Archive for January, 2012

Private Equity Funds May Splurge on Senior Living

Tuesday, January 31st, 2012

Private equity firms are in a prime position to become the next big investors in the senior living segment of multi-family. According to the National Real Estate Investor, private equity groups are looking for places to put their money to work amid poor economic conditions and a rather lackluster commercial real estate market. Investors are drawn to the market due to the sheer volume of seniors who might need special housing, in addition to current occupancies rising and the lack of new construction under way.

The main concern to an all-in approach for private equity investors on the senior living market is the fact that many of the large portfolios have recently been traded. With a shortage of these deals on the table, investors will look towards individual assets to assemble a portfolio. Many believe the best bet is to look at underserved markets, underperforming properties and creative approaches like buying non-profit assets and converting them to for-profit entities.

To read the full article from the National Real Estate Investor, click here.

Posted in Financial Services, Multi Family, Real Property, Senior Living, Special Services | No Comments »

Smaller Stores and Shrinking Sales for Retail

Monday, January 30th, 2012

Retailers who continue to use the same strategies and fail to make adjustments are the ones that will continue to struggle with current economic and market conditions. According to GlobeSt.com, many retailers are continuing to perform poorly, but decreased storefront sales don’t necessarily translate to store closures. These days it is normal for retailers to look at culling poor-performing stores via closures or the downsizing of their footprints square footage.

Downsizing can create both opportunities and problems for landlords. Looking forward, landlords need to be thinking proactively about their portfolios moving into 2012 and try to anticipate where their retailer issues might be. The main factors going into the decision of whether or not to close are the market, quality of the property, and location. When it comes down to it, struggling stores located in tougher locations are the ones most likely to close.

To read the full article from GlobeSt.com, click here.

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

US Commercial Property Sales Rose 57% in 2011

Friday, January 27th, 2012

US commercial property sales, led by retail and apartments, rose 57% in 2011 to more than $220 billion. According to a report by Real Capital Analytics, more than 14,700 properties, each worth at least $2.5 million, changed hands in 2011. Retail transactions rose 91% from 2010 to $42.4 billion, and sales of low-rise apartments rose 70% to $34.5 billion. By itself, Manhattan accounted for 12% of the total deal volume.

Sales increased as investors went after higher yields from successful real estate properties and debt-laden owners ridded themselves of properties acquired before the recession. The second half saw the frequency of deals slow down as turmoil in the market for CMBS curbed financing. Office properties and hotels in particular fell in the fourth quarter of 2011 after two quarters of significant year-over-year gains. Buyers have started to broaden their horizons both geographically and by property type.

Posted in CMBS, Eastern, Economy, Financial Services, Real Property | No Comments »

Bulk Sales Taxes When a Hospitality Business is Sold

Thursday, January 26th, 2012

Are you planning on buying or selling a hotel? Have you addressed the sales tax implications of the transaction? During the hectic activity that accompanies the purchase of a business, buyers and sellers frequently overlook two sales tax issues that can arise when a transaction is structured as an asset sale. For specific transactions, the statutes and regulations of the jurisdiction where the transaction will take place must be consulted to provide guidance for your particular transaction.

First, is sales tax due on any of the assets that are being purchased? In most states the sales tax is applied to all sales of tangible personal property unless a specific exemption applies to the sale. Second, is the purchaser subject to liability for the seller’s outstanding sales tax due as a successor to the business? Most states have a provision whereby the state taxing authority can collect a seller’s outstanding tax liability from the purchaser in an asset sale.

To read more from Paradigm Tax Group on the two sales tax issues that can arise when a transaction is structured as an asset sale, click here. For more information, contact Holly Unck at (602) 427-4059 or hunck@paradigmtax.com.

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

Anxiety Mounts over Maturing Real Estate Loans

Wednesday, January 25th, 2012

Reality is starting to set in for those who have borrowed or lent the billions of dollars in commercial real estate loans made five years ago that are now coming due. According to The New York Times, experts have warned of a rash of recapitalizations, refinancing, and building sales. In New York City alone, nearly $70 billion worth of commercial mortgages that were bundled together and issued as collateral for bonds are maturing this year. $26 billion of those are five-year loans that were originated during the height of the real estate bubble.

Because many of the loans were created when property values were much higher than they currently are, it will be difficult to achieve reasonable refinancing. In addition, most large CMBS typically require a much larger payment upon maturity as they are not self-amortizing. The economy has also caused the pool of lenders to shrink, and the market for CMBS to remain relatively small.

To read the full article from The New York Times, click here.

