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Posted by: In: Newsletter 13 Jul 2013 0 comments

By Jim McAlister IV

President & Chief Executive Officer

Seeking higher yields and more stability, major international real estate investors continue to broaden their geographic scope, turning their attention to more than just the traditional U.S. gateway cities. Texas’ major markets have been garnering much of this attention, particularly Houston, the “Energy Capital of the World.”

Although Houston has been attracting international capital for some time now, in 2012, foreign investors contributed an unprecedented $1.4 billion to the city. This is evidence that the U.S. major cities are not the only markets attracting significant international capital. The cities of the “Texas Triangle,” especially Houston, have been providing higher returns as investors have bid returns down to record levels in the other large U.S. cities. The improving U.S. economy and global economics will boost the amount of deals done cross-border as investors are becoming more confident in the economic outlook and target investments outside their home market.

We have benefited directly from this increased foreign capital flowing into Houston as our company recently launched its first fund available to investors outside the country. Rockspring Capital Texas Real Estate Trust will invest in strategic and undervalued land sites in Texas alongside our U.S. investors. We welcome our new international partners and look forward to providing them the same reward potential and investor relations that have been provided to all our investors for more than 40 years.

Posted by: In: Newsletter 10 Jul 2013 0 comments

By Beau Ryan

Senior Vice President & Chief Operating Officer

Sierra Mansukhani

We are excited to announce that Sierra Mansukhani has joined our team as vice president of investor relations. Working out of our Houston office, Sierra will be responsible for investor relations activities, growing the company’s investor base and marketing future opportunities.

Sierra brings a diverse skill set and years of marketing and sales experience to our firm.  She has been an impactful leader throughout her career, as evidenced by winning consultant of the year from 2010 – 2011 in her prior capacity.

Prior to joining Rockspring, Sierra was a consultant and general sales manager for My Fit Foods in Houston where she led a team of nine to 12 employees at any given time. She was responsible for the store’s financial success, oversaw marketing efforts for the region, consulted, retained hundreds of clients and developed ideas to boost sales.

Sierra’s ability to understand client needs and provide them with the best products and services will be of great value to the team as we continue to grow our business and investor partnerships. We look forward to her playing a significant role in the success of our firm.

George Herrera

We’re also excited about the addition of George Herrera to our brokerage team – McAlister Real Estate. He will be working exclusively in the San Antonio market.  In addition to growing the office, George is responsible for the acquisition and sale of commercial tracts to developers, investors and end users.

Prior to joining McAlister Real Estate, George progressed in entrepreneurial ventures in finance, real estate and service industries. A San Antonio native, George received his bachelor of business administration in marketing from Texas State University, in San Marcos, Texas.

Summer Internship Program

Our summer internship program is off to a great start this year. Brock Hudson, a senior at the University of Alabama, and Stefan Stankovic, a senior at the University of Texas at Austin, will assist with and be exposed to all parts of our business this summer, from brokerage to investor relations to investments, and more.

Posted by: In: Rockspring News 05 Jun 2013 0 comments

Rockspring Capital, a privately-owned real estate investment firm based in Houston, today announced the sale of the remaining residential lots of the Whitewing property in New Braunfels, Texas. The sale was made by a wholly owned subsidiary of Rockspring Capital’s Opportunity Land Fund No. 7, L.P., and this sale, along with the previous sale of the lots in such property, will generate more than a 50 percent internal rate of return to the Fund on this investment.

The lots, located near the intersection of Seguin Avenue and Klein Road, were first purchased in January 2012. Four months later, the firm sold about half the lots to a national homebuilder and just recently closed on the remaining lots to the same buyer.

“The booming Texas economy and population growth is driving the demand for residential lots to its highest level in years,” said Jim McAlister IV, President and CEO of Rockspring Capital. “Our local market expertise and all-cash strategy allowed us to quickly purchase the property and then turn right around and patiently sell to the right end user buyer for substantial returns to our partners.”

