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Posted by: In: Rockspring News 26 Sep 2012 0 comments

Rockspring Capital, a privately-owned real estate investment firm based in Houston, announced today the purchase of the Notting Hill subdivision in San Antonio, Texas by one of its affiliates.

The investment was made on behalf of Rockspring Capital’s eighth fund, Growth and Income Fund No, L.P. The 108-acre land parcel is located in northeastern San Antonio, just north of Interstate 10 at the intersection of FM 1516 and Weichold Road.  The company plans to invest several million more dollars in order to complete the residential development and make the subdivision’s 515 entitled residential lots ready for homebuilders.

“Well located property like this is in high demand because of the shrinking inventory of residential lots in areas like San Antonio. A number of excellent homebuilders have already approached us to start building on the land, as adjoining subdivisions are almost sold out.” said Jim McAlister IV, President and CEO of Rockspring Capital. “We expect this investment will allow our investors to quickly realize an attractive cash flow return, as we plan to sell off the finished lots to homebuilders soon.”

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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. For more information about Rockspring Capital, visit www.rockspring.com.

Posted by: In: Newsletter 25 Sep 2012 0 comments

By Michael Ross

Senior Vice President, Asset Management & Entitlements

Rockspring Capital continues to find opportunities. Our seventh fund recently closed with the purchase of a 10-acre commercial corner in the bustling Brazos Town Center project in Rosenberg, Texas. Rosenberg is a rapidly growing bedroom community south of Houston.  Its growth is expected to continue as the massive bridge expansion over the Brazos River has shortened the commute time to Houston area business centers dramatically. The property is strategically located at the intersection of Brazos Town Center Blvd. and FM 2218, both of which bring the important going home traffic by this future strip retail/office warehouse property. Rockspring’s strategy of patient aggression was rewarded when the owner of the property decided to liquidate after turning down much higher offers during the mid 2000s before the recession eroded consumer confidence.

Rockspring also recently acquired a 108-acre residential development tract on the North East side of San Antonio. With an ever tightening supply of developed lots, builders are becoming more aggressive with their acquisitions. Rockspring’s team, leveraging its real estate expertise and contacts built over the years, was able to find the partially developed property and analyze its market potential quickly and quietly. Before others could act, Rockspring was able to finish the feasibility analysis and close with cash on this property, which was about to go bankrupt. The seller had several other properties and Rockspring cherry picked the cream of the crop allowing the seller to hold off the banks on his other holdings.  Rockspring has started to develop the first phases of the 515 lot project. The initial construction plans are with the city of San Antonio waiting for final approval and these highly desired lots should be on the ground in the third quarter of 2013.

Rockspring is very excited about these two projects and looks forward to them rewarding our investors.

Posted by: In: Newsletter 20 Sep 2012 0 comments

By Jim Hynes

Managing Director

There have been a number of local and national articles published lately covering the popularity of alternative investments.  Alternatives are commonly defined as assets in private equity, real estate, hedge funds, commodities and infrastructure.  Globally, alternative assets under management more than doubled between year-end 2005 and year-end 2011, to $6.5 trillion, according to a recent report from McKinsey & Company.  This pace represents a compounded annual growth rate of 14 percent over that period, far outpacing the 1.9 percent growth for traditional asset classes.

Low rates and market volatility in traditional stock/bond portfolios are the main drivers for investors seeking alternatives.  Another significant factor is to generate increased alpha.  The result is institutional and retail investors increasing their allocations to alternative investments.  U.S. institutional investors are expected to have 28 percent of their portfolios allocated to alternatives by the end of 2013.

Rockspring Capital has benefited greatly from this trend.  The main reasons investors go with us are:

1)      The attractive opportunity of a Texas real estate investment;

2)      Our use of no debt; and

3)      Our track record of delivering double digit returns.

Rockspring Capital looks forward to providing our investors returns with this alternative investment strategy for many years to come.

Posted by: In: Newsletter 20 Sep 2012 0 comments

By Jim McAlister IV

President & Chief Executive Officer

CoStar Group, a company that provides commercial real estate information and analytics services, is the only organization that tracks land prices across the country. In October, it published a comprehensive report about the national land market.  As I write my article, I will share some hard data from this report.

CoStar found that most high-growth states experienced an unsustainable run up in home and land prices between 2000 and 2007, with the cost of homes and land increasing 15-20 percent annually.

This resulted in massive over-development and eventually busted the lending system. In the aftermath of the bubble bursting in these states, there was an overabundant inventory of houses and finished lots that will take years (or in some cases, decades) for the market to absorb.

However, the story in Texas is the opposite. Texas never experienced the run up in land prices or the mass overdevelopment like those other states. As a result, Texas is actually now short on housing and lot inventory.

