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