MORAN & COMPANY
Paul Harris Managing Partner Southwest
D: 972.764.8490 M: 214.232.8689
Thad Wetterau Director - Dallas D: 972.764.8491 M: 972.754.5420
Greg Smith Director - Dallas D: 972.764.8499 M: 817.313.7081
Jeffrey SkipworthDirector - Houston D: 713.425.4942 M: 214.533.3322
Eric Calub Director - Dallas D: 972.764.8492 M: 972.567.3560
DALLAS OFFICE 5440 Harvest Hill, Ste. 146
Dallas, TX 75230 972.387.2500
HOUSTON OFFICE 12 Greenway Plaza, Ste. 1100
Houston, TX 77046 712.425.4942
DALLAS - FORT WORTH
MULTIFAMILY TRENDS & OBSERVATIONS
3RD QUARTER 2017
PAGE 2&
PAGE 3DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
DALLAS-FORT WORTH TRENDS TO WATCH
DFW Job Growth #1 in the Nation: DFW is the #1 MSA for Job Growth in the country, jumping past New York in the
latest quarter. DFW added 93,600 new jobs Year-Over-Year. Unemployment rate of just 3.9%, well below the national average. A, B C’s For Future DFW Job Growth:
A Affordable D Diversified EconomyB Business-Friendly E Educated WorkforceC Centrally Located F Fair-Weather Climate
DFW Apartment Market Fundamentals Remain Strong: While new deliveries exceed absorption in 2017, occupancy still over 95% Absorption vs. Deliveries trend forecasted to turn positive again in 2018 with
approximately 2,500 more units absorbed than delivered New multifamily supply peaking in 2017 and forecasted to begin decline in 2018
Headwinds Slowing Down New Development: Diminished available apartment sites along with resistance among suburban
communities to rezone new multifamily parcels supports higher land prices and longer lead times
New construction costs continue to rise with rebuilding related to hurricanes Harvey and Irma expected to put further pressure on labor and material costs
Conservative construction lending also continues to provide some discipline in new development
Transaction Market Remains Robust with some Caution: Ample low cost debt and equity for all multifamily asset classes Value-add deals are still the darling of the investment market with cap rate
compression among B and C classes Some traditionally value-add capital is shifting its focus to newer, more stabilized
assets chasing a higher going in yield with lower capital risk Institutional investors are still cautious in the core space, but private investors fill
the gap Institutional investors considering suburban over urban core locations in attempt
to find higher yields There is continuing caution in underwriting rent growth in the near term in
submarkets with a higher new development pipeline
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PAGE 4
3RD QUARTER 2017 STATS AT A GLANCE
TOTAL UNITSUNITS ADDED
SINCE 2010UNITS ABSORBED
SINCE 2010
715,309 +110,013 +134,457
CURRENTOCCUPANCY
PROJECTEDOCCUPANCY Q3 2018 NEW UNITS DELIVERED
95.1% 95.3% YTD: 18,550 2017F: 27,207
CURRENT AVERAGE EFFECTIVE RENT
EFFECTIVE RENT GROWTH SINCE 2010
EFFECTIVERENT GROWTH
$1,127 34%
YOY Q3 2017: 2.8%
PROJECTED YOY Q3 2018: 3.49%
DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS
Source: Axiometrics, Bureau of Labor Statistics, U.S. Census Bureau, Natl. Asso. of Realtors, Fortune 500, & Sperling’s Best
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PAGE 5DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
ECONOMIC DRIVERS AT A GLANCE
SEPTEMBER 2017WORKFORCE
JOB GROWTH #1 IN THE NATION
SEPTEMBER 2017UNEMPLOYED
3,624,000 SEPT. 2018 YOY:93,600+
2010-2016:579,000+
DFW: 3.4% U.S. 4.8%
CENSUS BUREAUJULY 31, 2016 POPULATION
2010-2016 POPULATION GROWTH
2010-2050 PROJECTED POPULATION GROWTH
7,233,323 807,109+ 10MM+
PUBLIC/PRIVATE PARTNERSHIPS
FORTUNE 500COMPANIES
CLASS A OFFICESPACE Q3 2017
$246,550,000 21 151 MM SF $28+/SF
Q3 2017MEDIAN HOME PRICES
YOY % GROWTHMEDIAN HOME PRICES
COST OF LIVING INDEX SPERLING’S BEST PLACES
$249,000 7.4% DALLAS: 95
DENVER: 128
HOUSTON: 101
ATLANTA: 102
BENCHMARK: 100
DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS
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PAGE 6
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Mul
tifam
ily P
erm
its
Popu
latio
n
Population MF Permits
DFW MULTIFAMILY STARTS - A HISTORY LESSON!!!
