Pay Down Debt at KPERs With Surplus

 

By Michael Hooper

Kansas has a surplus of $2.9 billion in tax revenue. The Kansas Legislature could go on a spending spree and buy all kinds of things and start new programs, offer tax breaks, maybe give money back to taxpayers.

Or the Legislature could do something that would be very wise; pay down the debt of the Kansas Public Employees Retirement System (KPERs).

The disturbing trend at KPERs in recent years has been its habit of borrowing money to invest in equities. More than $1 billion in borrowings has been used by KPERs money managers to invest in assets that they hope earn a higher rate of return than the interest expense on the debt. So far this strategy has seemed to benefit the KPERs system, but they've had the benefit of a long and prosperous bull market that began in 2009. What if there is a serious correction in stocks and a subsequent bear market for years? This happened in the 1970s when there was high inflation. Well guess what? We're having high inflation right now. And domestic stocks are overvalued.

What if KPERs’ investments start losing money in a bear market. The investments, purchased with borrowed money, may end up being worth less than the debt used to acquire them. This is called being under water, sort of like owing more money on a car than what it's worth. This bear-market-case scenario could be disastrous for KPERs. 

And this is the public government employees retirement system for goodness sakes.

I've been an investor for many years, I don't borrow money to buy stocks. It's too risky. Margin calls are real. 

Kansas Attorney General Derek Schmidt recommended using surplus funds to pay down at least $1 billion in debt at KPERs, WIBW reported.

Schmidt said aggressively prepaying $1 billion will save taxpayers hundreds of millions of dollars in debt service, more than $400 million over the next five years.

On September 30, 2021, KPERs had $25.4 billion under management. The portfolio was up 10.6% year-to-date through September 30 and has been up an average of 10.6% for the last 3 years and 10.5% the last five and 10 years. I would say those are pretty good returns for a portfolio of this size.

A picture of the portfolio shows that 26.2% of assets were in domestic equities 24.8% in international equities, 9.6% in fixed income, 5.7% in yield driven assets, 10.5% in real return assets, 9.5% in real estate and 10.2% in alternatives.

On Jan. 6, Gov. Laura Kelly announced plans to pay off over $500 million in debt at KPERs, using surplus funds.

The Kelly Plan to restore fiscal responsibility includes paying over $500 million in debt off early and avoiding future principal and interest costs. It will also include re-amortizing the legacy unfunded liability of the KPERS fund. Re-amortization has been previously proposed by Republican state lawmakers to help ensure long-term viability of the state employee pension system.

“We must act decisively to meaningfully reduce state debt, rebuild the state savings account, and protect Kansas’ ability to pay its bills in the long term,” the Governor said in a press release.

Celebrating Gigantic Creativity

Eiffel Tower, oil on canvas board, by Michael Hooper

A gigantic wave of creativity is a sweet release from pain.

I do not eat, I do not sleep, I do not stop to rest. I am so in love with this new project, this compelling image in my brain, which I'm trying to put on canvas. Each stroke is so liberating, so gigantic and so maddening.

Gigantic madness is a form of coping with pain

Pain is a universal language, we all understand it. I try to avoid it, yet pain always finds its way back.

Nobody wants to hear about pain, yet it is always there.

We should never say I'm sorry for our pain. Yet I still feel guilty for sharing it with someone because I'm afraid my story may bring them down too.

Escape away. Dive deep into that book. Start a painting. Create a legacy of color. Shapes and shadows, figures and trees, these are the symbols of my tender existence.

Without this gigantic madness, I might not survive. Pain would shut me down. Yet somehow I have this imagination that transcends my agony.

Don't cry in front of anyone. Cry alone. Perhaps God will take pity on you.

Big sky holds the clouds of darkness and light. There is sorrow and shadow, with a glimmer of hope.

Madness is out-of-control creativity, a continuous raging rant runs into a brick wall and falls asleep.

