Mrej December 2014

VOLUME 30, NUMBER 12

Š2014 Law Bulletin Publishing Co.

December 2014

Minneapolis’ Doran Companies gets a boost: Will manage Robert Muir Company’s Twin Cities retail centers

By Dan Rafter, Editor

B

loomington, Minn.-based Doran Companies just boosted its property management portfolio by five regional shopping centers.

That's because officials with Robert Muir Company are closing the company's operations and management offices in Edina, Minn. In doing so, the company is turning over daily management and leasing operations of the five regional shopping centers to Doran Companies.

Four of the five shopping centers are in Woodbury, Minn.: Woodbury Village, Woodbury Village Green, Shoppes of Woodbury Village and Tamarack Village/Woodbury. The fifth, Rivertown Village, is located in St. Cloud, Minn.

In all, the five shopping centers total about 1.5 million square feet of space.

Kristin Muir is handling the transition of the centers for Robert Muir Company. It makes sense that the Muir family is turning over the centers to Doran Companies. Kelly Doran, owner of the company, served as president of Robert Muir Company from 1992 to 2005, before leaving to form development, construction and property management business Doran Companies.

"It gives us great comfort to once again be connected to someone who had such great success working with our father in the past," said Muir in her statement.

Doran Companies, with the addition of the Muir shopping centers, will now have more than 3 million square feet of combined Doran and Muir properties Doran to page 22

Apartment boom a resilient one in Twin Cities

By Dan Rafter, Editor

H

ow strong is the multi-family market in the Minneapolis/St. Paul area? Just look at the Southdale Center shopping center in Edina, Minn. Three multi-family projects planned for land surrounding the center will bring more than 700 units to the area.

That's just one small example. According to the latest research from Marcus & Millichap, the apartment market in the Twin Cities continues to boom.

And if housing experts are right, this boom could be a strong one. Millennials, these experts say, are drawn to renting in dense urban areas and are putting off buying homes in suburban communities. This could mean a long period of multi-family construction in Minneapolis and St. Paul.

According to Marcus & Millichap's fourth-quarter apartment research report, pent-up demand for apartments in the Twin Cities and its suburbs means that vacancy rates are falling in most Twin City submarkets while rents are rising. This is holding true even as developers keep adding new apartment units to the

mix.

The Twin Cities market isn't alone in this, of course.

The U.S. Census Bureau said that the homeownership rate for U.S. residents 35 and under fell to 36 percent in the third quarter of 2014. That figure is the thirdlowest this measure has been since the bureau began tracking homeownership rates by age group in 1982.

The evidence suggests that this could be a trend. The Census Bureau said that this figure fell to its all-time low of 35.9 percent in the second quarter of 2014.

Apartment to page 22

December 2014

Contents

Minnesota Real Estate Journal

DECEMBER 2014 • VOLUME 30, NUMBER 12

Page 3

Departments PEOPLE

4

NEWS

6

RESOURCE GUIDE

1

MINNEAPOLIS’ DORAN COMPANIES GETS A BOOST: WILL MANAGE ROBERT MUIR COMPANY’S TWIN CITIES RETAIL CENTERS APARTMENT BOOM A RESILIENT ONE IN TWIN CITIES

10

RE/MAX’S MARK HULSEY: DRONES JUST THE BEGINNING OF HIS HIGH-TECH MARKETING

12

NAIOP WORKING TO RE-INTRODUCE LOCAL BUDGET TRANSPARENCY LEGISLATION IN NEW SESSION

14

APARTMENT FINANCING - IT’S MORE THAN JUST ABOUT THE LOCATION

16

LOOKING AT THE BOX . . . FROM INSIDE AND OUT

18

VALUE PLACE HOTELS READY TO MAKE A SPLASH IN THE TWIN CITIES

22

The Minnesota Real Estate Journal (ISSN 08932255) is published monthly for $85 per year by Minnesota Real Estate Journal, 13400 15th Ave North STE C, Plymouth 55441. Phone: 952-885-0815. Periodicals postage paid at Minneapolis, MN. POSTMASTER: Send address changes to Law Bulletin Publishing Co, 415 State Street, Chicago IL 60654. Lanning Macfarland, Jr. chairman; Sandy Macfarland, CEO; and Brewster Macfarland, president. Back issues $10.00. Subscriptions are non-refundable.

For more information call 952-885-0815. ©2014 Law Bulletin Publishing Co. No part of this publication may be reproduced without the written permission of the publisher.

Page 4

Minnesota Real Estate Journal

December 2014

People a division of Law Bulletin Publishing Co.

13400 15th Ave North, Suite C Plymouth MN 55441 For information call 952-885-0815

Publisher | Managing Editor Jeff Johnson jjohnson@rejournals.com Associate Publisher Jay Kodytek jkodytek@rejournals.com Consulting Editor Dr. Tom Musil tamusil@stthomas.edu Conference Manager Alan Davis adavis@recg.com

EDITORIAL ADVISORY BOARD JOHN ALLEN Industrial Equities ROBERT ANGLESON Navigator Real Estate RICK COLLINS Ryan Cos. US Inc. JEFF EATON Cushman & Wakefield/NorthMarq MARK EVENSON ULG Equis PATRICIA GNETZ US Bank TOM GUMP TAG Consulting JON HEMPEL Hempel Properties DAVID JELLISON Liberty Property Trust CHAD JOHNSON Hellmuth & Johnson BILL WARDWELL Colliers International GEORGE KLUEMPKE Braun Intertec JEFFREY LAFAVRE CBC Griffin Companies WADE LAU Founders Properties MIKE LE JEUNE Fabcon JIM LOCKHART WIPFLI DUANE LUND Exchange Realty PATRICK MASCIA Duke Realty Corp.

CLINT MILLER Cushman & Wakefield/NorthMarq DR. THOMAS MUSIL University of St. Thomas WILLIAM M. OSTLUND CBC Griffin Companies WHITNEY PEYTON CB Richard Ellis MIKE SALMEN Transwestern STEWART STENDER Stewart Capital Partners

a division of Law Bulletin Publishing Co. 13400 15th Ave North Suite C Plymouth MN 55441 For information call 952-885-0815

Tad Jellison, John Lorence, John Nigon and John Hofmeister Join CBRE Minneapolis CBRE announces that Tad Jellison, John Lorence, John Nigon and John Hofmeister have joined CBRE Minneapolis Global Corporate Services team specializing in occupier advisory and transactional services. Mr. Jellison joins as Executive Vice President, Mr. Lorence as Senior Vice President, Mr. Nigon as First Vice President and Mr. Hofmeister as Sales Associate.

