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Holland and Wolf arrange off-market sale of six properties Kislak sells 825-unit multifamily portfolio in Harrisburg, PA for $50M
SPOTLIGHTS MULTIFAMILY FINANCING ISSUE HIGHLIGHTS Volume 31, Issue 15 August 9 - 22, 2019 3-16A REDCOM HOLDS GROUNDBREAKING CEREMONY FOR RESIDENCE INN UPCOMING CONFERENCES September 24, 2019 6 th Annual NJ Apartment & Multifamily Conference September 25, 2019 Pennsylvania Apartment & Multifamily Conference November 1, 2019 5 th Annual NJ CRE Leadership Conference For speaking and sponsorship information, please contact: Lea at 781-740-2900 or lea@marejournal.com 3B
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three of the properties twice before orchestrating the port- folio sale. The portfolio was previously assembled over a number of years for approxi- mately $15 million. The $50million sale marked the largest multifamily sale in Harrisburg this year accord- ing to date from CoStar. The properties are well- located throughout Harris- burg, which is the capital of Pennsylvania and among the state’s largest cities with a strong workforce and increas- ing population. The city is a major private and public sector employment center given the high concentration of state and Federal govern- ment agencies. The city offers convenient highway access to Rtes. 81 and 83 and the Penn- sylvania Tpke. “The portfolio is a value-add opportunity,” said Mr. Hol- land. “King St. has the ability to increase rents following the completion of property upgrades.” ment centers, including Joint Base Anacostia-Bolling, An- drews Air Force Base, MGM National Harbor, and Suit- land Federal Center, driving demand among residents who wish to live close to their work. “WorthingtonWoods was one of Washington DC’s most sig- nificant tax credit acquisition/ rehab opportunities and one of the District’s largest properties traded in the last couple years,” said Tangney. “Our clients, WCSmith and Aldon Torch, ran an incredible operation at the community which garnered a lot of attention from the na- tional buyer community. Our experience and knowledge of the DC MSA market, where since the beginning of 2019 we have sold 839 multifamily units totaling $82M in DCWards 7 & 8, enabled us to really highlight the unique opportunity and find the right buyer who would be able to usher the community forward.”
ARRISBURG, PA — The Kislak Compa- ny, Inc. announced
the recent $50 million o f f -market s a l e o f a multifamily portfolio in Harrisburg w i t h 8 2 5 residential units along with eight commercial spaces and f o u r c e l l phone tow- ers. The portfo- lio includes the following
Robert Holland
River Plaza
- Bellevue Towers with 118 units and six commercial spaces at 2400 Market St.; - Magnolia Gardens with 114 units at 210 Hale Avenue; and - Magnolia Hills with 108 units at 35 Thomas St. Kislak arranged the sale on an off-market basis with president Robert Holland and vice president Matt Wolf handling the assignment on
behalf of the sellers, affili- ates of The Loketch Group led by principals Moishe and Pinny Loketch. Messrs. Hol- land and Wolf also procured the purchasers, affiliates of King St. Commons. All par- ties involved are longtime Kislak clients. During Holland’s 35-year tenure with Kislak, he previ- ously arranged the sale of four of the properties once and
Matt Wolf
properties, all of which are located in close proximity to one another in Pennsylvania’s capital: - River Plaza with 269 units and two commercial spaces at 2311 North Front St.; - Riverfront Park with 216 units at 2600 Green St.;
Greysteel arranges the sale ofWorthington Woods in Washington DC for $37 million
WASHINGTON, DC — Greysteel has arranged the sale of Worthington Woods, a 394-unit garden-style multi- family community located in Washington, DC. Greysteel president & CEO, Ari Firoozabadi ; manag- ing dir., Kyle Tangney; dir.
Directory Multifamily Financing. .....................................3-16A DelMarVa.......................................................19-22A Organization Events. ...........................................24A Business Card Directory & Billboard Directory.....23A New Jersey................................................. Section B Central New Jersey.............................................3-9B Pennsylvania.............................................. Section C Central Pennsylvania..........................................7-8C www.marej.com
Worthington Woods
cured the buyer, Montgomery Housing Partnership. The property sold for $37 million. The 394-unit property is located at 4419 3rd St., SE, Washington, DC constructed in 1944, Worthington Woods was fully placed-in-service under the Section 42 Low Income Housing Tax Credit program in 2002. The property’s location in Southeast Washington, DC is convenient to many major public and private employ-
Herbert Schwat ; sr. invest- ment associate, Henry Ma- thies ; and investment associ- ate, Dutch Seitz , of the c omp a n y ’ s W a s h i n g - ton, DC of- fice, sold the property on behalf of the seller, WC- Smith and Aldon Torch and solely pro- Kyle Tangney
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2A — August 9 - 22, 2019 — M id A tlantic
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UPCOMING features SPOTLIGHTS
Mid Atlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Section Publisher ............................................. Steve Kelley Section Publisher ............................................... Kim Brunet Editor/Graphic Artist ......................................Karen Vachon Office Manager ............................................... Kerrin Devine Contributing Columnist ..... Perry Cirigliano, Patcraft; Drew Romanic, Martin Architectural Group, PC; Michael Shuster, CPA, EisnerAmper LLP Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 350 Lincoln St., Suite 1105 Hingham, MA 02043 USPS #22-358 | Vol. 31, Issue 15 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion 781-740-2900 | Fax: 781-740-2929 www.marej.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
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Re-Visioning Retail, One Center at a Time T Drew Romanic he world of retail is ev- er-changing and exceed- ingly fickle. Neighbor- hood centers, once the heart of the suburban retail landscape, have been challenged by malls, lifestyle centers, town centers, and power centers, all of which are a derivation or adaptation of the neighborhood center for- mula. Oftentimes the original grocery-anchored neighborhood center sees itself outpaced and out-positioned by newer cen- ters with superstores, offering both dry goods and groceries, as their anchors. At the same time, the renaissance of urban centers coupled with shifting demographics is generating a resurgence in urban and near urban areas. Just as several big box retailers are reformatting to fit into urban markets, even going vertical to accomplish this, there is still hope for the neighborhood center to be revi- talized if the location is sound. Through the evolution of the suburbs, and their expan-
sion made possible by the automobile, many markets eventually created “B” and “C” centers and malls which are now seeing a decline in use. These properties are still vi- able, but require a courageous and resourceful caretaker, aided by the design team, to repurpose and re-vision the property. The intent of these projects should be creating a place for people to shop, dine, enjoy, and relax. The added op- portunity to live and work in a newly refurbished community inserts a population into the property and provides a more compact lifestyle, saving time and energy and shifting it toward leisure and personal endeavors.
