R EAL E STATE J OURNAL the most comprehensive source for commercial real estate news
ISSUE HIGHLIGHTS Volume 25 Issue 23 December 6 - 19 , 2013 Accounting- Tax Issues Spotlight
Witten, Nolletti, Thomson & Pierce represent both parties 1,176 unit portfolio sale arranged by IPA includes a $68m property
P
HILADELPHIA, PA — Institutional Prop- erty Advisors (IPA) , a
amenities, looked at unit lay- outs, views, accessibility and visibility.” “Our understanding of the properties and the buyers’ vi- sion for themwas an important element of the sale,” Thomson said. “We conducted more than 40 property tours, received numerous offers and matched the right buyers with the right assets.” Built on 26 acres in 1968, The Marquis is prominently located at 251 West DeKalb Pike in King of Prussia, PA. The unit mix features studio-, one-, two- and three-bedroom apartments and more than 22 different floor plans. Witten and Nolletti also just closed 124 units in Stamford, Conn. for $45,100,000, 597 units in Hartford, CT for $29,500,000 and 168 units in Orange, CT for $35,300,000. Thomson and Pierce closed 218 units in Harrisburg, PA for $25,625,000 and have 502 units on the market in the East Falls section of Philadelphia. ■ Street in Harlem, a premier location in the area. The mixed use project will feature a 13 story, 164 unit residential development with ground floor retail shops. •A$5,550,000 construction loan to City Island Reserve, LLC. The borrower is using the loan proceeds to develop 43 waterfront townhomes on one of the last development sites on City Island. The project, known as “On the Sound,” is being developed by Greystone Property Develop- ment Corp. • A $3,576,000 discounted debt purchase on 5 mixed use properties throughout Bergen County. • A $2,650,000 acquisition/ renovation loan with JCM Investors on 3 multifamily/ retail buildings in Paterson, NJ. ■
multifamily brokerage divi- sion of Marcus & Millichap serving the needs of insti- tutional and major private investors, has arranged the sale of a 1,176-unit multi- property portfolio in suburban Philadelphia. The properties include The Marquis, a 641- unit multifamily complex in King of Prussia, PA that sold for $68,000,000. The balance of the transaction is undis- closed. IPA executive directors Steve Witten and Victor Nolletti , along with Marcus & Millichap vice president of investments Mark Thomson and senior associate Zachary Pierce , represented all of the principals in the transactions. Candlebrook Marquis Prop- erty Owner LLC purchased The Marquis from Marquis Associates LLP . “This portfolio provided in- vestors with a once-in-a-gen-
13A
Cushman & Wakefield arranges $35.6m sale
The Marquis, King of Prussia, PA
eration opportunity to acquire underperforming assets in exceptional locations,” said Nolletti. “The acquisitions provide the new owners with tremendous opportunities to add value and return these assets to promi- nence within their respective
submarkets,” said Witten. “During the course of mar- keting these assets for sale we studied every detail of every comparable property in the area,” said Pierce. “We interviewed onsite staff and owners about renovations and construction costs, toured the
6B
Landmark Comm’l negotiates deals totaling $4.2m
Announces a 16.97% Annualized Return for the first 9 months of 2013 Procida’s 100 Mile Fund provides $12.3 million construction loan to Nobility Crest
ENGLEWOOD CLIFFS, NJ —The 100 Mile Fund, pro- vided a $12.3m infrastructure / construction loan to the proj- ect known as The Shoppes & Residences at New Visions in
Brick Township, New Jersey. The project consists of two separate developments; A mixed-use project which will consist of 21,109 s/f of re- tail space and 44 rental units made up of 30 two-bedrooms and 14 one-bedroom apart- ments. The second parcel will consist of 170 townhomes. This is the second project on the Jersey Shore that The 100Mile Fund has undertaken with Jerald Development . The town homes will be built and sold by Ryan Homes , one of the largest homebuilders in America, while Jerald De- velopment will construct the rental and retail sites. Jerry Cernero is an award winning developer with deep roots along the Jersey Shore. Jerry Cernero, president of Nobility Crest at Brick, commented: “Dealing with Procida Fund-
ing is far easier than dealing with a bank. Their expertise as developers and builders make for a smooth process, and they add value to every decision I make. They may be a lender, but they think like a builder” This site is centrally lo- cated in Brick Township and is in close proximity to most major retailers, the Garden State Parkway and the area beaches. In other news, Procida Fund- ing announced that its 100 Mile Fund earned a 16.97% annualized return during the first 9 months of 2013. Since January the fund has origi- nated $46,051,303 of new deals and over $100,000,000 since inception in October of 2011. Some highlights include; •A$10,000,000 bridge loan to Ladera II for its develop- ment site at 300 West 122nd
5C
Directory