Slide1

Of course the downturn did have a significant impact on land movement and land prices in Texas. The housing bubble decimated the lending system everywhere, including in the Lone Star State. From 2008 until only a few months ago it was virtually impossible for a residential developer to get a loan. Since developers could not get loans, they could not buy land and something that never happened before in Texas occurred: land stopped moving.

During the time the lending system was frozen (from 2008 to earlier this year), people moving to Texas ate into the existing inventory of housing. Our inventory went from slightly above normal to very low – and it remains at that level today.

According to the CoStar report, land prices in Texas fell about 50 percent from peak to trough but are now on the rise again. The reason they fell 50 percent is because anyone who needed to sell their land during this time had to sell to an investor (generally at about half price) rather than to a developer or end user for the reasons mentioned above. The velocity of land sales also dropped by about 90 percent and those sales that did occur happened at great discounts.

The good news though is that we have emerged from the downturn as the credit markets are slowly thawing. Today, Texas is experiencing an explosion of population and job growth, and it’s expanding far more rapidly than any other state in the nation. Yet we still have a shortage of available lots for houses. This means that over the next couple of years, a massive amount of land will have to be absorbed to build the houses needed to accommodate our growth.

Slide2The downturn has been long and hard, but in Texas, the market is coming back quickly and Rockspring Capital is poised to make the most of this opportunity.

Slide3

Posted by: In: Newsletter 15 Sep 2012 0 comments

By Beau Ryan

Senior Vice President & Chief Operating Officer

We recently hired full-time broker Vonda Crisp to exclusively market the San Antonio Dancing Bear Ranch properties.  Vonda brings more than 14 years of experience in small tract and residential sales to Rockspring Capital.  She also resides in the Dancing Bear neighborhood, which puts her in close proximity to potential purchasers of tracts within the property as well as our neighboring sites in the northwest San Antonio area.

On another note, Houston home sales continued to break records in July, the fourteenth straight month of positive home sales, according to the Houston Association of Realtors.

Sales of all property types in Houston totaled 7,363 in July, up 24.6 percent from July 2011.  Single-family home sales totaled 6,324 — an increase of 27 percent from July 2011. The robust sales activity is keeping local housing inventory at its lowest level in more than five years.

The average price and the median price for single-family homes were also up in July.  The average price increased 3.7 percent year-over-year to $231,484, and the median price was up 6.3 percent to $170,000.  Total dollar volume for all property types sold in July rocketed 29.9 percent from the previous year to nearly $1.6 billion.

Forward-looking indicators also improved in July. Total pending sales at the end of July were up 11.5 percent from the same time last year, which indicates that August’s report will also be a strong one.

This new home activity bodes well for land investors like Rockspring Capital.  As builders continue to burn through their existing lot supply, the demand for land will spike sharply and lead them to look to land holders like us for additional supply.

Posted by: In: Newsletter 13 Sep 2012 0 comments

By Michael Ross

Senior Vice President, Asset Management & Entitlements

Rockspring Capital’s management team has worked very hard in the past 12 months to find properties that generate immediate cash flow for fund investors. This is in order to balance out the more traditional two to three year investments that provide capital appreciation.

Here’s a recap of a couple of the team’s recent investments that exemplify this strategy:

–          In early June, we announced the sale 46 of the original 117 finished or fully entitled residential lots in New Braunfels, Texas. They were acquired just four months earlier in January.  The remaining lots are under agreement with the same home builder and are slated to close February 2013. In the event the pending transaction closes as agreed in February 2013, this entire transaction will deliver a net investor unlevered IRR of 80 percent plus in one year.
–          Our team also made a $7.8 million bridge loan to the new operator of the Harborwalk project, a 550-acre master planned community in Galveston County, Texas.  The Harborwalk property features several hundred developed and undeveloped lots, a sales office, a marina which can be expanded, a retail store, a swim center and a yacht club with a restaurant. Also included in the deal are 400 acres of land, which can be further developed, and millions of dollars in municipal utility district receivables.  This two-year bridge loan is at the rate of 18 percent.

These investments demonstrate that Rockspring is continuing to execute on its business plan as promised to investors. We’re making generational investments in Texas land because of the dislocation in the lending market and we have a pipeline full of similar opportunities.

Posted by: In: Newsletter 13 Sep 2012 0 comments

By Jim McAlister IV

President & Chief Executive Officer

California, which used to lead the nation in population growth, is now losing population. For example, Intel Corp. stated that they will never build another plant in California.

The cost of living and operating a business in California is well over double that of living and operating in Texas. The result is individuals (employees) and companies (employers) moving to Texas by the droves.