When reviewing your avail- able options for a property, begin with the low hanging fruit by refreshing the signage and facades with new finishes or visual elements to draw new clientele and existing custom- ers back into the renewed center. Invest in landscaping, restriping the parking, and addressing any safety issues such as poor lighting, pedes- trian access, and vehicle en- trances. Harness the power of a social media campaign, with the inclusion and participation of the tenants, to re-affirm the property’s importance and connection to the community it serves. Invite your new fol- lowers to regularly scheduled continued on page 13A
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M ultifamily F inancing
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HFF closes sale & secures financing for Phila. apartment community
M&T Bank & BBVA USA provides financing Cushman&Wakefield advises on $60M construction loan B © PCD Capital
OGO T A , N J — Cushman & Wake- field’s Equity, Debt & Structured Finance (EDSF) team advised on a $60 million construction loan for Phase I of a 13-acre, multifamily development in Bogota. PCD Development, LLC of New Providence, a subsidiary of PCD Capital, LLC, along with its partners at Saber Real Estate Advi- sors, LLC of Armonk, NY are building an exciting 421-unit luxury rental community with supporting retail on the riverfront site at 238 West Fort Lee Rd. EDSF’s John Alascio and Sridhar Vankayala , with multifamily investment sales specialist Brian Whitmer , advised on the financing which was provided by M&T Bank and BBVA USA . “Lenders
Riverwalk at Millennium
proved Lender for Conventional Loans. The HFF investment advisory team representing the seller was led by senior manag- ing director Mark Thomson , senior director Carl Fiebig and director Francis Coyne along with senior managing director Jose Cruz. HFF’s debt placement team representing the new owner was led by managing director Ryan Ade and senior direc- tor Jamie Leachman . Deal secured by Holliday Fenoglio Fowler LP (“HFF”) prior to being acquired by JLL on July 1, 2019. Co-brokerage services provided by Jones Lang LaSalle Americas, Inc.
CONSHOHOCKEN, PA — Holliday Fenoglio Fowler, L.P. (HFF) has closed the sale of and secured financing for Riverwalk at Millennium, a 375-unit, transit-oriented multi-housing community in the Philadelphia-area suburb of Conshohocken. HFF marketed the property on behalf of the seller, a joint venture between Long Wharf Capital and Scully Company . Relative Properties purchased the as- set. In addition, HFF worked on behalf of the new owner to place the fixed-rate acquisition loan through Freddie Mac . The loan will be serviced by HFF, a Freddie Mac Multifamily Ap-
13-acre, multifamily development in Bogota rendering
continue to actively back strong multifamily develop- ment projects with proven developers,” Alascio said. “PCD’s experience, strong deal metrics and a transforming submarket resonated in this offering, with M&T ultimately providing the best terms to win the business.” The project will incorporate first class amenities, including
an 8,000 s/f clubhouse featur- ing fitness and media rooms; a 5,000 s/f outdoor amenity area with an infinity-edge heated pool, theater, natural gas grills; a riverfront walkway with dog park; and a new on- site NJ Transit bus stop with access to NYC and beyond. Residents will also benefit from approximately 8,000 s/f of onsite retail space.
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4A — August 9 - 22, 2019 — Multifamily Financing — M id A tlantic
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Multifamily Financing By R. Brenner Green, Real Property Capital, Inc. Multifamily lending market
I nterest Rate Volatility in Multifamily Creates an Opportunity for a Shame-
are generally reserved for larger loans on properties in trophy-type locations at lower leverage. To be sure, if max loan proceeds are the goal, CMBS will again win most of the time. So in the span of half a year, the multifamily lending mar- ket did a complete back flip. It’s a reminder what a volatile financial world in which we all operate. It will be interesting to see if the rumor of a single rate cut for 2019 sends us back toward where we were a year ago, which if it happens will probably happen quickly.