DelMarVa ................................................. 7-12A Financial Digest ...................................Section A New Jersey .......................................... Section B Northern New Jersey................................ 5-12B Pennsylvania ....................................... Section C Central PA................................................... 5-9C
Upcoming Spotlights December 20, 2013 Annual Review
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MAREJ A dvertisers D irectory A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal AIA Delaware..................................................... 9A Barley Snyder Attorneys at Law. ..................... 7C Bayshore Recycling. .......................................... 4B Bennett Williams............................................... 4C Billboards......................................................... 25A Brasler Props................................................. IC-C Business Cards................................................ 23A Bussell Realty Corp........................................ IC-B Cervelli Real Estate. ....................................... 10B CIRC................................................................. 10A Comly. ................................................................ 4A Cooper Horowitz.............................................. 12A Cushman & Wakefield....................................... 7B Deerwood.......................................................... 13B Earth Engineering Inc.. ................................... 7C First Key Lending..........................................BC-A Gebroe-Hammer................................................ 4B Gerber-Somma Associates............................... 15B GFCIB.............................................................. 18A GREP.................................................................. 2C Hartz Mountain.............................................BC-B Harvey Hanna. ................................................ 11A Heller Industrial Parks..................................... 3B Henry’s Real Estate Co.. .................................. 1A Hinerfeld Commercial RE................................. 1C Hurley Auctions................................................. 5A Kaplin Stewart . .............................................. 17A Keast & Hood................................................... 11C Kislak................................................................. 2B Landcore Engineering Consultants, P.C.......... 5C Landmark Commercial Realty.......................... 5C Lee & Associates................................................ 1B M. Miller & Son................................................. 3A Mericle............................................................BC-C Meridian Capital Group.................................... 9B Michael Baxter & Associates. ........................... 2C NAI Summit....................................................... 2C NorthMarq....................................................... 11B Poskanzer Skott Architects............................... 6B Provident Bank............................................ I-FC A Rational Contracting....................................... 13B Regal Bank......................................................... 8B Rittenhouse Realty Advisors............................. 3C ROCK................................................................. 4C Rose Metal Systems. ..................................... FC-A RPC. ................................................................... 6A Sebco................................................................... 2B Sheldon Gross Realty........................................ 3B Sperry Van Ness...............................................11A Target Building Construction......................... 11C The Berger Organization. ............................... 12B The Green Group............................................... 3A Thompson Management.................................... 6A Tri-state............................................................ 24A TTI Environmental Inc................................... 14B WCRB............................................................... 14B Wilkin Guttenplan........................................... 15A Wiss & Co......................................................... 19A WithumSmith & Brown. ................................. 14A Worth & Company............................................. 2A
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Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Publisher/Senior Account Executive ................................. Elaine Fanning Section Publisher .................................................................... Steve Kelley Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Guest Columnists........................................................................... Alan Fruitman Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 25 Issue 23 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com
Mid Atlantic Real Estate Journal
By Alan Fruitman
NNN properties are HOT!