Texas is the No.1 relocation spot for California businesses and individuals. Austin is capturing the highest amount of the migration in the state. This is due to a similar culture and high-tech industries. Dallas is the second highest relocation spot within the state for California transplants.

While California may be the “poster child” for anti-business climates, there are many other states following in its footsteps. This will continue to incentivize individuals and companies to move to Texas.

Going back to the mid 1800s, Texas has always grown in population of at least double that of the U.S. This is due to an abundance of land, plenty of water, warm climate, proximity to Latin America, port access, being centrally located in the U.S.,  and more.

All these long term growth trends still hold true today. The growth is happening at even a higher rate than normal due to Texas’ current pro-growth and pro-business climate.

The implication of this growth to a land fund such as ours is profound. Population and job growth result in land absorption. Being the top ranked state for job and population growth translates to being the number one state for land absorption.

Our model is buying distressed, undervalued land sites, entitling them and then selling to developers at full market value. The one ingredient we need for success is demand for land. We are clearly operating in the best market in the U.S.

Posted by: In: Newsletter 10 Sep 2012 0 comments

By Beau Ryan

Senior Vice President & Chief Operating Officer

In October, Rockspring Capital and independent financial advisory firm Partners in Wealth hosted a wine pairing and tea event at the Gremillion Art Gallery for our investors.  The wine portion of the event was hosted by Denman Moody, author of “The Advanced Oenophile” (oenophile means a wine connoisseur and lover of wine for those of you who are not wine experts or attendees of the event). The tea portion of the event was hosted by Thia McKann, certified tea master with The Path of Tea.

The evening provided an opportunity for the two complimentary companies to come together in a unique setting where our investors and clients could interact in a relaxed atmosphere.  This occasion also provided an opportunity for our investors to connect with the team at Rockspring Capital.

This year’s wine event rivaled our event last year in attendance as the venue was packed with Houston business leaders and investors from various industries. In addition to wine and tea, attendees also enjoyed gourmet hors d’oeuvres and other treats.

Rockspring is looking forward to joining forces again with Partners in Wealth next year to host another successful event. Stay tuned!

Posted by: In: Newsletter 05 Sep 2012 0 comments

By Jim Hynes

Managing Director

Rockspring Capital recently joined forces with the Southern Texas Professional Golfers’ Association (STPGA) to support the organization’s Charity Golf Summer program.

The program is a series of 100-hole golf marathons played by STPGA Professionals, each of whom solicited per hole pledges from club members, friends and others. It kicked off in June and ran through August.

This is the second year of the program, and nearly 50 STPGA Professionals from some of the finest golf clubs and facilities in the region participated. In 2011, the Charity Golf Summer program generated nearly $50,000 for the STPGA Foundation and many other deserving charities, which were chosen by participating STPGA Professionals. The Charity Golf Summer program was so successful this year that it raised nearly double last year’s amount.

“The Southern Texas PGA’s Charity Golf Summer Program will impact thousands of lives in a very positive manner, and we are thrilled that Rockspring Capital was the sole sponsor of this effort,” said STPGA Executive Director Mike Ray. “Every fundraising endeavor has costs, but thanks to their generous support virtually every dollar raised by our professionals will go directly to charity.”

We are very excited to have partnered with and supported a fantastic organization like the Southern Texas PGA. The program was a tremendous success and we are proud to have helped make this great charity even better.

For more information about the Southern Texas PGA’s Charity Golf Summer program, please click here.

Posted by: In: Industry Insights 21 Aug 2012 0 comments

(Houston Business Journal) Houston is outperforming the U.S. in many economic indicators, especially in job growth, according to the latest Comerica Regional Economic Update.

The Houston-Sugar Land-Baytown area’s payroll job creation was up 3.4 percent on a year-to-year basis for the second quarter. That’s the fastest-growing job creation of any major metropolitan area in the U.S., Comerica Bank said.

After registering a 6.9 percent unemployment rate for the second quarter, Houston is expected to record 6.8 percent in the third quarter and 6.5 percent in the fourth quarter. Comerica forecasts Houston’s overall rate for 2012 to be 6.8 percent, followed by 5.6 percent in 2013 and 4.4 percent in 2014.

Both housing prices and housing starts are on their way up, and business and personal bankruptcies are decreasing, Comerica notes.

“Houston is still attracting new energy‐related industry, but a critical component of the metro area’s long‐term economic outlook will be its ability to grow non‐energy‐related industries, which will provide economic vitality and stability when energy markets are weak,” Comerica writes. “A rapidly expanding population with strong income growth will foster gains in the non‐energy sector.”

To view the Houston Business Journal article, click here.