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ISSUE HIGHLIGHTS Volume 32, Issue 21 Dec. 18 - Jan. 14, 2020
OMERSET, NJ — NAI DiLeo-Bram & Co. , a leading full-service S Bram Johnston and Galiano represent tenant in transaction NAI DiLeo-Bram inks 308,000 s/f industrial lease at Bridge Point Somerset ports and offers the ability to transport their product easily throughout the northeast,” he added.
SPOTLIGHTS
commercial b r o k e r a g e firm, recent - ly announced that it closed a long-term 308,000 s/ f i n d u s t r i a l lease at 481 Weston Ca - na l Rd . i n Somerset. EricBram Johnston , p r i n c i p a l , and Christo- pher Galia- no , executive v i ce pres i - dent of NAI DiLeo-Bram, represented
“Working on this transaction when the pandemic began was extremely challenging, but all parties stayed in constant contact to work through the myriad of issues that needed to be solidified,” said Galiano. Bridge Development Part - ners, LLC, was represented by Jones Lang LaSalle . 418 Weston Canal Rd. is a 308,550 s/f industrial build - ing located within Bridge Point Somerset, a newly con - structed three-building class A industrial corporate park. The building features 36-foot clear ceiling heights, 78 trailer stalls, 50 loading docks and two electrically operated drive- in doors. MAREJ
Section D YEAR IN REVIEW CRE LAW
Eric Bram Johnston
481 Weston Canal Rd.
the tenant in this transaction. The tenant, a furniture manufacturer, is relocating most of its operations from Edison, to this location. The newly constructed property was developed and is owned by Bridge Development Partners, LLC . “We are pleased to have
helped our client negotiate a lease at this class A industrial property,” said Johnston. “This newly constructed property of - fers our client the opportunity to grow its business in a corpo - rate park setting. Excellent access to the New Jersey Tpke. and major road networks al - lows for quick access from the
David B. Wolfe, Esq. Skoloff & Wolfe, PC
9A
Christopher Galiano
Nathanson, Helpern & Marks of IPA brokers 304,974 s/f grocery-anchored shopping center
the time of the sale, the center was 98% occupied with a strong lineup of essential-use ten -
YORK, PA — Institutional Property Advisors (IPA) , a division of Marcus & Mil- lichap, announced the sale of YorkMarketplace, a 304,974 s/f grocery-anchored retail shop - ping center in York. “The property is a best-of- class asset within one mile of the crossroads of I-83 and Rte. 30, one of the busiest intersec - tions in Central Pennsylvania,” said Brad Nathanson , IPA senior managing director. “At
Andrew Maguire, McCausland Keen + Buckman
ants, anchored by a 74,541 s/f Gi an t Fo od Stores grocery store and co- anchored by a 125,353 s/f Lowe’s Home Improvement and a 12,500 s/f Premium Fine Wine & Good Spirits.” N a t h a n s o n represented t h e s e l l e r , and identified t h e b u y e r , Tr i p l e BAR Group. Man - hattan-based M i c h a e l Helpern and Chris Marks of IPA Capital Markets, a di - vision of Mar-
10A
OWNERS, DEVELOPERS & MANAGERS FEATURING INDUSTRY LEADERS
Brad Nathanson
Section C
Directory ROP (Front Section) .................................... Section A Contributing Columnist ..................... Glenn Ebersole What Will The AEC Industry See In 2021? . ............ 2A DelMarVa.......................................................... 3-4A Financial Digest ................................................. 7-8A Commercial Real Estate Law............................. 9-10A Retail Development Reimagined . ................... 14-15A People on the Move............................................ 16A Business Card/Billboard Directory ....................... 18A Organization Calendar of Events .......................... 20A New Jersey.......................................................1-16B Pennsylvania.................................................17-BC B Owners, Developers & Managers ............... Section C Year in Review. .......................................... Section D www.marej.com
York Marketplace
desirable retail investment. At a time when very few shopping centers are on the market, the execution of this transaction was material to the health of the valuation of shopping centers and a positive sign for private and institutional inves - tors, including publicly traded REITS.” “Given the strong co-tenancy of Giant and Lowe’s, we had 14 lenders competing to finance the property,” said Helpern. MAREJ
Michael Helpern
how retailers have transi - tioned their operations during the pandemic, the strong ten - ancy and positioning of York Marketplace provided some of the best metrics investors have seen between collections, tenant retention, and perfor - mance,” Nathanson added. “With 57% of the income com - ing from essential anchors with strong above average sales, York Marketplace was nation - ally recognized as a highly
Chris Marks
cus & Millichap Capital Corp., arranged the debt on behalf of the buyer. “Within the spectrum of
Inside Cover A — December 18 - January 14, 2020 — M id A tlantic Real Estate Journal
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This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies,general market conditions and competition, lack of operating history, interest rate risks,general risks of owning/ operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through Growth Capital Services member FINRA, SIPC Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.