1
031 exchange buyers, baby boomers, doctors, lawyers, REITs and
seemingly everyone else who has money wants to own NNN property. Guaranteed income, strong tenant with a long-term lease, no property manage- ment, no maintenance, and a prime location are what inves- tors crave. NNN properties are one of the only investments that yield stable and guaranteed income with a relatively high return. Multi-tenant properties have sporadic vacancy, management hassles and continuous mainte- nance requirements. Dividend yield on stocks is miniscule. The 10 year US Treasury yields less than 3%. Bank savings ac- counts yield less than 0.2%. In contrast, most NNN properties yield between 5% and 7%. Investors often purchase Lease signed between Ward’s LLC, and General Nutrition Corporation, for 1,600 s/f of space at Wards Crossing West, 120-J Simons Run, Lynchburg VA. Ellen Long and Clint Greene represented the land- lord. Lease signed between Hot Rod City, LLC, andAuto Repair / Keith Epps, for 3,300 s/f of flex space at 1019 W. Graham Rd.,
The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
NNN properties for the passive / retirement income. In addi- tion to retirement income, it is very easy for a spouse, child or charity to inherit a NNN prop- erty since minimal real estate expertise is needed to own this type of investment. Receiving and promptly re- viewing NNN properties the first day the property comes to market, or before the property officially comes to market, is one key to your purchasing Lease signed between Brook Run 6A Associates LLC and Dale Matheney, dba Liberty Tax, for 1,360 s/f of space at 6000 Brook Rd, Richmond, VA. Brian Bock represented both parties. Lease signed between RCC Crossings, LLC, and Destina- tion Church for 1,377 s/f of
success. Another key to your purchasing success is be- ing decisive. Once you find the right NNN property, you must quickly submit a Letter of Intent (LOI) to purchase the property. If you wait, another buyer will secure the property before you do. Contact Alan Fruitman, Jim Slinkard or Elizabeth Laesecke at www.1031tax. com or call 1.800.454.0015. n space at The Crossings Shop- ping Center in Hopewell. Jan- ice Logue and Clint Greene represented both parties. Lease signedbetweenTNPPM Wistar Center, and Heather Capel Insurance and Financial Services, dba Capel Agency Nationwide Insurance, for 2,432 s/f of space at 8105 Staples Mill Rd., Richmond, VA. Brian Bock represented the tenant. n
Taylor Long Properties announces recent transactions Richmond, VA. Mike Weisberg represented the tenant.
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To advertise, call 1-800-584-1062
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M id A tlantic R eal E state J ournal 2100 Country Line Rd. Weis Markets opens 62,800 s/f in Huningdon Valley, PA
O
n Sunday, November 10 The Marketplace at Huntingdon Valley,
located at 2100 County Line Rd. in Huntingdon Valley, PA, welcomed Weis Markets , a 62,800 s/f supermarket. The new Weis Markets is open 24 hours per day and departments include a full- service pharmacy and 35-seat café and sales of domestic and imported beer. “We are proud to be able to bring Weis Markets to the Huntingdon Valley commu- nity,” said Joseph Casacio Jr ., partner of New Century Associates Group, L.P ., the ownership entity for the Mar- ketplace. “With the addition of Weis Markets the Marketplace is now a one stop neighborhood shopping center.” The Marketplace at Hunt- ingdon Valley is a 255,000 s/f community shopping center located on the border of Mont- gomery and Bucks Counties, a few miles northwest of Phila- delphia. The Center is the winner of the 1993 Merit Shop Award of Excellence in Con- struction, from the Associated Builders and Contractors. The Marketplace at Hunt- ingdon Valley is the home of more than 45 popular retail stores, restaurants and ser- vice establishments. Major anchor tenants include Sears Hardware and LAFitness. The Marketplace at Huntingdon Valley is managed and leased by Revere Suburban Realty Corporation, a company that boasts personnel with a wide range of expertise including property