So be sure you are talking to someone who is in the market every day as what might have been the best deal a week or two ago may not be the best deal next week. Your banker definitely isn’t going to tell you… R. Brenner Green is a 20- year veteran in commer- cial real estate finance and president of Real Property Capital, Inc., a full-ser- vice commercial mortgage banking firm based in the Philadelphia suburbs. Marcus &Millichap announces QOZ multifamily asset in Virginia sells for $28 million RICHMOND, VA — Mar- cus &Millichap announced the sale of Vida East Apart- ments, a 178-unit apartment complex in the Shockoe Bot- tom neighborhood of Rich- mond, Virginia. The property sold for $28 million, which equates to $157,303 per unit. “Vida East is a newly con- structed multifamily asset in a Qualified Opportunity Zone that was sold subject to assumed Virginia Hous- ing Development Author- ity (VHDA) taxable bond fi- nancing,” said Christopher Chadwick , first vice presi- dent investments in Marcus & Millichap’s Washington, D.C. office. “The high level of interest we generated during the 45-day marketing period underscores the appeal of Qualified Opportunity Zone investments.” Chadwick and Martin Mooradian , associ- ate, represented the seller, an out-of-state developer, and procured the buyer, a local developer. Bryn Merrey , senior vice president and di- vision manager is Marcus & Millichap’s broker of record in Virginia. Completed in August 2018, Vida East Apartments spans an entire block near the James River, Franklin Street and some of Richmond’s most vibrant restaurants and nightlife. Virginia Com- monwealth University, J. Sargeant Reynolds Commu- nity College and the Univer- sity of Richmond are nearby. Community amenities in- clude a rooftop picnic area, a saltwater pool and a dog park.
months is pretty remarkable. Last year, a seven-year bank loan at 4.5% was about 75 ba- sis points cheaper than a ten- year CMBS loan and 40 basis points cheaper than a ten-year agency loan. That would be a pretty easy decision for most investors as the simplicity of the non-recourse bank struc- ture is preferred by most. Only a couple months later, from the first discussion of a rate cut early this year and un- til very recently, that spread basically inversed, with few banks offering ten-year money and at rates around 50 basis
points above CMBS and 75 basis points above agency. When you combine that with the chance to obtain two or three-years interest only on the front end, and the banks’ general loathing to provide cash out on quick value add deals, all of the sudden the much maligned CMBS option starts to look pretty attractive in certain cases. The banks are starting to catch up for sure, with some of the most aggressive lenders offering rates in the high three per- cent range for as long as ten years. However, these deals
l e s s P l u g as to Why Y o u Ne e d A Mortgage Broker. L o o k i n g back on in- terest rates f o r mu l t i - family loans
R. Brenner Green
from the end of last year until now, the disparity in what type of lender was pro- viding the most competitive financing in those six or seven
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Real Estate Journal — Multifamily Financing — August 9 - 22, 2019 — 5A
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6A — August 9 - 22, 2019 — Multifamily Financing — M id A tlantic
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Multifamily Financing By Brenda Muller, Asset Preservation, Inc. Qualifying vacation property as investment
N
for vacation property owners seeking to defer capital gain taxes on the sale of a vacation- type property held for invest- ment. The main issue, in most cases, is whether the property to be exchanged is held “for the productive use in a trade or business or for investment,” or whether held exclusively for the personal use of the taxpayer. The starting point in addressing this issue is Revenue Procedure 2008-16. Rev. Proc. 2008-16 creates a “safe harbor” for exchanges of vacation property; in other words, if the specified owner-
critical at the time a property is sold, since many vacation destinations have appreci- ated and property owners may be facing significant capital gain tax consequences upon disposition. The use of a tax deferred exchange under IRC Section 1031 can be particu- larly important in disposing of vacation property—if such property can qualify as “held for investment”. Tax Treatment at Disposition: Qualifying for a 1031 Exchange Internal Revenue Code Sec- tion 1031 may be available
ow that we are in the full swing of summer, outdoor fun and enjoy-
ship and use requirements of Rev. Proc. 2008-16 are met, the property will qualify for tax deferral under Section 1031. Under Rev. Proc. 2008- 16, a “dwelling unit” is defined as any real property improved with a house, apartment, condominium, or similar im- provement that provides basic living accommodations, which include a sleeping space, bath- room and cooking facilities (e.g., a residential property). The safe harbors for the re- linquished property and for the replacement property are substantially the same. The
IRS will not challenge whether a relinquished dwelling unit, or a replacement dwelling unit, qualifies as Section 1031 property if: 1. The relinquished prop- erty is owned by the property owner for at least 24 months immediately prior to the ex- change, or the replacement property is owned for at least 24 months immediately after the exchange (the 24-month period, whether for the re- linquished property or the replacement property, is re- ferred to as the “qualifying use period”); and 2. Within each of the two 12-month periods which make up the qualifying use period (whether for the relinquished property or the replacement property): • The property owner rents the property to another person or persons at a fair market rent rental for 14 or more days; and • The property owner’s per- sonal use of the dwelling unit does not exceed the greater of: 14 days, or 10% of the number of days the dwelling is rented out. Under Rev. Proc. 2008-16, personal use of a dwelling unit occurs on any day in which the taxpayer is deemed to use the property for personal purposes. Rev. Proc. 2008-16 discusses Barry Moore v. commissioner, T.C. Memo. 2007-134, a 2007 Tax Court decision, which provides a good example of what will not qualify for a 1031 exchange of a vacation prop- erty. In Moore, the property owners exchanged a lakefront vacation property for another lakefront property. The prop- erty owners argued that both of these properties were held for investment because of the potential for long-term ap- preciation, and thus qualified for tax deferral under Section 1031. However, the tax court concluded that neither prop- erty was held primarily for investment purposes, but were instead held for their personal use and enjoyment. In reach- ing this conclusion, the court considered that: • The property owners never rented or attempted to rent the property to others; • The property owners de- ducted mortgage interest as a “home mortgage interest” ex- pense rather than investment interest expense; and continued on page 10A
