Archive for February, 2011

Washington Assessor Backs Fee On Commercial Property Owners

Monday, February 28th, 2011

Clark County, Washington assessor Peter Van Nortwick has gone on record as supporting proposed legislation that would allow counties in Washington to charge a fee to commercial property owners who appeal the assessed value of their properties. Van Nortwick has said that he is surprised to learn how many commercial property owners routinely appeal their assessed values without providing any supporting documents to the county. The number of commercial and residential property owners who appeal their values account for less than one percent of total property owners, but the paperwork can take three to four months to complete. The proposed bill would allow the county to charge commercial property owners up to $500 to file an appeal to the Board of Equalization.

Paradigm Tax Group is working on preventing the proposed legislation from passing as it is already difficult enough to represent the concerns of property owners in Washington as is without a measure like this to deal with. Not every commercial owner files appeals without support and the due process rights of those that do should not be strained by the actions of those that do not.

Posted in Real Property, Western | No Comments »

Tax Valuations of Vacant Residential Lots in a Down Market

Friday, February 25th, 2011

As a result of tax values of residential subdivision lots having been in decline for over two years, paired with the increased supply of homes in the market and prices declining, it does not make economic sense for builder/developers to put more homes into a marketplace that cannot readily absorb the existing supply of already built homes. Paradigm Tax Group can cut the tax liabilities these factors lead subdivision builders, developers and land owners to face through an aggressive property tax appeal program.

In today’s market, subdivision lots should be valued based upon the net present value of the sell-out of the subdivision. Most appraisal districts allow for value reductions based upon the NPV of the sell-out of lots within a subdivision with the discount sometimes being 10-25% depending on the district. However, using a conservative model, Paradigm Tax Group is able to derive an average discount rate of 45% with some slower moving subdivisions deserving more than 70% reductions below market value.

To read the full article and analysis from Paradigm Tax Group, click here.

Posted in Economy, Foreclosures, Real Property | No Comments »

Ohio Drop in Construction through Recession not as Bad as U.S.

Thursday, February 24th, 2011

Commercial Real Estate development across the country took a significant fall since the economic downturn that started in late 2007. As bad as many Ohio real estate professionals may have thought it was locally, the results across the nation were even worse. Commercial construction spending in the U.S. dropped nearly 48% from 2007 levels of $549 billion to $288 billion in 2009. Respectively, Ohio fell only 23% from $12.5 billion to $9.6 billion in the same time frame.

Jobs supported by Ohio construction activity fell 26% from 119,687 in 2007 to 88,604 in 2009. Job numbers nationally of commercial construction project employees fell from 4.89 million in 2007 to 2.4 million in 2009. Despite its decline in spending due to economic contraction, commercial real estate construction still generated a positive overall contribution to the U.S. economy.

To see a state-by-state breakdown from the NAIOP on the CRE development and construction relative to the economic recession, click here.

Posted in Economy, Mid America, Real Property | No Comments »

Hotel Loans: Secured by More than Just the Real Estate

Wednesday, February 23rd, 2011

Many Real Estate Appraisers would have you believe that the security for a hotel loan is simply the real estate. If this were the case, all lenders would require to see is a properties Deed of Trust. The fact is though, that when looking at the document that secures the loan, the title gives away what lenders really want: “Deed of Trust, Financing Statement, Fixture Filing and Assessment of Leases, Rents, Security Deposits and Hotel Revenue.”

When it comes down to it, if a hotel owner defaults on a loan, the lender can foreclose and take all assets – not just the real estate. With this in mind, being able to embrace cutting edge valuation techniques for successful tax appeals requires a thorough understanding of the assets – how they are bought and sold in the marketplace and how they are financed.

To read the full article and analysis from Paradigm Tax Group, click here.

Posted in Financial Services, Hospitality, Hotels, Real Property | No Comments »

San Francisco Office Rents Expected to Lead Nation in 2011

Tuesday, February 22nd, 2011

Office rents in the United States will see modest growth in 2011, the first increase in three years. A report from CB Richard Ellis Group tabs San Francisco, California as the market to most likely lead the way in terms of the largest gains. The city may see gains as high as 9 percent over the next two years. Phoenix, Arizona and Orange County, California are expected to be the followers behind San Francisco with increases of more than 4%.

Commercial Real Estate values in general began to rebound last year while office vacancies stabilized and are expected to improve through 2012 as more jobs are created. On average across the country, rents last year were down to $25.62 per square foot from $26.84 in 2009. They are expected to rise back up to $26.08 in 2011.