management and real estate to architecture, engineering and construction services as well as finance and accounting. For the last fifty years, Revere has man- aged retail, office, multifamily and mixed use developments throughout the Philadelphia area. The Marketplace at Huntingdon Valley’s on-site management office provides ongoing support for all of its merchants. In honor of their Grand Opening, Weis gave $10,000 to local community organiza- tions, including Upper Mo- reland High School, Willow Grove Volunteer Fire Com- pany, Abington YMCA, Upper Moreland Soccer Club, Greater Philadelphia CoalitionAgainst Hunger, Public Citizens for Youth and Children, and Bux- Mont Meals on Wheels. n
MMSON_MidlanticRealEstate_B&W_FINAL_Layout 1 4/5/13 1:08 PM Page 1 Weis Markets ribbon cutting, Huntingdon Valley, PA
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4A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
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COURT ORDERED SEALED BID REAL ESTATE AUCTION FORMER GETTIG INDUSTRIES FACILITY SEALED BIDS DUE FRI. JANUARY 24 BY 12PM 4+-ACRESW/ NUMEROUS COMMERCIAL/INDUSTRIAL BUILDINGS 1 Streamside Pl., Spring Mills (State College), PA 16875
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BUILDING 1 : 13,400+- s/f facility, 900+-s/f executive office area, cafeteria, (2) mens/womens restrooms, numerous large rooms, (2) O/H garage doors. Ideal for manufacturing, warehouse, offices, etc! BUILDING 2 : Approx. 2400+-s/f automotive garage, (5) O/H 10x12 doors, clear span, water/sewer BUILDING 3 : Approx. 9750+- s/f w/ approx. 3750+-s/f former manufacturing area w/ restrooms, approx. 6000+- clear span garage area w/ (4) O/H 14x14 doors, loading dock w/ 8x8 O/H door BUILDING 4 : 14x60 Mobile office BUILDING 5 : Older 2-story home needs considerable TLC: 4 BR, 1 bath, LR, DR, kitchen, water/sewer. ADDITIONAL 2 PARCELS : Available at Live Auction Jan.31. Including residential home & garage & commercial garage. (See website for details) Sealed bids due Fri. Jan 24th by 12pm at the offices of Hurley Auctions-Greencastle, PA 17225
See website for terms & bidding forms 717-597-9100 Matthew Hurley-003413L | AuctionZipID1023 866-424-3337 www.HurleyAuctions.com
A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
www.marejournal.com M id A tlantic R eal E state J ournal Vatech America, Inc. will relocate to Fletcher Ave. Cushman & Wakefield handles 16,000 s/f HQ lease
F
ORT LEE, NJ — Vat- ech America, Inc . has signed a lease for
16,000 s/fof office space at 2200 Fletcher Ave. in Fort Lee, NJ, announced commer- cial real estate services firm Cushman & Wakefield of New Jersey, Inc. , leasing and management agents for the classAproperty. The East Rutherford-based Cushman &Wakefield team of Richard Baumstein , Marc Gra- ham and Christian Politan represented owner James Campbell Company . Vatech America, Inc., a
2200 Fletcher Ave., Fort Lee, NJ
leading provider of digital im- aging products and services, was represented by Sarah Kim of Z Realty Group, LLC . With the transaction, the tenant will relocate its U.S headquarters to north- ern Bergen County from its current location in the Mead- owlands. “With a need to expand, this location perfectly fit Vatech America’s requirements,” said Politan. “This is also a welcome transaction for the Fort Lee office market, which has been stagnant with the exception of existing tenants moving within the market. This latest transaction cre- ated some positive absorption for the market.” The signing leaves an avail- ability of 25,782 s/f at 2200 Fletcher Ave., a 215,500 s/f, seven-story building that was constructed in 1988 and re- cently underwent substantial upgrades. It is located on five acres near the George Wash- ington Bridge, I-80, I-95, Palisades Interstate Parkway and Route 9W. Amenities in- clude an atrium lobby, fitness center, café, parking garage, security system and 24/7 on- site security. “More building improve- ments are being made going forward,” said Politan. “With its amenities, great location and accessibility and strong institutional ownership, it is a prime location for business. We are seeing considerable in- terest in the remaining space and anticipate additional an- nouncements soon.” The Hawaii-based James Campbell Company acquired 2200 Fletcher Ave. as part of the company’s initial expan- sion into the New Jersey/New York market. n
