Social Investing in Real Estate

All of my clients want to earn a reasonable rate of return on their passive real estate investments but more and more they also want to do something good if they can at the same time.  Enter Social Investing.  While real estate is not the norm in social investing there are several commercial real estate investments that provide safe, secure long term yield while at the same time doing something to help other people and/or the environment.  Here are a few of the investments my clients are considering when investing in commercial real estate in a socially and environmentally conscious way:

• Green and LEED certified buildings
• Historic Preservation and Rehabilitation
• Community Investments such as non-profit tenanted buildings and conservation easements
• Buildings with solar features, gray water systems and/or green roofs
• EnergyStar certified buildings

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

Here is some general info about Social Investing.

Social Investing Definitions:

•    Socially responsible investing, also known as socially-conscious or ethical investing, describes an investment strategy which seeks to maximize both financial return and social good. Source

•    Limiting one's investment alternatives to securities of firms whose products or actions are considered socially acceptable Source

•    Social investing is the deliberate effort to invest money in financial securities that reflect your personal social attitudes while avoiding financial securities that support things you disagree with. It can also reflect religious, political or environmental beliefs as well. Social investing stems from the philosophy that financial support of something is the same as endorsing it. Source

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

Most Relevant Sites on Social Investing and Social Investments:

1. What Is Social Investing? Discusses Identification, Significance, Geography, Effects and Considerations of Social Investing. http://www.ehow.com/about_4614985_what-social-investing.html

2. Social Investing Business Ethics. The Magazine of corporate responsibility http://business-ethics.com/

3. Socially responsible investing (wikipedia) Wikipedia information about Social Investing http://en.wikipedia.org/wiki/Socially_responsible_investing

4. Social Investment Forum The Social Investment Forum (SIF) is the US membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing. SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. http://www.socialinvest.org/

Contact TMO for assistance in planning your next social investment in real estate. email or 1.866.539.1777

The Vitamin Vault - Walgreens in Historic Bank

This is a Walgreens store located inside a historic bank building in Chicago. It has been a very talked about redevelopment project including Huffington Post and Forbes. I came across this photo on Instagram:
from Instagram http://bit.ly/1qGCAPW
via jorgemus
The Vitamin Vault #chicago #architecture #bank #walgreens #farmacy #vitamins #vault #door #metal #health #shopping #design

Here is an exterior shot before the signs went up:

Adaptive Reuse - School, Church & Starbucks

Great example of adaptive reuse project with corporate tenants:

Old School O7 in Phoenix, AZ

Vital Stats Opened: 2013

Owned: Wetta Ventures

Size: +/- 9,000 SF

Team: PK Associates, RSP, Chasse Building Team, MSA Engineers, TwinEngine Design, Airpark Signs & Graphics

Old School O7 ("O" for Osborn Road; "7" for 7th Street) is an adaptive reuse and new construction project in Midtown Phoenix. The project consists of a 1,700-square foot freestanding drive thru building that is leased to Starbucks. The existing 4,075-square foot church, built in 1948, will be re-purposed as a new restaurant for Z'Tejas new concept, Taco Guild. The remaining, 3,518 square feet housed in the 1955 school building will serve as new shop space for general retail uses. The project represents a one of kind redevelopment project with a 100+ year history - a combination of new construction and adaptive reuse that will spur further economic growth in the neighborhood.

What people are saying: ‘This is a great example of responsible development, as it retains a piece of Phoenix history while meeting modern needs’ -Tom Simplot, Phoenix City Councilman

source via Old School O7 –.

Good Deals find Good Money

Freshman year in college, I met a friend. The friend's dad was a commercial real estate developer. I had always wanted to learn more about commercial real estate given that my dad was in the hardware business, owned his stores and as well as a few strip centers. I offered to take my friend's dad to lunch. He actually took me to lunch. We visited his office. Met his small staff: an office manager (the type of woman who you know is the one who really runs things and makes sure it all stays together) and "the engineer" who also wore hats as an architect, surveyor and a lawyer. Three people, the manager, the engineer and the developer.

The conversation zig-zagged from "how's school?", to naive questions from an eighteen year old, to real nuts and bolts lessons from the trenches of a life long commercial real estate person.

Boom times in Deer Valley, UT. Major failures in Vail. Huge successes in Chicago and the midwest. Now, if only the city would agree to that damn traffic light and bypass at project so and so.

"See now" the mentor said. "Your dad has to open the stores everyday. Someone has to unlock the doors and let the customers in. I did not want to open the doors everyday, I wanted to own the doors and collect the rent."

He continued with more stories of leases and financing and lore. His excitement was relentlessly contagious.

"The yield, I do it for the yield." (Yield what's that?) He grabbed his HP off the desk. "Look, cap rate. Capitalization rate." He punched the numbers in the calculator. Rent, net income, price, value, yield, cap rate.

The specifics pretty much went over my head. However, the lesson sunk in. Income streams create value. Income streams are created by location, tenants and buildings. By the enterprising developer, of course. (And, if I really understood it correctly, I would never have to work in a hardware store the rest of my life.)

His projects were big. Even by today's measure. He was on the leading edge of developing these new projects that are now commonly referred to as Power Centers or Regional Centers. Not malls. Kohls. Bed Bath & Beyond. Dick's. Best Buy. Target. All in one project perfectly located to draw shoppers from all directions from up to 30 minutes away. And not to mention the in-line retail spaces that were really just gravy.

These projects were 10, 20, 50 million dollar deals. I could not even fathom the dollars. When he showed me the numbers the last 000 were not written. Everything was short form for million. 1,000 was $1M. 20,000 was $20M. Wow, I thought.