Ryan Companies US, Inc. Hires Carl Runck as Director of Development Ryan Companies US, Inc. announced Carl Runck has been hired as Director of Development in the North Region. In his new position, Carl will work closely with Tony Barranco in the development of urban mixed-use and corporate office projects where he will be responsible for all aspects of development, from site selection and land acquisition, constraint analysis and due diligence, financial feasibility, municipal approvals, design and construction coordination, and lease or sale negotiations.

“Carl has a strong and wide ranging background in both development and design and holds a unique ability to manage multiple complex projects,” said Collin Barr, President of Ryan’s North Region. “His skill set will be a real advantage to the Ryan team and we’re thrilled to have him on board.”

Prior to joining Ryan, Carl was a developer with Alatus LLC where he played a key leadership role in the redevelopment of the Block E project into Mayo Clinic Square in downtown Minneapolis, and in the new development Latitude 45, a luxury apartment tower on Washington Avenue, also downtown Minneapolis. He is known for his passion for transformative mixed-use development, as well as his complex problem solving skills and design insights. He is fiercely dedicated to his customers who greatly appreciate his loyalty and commitment; they always know that Carl is working hard on their behalf.

“I’m excited about being part of a Ryan team that includes many different disciplines working together on complex projects toward a common goal,”

said Runck. “I’m honored to join such a dynamic and talented group of people in a company with an outstanding heritage of excellence in the industry and business community.”

Carl received a Masters in Architecture from the University of Colorado at Denver and Bachelor of Science in Architecture with Business Management Minor from the University of Minnesota. He is the Co-Chair of two Minneapolis Downtown Council 2025 Plan Development Task Forces and recipient of the first 2025 Plan Leadership Award for Development for his work in launching a downtown job growth campaign.

He is also a Board Member of the Minneapolis Warehouse District Business Association, Minneapolis East Downtown Council, and former Commissioner of the City of Plymouth’s Housing & Redevelopment Authority. He will continue to be an active member of NAIOP, the Commercial Real Estate Development Association, and Urban Land Institute (ULI).

Cushman & Wakefield / NorthMarq Announces New Retail Capital Markets Team Cushman & Wakefield | NorthMarq (CWN) announced it has a new Retail Capital Markets Team which represents institutional and private capital clients in the acquisition, disposition, and strategic planning of retail investment real estate. The team’s emphasis on retail properties ranges from large, institutional-quality assets such as power centers and grocery-anchored centers, to neighborhood strip centers and singletenant assets.

This new retail capital markets team is the result of CWN combining its previous two capital markets retail groups.

This team includes Jim Rock, executive director; Skip Melin, senior director; and Leah Maurer, associate director.

Collectively, the three have sold over $2 billion in transaction volume. “We have created one solid investment team that specializes in retail, which is unique to the upper Midwest in capital markets,” said Mike Ohmes, executive vice president of Cushman & Wakefield | NorthMarq. “Jim, Skip and Leah are true specialists in the area of retail investment services and I believe these three will take our retail capital markets team to a new level.”

“Our team has handled transactions of all sizes and types in the Twin Cities and throughout Minnesota, from straightforward dispositions and acquisitions to joint ventures and more complicated arrangements,” said Rock. “This range of experience allows us to position our clients for success and sets us apart in the market.”

Recent transactions generated by this team include the sales of Brackenridge Skyway Plaza a 38,000-sq.-ft. center in Rochester, MN; Southview Shopping Center, a 55,428-sf.-ft. shopping center located in St. Paul; and Thomas Lake Center, a 42,000-sq.-ft. shopping center, located in Eagan.

Mid-America – Minnesota Hires Jeremy Edwards as Retail Leasing Specialist Minneapolis-based Mid-America Real Estate – Minnesota, LLC recently hired Jeremy Edwards to the Project Leasing team. Edwards will be working as Retail Leasing Specialist. In his new position, Edwards will be focusing on landlord representation in the Twin Cities, as well as Rochester, Minn.

Prior to joining Mid-America, Jeremy worked for the Triple Five Group of Companies, the owners of Mall of America, West Edmonton Mall, and American Dream in New Jersey. Jeremy began his career with Triple Five as an intern in the Office of Development at Mall of America. He was subsequently hired to join the project leasing team at American Dream in New Jersey. At American Dream, Jeremy was responsible for the majority of food and beverage leasing in all tenant categories including but not limited to specialty food, food court, fast casual, and full service restaurants.

“We are very excited to have Jeremy join our project leasing team,” said MidAmerica Managing Partner Doug Sailor.

“Jeremy comes with a unique set of skills and experience along with very high praise from his previous associates.

We consider ourselves lucky that he had such a high desire to move back home and join our team,” Sailor said.

Page 6

News MARCUS & MILLICHAP ARRANGES THE SALE OF A 16-UNIT APARTMENT BUILDING Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Hampshire Apartments, a 16-unit apartment property located in Saint Louis Park, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $1,420,000, or $88,750 per unit.

Josh Talberg, Mox Gunderson, Dan Linnell and Chris Collins, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, an individual/personal trust.

The buyer, a limited liability company, was secured and represented by Josh Talberg, Mox Gunderson and Dan Linnell.

Speaking with Mr. Talberg, “This

Minnesota Real Estate Journal

well-kept 16-unit apartment property is ideally located in a quiet residential neighborhood of Saint Louis Park near major transit and The Shops at West End. The property achieved multiple offers within a two-week marketing timeline; ultimately selling to a local investor at 98.6 percent of the original listed price. The investment offered a rare opportunity to acquire both a welllocated and well-kept apartment community in the heart of one of the strongest rental markets in the entire Twin Cities as well as an upside potential through strategic in-unit upgrades.”

Hampshire Apartments is located at 2407 Hampshire Avenue South in Saint Louis Park, Minnesota.

Schafer Richardson Announces Formation of Synergy Builders, LLC Sam Riesgraf, co-owner, to Serve as President of New Entity Two Twin Cities businesses have formed a new entity, Synergy Builders, LLC, which merges the two existing construction companies of Synergy

Builders, Inc. and SR Construction Services, Inc. - Schafer Richardson’s inhouse construction firm dedicated to servicing its portfolio of commercial property. The new entity will have shared ownership but will be under the direction of Sam Riesgraf, who will serve as president.

“We’ve had the opportunity to work alongside Synergy, so we have great appreciation for the expanded services it offers,” says Steve Norcutt, president, Schafer Richardson. “We knew Sam and his team would complement and enhance our construction services.”

