North Texas CCIM 5yr Forcast Outline

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Real Estate Investments/Economic Forecasts
Baen’s 5-year Sign Posts to the Future
2017-2021
By: John S. Baen Ph.D.
Professor of Real Estate
Texas Apartment Association Professor of Residential Property Management
Department of Finance, Insurance, Real Estate and Law - UNT College of
Business
PO Box: 310410, Denton Texas 76203
Email: Baen@unt.edu
Cell: 940.507.0312
Website: www.cob.unt.edu/firel/baen
Perspectives and Trying to Connect the Dots: Science, Art or
Hopeless Opinion?
Annual CCIM Dallas Presentation 2016 – Dedicated and in Honor to UNT Real Estate
Alumni Jim Lake 1930-2003
“No Man Knows the Future”
“Good things take a long time!”
“Bad things happen in a hurry!”
“Even the ants plan”
Thursday, November 17, 2016

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BAEN’S 5-YEAR SIGN POSTS TO THE FUTURE
2017 – 2021
Overview of Presentation Perspectives
By John S. Baen PhD.
UNT College of Business (Baen@unt.edu)
Classes of Real Estate Investments
V. Houses
VI. Land Rural/Urban Fringe
VII. Apartments
VIII. Retail, Banks, Governing Works, etc.
IX. Office/Medical and ER Clinics
X. Industrial
XI. Conclusions/Action Plans
I. Introduction/World Overview Influences
II. $ - Capital – Currencies - Markets
Overview: Economy and Markets
III. Texas Oil: Economy/
Royalties/etc.
VI. United States,
Texas, and North Texas
Real Estate and
Corporate
Moves

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I. World Overview in Regard to Risks and Opportunities in America and
Real Estate Investments 2017-2021
By John S. Baen PhD. (Baen@unt.edu)
• *** Real Estate is Important (50% of USA GDP) Steven Roulac (New Book)
• 1 in 4 employees (related industry – builders, banks, etc.)
• 50% of the world’s wealth stored in Real Estate/True Wealth
• 30% of Household Budgets
• #1 Household Expense
• 20% Indirect Household Budgets
• Second Largest Business Expense
1. Trump “Wins”
• He is a Real Estate Expert
• Understands and has created jobs
• Understands After tax income
• Is a Business person
• All his Real Estate Deals did not work – some Bankruptcies! Good.
He is willing to take reasonable chances with an action plan.
2. Federal Reserve Bank – The FED
• Interest rates will rise (Baen was wrong for 3 years)
• Pre November 9, 2016, publically tied and was waiting to raise
rates after the election.
• Now will raise rates (and CAP rates will follow)
• Trump will be wrongly blamed for stock market correction.
• Stocks with offshore IRS/Corp Tax havens will suffer. Apple, Intel,
etc.
• Federal budget and deficit will blow up to interest rate increases.
• A new Quantitative Easing (QE 4, 5, etc.?) will be required or
recession and “Fluttering” economy will continue in US.
• Corporate taxes will Fall, stimulating jobs
3. The Liquidity of the World is in the US for FDIC “guaranteed” Currency
and Perceived Relative “Safety” of the U.S. and $.
4. The Rate of Foreign Capital flowing into the US will SLOW – Much of the
foreign cash here is from unstable countries and drug money or money
escaping from China
5. The Devaluation of the Pound – Euro Drama is Real and Smart by the UK
• UK votes to Exit Europe!

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• Real Estate wins (Homes up 30%)
• UK Exports win
• Hard Asset = huge play
6. Greece Bites Bullet, Raises new Taxes, Collecting more Taxes, Firing
Government Jobs, No $ and Real Estate Values and Economy are
Collapsing! Who cares? They do!
7. Puerto Rico Defaults on Huge Per Capita Financial Bonds and U.S. Prints
Money and Congress Bails them out! What a crock! Bond investors
bailed out by U.S. taxpayers.
8. China Exports Down 25 – 40% and Government very Smart! Dropped
Values of the Yuan – to Boost Sales and protect Chinese Jobs/Banks.
• China devalued currency, killed US exports, increased US imports
• August 26, 2013, Cut Interest Rates – Yikes! And 2016 Devalued
Yuan
• China slow down killed Worldwide Commodities for raw materials,
<-25%>
• Chinese drop in exports by 25% is an indication of how weak the
U.S. consumer economy/people are!
9. 2016 US Dollar very “Strong” (China beats US in any Devaluation)
• Vacuum Cleaner of the World’s Capital
• New Capital flowing into the US
• Keeping Interest Rates Low
• “Flight to Safety”
• Perceived “Safety” of FDIC and US Government (US Printing
Press)
• China Invaded U.S. FDIC Computers and Banking System 6 times
in 2016
• Killed US Exports and Walmart sales drop off with export figures
from China reflective.
10.Middle East and Turkey continue to be Problem Areas for World Peace.
We sell them F-16 (From Fort Worth, Texas – Lockheed) and Weapons
and US needs their Air Bases and Air Space for American Defense
11.Ireland Imposed New Taxes on US Companies Based on Income and
Company Value (The benefit of US companies going offshore for
manufacturing or corporate headquarters may be shrinking)