M id A tlantic Real Estate Journal — December 18 - January 14, 2020 — 1A
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Bojangles La Follette, TN $1,951,220 Burger King Pensacola, FL ,100,00
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7-Eleven Coppell, TX $4,400,582 Citizens Bank Ostervil e, MA 2,1 ,000
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M id A tlantic Real Estate Journal
We are searching for high-level professionals to write a by-lined article about their area of expertise for upcoming spotlight features.Suggested topics include, but are not limited to: WANTED AUTHORS WITH A FLAIR
M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Editor/Graphic Artist ......................................Karen Vachon Contributing Columnist .............................. Glenn Ebersole 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. 32, Issue 19 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 | Fax: 781-740-2929 www.marej.com
Glenn Ebersole
What Will The AEC Industry See In 2021?
-
Development • Industrial Market • Multi-Family Market Retail Market • Distribution Centers
M
embers of the AEC (Architectural, En- gineering & Con-
• Mediation • Real Estate Law • Mold Environmental • Architecture • Engineering
struction) industry are look- ing ahead to 2021 and realize the year ahead looks chal- lenging. However, 2021 will present opportunities for leaders who are anticipa- tory and think strategically. Those leaders will look for the hard trends and soft trends, identify the disruptors in the industry and subsequently define the opportunities that will exist for them. Assessing market opportu- nities and developing stra- tegic business development/ marketing plans will identify where AEC firms will invest for growth in 2021. The pro- cess of assessing the market opportunities and creating plans to pursue business will be very different than the process used in creating plans prior to COVID-19. Several factors will com- plicate market analysis and plans for 2021, including the course of the pandemic and the availability of a safe and effec- tive vaccine. The uncertainty
Call 781-740-2900 or email editor@marejournal.com
about the vaccine and the post- election socio-political environ- ment will further complicate planning for 2021. The overall market for AEC services will contract in 2021 and yet there will be oppor- tunities for growth. Some of the growth will come from existing market sectors where new needs have emerged from COVID-19. Other opportuni- ties will be in new markets that have been created by the pandemic. The pandemic has caused the various markets within the AEC industry to evolve into much different markets. Leaders of AEC firms must look at their markets through entirely different and new lenses to plan for 2021. One significant example is the
retail market which has been going through a major evolu- tion. This evolution is creat- ing opportunities for AEC firms that look at redesigning, remodeling and repurposing existing retail facilities for different product delivery systems and increased safety. The AEC industry will face a contraction of state and municipal budgets due to revenue shortfalls caused by the pandemic. This will mean a smaller market for AEC services and more pressure on company margins. A bright spot for 2021 ap- pears to be in multi-family and mixed-use real estate development. Historically low mortgage rates, demand exceeding supply and an continued on page 6A
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Mill Point Capital sells 256,258 s/f industrial manufacturing portfolio MAG Capital Partners acquires three-building industrial portfolio
IRGINIA, TEXAS AND MICHIGAN — In a sale-leaseback- structured transaction, Fort Worth, Texas-based MAG Capital Partners, LLC, ac- quired a three-bui lding, 256,258 s/f industrial man- ufacturing portfolio that spans approximately 20 acres across locations in Virginia, Texas and Michigan. The facilities are occupied by Huntington Solutions, a full- spectrum product solutions manufacturer specializing in high-volume standardized packaging, innovative cold chain systems, engineered OEM components and cus- tomized construction mate- rials. The seller, Mill Point Capi- tal, is a New York City- based private equity firm that purchased a predecessor of Huntington Solutions in 2016. Huntington Solutions will continue to occupy its facilities located at 604 and 606 17th Street, Radford, VA; 1278 Highway 71 West, Bas- trop, Texas; and 1323 Moore Street, Greenville, Mich., under long-term net leases. “Despite headwinds in the general market brought on primarily by COVID and the turbulent election cycle, gen- eral manufacturing market fundamentals remain solid,” said MAG Capital Partners Principal Dax T.S. Mitchell. “The purchase is MAG Capi- tal Partners’ latest as we con- tinue to grow our net-leased industrial portfolio of invest- ments across the country.” “We are delighted to close on another acquisition in a sector of the market that is showing exceptional resil- iency during unusual times,” said AndrewGi, MAGCapital Partners principal. “Strong fundamentals point to future stability and growth in the market and we remain highly active in the acquisition of net-leased industrial assets with value companies such as Huntington.” MAG Capital Partners, led by principals Dax T.S. Mitchell and Andrew Gi , was represented by Mary Garnett and Jim Tuesley of Barnes & Thornburg LLP . Mill Point Capital was represented by J.C. Asensio, AndrewSandquist, Briggs Goldberg and Tyrell Mc- Gee with Newmark’s Chi- cago office. MAREJ V
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Commercial-Industrial Realty Council Great CRE Events...Cont. Education...Speakers...Networking
2020-2021 Board of Directors
Visit our new website and consider joining CIRC!