The challenge – “boom or bust” perception vs recent history and reality todayHalf the MF permits with twice the total population vs. the 1980s
DFW POPULATION PROJECTIONS 2010 - 2050
2010 – 2050 (Estimate) = + 10 million peopleAt 2.7 people per HH = 3.7MM HHs
= 92,500 HH per year
19702,428,365
19853,624,952
20106,341,740 2016
7,233,323
205016,367,293
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
1970 1980 1990 2000 2010 2020 2030 2040 2050
Source: U.S. Census Bureau/Real Estate Center at Texas A & M University
Source: U.S. Census Bureau
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PAGE 7DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
2010-2016 POPULATION GROWTH OF TEN LARGEST US METROS
Population increase DFW 2010-2016 = 807,109Average = 115,301/year
5 7
14.4%
12.6%
9.5%9.0% 8.8%
5.3%
3.8%
3.0%
1.8%
0.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Houston Dallas-Fort Worth Atlanta Miami Washington DC Boston Los Angeles New York Philadelphia Chicago
20%
18%17% 17%
13%
11% 11%
10%
8%
6%
0%
5%
10%
15%
20%
25%
Dallas-FortWorth
(579,000)
Miami(389,800)
Atlanta(391,700)
Houston(434,500)
Los Angeles(676,300)
Boston(271,200)
New York(936,600)
Chicago(408,400)
Washington DC(243,300)
Philadelphia(172,200)
2010-2016 YTD JOB GROWTH TO TEN LARGEST U.S. METROS
September 2017 T12 = 93,600 Jobs Added - 2.7% Year-Over-Year Growth Rate
DFW JOBS CREATED2010 - 2016
579,000+
Source: U.S. Census Bureau
Source: Bureau of Labor Statistics
5 4 9 8 7 10 2 61 3
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PAGE 8
AT&T STADIUM KLYDE WARREN PARK
DART RAIL LINE I-35 CORRIDOR PARKLAND HOSPITAL
PUBLIC & PRIVATE CAPITAL INVESTMENT
21%
17%
12%12%
11%
8%
8%
6%4%
2% Trade, Transportation, and Utilities (768,000)
Professional and Business Services (612,000)
Education and Health Services (441,000)
Government (416,000)
Leisure and Hospitality (391,000)
Financial Activties (294,000)
Manufacturing (273,000)
Mining, Logging, and Construction (211,000)
Other Services (128,000)
Information (82,000)
DFW EMPLOYMENT BY SECTOR – 3,624,000 JOBS – September 2017
Source: Bureau of Labor Statistics
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PAGE 9DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
COMPANIES HEADQUARTERED IN DFW
2017 Fortune 500 / 1000
COMPANY RANK REVENUE(Millions)
DallasAT&T 9 $163,786Energy Transfer Equity, L.P. 79 $37,504Tenet Healthcare Corporation 134 $21,070Southwest Airlines Co. 138 $20,425Texas Instruments Incorporated 206 $13,370HollyFrontier Corporation 274 $10,536Dean Foods Company 351 $7,710Builders FirstSource 421 $6,367Neiman Marcus Group LTD LLC 515 $4,950Trinity Industries 539 $4,588Alon USA Energy 605 $3,832Brinker International 664 $3,258Atmos Energy Corporation 670 $3,350Comerica Incorporated 736 $2,960Primoris Services Corporation 938 $1,997
PlanoJ.C. Penney Company 221 $12,547Alliance Data Systems 378 $7,138Dr Pepper Snapple Group 416 $6,440Rent-A-Center 735 $2,963Cinemark Holdings 744 $2,919
RichardsonLennox International 627 $3,642Fossil Group 723 $3,042
IrvingExxon Mobil Corporation 4 $205,004Fluor Corporation 149 $19,037Kimberly-Clark Corporation 155 $18,202Celanese Corporation 484 $5,389The Michaels Companies 496 $5,197Commercial Metals Company 535 $4,652Flowserve Corporation 589 $3,992Pioneer Natural Resources 606 $3,824Darling Ingredients 665 $3,398
DentonSally Beauty Holdings 592 $3,953
Fort WorthAmerican Airlines Group 67 $40,180D.R. Horton 232 $12,157
CoppellNationstar Mortgage Holdings 852 $2,340
Source: Fortune 500
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PAGE 10
CALIFORNIAAcacia Research GroupAccentCareACTIVE NetworkAmeriflight LLCC&S PropellerCaliber Collision CentersChannell Commercial Corp.Ciao TelecomCinepolisConsolidated Electrical DistributorsCopartDaegis Inc.Farmers Brothers CoffeeFlour*FonalityGlenmount Global SolutionsIronclad Performance Wear Corp.Jacobs Engineering GroupJamba Inc.Kubota Tractor Corp.loanDepotMimi’s CafeMonkey Sports Inc.
