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West Side Family Business

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The Albuquerque area has landed two new business owners who have a unique name for their future retail enterprise, interesting back stories and a commitment to giving back to a favorite charity.

The Pink Ribbon, scheduled to open this fall at 10301 Cottonwood Park NW, will be a high-end nail salon and spa operated by Tina Carmichael and her fiancé, Joe Nguyen. Tina is a breast cancer survivor, and a portion of the salon’s proceeds will be donated to cancer research. The salon was named The Pink Ribbon to bring awareness to breast cancer.

Joe and Tina were both born in Vietnam. Their fathers were American servicemen. Joe was able to locate his father a few years ago through DNA research. With Joe’s help, Tina discovered last year that her biological father and three half-sisters are living in New Mexico, so they are moving to the Albuquerque area from the East Coast so she can be close to the family she had never known.

NAI Maestas & Ward brokers Randall Parish and Cindy Campos represented the couple on the deal for the new business space – a 1,200-square-foot store in a brand-new retail strip right in the heart of the Cottonwood trade area.

By:  Steve Sinovic, Commercial Real Estate Reporter – Albuquerque Journal

 

Presbyterian breaks ground on new South Valley clinic

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Presbyterian has broken ground on its new South Valley clinic.

Presbyterian is building a 35,000-square-foot clinic on a five-acre site that it owns in the Las Estancias mixed-use commercial development in the South Valley.

Albuquerque-based Platinum Builders Corp. is the general contractor and Dekker/Perich/Sabatini is the architecture firm on the project. Presbyterian anticipates a spring/summer 2019 opening. The new clinic will replace Presbyterian’s nearby clinic on Isleta Boulevard SW. Presbyterian said the new clinic represents its continued mission to serve its South Valley patient base.

Presbyterian is the latest addition to the Las Estancias project. In January, Business First reported Hobby Lobby is planning a 55,000-square-foot location there. Las Estancias is a mixed-use project in the South Valley spearheaded by Steve Maestas, CEO of Maestas Development Group. Business First previously reported the retail development cost about $70 million.

Existing tenants include AMC IMAX, Baskin-Robbins, Dion’s and Starbucks. NAI Maestas & Ward Commercial Real Estate is the listing agent for Las Estancias.

With Presbyterian and Lovelace, which opened a clinic at Las Estancias in 2017, Las Estancias is building its status as a commercial real estate anchor in Albuquerque’s South Valley.

By:  Christopher Ortiz, Managing Editor – Albuquerque Business First

Where Is Smart HNW Money Going?

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A look into the current investment strategy and appetite of high net worth families…

The folks at Money360 wanted to find out where high-net-worth investors, family offices and hedge fund managers plan to put their capital over the next 12 months.

In March, commercial real estate lender Money360 Inc. polled family offices, hedge fund managers, wealth managers and other attendees at the ALTSLA alternative investments conference. The folks at Money360 wanted to find out where the “smart money” is going.

The survey showed that half of the attendees expected to boost their investment in physical assets like real estate and gold over the following 12 months. The same number of people planned to increase allocations in private debt. Meanwhile, 43 percent of the investors envisioned assuming less investment risk during the 12-month period.

Many high-net-worth (HNW) investors and family offices “feel like it’s time to take some chips off the table and put their money in a safer, more secure investment for the next couple of years,” says Evan Gentry, founder and CEO of Ladera Ranch, Calif.-based Money360.

“We’re on a 10-year bull run on real estate values and the stock market,” Gentry adds. “We all know these things cycle. So, even though the economy is still strong and unemployment is low, there’s a sense among many that the best years of the cycle are behind us.”

Money360 is an originator and servicer of commercial real estate loans. Among the borrowers are HNW individuals and family offices. A subsidiary, M360 Advisors LLC, manages portfolios of senior debt investments secured by first-priority liens on income-producing commercial real estate in the U.S.; investors include HNW individuals and family offices. The M360 Advisors fund comprises more than $500 million in assets.

In a Q&A with NREI, Gentry gives his take on the appetite of HNW investors and family offices for commercial real estate investments, pinpoints which real estate sectors are his current favorites and explains why his firm prefers “selective” retail assets.