Burn burn burn. Run that brain as high and hot as you can. Hyperconsciousness drives my vision on the canvas.

I paint big swaths of purple and blue, green and black. I hope this creative wave never washes on shore, because all I have to go back to is a sea of pain.

So let's hear praise for gigantic madness, maybe there is another Van Gogh painting in there.

I risked everything to capture this image. The journey through hell on the way to heaven is my reward.

As my creative energy slips away, I fall back down into the pit. How long must I be here before I can climb out? 

When will I see my gigantic maddening friend again? Until then, I remember all of those precious moments when I created the Sun, the Moon and the Stars.

--Michael Hooper

Dec. 30, 2021

Kohan Retail Investment Group Buys West Ridge Mall in Topeka

 

By Michael Hooper

Kohan Retail Investment Group, of Great Neck, N.Y., has agreed to purchase West Ridge Mall in Topeka.

Mike Kohan, founder and CEO of Kohan Retail Investment Group, confirmed that his group is buying West Ridge Mall for $6,025,000. 

Kohan, reached by telephone, said his group owns Town West Square in Wichita.

"We try our best to revitalize these properties," he said. "Sometimes they are beyond our capabilities but we always try to improve through leasing and development."

He said he will know more information about plans for West Ridge after closing on the property occurs on Jan. 14th 2022.

WIBW's Kimberly Donahue first reported yesterday that Kohan Retail Investment Group is the buyer of West Ridge Mall. Her source was Topeka city councilman Mike Lesser.

On its Web site, Kohan Retail Investment Group, says, "We will continue to invest in local communities by purchasing shopping centers and working with local employees to revitalize the malls and envision a new future for them. The retail landscape has changed, but many shopping malls have not. We believe the future of these large indoor spaces will be more of a hybrid of entertainment, food, and retail than the past model where retail reigned supreme. With the closing of many large anchor stores around the country in the past decade, those large spaces offer unique opportunities for venues of all different types: galas, expos, concerts, arcades, miniature golf, and others have found their homes at some of these spaces at our malls. This is a great time for businesses to consider large spaces that can be transformed into localized shops or venues at affordable prices."

Kohan Retail Investment Group owns hotels and malls around the country. The company's web site lists 52 malls owned by Kohan.

On Dec. 1, Kohan announced it had purchased Temple Mall in Temple, Texas, Triangle Town Center in Raleigh, N.C., and Montgomery Mall in North Wales, PA.

Future of West Ridge Mall Uncertain

By Michael Hooper

A Topeka commercial real estate professional says he did not bid on West Ridge Mall because he couldn't figure out an angle for the space.

Ken Schmanke, president and CEO at K1 Realty, says he could not figure out anything that would fit in the 411,000 sq ft that was sold on December 15th.

West Ridge Mall sold at auction for $6,025,000.

"This property is in escrow. Once escrow has been closed, the auction details will be made available upon request," according to Ten-X, who handled the auction.

Only 37% of the 411,000 sq ft is occupied at West Ridge Mall.

An income statement in October showed the property had $479,432 in net income for the first 10 months of the year. That would amount to around $575,000 annually.

If there is that kind of income, Schmanke expects the new owner will try to collect that income as long as they can.

Schmanke has worked in commercial real estate in Topeka since 1988. In 2020 he purchased Townsite Plaza and Townsite Tower for about $1.5 million. At the time occupancy in those downtown buildings was below 60%. Now there is about 80% occupancy. The Plaza has 90% occupancy and the Tower 70% occupancy.

"It has exceeded our expectations," Schmanke said. 

When asked how he purchased the property, he said, "The stars lined up, the price was right. I looked at it and decided somebody needs to do this and I thought I was a pretty good fit for it."

More than $10 million in total will be invested after all the renovations are completed on the Townsite properties. Schmanke painted the Tower building, which includes a line that looks like modern graffiti art.

Schmanke said that when it comes to old commercial real estate, you have to invest in capital improvements to attract new tenants.