ing vacations Mid-Atlantic many inves- tors should r e a d t h i s a r t i c l e t o ensure that if they ever want to sell their vaca-
Brenda Muller
tion home, they have the op- tion of potentially receiving favorable tax treatment in a 1031 exchange. Tax conse- quences can be particularly
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Programhas created a pipeline of deals the company has closed on with various development partners ARCTRUST is “PAVing” the way with its new preferred equity & lending program called PAVRs
A
RCTRUST Properties, a New Jersey based real estate acquisition
properties such as multi- family housing, retail, medical office, self-storage and indus- trial through preferred equity and loan investments. The programhas already created a pipeline of deals the company has closed on with various development partners. For more than 30 years, ARCTRUST and its affiliates have been responsible for the development and acquisition of more than 500 projects with an aggregate value more than $3 billion and has won numer- ous awards for its work in the real estate industry. The
company operates through- out the United States with a focus on the New York to Washington, DC to Florida corridor, tax free states, and major metropolitan areas with international airports. “The PAVR program is re- ally an extension of the way we have done business for the past 30 years” said Jason Kessler, the firm’s Chief In- vestment Officer. “We have always focused on location with intrinsic values for quali- fied owners in our real estate investments. The PAVR pro- gram was designed to help
expand our capital into a more diverse range of investment types.” Along with the PAVR pro- gram owners and developers get access to the ARCTRUST MORE program that allows developers to help expand their own pipelines while uti- lizing ARCTRUST for Money, Opportunity, Experience and Resources such as profes- sionals, forms and back office support and the experience that comes from three decades in every phase of real estate development. Adds Kessler, “PAVRs also
offer flexibility in the structure of the deal. Investments can be implemented through a combi- nation of development, acquisi- tion and financing activities.” Kessler also further highlights the benefits of ARCTRUST has a capital source by adding, “Real estate development can be a long difficult road. Devel- opers are balancing building their vision with the needs of municipalities against the con- straints of time, budgets and other events. We understand the process and the needs of developers. We are here to be a partner”.
and develop- ment firm, recently in- troduced its new “PAVR” j o i n t v e n - ture equity and lending p r o g r a m . PAVRs, an
Jason Kessler
acronym for Protected Ap- preciation Vehicles for Real Estate, is the newest in a line of successful joint venture equity and lending programs the company has made avail- able for qualified real estate developers. The PAVR program pro- vides joint venture equity or loans for various real estate Bellwether Enterprise closes $10Mloan for affordable housing community in VA STAUNTON, VA — Bell- wether Enterprise Real Estate Capital LLC (Bell- wether Enterprise) , the commercial and multifamily mortgage banking subsidiary of Enterprise Community In- vestment Inc. (Enterprise) , announced the closing of $10.1 million in financing to enable LEDIC Realty Company to purchase and renovate Willow View Townhomes, an afford- able multifamily housing com- munity in Staunton, 33 miles northwest of Charlottesville. This deal underscores Bell- wether Enterprise’s commit- ment to providing vital financ- ing for high-quality affordable housing in the Mid-Atlantic. Jon Killough , senior vice president of Bellwether En- terprise in the company’s Alabama office, arranged the loan. The financing plan in- cluded short-term tax-exempt bonds (cash collateralized) underwritten by Stifel, Nico- laus & Company , and 4% low-income housing tax credits purchased by Boston Capi- tal . The tax-exempt bonds were issued by the Staunton Redevelopment and Hous- ing Authority , and the low- income housing tax credits were allocated through the Virginia Housing Develop- ment Authority . The reha- bilitation of the property will be performed by Empire Con- struction of Knoxville, TN.
ARCTRUST
THE ARCTRUST “PAVR” PROGRAM IS ACTIVELY SEEKING SPONSORS AND JV PARTNERS: EQUITY FINANCING PROGRAM Preferred Equity & Participating Loans Multi-Familly, Retail, Industrial, Medical Deal Size $2 million to $10 million JV DEVELOPMENT Multi-Family, Retail, Industrial, Medical Up to 100% Equity Provided Firm Commitment to Purchase ACQUISITIONS Net Lease Properties Long-term leases Short-term, below market rents
REVISION HISTORY:
REVISED LOGO LETTERING, 18 JULY 2016 Logo letters changed to all same weight
Steve Maloy stevem@arctrust.com Rob Martone rmartone@arctrust.com
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973.249.1000 • 1401 Broad St. Clifton, NJ 07013 • www.arctrust.com
8A — August 9 - 22, 2019 — Multifamily Financing — M id A tlantic
Real Estate Journal
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Multifamily Financing
ew J e r s e y b a s e d Mortgage Expert, Mi- chael Mikhail, CEO By Michael Mikhail, Stratton Equities Hard Money Loans versus Fix & Flip Loans and why the industry is confusing the two N lender to get their money back quickly if the borrow defaults on the mortgage. ment for the borrower, as it doesn’t have many guidelines and criteria.
