ISSUE HIGHLIGHTS Volume 32, Issue 16 Sept. 11 - 24, 2020

Fertman, Matus, Cole and Weaver complete transactions NAI Mertz closes sale of two industrial buildings totaling +425,000 s/f inMuncy, PA this year.

ILKES-BARRE, PA — NAI Mertz , a full-service com- mercial real estate firm con - ducting business throughout the United States, and glob - ally, from its offices in New Jersey, the Greater Philadel - phia Region and Northeastern Pennsylvania, recently an - nounced that Howard Fert- man , vice president, national accounts along with the Wil - kes-Barre team of Chris Ma- tus , senior associate, Steve Cole , vice president/SIOR, and Dave Weaver , vice president/ SIOR, completed the sale of 1203 Lycoming Mall Circle in Muncy. The 235,000 s/f class A eCommerce distribution/retail facility was sold to eCommerce firearms merchant EuroOptic, LLC. The team also sold 490 S. Lycoming Dr., a 190,800 s/f class A distribution center, to Patton Warehousing, earlier W

The buildings are part of an industrial and land portfolio that the team has been ex - clusively marketing on behalf of the seller, S. Balolia Hold - ings, LLC. A 31.54-acre KOZ designated development site remains available. “We are very pleased to have sold the two distribution centers on behalf of Grizzly Industrial and now our singular focus is on achieving the same success with the 31.54-acre KOZ devel - opment site,” stated Fertman. “The development site provides great visibility with frontage to I-180 along with easy access to I-80 and represents an excel - lent investment opportunity in a mixed use industrial, retail and general commercial set - ting. This is especially the case with the near completion of PennDOT’s US Rte. 15 expan - sion project”. MAREJ



1203 Lycoming Mall Circle in Muncy


Southern NJ Chapter


UPCOMING WEB CONFERENCES September 2020 5 th Annual PA Healthcare & Medical Conference October 1, 2020 6 th Annual NJ Industrial Development Conference For speaking and sponsorship info., please contact: Lea at 781-740-2900 or lea@marejournal.com Section B NEW JERSEY/ PENNSYLVANIA

490 S. Lycoming Dr.

Christopher Todd&Scott Perkins of NAI Hanson represent CenterPoint in transaction Centerpoint acquires trophy last-mile site in the Northern New Jersey submarket of Elizabeth

ELIZABETH, NJ — Cen- terPoint Properties an -

miles from the Newark Inter - national Airport and has im -

nounced the acquisition of 349-369 1st St. in Eliza - b e t h . T h e rectangular 8.25-acre site is located one mile from the Port , three

mediate ac- cess onto the New Jersey Tpke. Significant e-commerce abso rp t i on in northern N e w J e r - sey has in -

Christopher Todd

Scott Perkins

creased demand for last-mile sites with excess parking. Additionally, the site is proxi - mate to one of the largest ports in the country, offering future flexibility for uses such as parking, yard or warehouse development. “This site aligns with the CenterPoint investment thesis of acquiring infill real estate with tremendous parking and future development optional - ity. The ability to acquire a site of this quality in the Elizabeth submarket is the equivalent of finding a needle in a hay - stack,” said Evan Lippow , CenterPoint vice president of

Directory ROP (Front Section) .................................... Section A Commercial-Industrial Realty Council Delaware.. IC A Contributing Columnist .. Melissa Nortz, HF Planners, LLC It’s Not Easy Being Green, or Is it? ........................ 2A Financial Digest ................................................ 5-15A Organization Calendar of Events ........................ IBCA New Jersey.......................................................1-14B Northern NJ. ....................................................7-11B Pennsylvania .................................................15-BC B Business Card/Billboard Directory.......................23B www.marej.com

349-369 1st St. in Elizabeth, NJ

gion from both an investment and development perspective. This transaction will put Cen - terPoint at $500M invested in the New Jersey/New York area alone since 2017. We are also excited about our new development project at 49 Rutherford in Newark, which is under construction and available for lease,” said PJ Charlton , senior vice president of investments at CenterPoint. MAREJ

investments. The site was acquired in an off-market transaction andwas structured as a sale-leaseback. Christopher Todd and Scott Perkins from NAI Hanson in New Jersey represented Cen - terPoint in the transaction. Marc Imrem, J.D. DeRosa and Colby Moore from Tran- swestern in Chicago repre - sented the seller. “CenterPoint remains ex - tremely active in the East Re -

Inside Cover A — September 11 - 24, 2020 — M id A tlantic Real Estate Journal


Commercial-Industrial Realty Council Great CRE Events...Cont. Education...Speakers...Networking

SCHEDULE OF EVENTS September 9 (Wed) - Virtual Membership Event (Logistics & Lodging) Time: 12:00-1:00 pm Register online for this free event: www. circdelaware.org/meetings/nextMeeting.cfm Oct. 7 (Wed.) - Delaware Lab Roundtable We invite you to hear about the local, regional, and global market demands driving the need for “ready-to-go” lab space for companies that are growing in, or looking to relocate to, Delaware. Oct. 14 (Wed.) - Virtual Membership Event Nov. 11 (Wed.) - Joint "Dinner" Event - SIOR, CCIM, CIRC (TBC) Visit us at: www.circdelaware.org CONTINUING EDUCATION Instruction by Frederick Academy of Real Estate Stay tuned for our upcoming schedule of 2021 continuing education classes www.CircDelaware.org

2020 Directors

Logistics & Lodging A Tale of Two Cities?