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12.Serious Trouble (Oil, Land, Security of U.S.)
• Iran – “Treaty” to Export Oil If Nuclear Deal Approved by Obama
Administration is not repealed?
• Yemen - #1 Threat to Saudi Arabia/U.S. is there!
• Ukraine – Russia is in the oil business
• Saudi Arabia – Defending the Kingdom (100,000 Troops)
• Israel
• Syria – Now Russia is there and controls the sky.
• Iraq – Now Russia is there.
• Afghanistan – Now Russia or China is there.
• Russia – Yikes! – Primarily in Oil Biz and broke (Only export except
war … U.S. too?)
• Mecca 1,500,000 people gathered while Pope 100’s of 1000s
(9/25/2015)
• 5,000,000 “Syrian” Migrants, (Camping in Europe) – winter now. If
ever armed by “somebody,” they could invade western Europe rather
than freeze. 85% men, 15% families.
• U.S to “take 10,000/ 85,000/ 100,000 Syrians migrants in 18 months –
Texas Balks – What will Trump Administration do?
• US Passport Offices Closed – 6 in Fort Worth
• US – China “Reach” Cyber Treaty
 To spare: Electricity, Water, Internet Systems and “Financial”
institutions. Wow!
 5.6 Million Finger Prints Stolen – High Security
 24 Million US Gov. Employees/ Applicant Files stolen
 Mrs. Clinton’s E-mails plundered
 FDIC computers invaded six times in 2016
13.U.S Economy “growing”/recovering at less than break even (2.6%); more
like 2.3% in 2016 … and future?
• Fewer Jobs
• Fewer Higher Paying Jobs
• More Migrants (Legal and Illegal)
• Robotics doing more work
• Minimum wages @ $15/hour will kill restaurants and retailers
(Washington, New York, etc.)
14. Other than military related, what export business is the USA in?

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15. What can the U.S. sell to the world to bring in and create fresh capital to
grow? New jobs?, etc.
16. What businesses or industries (Not government funded) is the United
States in? What industries are doing well? Worrisome!
17.Jobs, Jobs, Jobs can only come from small businesses creating new
products, services, etc. – NOT, Not Healthcare.

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II. A 2016 overview of US Economy and Capital Markets for 2017 – 2021
*RATES DID NOT INCREASE! (Baen was wrong for 3 years!) We need some
inflation and some rate hikes to move the economy.
** New rules and reduced financial services fees for Fidelity, Ameritrade, etc. will
send shockwaves through the industry. Rollovers will stop! Churning will stop.
1. See Snapshot charts of the Pulse of America 2004 – 2016 (attached)
• Fed Debt trends (flattening but Low in Rates)
• U.S. Printing Money – Out the Roof in a low Interest Rate Environment
• U.S. “Food stamp” Program off the charts high, huge (how to defuse
without civil disobedience)
• Home Ownership Rates have crashed from 72% to 63% in seven years.
• We have become what appears to be a No Stigma/A Nation or Society of
permanent renters? (Transfer of Wealth/Appreciation/Tax Incentives to
Investors!) We must reignite the Great American Dream of Home
Ownership.
• Student loans – Huge! 1 Trillion and growing investment? Or drag to US
and Borrowers? And kills credit scores and future government benefits.
FHA Homes, Social Security, etc. are canceled in the future for those who
default!
• Old Americans work? Yes.
• More Americans have 2 jobs
• Walmart and McDonalds are laying off 10s of 1000. (more efficiencies)
2. FED will no longer delay Rate Hike (From Fed Rate of .25 %!) and Rates may
increase to .75% quickly and the sooner the better?
• Weak US Economy (2.3% not break even growth)
• Fewer full time jobs for now; may improve in 2017.
• Bond market artificially supports Housing Market
• Weak World Economies
• Effects on Bonds and Stock Market/ETFs on total wealth of the 2% of U.S.
• Dividend Effects! Rats off Ship
• Banks to increase reserves! Developers will have less $ to develop.
Private equity will replace the financing.
3. US Dollar Hopefully Will Increase in value! (Predicted Wrong last year) Good or
Bad?

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a. After Stimulus/Bond Buying, stopped but offset by Foreign Deposit into
U.S – Capital flow is slowing
b. U.S is Huge Vacuum – Cleaner in the world for liquid cash – China Cash
flows to U.S. but offset by Buying, US hard assets (Oil) and companies
c. Perception of Safety – FDIC and ultimate guarantee of U.S government
(Printing Press)
d. Killed oil and other commodities. Prices will continue to flutter. (Also weak
U.S. economy)
e. Killed exports of U.S expensive exports (Currency Differentials)
4. Stock Market Volatility and ETF Risks – Huge due to low profitability of
companies – Nov 11, 2016 Largest Drop in Emerging Market ETF Funds Ever
a. In 2015 stocks had melted down:
• Energy (- 19.5%)
• Materials (- 18.8%)
• Health Care (- 12.5%)
• Telecom (- 9.3%)
• Utilities + 2.37%
b. In 2016, many of these recovered (oil, gas, etc.)
5. U.S Household Wealth Growth 2013 – 2015 was 90% Financials vs 10% home
equity, other investment, etc. This will shrink in 2016 – 2021 due to correction in
financial cycles. – 12 year Bull Run.
6. Forty (40) year 10 year Treasury Rate and Inflation Cycle fits Perfectly. Hyper
Inflation or Depression to Follow?
7. IMF Warned 9/30/2015 that U.S. Mutual Funds and Bonds are Risky (Short term
Corporate Bonds, Drilling Bonds, etc.) – illiquid
8. U.S Treasuries in Danger of Sell – Off (Liquidity Rush – and Sold First when
Interest Rates finally go up)
9. China Devalued First!
a. Yuan Devaluation – Brilliant! (Beat us!)
b. Dropping Int. Rates! (We are @ zero). China Can Drop and Devalue
More!
c. “Stopped” Currency transfers out of China
d. China stock market Crash