Loans are among the most popular programs that inves- tors utilize for their real estate investments. Although, they are two different programs, many in and outside the indus- try believe them to be the same loan…but this is the furthest thing from the truth. Hard Money Loans A true Hard Money Loan (is an asset-based loan, which means the financing is based on the Loan to Value (LTV) of the Asset. Unlike the Fix and Flip loan, it doesn’t go through full underwriting and there’s no minimum FICO require-
within 1-2 weeks (from day of application), commonly as a first lean position - because it’s just money. It’s normally in the form of a Bridge Loan, which is short term financing in a period of 12-24 months. One of the reasons why Hard Money Loans are for invest- ment properties ONLY, is due to the high cost regulations and predatory lending – you can’t put such high interest rates and cost on an owner occupied property. In certain states, there are non-judicial foreclosure laws, which allow a Hard Money
This type of loan doesn’t have as many restrictions as one might think considering that it’s just money, so no more having to worry about bankruptcies, foreclosures, col- lections, etc. Due to the lack of guide- lines and underwriting, a true Hard Money Loan is generally capped at 65% LTV or less. For example, let’s say you have a home worth $1M, if you want $500K against it (50% LTV), you’re able to receive the money
of Stratton Equities, re- views Hard Money and Fix & Flip Loans Pro- grams. Regardless of the type of investor you
These foreclosure laws make the lender more comfortable doing high-risk loans, usually the money is not sold on the secondary market – the lender holds the note, they don’t sell the paper. Fix & Flip Loans Fix & Flip Loans are also asset-based loans, however they utilize more underwriting guidelines and criteria. While Hard Money Loans focus solely on the asset, Fix & Flip loans look at both the asset and the borrower. The reason why people con- fuse Hard Money Loans with Fix & Flip Loans, are because both the loan and the laws are very similar - they are both private money to an investment property. Virtually all fix & flip and hardmoney loans are funded by hedge funds, the money comes from the same place, but the underwriting is different. Contrary to Hard Money Loans, Fix & Flip Loans are usually sold on the secondary market and goes through a full underwriting with tighter guidelines. For instance, de- pending on the lender, Fix & Flip loans have a minimum FICO requirement. Addition- ally, the borrower can’t have late payments, foreclosure, judgments, or bankruptcy on their credit for 24-36 months. Furthermore, a Fix & Flip loan is a rehab loan, a loan that you utilize to acquire a property and then receive the funds to rehab that property in short term financing (12-18 months). Depending on whom you are working with, it’s important to bring something dynamic to the table, to help you close your loans quickly, efficiently, and professionally. However, make sure that when you move forward with a mortgage lender that you know all the details of your loan, why they are utilizing that program, and whether or not that loan program is being properly pre- sented to suit your needs. For example, at Stratton Equities, we offer bothHard Money and Fix and Flip Loan Programs, amongst an array of other programs, for Nationwide Real Estate Investors. Each loan sce- nario is carefully curated by one of our Senior Loan continued on page 10A
Michael Mikhail
are and your loan scenario, there is an array of loan pro- grams that are designed to meet all your mortgage needs. Hard Money and Fix & Flip
We are the leading Nationwide direct private money & NON-QM Lender, o ering the most diverse array of loan programs in the country. Our Loan O cers are ready to discuss your unique loan scenario and loan program that best suits your needs! HARD MONEY - FIX AND FLIP - NEW CONSTRUCTION - MULT-FAMILY - COMMERCIAL BRIDGE - CASH OUT REFINANCE - STATED INCOME
1-800-962-6613 www.strattonequities.com info@strattonequities.com
Real Estate Journal — Multifamily Financing — August 9 - 22, 2019 — 9A
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By Jefferson F. Riddell, U.S. 1031 Exchange Services, Inc. 1031 + DST
I
typical first year cash-on-cash return for a DST property investment (depending upon the particular property) is between 4 1/2% and 7%. DST investments are pack- aged by real estate companies called sponsors. There are about 80 active sponsors in the United States. The busi- ness plan of most sponsors anticipates resale of a DST property within ten years, but some have sold earlier. The Purchase Agreement signed by all of the DST co- owners contains the rules gov- erning the relationship among
the co-owners. Although DSTs may sound like partnerships, they are not-partnership in- terests and do not qualify for 1031 exchange. Also, DSTs (single properties) are not the same as REITs (multiple properties). Like partnership interests, REITs also do not qualify for 1031 exchange. Any person or entity that can own real estate can own a DST interest. Although they are designed as convenient replacement properties in 1031 exchanges, others may choose to purchase one or more DSTs in order to add passive
investment real estate to their investment portfolios. Jefferson F. Riddell is a Florida Board Certified Real Estate attorney with over 40 years of experi- ence assisting people with a variety of residential and commercial real es- tate matters. U.S. 1031 Exchange Services, Inc. is a 1031 exchange quali- fied intermediary (QI). As president of U.S. 1031 Exchange services Jeff has been facilitating 1031 exchanges for more than thirty-five years.