Thomas J. Hanna, presi- dent of Harvey Hanna & Associates will speak to CIRC's members and guests at its September 9 th virtual membership event. TJ will discuss his company's two main areas of commercial real estate expertise: Logistics and Lodging - and what those areas of real estate look like in 2020 as a result of the on-going COVID-19 pandemic. Until we are able to return to in-person events, we hope you will take the time to attend a virtual membership event and get to know us better. We are pleased to offer these virtual events free of charge at this time. Hopefully in the future you'll consider

President: Robert Stenta Pettinaro Management, LLC

Vice President + Program Chair: Jay L. White , MAI, CRE® Apex Realty Advisory Treasurer: Barton L. Mackey, Jr. Patterson-Woods Associates

Thomas J. Hanna President Harvey Hanna & Associates

Secretary: Bayard Snyder , Esq. Bayard & Associates

supporting CIRC with your membersip. The September 9th event begins at 12:00 noon. Registration is required to get the link to join. Visit our Info/ Newsletter/Archive PRESENTATIONS to view past events. CIRCdelaware.org

— D I R E C T O R S —

Education Chair: Cynthia Fleming Jones Lang LaSalle

Membership Chair: James Manna BrightFields, Inc.

Classes Accredited: DE*PA*MD*NJ

Past President: Donald Robitzer The Commonwealth Group Benjamin Berger , Esq. Berger Harris, LLC Carmen Facciolo NAI Emory Hill Michael Hahn 44 Business Capital Jim O’Hara , Jr. NAI Emory Hill-Retail Division Lorraine Sheldon NAI Emory Hill Daniel Wham DSM Commercial Real Estate Ryan Kennedy Harvey Hanna & Associates

Twin Spans, New Castle, Delaware

Hyatt Place Dewey Beach, Delaware

— E X - O F F I C I O B O A R D M E M B E R S —

Business Manager Janet Pippert Landmark Science & Eng. 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 Kurt Foreman Del. Prosperity Partnership City of Wilmington Jeffry Flynn

c o n t a c t u s Janet@circdelaware.org / (302) 633-1705 www.circdelaware.org

M id A tlantic Real Estate Journal — September 11 - 24, 2020 — 1A







Horvath & Tremblay is one of the most active and successful Investment Real Estate Brokerage firms in the United States specializing in the sale of single tenant net-lease assets and retail shopping centers. We have experience successfully structuring sale lease-back programs, portfolio dispositions, and 1031 exchanges. We have a dedicated buy side desk that provides real time inventory and market data to each individual client placing capital or fulfilling a 1031 exchange requirement. The firm is dedicated to being the best source of information and expertise in the marketplace for private investors, developers, institutions, and industry professionals.


2A — September 11 - 24, 2020 — M id A tlantic Real Estate Journal



M id A tlantic Real Estate Journal

M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Marketing and Sales Specialist ................ Gabriella Gruber Editor/Graphic Artist ......................................Karen Vachon Contributing Columnist .. Melissa Nortz, HF Planners, LLC 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 16 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

Melissa Nortz

Julius Borrus Broker & President Borrus Associates 340 Rte 35 South Red Bank, NJ 0771 P: 908-839-0052

It’s Not Easy Being Green, or Is it?

F acility managers and interior designers are at the front of the line when fighting for a greater push towards sustainability and the green initiative. It is up to them to properly inform the client on how to improve their facility for both the envi- ronment and their employee’s wellbeing. However, where is the project manager, facility manager, designer or planner supposed to get the accurate insight to properly direct the client and their vision in the right direction? HF Planners, LLC likes to stay on top of how to promote wellness and sustainability. Here are a few insightful ways to align your next project with green initiatives and oc- cupant wellness: The Forest Stewardship Council was founded in 1993 by businesses, environmentalists, and community leaders. Their purpose to this day is to create and develop a way to work with

borruscommre@aol.com A Member Of The International Council Of Shopping Centers NY, NJ, CT, PA INVESTMENT REAL ESTATE

world markets to improve for- est management practices and stop environmentally devastat- ing deforestation. As of August 2019, 160.2 million acres of for- est and over 3,770 companies in the U.S. and Canada have achieved FSC certification. In - dividuals can download a list of these companies and patronize the ones that sell personal care and home products. Architects and designers can specify fur- niture and building products from certified manufacturers and do their part in the green initiative. In 2005, the Cradle to Cradle Products Innovation Institute developed a set of standards

– Cradle to Cradle Certified Product Standard - for product development. These standards seek to maximize the appli- cation of certain principles including material health, circular economy and carbon management to the design and manufacture of consumer goods. When a product manu- facturer pursues Cradle to Cradle (C2C) Certification, they must work with the Insti- tute to eliminate certain chem- icals from their products and to develop products that can be fully reused/recycled so as to never be placed in a landfill. There are several companies continued on page 16A



Kaplin Stewart At t o rney s a t Law Business and Corporate Law - To the point! Experience C ount s. Count On Us .