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About Rockspring Capital

Rockspring Capital is a Houston-based real estate investment firm with a history of investing since 1973, whose strategy is to acquire opportunistic land parcels and residential lots in high growth areas. It also makes special situation bridge loan and note purchases on land-related assets. Rockspring Capital acquires with all cash in markets within the “Texas Triangle” – Houston, Austin, San Antonio and Dallas/Ft. Worth. For more information about Rockspring Capital, visit www.rockspring.com.

Posted by: In: Industry Insights 05 Jun 2013 0 comments

How hot is the land market in the I-35 Corridor? Meritage Homes just purchased 40 acres in New Braunfels from Rockspring Capital, giving seller Rockspring a killer 50% rate of return. Only Novak Djokovic has a higher return rate.

Rockspring CEO Jim McAlister tells us his firm bought the Whitewing site, which includes 117 home lots, a year ago. The deal had a short fuse and only worked because Rockspring had money in hand to close. Within weeks, Meritage came forward to buy half the property—46 developed lots—and that sale closed in mere months. Now Meritage snagged the undeveloped remainder of the site, and Rockspring’s investors are up 50%. Jim says the speed and pricing of this deal is indicative of a trend: New Braunfels is changing from a quirky little town to a high-growth area.

In fact, Jim says the entire I-35 Corridor is seeing incredibly strong land demand and pricing, and he expects very serious upward movement in land prices over the next year or two. Look for land to sell much more quickly than you’re used to. And unusually, both the purchase and sale sides of the market are doing well at the same time. Jim tells us Rockspring put $60M into the title company in the last two or three months. Most are sites the firm has owned for years, and pricing was much higher than he expected on those deals.

To view the Real Estate Bisnow story, click here.

Posted by: In: Rockspring News 29 May 2013 0 comments

Rockspring Capital, a privately-owned real estate investment firm, today announced the addition of Sierra Mansukhani as Vice President of Investor Relations. In her new role, Sierra will be responsible for investor relations activities, growing the company’s investor base and marketing future opportunities.

“Sierra brings a diverse skill set and years of marketing and sales experience to our firm,” said Jim McAlister IV, President and CEO of Rockspring Capital. “She has been an impactful leader throughout her career, as is evidenced by winning consultant of the year for 2010-2011 at her previous company. Her ability to understand client needs and provide them with the best products and services will be of great value to our team as we continue to grow business and investor partnerships.”

Prior to joining Rockspring, Sierra was a consultant and general sales manager for My Fit Foods in Houston where she led a team of 9-12 employees at any given time. She was responsible for the store’s financial success, oversaw marketing efforts for the region, consulted, retained hundreds of clients and developed ideas to boost sales.

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About Rockspring Capital

Rockspring Capital is a Houston-based land investment company founded in 1973 whose strategy is to acquire opportunistic land parcels and residential lots in high growth areas. It also makes special situation bridge loan and note purchases on land related assets. Rockspring Capital acquires with all cash in markets within the “Texas Triangle” – Houston, Austin, San Antonio and Dallas/Ft. Worth.

Posted by: In: Industry Insights 23 May 2013 0 comments

(United States Census Bureau)  Eight of the 15 fastest-growing large U.S. cities and towns for the year ending July 1, 2012 were in Texas, according to population estimates released today by the U.S. Census Bureau. The Lone Star State also stood out in terms of the size of population growth, with five of the 10 cities and towns that added the most people over the year.

The fastest-growing municipalities are spread across Texas, from the High Plains of West Texas to the Houston suburbs. San Marcos, along the Interstate 35 corridor between Austin and San Antonio, had the highest rate of growth among all U.S. cities and towns with at least 50,000 people. Its population rose 4.9 percent between 2011 and 2012. Completing the top five nationwide were Midland and Cedar Park, both in Texas; South Jordan, Utah; and Clarksville, Tenn. No state other than Texas had more than one city on the list of the 15 fastest-growing large cities and towns. However, all but one were in the South or West. (See Table 1 for complete list.)

