T he UST REAA had a successful year in 2009 overall, despite the current economy and real estate market. This year’s highlights include our End of the Year Banquet, 7th Annual Golf Tournament, UST Alumni partnership, UST Real Estate Advisor Committee participation, and social events. Even though we had lower attendance then we hoped for at some of these events, we still had fun to network and reconnect with each other. Earlier this month, I created a LinkedIn group for the UST REAA, click here to join this group and to stay connected. Additionally, please allow me to extend my gratitude to our Board of Directors and Executive Committee who did a great job and made 2009 a blast. As President, the 2009 year was personally rewarding, creating new industry relationships and strengthening existing ones, as well as growing participation made donating my time to the UST REAA well worth it. The UST REAA is in good hands for 2010; I wish Peter Tanis, incoming President, the Board of Directors and Executive Committee the best of luck on a productive and successful year! Have a safe and enjoyable Holiday Season! Ben Bastian ‘05 UST REAA President Cushman & Wakefield RE CAP Fall 2009 The Official Newsletter of the St. Thomas Real Estate Alumni Association President’s Corner Contents President’s Corner | 1 St. Thomas Alumni in Real Estate | 2 7th Annual UST REAA Golf Tournament | 3 2010 Board of Directors | 4 Executive Committee | 4 Faculty Advisors | 4 2009 End of the Year Banquet | 4 D.C. & Vegas | 5 2009 Annual Sponsors | 6 Commercial RE MarketWatch | 7 News from the UST Real Estate Programs | 8 Tommie Spotlight | 9 UST Real Estate Society | 11 The Doc’s Final Thoughts | 11 UST REAA RE CAP | Fall 2009 | 1 EXECUTIVE COMMITTEE Events Chair Joe Mahoney Website Co-Chairs Brad Moore and Shawn Smith Golf Tournament Co-Chairs Grant Campbell and Mike Doyle End of the Year Banquet Chair Ben Bastian Student Liaison Chad Commers BOARD OF DIRECTORS Vice President Pete Tanis Treasurer Matt Larson Secretary Dan Brown
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RE CAP - iModules · T he UST REAA had a successful year in 2009 overall, despite the current economy and real estate market. This year’s highlights include our End of the Year
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The UST REAA had a successful year in 2009 overall, despite the current economy
and real estate market. This year’s highlights include our End of the Year Banquet,
Sheldon Adelson, Chair of the Las Vegas Sands Corp.,
is the perfect poster boy for Las Vegas’ fi nancial
meltdown. The 76-year-old who was third on Forbes’
list of the 400 Richest Americans in both 2007 &
2008 has lost $36.5 billion dollars (91.25% of his net
worth) – more than anyone else in the world has lost during
this recession. While most retailers across the country are
changing their tune, listening to their customers and providing
products and services at lower prices while marketing their
value, Adelson is staying the course.
He may have achieved success through a combination of hard
work, luck and persistence, but his stubborn insistence on
sticking with the same strategy is killing his bottom line. On
Aug. 24, 2009, TIME magazine columnist, Joel Stein, shared
his interviews with Adelson and other Vegas casino moguls: ‘he’s
(Adelson’s) not changing his strategy of using high-end dining,
giant suites and plush convention spaces to attract customers.
He does not believe that America is going to fundamentally
change its values from extravagance to thrift. “There’s no way
this world will change. There’s no way people are going to stop
doing things they want to do…,”’ he quotes Adelson.
Adelson borrowed as much as he could as fast as he could
and built, built, built. He added a micro-version of the Vegas
Strip to his successful hotel and casino in Macao, China and
also added 100% more space to the Venetian with the Palazzo
addition. This aggressive borrowing and building strategy
helped him rack up massive amounts of debt, and as Stein
reports: “…he has accumulated a debt-to-earnings ratio of 6.8
to 1 in the U.S. Then the loans stopped coming, and his stock
price sank from $144 to $1.42 in March.”
