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Cap Rate Calculations 

A capitalization rate is the overall or non financed return on a real estate investment, akin to the return on total assets in accounting terms. A cap rate is calculated as a mathematical relationship between net operating income and an

Cost-Segregation Savvy 

If you’ve been using cost segregation studies to accelerate depreciation of your commercial property, you’ve likely cut your taxes considerably. But could you save even more? Not all cost segregation studies are created equal. So what can you do to

Cost Comparison: A Case Study 

When looking to extinguish fixed rate debt, borrowers have two alternatives yield maintenance or defeasance. Both methods allow the borrower to unencumber the underlying real estate asset, and both compensate for the lender’s reinvestment risk following prepayment. However, each method

Engineering Value 

It seems like only yesterday that real estate investors and developers breezily talked about easy exit strategies and double digit internal rates of return. When lenders and investors were eager, winning at real estate was more about managing the capital

Alternative Risk Retention for Commercial Real Estate 

In response to input from the commercial real estate industry, the Dodd Frank Wall Street Reform and Consumer Protection Act expressly contemplates flexibility and custom tailoring for commercial mortgage backed securities risk retention requirements. The contemplated regulations shall specify the

Best Buys 

In the increasingly competitive commercial real estate marketplace, buyers and sellers continue to seek advantages in the negotiation process. Until recently, structured sales were a concept that resonated primarily with sellers. Yet commercial real estate buyers may be surprised to

The Big Fix 

Deferred maintenance in commercial real estate properties poses a significant challenge for market participants over the next several years. While nonrecourse lenders may suffer the most in the short term, this issue will be a serious consideration for property owners,

The Big Picture 

Companies that are real estate users can learn from today’s tough economy and past real estate strategies. Reflecting on best practices can provide insights to defend against future downturns. Real estate decisions, by their very nature, should include long term

Buyers Are Back 

Commercial real estate investors are lumbering out of the woods and back into the game. The menagerie of buyers shopping for properties in today’s market runs the gamut from private individuals to billion dollar institutions. But one thing they all

Bid vs. Ask 

Activity within the institutional commercial real estate market is picking up as a result of the abundance of capital seeking real estate opportunities. Property sellers who have been holding firm in their asking prices are being rewarded for their patience

The Benefits of Cost-Segregation Studies 

When a commercial property is purchased or constructed, a building asset is created and the dollars are entered into a fixed asset system as 39 or 27.5 year property. Using the straight line method,

Navigating the Maze 

The labyrinth of rules that taxpayers must follow when completing Internal Revenue Code Section 1031 exchanges can be overwhelming. Commercial real estate developers often prefer to avoid this maze, thinking that most of their work involves non qualified inventory. However,

Physical Fitness 

Commercial real estate investors conduct many types of due diligence, such as financial, legal, and physical. Regarding the latter, many investors assume that if they follow the current physical due diligence standard, ASTM guideline E2018 08, Standard Guide for Property

QI Questions 

The unregulated Section 1031 exchange industry has suffered instances of misappropriated client funds, breaches of fiduciary duty, theft, and qualified intermediary bankruptcy filings. The task of qualifying a QI has become paramount for real estate investors and their advisers. Understanding

Ready for Reform? 

On July 21, 2010, the Dodd Frank Wall Street Reform and Consumer Protection Act was signed into law. The risk retention requirements under Dodd Frank for asset backed securitizations, including commercial mortgage backed securities, have garnered substantial attention from the

ROI Check-Up 

Many investors ignore the return on investment that property condition assessments often can deliver. PCAs yield an ROI in three ways protecting buyers from bad purchases providing buyers with information for price negotiations with sellers and finding opportunities to improve

Lease Resistance 

As if rental demand weren’t already an issue, new accounting standards could make purchasing space more attractive than leasing. The changes will effectively eliminate most of the accounting differences between owning and renting a building. And in a market that

Money Magnets 

Capital that is now on the sidelines is likely to return to the market as a floor on asset pricing emerges and values become attractive once again. However, while lending conditions are expected to remain tight during the next 12

Due Diligence: Digging Deeper 

Lenders have overhauled their lending criteria and underwriting guidelines, so why shouldn’t buyers do the same? During these challenging times, property investors must refocus on the fundamental aspects of investment analysis to properly substantiate value in the purchase price. When

Foreclosure Fortunes 

In today&rsquo s market, the difference between traditional and distressed sales is mostly in the buyer&rsquo s mindset. Traditional sales currently are driven by need &mdash only investors who need to fulfill Section 1031 exchanges or other financial or market

Investor Insights 

When it comes to investing in today&rsquo s commercial real estate market, industry pro and author Kenneth D. Rosen, CCIM, founder and president of Kendar Realty in Coral Gables, Fla., has some simple advice &ldquo Stick with what you know.&rdquo

Industrial's New Image 

Long stigmatized as the asset type of old dirty factories, industrial real estate has ascended to prominence in private investors' portfolios. No longer is the big box warehouse a distant cousin from the bright, colorful retail center or the tall

Hands-Free Investments 

Non direct real estate investment choices run the gamut from tenancy in common interests and real estate investment trusts to net lease properties and mutual funds. Such investments provide many of the same perks as traditional real estate ownership, such

QI Questions(1) 

For investment property owners, the current top concern in a Section 1031 exchange transaction should be safety of the taxpayer&rsquo s funds. In the past decade, mismanagement and malfeasance have resulted in a handful of high profile qualified intermediary bankruptcies

Reclassifying REITs 

In today&rsquo s surging and oftentimes turbulent real estate investment market, responsible real estate professionals and investors must make decisions and strategically plan future steps armed with all the relevant facts. One area that consistently baffles the investment press and