Posted in CMBS, Eastern, Economy, Financial Services, Real Property | No Comments »

Appreciating Depreciation in Commercial Properties

Tuesday, January 24th, 2012

It is becomes increasingly difficult for commercial property owners to find funding to make necessary improvements in order to retain or enhance their property’s value. However, according to BusinessExcellence, cost segregation studies provide property owners an opportunity to write off depreciation of building assets over a shorter period than the 39-year depreciation period that’s typical for real property assets in the United States. This in turn can lead to larger tax reductions, allowing the saved expenses to be used for improvements.

This approach itemizes assets of a property as either real (i.e. the structure of the building) or personal (i.e. non-structural improvements) assets. By keeping the shorter life expectancy personal property assets separate, it is possible to claim a greater rate of depreciation over a shorter period of time. Cost segregation can be applied to several commercial property types, including apartments, grocery stores and office buildings to name a few.

To read the full article from BusinessExcellence, click here.

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

US Hotel Transaction Dollar Volume on the Rise

Monday, January 23rd, 2012

In the recent Hotel Sales Survey by LW Hospitality Advisors, 130 single-asset sales of more than $10 million in 2011 showed that the dollar volume of U.S. hotel transactions is gaining speed. According to HotelNewsNow.com, the deals totaled approximately $8.9 billion and compromised about 41,000 rooms. In comparison, the 2010 Hotel Sales Survey identified 84 transactions of the same criteria totaling only a little more than $5 billion and 24,000 rooms.

With enormous amounts of debt coming due in the next couple of years, it is predicted that this level of activity will continue. Once the economy further stabilizes, there will be an influx of pent-up demand on behalf of the buyers and sellers. Transactions should range from large headline deals, to lower-priced transactions, as many are saying that the smart money is discovering great opportunities in the secondary and tertiary markets.

To read the full article from HotelNewsNow.com, click here.

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

State Business Tax Break Being Considered in Arizona

Friday, January 20th, 2012

An Arizona business group, along with two legislators, has constructed a plan that intends on giving businesses a big break on property taxes in the state. According to the Arizona Business Gazette, the proposal would craft a partial exemption from existing constitutional requirements that businesses pay property taxes annually, not only on the value of their land and buildings but also on the worth of the equipment they own and use.

At the moment, due to a previously passed exemption, companies with property worth less than $68,000 don’t have to compute what their equipment is worth, a measure that has helped small businesses significantly. The new proposal would increase the amount on the exemption sharply. Detractors of the proposal say that by not taxing business equipment below the predetermined amount, the total valuation in the corresponding district would be reduced. This would in turn make it necessary to raise the tax rates on mainly residential property in order to cover the losses.

To read the full article from the Arizona Business Gazette, click here.

Posted in Complex, Industrial & Manufacturing, Personal Property, Western | No Comments »

More States Expected to Follow Indiana’s Lead in Amazon Tax Deal

Thursday, January 19th, 2012

Since the state of Indiana successfully announced an agreement to begin collecting a 7% state sales tax on Amazon.com purchases staring in 2014, other states are likely to introduce Legislation requiring Internet retailers to collect taxes on online purchases. According to the CoStar Group, Indiana follows Texas, Tennessee and California to reach an agreement with Amazon, claiming a win for real estate-occupying retailers and their landlords who viewed the online giant as having a distinct competitive advantage due to lack of sales tax.

Now, after numerous lawsuits, many believe that the only way to fix the problem nationwide is a federal solution that treats all retailers and all states the same. Federal legislation may be the only way to level the playing field for all product sellers, and is the only way states can obtain the sales tax revenue they are already owed. Retractors to this motion claim that any law dealing with Internet sales tax should focus on fairness and not revenue for the state.

To read the full article from the CoStar Group, click here.

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

Improved Fundamentals Add Interest to the Apartment Sector

Wednesday, January 18th, 2012

Over the last several quarters, the multi-family sector, apartments in particular, has been the shining star of the commercial real estate industry. According to the National Real Estate Investor, apartment fundamentals have improved significantly, with the vacancy rate dropping to as low as 5.6% in the third quarter of 2011, down from its peak of 8% in the first quarter of 2010. Additionally, new jobs and favorable demographics have supported an increase in apartment rents, with growth expected to continue through 2013.

The increase in these fundamentals has also caused a significant increase in interest towards purchasing core assets, which in turn has driven up the price of class-A complexes in primary markets to pre-recession levels. All of these trends are supported by an increase in the target market (echo boomers), declining homeownership, a limited supply pipeline, and attractive government-sponsored entity financing. These combined factors should see that the success continues in the sector for the next three to four years.

To read the full article from the National Real Estate Investor, click here.

Posted in Apartments, Economy, Multi Family, Real Property | No Comments »

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