—OFFICERS— President:
— D I R E C T O R S —
Education Chair: Cynthia Fleming Jones Lang LaSalle
Robert Stenta Pettinaro Management, LLC
Membership Chair: James Manna BrightFields, Inc.
Vice President/Programs: Jay L. White , MAI, CRE® Apex Realty Advisory Treasurer: Barton L. Mackey, Jr. Patterson-Woods Associates
Past President: Donald Robitzer The Commonwealth Group
Benjamin Berger , Esq. Berger Harris, LLC
www. CircDelaware .org
Secretary: Bayard Snyder , Esq. Bayard & Associates
Carmen Facciolo NAI Emory Hill
— E X - O F F I C I O — Business Manager Janet Pippert Landmark Science & Engi- neering Legislative Lobbyist C. Scott Kidner C. S. Kidner & Associates Legislative Affairs Chair William Lower Harvey Hanna & Associates Economic Dev. Liaisons: New Castle County Robert Chadwick NCC Chamber State of Delaware Joseph Zilcosky Div. of Small Business
CONTINUING EDUCATION Classes Accredited: DE*PA*MD*NJ 2021 Class Schedule Instruction by the Frederick Academy of Real Estate accredited real estate continuing education classes Stay Posted. Scheduled dates for classes will most likely be delayed from starting in January due to COVID-19 class-size restrictions which vary from state to state. CIRC's Continuing Education course instruction is scheduled for the 2nd Wednesdays of the month. Note that the actual date for classes to begin is pending and will be announced at a later date.
Jim O’Hara , Jr. NAI Emory Hill-Retail Division
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Ryan Kennedy Harvey Hanna & Associates
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contact us (302) 633-1705 | Janet@circdelaware.org www.circdelaware.org
M id A tlantic Real Estate Journal — December 18 - January 14, 2020 — 5A
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M id A tlantic R eal E state J ournal
By The Kay Properties Team What Properties Can be used in a 1031 Exchange?
f you are interested in sell- ing your real estate, the phrase “1031 Exchange” has certainly come up once or twice in your research, as an outright sale can trigger large tax consequences. The capital gains and deprecia- tion recapture taxes can be a serious dent in the return you expected to earn from the sale of your real estate. A 1031 ex- change is a process by which an investor can defer the taxes they would pay upon sale of their investment property. It is important to understand how the 1031 exchange can be utilized. A 1031 exchange may be performed if the property sold and the following property or properties purchased are both considered investment property. Investment proper- ties are those that are used for business or investment purposes. Raw land, land with mineral rights, multi-family, and commercial real estate can all qualify as “like-kind” for the purposes of a 1031 exchange. Any property that falls outside that definition would not qualify. A primary residence or any property in which one stays more than two weeks in a year is NOT consid- ered an investment property. Again, an investment prop- erty must be exchanged for another investment prop- erty. Properties can only be exchanged if they are used for investment purposes like residential rentals, multifam- ily, condominiums for rent, commercial, industrial, retail etc. Furthermore, there are many 1031 exchange alter- natives one may consider. A Delaware Statutory Trust is a great example. With DST real estate, an investor is able to exchange into properties and own a fractional interest in the real estate. Instead of invest- ing the entirety of the proceeds into another property, one for one, an individual is able to invest in multiple pieces of property as a fractional and passive owner. Under the DST structure, fractional real estate ownership is still considered eligible for 1031 ex- change. This is a helpful way to potentially diversify into a portfolio of properties, thereby buffering the risk of having “all your eggs in one basket” by buying a single property. Utilizing the DST structure, one can own fractional inter- est of multiple properties with I
does not guarantee profits or protect against losses. Kay Properties is a na- tional Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor com- panies, custom DSTs only available to Kay clients, inde- pendent advice on DST sponsor companies, full due diligence and vetting on each DST (typi- cally 20-40 DSTs) and a DST secondary market. Kay Proper- ties teammembers collectively have over 115 years of real estate experience, are licensed
in all 50 states, and have par- ticipated in over 15 Billion of DST 1031 investments. This material does not con- stitute an offer to sell nor a so- licitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk sec- tion prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associ- ated with investing in real estate securities including illiquidity, vacancies, general market condi-
tions and competition, lack of operating history, interest rate risks, general risks of owning/ operating commercial and mul- tifamily properties, financing risks, potential adverse tax conse- quences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guar- antee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through Growth Capital Services member FINRA, SIPC Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104. MAREJ
the opportunity for several geographic locations as well as with various asset manag- ers running each real estate investment as part of a diversi- fied 1031 solution into DSTs. These are illustrative ex- amples of 1031 DST offerings. Future available 1031 DST offerings and tenants may be different. Diversification
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6A — December 18 - January 14, 2020 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
continued from page 2A What will the AEC . . .