Motorsport AftermarketGroup and MAG RetailMV TransportationOmnitracsPacific Union FinancialPrimorisRaytheon Space and Airborne-Systems (SAS)Rixi Recovery ServicesSolera HoldingsTitan LaboratoriesToyota North AmericaToyota Industries
Commercial FinanceTrend MicroUnited Scientific Group (USG)Vendor Resource ManagementW3global
WASHINGTONAllied BioScienceBlucora
NEVADACoreSpace
COLORADOCagney Global LogisticsHarris Broadcast
OKLAHOMAGlobal Power EquipmentGroup, Inc.HiltiLinkAmerica
AUSTINGreenstreamSeven Hills Commercial
NEBRASKAHeartlandAutomotive Services
MINNESOTAMoneyGramSpeed Commerce (Navarre)
SAMPLE OF COMPANY HEADQUARTER MOVES TO DALLAS FORT WORTH 2010-2016
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PAGE 11DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
HOUSTONInx Inc.Magnum Hunter ResourcesU.S. Concrete
SAN ANTONIOAT&T*Christus Health
GEORGIANYLO Hotels
ALABAMATorchmark*Zoes Kitchen
FLORIDACCS MedicalFiesta Restaurant Group
CONNECTICUTAccudyne IndustriesiCall Inc.Revere Capital LLC
Note: Companies with an * moved to Dallas-Fort Worth prior to 2010
ILLINOISBar Louie Restaurant GroupFerris ManufacturingNevoia Logistics ServicesTopGolf
MICHIGANComerica*
MASSACHUSETTSNTT Data Inc.VCE
NEW YORKGreatbatchHMS HoldingsSignature Systems GroupSix Flags Entertainment
MISSOURIGKNAerostructures*
NEBRASKAHeartlandAutomotive Services
NEW JERSEYComparexCVE Technology Group
TENNESSEEDynamic EnergyAlliance
ARKANSASGolden Living
SAMPLE OF COMPANY HEADQUARTER MOVES TO DALLAS FORT WORTH 2010-2016
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PAGE 12
DFW APARTMENT MARKET FUNDAMENTALS TODAY - Q3 2017
DFW EFFECTIVE RENT GROWTH AND OCCUPANCY
DFW Metro Dallas Fort Worth
Existing Apartment Units 715,309 533,097 182,212
Units added since 2010 110,013 92,237 17,776
Units absorbed since 2010 134,454 109,495 24,959
Average Gross Occupancy Q3 2017 95.1% 95.1% 95.2%
Annual % Change -0.5% -0.5% -0.4%
Current Period Effective Rent Q3 2017 $1,127 $1,154 $1,047
Annual % Change 2.8% 2.3% 4.2%
$803
$1,140
92.5%
93.0%
93.5%
94.0%
94.5%
95.0%
95.5%
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
2010 2011 2012 2013 2014 2015 2016 2017 (P) 2018 (P)
Rent Occupancy
2010 – 2018 (projection)34% rent increase 2010 to 2016 YTD
Source: Axiometrics
Source: Axiometrics
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PAGE 13DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
DFW TOTAL HOUSING PRODUCTION
DFW HOME OWNERSHIP
9,8224,990
25,517
49,644
15,581
29,703
59,466
20,571
55,220
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Hous
ing
Perm
its
Multifamily (5+) Single Family Total
Total housing production still below peakDFW added 890,000(+/-) people since 2009
0
2
4
6
8
10
12
14
16
160,000
180,000
200,000
220,000
240,000
260,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Avg Price Months Inventory
Dearth of affordable single-family homes as prices rise and inventory declinesCurrent 1.8 month inventory = 25-year low
Building fewer homes and at higher price point
Source: U.S. Census Bureau
Source: Real Estate Center at Texas A & M University
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PAGE 14
WHERE IS THE PIPELINE CONCENTRATED? THINK JOBS!!!