Mid Atlantic Real Estate Journal — December 6 - 19, 2013 — A
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Marcus & Millichap arranges the sale of a 65-unit apartment building Marcus & Millichap arranges the sale of two apartment complexes totaling 328 Units for $23m+
YATTSVILLE, MD — Marcus & Mil- lichap Real Estate Investment Services has an- nounced the sale of Newbury Square, a 213-unit apartment property located in Hyattsville, MD, andFinchleySquare, a115- unit apartment property located in Brentwood, MD, according to Bryn D. Merrey , regional manager of the firm’s Washing- ton, DCoffice. The assets sold for $15,868,500 and $7,877,500 re- spectively with some additional H
BALTIMORE, MD — Mar- cus & Millichap Real Es- tate Investment Services has announced the sale of The Cecil Apartments, a 65-unit apartment community located in Baltimore, MD, according to Bryn D. Merrey , regional manager of the firm’s Wash- ington, DC office. The asset sold for $5,750,000. Dave Gray , an invest- ment specialist in Marcus & Millichap’s Washington, DC office, had the listing to mar- ket the property on behalf of the seller, a limited liability company. The buyer, a limited liability company, was also secured and represented by Dave Gray. The Cecil Apartments is located in the historic Bolton Hill neighborhood of Balti- more City and at the time of construction in 1902 is said to have marked the evolution of
capital expense credits against these purchase prices. DavidWeber of theWashing- ton, DCoffice alongwith Daniel Cunningham , DerekR.Gibbs and Tal I. Frydman , of the Ft. Lauderdale office of Marcus & Millichap had the listing to market the properties on behalf of the seller, a limited liability company. The buyer, a limited liability company, was secured and represented byWeber, Cun- ningham, Gibbs and Frydman as well.
elite living that has come to characterize this neighbor- hood. The property was complete- ly renovated in the early 2000’s and features larger than average luxury apart- ments and a myriad of tenant amenities. Gray said that within 30 days of placing the property on the market they received seven offers and opted to move forward with an offer that was not the highest they received, but since the buyer was will- ing to assume the current loan the seller would avoid pre-payment penalty and ulti- mately net more in profit. The purchaser was moti- vated to acquire the property as they were drawn to the character and housing selec- tions that are full of history whichmade the Cecil a perfect addition to their portfolio. n
Newbury Square
Finchley Square
December 6 - 19, 2013
HI-LIGHTS
Cecil Apartments
AIA Delaware
15 Worman’s Mill and 1227 Ritchie Center Avison Young sells two properties totaling 60,000 s/f for $5,357,000
FREDERICK,MD — Avison Young is pleased to announce the sale of 15 Worman’s Mill in Frederick, MD for $3,520,000. The sales team of Joe Fried- man and Julian P. Etches , represented the seller, First Potomac Realty Trust . The asset is a 40,000 s/f two-story office building in Frederick, MD. Located at the core of Frederick’s bio-tech hub, the property includes both office and laboratory space. CAPITOL HEIGHTS, MD — Avison Young is pleased to announce the sale of 1215- 1227 Ritchie Center in Capitol Heights, MD for $1,837,000. The sales team of J oe Fried- man and Julian P. Etches , represented the seller, Ritchie Road Investors, LLC , an af- filiate of Maryland-based Site Realty Group. The asset is a 20,000 s/f small- bay, industrial business center in Capitol Heights, MD. The property offers a unique combi- nation of office, warehouse, and outside storage space n
The AIA Introduces seven new contract documents For SP See Page 9A
UIP, PRP, Perseus Realty acquire 289-unit apartment. complex in DC
Urban Investment Part- ners (UIP), PRP LLC , and Perseus Realty has ac- quired the 289-unit Capitol Park Towers apartment com- plex at 301 G St., SW, Wash- ington, DC. See page 8A