AGB conducts webinar A&G executives: ‘NewNormal’ spurs schools to rethink their real estate M ELVILLE, NY — Trustees are scru- tinizing real estate
in target niches and seg- ments to build competitive advantages. They will work to achieve a compelling brand that represents an organiza- tion’s distinctive attributes and values that will take on added importance. Sustainability already is an important decision factor. The reality is that we are at the beginning of increas- ingly rapid development. In 2021, companies will need to: consider the environmental impact when sourcing ma- terials; make manufactur- ing more sustainable and optimize supply chains for sustainability as well as re- silience. The possibility of future lockdowns is a real “wild card” for 2021. For example, if positive things happen, construction activity could be back to pre-crisis levels by early 2021. But longer-term lockdowns could mean that it takes more than 3 years to recover. Previous crises have had an accelerative effect on trends, and this pandemic is also expected to trigger last- ing change that will impact the use of the built environ- ment. Survival and sustainability of AEC firms in 2021 will require the development of effective strategies to deal with the disruption that lies ahead. AEC firms must act now to define the vertical markets and segments of those markets, size and type of projects and geographic footprint they will pursue and then determine how to develop and execute their business development and marketing plans. The planning process is critical whether an AEC firm decides to continue only in their core business and ad- just or reinvent themselves to respond to the changing market environment. One of the most critical success factors for 2021 is business agility, which means rapid, continuous, and systematic evolutionary adaptation and entrepreneurial innovation directed at gaining and main- taining competitive advan- tage. How critical is business agility? Bill Gates provides a great answer when he said, “Success today requires the agility and drive to con- stantly rethink, reinvigorate, react and reinvent.” Glenn Ebersole is ex- ecutive director, strategic business development/ marketing at RCS Con- struction. MAREJ
emerging trend of movement to suburban and rural ar- eas are a combination that is providing confidence in this type of housing market. Therefore, AEC firms will see some growth opportunities in this market. Federal markets are differ- ent than the state and local government markets pri- marily because they are not required to have a balanced budget. Purchasing of AEC services at the federal level will continue but spending priorities will change with a new administration. Ac- cess to the federal market may remain focused toward the largest industry players, firms with specialized exper - tise, or those with special designations and security clearances. A very strong market for 2021 and beyond is life sci- ences. Billions of dollars are being invested in this sector in cities and on university campuses and the invest- ment will continue for many years. This is an especially attractive market for AEC firms that provide services to meet the demands of this industry. The industrial market is another very strong market going into 2021. Increased demand for warehouses and distribution centers will con- tinue because of the accelera- tion of e-commerce due to shop- ping behavior changes caused by the pandemic. One exam- ple is the continued opening of distribution centers at a rate of more than 100 in one month by one of the major players. On-line retailers will drive strong demand for AEC services in this sector and associated cargo facilities at airports through 2021 across North America. Data centers will be a strong market because of the increased need to sup- port growing technology. The exponential acceleration of e-commerce and technology drives the need for increases in the extraordinary power needed to process all the data necessary for its success. The prospects of govern- ment privatization and out- sourcing are expected to rise due to budget shortfalls. The budget shortfalls will create incentives for state and lo- cal governments to privatize and outsource services. This trend will create growth op- portunities for AEC firms. Some construction compa- nies may decide to specialize
property.” Latimer, the former CNR president, underscored the importance of defining timely strategies alongside the need to have a plan that maximizes in- vestment resulting from better leveraging of real estate. In other A&G Real Estate Partners news, the company has formally announced the creation of a dedicated Financial Report- ing & Property Analysis Group serving stakeholders across all sectors of real estate. Led by senior managing di- rector Douglas Bennett —for- merly vice president of business analytics and strategy at global retailer Ashley Furniture In- dustries—the five-person team combines years of experience in financial analysis, data sci - ence and real estate strategy, said Emilio Amendola , co- president of A&G. “A&G has had analytics ca- pability for some time, but we sharpened our focus on it this