Contact: NEIL A. STEIN • nstein@kaplaw.com • www . k a plaw.com 910 Harvest Drive, Blue Bell, PA 19422 • 610-941-2469 O ther O ffices : • Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120

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M id A tlantic Real Estate Journal — September 11 - 24, 2020 — 3A


M id A tlantic R eal E state J ournal

Farm & Natural Lands Trust of York County to occupy preserved Gateway Property in NW Triangle Kinsley completes Preservation of Historic Western Maryland Railway Freight Offices Y

configuration of the main entrance, which was altered in the late 20th century, was restored using the drawings from the original design. Well- known York architect John A. Dempwolf designed the 2,684 s/f railroad office building, which was built in 1896. The long vacant building was last used as a transfer station for grain. The building renovations were designed by Kinsley Properties to obtain the ap- proval of the Historical Ar- chitectural Review Board (HARB). Kinsley Construction handled the restoration and Warehaus served as the his - toric preservation consultant on the project. “We take a lot of pride in knowing this revived office building, one that could have been lost to decades of dete - rioration, will help propel the work of the Trust for genera- tions,” said TimKinsley. “This is a small but very significant project for downtown York and in the Northwest Triangle redevelopment area.” MAREJ

ORK, PA — Kinsley Properties unveiled the next chapter – or perhaps more fitting, the ideal tenant – for a historic office building in downtown York. The York-based company, a Mid-Atlantic leader in com- mercial real estate develop - ment, leasing and property management, has completed repairs and preservation ef - forts on the historic Western Maryland Railway Freight Offices on the corner of North George St. and the Codorus Creek. Starting Sept. 1, the Farm& Natural Lands Trust of York County, a nonprofit land pres- ervation organization that specializes in conservation easements, will occupy the re- stored 19th century building. “This gateway property in York’s Northwest Triangle exemplifies the long-standing mission of the Farm & Natu- ral Lands Trust to perma- nently preserve and protect properties in our York County communities,” said Timothy Kinsley , president of Kins-

ley Properties. “The Western Maryland office project show- cases our company’s ongoing commitment to community investment and historic pres - ervation projects. We hope it sends a message that the momentum of revitalization in York remains alive and well.” For the Trust, the office move from its current home at 156 N. George St., creates more collaborative work and public meeting spaces and will help the organization expand its staff. The Trust is celebrat- ing its 30-year anniversary as a nonprofit, and this year expects to be its biggest yet for land preservation. “We’re on pace to protect 1,500 acres this year and this new office will only enhance our downtown visibility to

Western Maryland Railway Freight Offices

attract new partners and do more to advance our long- term mission,” said Sean Kenny , executive director of the Farm & Natural Lands Trust. “We’re excited because this building will now be at the city hub for the Heritage Rail Trail, where we have suc- cessfully preserved hundreds of acres.” Kinsley Properties began

the preservation project last year, which included a de- tailed exterior restoration. The arched windows on the front of the building were pre- served and the masonry work, including the stone sills, brick and pointing, were restored using in-kind materials. The painted railroad signs on the building were also restored. In addition, the original


Every project is a new opportunity to positively impact our community.

MAREJ invites all to send in editorial pertaining to:


Repa i r s Evo l u t i on o f Roo f i ng Lands c ape o f t he I ndus t r y New De v e l opmen t s P r oduc t s I ns t a l l a t i on Ae s t he t i c Coa t i ng s New Loc a l Laws Fu t u r e o f t he I ndus t r y

Mark Superintendent

SPECIAL ADVERTISING RATES TO ALL PARTICIPATING FIRMS! For More Information Contact Joe Christman jchristman@marejournal.com 781.740.2900



Deadline: Sept. 13th Publication: Sept. 25th

4A — September 11 - 24, 2020 — M id A tlantic Real Estate Journal


M id A tlantic R eal E state J ournal

By Jeff Hubbard, A&G Real Estate Partners Certainty in an uncertain world: Structured CRE sales give lenders real-time data

he COVID-19 crisis is triggering major ques- tions about the value of assets in just about every sector of real estate. Take a newly built student- housing complex near the cam- pus of a state university. The appraised value of that building was derived from the pre-pan- demic assumption that it would be part of a fully functional college town—a place where students would be crowding into classrooms, sports venues, bars, restaurants and the like for most of the year. How do you put a number on the value of that building in a T

world of social-distancing and draconian capacity restrictions or outright shutdowns? Lend- ers face similar conundrums with respect to the value of certain malls, office buildings, hotels, movie theaters and the like. Adding urgency to the situ- ation: the rising tide of com- mercial mortgage defaults, bankruptcies and foreclosures – a trend likely to accelerate for the foreseeable future. The challenges and uncer- tainties of today clearly are significant. However, there is a way for lenders to gain a remarkable degree of pricing

transparency: engaging in a structured sale process. Whether conducted in or out of court, structured sales can be an effective workout solution. They offer lenders protections that are particularly important in today’s volatile real estate marketplace. Continuing Demand for Real Estate Assets With respect to the recovery, another factor that bodes well for secured creditors is the strong demand for certain dis- tressed real estate assets, both in and out of court. The Black- stone Group, Starwood Capital Group and others reportedly