DFW – THE DEMAND DRIVEN MARKET
Current lease-ups and projects under construction
90.5%
91.0%
91.5%
92.0%
92.5%
93.0%
93.5%
94.0%
94.5%
95.0%
95.5%
96.0%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2010 2011 2012 2013 2014 2015 2016 2017 (F) 2018 (F)
Occ
upan
cy
Uni
ts
Supply Demand Occupancy
Demand outpaced new supply 2010-2015; this trend is expected to continue in 2018
Actual (Demand outperforms expectations)
Demand Projection as of Q2 2016
Source: Axiometrics
Source: Axiometrics
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PAGE 15DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
DFW APARTMENT SALES
MF INVESTMENT ACTIVITY BY BUYER TYPE
Property or portfolio sales $10 million or greater
0
50
100
150
200
250
300
350
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
$9,000,000,000
$10,000,000,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
# of
Pro
pert
ies
Volu
me
Volume # of Properties
293 Properties$8.8 Billion Total Volume
$30.0 Million Average Deal Size58 Properties$1.15 Billion Total Volume
$19.9 Million Average Deal Size
DFW MARKET USA MARKET
0.0% 0.4% 0.1% 0.8% 1.0%
57%51% 49%
63%58%
5%
3% 5%
12%
5%
11%
6%
17%
4%
6%
27%
41%
29%21%
29%
2013 2014 2015 2016 2016
Institutional
Cross-Border
Public Listed/REITs
Private
User/Other
Property or portfolio sales $5 million or greater
Actual (Demand outperforms expectations)
Demand Projection as of Q2 2016
Source: Real Capital Analytics
Source: Real Capital Analytics
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PAGE 16
WE AREMORAN & COMPANY
––––––––– With over 22 years in business, we are the team you want on your side. –––––––––
We are... Nationally recognized leader in providing disposition, capitalization and advisory services
... Exclusively serving the multifamily industry
... Passionate client advocates with seasoned, dedicated professionals
... Capable, offering national coverage provided by 12 highly experienced partners operating from 8 regional offices
... Regarded as a dominant intermediary for transactions in excess of $100 Million and for ex-ecutions requiring higher levels of senior expe-rience and focused attention
THOMAS F. MORAN
FOUNDER & CO-CHAIRMAN
MARY ANN KING
CO-CHAIRMAN
DAVID MARTIN PRESIDENT | WESTERN REGION
PETER EVANS
PRESIDENT | EASTERN REGION
Moran & Company––––––––– National Leadership –––––––––
Moran & Company Southwest––––––––– Regional Team –––––––––
Paul Harris Managing Partner Southwest Thad Wetterau
Director - DallasGreg Smith
Director - Dallas
Jeffrey SkipworthDirector - Houston
Eric Calub Director - Dallas
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PAGE 17DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
SOUTHWEST LEADERSHIP
Education• BAYLOR UNIVERSITY, M.B.A. (1988)• BAYLOR UNIVERSITY, B.A. (1986)
Work Experience • MORAN & COMPANY (1999-PRESENT)• LEND LEASE (1998-1999)• L&B GROUP (1997-1998)• AMRESCO (1996-1997)• M/PF RESEARCH (1994-1996)• COMMERCIAL REAL ESTATE APPRAISAL (1989-1994)
Thad WetterauDIRECTOR | SOUTHWEST
Since joining Moran & Company in 1999, he has completed over $3 billion in multifamily transactions, pri-marily in Texas, but also in major markets across the southeastern U.S. He brings to bear his background in institutional real estate research, development consulting, appraisal, and transactions on every investment assignment. His current responsibilities cover the entire multifamily investment sales process, including cli-ent service, relationship management, deal management, property valuation, economic analysis, marketing and due diligence.
Education• TEXAS TECH UNIVERSITY, B.A. (1977)
Work Experience • MORAN & COMPANY (2003-PRESENT)• ARCHON GROUP (1994-2003)• NORTHCORP REALTY ADVISORS (1989-1994)
Professional Affiliations• NATIONAL MULTIFAMILY HOUSING COUNCIL• DALLAS REAL ESTATE COUNCIL
Paul HarrisMANAGING PARTNER | SOUTHWEST
Since opening the Dallas office in 2003, Paul has been responsible for all marketing assignments and client re-lationships in the Southwest Region with particular emphasis on the major Texas markets. Paul and his team have closed over $4.4 billion in multifamily dispositions and recapitalization since joining Moran. Prior to joining Moran, Paul was Director of Multifamily Investments for Archon Residential, a Goldman Sachs subsidiary, with responsibility for Archon’s national multifamily acquisition and disposition efforts. During his eight years with Archon, Paul completed the sale of 255 multifamily properties comprising over 56,000 units in 32 states with $3 billion in value. Paul has focused exclusively on multifamily transactions since 1995 and he is active in the National Multi Housing Council (NMHC).