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e. Saving Rate 35% (Average)
f. Bankers and stock brokers arrested
10.EB – 5 Program ($6 Billion in US) (cash for Green cards) and $30 billion USA RE
Investment
• Will Slow – Green Card Investors for US “biz”
• And US Real Estate Projects. Likely invested $30 Billion U.S $Dollars
(Leveraged deals @ 80%)
11. U.S Banks told to hold extra Capital (Nov. 2015) “Appear to be Solvent.”
• Fewer loans?
• Fewer extensions?
• More deposits?
• Reduce risk of 6 largest banks!
• Restriction on fess and new accounts for big banks are worrisome.
12. Bankruptcy Filings (Oil Companies First)
• 130 companies declared bankruptcy 2015-2016
• 60 Companies on Watch List
Debt/Bond Refinance trouble
• Hedges, Derivatives, Junk Bonds
• Mergers and acquisitions by cash rich companies do not create jobs….
Job killers but good for companies!!!
13. Many Pension Funds Insolvent
• Cuts of 30 – 65 % (soon)
• 401 – Ks in Mutual Funds.
• Texas Effects (They will not Freeze Here) many retirees will move to
Texas.
• Social Security running out of $? When? “20 years”
Printing press and new criteria will save the system.
14. Wanted by FED: Some Inflation! ($30 Raise in Social Security Benefits in
2016!!)
a. Appreciation!!
b. Inflation (wanted!)
15. Historically, interest rates Increase for three reasons:
i. Shortage of Capital
ii. Anticipation of Inflation
iii. Overheated economy / developments

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iv. Defaults (Families, Cities, States, Corps, US Government)
 “Appear” “Stable” today (bonds to be artificially Re-Financed will
crash at higher rates in 2017, very near – or defaults/panic)
 Bond Market is 600% Larger than US Stock Market
 Huge exposure to US banks – Drilling and oil/gas bonds/financing
based on high oil prices (Now dropped by 60% in price/bbl – Bond
values)
 Consumers up to their necks in debt – risk.
16.Millennials at the Point!
• 66% have Little to No Job Loyalty; most want to leave where they work
within 3 years (a restless bunch who have not found their work groove or
passion)
• Only 17% have typical Work-Life Balance Wishes at this Point
 To have families (They will?)
 Get married (They will?)
 Have kids (They will?)
 Buy a house (If possible?)
 Treadmill life (They might!)
 Not material driven (at this point)
 Love one year apartment leases with no plans – unless move
around area for better apartment – Do Not want a house yet!
 ARE moving to Texas and Southwest for jobs, are highly educated
and will compete with local college grads.

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III. 2017 – 2021 Overview of Texas Oil and Real Estate – The FRAC Bubble
1. Effects on Texas Real Estate/ Economy is Huge (won’t be felt until 2016/2017)
• Rural North Texas (from 240 Rigs to 2 Rigs – Nov. 2015; 2016 = Zero!)
• Rural Areas Slow Meltdowns/School districts, etc. laying off.
• Slow Down in Land Sales (Loss of wealth/income effects.)
• Reduction in Severance Taxes (State Budget)
• Less Disposable Income – Royalty Owners
• At Risk Real Estate Markets – Texas Real Estate Markets:
 Houston – High – Big House market meltdown, Luxury Apartments suffering
 Corpus Christi – High
 San Antonio – Medium
 Dallas – Low
 Austin – Very Low
 Fort Worth – Low (Toilet flush in slow motion since 2014)
 Fort Worth Alliance – Low!
2. Oil Prices have rebounded 30% in one year – 2016 (still half of peak)
3. Layoffs huge and under reported. 80,000 – 125,000 in Texas (2015 – 2016)
• Many Banks Exposed to Oil Deals and acquisition loans
• “Innovative Finance”/ Hedge / Bond Deals Scary
• First Year Shale Decline Curves <-80%>
• Royalties have dropped <-80 – 90%> - (The hidden evaporated TX
wealth)
• Many more bankruptcies expected (160 companies)
• Many S. Texas communities in the Eagle Ford have built Community
Centers, etc., with long term Bonds based on Oil Production/ Values and
Assumptions and Tax Base
• Hunts buy ONCOR Electric Utility Company
 Oil and Gas Owned, Pipelines, etc.
 Electricity Grid/Delivery
 Built in Customers
 Going Public? Wow.
• Russia may help Oil Prices – Supply/Disruptions/War
• U.S./Tex Oil Companies fighting for Survival – Tactics
 Suspension of Royalty
 Charging, Outrageous, Expenses (35 – 53%)
 Stealing from State and Mineral Owners
 Related Party Pipe lines and Buyers