have raised hundreds of bil- lions of dollars in “dry powder” for opportunistic acquisitions, and plenty of smaller investors are scouting for deals as well. These transactions, when they occur in a structured process, are competitive whether in or out of bankruptcy court. Part of the reason: Bidders agree to the sale terms (in- cluding due diligence items like rent rolls, environmental reports, preliminary title com- mitments and management agreements) up front, as op- posed to post-contract. Espe- cially in a time of uncertainty, handling due diligence in this

way gives bidders a higher degree of confidence; it’s a step that bolsters the likelihood of achieving maximum pricing. The level playing field among bidders (they have all agreed to the same terms as set forth by the seller) accelerates the process, which otherwise could grind to a halt over terms down the line. Generally, structured sales result in all-cash offers within 60 to 75 days. While they give sellers control over the process and timing (and, through professional market- ing, bring all logical bidders to the table), they also yield something that is critically important today: real-time data about what properties are ac- tually worth in the disrupted marketplace. In a Section 363 sale, more- over, the secured creditor en- joys an additional layer of pro- tection: the right to wholly or partially cancel that borrower’s debt in exchange for those as- sets—no cash required—in a credit bid. Acting as a qualified bidder in this way enables lend- ers to provide price support for structured deals even as they avoid the potential costs (in both time and money) that are so often associated with com- mercial foreclosures. That’s no small point when you consider that many com- mercial properties may require adaptive reuse to be viable moving forward. Taking these properties back, in other words, can be a risky proposition. Con- sider a conventional process in which a commercial real estate broker sells a hard-hit regional mall on behalf of the lender. Even before COVID-19, many regional malls were ghost towns. Now, it’s even less vi - able to move forward with such assets as 100 percent retail, and so the likeliest scenario is one in which the buyer makes the bid contingent on the ap- proval of new, non-retail uses. Ultimately, that means the lender could face a situation in which a thwarted buyer sends an email along the lines of, “Un- fortunately, our adaptive use strategy has hit a roadblock: The city will not allow me to make this a data-center and industrial development. I’m discounting my price by $10 million.” In taking such properties back amid such contingencies, lenders effectively become buy- ers’ development partners—not continued on page 16A

RECEIVER SALE Flex/Office Facility | Hagerstown, Maryland

INCREDIBLE SINGLE-USER FACILITY • 23,200 Sq. Ft. on 3.06 Acres • Turn-Key Facility • Built in 2005 • Office Suites, Over-Sized Conference Room, Computer Lab Ideal for Office, Industrial or IT Users

MIKE MATLAT 631-465-9508 | mike@agrep.com MICHAEL STANFORD 301-733-5388 | mstanford@cesproperties.com

F inancial D igest F eaturing 1031 E xchange & A ppraisal

M id A tlantic Real Estate Journal — September 11 - 24, 2020 — 5A


ORTH HALEDON, NJ _— JLL Capital Markets announced $34M loan secured for 920 Belmont Avenue development in North Haledon, NJ Mikula and Klein of JLL arranges loan for Tulfra Real Estate & The Hampshire Companies N ing stations and a fire pit. The development is also conveniently located near

working in,” said Klein. “The bank really stepped up and was able to provide a structure that met the unique nuances of this project.” “This project has been years in the making and will finally come to fruition due to the per- sistent efforts of the borrower,” continued Mikula. “Kudos to Investors Bank for helping us get to the finish line during COVID.” JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupi- ers. The firm’s in-depth local market and global investor knowledge delivers the best- in-class solutions for clients — whether investment advi- sory, debt placement, equity placement or a recapitaliza- tion. The firm has more than 3,700 Capital Markets special- ists worldwide with offices in nearly 50 countries. MAREJ

northern and central New Jersey and N e w Y o r k City’ s most p r om i n e n t employment centers. Ide- ally situated f o r t h o s e

today the ar- rangement of a $34 million construction loan for the development of a mul t i - housing prop- erty at 920 Belmont Ave. in North Haledon.

Jon Mikula

Michael Klein

wanting easy access to urban life, the property is within a five-mile radius of three train stations: Glen Rock Borough Hall, Hawthorne Station and Paterson Station with access to Hoboken, Jersey City and Manhattan. Nearby highways include New Jersey Rte. 208, I-80, I-287 and The Garden State Pkwy. Additionally, 920 Belmont Ave. is just 0.3 miles from William Pater- son University and residents will benefit from a variety of

JLL worked on behalf of the borrowers, Tulfra Real Estate and The Hampshire Companie s, to secure the loan through Investors Bank . The development is expected to be completed in 2021. The 180-unit, affordable lux- ury apartments will contain modern amenities including a fitness center, lounge area, coworking space, pet wash center, bike storage, outdoor pool and patio area with grill- PHILADELPHIA, PA — SCOPE Capital Group, LLC has arranged $20.5 million in construction fi- nancing for 88 market-rate apartments with 8,500 s/f of ground floor retail. The loan was funded by a regional bank to an undisclosed bor- rower for the ground-up con- struction of 2nd St. Lofts in Philadelphia. Scope Capital Group’s man- aging director Matthew Rosenberg negotiated the financing. The 75% loan-to-cost con-

920 Belmont Ave.

shops, restaurants and en- tertainment that support the university. The property is also locat- ed in the burgeoning Pas- saic County submarket, where mul t i -housing propert ies make up roughly 29.3% of the local market inventory with a total of 6,278 units across 112 properties.