Already, the companies have brought their teams together with the Historic Pillsbury A-Mill Machine Shop Building, at 300 2nd St SE in Minneapolis.

The new company will focus its efforts on increasing its volume of third party work, while enhancing the overall service and productivity in the tenant buildout arena. Synergy Builders will also look for opportunities to work on ground-up projects for both Schafer Richardson and other clients in the Twin Cities.

December 2014

Synergy’s Riesgraf is well-known for leading and delivering pre-construction and construction services for more than $150 million worth of successful projects in the Twin Cities market. Riesgraf obtained his construction management degree from Dunwoody College of Technology and is an active member of Minnesota’s chapter of Associated Builders and Contractors.

Dougherty Mortgage LLC Closes $5 Million Fannie Mae Loan for Village West Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, has arranged a $5 million Fannie Mae loan for the acquisition of Village West Apartments, a 288-unit multifamily affordable housing property located in Nashville, Tennessee. The 10-year term, 30-year amortization, 1-year interest only loan was arranged by Dougherty’s Brentwood, Tennessee office, for borrower OP Village West Property, LLC. The pet-friendly property offers individual entries, easy access to Inter-

Page 8

state 40, a convenience store on-site, as well as a playground, on-site laundry facility and picnic area with barbecue grills.

CBRE ANNOUNCES THE SALE OF 800 Oak Street in Frederick, Maryland CBRE announces the sale of 800 Oak Street totaling 209,184 square feet and located in Frederick, Maryland to Oak Corporate Center, LLC, for $27,000,000. The suburban office building is situated on 26 acres and is 100% leased to an investment grade tenant.

The seller, Inland American Real Estate Trust, Inc. was represented by the team of Steven Buss, Sterling Champ, Robert Brennan and Andrew Sandquist with CBRE Corporate Capital Markets, and locally by Jonathan Beard and Bo Cashman with CBRE Institutional Properties. Greg Greene with CBRE Debt & Structured Finance arranged the financing for the buyer. The Oak Brook, Illinois based Inland American real estate investment trust (REIT) was founded in 2004 and as of June 30, 2014 owned 268

Minnesota Real Estate Journal

properties, representing approximately 24 million square feet of retail, industrial and office properties.

The buyer, a subsidiary of a private real estate investment firm established in 1976, is an affiliate of Cronus, Inc., and was represented by its principal, Jorge Rodriguez. Affiliates of Cronus, which is based in Miami, Florida, own and manage properties net leased to investment grade tenants throughout the United States.

The Minneapolis based team of Steven Buss, Ryan Watts, Judd Welliver and Tom Holtz focuses on the disposition of single-tenant and multi-tenant industrial and office properties. The team also advises real estate operating companies on the sourcing and structuring of joint venture equity. Steven, Ryan and Tom are part of the 85-member CBRE Institutional Properties group. In 2013, the Capital Markets enterprise of CBRE including the Institutional Properties group completed over $87.2 billion in combined total U.S. capital activity.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 72-UNIT APARTMENT BUILDING Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of Whispering Oaks, a 72-unit apartment property located in Burnsville, Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $7,000,000.

Mox Gunderson and Dan Linnell, investment specialists in Marcus & Millichap’s Minneapolis office, had the exclusive listing to market the property on behalf of the seller, a private investor.

The buyer, a limited liability company, was secured and represented by Mox Gunderson, Dan Linnell and Josh Talberg, in Marcus & Millichap’s Minneapolis office.

Speaking with Mr. Gunderson he stated “this transaction really speaks to our marketing capabilities as we secured more than ten offers within a two and

December 2014

half week marketing campaign. We received offers from several different states. Through our platform we were able to achieve the highest price this asset could yield and surpassed our client’s goals.”

Whispering Oaks is located at 1600 West 143rd Street in Burnsville, Minnesota. The property was originally constructed as condominiums and is complete with fireplaces, in-unit washer and dryers, and multiple in-unit balconies.

The building itself is equipped with underground parking, a swimming pool, community rooms and an updated elevator.

NORTHMARQ CAPITAL ARRANGES $203.5 MILLION IN ACQUISITION FINANCING FOR NORMANDALE LAKE OFFICE PARK NorthMarq Capital’s Minneapolis office recently arranged a $203.5 million loan on behalf of an investment partnership between MetLife and AllNews to page 20

Page 10

Minnesota Real Estate Journal

December 2014

RE/MAX’s Mark Hulsey: Drones just the beginning of his high-tech marketing

By Dan Rafter, Editor

M

ark Hulsey, managing broker of RE/MAX Results Commercial in Saint Paul, Minn., has a simple philosophy about the importance of marketing: If you want to maximize the service that you provide to clients, you must maximize your marketing efforts, too.

And for Hulsey, that means relying on technology to market retail, office and industrial buildings, everything from Web sites dedicated to single properties to aerial photos taken by drones.

Those brokers who aren't tapping the latest technology to promote their listings? Hulsey says that they're not providing their clients with the best possible service.

"We take marketing very seriously," Hulsey said. "That old way of looking at marketing a property -- grab the listing, keep it close to the vest and promote it to a small circle of brokers and potential buyers and then take it to the wider market if that doesn't work -- is no longer the right approach. I came from a different theory: If you want to

maximize your value you have to maximize the way you market properties."

Hulsey points to a vineyard that he is selling. There are multiple elements to the property -- everything from the vineyard to several outbuildings.

Hulsey not only hired top photographers and videographers to snap photos of the outbuildings and take video of the property's landscape, he also used a drone to take aerial photography and videos of the entire property.

This allows Hulsey to showcase the property to potential buyers in California, Chicago or anywhere else on the globe. Hulsey just has to send these buyers a link to the video taken by the drone. Now potential buyers can evaluate whether the property makes sense for them before they take the long trip to the Twin Cities region.

"Now they can get a really good understanding of the scope of the property from above," Hulsey said. "They can get a more realstic portrayal when talking about an investment asset. They can see what surrounds that asset.

Rather than mapping out for them that there's a Home Depot or McDonald's nearby, you can show them these neighboring properties from a drone

point of view. It helps investors to get a better handle on that asset without even leaving their desks."

Drones certainly sound high-tech, and they are. But Hulsey says that this technology is now becoming almost commonplace among the most marketing savvy of commercial brokers. The next frontier? 3D virtual walkthroughs. Virtual tours of properties, of course, have been popular among real estate brokers for years. 3D tours, though, are even more realistic, creating the illusion that potential buyers are actually walking through a property.

