16B — August 29 - September 11, 2014 — Owners, Developers & Managers — M id A tlantic
Real Estate Journal
www.marejournal.com
2014 G overnor ’ s C onference
By Chris Cervelli, CCIM, Cervelli Management Corporation Cervelli Management: providing services to the real estate industry for over 29 years
C
agement and disposition of distressed assets. We use our own cash and we don’t rely solely on third party invest- ments. We are careful and con- servative in our investment strategies. Some have said this has lead to missed opportuni- ties however we like to think it points to a slow, sure and steady investment plan that will lead to passive income and asset accumulation. More importantly, this strategy has lead to consistently higher returns and has never jeop- ardized our partner’s invest-
ment. Here are a few examples of our investment strategy… Our group purchased a 36,000 s/f office building in Hudson County that had gone dark. Within 90 days of clos- ing we had the building 50% occupied. Within 180 days we had the building 75% occupied. Within 3 years the building was fully leased and financing was secured. We withdrew our equity and continue to enjoy a very healthy cash flow. The value of the building has in- creased over 350% as a result of our business acumen.
Within the last 5 years we purchased a rural underper- forming subsidized apartment building with substantial rent losses in Morris County. Within one year we increased the net income and have been enjoying a positive 8% cash on cash return. This was a result of aggressive, unyield- ing collection policies and cost control measures. The value of the project has increased over 200% as a result of our efforts. Within the last 7 years our group purchased an urban subsidized apartment build-
ing in Jersey City. As a result of our hands on management we substantially increased the net income in just 2 years and within the next year we extracted our equity out of the project. We have been enjoying a steady cash flow for many years. This property is in the heart of an urban area with neighborhood challenges. We like to boast that this prop- erty is in great condition and our lender recently did an inspection and stated it had the cleanest common areas in the county! In addition, our rent-vacancy loss is less than 4%. The value of this asset has increased over 300% as a result of our efforts. We saw the value in these deals that others did not and we unlocked that value with professional hands-on man- agement. If you would like to learn more about our team please visit our booth at the Governor’s Conference on Sep- tember 22nd and 23rd or reach out to us at 201-868-6300. Chris Cervelli is a broker associate at Michael Cer- velli Real Estate, LLC. n continued from page 10B purposes. Recently released proposed regulations under Section 752 make it clear that the IRS will not recognize bottom dollar guarantees as valid guarantees of partner- ship debt. Under the proposed regulations, a partner only bears the economic risk of loss if the partner is liable for amounts that the partnership does not satisfy. The new proposed regula- tions will not be effective until published in final form. However, for those partners who have bottom dollar guar- antees in place at the time the regulations are finalized, a seven year transition rule is provided. In conclusion, the proposed regulations, if finalized in their current form, will pro- vide that a partner is not able to both mitigate his or her economic risk and increase his or her outside tax basis when he or she guarantees partner- ship debt. Accordingly, main- taining a partner’s share of partnership debt will require that the partner take on a real economic burden. n The bottom dollar guarantee...
ervelli Management Corp and Michael Cervelli Real Estate
LLC ha v e been provid- ing broker- a g e , ma n - agement and c on s u l t i ng servi ces to the real es- tate industry for over 29
Chris Cervelli
years. In addition, we have partnered with local inves- tors and institutions in the purchase, rehabilitation, man-
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