15 Worman’s Mill, Frederick, MD
ALSO INSIDE:
C ommercial -I ndustrial R ealty C ouncil ............. 10A
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1227 Ritchie Center, Capitol Heights, MD
A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
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D el M ar V a
ASHINGTON , DC —Agroup that includes Washing- UIP General Contracting will do reno of Capitol Park Towers Apts. UIP, PRP, Perseus Realty acquire 289-unit apt. complex in Southwest Washington, DC W Douglas Development begins con- struction on rehab of former bank
with the New Capitol Park Towers Tenants Association that allows for us to pre- serve another rent controlled property while providing residents with meaningful improvements at the prop- erty with no rent increases outside of standard annual increases under rent control,” said Steve Schwat , princi- pal at UIP. UIP General Contract- ing, Inc. , a subsidiary of UIP, will perform the renovation work. UIP subsidiary UIP Property Management, Inc . is property manager. n
ton, DC-based Urban In- vestment Partners (UIP), PRP LLC , and Perseus Realty has acquired the 289-unit Capitol Park Tow- ers apartment complex at 301 G St., SW, Washington, DC. The group plans to in- vest in significant improve- ments over the next several years. “UIP is excited to be mov- ing into Southwest Washing- ton. We’re very pleased to have reached an agreement
RICHMOND, VA — Doug- las Development announced that construction has begun on the former Central Na- tional Bank building, located at 219 East Broad St. in down- town Richmond, VA. Working with CommonwealthArchi- tects Douglas Development will rehabilitate one of the city’s most iconic landmarks and convert it into a 23-story residential community. The mixed-use project will com-
219 East Broad St., Richmond, VA
Capitol Park Towers
bine modern functionality and amenities with a historically preserved building that will help revitalize Richmond’s central business district. Douglas Development Prin- cipal and senior vice president, Norman Jemal comments on the new development oppor- tunities in Richmond: “The city is changing and more office buildings, restaurants, and shops are opening in downtown Richmond. Now the Central National Bank building will offer contempo- rary housing for those who want to live closer to work or school.” On the former bank’s up- per floors, the rehabilitation will offer prospective tenants more than 200 studio, one, and two bedroom apartments, approximately 220,000 s/f. n R I CHMOND , VA — Hirschler Fleischer i s pleased to announce its repre- sentation of RRIApartments I, LLC in its recent purchase of a mixed-use property in downtown Roanoke, VA. The transaction includes a 157-unit apartment building and 28,230 s/f of commercial space. This is the first phase of what will eventually become a 22-acre mixed-use project known as “The Bridges.” The Hirschler Fleischer attorneys involved in the transaction include M. Ryan Jenness , Lisa J. Hed- rick , C. Brandon Spalding, Jr. and Anita G. Vaughn . Upon completion, the devel- opment will include 260,000 s/f of residential space and 368,000 s/f of commercial space. n Hirschler Fleischer reps. in Roanoke Riv- erfront investment
Mid Atlantic Real Estate Journal — December 6 - 19, 2013 — A
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2013 BOARD OF DIRECTORS
The American Institute of Architects
The AIA Introduces seven new contract documents For SP
Executive Committee 2013