f you are an investment real estate owner who would prefer not to pay
Formerly a licensed se- curities registered rep- resentative, real estate broker, Jeff is uniquely qualified to assist those who wish to avail them- selves of 1031 and 1031 exchange tax savings and also guides investors in diversifying their port- folios with nonpublicly traded REIT, LP and LLC real estate investments. Jeffs book, 21st Century Real Estate Investing Fea- turing 1031 has been pub- lished and is available at Amazon.com.
tax on sale, you need to know about 1031 + DST. The process is simple-sell in a 1031 ex- change and p u r c h a s e D S T r e -
Jefferson Riddell
placement property. A DST (Delaware Statutory Trust) replacement property is a fractional interest in a large rental property such as an office building, shopping cen- ter, apartment complex, in- dustrial property, senior housing, student housing or hotel-even golf courses have been offered. DSTs are much like professionally managed whole ownership rental prop- erties. Most whole ownership properties are too small for professional management but DST properties justify professional management because the value of the property typically exceeds $20 million. In addition to 1031 ex- change tax deferral, DSTs have all of the benefits of rent- al real estate ownership in- cluding cash flow from rents, depreciation deductions and potential profit on resale. Along with the benefits, DSTs are subject to the standard risks of rental real estate ownership, but the risks are mitigated by professional ac- quisition analysis and evalu- ation (due diligence) at the sponsor, lender, broker-dealer and securities registered rep- resentative levels and ongo- ing professional management. DST properties are not speculative to-be-built prop- erties or properties for which tenants need to be found. Instead, DST properties tend to be relatively new properties with tenants in place under typical length leases for the type of property involved. Of course some properties like hotels and golf courses are an exception because their “tenants” change daily. Since DSTs are deeded interests in real estate, they are not as liquid as stock market invest- ments so those who may have an immediate need for their funds should not buy DSTs. Each DST investor is a co- owner of the property along with other investors. The
SELL INVESTMENT PROPERTY TAX FREE
Learn about 1031 exchanges VISIT OUR WEBSITE > US1031.COM
Jefferson F. Riddell President Phone: (941) 366 -1300 Fax: (941) 366 - 6973 E-mail: jriddell@rlglawfirm.com
Board Certified Real Estate Attorney has been facilitating 1031 exchanges for over 30 years. Learn how a 1031 exchange may help you defer taxes, save money and maximize your investment dollars. Visit our website or call for a FREE consultation.
21 ST CENTURY REAL ESTATE INVESTING available on Amazon
U.S. 1031 EXCHANGE SERVICES, INC.
3400 South Tamiami Trail, Sarasota, Florida 34239
10A — August 9 - 22, 2019 — Multifamily Financing — M id A tlantic
Real Estate Journal
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MonarchHousing Associates served as the consultant for the project NJHMFA uses Sandy Recovery Funding for veterans inHoboken
Regions Bank hires Cahill to leadReal Estate Banking for DC
property is rented. • Leasing the property as much as feasible, given its location; • Retaining written records of all leases, leasing activities and listings for lease; • Hiring a local proper- ty management company to make the property available for rental use; • Listing the property for rental on popular websites such as VRBO.com, rentals. com, homeaway.com, vacation- rentals.com, etc.; and • Showing rental income and expenses on Schedule E of the property owner’s tax return and other tax treat- ment consistent with a rental investment property. • As always, it is important for taxpayers to consult with their tax and legal advisors before engaging in a Section 1031 exchange. A careful re- view of the unique facts and circumstances of a vacation property owner’s situation should be done before the deci- sion is made to proceed with a 1031 exchange. Brenda Muller is VA, MD & D.C. Division Manager with Asset Preservation, Inc., a leading national qualified intermediary. and expertise that provides support to any borrower that contacts Stratton Equities. Due to our extensive training and rigorous work ethic, we never have a mix up between loan programs, scenarios, and other situations. As we are always striving to grow, we put all of our energy into building our Loan Officers and providing them with the materials, training, and direct (organic) leads – to always stay on top of the Mortgage trends and new programs. Michael Mikhail is the founder and CEO of Strat- ton Equities, the nation’s leading direct hard money and NON-QM lender to real estate investors, with the largest variety of mortgage programs. Real Estate Banking execu- tive Mike Smith commented, “I’m excited to welcome Jame- son to the Regions Income Property Finance team. Mid-Atlantic region, working collaboratively with Regions Capital Markets to provide comprehensive financial ser- vices to meet the needs of real estate clients.