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IV. 2017 NOW/ North Texas Overview
What is positive about Texas? 2017 – 2021 – The Beat Goes on!
More Corporations will come! (Frisco Boom - Toyota, FedEx, Liberty Mutual,
Fidelity, TDAmeritrade, etc.) (Southlake/Westlake Boom!)
Texas Minimum Wage works! $8.50 vs $17/hour.
* 48,500 NEW North Texas JOBS are real 2017-2021
You/We are Ambassadors of Texas, sell others to come to Texas!
1. Cost less to go broke in Texas – U.S Corps. Struggling (Many U.S Companies
not doing well)
2. No state Income Tax (yet) – State Sales Tax, O+G Severance Taxes and
Royalties make our state rich
3. Shipping Coastal and Rail (Liquefied Natural Gas Complexes)
4. International Boundary (+/-)
5. Cheap Labor (Migration and non-union state)
6. Time zone extra 2 hours’ work day (East – West coast)
7. Center of US – Travel Time Costs (50% less)
8. Cheap Buildings and Land (No snow designs)
9. Cheap houses (Preowned $130/sq. ft. – New $174/sq. ft.)
10. Pro-business attitude/ Easy Zoning (Local and State Incentives – Tax Waivers
11. Self – Reliant Oil and Gas production (Oil Curve of Boom/ Bust)
12. Texas Electric power grid vs East/ West Power Grid (Selling Excess off Texas
Grid)
13. Texas CAN DO attitude and personalities / positive!
14. EZ Zoning (vs 5 + years in California) – (Except Flower Mound!!) (Denton doing
much better than 2013/2014)
15. Friendly Corporate Legal Environment – the courts and Laws
16. Privately funded Foreign Support to Mexico (US$ -> Mex)
17. New California and New York immigrants’ $ to buy houses and other investments
• Land
• Warehouse
• Farms/Ranches
• Etc.
18. Alliance Corporate Campus tracts available for next 10 – 20 years (7X Frisco)
19. Road projects will end…… someday!
20. Politically powerful state in US and population/congressional seats growing
21. Will Alliance or Denton Airport become Love Field? (2020)

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V. North Texas Housing Market 2017 – 2021
1. We are becoming a Nation of Young People who are Satisfied with Renting (at
this time)
• Home Ownership is Basis of any Stable Society and Democracy
• We live in a totally government sponsored Socialized Housing Market!
(FHA, VA, FNMA, etc.)
• U.S. Home Ownership dropped from 73% to 62% since 2008
• Texas Housing Market <- Houston> Booming – Affordability Driven?
• Cheap gas prices help to drive until you qualify (Danger?).
2. There are Six (6) types of Buyers Driving the North Texas Market. Average Price,
$240,000 or pay $7200/month take home pay or Pretax $120,000/year!
A. Typical first time buyers – Market on Fire
• Affordable $150 – 250K (Inventory Low – New or Preowned)
• Multiple Contracts
• Selling in 40 days or less
• Selling higher than asking (often)
• McKinney Camp Out to Bid or New Houses
B. Out of State Migrants and New Professional from India, Pakistan, and China
($450 – 550k)
• Often Pay Cash
• Rarely Sell
• Extended Family Residences (Often 3 generations) in same house)
• Often Flock together
C. Investment/ Rent House Buyers (1 in 7 houses sold in North Texas)
• Seeking 10% NOI, After tax 8% returns
• Seeking Appreciation 9 – 12%
• Seeking Tax Write Offs
• Property Management Firms Booming
• DANGER!
 Cities of Dallas, Denton, others
 Slum Lords unit!
 City Rent House Inspection and Permit to Rent
 Ridiculous City Standards for Rent Homes
 Health Safety
 Illegal Protection and Imposition of Law
 Owner Occupied vs. Landlords
 Owner Occupied Discrimination

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D. Condo/Townhouse Boom (Alternative)
• Are conversions next (Apartments)??
• Inner City up Town etc. Booming @ $1700/month rents
• Mega Multiuse Booming? (Building Now)
E. City Infill Developments and Demolish of Old Buildings/Homes (Booming in
North Dallas) $450,000 Homes being demolished for Lots!
F. New Micro / Cottages Proposed by city of Dallas – 400 - 900 sq. ft. homes
• Small lots
• Small, small homes
• Welcome to Europe
• Affordable Homes
• 12 lots/acre
3. Tight Supply of Existing Homes and Affordable Lots
• People not moving! Satisfied! – That’s a “Good thing”?
• 7 years “Rule” not occurring – Lifetime Home concept (Europe?)
• Move up being questioned – Incomes not increasing with value
• Hip Pocket Listing (data missing)
4. This is a Job and Immigration pushed House Market from Corporate Transfers,
Announcements, and People moving to Texas Jobs?
• Toyota expects a large number to come to Texas – 4000
• Expected was 25% - Now up to 66% may come that were invited
• Many are buying early! For 2017 and 2018 arrival date
• Many buying Temporary smaller home, wait and see, possible Rent
House.
• “Raindrops Now, small Stream in 2017, and Giant River in 2018 of people”
• Many will keep their homes in California as Rentals and “Safety Value” to
return to California!??!!
• The “Low” Initial Cost of Nice Homes here in Texas are “offset by very
high property Taxes”
5. Realtor Data is incomplete view of Market in 2016
• “Coming Soon” Signs
• Hip Pocket Listings
• Online and “Help You Sell” save the Fee programs
• Some “Realtors” going independent (Non – Realtors)
• FSBO (For Sale By Owners) and reduced commissions

