Commercial Real Estate Finance

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I never took much time to explore Keystone Opportunity Zones–Pennsylvania’s program of tax abatements for those who invest and develop in certain economically depressed neighborhoods. The main reason it’s taken me this long is because I couldn’t think of a decent title for the post–until now. (On a side note, we’re just a couple weeks away from Biggie Smalls’ birthday, so the title is especially fitting. Rest in peace, Biggie.)

Okay. Keystone Opportunity Zones.

The KOZ program started in the late 90s under Pennsylvania governor Tom Ridge. Legislators were looking for ways to spur economic and development activity in cities and neighborhoods suffering from the various symptoms of economic decline: real estate vacancies, unemployment, population loss, crime and blight, etc. As one of the Rust Belt states, Pennsylvania (despite many vibrant industries like healthcare, pharmaceuticals, education and technology) has its fair share of dilapidated former industrial parks and similar sites.

The premise of a KOZ–and the related Keystone Opportunity Expansion Zone (KOEZ) and Keystone Opportunity Improvement Zone (KOIZ)–is fairly simple: encourage developers and businesses to invest in a designated, distressed area and reward them with decreased (or eliminated) state and local taxes.  Read the rest of this entry »

Today we’re excited to feature our first guest post from our friends at Integra Realty Resources! From their IRR on Real Estate blog, here is IRR Managing Director Jim Andrews to discuss the complex, ever-changing world of real estate valuation. Many thanks to the IRR Blog and Jim Andrews for the contribution!

Why Consistent International Valuation Standards Are Essential

There’s no shortage of valuation standards today, such as the Royal Institution of Chartered Surveyors (RICS) “Red Book,” the Uniform Standards of Professional Appraisal Practice (USPAP), and the International Valuation Standards (IVS), to name a few. Use of these standards varies by country and based on the clients’ needs. But the real property and business valuation community is increasingly boiling down these rules into a more consistent set of standards as the members of these organizations collaborate in defining the guidelines for appraisals.

I spoke about this topic [last November] at the RICS Summit of the Americas on a panel discussion I helped spearhead, titled “Comparison of Valuation Standards and Movement to Globalization.” Joining me were current and former committee members of the organizations that produce the various standards, such as RICS, the Appraisal Foundation, the Appraisal Institute of Canada, and the International Valuation Standards Committee (IVSC).

Everyone on the panel expressed interest in having a more consistent set of standards. We delved into the reasoning more deeply, and I wanted to share it with you.

1. Enhance the reputation of the profession and promote its usefulness around the world. 

Currently, the U.S. uses Generally Accepted Accounting Practices (GAAP) as its set accounting principles. Nearly every other significantly developed country has already adopted the International Financial Reporting Standards (IFRS). The U.S. still hasn’t moved toward total adoption of the IFRS measures, but it has begun integrating IFRS with GAAP. An established set of consistent standards would help in appraising assets and liabilities for financial reporting, especially for companies that control assets in various countries and work across national borders. For valuations for other purposes, the reputation of the profession would be enhanced if the clients could expect consistency in valuation reporting internationally.

2. Simplify the appraisal process.

USPAP is the accepted set of standards for valuation in the U.S. But if a member of RICS is performing the appraisal, it should also comply with RICS standards, which differ in subtle ways. In the Caribbean, I work across U.S. and British territories, which typically require different standards, as well as Dutch, French, and Latin American islands where there are generally no nationally accepted standards. A single set of standards and guidance notes would enable appraisers to produce a credible valuation with a similar report structure regardless of membership or the location of the asset to be valued. Read the rest of this entry »

A new year means the results of last year’s real estate competitions are beginning to trickle in. Of course, the finals for MIT’s annual case competition aren’t until April, and the Philadelphia Real Estate Council’s Student White Paper Competition just wrapped up its submission period. But a high-profile competition on the urban planning side has already announced its winners.

The Philadelphia Center for Architecture recently announced the results of its 2013 Ed Bacon Student Design Competition. This year’s winner is a team from Cornell University (which has a pesky habit of winning these things), with additional jury prizes going to the University of Maryland, University of Nottingham (UK), University of Tennessee, and National University of Singapore. Congratulations to Cornell’s team: Logan Axelson, Caleb Cheng, Katherine Li, Jesse Nicholson, and Travis North!