The Texas cities that added the most people included Houston, San Antonio, Austin, Dallas and Fort Worth. New York, the nation’s largest city, topped the list and was the only city among the top 15 outside the South or West. It added 67,058 people over the year. Three cities were in California: Los Angeles, San Diego and San Jose. (SeeTable 2 for complete list.)

New York continued to be the nation’s most populous city by a wide margin, with 8.3 million residents in 2012, followed by Los Angeles and Chicago. The composition of the list of the 15 most populous cities has remained unchanged since last year; however, the list’s order has changed slightly. Between 2011 and 2012, Austin moved up from 13th to 11th in total population, supplanting Jacksonville, Fla., while Indianapolis moved down from 12th to 13th. Texas and California each had four cities on the list in both years. (See Table 3 for complete list.)

The estimates released today cover all local governmental units, including incorporated places (like cities and towns), minor civil divisions (such as townships) and consolidated cities (government units for which the functions of an incorporated place and its parent county have merged).

Other highlights:

– Of the 19,516 incorporated places in the United States, only 3.7 percent (726) had populations of 50,000 or more in 2012.

– Nine areas surpassed the 50,000-population mark between 2011 and 2012, including four in the West, four in the South, and one in the Northeast. The Western areas were Lehi, Utah (51,173); Kirkland, Wash. (50,697); Gilroy, Calif. (50,660); and Palm Desert, Calif. (50,013). Those in the South included Harrisonburg, Va. (50,981); Bradenton, Fla. (50,672); Southaven, Miss. (50,374); and San Marcos, Texas (50,001). Plainfield, N.J. (50,244) in the Northeast also crossed the mark.

– Two local governmental units dropped below the 50,000 threshold between 2011 and 2012. Troy, N.Y., declined from 50,072 in 2011 to 49,946 in 2012, with Joplin, Mo. falling from 50,475 to 49,526. Joplin was struck by a devastating tornado in May 2011.

For more information about the geographic areas for which the Census Bureau produces population estimates, see <http://www.census.gov/popest/about/geo-topics.html>.

The population clock, one of the most widely visited features of the website, displays continuously updated projections of the total U.S. population, including the rate of births, deaths and net migration for the United States. The projections are based on a monthly time series of population estimates starting with the April 1, 2010, resident population count derived from the 2010 Census. Additionally, users can access tables displaying the most populous states, cities and counties in the United States.

To view the United States Census Bureau news release, click here.

Posted by: In: Industry Insights 21 May 2013 0 comments

(Houston Chronicle) The dwindling supply of homes on the market and a surge in million-dollar housing activity sent the Houston-area median home price into record high territory in April, a new report shows.

The median — the figure at which half the homes sold for more and half for less — jumped 14.5 percent to $184,900, according to the Houston Association of Realtors, which tracks properties sold through the Multiple Listing Service. April marked the second  month in a row the median hit a record high.

“The Houston housing market shows absolutely no sign of letting up,” the association’s chairman, Danny Frank, said in a statement. He said more listings and additional home building are needed to meet the growing demand fueled by the healthy job market.

Single-family home sales last month spiked 27.2 percent over April 2012, marking the 23rd straight month of positive year-over-year sales. Townhomes and condominium sales shot up 31 percent.

As the demand continued, so did the constrained inventory, which dwindled to 3.4 months. That was the lowest level since 1999 and far below the six months experts consider a balanced market. Active listings, or the number of available properties, at the end of April declined 23.6 percent from April 2012 to 32,498.