WASHINGTON, DC — The American Institute of Architects (AIA) announced the release of seven new Sustainable Projects (SP) contract documents. The release includes SP versions of the AIA’s two families of Construction Management documents, Construction Manager as Adviser (CMa) and Construction Manager as Constructor (CMc), as well as B103™–2007 SP, Standard Form of Agreement Between Owner andArchitect for a Large or Complex Sustainable Project. “The Construction Manager as Adviser and Construction Manager as Constructor delivery models are beneficial for sustainable projects. The construction manager’s involvement in the early stages of the project results in collaboration between the owner, the architect, and the construction manager in the development of the owner’s sustainable objective, and in the development of the measures they will take toward achieving that objective” said Ken Cobleigh , managing director and counsel at the AIA. B103–2007 SP is an agreement between Owner and Architect that is specifically developed for use on large or complex sustainable projects. It is written for use in the design-bid-build delivery model; however, and with some modification, it is also well suited for use on CMc projects. The seven new documents include: Construction Manager as Adviser Family • A132™–2009 SP, Standard Form of Agreement Between Owner and Contractor, for use on a Sustainable Project, Construction Manager as Adviser Edition • A132™ SP Exhibit A, Determination of the Cost of the Work • A232™–2009 SP, General Conditions of the Contract for Construction, for use on a Sustainable Project, Construction Manager as Adviser Edition • B132™–2009 SP, Standard Form of Agreement Between Owner and Architect, for use on a Sustainable Project, Construction Manager as Adviser Edition • C132™–2009 SP, Standard Form of Agreement Between Owner and Construction Manager as Adviser, for use on a Sustainable Project Construction Manager as Constructor Family • A133™–2009 SP, Standard Form of Agreement Between Owner and Construction Manager as Construc- tor, for use on a Sustainable Project where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price • A133™ SP Exhibit A, Guaranteed Maximum Price Amendment • A134™–2009 SP, Standard Form of Agreement Between Owner and Construction Manager as Construc- tor, for use on a Sustainable Project where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price B103™–2007 SP, Standard Form of Agreement Between Owner and Architect for a Large or Complex Sustainable Project The new Sustainable Project documents are currently available through the current version of AIAContract Documents software, and individually through AIA Documents-on-Demand®. n
President Mark Edward Clark, AIA Clark Design Group Phone: 410-398-8866 mclark@clarkdesigngrouparchitects.com President-Elect Philip R. Conte, AIA StudioJAED Phone: 302-832-1652 contep@studiojaed.com Vice President Robert M. Maffia, AIA Tetra Tech Architects & Engineers Phone: 302-738-7551 bob.maffia@tetratech.com Secretary Mark A. Magrino, AIA TBS Services, Inc. Phone: 856-547-6250 mmagrino@tbsservices.com Treasurer Michael D. Berninger, AIA Tetra Tech Architects & Engineers Phone: 302-738-7551 michael.berninger@tetratech.com 
Directors 2013-2014
J. Patrick Fugeman, AIA Christiana Care Design Services Phone: 302-733-3960
Ed Rahme, AIA THINK Architecture Phone: (610) 453-7874 ed@edrahme.com Patrick W. Ryan, AIA French + Ryan Phone:(302) 856-4113 pryan@frenchryan.com
Mary G. Severino, AIA CFI Delaware – The Knoll Source Phone: (302) 425-3700 Fax: 302-424-0430 mseverino@cfi-knoll.com Michael Wheedleton, AIA Davis, Bowen & Friedel, Inc. Phone: 302-424-1441
Fax: 302-424-0430 mwh@dbfinc.com
10A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
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Mid Atlantic Real Estate Journal — December 6 - 19, 2013 — 11A
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12A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
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Real estate Financing
Mid Atlantic Real Estate Journal — December 6 - 19, 2013 — 13A For the Hilton Meadowlands and the Sheraton Edison PCCP provides senior loans totaling $57.5 million to recapitalize two New Jersey hotels F inancial D igest F eaturing T ax I ssues & A ccounting
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N
EW YORK, NY — PCCP, LLC announced it has provided two se-