The JLL Capital Markets team representing the bor- rower was led by senior man- aging directors Jon Mikula and Michael Klein . “We are pleased to have been able to close this transac- tion on behalf of Tulfra Real Estate and The Hampshire Companies despite the diffi - cult market conditions we are

SCOPE Capital Group Arranges Construction Debt for 88-Unit Luxury Mixed-Use Project in Philadelphia

struction loan was provided by a regional bank and features a permanent conversion option to non-recourse. Located at 1701 North 2nd

St., the 18,650 s/f development site is located within a qualified opportunity zone at the border of Olde Kensington and Fish- town neighborhoods. MAREJ

Cronheim closes $4.4M pre-stabilized permanent financing for retail center

Florida’s west coast. The loan was structured on a 10/25 basis with flexible prepay and the interest rate was locked four months prior to closing. It was placed with Southern Farm Bureau Life Insurance Co. MAREJ

MANATEE COUNTY, FL — Cronheim Mortgage ar- ranged a $4.4 million perma- nent loan for a recently devel- oped neighborhood shopping center in the fast-growing Lakewood Ranch commu- nity of Manatee County on

2nd St. Lofts

INSIDE: Kay Properties..............................................................................................................................................................................6-7A Louis Rogers, Capital Square........................................................................................................................................................ 8A Jay White, MAI, CRE, Apex Realty Advisory. ............................................................................................................................. 10A Appraisal Institute Southern NJ Chapter...............................................................................................................................14-15A

6A — September 11 - 24, 2020 — Financial Digest — 1031 Exchange — M id A tlantic Real Estate Journal


1031 E xchange

ne of the most attrac- tive real estate tax benefits available in Kay Properties Before you do a 1031 Exchange, consider these four alternative investment options O company that offers the DST to investors. Bottom line: You have confidential Private Place - ment Memorandum (the “Memorandum”). Please read potential exposure to a black swan event like COVID-19 if the tenant turns out to be

the U.S. is the like-kind ex- change, which is governed by Section 1031 of the Internal Revenue Code. About one- third of all commercial and multifamily property sales in the U.S. involve a like- kind exchange, according to Bisnow. A like-kind exchange al- lows an investor to defer capital gains, depreciation recapture and other taxes at the time an investment prop- erty is sold if the net equity from the sale is reinvested into a property of the same or greater value. But “property” does not mean the proceeds have to be reinvested directly into another property that you purchase outright. There are multiple ways the gain can be reinvested to qualify for preferential tax treat- ment. Here’s a look at four alternative 1031 exchange investment options. #1: Qualified Opportunity Zone Funds Qual i f ied Opportunity Zone Funds, allowed under the Tax Cuts and Jobs Act of 2017, are an alternative to 1031 exchange investing that offers similar benefits, including tax deferral and elimination. A fund of this type can invest in real prop- erty or operating businesses within a designated Op- portunity Zone, typically a geographic area in this U.S. that has been so designated because it may be under- served or blighted. As such, there may be a higher level of investment risk. Also, the time horizon of the fund may be as long as 10 years, which means tying up your capital for that length of time. If you seriously consider this investment option, be aware that these funds may have been set up to invest in only one property or busi- ness, in which case there is no diversification. But the re - verse may also be true. With a fund of this type, there can be potential cash flow and positive economic and social impacts on a community. This fund option also works

One of the most attractive real estate tax benefits available in the U.S. is the like-kind exchange, which is governed by Section 1031 of the Internal Revenue Code.

if you are selling other ap- preciated assets like stocks or businesses. #2: Tenants-in-Common Cash Out In addition to using a 1031 exchange to defer taxes, some investors also want to improve liquidity so they can take advantage of other buying opportunities in the future. With a Tenants-in- Common (TIC) investment, you own a fractional interest in a commercial, multifam- ily, self-storage or other type of investment property. The TIC cash-out is a specific strategy where the invest- ment property is purchased using zero leverage so it is debt-free, with no mortgage, going in. Then, after a year or two, the property can be re- financed at 40%-60% loan to value, effectively providing investors with a large por- tion of their initial principal back tax-free in the form of a cash-out refinance. Under this scenario, the remaining equity in the investment stays in the TIC, providing potential distributions to investors while they get to enjoy liquidity with a large portion of their funds. #3: Direct Purchase of Triple-Net (NNN) Properties With a triple-net leased property, the tenant is re- sponsible for the majority, if not all, of the maintenance, taxes and insurance expens- es related to the real estate. Investors utilizing a 1031 exchange often directly pur- chase NNN properties, which typically are retail, medical or industrial facilities occu- pied by a single tenant. On the surface, these invest- ments may seem passive, but there are three distinct downsides, including con- centration risk (if an inves- tor places a large portion of their net worth into a single property with one tenant);