• The property owners did not take (and probably did not qualify for) depreciation or other tax benefits associated with an investment property including deductions for main- tenance expenses. Rev. Proc. 2008-16 provides a safe harbor for qualifying vacation homes for purposes of Section 1031, and meeting its requirements is likely critical to qualifying a vacation home under Section 1031. A vacation property that does not meet the requirements of Rev. Proc. 2008-16 will likely not qualify for Section 1031 exchange tax deferral. Converting a Vacation or 2nd Home into an Investment Property A property owner can pre- pare in advance for a poten- tial Section 1031 exchange in the future by converting their vacation home or second home into a property held for investment. There are a num- ber of steps that can be taken to accomplish this, which may include some of the following actions: • Keeping any personal use of the property to a minimum, under 2 weeks a year, and/ or below 10% of the days the Officers, who then qualifies the loan to our wide range of Mortgage Programs – to best suit the borrower’s needs. This ensures that each scenario is matched with its ideal and best possible program. The biggest misconception borrowers have, is that many believe that you need a hard money loan at high interest rates even though you are a high credit score qualified borrower. The fact is you can receive interest rates and terms very close to conven- tional financing while still being a no income verification loan. Hard Money is not a blanketed statement for all private money loans. Our team members are fully equipped with the knowledge BIRMINGHAM, AL — Re- gions Bank announced that Jameson Cahill has joined Regions Income Property Fi- nance as senior vice president and will be based in Wash- ington, DC. In this new role, Cahill will lead Regions’ efforts to expand outreach to real es- tate clients throughout Wash- ington, D.C. and the larger
ing veterans who have served our country so honorably. Permanent supportive hous- ing and services will provide the needed stability to help them rebuild their lives,” said NJHMFA executive director Charles Richman . “This outstanding project also re- flects the continued successful rebuilding efforts after Super- storm Sandy, which severely impacted Hoboken.” The building also includes bicycle and storage rooms, and an outdoor covered patio. The two residential floors each have their own laundry rooms. All apartments are either handicap adaptable or accessible, and one efficiency and a one-bedroom apartment are for the hearing and visu- ally impaired. The complex is within walking distance of pharmacies, grocery stores, hospitals, doctors’ offices, schools, parks, and other rec- reational activities. The Hoboken Shelter Inc. will provide support services focused on helping residents live independently in perma- nent supportive housing, in- cluding ongoing services that address residents’ daily living and special needs. Services will include onsite case man- agement services and linkages to mainstream resources, and access to health care and other treatment services. MonarchHousing Associ- ates served as the consultant for the project. Monarch is a Cranford-based nonprofit dedicated to expanding the supply, accessibility and vari- ety of affordable, permanent supportive housing through development, planning, advo- cacy and partnerships. Mac. He earned a Bachelor of Arts degree from James Madi- son University and a Master of Business Administration from GeorgeWashington University. KeyBank Community Devel- opment Lending and Invest- ment (CDLI) helps fulfill Key’s purpose to help clients and com- munities thrive by financing projects that stabilize and re- vitalize communities. Experts in complex tax credit lending and investing, Key is one of a handful of affordable housing lenders in the country with a platform that brings together balance sheet, equity, and per- manent loan offerings.
OBOKEN, NJ — American Legion Veterans Affordable
Housing , which will provide affordable supportive homes for six homeless veterans and was funded in part by the New Jersey Housing and Mortgage Finance Agency (NJHMFA) , celebrated its opening with a ribbon cutting joined by NJHFMA execu- tive staff, US Senator Robert Menendez, local officials and the developer, American Le- gion Hoboken Post No. 107. The project on Second Street involved the demolition of American Legion Post No. 107 and construction of a five-story building, which provides three efficiency and three one-bed- room apartments. The second floor, financed separately, is housing the new American Legion Hall. Residents are expected to start moving into the apartments this month. “Governor Murphy and I are dedicated to taking care of our military veterans in New Jersey. When our state was hit by Superstorm Sandy, it left some of our most vulnerable residents, including veterans of limited financial means, in an even more precarious situation. This prompted the State of New Jersey to work with housing developers such as Monarch to create perma- nent, affordable housing for people with special needs in communities impacted by the storm,” said Lt. Gover- nor Sheila Oliver , who also serves as DCA Commissioner and chair of NJHMFA board. “The American Legion Veter- ans Affordable Housing proj- ect is emblematic of this col- laboration. The Department of WASHINGTON, DC — KeyBank Community De- velopment Lending and Investment (CDLI) has ap- pointed Jonathan Wittkopf as senior vice president and senior banker. Wittkopf will be based in Washington, D.C., where he will be responsible for continuing KeyBank’s expan- sion in the Mid-Atlantic, East and Southeast territories. He will report to Kyle Kolesar , senior vice president. “Jonathan has extensive knowledge of the affordable housing market, with notable success in the Mid-Atlantic re- gion,” said Kolesar. “His strong
continued from page 6A Qualifying vacation property . . .