spring when the extraordinary need for portfolio-optimization became apparent across mul- tiple sectors of real estate,” he said. “As part of that process, we have brought on board ev- eryone from former retail VPs with decades of experience in data-driven approaches, to tech-savvy analysts schooled in data analytics software and programming languages. Im- portantly, this group expands our ability to rapidly service clients in distressed situations as well as handle the needs of expansion-minded small and mid-sized companies looking to outsource all or parts of their real estate functions.” In addition to consulting on big-picture strategy, the new team integrates data from site- selection and demographics services, proprietary databases, lease documentation, and a raft of other sources to create visu- ally compelling dashboards and automated reports for use by A&G and its clients. Graiser, who like Amendola, has decades of experience in real estate portfolio strategy, said the move comes at a time of unprecedented need for efficient approaches to real estate. “This year alone, our firm has handled lease restructurings, occupancy cost reductions and lease terminations onmore than 11,000 locations across North America on behalf of various clients in the retail, restaurant, supermarket, entertainment, education, health and fitness, office and industrial sectors,” he said. MAREJ
with Mercy College and sub- sequent structured sale of the main campus. This followed earlier real estate moves de- signed to “build runway” that included a structured sale of non-core assets located near the school and a sale-leaseback of its Bronx satellite campus. “In the wake of the Covid-19 Pandemic,” Latimer said, “col- leges and universities need to formulate a top-to-bottom adaptive strategy that optimiz- es all facets of operations. That includes looking closely at real estate—how it is collateralized, what the interest rate was when originally financed, and how much time is left to go.” Panelist Laws also pointed to a shift in thinking. “What we continue to see is more of this increased appetite for trans- formational changes,” he said. “How do we really bend the cost curve of an institution?” From a real estate stand- point, Graiser said, it all starts with a comprehensive review of owned and leased properties. “You need to drill into the nuances of your leases, both financial and non-financial clauses,” he explained. “You want to understand your lever- age and scrutinize all of the pros and cons—including the community impact—of any real estate decisions. The portfolio review rolls up into a realistic ‘ask’ of your landlords with respect to rent-reduction; the key is to be transparent.” In the case of owned proper- ties, Hubbard noted, institu- tions can bolster liquidity in two ways: structured sales of non-core properties, and sale- leasebacks of core properties for which the school wants to retain control. A national ly recognized expert on structured sales, Hubbard explained how this approach allows colleges and universities to rapidly execute real estate sales in anywhere from 60 to 120 days, with none of the contingencies that often kill real estate deals late in the game. “CNR, for one, looked at their portfolio, identified places where they could generate im- mediate cash, and, through a structured sale process, got it all done in the timeframe they needed,” Hubbard said. “We ran a competitive process to sell the main campus for $32 million, with three bidders that all came in with bids of between $31 million and $32 million. It was a clear demonstration of the market value of that
holdings in education as never before, n o t e d t w o e x e c u t i v e s f r om A&G Real Estate Partners in a webinar con- ducted by The Assoc iat i on o f Go v e r n - ing Boards of Universities and Colleges (AGB). “The pan- demic is fast- f o rwa r d i ng business mod-
Jeff Hubbard
Andy Graiser
els that were already pivoting to take into account declining enrollments, reductions in state funding, higher debt loads and more distance learning,” said Andy Graiser , co-president of A&G. “At the board level, there’s a growing focus on ramping up the efficiency of real estate.” The Oct. 22 webinar (“Bolster- ing Liquidity by Optimizing Real Estate”) drew more than 70 AGB members. Graiser was joined by Jeff Hubbard , a se- nior managing director in A&G’s Structured real estate sales division, as well as panelists Dr. William W. Latimer, vice president of the Bronx Campus of Mercy College, and Andrew Laws , managing director of the education practice at Huron Consulting Group . Graiser, a 28 year veteran of lease restructuring and disposi- tion, noted that A&G’s Educa- tion Services group has helped the likes of Dowling College, The College of New Rochelle (CNR), Career Education Corp., and Kaplan University reduce their occupancy costs through strat- egies such as restructuring or terminating leases, and boost li- quidity through structured sales and sale-leaseback transactions. Panelist Latimer shared his experience in working with A&G on such a strategy at CNR, where he was brought in as president in 2018 in the wake of a financial crisis dat - ing to 2016 that caused the college’s debt service to swell and required the time needed to broker a partnership. With A&G’s help alongside a deliberate plan that sustained the college’s solvency during negotiations, CNR avoided a precipitous shutdown while the school negotiated an interim campus leasing agreement