Brokers can even create 3D tours for commercial properties that are not even built, relying on renderings to give potential buyers a sample of what they might want to purchase or invest in.

Hulsey said that he hasn't yet tapped into 3D walk-throughs. But he does plan on making this technology his next big marketing investment, he said.

"Commercial real estate has been viewed as more of a slow-adopting industry when it comes to technology," Hulsey said. "That is changing. All industries now have to adopt more quickly to new technology. Now more

of the players in the industry recognize that you don't have be bleeding edge, you just have to make sure that you are using the technology that is available to you. If you don't, then you don't have an edge. In our industry that is so competitive, using the latest technology to market your listings can become a real advantage."

Hulsey said that clients come to him because of his marketing skills. He's worked in marketing and communications for about 30 years, something that has helped as he's built his commercial real estate business.

"Clients today understand how important marketing is. They don't just want people who have a thorough understanding of valuation and due diligence. They also want marketing experts to showcase their properties in front of the largest number of potential buyers," Hulsey said. "It's a matter of saying that we need to get our listings out to the market in a big way, especially in the changing market we are now in after the Great Recession. The exceptional marketing skills are so important today."

Page 12

Minnesota Real Estate Journal

December 2014

NAIOP Working to Re-Introduce Local Budget Transparency Legislation in New Session dance has become widely acknowledged by both observers and participants in the process, among them Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence.

“What might be chalked up to taxpayer indifference or disengagement, he says, “is just as likely a sign of taxpayer resignation to a system that’s impossible to understand and a process in which it is difficult to feel comfortable and confident participating.”

By Brandon Champeau Vice President, United Properties Chair, Public Policy Committee NAIOP, Minnesota Chapter The Commercial Real Estate Development Association

T

he just-ended Truth in Taxation season, Minnesota’s annual mostly-ceremonial discussion of their 2015 budgets by local governments across the state-- have once again proved their lack of value to the average taxpayer, whether he or she attended their local city or county meeting or not. Coming well after local budgets have been discussed, planned and set in place by elected officials, the meetings offer little reason---or hope, for that matter--that taxpayers might actually be able to influence local budget decisions by offering their own insights and perspectives on spending trends and priorities.

Long characterized as being “too little and too late” in the budgeting

Brandon Champeau process, the truth in taxation hearings have acquired a reputation as being more cosmetic than anything else—legislatively mandated “shows” which draw steadily shrinking audiences. Over the years, the reason for their low atten-

Endlessly Complicated Reporting Frustrates Taxpayers Quite simply, local government finance, with the additional complications of Minnesota’s nearly inscrutable property tax system, has become so complex that it is well beyond the understanding of most of those who actually pay the bills---local property taxpayers.

Says Haveman, “State-imposed complexity is often matched by local budget reporting that is heavy on data

but short on generating understanding.” City and county officials will argue that “it is all there,” but the overwhelming detail of an indiscriminate “data dump” is actually counterproductive in terms of informing citizens.

NAIOP Minnesota first began working on a solution to the problem of putting understandable and actionable information in the hands of all shareholders in local government more than four years ago. The Nexus Task Force of the Public Policy Committee, headed by chapter member Paul Reinke, president of Silver Oak Development, was charged with finding a better way for its members and their thousands of business tenants--who together pay a substantial part of all local property taxes—to identify and understand the real drivers behind constantly rising taxes.

NAIOP’S Proposed Legislation Previously Won Bipartisan Support NAIOP Minnesota’s initiative, first NAIOP to next page

December 2014 NAIOP from previous page

introduced in the 2012 legislative session, called for greater, more understandable detail on local spending. To add clarity to local budgets, the NAIOP legislation called for cities and counties to report on their spending decisions in three ways: by categories, departments or function (as most already do) such as public works, parks, public safety or police; by expenditure type, further breaking down those categories by detailing such items as salaries and wages, retirement and health benefits, debt service, capital costs, and supplies, for example; and by year-over-year trends in spending in each of those line items.

Reinke, as both a developer of healthcare and medical office facilities and a member of the Oakdale city council, brings a unique perspective to the questions surrounding local budget transparency. Commenting in a recent St. Paul Pioneer Press editorial supporting NAIOP’s initiative, Reinke said that elected city officials like him, real estate developers and property owners all “struggle to explain increased charges to tenants as a result of tax increases…It’s awkward not to be able to explain ‘how that all comes

Minnesota Real Estate Journal

together’ and why a change a city makes is costing them more money.”

Although receiving bipartisan support and actually reaching the governor’s desk, the 2012 effort had the misfortune of being included in a larger omnibus tax bill that ended up being vetoed.

Reportig in Greater Detail Can be Done at Minimal Cost to Local Governments Since that time, NAIOP has been working hard to set the stage for reintroducing legislation in the 2015. In addition to our initiative being considered in the legislature as a stand-alone proposal, we also hope that the concept behind it might become a key factor in the larger, continuing discussion by a number of influential legislators regarding ways in which the “truth in taxation” process might be transitioned to a more useful process centered on “truth in budgeting”---providing information to the public early enough to be understood, analyzed and acted upon.

In response to concerns voiced in 2012 that reporting to the public in such a format would be costly and consume too much staff time, we have conducted a series of pilot demonstration projects in several Minnesota

cities and a sample county, with the assistance of local chambers of commerce and the cooperation of interested local officials. These tests, in Faribault, Hastings, Edina and Dakota County, proved the opposite was true: the staff time and cost involved were modest, and the results were uniformly praised by the city officials involved.

In fact, as a result of these demonstration projects, NAIOP’s initiative has developed the support of some of the same people who will be most affected by it, among them Edina’s City Manager, Scott Neal.

“The real value of the exercise for us is the new perspectives on city spending that people gain, and that we gain from fresh eyes,” he says. “It’s a more dynamic way of communicating about city spending, rather than the old static ‘we’re not hearing from anybody, so it must be OK’ approach. In fact, our staff sees great value in potential suggestions from our citizens.”

NAIOP Minnesota is also working to build a coalition of citizen groups to work with us on the issue. Starting next spring, we are planning with civic group partners to convene a broader and deeper discussion of the subject with all of those who have a stake in

Page 13

implementing greater transparency, including city and county elected officials, public employee unions, the media, and of course, commercial and residential property taxpayers.

As local property tax burdens continue to grow, the availability of hard, clear, understandable information on which to base both business and family decisions has never been more relevant or more valuable. The first step to achieving that is to acknowledge that the way in which local budgets and trends in spending have been routinely been reported in the past are no longer adequate for today’s better educated and highly involved taxpayers, and that a change to greater transparency is not only needed and fair, but inevitable.