Will the new mall owner take the steps necessary to make it a viable mall? he asked. Will they invest additional money into the property to attract new tenants? Or will they just bleed as much money as they can out of it?

Henry McClure, a commercial real estate broker with MCRE LLC, said West Ridge Mall was always overbuilt from the very beginning.

The mall was constructed in 1988 by Simon Property Group, but Simon sold the mall in 2014. By that time, the mall had declined substantially and many tenants left. Washington Prime was the new owner but eventually that group went bankrupt and West Ridge ended up in the hands of Wells Fargo Bank.

There are many possibilities for the future of West Ridge Mall.

McClure said the best buyer is the end user, somebody who will actually use the space. One of the challenges with the mall is all the separate ownership of various tracts of land. Sears, Dillard's and JCPenny and Furniture Mall of Kansas all own their own land and buildings. The total mall area is about 1 million square feet.

McClure said that it's possible for the new owner to work with the existing owners through a reciprocal easement agreement, a treaty between the owners.

Amazon has been purchasing malls and converting them into online distribution centers. That is a possibility for West Ridge, but McClure says there's probably a higher and greater use for it.

He said the entire campus could be converted into a senior center with medical facilities and housing but he doesn't see retail space growing at the mall.

Shopping habits have changed. People buy online. People drive up to a store and go through the front entrance and leave that way. 

Other options for the property is a convention center, entertainment center, with hotel and gaming areas. Or perhaps a medical campus with a new hospital, plus offices and leisure.

Certain malls are recycled and others are scrapped all together, McClure said. Some commercial space is easy to convert. McClure said he is working on renovating the former Gordmans store into a light industrial space on South Topeka Boulevard.

A search on the internet for mall redevelopment will bring up all kinds of stories about malls. The Landmark Mall in Alexandria, Va., is going to be torn down to make room for a new hospital and other development.

West Ridge Mall Sells for $6 million

By Michael Hooper

West Ridge Mall sold at auction today for about $6,025,000. The auction was scheduled to end at 11:30 a.m., but the operators of the auction extended the time in 3-minute increments before finalizing the sale shortly before noon.

The property for sale, West Ridge Mall, 1801 SW Wanamaker Road, Topeka, includes 411,000 ft of space; the seller is Wells Fargo. The buyer is unclear at this point. The mall is over 1 million square feet with some space such as Dillards owned separately.

After the close of the auction for West Ridge Mall, Ten-X, the auctioneer, said, "This property is in escrow. Once escrow has been closed, the auction details will be made available upon request."

The $6 million sale price is super cheap compared to the days when the mall was worth $45 million during the good times 15 years ago. Occupancy is 38.7%, vast cavernous space is entirely empty in this two-story mall.

It will be interesting to see what the new owner does with the property.

Marshall Barber, a Valley real estate agent in Topeka, said he does not see a path forward with traditional mall retailing filling up the space. If the city wants retail there it would probably be best to use a dominant retailer like a Costco, Ikea or Cabela's or Bass Pro Shop or Nebraska Furniture Mart. A major retailer like that might work in that space. Those types of retailers are doing very well in Johnson County, Barber said.

Perhaps the mall could be used for large-scale entertainment venues, Barber said.

Another option for the space is a logistics center.

Logistics centers act as transportation hubs for the movement of freight.

Or another option, I believe, is turn it into a server farm for an Amazon or Google.

Barber attended the sheriff sale when Wells Fargo bought the property for about $27 million.

David Tangeman said net income for the property shows $479,432 net income for 10 months, he estimates annual net income $575,000 annually. That equates to a 9.55% Cap Rate (net income divided by sale price). That cap rate is pretty good in the commercial real estate market. It's reasonable for a property this old to have a higher cap rate, he said.