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6. Housing Market driven by Low Interest Rates and FNMA buying Loans for
$417,000 or less and Migration of People from Expensive Markets! (Risk
potential in bond market)
The market will cool due to loan qualifying ratios and over supply of $450,000+
homes
7. Collin and Denton County will Boom and Follow the Jobs to Plano/Frisco and
Alliance
8. Buyers are willing to commute one hour (travel time – not distance) each way
(less than California) Growing Gas Prices a Risk.
9. Lot Prices and Development Costs will change the ratio of House to Lot (20% Lot
becoming 25 – 40% of total house Costs in key high demand areas)
10.Smaller Houses are the demand BUT the Supply and Zoning are for larger
homes/City/Lot Size Driven – Uncooperative/Unrealistic Cities
11.2016 – 2020…. Texas Homes are likely to Double in Value in 5 years!
• Welcome to California 1955. Current Apartment Dwellers may become
California Dreamers… and be stuck in Apartments or Parent’s Home!
There needs to be innovations to adjust for:
 Student Debt
 Income Stagnation with increasing house prices
 Shorter View of life and lifestyles (less responsibilities and risk)
 Less Materialism Life Style
 Transportation issues/Urbanization
 Appreciation and costs increasing further than Incomes!
12.FNMA Dependent/Secondary Market? Yikes? US Housing Market Driver!
• $417,000 Max Loan
• Income Ratios for a $417,000 Loan Requires $12,000/month take home
Pay – After Tax! or $150,000/year
• Or the 30-year Mortgage will be gone Forever
13. Need: Planned, approved by cities Granny Flats and places for grandparents
(Baby Boomers) to live in the back yard!
• Families cannot afford assisted living
• Older Americans are broke.
• Families will love it –Baby sitters

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• Grandparents Not welcome IN the House
• Cities will fight Granny Flats with all they have on zoning.
• Voters should demand this NOW and approve new projects NOW!
• New Homes will be smaller but need MORE storage for Baby Boomers
Special Heirlooms and Individual Treasures. (S.H.I.T they inherited from
their parents!)

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VI. Growing Concerns in The Housing Market and Investment Values 2017 –
2021
1. 3.5 – 4% Increasing “Texas Mortgage”! Even if paid for 2.5 – 3.5% Taxes and
Equal to as much as Mortgage. High property taxes could put many investments
and city/school budgets at risk during correction of markets.
2. Unequal Imposition and Protection City Rent House Rules of Inspection
Unequal imposition and enforcement of City Housing rules, inspections, repairs
and License in regard of Rent Houses
• Vacation Renters ????
• Rent house vs. Owner Occupied Repairs Required?
• Enforceability (Renter Rooms)
• Boarding Houses/Rooms will be new trend of older Baby Boomer
3. Other concerns:
• Young College Grads and professionals are not excited or motivated to
buy a house… yet. When?
• Interest Rate increases?
• Affordability Index Down? (Construction/Lot Prices, College Debt Loads)
• Appreciation Rates far exceeding Income Increases! DANGER SIGN!
• Huge Lot Inventories on Horizon for $ 450 + K Homes Major Assumptions
of FNMA support and Corporations are coming to Texas
• Correction or Shift in U.S Economy and Wall Street (Down)
• Bust in Texas Oil Boom – Houston = Foreclosures?
• FDIC Reserve Requirement Changes
• Changes at the FED – Interest Rates Increase
• Availability of Loans – Loan Standards
• Oil bust area home defaults… serious
• “New” 3.5 – 4% “Texas Mortgage”! Even if Home is Paid for 2.5 – 3%
taxes plus 1% Insurance per year based on value!
• City impact fees/lot and construction costs up 15% (Income not?)
• Old kids live with Mom and Dad? (34% over 25 years old)
4. Lot Prices Outrageously HIGH! Due to:
• City Fees/Impact to Fees
• High Dev. Costs
• Low density “Desires” of City
• Regulations
• Huge “impact fees” by cities (transferred to lots.)

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VII. Rural Land and Urban Fringe Land 2017 – 2021
1. The Waggoner Ranch 510,000 Acres Sold for $725 Million - $1,400/Acre!! Base
line for all Texas land?
2. Land Rents and Values in Midwest should be crashing with Commodity prices.
Texas Hunting Lease and Grass Lease suffering. Farmer Profits, as Baen
projected in 2015-16, expected to drop in 2017 (continued down)
3. A drop of 25% for corn and wheat (examples) may relate to a 50% drop in profits:
• Reduced subsidies
• School lunch programs (healthy?)
• Ethanol Support B.S discontinued
4. AG Values (different than Market Value) being raised significantly by Appraisal
Districts even with FALLING commodity prices and lower Farm NOI – DANGER!
This is Real – Take Note!
5. Farm Royalties and the Market is softening for the sale or liquidation of mineral
rights/sales. (Lower NOI for farms and ranches)
6. Midwest Banks/Farm Belt is bracing for Farm Foreclosures and possible
increasing interest rates… will increase costs/defaults
7. U.S Food Exports to continue to fall (U.S Dollar Strength)! Also Changing in
eating habits among primarily younger customers
8. Texas Cattle Prices are dropping for many reasons:
• Affordability of consumers!! $6.00 hamburgers!!
• Antibiotics effects (Costs up – Losses up)
• General Economy
• Rains
• Herd Repairs/ Numbers have recovered.
9. Texas Rural Land Prices Stable but market has Stalled
• Oil crunch
• Royalty Crunch
• Commodity Prices
• Risk of CWD in deer herds?