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PAGE 18
SOUTHWEST LEADERSHIP
Education• TEXAS CHRISTIAN UNIVERSITY, M. B.A. (1997)• TEXAS A&M UNIVERSITY, B.B.A. (1989)
Work Experience • MORAN & COMPANY (2005-PRESENT)• GOLDMAN SACHS / ARCHON GROUP (1997-2005)• TEXAS COMMERCE BANK (1995-1997)• THE WALT DISNEY COMPANY (1992-1995)• COOPERS & LYBRAND CPA’S (1989-1992)
Professional Affiliations• NATIONAL MULTIFAMILY HOUSING COUNCIL• URBAN LAND INSTITUTE• DALLAS REAL ESTATE MINISTRIES (DREM)
Greg SmithDIRECTOR | SOUTHWEST
Greg’s responsibilities include business development, economic underwriting, marketing, and due diligence for assignments in the Southwest region. Prior to Moran & Company, he managed investment sale transactions for Goldman Sachs of all property types. Gregory is a licensed CPA and real estate broker and also has experience in commercial banking and public accounting, along with positions at two Fortune 500 companies. Greg graduated as a Neeley Scholar from the Masters of Business Administration program at Texas Christian University and cum laude with a BBA from Texas A&M University.
Education• SOUTHERN METHODIST UNIVERSITY, M.B.A. (2005)• AUSTIN COLLEGE, B.A. (1999)
Work Experience • MORAN & COMPANY - BROKERAGE (2006-PRESENT)• FIDELITY INVESTMENTS - FINANCIAL & TAX ANALYSIS (2005-2006)• FIDELITY INVESTMENTS - INSTITUTIONAL MANAGEMENT (1999-2005)
Jeffrey SkipworthDIRECTOR | SOUTHWEST
Jeffrey Skipworth is the Director for Moran & Company in Houston, an office he opened with Paul Harris in 2011. Jeffrey started his career with Moran & Company in 2006, and has worked on $1 billion of real estate during his tenure at the firm. Jeffrey has extensive experience at all levels of the marketing process including underwriting, marketing presentation, research and investor solicitation. Prior to joining Moran & Company, Jeffrey was a senior analyst and relationship manager for Fidelity Investments, where he represented a num-ber of billion dollar companies in large investment transactions in addition to conducting tax analysis for large multinational firms. He is a licensed real estate broker for the state of Texas.
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PAGE 19DALLAS - FORT WORTH MULTIFAMILY TRENDS & OBSERVATIONS | 3RD QUARTER 2017
SOUTHWEST LEADERSHIP
Education• UNIVERSITY OF MICHIGAN-ANN ARBOR, B.B.A.
Work Experience • MORAN & COMPANY• PASSCO COMPANIES, INC• THE KISLAK ORGANIZATION• BERKSHIRE REALTY• WALDEN RESIDENTIAL• THE PRIME GROUP
Professional Affiliations• NATIONAL MULTI HOUSING COUNCIL• THE REAL ESTATE COUNCIL - DALLAS
Eric CalubDIRECTOR | SOUTHWEST
Eric has spent most of his career in the multi-family sector on the principal side as both an Acquisitions and Dispositions officer in addition to asset managing a portfolio of properties. Eric has worked for both large public entities (Berkshire Realty and Walden Residential - REITS) and smaller private companies (The Kislak Organization and Passco Companies – TIC/DST sponsor). Eric has over two decades of experience include executing transactions involving single asset entities and portfolios of core, core-plus, and value-add properties, as well as performing and non-performing loans. Throughout his career Eric has successfully closed acquisitions and dispositions in excess of $2 billion.
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SOUTHWESTDALLAS, TX
HOUSTON, TX
MOUNTAIN STATESDENVER, COPHOENIX, AZ
PACIFIC NORTHWESTSEATTLE, WA
WESTSAN FRANCISCO, CAIRVINE, CA
MIDWESTCHICAGO, IL
SOUTHEASTATLANTA, GA
Moran & Company Offices
Paul Harris Managing Partner Southwest
D: 972.764.8490 M: 214.232.8689
Thad Wetterau Director - Dallas D: 972.764.8491 M: 972.754.5420
Greg Smith Director - Dallas D: 972.764.8499 M: 817.313.7081
Jeffrey SkipworthDirector - Houston D: 713.425.4942 M: 214.533.3322
Eric Calub Director - Dallas D: 972.764.8492 M: 972.567.3560
DALLAS OFFICE 5440 Harvest Hill, Ste. 146
Dallas, TX 75230 972.387.2500
HOUSTON OFFICE 12 Greenway Plaza, Ste. 1100
Houston, TX 77046 712.425.4942
NORTHEAST & MID-ATLANTIC
BOSTON, MAWASHINGTON, DC
Photo: Steve Hinds