I think Adelson is right in assuming that human nature isn’t
going to change – people are always going to want certain
pleasures. Las Vegas feeds and satisfi es many basic pleasures
and desires for: attention, sex, the thrill of risk-taking and
gambling, socializing and a euphoric sense of getting away
from it all. Where I think Adelson goes wrong, is in assuming
that Las Vegas is the only place where people can and will go
to satisfy these pleasures.
Most of the aforementioned human desires can be fulfi lled in
much less expensive ways. With the exception of gambling,
they can all be fulfi lled for the attractive price tag of $0.00.
Gambling is exciting because it’s about taking risks and
potentially reaping large rewards. There are other ways to
satisfy this desire to take risks, which are less expensive than
throwing hundred dollar bills at the craps table, such as cliff-
jumping or sky-diving. Really, you could have your own Vegas-
style party in your own basement for free if you wanted to. (I’m
not necessarily recommending you do this, I’m just stating
the obvious.) Adelson doesn’t think you will, so he’s going to
keep furnishing his rooms with the biggest and the best for
you to purchase, even though you and your friends may now be
unemployed, thanks to the recession.
Adelson’s “build it and they will come” strategy is a great example of how to lose touch with your customer and build your own grave as an entrepreneur. Yes, success is about taking
risks. But right now, Sands is acting like a child. He wants to play by his rules and refuses to adjust his business strategy to his market.
If entrepreneurs and leaders in our country look to investors like Sands as their role models, we will be doomed to further economic stress.
Whether you are a business leader or a
politician, you are only as successful as
the people who got you there. President
Obama can not assume that because
66 percent of young people elected him
into offi ce based on the hope that he
would offer positive change and ideas
for growth that he’s locked in. There
are no rules other than the people’s
rules. President Obama’s approval
ratings have been falling on issues
because, while he did an excellent job
of marketing “change” and “hope,”
he hasn’t provided us with reasons to
jump on-board with his healthcare plan
or economic stimulus proposals.
According to a Sept. 10, 2009 article
by Beth Jinks on Bloomberg.com,
“Las Vegas Strip gambling revenue fell
11 percent in July, the 19th straight
decline, and Atlantic City’s dropped 16
percent in August as the two biggest
U.S. gambling centers grapple with
the worst slump on record.” Clearly,
the people Adelson is counting on to
support his fl amboyant casinos are
making a lifestyle change: They are
fi nding other ways to have fun beyond
throwing money at his luxurious table
games and hotel rooms.
Meanwhile throngs of American people
have gathered on Capital hill for
protests, as Michelle Malkin exposed
in her September 12th blog post, they
are forming their own tea parties and
participating in Town Hall meetings. All these citizen gatherings send a clear message to our elected offi cials: We want you to listen to us – we are the consumers, the constituents and the voters. And if I haven’t made it clear, we vote with our pocketbooks.
impossibility of getting special servicers on the phone.
Constrained by tax regulations that dictated real estate
mortgage investment conduits (REMICs) could not allow
modifi cations to their mortgage pools without incurring tax
penalties and the possible loss of REMIC status, servicers told
borrowers to wait until they were in default to contact them.
That’s lead to frustration and a lot of inaction.
As a result, there is now a lot of buzz being generated by the
move last week from the Internal Revenue Service and the
U.S. Department of the Treasury to loosen the rules to allow for
loan modifi cations and extensions. If all goes well, the relaxed
rules will get servicers to work with borrowers on potentially
distressed situations earlier in the game, and might stave off a
signifi cant number of mortgage defaults, according to market
analysts. The measure might even lessen potential losses from
defaulting loans, giving servicers the opportunity to hold on
to distressed assets until conditions in the investment sales
market improve somewhat.
But like the banks’ strategy to “pretend and extend” on
traditional mortgages, the new CMBS regulations might only
be effective in delaying the problem, not solving it, says
Clint Myers, strategist with Property & Portfolio Research, a
Boston-based real estate research fi rm. Plus, analysts remain
concerned about the possibility of unnecessary modifi cations
and loss of value for holders of highest rated CMBS securities
if the new regulations allow for the forgiveness of principal
debt or long-term extensions.
“It doesn’t make problems go away, it delays them for another
day with the hope that things will get better in the meantime,”
says Myers. “This will give servicers slightly more fl exibility
and lengthen out the cycle, making less clear what values are
and delaying the bottom.”