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• Risk of Florida screw worm! (New)
10.The Immigration of Jobs and people to Texas will increase and rural land prices
will follow 2017-2021 due to “higher and better use” rural homes and recreation.
11.Land is a way to store wealth very long term (Waggoner Ranch)
12.Land has maintained its value, although volume of sales in significantly down
• Farm land has appreciated above inflation rates
• Quantity of farm land decreases but productivity is up
• World population pressures provide growing opportunity in this segment
13.Record low debt on Land today per acre, appears as few foreclosures are found
in data
14.Oil and Gas and other hidden income have been icing on the cake, not the cake
• Royalties
• Wind royalties
• Water Sales
• Pipeline Condemnation Income
• Hunting Leases (Stable for Now)
• Lower grass leases and farm leases
• Power line easement payments
15.Financing for Land will be tough! Farmer Mac and U.S may bow out while FDIC
restrict loans
• Liquidity will be low
• Holding periods will be longer
• Down payment 35%+
16.The Rich will keep their lands (Perot, Hunts, Basses, Ted Turner, etc.)
17.Land, as always, will be a place to store wealth and for retaining wealth for
estates and very long – term holding periods – The True Basics of Wealth
18.The Illiquidity of Land has Skyrocketed. 2017-2021 Owner Financing will return
and retired farmers will enjoy much higher interest rates than banks will pay them
on a cash sale!
19.There will be opportunities due to the Oil Bust for Raw Land (New Mexico and
Texas Ranches)

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VIII. Apartments 2017 – 2021/2017 to be the Top of Cycle
Short-term Apartment Leases add Volatility to General Economy due to 1 year
leases
1. Dallas rents $957/month and 97% occupancies and construction are reflective of
a New Renters Society in America. Appear to be a classic cycle @ peak
• Rents increases will slow
• Construction cycle/Number of Permits
2. No longer any stigma of renting vs. Owning a home (good for apartment
investors)
3. Economic Reality for Tenants – Short view Volatility, 12 month Leases
4. Short – Term housing Fuse? 12 Month Option vs 30 years Loans
5. Apartment Owners tenant criteria options is more flexible than LOANS and may
allow 50% or more of take home pay to apply to rent. May insure occupancies
and high NOI at risk of lowering tenant quality.
6. More professional and better property management companies/institutions are
operating in Texas and reduce risk.
7. 51 – 58% Operating Expenses for apartments by owners are cheaper than cost
of ownership of homes for tenants. Rent/buy decision is a very, very wide gap in
2016.
8. Condo Conversions is always an option to monetize and create value for
apartment Owners (Here we go again?)
9. Doubling Up is always an option for Broke Tenants
10. Uptown Dallas rents at $1700/month vs $925/month 5 miles away is the cost of
Rich Mate Hunting. The IN Group who later will settle down and likely buy home in
the suburbs??
11. Untested major mixed use projects with DART Rail will change the dynamic and
market for all apartments. (State Farm Project, etc.)
12. Cost and labor to construct increased 15% in 2015 and 5% in 2016. Yikes!

21
13. Rent increases are greater than income increases of tenants!
14. 2016 will be found to have been the peak of the apartment market:
15. CAP Rates are likely to increase when interest rates finally increase?
16. Market or replacement value versus investment value may become the new
NORM!?!? Look out in 2017-2021.

22
IX. Usage Texas Retail Investment Trends 2017 – 2021
1. Smaller Standard Footprint Stores and Lease Renewals will have Huge
Dynamics
• More tenants in smaller spaces. Same total space?
• Smaller freestanding buildings /Less lands and parking?
• Smaller pad sites?
• Redevelopment or reconfiguration of existing retail projects!?
2. The rapid rise in Internet Sales will continue and accelerate to cut into Gross
Sales.
• City Taxes and eventually less Real Estate Taxes? AND Lower retail
property returns?
• Giant Gas Stations will change Gas and Convenience Store Retailing and
Sales/Property Tax Dynamics
3. Giant mixed use projects in Richardson (State Farm) and Frisco will place new
Dynamics in the overall market
4. Conversion Action of Reduced needed Specialty Buildings?
• Branch banks?
• Car title loans? Locations?
• Traditional gas station?
• Taco and chicken places?
• Emergency care places?
5. What to do with huge larger spaces and places after the retail grocery store
wars?
• There will be many closings.
- Can you say THRIFT STORES!
• Walmart’s serious changes – Building and New store slowdown:
• 230 new buildings in 2016/2017 to 34 new building in 2018
• Closing Sam’s Club and Walmart stores
• Change in operating and acquisition policies. Develop and keep retail
pad sites! (Kroenke/Waggoner)
• Projected changes in existing store uses (distribution) and footprint
 Smaller stores
 Internet groceries and drive through pick-up options
 Major online retail efforts
 Major grocery store dominance
• Huge loyalty of senior managers and store management (14,000+)
dues to less development /Growth and Efficiencies

23
6. Many companies that traditionally grow through expansion and new locations will
begin to close locations
• The Gap (-25%)
• Rent-A-Center
• J.C. Penney
• High-end Retailers in “Wannabe” shopping centers trying to copy
Southlake Town Center
• Sam’s, Walmart, Macy’s, etc.
7. Nebraska Furniture was projected to put big-time pressure on all local furniture
stores, impact has not been readily apparent
• Rooms to Go
• Finger Furniture
• Etc.
8. Restaurants and retailers – Build to suit is changing
• New minimum wages of $15 - $17/hour in New York, Washington State,
etc. will reduce or eliminate profits of many businesses – Help Texas grow
• $8 Hamburgers? Consumer will cook at home?
9. New federal Guidelines proposed for “Daddy Baby Leave and Pay” and overtime
requirements will hurt retailers (and employers)
10.Serious anti “antibiotics” chickens, cows, and grades for food will really hurt both
supply and cost of food (Farmer’s cost, too). Increase costs in meat
• Report cards – Quality of food served:
 A+ - Chipotle – stock down <-26%>
 B – Chick-Fil-A
 F – all, all others
• Whole Foods “Organics” Expensive – Questioned!
11.Grocery stores will continue to fight for market share
• Walmart will win (28.4%)
• At risk?
 Whole Foods (1.8%)
 Market Street (1.0%)
 Sprouts (1.5%)
 Etc., etc., etc.