Buyers closed on 6,482 single-family homes, representing the largest one-month sales volume recorded since August 2007, right before the recession took hold. All housing segments experienced gains except for the low end. Here’s the breakdown:

  • Up to $79,999: decreased 16.5 percent
  • $80,000 – $149,999: increased 14.1 percent
  • $150,000 – $249,999: increased 36.0 percent
  • $250,000 – $499,999: increased 49.5 percent
  • $500,000 – $1 million and above: increased 68.3 percent

To view the Houston Chronicle article, click here.

Posted by: In: Rockspring News 20 May 2013 0 comments

In the first of a two-article series, Rockspring Capital CEO Jim McAlister IV shared his views about land prices and their impact on development. In this installment, McAlister discusses land buying strategies, lender trends and hot spots with GlobeSt.com’s Amy Wolff Sorter.

GlobeSt.com: What types of land plays are we seeing these days?

Jim McAlister: The days in which investors were buying land to hold are ending. What was going on prior to the financial downturn is that developers would say “I’ll take that 500-acre piece; I only need 100 acres of it now, and develop the remainder over the next 15 years. The bank’ll give me the whole thing.” Now banks are saying no way on that – they’re only issuing loans for bite-sized pieces.

That’s good news for our company, because those guys are going back to being developers rather than land owners like us. They were competing directly against us before the downturn. What we do is buy that large piece at a discount, sell it in phases, then get out relatively quickly. It reduces the developer’s risk and makes it easier for them, and it give us a built-in exit strategy.

GS: Speaking of lenders, what are they requiring for land buys these days?

McAlister: They’re requiring more equity than they did before. Many times, for a new project to get the green light, a developer will need to come in with a whole lot of equity. That means getting a mezzanine lender involved. A lot of non-traditional lenders are stepping in and either doing the whole deal with the developer or working with the banks.

Lenders are also being thorough. For example, it’s hard to get a loan to build a class B apartment because the demand is for class A apartments. But one thing to keep in mind is that anything dealing with real estate of any kind is very geographically oriented. What could be true in one submarket might be different in another.

GS: Where are the hot spots in Texas; the places were there is more land demand?

McAlister: I’d rank it in this order; the Houston area is number one. Even though the Eagle Ford shale play is south of San Antonio, most of the companies doing the operations are Houston companies. Houston is in the process of morphing into the next global city. So much synergy here and growth, and for next 10 years it will be spectactular.

I’d rank Austin number two. The drive there is from California; people from there realize they can run a business in Texas with half the overhead, fewer regulations and taxes, and they can live here for half the price they can out there. The most desirable city, as far as aesthetics, for a lot of people is Austin. Austin has its challenges, though – traffic problems and lack of infrastructure. That’s what’s holding it back from more growth, and is causing the growth of satellite cities there.

San Antonio is third; the dynamics there are strong, people love the Hill Country type of living and the Eagle Ford shale is important there as well as in Houston.

GS: So the Dallas-Fort Worth area comes in fourth.

McAlister: Well, the region is still a tremendous growth region, among the top in the nation. But I give it a lower ranking because it got more overbuilt than the rest of Texas. There’s some excess inventory to burn through, though they’re working on that. Still, all four metropolitan areas are doing incredibly well.

GS: What’s your prediction for the coming months and years?

McAlister: I’m seeing a massive land play; a rush to buy and develop on land. Over next three years, the cities will look radically different from where they are now. We’ll also see a continuation of first-class, infill urban developments – and in many cases, redevelopments.  The trend of class A urbanization will continue. We’re seeing that in Houston – for example, industrial product inside the (Interstate) 610 loop is being bought up by investors, who are tearing it down and putting up class A developments. As far as the pathway of growth, urbanization of farm land will also continue. We’re basically playing catch-up for five years of stagnation.

To view the GlobeSt.com story, click here.

Posted by: In: Rockspring News 16 May 2013 0 comments

Though much has been written about commercial real estate development in Texas, not much has been said about the land supporting this development. In this first of two articles, Rockspring Capital’s Jim McAlister IV talks to GlobeSt.com editor Amy Wolff Sorter about land prices, what’s hot when it comes to land, lenders’ views and more.