Page 14

Minnesota Real Estate Journal

December 2014

Apartment Financing - It’s More Than Just About The Location

By Bryan Haines, BankFinancial

D

espite the cold weather gripping our region, the apartment market in the Twin Cities is hot. While you probably know that new properties located in the North Loop are fashionable right now, you might be surprised to know that existing buildings in established neighborhoods like Summit, Grand, Kenwood and Uptown are also extremely hot commodities. That’s because they offer more than meets the eye to apartment investors, including: • Desirability - Young adults right out of college are always looking for apartments to rent in these areas.

• Stability - These particular properties performed well during the downturn in the economy.

• Profitability - Owners of these properties withstood the bad times and now they’re enjoying the good times.

Now that you know where to look for your next investment it’s important, to understand what banks look at when deciding to lend money. Despite great

rates, banks aren’t giving away their money to just anybody looking to refinance or buy an apartment building. In addition to your personal financial picture, most banks will need to know that the property you are looking to purchase meets most, if not all, of the following criteria: 1. Maintenance - The property should be well maintained and well managed.

Make sure the big items such as the windows, roofs and mechanicals are in good condition.

2. Vacancy - The property should have a low vacancy rate. Tenant stability plays a role in the long-term performance of the property.

3. Equity - A bank will want to know that the property is not over leveraged.

In addition, there are a few other factors to consider when looking to invest in a property. Take a look at the property’s expenses including: taxes, insurance, utilities, repairs and maintenance, management fees and other related costs. It’s also important to take a look at operating statements with clear collections detail and rent rolls.

While reviewing the property’s

recent real estate taxes, including the taxes that are assessed based on the value of the building, make sure to see how they compare to what you’re negotiating to pay for the property.

Also take a look at the actual history of the property taxes and forecast what they will be five or ten years into the future. This will allow you to see what your return will be on the property for the long term.

When it comes to insurance, it’s important to know that some sellers may have their property insured as part of a blanket policy while others have their properties insured individually.

The costs between those two types of coverage can be dramatically different.

It’s important that you consult with an insurance professional to understand your costs.

Managing a property can be a costly undertaking and should be considered as part of the purchase. If you buy a smaller property with less than 20 units and plan to use a management company you should be prepared to pay higher fees. Larger properties tend to present a greater proposition for most management companies due to potential for higher fee income.

After you’re done shopping it’s important to find the best apartment building loan to meet your needs.

Below are the factors you should consider in selecting the right lender.

1. Property Type: Does the bank finance the property type you are looking to buy?

2. Loan Size: Is that loan size in the bank's sweet spot?

3. Interest Rate: What is the rate? How long is it fixed?

4. Term/Amortization: How long will the bank lock you into a rate?

5. Loan to Value: What is the max loan to value the bank will finance?

6. Special Features: Does the bank offer any special programs that fit your needs?

Bryan Haines can be reached at 612.219.9745 or bhaines@bankfinancial.com to learn more about BankFinancial’s Apartment Lending Program.

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Minnesota Real Estate Journal

December 2014

Looking at the Box . . . From Inside and Out

By Bill Morrissey, CEO, Morrissey Hospitality Companies, Inc.

I

’ve done a fair bit of traveling in 2014, including national industry trade shows, and it’s clear that while the hotel and restaurant industries seem to be, thankfully, in a better position than a few years ago, there’s still a huge level of uncertainty.

How strong will the recovery be and how long will it last? How will continuing uncertainties in economic and financial markets impact the bottom lines of hotel owners and operators in the short term and intermediate term?

Will we ever understand health care reform?

We cannot know the answers to these questions with any certainty. But what is clear is that everyone – owners, operators, suppliers and lenders – are looking for an edge that produces optimum profitability in each and every component of a business. That means looking at a hotel in new and different ways, maximizing revenue, resources and expenditures at every turn.

Doing so requires different perspec-

tives and sometimes looking at the box from angles you have never considered before. Here are a few examples to spur some thought.

Stepping Outside the Box It always amazed me that most hotel owners never consider the fact that at least half of the customers who enter an upscale or luxury hotel never sleep there. They probably never will.

Consider your daily foot traffic – meetings conducted over meals at your restaurants; business and leisure guests who get together to chat in the lobby or bar; local events that utilize your meeting space.

Few of these guests stay overnight, but it is clear that each one forms an opinion of your hotel – its physical features, staff and service. Those opinions build on themselves, become the prevailing marketplace opinion. Before you know it, they quickly become your reputation or your brand in the local marketplace.

It goes without saying that brand reputation has a huge impact on longterm revenues from overnight stays, meetings and events, etc. Here is a suggestion: Look at your hotel’s public

spaces as a retail operation. How do you like to be greeted when you walk into a high end department store or restaurant? Make sure your bellmen, front desk clerks and valets are trained to greet all guests, even those just passing though, in the same way.

What kinds of feelings or emotions induce you to frequent a retail establishment, make a purchase or become a fan of the retail brand? The design and décor in your lobby should aim for many of the same ends.

The location, style and positioning of your restaurant should be an inducement for guests to enter off the sidewalk and sample something special, something new and different – not a bland representation of what some in the industry woefully describe as a “three meal restaurant.” Could there be a less exciting or interesting way to describe a venue that is supposed to provide diners with memorable experiences?

The point is that to really interest guests in your brand and to provide them with an experience that makes them loyal, owners and operators need to look at the hotel through the consumer’s eyes. This means stepping out-

side one’s comfort zone – separating oneself from Hotel 101 and re-introducing yourself to the basics of consumer marketing.

Production Without Process On the restaurant side, I am often surprised at how little structured process guides the content, preparation, plating, delivery and clean up.

Can anything consistently be produced without specifications, linear process, quality control, planned cost of goods and labor factors? Why should there be any less detail to every aspect of preparing and serving a meal at a restaurant – which is an inherently more complex, interactive, variable and difficult process.

At MHC, we have a training manual that literally runs into the thousands of pages, presenting detailed processes for everything from steps involved in preparing and presenting silverware, to the proper grooming and requisite personal presentation of wait staff, to the location and positioning of food on the table itself. Since demand and consumption are spontaneous, the need for measurable process is even more critiHotels to page 22

Page 18

Minnesota Real Estate Journal

December 2014

Value Place hotels ready to make a splash in the Twin Cities

By Dan Rafter, Editor Wichita, Kan.-based extended-stay hotel brand Value Place is ready to make a big move into the Minneapolis/St. Paul market. The company, which specializes in economy longstay hotel properties, has reached an agreement with Minneapolis' United Development Solutions to develop three Value Place hotels in the Minneapolis market.

