Written by John Phair, President & CEO
I’m happy to say that 2013 is off to a good start, especially compared to 2008, 09, 10, 11, 12...five difficult years for the real estate industry. Capital has become accessible again. Groups are making expansion or acquisition decisions again. Changes are coming – slowly and deliberately – but we are seeing some of our old clients come to life after being in hibernation for years. Hurrah!
At Holladay Properties, I want to make a few ‘shout outs’ for some specific improvements or success stories. But then I will want to mention some of the new challenges that we are facing.
- Our whole residential/apartment division has seen great improvement. A few weeks ago, I saw our weekly report that showed 100% occupancy at our existing portfolio for the first time in history! It was less than two years ago that we were bleeding so bad that we were not sure if we were even going to be able to maintain ownership. But a combination of efforts – refinancings, management improvements, strategic capital improvements, better grounds and operating expense controls – all contributed here. And every department – property management, accounting, landscaping, maintenance, leasing, you name it – has had a hand in the improvement, a real team effort!
- A couple of strategic building sales that have happened have boosted our capital position and made it possible for us to invest in new projects. Two in particular are especially noteworthy.
- The first was a project in AmeriPlex at the Port known as the Ashland. This project was originally a build to suit and has leased, re-leased and remodeled several times as well as refinanced at least twice. Finally, it sold in May to a Minnesota Group that turned around and hired us to manage on their behalf. Lots of hands contributed to this exceptional effort from all parts of the company and because we continue to professionally manage here, the Ashland did not really go away.
- The other was the sale of a Medical Office Building in Westville, IN; the second build to suit with a group who has been a great partner. And in this case, like the Ashland sale, we retained the professional management of the building. Just as important, we retained our relationship with our medical partner and hope to announce another joint venture in the near future.
- In the last 60 days or so, we closed on more land sales than we have – combined – in the last five years! Most of that activity happened in Indianapolis. To be fair, several of these transactions have been in the works for years. But the sun, moon and stars finally aligned and the sales happened in this short period. $10 million dollars in loans were paid off, which means much lower interest payments and more dollars for capital investment for new projects.
- Two large third party construction projects by Holladay Construction Group – one in Mishawaka and the other in Indianapolis – were started earlier this year and are contributing to what may be a record volume in new construction activity for our company. Good activity in Merrillville, Nashville and Portage for HP projects is also adding to the excitement in that group.
- Our management portfolios in both Nashville, Indiana and even Richmond, have all grown this year with new customers in each area – and some expansion of older customers as well. Right now, we have over 10 million square feet that we watch day in and day out.
- Our three hotels and conference center may be headed for a record year, after struggling for a couple of years. We have completed substantial upgrades at two of the hotels this year and the marked improvement in the economy has been helpful. But mostly, our customer service scores have been outstanding, keeping our customers coming back again and again.
Not so successful:
- For 5 years, we have been meeting every Friday morning to address our “Bottom 10” projects – those projects requiring special management attention. The good news is that this list has shrunk; the bad news, it has not gone away and we still are working with a few stinkers. Until that list is 0, we are going to keep focusing on problem areas. This impacts everyone because this takes valuable time and capital, and results in a stressful environment. But it should be reduced to only a handful – maybe just 2 or 3 by the end of the year. Virtually every office and department has contributed to this area – but also has joined in the clean-up effort.
- We re experiencing some employee turnover. We know we have to provide a good working environment: including opportunities for improvement and advancement, quality training and the right equipment and tools. That has been difficult during these past few years but our goal is to get better in all areas. Not just brag about our fellow employees – but really provide meaningful improvements where we have shortcomings. We will need help and suggestions here.
We are really busy! It is easy to lose sight of our goals because of the pressure of the moment, but I want the staff of Holladay to take a moment to pat yourself and your fellow employees on the back. You deserve it.
Our 60th year in business – 2012 – was at the tail end of a major recession, especially in the real estate business. But I can truly say 2013 – especially this last quarter – has been a memorable one and our 61st year will be a good one.
Thanks to you all!