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The ominous tune to that of a well-known and terrifying movie track played as the San Antonio chapter of the Urban Land Institute (ULI) opened it’s first “Developer Shark Tank” event Tuesday night as part of the Mayor’s Housing Summit happening this week.
Tailored after the popular TV show and similar events produced at ULI’s national meetings, the event featured two local real estate entrepreneurs who pitched a development proposal to a panel of “sharks”— and gave the audience a behind-closed-doors look at an investment committee review process.
There are no “winners,” cash prizes, or awards beyond free tickets to the ULI Texas Forum, but the developers can take this experience with them when they seek real-world investment in the future.
Finalist Peter French, CEO of Rising Barn, proposed an innovative single-family housing concept in Denver Heights called Porter Street Greens, and Randal McLeaird, owner of RAM Realty Group, proposed a multi-family housing and retail development space near the Lone Star Brewery District.
“These are examples of the kind of work we’re doing locally,” said ULI-SA Chairman Stephen Yndo of Yndo Commercial Real Estate.
With a vision and Powerpoint presentations, the developers faced a four-person panel of sharks that included Texas Capital Bank Executive Vice President Laurie Griffith, Silver Ventures Director of Development Bill Shown, Overland Partners Principal Madison Smith and San Antonio City Manager Sheryl Sculley.
AREA Real Estate Principal David Adelman moderated the event. “I’ll be doing my best ‘Chris Harrison,’” he told the crowd, referring to ABC’s “The Bachelorette” host, and saying he would pop in and out during the program.
“The goal of tonight is to give all of you a real flavor and feel for what a real meeting actually feels like to a developer, to the investor or someone trying to raise money, and show what it takes to get a project done,” Adelman said. “We think that if we can share best practices, we can work together … to make San Antonio better and a place where we can live and families can live.”
Affordable housing and responsible infill were common themes in both proposals.
French made the case for his affordable housing project in Denver Heights, saying only 65 entry-level homes, in the $150,000 range, were built in San Antonio in 2015. Houses have gotten not only more expensive, but also bigger.
“Small houses are a big market opportunity,” he said. “Households are shrinking (everywhere).” He wants to fill that void for middle-income housing by partnering with a nonprofit to build five smaller, efficient, modular homes priced under that range.
The sharks were intrigued by his plan, but had feedback and some questions. Smith loved the design, though its weakness was in the outdoor space. Griffin wanted to know more about the construction aspect, and Shown challenged French to make the project scale-able. Sculley asked about building code adjustments and how the property taxes would be handled. She also suggested French look at how the project could satisfy requirements of the Urban Renewal housing bond recently passed by voters.
“So, are you in?” Adelman asked the sharks.
“I’m in on three conditions,” said Shown, as a potential investor. “Entitlement, permanent financing and scale-ability. I’d like to go in knowing there’s a bigger game to play.”
McLeaird proposed a public-private land investment called The Grid @ Lone Star, an 11.7-acre site divided into four parcels, two with 750 units of housing – both affordable and market-rate – and the others with office, retail and hotel developments. The $21 million project would be connected to the energy think-tank space, EPIcenter, via a pedestrian bridge.
McLeaird described the site as having several challenges, including $10 million worth of infrastructure issues, such as relocating power lines and restoring a historic trolley bridge.
Sculley expressed some concern over these issues, and Shown agreed, though he admitted how much he enjoys walking near the site located next to the former Lone Star Brewery. “I like how you’re tying it into the Lone Star,” Smith said.
Griffin suggested McLeaird find an investor “with very large pockets and a long timeline (because) lenders are not very patient. They want to see performance, from an interest and tax carry standpoint.”
ULI-SA Young Leaders, led by Hemisfair’s Commercial Real Estate Development Manager Juan Cano, organized Developer Shark Tank. The San Antonio Housing Authority sponsored the event, with proceeds going to the SAHA Education Investment Foundation which gives scholarships to graduating seniors and college students as well as attendance and honor roll incentives to local students.
French told the audience that his proposal would serve as a model for what can be done to build affordable housing. “What is astonishing to us is why nobody is stepping up to fill the market,” he said.
In addition to renderings and housing statistics, both French and McLeaird also presented detailed investment summaries, showing the financing structure and projected return on investment.
In the end, the proposals were judged by the volume of applause each received. The audience gave French’s proposal an enthusiastic response and McLeaird’s plenty of encouragement as well.
“This is a project five or 10 years ahead of its time,” Shown said.