These three hotels will be developed in Fridley, Burnsville and Mendota Heights. And this might be only the beginning of Value Place's move into the Twin Cities. United Development Solutions and Value Place say that they might add six or seven additional Value Place-branded hotels in the next three years here.

Value Place has already made a mark across the country. The brand now operates nearly 200 hotels in 32 states.

Troy Hoekstra, partner at United Development Solutions, said that his company's partnership with Value Place makes sense, especially considering the strength of the Minneapolis/St. Paul commercial real estate market today.

"Adding an extended-stay lodging

concept to our portfolio was the perfect complement to our current assets," Hoekstra said. "Value Place has a proven track record of opening hotels."

A growing trend The Value Place concept has been a strong one. And there's no real surprise as to why this is: It's the economy.

Staying in a hotel for a week or longer can be costly for both business travelers and families. And economy hotels? Travelers are taking a risk; some of the properties in this lower-

cost segment haven't been updated in decades. And many are showing their age, with frayed carpeting, peeling wallpaper and chipped desktops.

This isn't good enough for many of today's travelers. Both leisure and business travelers are raising their expectations when it comes to hotels. Even those who don't want to spend a small fortune on hotel stays expect accommodations that are clean and modern.

And this is where the Midwest-based Value Place brand hopes to make its stand.

Value Place, which is headquartered in Wichita, hopes to provide business and leisure travelers another option in the economy segment. The company fills a void in the hospitality industry, said Kelly Poling, executive vice president and chief marketing officer of the chain, by providing inexpensive longterm stays in modern, freshly built properties.

"All of our hotels are new construction," Poling said. "That allows for a high degree of predictability. Guests know what they are going to get. It's a consistent experience."

This isn't always the case in the economy-hotel segment. As Poling says, many of today's economy hotels might have started their lives as a Holiday Inn. Then they might have converted to a Quality Inn and then a Days Inn. "A lot of these economy hotels might be nearing the end of their life spans," Poling said. "Many of the brands rely heavily on conversion properties.

Many have hotels than have been through more than one conversion."

Entrepreneur Jack DeBoer, unofficially known as the father of the extended-stay hotel industry after creValue Place to page 22

Page 20

News From page 8

state Insurance Company/Allstate Life Insurance Company for the acquisition of Normandale Lake Office Park.

Northwestern Mutual is the lender.

The complex consists of 1.7 million square feet of Class A office space in five towers, which are connected by enclosed skyways. Located in the Southwest suburb of Bloomington, Minnesota, Normandale is situated on 23 acres overlooking the 2,500-acre Normandale Lake Recreational Area.

The complex is larger in square feet than the tallest office in downtown Minneapolis, the 55-story IDS Center.

Amenities include a child care facility; two full-service restaurants, conference space and two fitness centers.

The park is 93% occupied, an increase of 10% in the last two years.

Many of the park’s largest tenants have been tenants for more than 20 years, with some of the largest tenants including Prime Therapeutics, Aon Benfield, Schwan's, Towers Watson, Tata Con-

Minnesota Real Estate Journal

sultancy Services, Emerson Corporation and Oracle Corporation. The sale was the second largest suburban office sale in the U.S. YTD 2014.

“We are proud to have been a part of the team that brokered and financed the largest deal in Minnesota in 2014,” said Patrick S. Minea, senior vice president/managing director of NorthMarq Capital’s Minneapolis office. The Minneapolis team also includes James Hoopes, senior vice president/senior director; Daniel Trebil, senior vice president/managing director; Michael Padilla, vice president; and Jon Miller, vice president.

MARCUS & MILLICHAP ARRANGES THE SALE OF A 5,600-SQUARE FOOT NETLEASED PROPERTY Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, today announced the sale of O'Reilly Auto Parts, a 5,600-square foot netleased property located in Rochester,

Minnesota, according to Craig Patterson, regional manager of the firm’s Minneapolis office. The asset sold for $795,000.

Adam "AJ" Prins, Matthew Hazelton and Mike Marzinske, investment specialists in Marcus & Millichap’s Minneapolis office had the exclusive listing to market the property on behalf of the seller, a limited liability company.

Speaking with Mr. Hazelton, “the property generated multiple offers and ultimately sold to an investor from California. This sale is a great example of the continued demand for properties occupied by credit tenants on longterm leases”. O'Reilly Auto Parts is located at 2610 Broadway Avenue North in Rochester, MN.

Dougherty Mortgage LLC Closes $2.3 Million Fannie Mae Loan for Darby Square Apartments Dougherty Mortgage LLC, a full service national mortgage banking firm, has arranged a $2.3 million Fan-

December 2014

nie Mae loan for the acquisition of the Darby Square Apartments, a 75-unit market rate multifamily housing property located in San Antonio, Texas.

The 10-year term, 30-year amortization loan was arranged by Dougherty’s Dallas, Texas office, for borrower 811 Darby LLC. Dougherty Mortgage LLC is a full service mortgage banking firm, an approved FHA MAP and LEAN lender, as well as a Fannie Mae Delegated Underwriting and Servicing (DUS®) lender, offering a variety of loan products for the acquisition, refinance, construction or rehabilitation of various property types. In addition, Dougherty Mortgage LLC provides loan servicing on their mortgages and is an approved Ginnie Mae seller/servicer, currently servicing in excess of $3 billion of loans. Based in Minneapolis, Dougherty Mortgage also has additional offices in California, Colorado, Tennessee, Texas and Virginia.

News to page 23

December 2014

Minnesota Real Estate Journal

Page 21

Oil and gas royalties can energize your 1031 exchange with zero drilling risk

By Parker Hallam, president of Crude Royalties

S

o often we come across folks who are unaware oil royalties or gas royalties qualify for like – kind exchanges. Indeed, they’ve been utilized for years, contributing to a welldiversified investment portfolio of stocks, bonds, cash and traditional real estate while also helping to defer taxes through a 1031 exchange.

Here are just a few examples of the guidance provided by the IRS for utilizing oil and gas minerals and royalties as replacement property: Private Letter Ruling 8135048 The exchange of overriding royalty interests for an apartment building, office building and 50 percent interest in a condominium is of like-kind.

Revenue Rule 55-526 IRS held that a royalty interest in oil and gas in place constitutes real property for federal income tax purposes.

Revenue Rule 73-248 IRS held that a royalty interest is an interest in real property for federal tax purposes.