hard hit (examples: Star- bucks asking for major rent relief, 24 Hour Fitness filing Chapter 11 and Souplanta- tion declaring bankruptcy); andmanagement risk. I have owned dozens of triple-net properties over my career and in order to effective- ly manage them I’ve had to employ a team of asset managers, accountants, at- torneys and administrative staff — the investments are anything but passive. #4: Delaware Statutory Trusts In contrast to the example above where you buy the whole property yourself, Delaware Statutory Trusts (DSTs) are a form of co- ownership that allows diver- sification and true passive investing. Most types of real estate can be owned in a DST, including retail, industrial and multifamily properties. A DST can own a single prop- erty or multiple properties. In a 1031 exchange scenario, you can invest proceeds from the prior property sale into one or more DSTs to achieve diversification. DSTs often hold institu- tional-quality properties. (An example would be a 300-unit multifamily build- ing in a secondary market such as Charleston, Raleigh or Savannah.) A DST may hold one or more properties occupied by single tenants operating under long-term net leases, such as a FedEx distribution center, Amazon distribution center, a Wal- greens Pharmacy or a Fre- senius dialysis center. DSTs can be one of the easiest 1031 replacement property options to access because the real estate already has been acquired by the DST sponsor

many options to consider before entering into a 1031 exchange. Regardless of the approach you choose, the net effect of 1031 exchange investing is generally the same: The initial invested capital and the gain can continue to grow, potentially, without immediate tax con- sequences. Then, if and when the new investment is sold down the road without the equity reinvested in another exchange property, the prior gain would be recognized. There are some finer points, and investors should consult their tax or legal advisers prior to selling or exchang- ing a property. Everyone’s tax situation is different, as is their time horizon, diver- sification strategy, risk tol - erance and interest in being a passive versus an active investor. About Kay Properties and www.kpi1031.com Kay Properties is a na- tional Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com plat- form provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary mar- ket. Kay Properties team members 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 constitute an offer to sell nor a solicitation of an offer to buy any security. Such of- fers can be made only by the

the entireMemorandumpay- ing special attention to the risk section prior investing. IRC Section 1031, IRC Sec- tion 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 mate- rial risks associated with investing in real estate se- curities 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 conse- quences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire in- vestment principal. Past per- formance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Nothing contained on this website constitutes tax, legal, insurance or investment ad- vice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. If you are not the intended recipi- ent of this message, any use, dissemination, distribution or copying of this communica- tion is strictly prohibited. If you have received this com- munication in error, please immediately notify the send- er and permanently delete all copies that you may have. 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

M id A tlantic Real Estate Journal — Financial Digest — 1031 Exchange — September 11 - 24, 2020 — 7A 1031 E xchange


Thinking about selling your investment property? CONSIDERING A 1031 EXCHANGE?

CALLTODAY for a FREE book on 1031 exchanges as well as a FREE list of available 1031 exchange listings: 1.855.899.4597

Login at the Kay Properties 1031 Marketplace at www.kpi1031.com for FREE access to: ✔ 1031 Exchange Solutions ✔ Delaware Statutory Trust - DST Properties ✔ Management Free 1031 Options - No More Tenants, Toilets and Trash! ✔ Triple Net Leased - NNN Properties ✔ 721 UPREIT Investments - How to 1031 into a Real Estate Investment Trust (REIT)


ACQUISITION FUND, LLC - 7% Debentures* Minimum Investment: $50k The Acquisition Fund LLC

SEATTLE MULTIFAMILY DST Minimum Investment: $50k An all-cash / debt-free

was formed to facilitate the acquisition and inven- tory of long-term net leased assets, multifamily assets and private equity real estate investments. The offering provides investors with the ability to participate in the sponsor’s inventorying of real estate assets prior to syndication. *The Debentures will bear non-compounded interest at the annual rate of 7.0% per annum (computed on the basis of a 365-day year) on the outstanding principal, payable monthly on between the fifteenth and twentieth day of the following month.An investment in the Deben- tures will begin accruing interest upon acceptance and closing of the Investor’s Subscription Agreement. There is a risk Investors may not receive distributions, along with a risk of loss of principal invested.

multifamily apartment community. Located in the Seattle Metropolitan Area which is home to a strong workforce with Amazon, Microsoft, and Expedia. This all-cash/debt-free 1031 exchange offering is believed to potentially possess a defensive cash flow profile with ex- isting and resilient occupancy along with the potential for asset appreciation as the demand from Seattle’s core central business district supports greater growth in broader submarket neighborhoods. The offering which is available to 1031 exchange and cash investors also has a cost segregation report prepared to enhance investors depreciation write offs and tax shel- tering of projected monthly income.

SHREVEPORT PHARMACY DST Minimum Investment: $50k

A long-term net lease offering with a corporate Walgreens guarantee. Walgreens has been a tenant at this location since 1999 and recent- ly extended their lease an additional 10 years, showing a strong commitment to the site and trade area. The offering which is available to 1031 exchange and cash investors also has a cost segregation report prepared to enhance in- vestors depreciation write offs and tax sheltering of projected monthly income.