 

This Q&A has been edited for length, style and clarity.

NREI: What are you sensing from HNW individuals and family offices regarding their future investments in commercial real estate?

Evan Gentry: We’ve continued to see a very strong appetite to get more exposure to commercial real estate, whether it’s owning properties or investing in the lending side. Most recently, we’ve seen a surge of high-net-worth individuals and family offices wanting to invest on the debt side of the equation because it’s a safer play at this point in the cycle. I think that’s a trend that will continue all the way through to when the cycle really does top out and begins to turn.

I’m a strong advocate of the point that you can make money on every side of the real estate cycle, as long as you’re doing the right thing at the right time. At the bottom of the cycle, you should buy all the properties that you can. But when you get up toward the top of the cycle, where we appear to be today, you’re better to be in a first-lien debt position at low loan-to-value so if the market turns, you have a considerable level of cushion on those loans.

NREI: Your firm works primarily in the office, industrial, multifamily, retail and hospitality sectors. Which of those sectors are you favoring now?

Evan Gentry: We always like multifamily. It’s a very attractive asset class. Class-A multifamily is very highly valued today and may be at its peak in the cycle. A lot of the multifamily we do is class-B multifamily in good markets. Obviously, everybody loves class-A multifamily. But class-A right now is trading at such a high premium that there’s not as much safety as in class-B. Class-B is not trading at the same premium from a cap-rate perspective that class-A is.

We also like office and industrial. Office and industrial make up our biggest bucket of loans. But like many things, these things are geographically specific. We’re not going to do the same type of property in every market in the country. But if we’re looking at the right market, there are some really attractive opportunities.

NREI: Why are you drawn to office and industrial?

Evan Gentry: We’ve just seen good opportunities in industrial and office. We’re opportunistic, so we’re going to move toward the asset class that’s providing the best opportunities for us and that has less risk than hospitality and retail. The changes that are taking place in retail, although they’re hurting some of the retail markets, are actually causing a boom in industrial projects.

NREI: Your company is leaning toward“selective” retail, but not all retail. How do you define “selective” retail?

Evan Gentry: We’re avoiding J.C. Penney-type retail centers. We say no to a lot of the retail that we see, but we’re not saying no to all of it. There are some out there that’ll just say they won’t do any retail because Amazon is putting them all out of business. But there’s a lot of retail, especially experiential retail centers that have anchor restaurants and grocery [components], that makes a lot of sense.

 

John Egan | Jul 03, 2018

Meet this NM top private company that’s been involved in more than $190 million in real estate deals

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In May, Albuquerque Business First revealed the companies that made our new Top 100 New Mexico Private Companies Awards.

Business First is highlighting a handful of companies that are new to the list this year.

First up is NAI Maestas & Ward Commercial Real Estate.

The commercial real estate firm was involved in $193.70 million in transactions in 2017, according to our Largest New Mexico Commercial Real Estate Firms List. It also managed 3.45 million square feet in 2017.

But beyond its number, the firm’s leadership continues to make headlines. CEO Debbie Harms was among notable commercial real estate executives across the country included in the Business Journals’ list of commercial real estate influencers.

In March, Harms talked to Business First about how to get more women involved in commercial real estate and construction jobs.

“Commercial real estate is either appealing to you, or it isn’t,” she said. “It takes a lot of knowledge, education, tenacity, networking, perseverance and honor to work in commercial real estate. It’s not easy, there are no “free lunches” and the standard is high. The way we get more women in commercial real estate is to teach them as young girls that they are equal to any man, and more importantly, we teach them that respect is earned, not given. You earn respect by doing the homework, doing the analysis, doing the research and being prepared. You earn respect by working with your clients, going the extra step, taking the extra time, giving the extra thought and being ready when the time is right.”

Jim Wible, director at NAI Maestas and Ward, was named Commercial Association of REALTORS New Mexico’s “REALTOR of the Year” for 2017.

The Top 100 Private Companies encompasses the top-performing independent companies, including wholly owned subsidiaries and nonprofits, that are based in New Mexico. Companies submitted their information by survey to be considered for The List of New Mexico Private Companies. The List is ranked by 2017 New Mexico revenue.