We’re helping with a 1031 exchange right now for a gentleman who is in retirement and looking for both growth and income from his exchange dollars.

While he’s selling a mobile home park he’s able to exchange in to a couple of different properties including a multitenant property and oil and gas royalties.

Our client is interested in oil and gas royalties because of the diversification and potential for monthly income and growth. He’s also savvy enough to be interested in taking advantage of the rapidly developing shale oil and gas plays that are presenting so much opportunity today.

We’re helping him to identify opportunities in the Haynesville Shale area, located in North Western Louisiana where there have been over a million acres leased by the biggest and the best operators and there continues to be a tremendous amount of natural gas drilling.

Quietly, almost overnight, the United States has seen an oil and gas land grab unlike any in the history of domestic oil and gas production. During the last three years, billions of dollars have been invested in shale oil and gas leases by all of the major operators such as ExxonMobil ($40 billion acquisition of XTO), Shell and many others. Even China, Spain and many other foreign national companies have invested literally billions of dollars into our U.S. shale plays within the last 12 months.

What are known as “blanket” shale formations have for years been known to hold significant quantities of hydro-

carbons but production from these zones has been dormant due to the lack of ability to make them economically productive. This recent land grab, buying Hallam up or leasing the areas containing blanket shale, is being driven by advances in drilling technology known as hydraulic fracturing.

That, coupled with advanced horizontal drilling technologies, has made millions of acres of minerals, containing trillions of cubic feet of natural gas and millions of barrels of oil, economically attractive. If you follow the money trail, huge amounts of money are being invested by major oil and gas companies, which bodes well for the future of domestic energy production and the benefits of owning the minerals.

Our client also believes, as we do, that exposure to a hard asset, outside of his gold, can help him to protect his portfolio against inflation or dollar devaluation. And, unlike traditional

real estate, owning royalties provides passive income with little to no operational risk or additional capital expenditures.

Additionally, oil and gas royalties provide 1031 exchanges with a different kind of security blanket. Hard assets such as oil and gas minerals have a strong appeal to those who are experiencing anxiety about the devaluation of the dollar and hyper-inflation and want to diversify their 1031 exchange.

Blanket shales are tight geologic formations that literally blanket hundreds or thousands of contiguous acres and are known to contain potentially billions of barrels of oil and/or natural gas. Recent advances in horizontal drilling technology have created a new “oil boom” here in the United States.

During the last three years, while most of us have been trying to get through one of the toughest recessions in U.S. history, billions of dollars have been invested into our domestic onshore oil and gas shale plays by the biggest and best oil and gas companies in the world.

So, why does blanket shale present

for me a security blanket? Because I can diversify a 1031 exchange into mineral properties that contain these shale oil and gas assets with a great degree of certainty that I own a very popular commodity and am essentially partnering with the biggest oil and gas producers in the world by owning those assets that they are actively producing. In doing so, I benefit from owning the hard asset of oil and gas reserves in the ground and receive monthly royalty income as the oil company sells the oil or gas that is produced from the blanket shale that I own.

Do more with your exchange than just avoid the taxes. Benefit your portfolio by increasing its level of diversification and passively take advantage of the domestic oil & gas shale boom by owning the minerals.

Parker Hallam President Crude Royalties phallam@crude.com 214-716-2200

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Page 22

Doran From page 1

under its management.

Robert Muir Company employed 16 staffers in its Edina operations. Some of these staffers will be absorbed by the Doran Companies, though it is uncertain how many.

Robert Muir, chairman of Robert Muir Company, has retired. When he and Doran worked together, though, the Robert Muir Company developed mil-

Hotels from page 16

cal as there are few final checks before the customer begins rating their satisfaction. Details, discipline and measurement are absolute needs in highly variable processes. Failure rates are difficult to monitor after the guest leaves and begins your marketing opportunity or nightmare known as word of mouth. Your staff is your means of production and must be well maintained and monitored if you want your success rate in the 90% or better range. Would you visit a dentist who advertises or accepts that 80% of their treatments are accurate?

The logic is straightforward. Along with rooms and meeting space, a luxury hotel depends on its restaurant to deliver a superior guest experience and to drive revenue. Often, a lack of preparation and process, create a loss leader in what should be a hotel profit center.

Bringing “Outside the Box” Back to the Inside We often encourage our kids – as I’ve encouraged mine – to get a diversity of experiences in their younger years, studying different subjects in school, traveling to different places and generally widening their comfort zone.

One could make the same sort of recommendation to hotel owners and operators. For example, on the strength of our hotel and restaurant management experience in Minneapolis and Saint Paul, a few years ago we were approached to manage premium cater-

Minnesota Real Estate Journal

lions of square feet of shopping centers.

These developments included Oakdale Village in Blaine, Minn.; Rivertown Village in St. Cloud; Silver Lake Village in St. Anthony, Minn; Calhoun Commons in Minneapolis; and four shopping centers in Woodbury.

"I cherish the time I worked with Robert," Doran said in a written statement. "He was a great mentor during the years we worked together, and he remains a great friend."

ing operations for the new Xcel Energy Center, home of the NHL’s Minnesota Wild.

We jumped at the chance and quickly became the catering manager of the operation. More importantly, we developed skills sets and outside perspectives, which we have translated into the hotel and F&B contexts to our and the guest’s benefit. We learned our four walls are confining; grow your business outside them.

The same kinds of perspectives and skills can be developed in myriad ways; hotel operators, managers and personnel at all levels should be alert to every one of them, and ready to seize opportunities when and where they present themselves.

So go ahead, step outside the box.

You’ll find the atmosphere refreshing – and profitable.

Bill Morrissey is the CEO of Morrissey Hospitality Companies, Inc., based in Saint Paul, Minnesota. Among other ventures, MHC manages The Saint Paul Hotel, as well as a dozen restaurants in the Upper Midwest. MHC also manages the catering for some of the Midwest’s finest sports and entertainment venues, including the 250,000 square-foot Saint Paul RiverCentre, Bunker Hills Golf Club and Hillcrest Golf Club.

Apartment From page 1

Michelle McDonough Winters, senior visiting fellow for housing at the Urban Land Institute Terwilliger Center for Housing, said that Millennials are already having a significant impact on the housing market across the country.

Because Millennials are seeking urban living, planning officials in suburbs across the country might push for changes to their communities, McDonough Winters said. They might push for more urban amenities in their suburban communities. That could mean enhanced public transportation, more apartment communities and more shops, restaurants and entertainment venues to which younger residents can easily walk.

In other words, suburbs to compete with their urban cousins might have to become more walkable and pedestrian-friendly if they hope to attract Millennials who prefer an urban experience, McDonough Winters said.