** All offerings shown are Regulation D, Rule 506(c) offerings. 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. Kay Properties and Investments, LLC and Growth Capital Services are separate entities. These testimonials may not be representative of the experience of other clients. Past performance does not guarantee or indicate the likelihood of future results.These clients were not compensated for their testimonials. Please speak with your attorney and CPA before considering an investment. ABOUT KAY PROPERTIES and WWW.KPI1031.COM Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market. Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 15 Billion of DST 1031 investments. WWW.KPI1031.COM 855.899.4597 LEARN MORE:

8A — September 11 - 24, 2020 — Financial Digest — 1031 Exchange — M id A tlantic Real Estate Journal


1031 E xchange

By Louis Rogers, Capital Square DIVERSIFY TO REDUCE RISK: Don’t put all your eggs in one basket


in different parts of the coun - try with different tenants. In this way, the inherent risks of the investment are sub - stantially diminished. If one property goes bad, the inves - tor still has four other invest - ments in their portfolio. The real estate recession of 2008 to 2012 slammed many real estate investments. A large number of investors learned the hard way about concentration risk, while investors who owned a more diversified portfolio fared much better. Following the recession, the previously common tenant-in-common structure was replaced by the Delaware Statutory Trust (DST) structure. A DST is an interest in a property that qualifies for Section 1031 ex - change treatment. Unlike a “whole” property investment, DSTs have a “sponsor” who does all the work in terms of acquisition, due diligence, financing, closing, asset/ property management, ac - counting, investor and tax reporting, and ultimately disposition of the asset at the end of the holding period. DSTs have a very low m i n i mum i n v e s tme n t amount, frequently as little as $50,000, which encour - ages diversification. Assume you are an exchanger with $250,000 of net proceeds from your sale and you would like to acquire a diversified replacement property port - folio to qualify for deferral under Section 1031. Un - fortunately, if you seek to acquire “whole” properties, you are out of luck. But you have a solution: acquire a portfolio of DSTs that are turn-key investments. And the best part, even a small investor can diversify with investment minimums so low. Bottom line – investors who own a more diversified portfolio enjoy reduced risk, especially during challenging economic times when com - pared to investors in a single asset. Section 1031 exchang - ers acquiring replacement property should diversify to reduce risk. In this way, you can both qualify for tax defer - ral and reduce the inherent risk of making new real es - tate investments. Louis Rogers is founder and chief executive officer of Capital Square. MAREJ

ith diversification, risk can be reduced in real estate in -

eggs. Building a diversified real estate portfolio can be a daunting task. Financial and background information on private real estate is not readily available and can be costly and time-consuming to obtain. As a “whole” property investor, the investment cost of most real estate assets is also significantly higher than stocks. Still, it’s possible to diversify your real estate investments in a number of ways: • asset classes , including multi-family, retail, medical, office/HQ, and industrial,

diversify by sponsorship, so that all of your assets are not sponsored/managed by the same real estate firm. For example, assume you are a Section 1031 exchanger who invests all your ex - change proceeds in a single replacement property. You are highly concentrated and at maximum risk. If that property suffers a melt- down, you could be wiped out. Instead, let’s say you divide your exchange pro - ceeds into several different investments and invest in a portfolio of five DSTs that have different asset classes

• geography , • tenants , • holding period, and • via a sponsor for secu - ritized real estate, such as Delaware statutory trusts (DSTs). By investing in different asset classes, different loca - tions, and properties leased by different tenants, you have a more diversified port - folio and generally less risk. Also, by diversifying your holding periods, all of your investments will not mature and have to be sold at the same time. And if you invest in DSTs, you may further

vestments. Instead of i n v e s t i n g in a single p r o p e r t y with concen - tration risk, p r u d e n c e dictates in - vesting in a numbe r o f

Louis Rogers

properties. Remember the old proverb: “Don’t put all your eggs in one basket”? Why? Because dropping the basket will break all the

Sponsor of DSTs for tax deferral under Section 1031 of the Internal Revenue Code and Qualified Opportunity Zone Funds for deferral and exclusion of capital gains taxes

Capital Square provides investors greater access to tax-advantaged real estate investments.

$2 billion+ in transaction volume

78 investment offerings sponsored

113 real estate assets acquired

www.Cap i t a l Square1031 . com | 877.626.1031

*August 13th, 2020

M id A tlantic Real Estate Journal — Appraisal — September 11 - 24, 2020 — 9A


A ppraisal

$20.5M refinancing secured for Garabrant in New Jersey JLL arranges loan for the multi-housing property in the Lafayette, NJ neighborhood by director Matthew Piz - zolato .


Completed in 2019, the six- story property features best- in-class construction and unit design, offering a diverse mix of spacious studios, one- and two-bedroom apartments. Units feature stainless steel appliances, quartz counter - tops, hardwood floors, island kitchens and large closets. Community amenities include a roof deck with views of the Manhattan and Jersey City skylines, a fitness center, sauna, onsite parking, bike storage and cooking grills. The JLL Capital Markets Debt Placement team repre - senting the borrower was led

ERSEY CITY, NJ — JLL Capital Markets has arranged a $20.5 million refinancing for Garabrant