"But, but, but.. where, I mean how do you come up with money?" I said. He replied "That's the easy part. The money finds me. I create the deal and the money comes."

Uh. OK. Sure. My 100 was $100, not $100,000.

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Many years later, after being in the CRE a while myself. I decided it was time to do my own deals.

How would I finance them? Where would the money come from?

I remembered that first CRE lesson as an 18 year old hippie (yes, I had a ponytail at the time).

Just to be sure, I asked a CCIM friend what the best deals would be to get started in and get financed. He said it does not matter. What, all these people are crazy, I thought. Millions of dollars easy to get? I asked him to extrapolate.

"Good deals find Good Money" he said. "There is so much money out there. Sitting there. Just looking. Waiting. Looking for a home. A good deal."

A good deal, he explained, was one that was fundamentally strong. Good location. Good building or bones. No hair. (environmental or title issues etc.) Good tenant(s). Good price. Nothing over the top. Just good all around. Solid.

Even better if it had upside: below market rents, extra land, below market purchase price, etc..

In other words, create a good deal and the money will come.

I have now seen it first hand. Whether it be my own land subdivision on the river that was easy to sell the parcels at crazy prices. Or a $12M Walgreens with non-recourse financing. Or a NNN Dollar General attracting multiple all cash buyers. Or a trailer park on the river with unsolicited offers.

Bad deals or marginal deals on the other hand struggle. Languish. Sit on the market. Need personal guarantees (and your first born child). Fall apart.

Finally, I got it. And get it.

Thank you Mr. Cap Rate.

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Now, what is this all about? It is about a new kind of deal. A deal that is not just about money. It is a deal that does good. Of course it makes money. But it does not have to take every penny off the table. It is a deal that does good at the same time while making money. A deal that helps people. Helps the environment. Maybe helps animals. A deal that does good.

The current lingo is "impact investment" or "social fund" or "CSR (Corporate Social Responsibility).

I see these deals as building reuse, parks from vacant lots, public art, community uses, historic preservation, corporate reuse, conservation or any real estate deal that can actually do some good besides just make money.

Do you care? If you do, call or email me to find out more. I'm not eighteen anymore.

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Making money is art and working is art and good business is the best art.

- Andy Warhol

Transdisciplinarity

A discipline to call our own. Andrus & Morgan is a creative real estate company that does important work on meaningful projects nationwide.

We specialize in commercial real estate reuse, repositioning and investment.

We make the world a better place by combining real estate redevelopment, impact investing, media, design, architecture, historic preservation, crowdfunding, green, reuse, finance, commercial real estate, residential real estate, non profit, real estate donations, web, technology, crowdsourcing, social media, law, planning, land use, brokerage, conservation, philanthropy, marketing, art, public affairs and CSR.

For a minute, we seriously considered blending all the disciplines above into one word. In the end, we felt that this company name was too long (laugh laugh):

The Real Estate Impact Media Design Historic Crowdfunding Commercial Non Profit Weblaw Planning Use Philanthropic Art Affair Firm

We settled on Andrus & Morgan instead.

Besides the unseen well of daily inspiration that has created all of this, Candy Chang helped me take the leap with this short two minute video about "Making your own Discipline". Thanks Candy!

Former Bank Building #adaptivereuse as AT&T retail #cre

from Instagram http://bit.ly/1qGCAPS
via realtmo
Former Bank Building #adaptivereuse as AT&T retail #cre

What is Impact Investing?

You may have been hearing the words "impact investing" or "social investment". If you care only about making money, read no further. If you care about making a positive difference in the world while making money, read on.

Using for-profit impact investments to solve social problems.

Here is decent video from Forbes featuring the authors of Impact Investing: Transforming How We Make Money While Making a Difference. This new breed of "investment" achieves social and environmental good while earning an investor a decent return. Formerly, donations were the main way to make a difference while having some financial incentive. Now, you can do good and get a good return simultaneously.

I see opportunities for Impact Investing in Real Estate by purchasing properties that are occupied by tenants whose business practices you support (i.e. Goodwill or Whole Foods), buying a green or LEED building, or doing redevelopment projects on existing buildings (i.e. adaptive reuse or historic preservation).

Impact Investments: Transforming How We Make Money While Making a Difference

A ground-breaking book on the transformative power of impact investments: Impact Investing Book

This is the first book to chart the catalytic path of Impact Investing, explaining how it is and can be a positive disruptive force. It shows how impact investments are a transformational vehicle for delivering "blended value" throughout the investment spectrum. Written by two leaders in the growing field of impact investing, the book defines the emerging Impact Investment industry for participants on all sides of the funding equation (investors, funders and social entrepreneurs).

What types of impact and social investments would you consider? What rate of return would you require?

Learn More about Impact Investing in Real Estate

featured img credit: SOCAP

Reuse and redevelopment of former bank branches

Put your thinking cap on.  How do we reuse and re-purpose all these old buildings? It seems to me the "greenest" building is an existing one.  Why build new when you can buy for 20% of replacement cost?

Specifically, this is a former Citibank branch in a decent location within a major western MSA. The building is about 10,000 sf total (half ground level and half basement). Branch is fully finished and built out as a bank with drive thru lanes, teller counters, office, conference rooms and all furniture. It is for sale or for lease and owner is open to redevelopment.

Let me know your ideas.....

Networking Opportunity for Reuse of Existing Buildings

Also, if you are interested in reuse and redevelopment of existing buildings please let me know. I will be forming a networking group of those interested. This would also go for properties that you own or have listed that are taking a long time to sell/lease, are functionally obsolete or are just plain "weird". I am thinking we can help each other out with some regular brainstorming sessions of how to redevelop and reuse odd buildings and make them easier to sell or lease.  If interested, email here or tweet me.