This new event will highlight the work of New Mexico’s private sector and will include lots of fun surprises and recognition, including the new Company of the Year Award.

Join us June 14 at the Albuquerque Convention Center as we celebrate the many companies thriving in New Mexico’s private sector.

The Top 100 New Mexico Private Companies Awards is sponsored by Bank of America and Meals on Wheels.

By:  Christopher Ortiz, Managing Editor – Albuquerque Business First

Kirtland Partnership Committee taps new leadership

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Three leaders have taken new roles with the Kirtland Partnership Committee, which is designed to help grow Kirtland Air Force Base.

New board leaders include Jim Wible, who will serve as chairman; J. Brad Steward, chairman-elect; and Kevin Yearout as the committee’s treasurer.

“The board is thrilled to support our new board leadership as we continue our mission to uphold the important work of KAFB,” said Sherman McCorkle, vice chair of the KPC board, in a statement. “We are lucky to have these high-caliber individuals on our team and we are confident their efforts will elevate KPC’s purpose in our state.”

In December, Wible, director at NAI Maestas and Ward, was named Commercial Association of REALTORS New Mexico’s “REALTOR of the Year” for 2017. Wible previously worked for Intel and has been in the real estate business since 2006, according to previous Albuquerque Business First reporting.

Steward is president of Pulakos CPAs PC in Albuquerque. As of July 2017, his company had 30 full-time New Mexico employees, according to Business First’s List of Largest New Mexico Private Companies.

Yearout is the CEO of Yearout Cos., an Albuquerque-based mechanical contractor that specializes in nuclear and specialty industries. In December 2016, Yearout was elected to serve a three-year term on the Albuquerque Economic Development as a director, according to previous Business First reporting.

Kirtland Partnership Committee helps enhance existing missions, attract new missions and support legislation at the local, state and national levels. The committee also supports the Air Force Research Lab and Sandia National Laboratories, according to a release.

Kirtland has a nearly $7.8 billion economic impact on the Land of Enchantment.

By:  Ron Davis, Reporter – Albuquerque Business First

Taking Advantage of New Tax Laws Will Require Structuring Your Business the Right Way

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To reap the maximum benefits, it’s important to understand how best to structure your business in light of the new provisions of the law.

Tax reforms introduced as the Tax Cuts and Jobs Act and signed into law last December are generally agreed to be the most comprehensive in more than three decades. They include several major changes affecting real estate investment. In general, these changes are beneficial to real estate professionals and investors. To reap the maximum benefits, however, it’s important to understand how best to structure your business in light of these new provisions of the law.

Enhanced depreciation opportunities

Previously, qualified business property was eligible for an immediate bonus depreciation of 50 percent, which effectively allowed the buyer to deduct 50 percent of the cost for the year the property was placed in service, a 40 percent deduction the next year and a 30 percent deduction the year after that. Under the new law, investors can claim a 100 percent bonus depreciation for qualified properties placed in service after Sept. 27, 2017 and before 2023. So, property owners can now take an immediate deduction rather than spread it over several years.

After 2022, the bonus depreciation will decrease by increments—to 80 percent for properties placed in service in 2023, 60 percent for properties placed in service in 2024, 40 percent those placed in service in 2025 and 20 percent for those placed in service in 2026.

The definition of a qualified property has also loosened. For the first time, the 100 percent deduction applies to both new and used properties, as long as they are not purchased from a related party. Importantly, bonus depreciation is available only for short-lived capital investment property such as machinery and equipment.

 In addition, the Section 179 deduction, which allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, increased from $510,000 to $1 million and the phase out threshold increased from $2 million to $2.5 million. Qualifying equipment and/or software includes almost all types of business equipment that a company buys and uses in its ordinary course of business. Importantly, the deduction limitation amounts will be indexed for inflation after 2018.

To take full advantage of these enhanced depreciation opportunities in some instances it may be advisable to perform a cost segregation analysis to identify personal property assets that are grouped with real property assets, and separating them for tax purposes.

Retention of interest deductibility

The new law enforces a 30 percent limit on interest deductibility for businesses with average gross receipts greater than $25 million. A real property trade or business–– spelled out as one involved in development, construction, rental, management or leasing and brokerage activities–– has the option to elect out of this limitation. However, doing so does change the depreciation rules for businesses that do. Therefore, before opting out, any business or entity should conduct a careful analysis of the cost/benefit on a case-by-case basis.

