AUM Honors Local Developer Wilson

MONTGOMERY, AL | MAR 10, 2010–The head of one of Montgomery’s largest real estate development firms said the financial crisis means it will be far more difficult for such companies to construct huge projects. Jim Wilson III, CEO of Jim Wilson & Associates, was named the Auburn Montgomery Outstanding Business Leader of the Year on Tuesday. The company that built such Montgomery landmarks as EastChase and Wynlakes could well be reduced to the role of real estate agent if current trends continue, he said. “We will be nothing but a broker,” he said. “The risk profile will come off of us. “Today, I can’t sell the dream of an EastChase being built.”

Architects, engineers and planners at the company remain able to churn out attractive plans, but those rarely get past the planning stage. “They are not worth more than the paper they are on,” Wilson said. Wilson’s father and namesake built the family company by taking risks, and it was often heavily leveraged, he said. The capital to take those risks either is no longer available or is simply too costly, Wilson added. Banks are regaining the ability to lend, but don’t yet have the will to do so, he said. “They lack the confidence to lend, and that took capital out of the market,” Wilson said. Venture capitalists, once a ready source of loans or investments, now expect much higher rates of return. Investors who once would have settled for 20 or 30 percent of a company now want at least half. “They don’t know how to price their money,” Wilson said.

Wilson’s company, which is heavily invested in commercial real estate, is suffering as businesses across the country cut back. That means fewer tenants for more space. “The smart guys right now are taking us to the woodshed,” he said. Potential tenants are much more aggressive in seeking incentives to lease space. “We can’t lease the stores, and we can’t get the financing,” he said. That means the company is changing the projects that it builds and the way it pays for them. Its newest project, Redstone Technology Park in Huntsville, will be built in a partnership with the city. Taxpayers will pay up front for infrastructure such as roads and utilities so that the developer can build up to 4 million square feet of office space. Wilson said the development is driven by Defense Base Closure and Realignment Commission moves that require more space for military contractors. Still, traditional financing was not available. Such changes, he said, are the way for his company to keep the doors open. In this economy, that is what matters most, according to Wilson. “The main thing is we survived,” he said.