, Fla.

By Malloy Peterson, vice president of marketing, Carter

ATLANTA (Dec. 28, 2010) - Carter has joined with Wood Partners and Lubert-Adler to invest in Magnolia Village Apartments, a class A rental community in Jacksonville, Fla.

The apartment community, located at 1620 Bartram Road in Jacksonville's desirable Southside neighborhood, comprises 168 units in six buildings. The Wood Partners-led investment group acquired the complex "on a short-sale basis at a significant discount to replacement cost," Wood Partners said today in a press release announcing the acquisition.

Carter decided to invest in Magnolia Village Apartments because of the opportunity to acquire a high-quality asset at a price well below what it would cost to replace it. Moreover, investing in Magnolia Village offered Carter the change to fortify its presence in the Jacksonville market.

"Magnolia Village presented an opportunity to acquire a class A multifamily asset at a price below replacement cost, in a market Carter believes in, with strong operating and capital partners," said John Akin, a senior vice president in Investments & Advisory who oversees Carter's multifamily investments. "It is the perfect complement to our recent acquisition of Valencia in Ponte Vedra."

In September, Carter Real Estate Fund II acquired Valencia, a distressed condominium complex just outside Jacksonville. Carter is marketing the remaining available condos at Valencia and has land for the development of future units there.

Magnolia Village is a gated apartment community offering one-, two- and three-bedroom apartments as large as 1,513 square feet. The landscaped grounds include a clubhouse, resort-style swimming pool and poolside Wi-Fi access.

"Magnolia Village fits the direct center of our strategy to buy well-constructed, well-located assets in stabilized submarkets that exhibit stabilized cash flow with room for growth," said Jay Jacobson, director of national acquisitions for Wood Partners. "We found the near-in Southside area attractive due to its infill nature, which was further enhanced by the adjacent redevelopment of a Publix grocery store that anchors a new neighborhood shopping center - a convenient amenity for our residents."

 

 

 

The Condo Market: What Happens When the Bust Settles

By: John Akin, senior vice president, Carter

In 2005 and 2006, condominiums grabbed real estate headlines across the Southeast with their ever-expanding development. Touting new urbanism design and trends of reverse migration to our cities’ cores, developers scrambled to meet housing demand with newer, bigger and better condominiums.

Unfortunately, the long development timeline, combined with an untimely recession of epic proportion driven by the housing boom led to a bust for most condos started after 2006.

The trends that served as the foundation for would-be condo-dwellers are still alive and well; it's mainly the market prices that have suffered. This set of circumstances presents an excellent opportunity for investment in distressed projects. Fresh capital is flowing into deals across the country, particularly in the southeast, where development was prevalent with investors buying projects at a fraction of their replacement cost. The new investors are typically using one of two strategies: turning the condos into apartments for the cash flow or, re-pricing the condos and proceeding with a sellout.

With developers resigned to the loss of equity on their projects, new investors setting realistic return requirements, and banks starting to get real about the actual value of their debt in these projects, the market has really accelerated its transaction pace. One example of this new activity in the condo market occurred in August, when The Atlanta Journal-Constitution reported ST Residential would resume sales at The Atlantic in Atlantic Station (pictured here), and The Brookwood in south Buckhead.

Carter is also active in this arena, having acquired City Federal in Birmingham. The iconic building has a vertical stretch of 325 feet making it the tallest residential structure in Alabama. We are pleased to expand our investment in condo turn-around opportunities with the acquisition of this landmark.

John Akin is a founding principal of Carter's advisory services group where he serves as Senior Vice President. In this role, he provides strategic real estate advisory services to Carter clients across a variety of disciplines. Prior to joining Carter, John was Senior Vice President of Development and Investments at Novare Group for five years. While there, he successfully led the development and acquisition of more than $850 million worth of mixed use projects including 2,000 for sale condominium units, 700,000 square feet of office, 200,000 square feet of urban retail and a boutique hotel.

Be Patient, Market Distress Will Create Variety of Real Estate Opportunities

By Eli Green, Vice President of Investments, Carter

I recently had the opportunity to sit on a commercial real estate panel to discuss the “10 Things You Need to Know About Distressed Assets” from an investor’s point of view. The educational discussion, sponsored by the Atlanta Commercial Board of REALTORS took place in June.

The panel comprised myself, an attorney specializing in representing special servicers, a special servicer/asset manager and a broker with significant experience dealing with distressed assets. They were Chad Defoor, an asset manager with Trimont Real Estate Advisors, Harrison Coleman, a partner with Coleman Talley and John Leonard, Regional Director with Marcus & Millichap. Lance Healy, Cushman & Wakefield leasing manager, moderated the discussion.

As an owner/operator, we believe distress in the market will create a variety of unique opportunities for Carter over the next few years. Our investment strategy is to position ourselves to make strategic investments in office, industrial and mixed-use assets across the Southeast where we can leverage our operational platform and maximize our investor’s returns. In addition to investing our own capital, through The Carter Real Estate Funds, we generally partner with private and institutional investors who are seeking to align themselves with owner/operators like Carter who are stable organizations with a proven operational and investment track record.

There was significant discussion regarding the distressed asset acquisition process, which is often very unique and complicated.  One of the most important things to understand in the process is the seller.  Who is actually in control and what are their motivations?  Sellers of distressed assets range from owners/developers, banks, special servicers to bankruptcy auctions, to name a few.  Three years ago, sellers were focused on maximizing their gains, but today many sellers are focused on minimizing their losses.  Another consideration is the timing associated with the different level of required approvals resulting from the variety of parties involved in the deal on the seller side, like borrowers, lenders, etc.

Another topic focused on Atlanta’s distressed office market.  As everyone knows, this distress was ultimately caused by the confluence of easy money, job losses, overbuilding and corporate contractions. Overall office vacancy rates are higher than they’ve been in over 10 years, and we are still experiencing negative net absorption.  Until we see significant, sustainable job growth, this distress will remain.

Despite the challenges, though, distressed assets present opportunities for well capitalized investors.  Similarly, brokers have an unprecedented opportunity to add value to these complex transactions.  However, everyone involved has to be willing to roll up their sleeves, expand their areas of expertise, think outside the box and, most importantly, be patient!

As vice president, Eli's primary focus is day-to-day management of The Carter Real Estate Funds. His responsibilities include acquisitions, due diligence and financing of the Carter Real Estate Fund investments. Since joining Carter, Eli has been involved in the acquisition, development, financing and disposition of over $900 million of office, industrial, retail and residential properties in Georgia, Florida and North Carolina.