GlobeSt.com:  I keep hearing that land prices are on the rise, especially in so-called “hot” markets. Are we seeing this in Texas?

Jim McAlister: We’re seeing a significant rise in land pricing. But it’s been an unusual market for a number of years. When Texas went into the downturn at beginning of 2008, single-family residential developers were so clobbered in other parts of country, they were in poor financial shape; they wouldn’t consider doing developments in Texas or anywhere else. As developers improved their positions during the following two or three years, land still wasn’t moving in Texas; lenders weren’t lending and developers can’t operate on an all-cash position.

Well, about 1.5 years ago, lenders starting lending to developers building class A, multifamily infill in super urban areas; then we started to see some class A retail going up in highly urban areas. Because of that, it’s only been very recent that we’ve seen pathway of growth land sites move.

Now, when I say land prices have gone up significantly, this is based on almost no sales happening during the downturn, other than some distressed seller selling to an investor at $.25 or $.50 on the dollar.

GS: Are prices going too far, then?

McAlister: Well, unlike the rest of the country, Texas land prices never really got overheated before the downturn. We didn’t have the run-up in pricing like we saw in area like California, Nevada or Florida. In those locations, land traded at price points that didn’t make sense. But in Texas, nothing was priced above reasonable. Then things went down for five years, and the only people buying land were investors. Now land is trading at prices that are at around 20% higher than before the downturn, but at realistic numbers that make sense.

GS: Then it’s safe to say that increasing land prices in Texas won’t slow down development.

McAlister: Not at all. What’s happening with development is similar to what happens when you throw a rock in a pond – you get the ripple effect. The land sales and development started in the inner cities of Texas and now it’s rippling to the suburbs. Pathway of growth land, generally speaking, sees more of a movement in single family residential first, then retail. What we’re seeing now is that mass movement toward single family residential.

GS: What do you mean by “pathway of growth?”

McAlister: Well, if we look like a city of Houston, under normal circumstances, that will urbanize at least 10,000 acres a year; this is land that goes from farmland to finished, developed communities. The land mass of all the cities in the Texas triangle continue expanding and, unlike other areas of the country, Texas has lower density. So as we grow, we expand on the land.

GS: Is there enough land to satisfy that demand?

McAlister: That’s one of the beauties of Texas – plenty of land and water. What allows the Texas cities to keep growing is that they’re forming a bunch of large submarkets. Getting back to Houston, that might as well be about 10 different cities. People who live in various quadrants stay there. Those who live in The Woodlands won’t come to downtown Houston to do anything. That’s the way Texas continues to grow; edge cities growing and little shortage of land and water.

To view the GlobeSt.com story, click here.

Posted by: In: Newsletter 23 Apr 2013 0 comments

By Michael Ross

Senior Vice President, Asset Management & Entitlements

There are a number of ways to make money in real estate. Some strategies include: buying properties “off market” that have not been widely seen by buyers; purchasing in a temporary “illiquid” market and waiting to sell when the market is moving more efficiently; managing intensely-maximizing revenues and minimizing expenses; adding value with capital improvement dollars or with proven asset management processes; or acquiring in a rebounding market and then riding the wave to higher values. These strategies can quickly produce profits, especially when you have them all working at the same time.

Although the strategies mentioned above have their advantages, my personal favorite is making money on the buy. The key to this strategy is proper due diligence. Whether we found the opportunity scouring through hundreds of sites or meeting with a trusted land owner, all of the deals that enter our pipeline go through a rigorous examination of the properties physical, zoning and environmental characteristics.

To help us continue initiating comprehensive examinations as Rockspring’s transaction activity continues to increase, we are pleased to announce the addition of Will De Young to our due diligence team. De Young will be a critical player for the company in the years ahead.

A great due diligence team is the key to making money on the buy, and having De Young as a part of the team will further help us with this process.