24
12.Buc-ees 80 pump destination store will close or have “wars” with a significant
number of gas stations along Interstates
• Quick Trip (will prosper) (Gas @ $1.77 11/08/2016 @ 114 and 35W)
• Race Trac (will prosper)
• Shell (hurt?), 7-11 stores/gas splits

25
X. OFFICE MARKETS ON FIRE: Office Market Snapshot – North Texas
48,500 New jobs 2017 – 2021
1. Frisco turning mixed use industrial land and buildings into offices or “office”
retail. Higher and Better use.
2. Average office rents @ $22.39. Office record price? Record Office Sale prices
$510 (Uptown Dallas)
3. 54 Fortune 500 companies driving construction and 48,500 new
employees/transfers expected. Synergistic Effects – Big word but absolutely
the perfect word. – More Positive Moves Bring More Positive Moves.
• State Farm 3,000
• Liberty Mutual 4,000
• Toyota 4,000
• Kubota (TBA)
• FedEx (TBA)
• Ameritrade 5,000
• Charles Schwab 1,500
• Brothers Coffee
• Many Confidential HQs in
Transition in 2017 - 2021
• Related suppliers’ huge numbers
• Many, many more
4. North Dallas Toll road and 114 Northwest hubs for new offices markets (as
always and always)
5. Older class “B” and “C” buildings in Dallas and Stemmons Freeway – Second
look and life?
• Love Field booming
• Arts District
6. Chinese Modular office buildings may be exported or concept adopted and
kill traditional office building!?? Serious supply shocks possible – like
warehouses? 40 stories – Yikes!
• Components built offsite
• Built in six months
• Ugly, ugly buildings
• But may be in U.S./Texas?

26
XI. Industrial Projections for 2017 – 2021
1. Hillwood/Perot sells their new, leased, industrial portfolio in/at Alliance!!
• Retained 10% ownership
• Retained management
• Very, very smart people
• What will they do with the cash! Great question!
2. Frisco has zoned industrial land that is worth so much more for other uses
3. Plano wants all industrial land to be employment centers, vs.
warehouses/distribution uses.
4. Industrial split market
• Alliance/Denton/McKinney
• Wilmer, Hutchins, South Dallas
• Denton on Fire!
• Westgate Denton projects – win groceries, target fridge, Winn Co, etc.
5. Average Cap rates 5-7%
6. The “average” new rents for new projects may be “$5.18/sq. ft.”
• These will stay flat or slightly increase due to construction materials costs
in the future (longer term/flatter rents)
• Concrete is costing a lot more!
7. Land/development costs and construction costs more and continue to increase
faster than rents.
8. Warehouses average rent (new, old, low ceiling, high, metal, etc.) is $4.10/Sq. ft.
and “Flex space” is $9.90 (Colliers Data – thank you)
9. Vacancies are currently “8%“
10.The South Dallas Development are getting farther and farther away in many
ways from North Dallas/Collin County growth:
• Travel time – more traffic
• Social economic difference
• Distances
• Opportunities for population
• Hourly pay/Cost of living differentials

27
• Frisco economic development boards industrial land – in valuable Never
Never Land???
11.Alliance, Denton, and McKinney projects will blossom and have high growth rates
of large projects to support Plano/Frisco and Southlake/Westlake Corporate
growth (Suppliers)
12.Affordable Industrial Land will win!
• South Dallas
• Denton
• McKinney
13.South Dallas warehouse projects are isolated locations far from North Dallas
Plano/Frisco executives and inventory managers
14.Traffic/Construction is a Temporary Barrier (2499, 35W, 35E, 380, 121). Shocks
when completed – isolation until then
15.Employment center vs. Warehouse Distribution in Frisco/Plano
• Hillwood warehouse/Distribution/Industrial Alliance Portfolio Sold!
• Frisco shortage of economically priced Industrial land
 “Higher” and Better use reality.
 Frisco Economic Dev. Corp. has land but at what price to offer? 5
offer but cannot compete with others in town industrial
developments by policy.
16.The Toll Roads System will act as both Barriers and Security for the Hot Now
Developing Markets. No crime or criminal can occur without Toll Road Central,
Photos and Transparency/Tracking.
17.The boom in mini-maxi warehouses to store Baby Boomers: Special Heirlooms
and Individual Treasures (S.H.I.T.) the kids do not want or appreciate.

28
XII. Texas/US Health Care and Hospital, and University Buildings,
Investments and Jobs Creation 2017 – 2021
1. Health Care Insurance Proceeds and Judgement against Citizens and Families
are driving the Market (More bankruptcies due to hospital bills than any other
reason for families in Texas.)
2. High local taxes, Insurance, attorneys and high pharmaceutical costs are driving
Health Care prices high
3. Emergency care clinics will go broke
• Cost of real estate construction high!
• Cost of care overly high
• Cost of staff overly high
• Clinics on every corner
• Plan alternative uses Now
4. Doctors are revolting on Insurance claims, Obamacare, Med. Care, and
Medicare. The money is stalled
• Service price lists
• Difficulty in getting paid
• Insurance slow pays
• Paperwork is huge
• High cost of prescriptions
5. Health care costs and insurance are killing businesses, small businesses, and
families
• $17,000 - $18,000/year with $10,000/year deductible
• Blue Cross raising Obamacare members 35-65% in 2016
6. Government Health care is untested in Texas. Fines on the way for Employers!
7. Parkland and property taxes for hospitals continue!
8. Obamacare Premium increasing 35-65% during 2016, and will worsen in 2017?
9. Universities raise tuition for administrative positions and because they can
• Supply of $ by Government loans
• State taxes
• State co-funding

29
• Fees are increasing faster than tuition and unregulated
• If universities were business, they would be bankrupt
• Underutilized space, classrooms and buildings
• No accountability to anyone on costs
• Driven by Student Loans by Government.
• Classroom underutilized (Few 8:00 am classes/students)
• Administration Financial and Staffing Ratios are equal to Academics’
Budgets and number of Professors. (Something wrong with the
photograph.)

