Capital Markets and Houston CRE Discussion with Jimmy Hinton

Wednesday, February 6, 2019

HFF Managing Director of Research Jimmy Hinton will moderate Urban Land Institute (ULI) Houston's annual Capital Markets Discussion, which is February 18 from 6:00 to 8:00 p.m. at Rice University's McNair Hall in the Anderson Family Commons. It is jointly hosted by ULI Houston's Young Leaders and the Rice University Real Estate Club.

Hinton will moderate the panel discussion on real estate capital markets and investments across global, U.S. and Houston markets in 2019 and beyond. The panel comprises Houston leaders Doug Goff, who supports portfolio acquisitions at Hines; Catherine Justice, who is responsible for conventional multifamily originations throughout Texas for Freddie Mac; and Andy Lusk, who is head of acquisitions at Lionstone. Visit ULI Houston's event website to register for this event. For more information about ULI Houston, please click here.

In honor of the event, Mr. Hinton answered questions about topics relating to the Houston commercial real estate and capital markets.

Q&A with HFF Managing Director of Research Jimmy Hinton

  • What are the main factors currently driving Houston’s commercial real estate market?  Houston is performing like a diversified economy, with lower dependency on the price of natural resources and more on global demand. For the doubters, Houston led the country in employment growth in 2018 and the price of WTI crude was only $45.41 at year’s end. More important, a heightened level of innovation in fields such as energy, medicine and trade is being fostered by both private and public investment, especially in the urban core. Common spaces for citizens are also being improved dramatically, with tens of millions being invested across the city to improve mobility, amenities and safety. The fabric of Houston’s commercial real estate market has matured so dramatically over the past two decades, institutional investors now see our home as necessary to diversification and growth in net operating income within their portfolios.
  • Where do you see the CRE market heading during the year?  Investors will notice more medium- to low-quality commercial real estate in high-quality locations being renovated/upgraded for modern use – and not just in the urban core. Landlords will improve tenants’ experience, investing to improve amenities and ease of using an asset. From a capital markets perspective, I expect Houston to benefit from more retail and multi-housing investment in 2019. I also expect a very strong year for mortgage originations in Houston, driven principally by stable interest rates and a return of rent growth across most property types.
  • What specific advantages and challenges does Houston have over other major U.S. cities?  Houston’s lack of organized transit for the masses is a major disadvantage, given now that approximately seven million residents call the Houston MSA home. But the composition of Houston’s citizenship and the significance and predictability of Houston’s population growth provides investors a defense mechanism to broader economic volatility. Houston’s entrepreneurialism and grit is more than a prideful rallying cry, it is the embodiment of the market’s terrific performance over the past several in the face of headwinds from energy and weather.
  • What are the biggest risks you see in the capital markets?  Self-fulfilling prophecy. When credit markets get spooked, they tend to exacerbate their own problem of perception. Certainly in the commercial real estate markets, we are seeing a far more balanced marketplace in 2019 than in 2007. Yet we still field the same questions about peak valuations, thin return expectations and tight credit spreads. Ironically, the acute focus on risk is what makes me feel more comfortable; so long as it doesn’t create a sclerotic pace of capital flows.
  • What capital markets expectations should investors have for the remainder of the year?  Harvest your gains, then redeploy into assets that can grow net operating income. The way to outperform late-cycle is through active management. The tide can no longer raise all ships, be nimble!

About Jimmy Hinton

Jimmy Hinton serves as managing director of HFF and is responsible for the firm’s national research efforts. He works with the executive management team to assist in investor relations, corporate and digitalization strategies and to inform both HFF staff and firm clients with in-depth analysis of economic, property and capital market trends. He is also responsible for providing market reporting, client presentations and deal-specific analysis for debt and equity placement and investment advisory assignments. Mr. Hinton’s responsibilities include substantial interaction with pension funds, insurance companies, regional and CMBS lenders, REITs, foreign investors and private equity funds.

Prior to his role as managing director, Mr. Hinton worked at Cadence Bank, N.A. (fka Community Bancorp, LLC), a de novo bank holding company formed in 2009 to invest $1 billion of equity in distressed financial institutions. Mr. Hinton’s responsibilities included mergers and acquisitions, investor and regulatory relations, corporate governance and CRE loan portfolio management.

Prior to Cadence Bank, Mr. Hinton served as an associate director, research and real estate analyst at HFF, underwriting, valuing and facilitating debt and structured finance transactions, as well as equity placements.

During his tenure at HFF, Mr. Hinton has supported the execution of more than 200 commercial real estate transactions totaling more than $5.5 billion in more than 20 states. Mr. Hinton first joined HFF in February 2005 after working in the private wealth management industry for two years.

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