"Given that there is so much upside potential, this is a really good price," Tangeman said. "If they can fill it up, they could make a ton of money on this. The challenge is you got to get it back to 80% occupancy. Or find other uses, event space, or office space, or warehouse. If they can increase the use, they can increase the value."

The Paris Painter

Ivy-Covered Home on the Rue De Seine, Paris,

Oil On Canvas board 11 by 14 in

By Michael Hooper

The Paris painter is alive with views of turquoise sky, yellow ochre, Paynes grey and alizarin crimson

He sings, he dances, he is moved in awe before gigantic paintings by David and Delacroix.

The Paris painter sees the color of yellow grey everywhere. The color is in the stone, across the Louvre, on the Bridges over the Seine.

So many buildings carry this special kind of yellow. The painter tries to match it.

Like a chemist he mixes yellow ochre with lemon yellow and Paynes grey and burnt sienna. 

When the sun is bright on this color, it is more lemonade than dirt. Like the Kansas limestone. Or The Yellowstone.

The color is hope and despair but mostly hope. Yellow is for sunshine, and the joy of a lovely day.

The gray is for our emptiness, our fragile nature, our mortality, our existential despair.

I meet my neighbor Anne-Marie

 

She tells stories of broken love affairs

Tears and sorrows. 

"I don't like the way I look," she says.

"I cried myself into this face."

The Parisians have come out of their covid-19 lockdown and are still trying to keep safe. In March of 2020 you couldn't leave your house for more than an hour and only for essential services.

Now there is some life again but it's restrained. The greeting with a hug and a kiss on each cheek is gone.

Where's your covid-19 papers, the waiter asks.

 

"Oh I forgot them, they are in my hotel room," I say

 

"You must have them. The police may check."

 

I return with my papers,

  

she takes a picture. 

 

I dine alone

 

'80s Post-Punk Band Get Smart! 40th Anniversary Show Nov. 6 in Lawrence, Kansas

 

• Get Smart! 40+1 Anniversary Show, November 6, 2021 @ The Bottleneck

• Get Smart!, The Pedaljets, Other Geese, Boy Soprano, Ray Velasquez

• November 6, 2021, The Bottleneck, Lawrence, KS at 8:00 pm, Doors Open: 7:00 PM

• Tickets: ADVANCED: $20.00, DAY OF: $25.00

LAWRENCE -- Get Smart! -- a 1980s post-punk band that formed in Lawrence by KU students -- celebrates their coronavirus-delayed 40th anniversary show on November 6 at The Bottleneck.

Joining the bill are Kansas City jangle-pop powerhouse The Pedaljets (with special appearance by Other Geese), upcoming Lawrence, KS 3-piece Boy Soprano, and KJHK alumnus DJ Ray Velasquez spinning tunes.

Distance, obligations and other decisions made it improbable for a reunion before 2020, then the arrival of Covid-19 scratched their previously scheduled show. Now, Get Smart! are ready to showcase the music that made them a local favorite and college radio staple.

Guitarist/vocalist Marcus Koch is excited, “Playing our music again, after all of these years, has been exceptionally rewarding and I cannot wait to perform live!” Adds Lisa Wertman Crowe, bass player and vocalist, In some ways, it’s like no time has passed, and in other ways, it’s really satisfying to see how each of us has progressed both musically and personally. For me, it’s like a family reunion, only better."

In the early 1980s, Get Smart! became prime movers in the regional music scene, it was among the bands that put Lawrence on the map as a hot music city. They played live often, released their first single as a flexi-disc in Talk Talk Magazine, then put out the self-released four track EP Words Move, while almost simultaneously contributing very well-received songs to the historic Fresh Sounds from Middle America four-band compilation, which garnered significant press in the burgeoning indie band underground.

Their first LP Action Reaction was recorded prior to their relocation to Chicago in ’83, and eventually released in 1984 from Fever Records and distributed by Enigma. 1986 found them putting out Swimming With Sharks through Restless Records, a subsidiary of Enigma. These releases made the charts at college rock stations while the band spent the seven years blazing the road to play venues from coast to coast.