The changes, effective as of Sept. 16, will cover loans
modifi ed on or after Jan. 1, 2008. They will allow for
modifi cations to the loans’ collateral and guarantees, as
well as giving servicers the power to switch non-recourse
mortgages to recourse. As a result of the new regulations,
servicers will now also have greater discretion in deciding
which loans might need modifi cation, enabling them to step
into those situations where a loan that’s still performing today
has a high likelihood of defaulting in the future.
Overall, according to Federal Reserve data there is $900
billion in outstanding CMBS debt accounting for 25.7
percent of the $3.5 trillion in commercial real estate debt
outstanding. In 2010, there will be somewhere about $39
billion in CMBS debt coming due and about $150 billion
coming due by the end of 2012. In July, the delinquency rate
for CMBS loans reached 3.1 percent, according to Realpoint
LLC, a Horsham, Pa.-based credit rating agency. By the end
of the year, the fi rm predicts the delinquency rate will move
past 6 percent.
“It’s defi nitely a positive move, as it will temper the level of
distress that we otherwise would project for the securitization
market and will indirectly benefi t the larger pool of
commercial mortgages,” says Sam Chandan, president and
chief economist with Real Estate Econometrics, a New York
City-based research fi rm. “But this program will be most
effective in cases in which some reasonable modifi cation will
allow the mortgage to perform. Some of the most egregiously
underwritten mortgages from the peak of the market will not
benefi t from this program.”
In addition, the new regulations might turn out to be more
beneficial for holders of lower rated CMBS bonds than
for those who invested in AAA-rated securities. Because
AAA-rated bonds are, in theory, backed by highest quality
properties, those investors expect to see full repayment
of loans at maturity date, says Frank Innaurato, managing
director of analytical services with Realpoint. They tend
to hold the bonds for the short term and, for them, more
modifications might mean lower yields. For investors in
AA-rated and A-rated securities, on the other hand, who
tend to hold the bonds for a longer-term and who incur
most of the penalties in default cases, more modifications
mean smaller losses.
“If too much fl exibility is granted, you are going to have
investors losing money because what is good for the borrower
might not necessarily be good for the investor. The position
we are taking is that it can be a double-edged sword—it
may preclude balloon defaults, but it will increase the risk
of extension and modifi cation,” says Innaurato. “Will there
be any type of debt forgiveness that will lead to a loss for
the Trust? And one of the biggest concerns is how many
borrowers with otherwise performing properties and stable
cash fl ows will be in line for this?”
Andrew Chana ‘01CHANA Investment Group
Commercial RE MarketWatch: New IRS Regulations Might Contain CMBS Defaults,
but Won’t End the Commercial Real Estate Crisis
8 | UST REAA RE CAP | Fall 2009
As alumni of the University of St. Thomas, many of you
have, in one way or another, worked with real estate
program staff and faculty. We want to take this
opportunity to introduce you to the real estate team as well as
to highlight some of the new and exciting things planned for
the spring semester and beyond, and how all of these plans
will affect you as alumni.
This academic year has included the addition of familiar
faces to full-time staff and faculty within the University of
St. Thomas real estate programs team. These additions
allow for expanded program offerings, real estate community
involvement and further development of the Shenehon Center
for Real Estate, the UST BS Degree in Real Estate, the
UST MS Degree in Real Estate and real estate professional
development programs.
New Full-time Real Estate Faculty Member
Many of you may know Dr. Tom
Musil as the former director
of the Shenehon Center for
Real Estate and the UST MS
Degree in Real Estate. As of
September, Tom has accepted
a faculty position teaching both
undergraduate and graduate
real estate courses in the Opus
College of Business. Tom will
be teaching the Advanced Topics
in Real Estate course, Real Estate Decision Making, Real
Estate Development, Real Estate Property Management and
Real Estate Appraisal. Tom is working on a major research
paper addressing how the mortgage foreclosure crisis differs
among the largest 200 Metropolitan Statistical Areas in the
U.S. and how government solutions to the crisis should refl ect
community social and economic characteristics.