Since the competition is run by the Philadelphia Center for Architecture, each year’s challenge is, of course, focused on one of Philadelphia’s complex planning opportunities. Previous contests have focused on the I-95 corridor on the east of the city and brownfield reclamation in the city’s Gray’s Ferry area. The 2013 challenge focuses on the transportation infrastructure and neighborhood to the west of the Schuylkill river (between Spring Garden and South Street). Here’s a brief excerpt from the competition’s overview: Read the rest of this entry »

A couple weeks ago, I wrote an uncharacteristically snarky post about two start-ups offering high-tech data services to the commercial real estate industry. Both of these start-ups promised their technology would allow property owners and operators more accurate data than would otherwise be available, thereby helping their CRE clients make the most informed, effective decisions for their businesses. In both cases, I was very skeptical.

I didn’t doubt that these two very different data providers offered useful information. Rather, I was skeptical of their mutual premise that a hyper-detailed, real-time analysis of a property was more beneficial than the estimates and averages CRE professionals have relied upon for years. Further, I was uncertain such sophisticated analytics were worth the extra cost.

Since then, one of the companies I discussed–Motionloft–reached out to me, addressing my skepticism and offering some clarification about their services. Needless to say, I felt a little bad about my snarkiness toward their product. People don’t usually call me out on that.

Here’s how Motionloft explains its product: Read the rest of this entry »

From CNBC.com, here’s a list of the 10 Hottest Real Estate Markets, ranked by country:

10. Switzerland. 5-year price growth: 27.5 percent, thanks to ultra-low interest rates meant to curb the growth of their franc.

9. Malaysia. 5-year price growth: 28.5 percent. The government is looking to further capitalize on international investment by doubling the cost to enter their market.

7. (tie) Norway. 5-year price growth: 28.7 percent.

7. (tie) Canada. 5-year price growth: 28.7 percent. Unlike the U.S., Canada managed to avoid the housing market crash that figured so prominently in the ’08 financial crisis.

6. Taiwan. 5-year price growth: 30.1 percent. Rapid urban growth has created extremely high real estate values, especially in Taipei. Read the rest of this entry »

A couple months ago, I emailed a fellow CRE blogger who is based in the Midwest. It was a simple bit of correspondence, intended to say how much I enjoyed his site and to exchange links. “Oh yeah,” he said. “I know the Llenrock Blog–I read it all the time!”

I shouldn’t have been surprised. Despite living 1,000 miles apart, in very different markets, we were both familiar with each other’s social media efforts and respective companies. As in other industries, social networks have served to consolidate us, to create relationships between professionals and clients in a way that couldn’t have happened just a decade ago. Yet many CRE firms have been slow to embrace social media as a networking/PR tool, as reported in a recent CoStar Group article.   Read the rest of this entry »

Just several years after the housing crisis devastated the home construction industry, people are discussing the chance of a rebound:

Read the rest of this entry »

The deficit-cutting Super Committee responsible for finding $1.2-$1.5 trillion in federal budget savings continued its deliberations last week. The Super Committee is seeking, among other measures, to raise approximately $15 billion by selling surplus government real estate and other assets. It’s a tough move for desperately needed funds, but it may pay off. Unlike our government, there are people and firms in the private sector still flush with cash. For example: ESPN just threw out  $15.2 billion for the rights to “Monday Night Football.” Recession notwithstanding, there is still a great deal of money stored up in parts of the private sector. Read the rest of this entry »

Week in Review for November 5th – 11th:

-Europe’s fiscal crisis leads to large-scale sell-off of commercial property loans

-Hersha Hospitality Trust (NYSE: HT) to pay $95 million for Miami hotel and beachfront land

-S.L. Green (NYSE: SLG) and other REITs prefer redeveloping and raising rents over acquiring new properties

-As foreign investment in U.S. REITs slows, FIRPTA reform movement gains momentum

-Hit with major losses, Fannie Mae seeks $7.8 billion in government aid

-As Fannie and Freddie losses continue, lawmakers target execs’ pay

-Healthcare REIT National Health Investors (NYSE: NHI) purchases four nursing facilities for $49.8 million

-Despite tepid British economy, Hammerson (LON: HMSO) plans to begin $778 million London project in early 2012

-Entertainment Properties Trust (NYSE: EPR) moves from cinemas to charter schools

-Brixmor Properties Group buys up retail space left by Borders

#CRE #REIT #finance

Commercial Real Estate Week in Review: October 29th through November 4

-Stock Market volatility continues, with Greece making everybody very, very nervous.

- Fed offers gloomy forecast, predicting limited economic and job growth for years.

- Texas-based REIT FelCor (NYSE: FCH) sells off major assets, refinances others.

- Marty Cohen of Cohen and Steers recommends retail and apartment REITS over other commercial investments.

- Kenya’s Capital Markets Authority nears completion of regulations allowing for REIT involvement. Read the rest of this entry »