Despite living hundreds of miles apart, the trio has been practicing together frequently. Says drummer and some-time singer Frank Loose, “We’re all having a lot of fun, but it’s also been quite a process to put together a set list. The songs we're going to play span our seven years together, and include later originals never recorded.” This includes those recorded in 1987 for their third album, but not released until 2020, as Oh Yeah No, named after its volatile title track. Recorded at the time by the English sound engineer Iain Burgess (Naked Raygun, The Effigies) at the Chicago Recording Company, recordings have been given final mixes by another studio legend, Steve Albini. 

Still fit and fighting to play out live again, their 40+1 Anniversary show is a reset, and they plan to keep the mission alive by collaborating and playing more live shows as Get Smart! Plans are open for 2022, but include recording more unreleased songs, releasing out-of-print vinyl, and writing more new music.

The band formed on Jan. 1, 1980 in Lawrence.

"We were founded approximately January 1, 1980 when Marcus asked Lisa and me to play together," wrote Frank in an email. "We were already friends and, picking up on the DIY punk ethos of the time decided to form a band. Small problem was that I didn’t know how to play the drums! So I bought a set and spent the summer of 1980 learning to play (mostly to The Ramones). Lisa played guitar, but had never picked up the bass. In August, Marcus returned after a summer in Chicago and we started practicing and writing songs in earnest. Our first show was October 31, 1980 at a place called The Greek Sports Desk. By early 1987 we had played more than 300 shows coast-to-coast and release numerous records, tapes, appeared on compilations..."

Our first meeting of the minds:

"Marcus and I met when I heard him playing The Sex Pistols through the walls in my dorm room at KU," Frank wrote. "Kinda blew me away that there was a like-minded music listener. That was fall, 1978 and there were not many punk rock enthusiasts around at that time. A short while later we met Lisa and became friends. It took us awhile to decide we would form a band, mostly as a response to the dreadful state of music on the radio at the time."

Get Smart! is a three-piece indie alternative rock ‘n roll band that formed while Marcus Koch (guitar/vocals), Lisa Wertman Crowe (bass/vocals) and Frank Loose (drums/vocals), were attending the University of Kansas.

The group was prominent in the local music scene, and along with a cohort of other bands, helped to solidify Lawrence as an alternative music hotbed and a touring destination for many other regional and national acts. Along with frequent local shows, the band toured coast-to-coast, performing more than 300 gigs in a six-year span.

They released their first recording in 1981, a flexi-disc released through Talk Talk magazine. This was followed by Words Move, a self-released 4-track EP, and next was a four-band split cassette, Fresh Sounds from Middle America. They recorded their first LP, Action Reaction, prior to relocating to Chicago in late 1982. The debut was released in 1984 by Fever Records and distributed by Enigma and received positive reviews and climbed the ranks for college radio playlists. In 1986, they released their second LP, Swimming With Sharks through Enigma’s subsidiary, Restless Records. Once again, the release high praise from critics and scored even higher on college radio playlists.

In 1987 plans for a third album were formally set into motion.  Half a dozen songs were cut with the late, great engineer Iain Burgess, but the band was unable to secure a label to release the recordings before gradually grinding to a halt in the late '80s, save for a couple of stray 1990 gigs.

The original lineup reformed in January, 2020, and in December, 2020, they released the collection of previously recorded (but never released) songs, titled Oh Yeah No, with the final mixes completed by Chicago scene contemporary Steve Albini.

The group plans to play a 40th anniversary show in Lawrence on November 6, 2021 and to continue to collaborate, play live when they can, and release more new music in the near future.

"The band has a truly impressive knack for three-piece writing and arranging. Their new LP, Swimming With Sharks, is full of tense, carefully crafted miniatures that meld unvarnished noise with unexpected pretty vocal harmonies" (Renaldo Migaldi; Chicago Reader; 1986).