"Suburbs can't become cities," McDonough Winters said. "But they might become more urban. They might offer their own pedestrian-friendly downtowns. They might need to add urban elements that appeal to today's Millennials."

There are suburbs that do this already. And this helps explain why apartment construction, according to Marcus & Millichap, is already on the

Value Place from page 18

ating the Residence Inn, Summerfield Suites and Candlewood Suites brands, launched the Value Place brand in 2003 with the first property in the chain, an extended-stay hotel located in Wichita.

The chain has steadily grown. And Poling says that several factors today make this a good time to be in the economy extended-stay market.

With the economy continuing its slow but steady improvement, consumers say that they are ready to travel more frequently. But because the country's Great Recession lasted so long and was so painful, these consumers want to travel in a more frugal way. They are looking for deals as they hit the road.

This means that economy hotels, and those offering extended stays, will play a more important role in the hotel industry, Poling say.

For instance, travelers to Value Place can cook at least some of their meals in their suites. They can also do their own laundry on the property. This can cut costs during a long vacation or business trip.

"To a much, much lesser degree, we are experiencing the same kind of

December 2014

rise in the suburbs surrounding Minneapolis/St. Paul.

Marcus & Millichap reported that in 2014 developers will have added 6,600 apartment units to the Twin Cities market. About 77 percent of these apartments will be priced at market rates. In 2013, developers added 4,000 rental units to this market.

The new units, though, won't cause vacancies to rise. Marcus & Millichap says that by the end of 2014, the multifamily vacancy rate in the Twin Cities should fall to 2.7 percent, down 50 basis points from the end of 2013.

Rents, too, will continue to rise.

Marcus & Millichap said that effective rents in 2014 will rise 2.1 percent to an average of $1,039 a month. In 2013, effective rents in the Twin Cities market rose 3.8 percent.

Don Lawby, a multi-family expert with Real Property Management, said that Millennials' impact on the housing market can already be seen. Without the rising demand from young renters, markets such as Minneapolis/St. Paul wouldn't be seeing quite as many new rental units each year, he said.

"Just look at the new apartment construction across the country," Lawby said. "You are seeing major apartment booms in so many markets. The rate at which developers are adding apartment units across the country is amazing. I don't know if we've ever seen an apartment boom like this one."

mind-shift that happened to people who made it through the Great Depression," Poling said. "If you know people who lived through that, the Great Depression impacted their spending behavior for the entirety of their lives.

That generation of people is just more frugal. To a much, much lesser degree, the Great Recession is having a similar impact. That was a challenging time, and it has changed the thought processes of consumers. They are placing a higher value on every dollar that they are spending."

Value Place officials expect the brand to flourish in the Twin Cities area, too.

"United Development Solutions is a great franchise partner for Value Place as we continue to expand our national footprint in the North Central region of the United States," said Ron Burgett, executive vice president of development at Value Place. "Working with developers who understand the return on investment potential of our simplified operations model is vital to our mutual success. We could not be more thrilled to have United Development Solutions join our franchisee family."

December 2014 News from page 20

CBRE ANNOUNCES THE SALE OF THE WINNETKA DISTRIBUTION CENTER CBRE announces the sale of Winnetka Distribution Center located in New Hope, Minnesota, to One Liberty Properties, Inc. for $7,200,000. The seller was Exchange Realty, Inc., a Minneapolis based private equity firm was represented by the CBRE Institutional Properties group in Minneapolis led by Steven Buss and Judd Welliver.

Winnetka Distribution Center is a 121,225-square-feet office/warehouse built in 1966. The property has 28’ clear height and underwent a complete interior and exterior renovation. At the time of sale, the building was 100% occupied by one tenant.

The Minneapolis based team of Steven Buss, Tom Holtz, Ryan Watts and Judd Welliver focuses on the disposition of single-tenant and multi-tenant industrial and office properties. The team also advises real estate operating companies on the sourcing and structuring of joint venture equity. Steven, Tom and Ryan are part of the 85-member CBRE Institutional Properties group. In 2013, the Capital Markets enterprise of CBRE including the Institutional Properties group completed over $87.2 billion in combined total U.S. capital activity.

Minnesota Real Estate Journal

Minnesota Real Estate Exchangors Announce its 2015 Officers Established commercial real estate marketing group takes innovated approach to making industry connections Minnesota Real Estate Exchangors (MREE), one of Minnesota’s oldest and most established commercial real estate exchange groups, announces its 2015 officers.

President Neil L. Friedman: Jordan Realty Inc. Immediate Past President Michael Berglund: Kontor Realty Board Members: Gary Orcutt: First Western Bank & Trust Cindy Nosan: Guaranty Commercial Title Inc. Eli Rupnow: Twin Cities Real Estate Since 1962, members of this professional networking and commercial real estate exchange organization have met twice monthly to share ideas, hear from relevant industry experts and most importantly to promote, in person, their commercial real estate investment properties.

“In today’s market Commercial Real Estate Agents need to be more creative about how they market their investment properties,” said Neil Friedman, 2015 MREE president. “MREE offers a place for Real Estate Investors, Commercial Realtors®, Trusted Advisors plus Allied Professionals to connect, to

problem solve, and to learn the benefits of IRC Section 1031.”

One innovative method MREE offers its members is the ability to showcase their investment offerings through the “Have/Want Session”. The Have/Want Session is a large part of each meeting. During Have/Wants, members can either present their listings to the group or express a client’s or their own want. The goal is to connect members that may know of someone that might be interested in creating a transaction.

“The Have/Want portion of our meeting is always pretty lively,” said Lance Johnson a long time member.

“Members have the opportunity to stand in front of the group and describe, in great detail, the attributes and benefits of their subject property.

The moderator can then take follow up questions from interested attendees.

People can get really passionate about trying to structure a deal.”

Members also benefit from the networking aspect of the meetings during the Speed Dealing sessions. “Sitting across from another member for a five

Page 23

minute one on one discussion not only promotes a more personal relationship but also helps make connections that otherwise might not happen,” said Mike Berglund the group’s immediate Past President. “It is not uncommon for someone to describe an opportunity or a challenge and through the Speed Dealing process find another member with a similar need or whose experience can offer alternative solutions. It’s refreshing.”

The Minnesota Real Estate Exchangors group is open to anyone interested in buying, selling or exchanging investment real estate, capital equipment, or business opportunities. The group meets on the first and third Wednesdays of each month at the law offices of Hellmuth & Johnson PLLC in Edina, MN.