Pass-through deduction

While it’s been widely reported that the new law introduced a flat corporate tax rate of 21 percent, this applies only to tax-paying C-corporations (typically large public companies) and not to the majority of U.S. businesses, which are predominantly conducted as pass-through entities such as partnerships; limited liability companies taxed as partnerships; and S corporations, whereby the attributes of income or loss are passed through the owner. This discrepancy potentially creates a tremendous imbalance between large businesses and others.

To level the playing field, owners—including investors regardless of their level of participation—can deduct 20 percent from qualified income earned through pass-through entities. While this might not seem momentous, real estate entities could realize significant benefits through restructuring, particularly on the support side. For example, the 20 percent deduction combined with enhanced depreciation could reduce the income tax rate from 39.6 percent to just under 30 percent.

While this deduction is generally equal to 20 percent of the owner’s allocable share of qualified business income, there are some payroll limitations that should be taken into consideration. Specifically, the deduction cannot exceed 50 percent of the individual’s allocable share of W-2 wages paid by the business, or 25 percent of the individual’s allocable share of W-2 wages paid by the business plus 2.5 percent of the individual’s share of the unadjusted basis (i.e. the original purchase price) of property used in the production of income. These limitations underscore the importance of proper tax planning in order to take full advantage of the pass-through deduction.

Significantly, this 20 percent deduction does not apply to “personal service businesses” unless the individual earns less than $157,500 (single) or $315,000 (married filing jointly). Personal service businesses include businesses in the fields of accounting, health, law, consulting, financial services, brokerage services or any other business in which the principal asset of the business is the reputation or skill of one or more of its employees. Two notable exceptions are architectural and engineering services.

Residential real estate

The deduction for single-family or multifamily properties is now limited to $10,000 for the combination of both property and income (or sales) taxes. In other words, taxpayers who pay both property and income (or sales) tax will be able to deduct up to $10,000 total per return. This deduction will impact individuals who itemize their deductions on Schedule A of their 1040 and will be particularly detrimental to those individuals who live in high real estate tax states and in high income tax states such as New York, Connecticut or New Jersey.

Conclusion

For the most part, the new law applies solely to properties within the U.S., however investors do need to be mindful that the rules governing foreign investment are also in flux. In many respects the Tax Act is still a work in progress. Clarifications and refinements are inevitable, and will require ongoing monitoring and analysis.

At the same time, real estate remains a very strong investment vehicle, and one that can be sheltered for the first several years. Creative restructuring that takes advantage of the new law can be an added bonus in helping improve an investor’s tax situation dramatically.

Steven F. Klein | Mar 27, 2018 | Steven F. Klein is a partner at Gerson Preston Klein Lips Eisenberg Gelber, a Miami-based accounting firm.

Why Amazon May Be Picking Up More Retail Locations

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Amazon needs to increase its retail footprint to stay competitive in the race for quickest, cheapest delivery.

Time to delivery is now the yardstick for e-commerce success, so “last mile” distribution space is of utmost importance to online retailers. With last-mile warehouse space in short supply and most of it in old, obsolete industrial buildings, it was only a matter of time before big-box stores began doubling as distribution space.

Online giant Amazon has already partnered with department store chain Kohl’s to handle its returns. Kohl’s is now selling Amazon devices in its stores and offers free returns for Amazon products at a number of locations. “This is a win-win for Kohl’s and Amazon,” says Gregory Healy, senior vice president of supply chain and logistics consulting with real estate services firm Colliers International. He points out that this back-store operation is taking up extra space in stores Kohl’s has downsized and adding foot traffic, while saving Amazon a bundle on shipping, labor and distribution space for returns.

Even more recently, Kohl’s struck a similar deal with 365 by Whole Foods, the grocer’s neighborhood-sized concept, which could expand Amazon’s brick-and-mortar reach to tens of millions of new consumers nationwide—a move that will likely prove a negative for supermarket chains like Kroger.