F inancial D igest
M id A tlantic Real Estate Journal — December 18 - January 14, 2020 — 7A
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S3 Capital provides 24-month floating-rate loan, and was negotiated by Filler & Koschitzki Meridian Capital Group arranges $60 million in financing with S3 Capital Partners
RONX, NY — Merid- ian Capital Group arranged $60 million in financing with S3 Capital Partners for the construction of a multifamily property in the Mott Haven neighborhood of the Bronx, NY on behalf of JCS Realty . The 24-month floating-rate loan, provided by S3 Capital, features a LIBOR-based rate, full-term interest-only pay- ments and was negotiated by meridian managing director, Isaac Filler , and associate, Yossi Koschitzki , who are both based in the company’s New York City headquarters. “S3 Capital is excited to continue our long-standing relationship with JCS Realty and their team. They have a proven track record and will MIAMI, FL — Bob Har- rington and Paul Whalen , vice presidents of North- Marq’s Miami office, com- pleted the $41.777 million refinance of a multifamily portfolio in Southern Vir- ginia. The three-property portfolio contains a combined 724 units. The transaction was structured with a 10- year term, interest rate in the upper 2%’s with 5-years of interest only followed by a 30-year amortization sched- ule. NorthMarq arranged the fixed rate loan for the bor - rower through the company’s status as an Optigo lender. Properties include: • Reserve at Deer Run Apartments - Newport News, Virginia (232 Units) B • Newpo r t Commons Apartments - Newport News, Virginia (272 Units) • Jefferson Pointe Apart - ments- Prince George, Vir- ginia (220 Units) The Prince George prop- erty has an approximately 30 percent military concen- tration from nearby Fort Lee, while the two Newport News properties qualified as
tall and contain 215 units across 190,000 s/f. Residents will benefit from immediate proximity to the 4 and 5 sub- way lines at the 138th Street – Grand Concourse station in addition to various shops, restaurants, supermarkets, and schools. “Relationships always play an important role in negotiat- ing deals and are often what allow us to achieve exception- al outcomes for clients. In tur- bulent market conditions and moments of uncertainty, re- lationships matter that much more and this transaction is a result of great relationships, where we were able to bring S3 and JCS Realty together again for another spectacular development in Mott Haven,” said Filler. MAREJ
ing principal at S3 Capital. Located at 276 Grand Con- course in the Mott Haven 276 Grand Concourse rendering
neighborhood of the Bronx, NY, the multifamily prop- erty will stand 12 stories
deliver a great product in a rapidly growing sub-market,” said Joshua Crane, manag-
NorthMarq’s Miami, FL office secures $41.777 million refinance for Southern Virginia multifamily portfolio
Reserve at Deer Run Apartments
Newport Commons Apartments
Jefferson Pointe Apartments
100 percent Mission, meeting Freddie Mac’s goal of provid- ing affordable rental housing. The properties were also coming out of a significant renovation project, and the Freddie Mac loan terms will allow the borrower to seek supplemental financing after a stabilized operating history has been achieved.
“Even when not in a health pandemic, the logistics of a simultaneous three-property closing can be challenging. Great communication by all of the parties involved – in- cluding the borrower, lender, legal and closing teams – made this a very efficient process,” said Harrington. “We are gratified that the
offer partnership and financial acumen that support long- and short-term investment goals. Our culture of integrity and innovation is evident in our 60- year history, annual transac- tion volume of $13 billion, loan servicing portfolio of more than $61 billion and the multi-year tenure of our more than 600 people. MAREJ
borrower, in a highly com- petitive market, entrusted NorthMarq to recapitalize these properties.” As a capital markets leader, NorthMarq offers commercial real estate investors access to experts in debt, equity, invest- ment sales, and loan servicing to protect and add value to their assets. For capital sources, we
8A — December 18 - January 14, 2020 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
Banas, Wood, Wilson, Saltiel, and DiGirolamo arrange refinance on behalf of Boyd/Wilson Walker & Dunlop provides $20.4M in financing for 170-unit multifamily property in suburban PA L