New Director of the Shenehon Center for Real Estate and the MS Degree in Real Estate
Herb Tousley has been a member
of the UST real estate team
since 2004 as an adjunct faculty
member teaching undergraduate
and graduate real estate courses.
He has more recently accepted
the director position to join the
team on a full-time basis.
Herb comes to St. Thomas from Griffi n Companies, where he
was a senior vide president handling acquisitions and client
services with an emphasis on property tax appeals. In this
new position, Herb plans to add programs that are timely and
relevant to today’s rapidly changing real estate environment
and continue to build strong relationships within the real
estate community. In the UST MSRE program, he plans to
allow candidates the opportunity to tailor their courses of
study to provide more opportunities to specialize in areas that
best fi t their interests and career situations. In addition, he
would like to develop more robust internship and mentorship
programs for students in the MSRE program. These changes
will enable MSRE graduates to enter positions with relevant
work experience, making them even more marketable to
potential employers
Transition from Undergraduate to Graduate Courses
Dr. Tom Hamilton teaches in both
the undergraduate and graduate
programs in real estate, as well
as in professional development
programs. As the “new” MSRE
program is growing and evolving
to meet ever-changing market
demands, Tom has transitioned to
teaching more graduate courses
at UST. Taking the successes
achieved from developing the
undergraduate program from a handful of students in 2000
to more than 70 majors today, he is working to develop
similar strategies and promotions to give graduate students
(MSRE and MBA-Real Estate) a similar advantage in the
marketplace. Using his experience and background (coming
from the Wisconsin Real Estate program), he hopes to recreate
the successes of the “Big Red Machine” at UST to develop
the best, well-rounded real estate “thinkers and doers” in
the world. The goal of the UST real estate programs is to
develop the best prepared, equipped and trained real estate
professionals in the world—second to none.
In addition to teaching, Tom has also been working on
researching numerous real estate-related issues in the
marketplace, including inequitable property tax assessment
and valuation practices. The current standards used and
applied by assessors are oftentimes misinterpreted by local
and state assessment districts and state agencies, especially
the use of nonparametric statistics to test for valuation
uniformity within and between classes of property.
CONTINUED ON PAGE 9
News from the University of St. Thomas Real Estate Programs
Peter Tanis sat down with St. Thomas alum,
Dan Gleason of NorthMarq. Dan is a well
known offi ce broker specializing in leasing
and sales in the Twin Cities market.
Dan has distinguished himself as a leading
broker in the brokerage industry and has been
recognized each year as a member of the
NorthMarq Offshore Club. Dan is known for
his strategic viewpoint and problem-solving
capabilities along with his knowledge and
relationships throughout the Minneapolis/St.
Paul marketplace. He has been responsible for
representing a variety of owners in obtaining
their real estate objectives. Throughout his
career, Dan has been responsible for the
marketing, leasing and sales of numerous
projects consisting of more than eight
million square feet. He has leased more than
four million square feet of offi ce and been
involved in numerous commercial property
acquisitions and disposition projects. He
has completed numerous large transactions
involving companies like Blue Cross Blue
Shield, Seagate, ADC and CH Robinson.
Q: Dan, what year did you
graduate from UST and
what was your focus?
A: I graduated in 1988 with a BA in
Accounting.
Q: Dan, tell me a little about
your family and home life?
A: My wife and I met at UST, and we have
been married for 19 years. We live
in Highland Park, St. Paul, with our
four children.
Q: What were you doing
before your current position
and NorthMarq?
A: Before joining NorthMarq, I was a
senior associate with the Koll/Shelard
Group for about fi ve years specializing
in offi ce leasing and sales.
Q: Dan, what is your favorite
aspect of the business?
A: I really enjoy the people. Our business
allows us to develop relationships with
our customers, our competition, and
our co-workers. I feel blessed to be able
to work with so many great people.
Q: What groups are you
involved with within the
industry and community?
A: I am a past president of the Minnesota
Commercial Association of Realtors and
try to stay active in the industry.
Additionally, I participate with various
non-profi t organizations and spend time
coaching the various sports activities of
my kids.