According to Bloomberg, Amazon also plans to expand Whole Foods into a larger store footprint and utilize back-store space for “last mile” e-commerce distribution operations. News reports also indicate that Amazon is targeting big boxes exited by bankrupt retailer Toys R Us.

“Amazon is actually playing catch-up with Walmart, which has about 4,700 store locations that reach 95 percent of the U.S. population within five miles,” says Pete Quinn, Colliers’ national director of industrial services, U.S.A. He notes that Amazon needs to increase its retail footprint to stay competitive in the race for quickest, cheapest delivery.

The recent plays are all about expanding Amazon’s last mile footprint, Quinn says.

The new buzz words for e-commerce success are: “closer, faster and efficient,” says Healy, pointing out the biggest challenge faced by e-commerce retailers in remaining competitive is lowering delivery costs, which are eating up profits. Consumers now want purchases delivered immediately for next to nothing, he notes.

So in addition to a larger last mile footprint, e-commerce retailers also must get very creative in order to fulfill these low cost expectations. They are doing so by optimizing transportation costs and eliminating the middlemen: UPS, FedEx, USPS.

Some low-cost products are now sold on Amazon as “add-on only,” requiring a total $25 purchase for free Prime shipping. Amazon is also offering customers gift cards for Amazon services if they are willing to allow extra time for delivery.

The e-commerce giant has also launched Amazon Now, which is establishing small, neighborhood storefronts with lockers near college campuses, to offer two-minute pickup service for certain household products, including soap, toothpaste and coffee. Healy foresees Amazon lockers going into all types of neighborhood retail, including grocery stores and pharmacies like Walgreens and CVS.

He suggests that this is the beginning of a trend toward getting consumers to pick up their purchases rather than delivering them, which has ramifications for commercial real estate. He predicts that retail boxes used for e-commerce will require pick-up stalls similar to drive-through banks and fast-food restaurants. According to the Bloomberg report, shopping center REIT Regency Centers, which owns a significant number of Whole Foods stores, confirmed that it is reconfiguring parking lots to provide drive-through stalls for Amazon Flex and other delivery partners.

 

Patricia Kirk | Mar 30, 2018

Two New Mexico women selected to national list of CRE executives

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Debbie Harms and Cynthia Schultz, the CEOs of NAI Maestas & Ward Commercial Real Estate and Bradbury Stamm Construction, respectively, have been selected to a national list of notable commercial real estate executives.

The Business Journals’ Influencers: Commercial Real Estate spotlights 100 executives having an influence on real estate and development in their respective communities. These 100 executives represent both large, nationally recognized firms and smaller, family-owned businesses. Some are long-tenured executives while others have found success relatively early in their careers. And while some might be familiar industry names and others less so, as a group nationally, these individuals are having an impact on the business being done in communities from coast to coast.

These executives were identified in conjunction with editors and staff writers across The Business Journals’ network of more than 40 publications, including Albuquerque Business First. Each has been featured as part of The Business Journals’ continuing coverage of the newsmakers in those cities. These are executives to know for entrepreneurs and companies that are looking to expand their businesses to new locations or to grow further in the cities in which they’re now operating.

We welcome your comments as you review our list and learn more about each of these executives. We also know there are many other good stories to tell. We look forward to sharing those stories with you through The Business Journals down the line.

NAI Maestas & Ward is No. 2 on Business First’s Commercial Real Estate Firms List with $193.70 million in 2017 commercial transactions.

By:  Mark Menshela, Reporter – Director, National News Desk, American City Business Journals

Debbie Harms on the topic, “This is really an awesome honor for me; however, I am infinitely more pleased with New Mexico and Albuquerque getting some good national press. We live in a fabulous state and I’m really happy to be part of something that adds to getting the word out about this great place to live and work.”

New-to-market taco chain heads to Uptown

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Uptown will soon have a new taco joint.

R Tacos has picked Uptown for the chain’s first Albuquerque location.

The Buffalo Wild Wings-owned chain is headed to Coronado Center, where it will take up about 2,000 square feet, says Thalia Toha, an adviser for NAI Maestas & Ward, who represents the tenant.

Dallas-based R Tacos is expected to open by the end of the summer, said Toha. The chain is finalizing construction decisions.