to have completed another assignment with their team.” Located in South Lebanon Twp., Fox Ridge Apartments is minutes from outdoor parks, restaurants, and shopping as well as desirable schools. The community also provides residents with ease of access to several neighboring cities, including Harrisburg, Lan- caster, and Reading, which are 30 miles away, and York, which is 40 miles away. Fox Ridge features distinct crafts- men architecture with modern community amenities, such as a clubhouse, a fitness room, pet stations, and ample green space. MAREJ G.S. Wilcox & Co. Places $42.5M in financing with Mutual of Omaha NORTHERN NEW JER- SEY — G.S. Wilcox & Co. closed a total of $42.5 million in financings over the past month through their exclusive correspondent lender, Mutual of Omaha. President Gretchen S. Wilcox , principal Albert Raymond , and vice president Wesley Wilcox worked to- gether to secure these loans. The firm announced that Mutual of Omaha provided the financing for three warehouse properties across Northern New Jersey. The first $21 million loan was secured by a 236,000 s/f warehouse property and had a self-amortizing 20- year term. At the same time, the team placed a $8.5 million loan with a 10-year term (5- year interest only) and 25-year amortization. This financing was secured by a 102,000 s/f warehouse property. The third loan was in the amount of $13 million and was also secured by a warehouse property, the loan had a 5-year interest only term with a rate in the mid-2% range. The loans were arranged for three repeat clients of G.S. Wilcox & Co. “We are pleased to obtain such attractive financing for these clients through our exclusive correspondent lender, Mutual of Omaha. Our life insurance company correspondents con- tinue to be stable sources of capital through the COVID19 pandemic, and we are confident that we will continue to navi- gate these uncertain times suc- cessfully.” GretchenWilcox said in a prepared statement. MAREJ
EBANON , PA — Walker & Dunlop, Inc. announced that it structured $20.4 million in financing for Fox Ridge Apart - ments, a 170-unit multifamily community in Lebanon, PA. The team arranged the refi - nancing on behalf of repeat- client, Boyd/Wilson , who has completed over $75 million in financing through Walker & Dunlop within the last six months. Walker &Dunlop’s Philadel- phia Capital Markets team, including managing directors, John Banas and Kris Wood ,
as well as analysts John Wil- son , Rhett Saltiel , and Erik DiGirolamo arranged the permanent financing through Fannie Mae . The team struc- tured the deal with six years of interest-only payments and an attractive fixed rate for the ten-year loan term. Banas said, “With nearly 40 years of experience in commer- cial real estate development and property and construction management, Boyd/Wilson is an extremely strong family- run business with an excellent understanding of the Pennsyl- vania market. We’re pleased
Fox Ridge Apartments
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M id A tlantic Real Estate Journal — Commercial Real Estate Law — December 18 - January 14, 2020 — 9A
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C ommercial R eal E state L aw
By David B. Wolfe, Esq., Skoloff & Wolfe, PC Prepare Now: COVID-Era Property Tax Appeals in Focus for 2021
T
he COVID-19 pan- demic has changed everything. How we
that this municipal action vio- lates the Uniformity Clause of State Constitutions as well as the Equal Protection guar- antees of the United States Constitution. 3. There is no substitute for quantitative analysis when projecting property taxes. S&W has an extensive transactional and capital markets practice in which we provide property tax un- derwriting and due diligence. As such, we routinely provide tax counsel to institutional and private investors, as well as commercial brokers on
significant market transac - tions. In that role, we advise our clients that there is no substitute for actual market- based analysis and that gen- eralities must be avoided. Failing to properly project or account for property taxes can single-handedly destabi- lize an investment thesis or destroy a business plan. It is imperative to examine this issue early and base your investment conclusions on a real understanding of the individual market. 4. Now is the time to assemble your team and prepare.
Given the extent of the re- lief taxpayers will be seeking, and the anticipated volume of appeals, it is vital to assemble your team of professionals as early as possible. We are actively analyzing our clients’ portfolios to identify appeal opportunities as well as to identify pathways to prospec- tive or emergent relief. This may also be the time to obtain an expert report for your prop- erty portfolio and begin nego- tiations with the appropriate taxing authorities. In challenging times, prop- erly addressing property tax issues becomes more essential
than ever. Skoloff & Wolfe is proud that our clients entrust us with this great responsibil- ity and accept the challenge to deliver positive results. David B. Wolfe, Esq. is the managing partner of Skoloff & Wolfe, PC’s Real Property Tax Department. Wolfe handles significant real property tax matters for both commercial and residential clients. He has obtained significant assess - ment reductions on behalf of his clients, including retail chains, hotels, res- taurants, and multifamily housing units. MAREJ
work, shop, a n d p l a y have all been u p e n d e d . One th i ng that has not changed is the need to pay property taxes.