The Point Capital Devel - opment, LLC team was led by founder, John Fio Rito . “I was excited to assist my client in securing and closing this financing during a chal - lenging capital markets en - vironment,” stated Pizzolato. “Coming to market for per - manent financing on a recently stabilized multifamily project in the midst of a global pan - demic had its challenges but JLL stepped in and did an excellent job getting this deal across the finish line,” said Fio Rito . MAREJ

in Jersey City. JLL worked on behalf of the borrower, Point Capital Devel - opment, LLC, to place the 10- year, fixed-rate conventional loan through Freddie Mac. The loan will be serviced by JLL Real Estate Capital, LLC, a Freddie Mac Optigo lender. The proceeds will be used to refinance the existing con - struction loan and payoff the preferred equity in the deal. Garabrant is located in the historic neighborhood of Ber - gen-Lafayette. Situated just one block from Liberty State Park’s Hudson-Bergen Light Rail station and less than one mile from Interstate 78, the property offers its residents convenient access to the Hud - son Waterfront, lower Man - hattan and the greater New York MSA. Cinnaire invests in FinTech building in Newark, DE NEWARK, DE -- A New Markets Tax Credit invest - ment from Cinnaire is sup - porting the development of a new, 100,000 s/f building dedi - cated to financial technologies, commonly called Fintech, at the University of Delaware’s Science, Technology and Ad - vanced Research Campus in Newark. Cinnaire provided a $9 mil - lion New Markets Tax Credit (NMTC) allocation to the Dela - ware Technology Park to sup - port the FinTech building, the latest project on the Uni - versity of Delaware’s growing STAR Campus. Construction is expected to be completed in November 2021. “FinTech will transform the future of Delaware’s growth in the financial technology sector, providing a space for entrepreneurs and innova - tors to collaborate on im - pactful projects,” said Peter Giles , Cinnaire vice president, Business Development. “This project will expand economic and educational opportuni - ties while creating jobs for Delaware residents. The New Markets Tax Credit continues to bring investment to com - munities that need it most, demonstrating the value of the program.” MAREJ


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10A — September 11 - 24, 2020 — Appraisal — M id A tlantic Real Estate Journal


A ppraisal

By Jay White, MAI, CRE, Apex Realty Advisory Commercial real estate valuation in turbulent times


he COVID-19 pandem- ic pushed the U.S. econ- omy into a recession

worthy essential tenants. However, a big problem now is figuring out how much a prop - erty is worth. The headline of national commercial real estate transaction activity is loud and clear: Commercial real estate transactions volume fell by 68 percent in the second quarter 2020 -- the lowest level for a second quarter since the Glob- al Financial Crisis, according to Real Capital Analytics. This headline should be taken with a grain of salt since real estate is local and property specifics are very important in real estate. Real

estate performance can differ across various locations due to divergent macroeconomic situations. For real estate to have value, four elements need to be present: demand, utility, scarcity, and transferability. Location is also very impor- tant since an asset located in a tourism-centric, leisure-ori- ented area is going to perform differently in the current pan- demic market conditions than a stabilized asset located in a diversified economic base area. Some assets will be considered riskier in the current market and therefore less in demand by many investors thus cre-

ating a spillover negatively affect impacting transaction activity and pricing. RCA reported that commer- cial property growth was posi- tive 1.5 percent year-over-year in July 2020 – meaning, price appreciation is nominally positive on a national level. Clearly, there are challenges that lie ahead related to the time for price discovery to occur between sellers and buyers, but in the short term it will put downward pressure on deal volume. It is difficult to price assets with so muchmar- ket uncertainty, let alone the unknowns related to the cre-

ation of an effective treatment for COVID-19, the restart of economic growth, the survival rates of businesses, and the durability of income streams. Many larger deals have been moved to the sidelines while others under contract are get- ting postponed with pushed out closing dates. On a positive front, lending markets have started to gain some certainty on their pric- ing and are bringing down spreads. A low interest rate environment and the potential for future inflation both bode well for the commercial real estate investment market. Ad- ditionally, it should be noted that commercial real estate is a slow moving, long-term as- set that does not reprice itself quickly. Plus, it typically lags the economy by six to nine months. In light of the current mar- ket conditions, who would sell an asset in a distressed mar- ket? On the buy-side no one wants to make a poor invest- ment decision without enough market clarity. Clearly, the concepts of confidence, stabil - ity, and liquidity are key to maintaining forward moving real estate activity. When market fundamentals become clearer and income streams more predictable, then risk can be better underwritten and pricing clarity will gradu- ally appear. Generally during periods of uncertainty, better quality stabilized properties are more attractive to inves- tors versus those with large vacancies or short-term lease rollover risk. Many inves- tors today are looking for off- market, suburban deals with defined cash flow streams, thus many are looking to buy long-term net leased assets to credit-worthy, essential tenants. The likely results of the on-going health crisis on com- mercial real estate is that deal volume will slow and the mar- ket will take a slight pause as sellers, developers, landlords, lenders, and investors all calibrate to the “new normal”. Many commercial real estate investors are itching to get deals in motion again, so it is anticipated that deal volume will return once the health crisis is behind us. However, given the current market uncertainties and the unclear timing of an effective virus treatment some investors are continued on page 11A

in Q1 2020. This in turn cascaded into the commer- cial real es- tate invest- ment market, as properties h a v e b e e n trading at a

Jay White

much slower pace. Most acqui- sitions, unsurprisingly, have focused on more pandemic- resistant asset classes like industrial, multifamily, and net leased real assets to credit

Jay L. White MAI, CRE® 101 Brandywine Boulevard Wilmington, DE 19803

P: 302-479-5300• F: 302-397-2403 www.apexrealtyadvisory.com

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