Community Affairs was proud to partner with NJHMFA and the project’s developer to pro- vide Sandy recovery funding and housing vouchers to help give six previously homeless veterans a permanent place to call home.” NJHMFA provided $1.3 million from its Sandy Special Needs Housing Fund, which was created in April 2013 with $60 million to facilitate the de- velopment of quality, support- ive permanent housing in the nine counties most impacted by SuperstormSandy. To date, the program has funded 48 projects providing 401 beds for special needs residents. DCA’s Division of Housing and Com- munity Resources awarded the project six project-based housing vouchers for military veterans, and the project also includes $855,000 in Hudson County Home Funds toward the construction of the overall building. “NJHMFA is proud to be included in this development partnership, which represents a deep commitment to help- American Legion VeteransAfford- able Housing industry relationships and wealth of affordable housing knowledge will be instrumental as we continue to expand our platform.” Wittkopf brings 14 years of multifamily affordable housing experience to the CDLI team. Prior to joining KeyBank, he served as vice president and debt originator at Citi Com- munity Capital, where he fo- cused on balance sheet and GSE executions for affordable housing in the Mid-Atlantic region. Previously, Wittkopf served as a senior analyst in the multifamily affordable sales & investments group at Freddie
Hard Money Loans versus Fix & Flip . . . continued from page 8A
Keybank Strengthens Community Development Lending And Investment team with addition of Jonathan Wittkopf
Real Estate Journal — Multifamily Financing — August 9 - 22, 2019 — 11A
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12A — August 9 - 22, 2019 — Multifamily Financing — M id A tlantic
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NGLEWOOD CLIFFS, NJ — Kennedy Fund- ing , the Englewood 46-acre lot pre-approved for residential development Kennedy Funding closes $1.575 million cash- out refinancing loan for Virginia Property E
Davis Ford Venture, LLC acquired the property, which is divided into two tax lots, in 2002 for $1.4 million. Since its purchase, the borrower has received preliminary approval for a residential subdivision for a community of single-fam- ily homes to be named Hoadly Falls. The second parcel, lo- cated across the street from Hoadly Falls, is pre-approved for 15 single-family homes, each on a .56-acre lot. The bor- rower plans to sell the lots to a national developer. “The applicant came to us with a concrete plan for the
will be used for working capital. According to Kevin Wolfer , CEO of Kennedy Funding, this arrangement is practically un- heard of in both traditional and alternative financing circles. “There are virtually no lend- ers who will look at an appli- cant who plans to use a cash- out refinance loan on land, let alone fund the deal,” Wolfer said. “However, Kennedy Fund- ing’s flexibility means that we are willing to read between the lines of a traditional applica- tion. We were able to truly as- sess the merits of this property and see the applicant’s vision.”
property, as well as a track record of remaining current on their current mortgage pay- ments,” Wolfer said. “With that in mind, we were able to fund the loan.” Manassas is in northern Vir- ginia, home to approximately 40,000 residents and serves as the seat of Prince William County government. Major employers include the Manas- sas Regional Airport, semicon- ductor manufacturer Micron Technology, Lockheed Martin, and the Novant Prince William Health System. The parcels sit immediately
off Prince William Parkway, a major county thoroughfare which connects directly to I-95. One of the properties is adja- cent to the Shops at County Center, with several restau- rants, professional services, and anchored by a 24-hour Har- ris Teeter grocery store. The proposed Hoadly Falls is also a few minutes away from golf courses, a BMX track, and the PWC Stadium Complex, home to the minor league baseball team the Potomac Nationals. Multiple national parks and historic sites are located just a short drive away. “This property is at the center of a thriving middle-class city, with many opportunities to live, work, and play,” Wolfer said. “New housing so close to employers, shopping, and recreation is sure to succeed.” About Kennedy Funding Kennedy Funding is a na- tionwide direct private lender specializing in bridge loans for commercial property and land acquisition, development, workouts, bankruptcies, and foreclosures. Kennedy Funding has closed more than $3 billion in loans to date. Their creative financing expertise enables the closing of loans of up to 75% loan-to-value, from $1 million to more than $50 million, in as little as five days. Avison Young secures financing for $55mmultifamily development near Amazon’s HQ2 site ALEXANDRIA, VA — Avi- son Young has secured financ- ing for NOVO Properties to develop a $55 millionmultifam- ily project in Old Town Alexan- dria near Amazon’s new HQ2. Avison Young’s Capital Mar- kets Group arranged joint venture equity and acquisition/ construction financing for the class A apartment development at 1200 North Henry St. NOVO selected Avison Young to arrange the financing. Lead- ing the effort were Avison Young’s Jon Goldstein, Wes Boatwright and Mike Yavin- sky , all principals; Matt We- ber , senior vice president; and Clayton Pristou , senior associate. The equity was provided by an insurance company and acquisition financing was pro- vided by Pinnacle Financial Partners .
Cliffs, New Jersey-based direct private lender, closed on a $1.575 million cash- out refinanc- ing loan to Davis Ford V e n t u r e ,
Kevin Wolfer
LLC. The borrower plans to use the loan to pay off an exist- ing first mortgage of $867,590 on land located at 5021 Davis Ford Rd., while the remainder
So we went all the way with this deal.
Recently Closed $1,575,000
A land deal like this sent traditional lenders running for the hills. Not Kennedy Funding. Our flexibility allowed us to see the true benefits of closing this type of loan, allowing the borrower to pay off an existing first mortgage and use the rest as working capital. A lovefest for all. CASH-OUT REFINANCE ON LAND!
Call 1-800-342-8500 or KennedyFunding.com
CASH-OUT REFINANCE–LAND • $1,575,000 • DAVIS FORD VENTURE, LLC • MANASSAS, VIRGINIA
LAND, DEVELOPMENT AND ACQUISITIONS, BANKRUPTCIES, DISCOUNTED PAYOFFS, NOTE PURCHASES, WORKOUTS AND FORECLOSURES
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