Foreign Investment

Guiding Foreign Investors

One CCIM unravels a foreign national’s accounting problems to make a sale.

Danny Zelonker, CCIM, SIOR, broker associate with Mizrach Realty Associates in Miami, thought he finally had the sale of Halevai LLC’s 23,000-square-foot Miami warehouse on track when he discovered a problem. The buyer, a Venezuelan-owned meat-packing business, had formed a corporation as a Subchapter S, for which foreign nationals are ineligible. Zelonker and his team worked with the buyer’s accountant, who had to reprocess three years of income, to form a C corporation.

Once the books were in order, it was time to secure funding. The team pursued a Small Business Administration 504 loan, which required a complete overhaul of the buyer’s business plan. “The SBA angle was mine,” Zelonker says. “My CCIM education helped me streamline the numbers while working on the business plan.” The SBA 504 loan was secured at a 20-year fixed rate of around 5 percent with no points. The conventional first mortgage was at 6.5 percent with one point, a 30-year amortization, and a 10-year balloon.

And though the client already intended to purchase the property, Zelonker used CCIM Excel-based worksheets to perform a buy vs. lease analysis using a five-year T-bar with 3 percent rent increases and a sixth-year reversal at a 7 percent discount rate. The client was right: It was time to buy. The accounting problem delayed the closing by more than two months, but after the paperwork was submitted, the more than $1.2 million deal closed in 45 days.

Rich Rosfelder is associate editor of Commercial Investment Real Estate. Find out how other CCIMs solved 2010’s challenging deal problems in “A Time to Buy,” in the March/April 2011 issue of Commercial Investment Real Estate.

Rich Rosfelder

Rich Rosfelder is vice president of strategic communications for CCIM Institute.

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