Posted in Leased, Office, Real Property, Western | No Comments »

Hotel Industry Forecast Optimistic for 2011 and 2012

Monday, February 21st, 2011

The U. S. hotel industry is projected to end 2011 with increases in all three key performance measurements; occupancy, average daily rate and revenue per available room (RevPAR). STR Global recently released a forecast that projects occupancy to increase 1.8% to 58.5%, average daily rate to end the year up 4.2% to $102.21 and RevPAR to increase 6.1% to $59.78. Supply and demand are also both expected to increase in 2011 at 0.7% and 2.5% respectively.

Getting back to hotel demand fundamentals in 2010 has resulted in a quicker turnaround in the industry than what was originally expected. While occupancies rapidly recovered in 2010, rebounding room rates should lead to RevPAR growth in 2011 and 2012. Room rates will start to rapidly accelerate towards the end of 2011 and by this time next year, room rate growth will rival the boom years of 2006 and 2007. In addition, the same performance metrics that are expected to increase in 2011 will continue to flourish in 2012.

To read a full analysis on the STR Global forecast from Hospitality Net, click here.

Posted in Hospitality, Hotels, Real Property | No Comments »

Host Hotels & Resorts to Pay $570M for San Diego Grand Hyatt

Friday, February 18th, 2011

Maintaining their strategy to buy hotels while the industry is early in its recovery, Host Hotels & Resorts will pay $570 million for the 1,625-room Manchester Grand Hyatt in San Diego, California. According to Commercial Real Estate Direct, Host believes that early cycle acquisitions tend to offer the best value in the hotel market. This pending sale boosts Host’s deal-making volume since last summer to more than $1 billion.

For luxury hotels such as the Manchester Grand Hyatt, revenue per available room increased in 2010 by 10.1% to $165.29, outperforming the hotel industry in general whose rose by 5.5%. The timing and patience of Host benefits them greatly as they are set to save 20% by acquiring the hotel as opposed to developing a similar asset in the area. The acquisition also gives the company a tightened grip on the San Diego convention business.

To read more from Commercial Real Estate Direct regarding this acquisition, click here.

Posted in Hospitality, Hotels, Real Property, Western | No Comments »

Borders Files for Chapter 11 Reorganization Relief

Thursday, February 17th, 2011

Borders Group has filed for reorganization relief under Chapter 11 of the Bankruptcy Code, a forgone solution for the company by many analysts in the commercial real estate industry. According to an article from the National Real Estate Investor, Borders lacks the capital resources essential for it to move forward with its business strategy to reposition itself successfully for the long-term. Chapter 11 will give the company a chance to infuse capital and reorganize itself into a new position in the market.

Borders will be able to run their business while under Chapter 11 through $505 million in debtor-in-possession financing from GE Capital and other investors. The company plans to close some 200 stores in the near future, with some of the underperforming ones as soon as over the next few weeks. The bulk of the stores will remain open for business during the filing and reorganization period. This is yet another sign of the times in the retail market and another warning as to how many retailers need to reevaluate how they relate directly to the consumer.

Posted in Bankruptcies, Financial Services, Real Property, Retail, Store Chains | No Comments »

Benchmark Senior Living and Health Care REIT Form Partnership

Wednesday, February 16th, 2011

Benchmark Senior Living will add their 34 senior housing communities to Health Care REIT’s portfolio, combining to form an $890 million partnership between the two companies. Health Care REIT will have 95% partnership interest to Benchmark’s 5%. According to GlobeSt.com, the partnership will continue to enhance Health Care REIT’s growth potential as Benchmark has been able to produce exceptional NOI growth despite a rough economic client.

With the partnership, Health Care REIT will have the right to fund future investments by Benchmark. This gives Benchmark a strong capital partner and a stable foundation to grow by adding new properties and pursuing new initiatives like geographic expansion outside of New England. Their current portfolio consists of 14 facilities in Connecticut, 13 in Massachusetts, three in Rhode Island, two in New Hampshire and one in Vermont and Maine.

Posted in Eastern, Health Care, Multi Family, Real Property, Senior Living | No Comments »

Arizona Real Property Tax Appeal Deadline Quickly Approaching

Tuesday, February 15th, 2011

Some of Arizona’s 2012 Real Estate Values have been mailed and Appeal Deadlines are quickly approaching. The new 2012 property values are out in some counties and will continue to be released throughout February and as late as into early March for Cochise County. The deadline to appeal these values is 60 days from the date they were postmarked.

Paradigm Tax Group is currently in the process of reviewing financials for our Clients as well as performing workups for the upcoming appeal deadline. If you have a property in Arizona that you would like reviewed for property tax savings opportunities, now is the perfect time to speak with us. It is important not to miss the appeal deadline as these values will impact the 2012 tax bill.

For more information on the Arizona deadlines and to learn more about our Phoenix, AZ office, click here.

Posted in Paradigm Info, Real Property, Western | No Comments »

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