Q: What keeps you motivated?A: The challenge, the deal, and
troubleshooting for clients. I love
collaborating with other individuals and
working hard to meet my client’s needs
and expectations.
Q: What is your favorite Sport or hobby? A: Golf.
Q: This market has been diffi cult for many people in the business especially the younger professionals; what advice do you have for new or younger real estate professionals? A: A: First of all, maintain an attitude of
gratitude. Ask yourself; do I have to
be here or do I get to be here? A
grateful perspective will make all of
the difference. Negativity is just noise;
don’t let it zap your energy and
enthusiasm. Secondly, manage your
expectations. Be patient and let
things play themselves out. Thirdly,
embrace change, it is the gift that
keeps on giving, and those who can
adjust will be the winners. Finally,
appreciate every relationship and let it
shape who you become.
Peter Tanis ‘06UST REAA Vice PresidentThe C. Chase Company
Tommie Spotlight
DAN GLEASON OF NORTHMARQ
UST REAA RE CAP | Fall 2009 | 9
CONTINUED FROM PAGE 8
Even though the international
standards are statistically
sound and well documented,
their application is oftentimes
misused by government,
resulting in adjustments in
valuations that are not supported
by sales data. The improper
application of statistics can
result in inequitable and
improper valuation and tax
liabilities for property owners.
Research issues like this are
frequently brought into the
classroom to enhance student/
graduate advancement in the
workplace.
Recruiting, Admissions and Student Life for the MS Degree in Real Estate
Susie Eckstein works with the
recruiting, admissions and
student life for the UST MS
Degree in Real Estate, and
also works with projects for
the Shenehon Center for Real
Estate. In addition to working
for UST, Susie earned a B.A.
in Marketing from UST in
2003 and will complete the
Evening UST MBA program this
December. With knowledge
of and experience with all of
the Opus College of Business
graduate programs along
with real estate professional
development programs, Susie
can help you to fi nd educational
opportunities that best fi t your
needs.
10 | UST REAA RE CAP | Fall 2009
THE UNIVERSITY OF ST. THOMASand
OPUS COLLEGE OF BUSINESSare pleased to introduce the inaugural members of the university’s
REAL ESTATE ADVISORY BOARD
Stephen Baker Ramsey County Assessor
Bill Beard Beard Group
Luigi Bernardi Aurora Investments
Thomas Burke TOLD Development Company
Colleen Carey The Cornerstone Group
Charles Caturia CB Richard Ellis
Richard Collins Ryan Companies
Daniel Commers Roseville PropertiesManagement Company
Thomas Crowley Dougherty Funding LLC
Robert Cunningham TOLD Development Company
Michael Dwyer Opus Northwest L.L.C.
Daniel Engelsma Kraus-Anderson
Joseph Finley Leonard, Street & Deinard
James Gearen Zeller Realty Corporation
Kyle Hansen U.S. Bancorp
Gene Haugland Haugland Company
David Jellison Liberty Property Trust
John Johannson Welsh Companies
Terrence Kingston Cushman & Wakefield
Frank Lang Lang-Nelson Associates Inc.
Timothy Murnane Opus Northwest L.L.C.
Russell Nelson Nelson Tietz & Hoye
Kathleen Nye-Reiling Silver Cliff Properties
Edward Padilla NorthMarq Capital
Ronald Peltier HomeServices of America, Inc.
Christopher Puto Opus College of Business
Mark Reiling Colliers Turley Martin & Tucker
Howard Roston Malkerson Gilliland & Martin
Mike Salmen Transwestern
Jerome Sand Kraus-Anderson
Richard Schadegg CB Richard Ellis
Jeffrey Schoenwetter JMS Companies
John Seidel John P. Seidel, Bank Consultant
Boyd Stofer United Properties
Robert Strachota Shenehon Company
Paul Sween Dominium Group, Inc.
Scott Tankenoff Hillcrest Development
William Tobin CRESA Partners
Vikram Uppal Uppal Enterprises
UST Alumni: Please feel free to contact the above members of the UST Real Estate Advisory Board with industry questions. For individual contact information,