The addition of R Tacos continues Coronado Center’s makeover. In the past year, the mall has introduced new shops like The Container Store, dessert spot Roll Avenue, Blaze Pizza and the upcoming Escape the Room.

New Mexico doesn’t yet have any R Taco restaurants, but by 2021, the state is expected to have four locations. JJ&D Enterprises signed an initial agreement with the fast-casual taco company to bring four locations to Albuquerque and Las Cruces over a span of four years, Business First reported in October.

Co-founder Rusty Fenton launched the taco joint in Dallas in 2010, calling it Rusty Taco, according to Dallas Business Journal.

In February, Arby’s Restaurant Group Inc. acquired Buffalo Wild Wings and created a new company, Inspire Brands, that would operate both restaurant chains, as well as offshoots. BWW acquired R Taco in 2014. The chain, which includes more than 26 units, rebranded from Rusty Taco in 2015, reports Dallas Business Journal.

Buffalo Wild Wings posted $494.2 million in revenue in the fourth quarter of 2017, reports CNBC.

By:  Christopher Ortiz, Managing Editor – Albuquerque Business First

Auto Parts Sector Stays Resilient To Online Competition

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Auto Parts Sector Stays Resilient To Online Competition.

CHICAGO—Competition from e-commerce has decimated portions of the retail market, and landlords now make it a point to sign leases with service-oriented businesses that can resist internet competition. Many net lease investors also increasingly prefer properties occupied by such ventures. One retail category that now looks especially promising is auto parts retail.

It’s a $58 billion industry which has experienced steady growth over the past few years, usually in the single digits, according to a new study by Quantum Real Estate Advisors, a Chicago-based firm that specializes in investment sales brokerage. Online retail sales within the industry have become more important, totaling $8.89 billion in 2017, a 16% increase over 2016. But AutoZone, Advance Auto Parts and O’Reilly Auto Parts have strong leads in market share, and the high levels of competition make it difficult for new operators to succeed. And this type of property has an additional advantage.

“The value of a property as real estate has become much more important, and from a physical standpoint, there is a lot of residual value in auto retail,” Chad M. Firsel, president of Quantum, tells GlobeSt.com. That’s because unlike, say, McDonald’s outlets, which typically have very specific layouts, auto stores are simpler. Most are one-story rectangles with great visibility, a lot of parking spaces, big open windows in front and high ceilings. That makes these buildings very appealing to a wide array of users, and in an age when Amazon has taken market share from many retailers, investors want that security in case one of their tenants is forced to shut down.

The low cost of auto retail stores also reduces investors’ risk, Firsel adds. A typical outlet, depending on local market conditions and lease details, can sell for about $240 per square foot, a fraction of properties such as pharmacies or popular restaurant chains.

Still, “the big three are performing well,” Firsel says, and investors can have confidence in these companies’ prospects. AutoZone, for example, operates 6,023 stores across 49 states, and saw its revenue grow to more than $11 billion in 2017, a 2.7% increase. In 2017, the company opened 168 stores in the US and has already added another 15 stores in 2018. Cap rates for AutoZone increased 23 bps in 2017 to 5.79%.

Advance Auto Parts operates 5,230 stores and had $9.4 billion in total 2017 revenue, a decline of 1.07%. But cap rates for these stores decreased two bps to 6.64%. The company also opened 47 new stores in the first three quarters of 2017. And O’Reilly operates 5,019 stores and had total revenues of almost $8.6 billion, or 7.9% total revenue growth. Like its two competitors, its cap rates have remained mostly steady, increasing just seven bps in 2017 to 5.93%.

Most importantly for investors, online sellers will find it difficult to further penetrate this market, Firsel says. Amazon has made some headway, but much of their business comes from people buying common products like washer fluid. He categorizes other online buyers as “weekend fixer-uppers,” or car hobbyists who putter around on vehicles they don’t use often.

But the big three have taken these losses in stride and continue to grow. The truth is, most auto parts shoppers highly value the experience of actually going to a store. “They want to go in, see the product, touch it, look it over, and speak to someone about it.” And speed also plays a role. “If something breaks on your car, you don’t want to wait three days to get it delivered.”

MARCH 1, 2018 | BY BRIAN J. ROGAL | Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.

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