30
XIII. Conclusions/Investment and Taxes – Action Plans 2017 – 2021
1. The election and American system worked
2. There is a refreshing hope and a real spirit of “Yes!” for Business and America
with the new President. The media and the polls did not pick the President.
3. Small business is the only answer for more jobs in America
4. More layoffs are coming in America due to
• Efficiencies
• Mergers
• Robotics
• Slowdown in economy
• Less disposable income by families that trickle and Reduce Retail Biz.
• Over market minimum wages (California, New York)
5. The financial and stock market cycle of investments is nearing the end of a 12-
year bull run cycle.
6. Volatility, speed of automation, and worldwide information flow and increased
risks of economic problems are High
• Internet Retail business attacks
• Terrorism
• Civil disobedience
• War
• Disease
• Excuses to be lawless here in U.S.
7. The velocity of:
• Money
• Technology
• News
• Financial markets are huge and disturbing
• Pre-election U.S. Stock Market up due to Layoff/Dividends layoffs and
Mergers.
8. US Job reports are concerning
• Flat
• No new business growth driven
• Employment driven

31
• Banks and financial industrial layoff
• Smaller retail footprint
• More Internet commerce
• More efficiency due to technology means fewer jobs and at lower pay
• Smaller profit margins for retailers
• Less sales and property tax for local/state governments
9. Corporate moves to Texas are smart for the Corporations and a boom for North
Texas (And a Drag on the economies where these people come from!)
• The impact and implications of job surge is underestimated
• The time fuse is 2017 – 2020 (seems like long time)
• Gas efficient cars in less demand due to $2.00 gas
10.Property taxes and IRS taxes on domestic companies are a huge drag on U.S.
and Texas Real Estate investments. Something got to change! (California
freeze/Legislation?)
• See changes proposed on estate planning
• See carried interest rules
• See corp. taxes for US companies onshore vs offshore.
11.Financial investments will correct (crash) and Real Estate values rents and
liquidity may also fall but Real Estate is always the True Wealth!
12.The winds of war are blowing and may stimulate the world economy but disrupt
Financial Market? Or like most wars create a Booming Jobs and Economy?
13.North Texas House Appreciation rates will increase faster (for a while) than
income and may require lower loan standard
• Federal loan/Bond buying (FNMA)
• Lower down payment (Higher risks)
• Reduced credit scores
• Smaller lots
• Smaller homes
14.Rent house – 10 years old or less will be great investments homes only (High
leverage/Non-recourse) with superior tenant and property management selection
15.For Real Estate investments, either go long on today (Low interest Rates/Fixed
Mortgages - High leverage/Non-recourse) or pay cash
• If financing (No liability/Non-recourse)

32
16. The US Dollar will be devalued to create inflation and exports and will suffer
(Let’s hope!) but propped up by worse-looking currencies in Europe: UK
Pound/Euro Falter/Etc.
17.The Euro will fail, refugees will cause problems, political and economic, and
security
18.We will either have (within 5 years):
A. Hyper-inflation/devaluation of US Dollar:
• Debt cancellation
• Fresh capital created for all Americans
• Skyrocketing hard assets value
• “increasing” home and small business values
• Debt holders and bind holders slaughtered
 China, Japan, foreign T-bill holders
 Mortgage holders
 Treasury investments
 Municipal bond holders
• Peace and new economy
B. A depression 1930s’ type (10-year slow or shrinking or slow growth of economy)
where US $1 is King and the dollar buying power worth 10x! – Purchasing power
will remain as rents fall!
• Cash will be king
• Hard asset value crash but buying power remains
• Financial assets, bonds, stocks evaporate to zero value
• Civil unrest and rioting
• Political upheaval
• Civil/Financial far and new economy
• Game over, start over! Unless you paid all cash – You break even
19.Protect yourself and pray for peace
• 10% cash (f a crash, buy buck assets @ 10 cents/$1,00
• Hard assets – the 7 Gs:
 Gold
 Guns
 Good cash flowing small business
 Grub (Commodities)
 Ground (Real Estate)
 Gas/Oil
 God
20.Action plan (Choose A or B or C – Combination of three blended approach)

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A. Be highly leveraged: with non-recourse debt on Real Estate with cash flow (the
default option). Go long on cheap debt now!
B. Have zero debt on Real Estate Assets: Cash flow will drop, but purchasing power
will remain (all prices fall). Concept know in Economic = PARETY
* If we have devaluation/hyperinflation to cancel out/ cheapen debt, borrowers will win 3
ways. If we have a depression, use the default option on leveraged deals. If you pay
cash, as rents fall the value of cash flow (purchasing power will skyrocket).
AMERICA IS GREAT without regard to the economy.
WE ARE BEST PLACE IN THE WORLD!

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