David B. Wolfe
Skoloff &Wolfe, PC has one of the largest property tax ap- peal practices in the Mid-At- lantic region and nationally. We have active cases in major markets throughout the U.S., and—for nearly 60 years—we have worked to secure billions in assessment reductions for individual, corporate, and institutional clients. This has given us a global perspective on how property taxes are assessed and how they can be challenged. The following are key ar- eas of focus on which we are advising our clients as 2021 approaches: 1. Taxing authorities will be forced to reckon with COVID-19 in 2021. Tax Year 2021 will mark the first year in which tax - ing authorities will be forced to acknowledge COVID-19’s impact on property values. Many jurisdictions have re- fused to recognize the impact of COVID-19 thus far because 2020 assessments were es- tablished with pre-COVID-19 valuation dates. However, since values for Tax Year 2021 are based on post-CO- VID-19 valuation dates, tax- ing authorities are no longer able to ignore the pandemic’s impact on property values. As such, we are anticipating a large increase in the volume of appeals, particularly in the retail, hospitality and office sectors. 2. Beware of increase cases in New Jersey and Pennsylvania. Despite the pandemic, the proliferation of municipality- initiated “increase cases” should be a top concern for commercial property taxpay- ers. As municipalities focus their attention on their larg- est taxpayers, S&W is help- ing clients defend increase appeals in Pennsylvania and New Jersey. Our firm is ac - tively litigating the constitu- tionality of these matters by seeking a judicial declaration
Increase the value of your real estate holdings. Skoloff &Wolfe is a nationally recognized leader in the area of property tax law. We have obtained billions of dollars in assessment reductions for our clients, including the following recent assessment reductions * :
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293 Eisenhower Parkway, Suite 390, Livingston, New Jersey 07039 973.992.0900 • skoloffwolfe.com *All assessments rounded to nearest million.
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10A — December 18 - January 14, 2020 — Commercial Real Estate Law — M id A tlantic Real Estate Journal
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C ommercial R eal E state L aw
By Andrew Maguire, McCausland Keen + Buckman 1031 Exchange Note Transactions: An option for real estate owners to consider
F
timeframes after the date of the sale. But what if some of the seller’s members prefer to
Qualified Intermediary In a typical 1031 Exchange, a qualified intermediary (“QI”)
(1) the QI takes receipt of the cash proceeds from the sale; (2) a portion of the cash proceeds is set aside and used to purchase the replacement property; (3) the remainder of the cash proceeds is retained; and (4) a promissory note is issued to and in favor of the seller in an amount equal to such remainder of the cash proceeds (“Remainder Note”). Redemption Following the sale of the property, those owners of the seller entity who wish to re- ceive their share of the sale proceeds (“Cashout Investors”) are redeemed out of the seller
entity. To effect the redemp- tion, the Remainder Note is distributed to the Cashout Investors in exchange for their interests in the seller entity. If the seller is a partnership or a limited liability company, a new partner or member may need to be admitted to the seller entity prior to the re- demption so that it remains a partnership for federal income tax purposes. Accordingly, the partnership agreement or operating agreement of the entity should be amended to reflect the exit of the Cashout Investors and, to the extent necessary, the admission of a new partner or member. Remainder Note For income tax purposes, payments made pursuant to a Remainder Note must be treated as an installment sale covering two taxable years of the seller. Accordingly, those Cashout Investors who receive the Remainder Note in re- demption of their interests will receive their cash payout un- der the Note over two tax (i.e., calendar) years. For example, if the seller entity sells a prop- erty in December of 2020, each Cashout Investor may receive a portion of the sales proceeds in December of 2020, with the balance to be collected in 2021. Conclusion A 1031 Note Transaction can be a viable method for allowing certain owners of an entity selling U.S. real estate to undertake a 1031 Exchange while allowing other owners to collect their share of the sale proceeds. However, the particulars of any 1031 Ex- change are fact dependent, and the rules governing 1031 Exchanges continue to evolve. A property owner must consult with capable tax and real es- tate counsel before undertak- ing a 1031 Note Transaction. Andrew Maguire coun- sels REITs and other pub- licly-traded companies, as well as privately held entities and family offices. He negotiates, documents and closes acquisitions, dispositions and financings across the spectrumof com- mercial real estate sectors. Please note that this ar- ticle does not constitute legal advice or tax advice, and that reading this ar- ticle does not create an attorney-client relationship with McCausland Keen + Buckman. MAREJ
or years, real estate in- vestors have enjoyed the benefits of tax de-
ferral under Section 1031 of the Inter- nal Revenue Code (“1031 Exchange”). Und e r t he 1 0 3 1 E x - change rules, sellers of U.S.
A 1031 Note Transaction can be a viable method for al- lowing certain owners of an entity selling U.S. real estate to undertake a 1031 Exchange while allowing other own- ers to collect their share of the sale proceeds.
pocket their share of the sales proceeds (and pay the result- ing capital gains tax) rather than re-investing those funds in a replacement property? One approach is to implement a like-kind exchange with a note structure (“1031 Note Transaction”). Role of the
holds the cash proceeds re- ceived from the buyer of the re- linquished property until they are re-invested in one or more replacement properties. This is done in an effort to prevent the cash proceeds from being characterized as taxable “boot” income to the seller. However, in a 1031 Note Transaction:
Andrew Maguire
real estate are able to defer some or all of the capital gains tax on sales proceeds which are re-invested in replace- ment properties identified and purchased within particular
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