and repositioning of the Hilton Meadowlands & Conference Center (formerly the Sheraton Meadowlands), a 427-room full-service hotel located less than a mile from MetLife Stadium (the site of the 2014 Super Bowl) and just six miles west of Manhattan. The hotel was acquired in 2005, under- went a $17 million renovation in 2006, was reflagged as a Hil- ton Hotel in conjunction with the closing of the PCCP loan, and will undergo a significant property improvement plan following the Super Bowl. PCCP also provided a $16.5 million loan to refinance an
existing senior loan on the Sheraton Edison, a 276-room full-service hotel located with- in the Raritan Center corpo- rate park in Edison, which is made up of nearly 350 compa- nies and over 13 million s/f of flex/industrial/office space. The hotel is also less than 1.5 miles from the 125,000 s/f New Jer- sey Convention & Exposition Center and is well positioned at the confluence of the New Jersey Turnpike, I-287, and the Garden State Parkway. The property was acquired in 2007 and underwent an exten- sive $20 million renovation in 2008. n
nior loans to a private, East Coast-based real estate firm totaling $57.5 million for the recapitalization of two New Jersey hotels. The hotels in- clude the Hilton Meadowlands in East Rutherford and the Sheraton Edison in Edison. “These loans are supported by institutional quality assets with strong in-place cash flow and significant upside poten- tial,” said Kevin Chin , vice president with PCCP, LLC. PCCP provided a $41 million loan for the recapitalization
Sheraton Edison, Edison, NJ
Meridian Capital Group arranges $4.8 million in permanent financing
MMCC arranges $5.3m multifamily aquisition loan
1221 Mount Vernon
PHILADELPHIA, PA — Marcus & Millichap Capi- tal Corp. (MMCC) has ar- ranged $5.3 million of debt for an apartment complex in Philadelphia. Kristopher Wood and John Banas , both directors inMMCC’s Philadelphia office, arranged the loan. “The borrower has worked with us on past projects and was seeking a five-year fixed- rate construction loan,” says Wood. “Our client wanted to mitigate the interest rate risk between now and stabiliza- tion.” “The 40-unit apartment building is in the Loft District,” says Banas. “It is an up-and- coming area in the city that is regarded as one of the top
places to live.” The five-year fixed loan am- ortizes over 25 years at 4.7 percent and it is interest only for the first 18 months. The loan represents 80 percent of the total cost of the project. Marcus & Millichap Capital Corporation is a subsidiary of Marcus & Millichap Real Estate Investment Services. Through its network of nation- al and regional lenders, MMCC provides capital markets prod- ucts for a wide variety of in- vestment properties, including apartments, shopping centers, office buildings, industrial fa- cilities, single-tenant net-lease properties, seniors housing, hotels/motels, manufactured home communities and self- storage facilities. n
124 Montague St., Brooklyn, NY
BROOKLYN, NY — Me- ridian Capital Group, LLC negotiated a $4.8 million mort- gage for the refinancing of a retail property located in Brooklyn, NY. The ten-year loan features a fixed-rate of 3.375% and was provided by a local balance sheet lender. This transaction was arranged by Meridian Capital Group vice president, Judah Hammer , who is based
in the company’s NewYork City headquarters. The two-story retail prop- erty, located at 124 Montague St., contains two commercial spaces totaling 4,450 s/f and a small office space. Situated at the corner of Montague St. and Henry St. the property is oc- cupied by notable tenants The Corcoran Group and Kiehl’s. The Montague Street corridor is home to many other notable
national retailers such as Ba- nana Republic, Ann Taylor, and Starbucks. “Meridian was able to lever- age our strong relationship with the existing lender to reduce the prepayment penalty on the sponsor’s current loan and negotiate a non-recourse loan on this commercial building complimented with loan terms typically reserved for multifam- ily assets,” said Hammer. n
14A — December 6 - 19, 2013 — Mid Atlantic Real Estate Journal
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F inancial D igest
By Arthur DaPonte, David Mendelsohn and Daniel Asbaty, WithumSmith & Brown, PC The long-awaited final repair and maintenance regulations: they’re here…
I
n 2006, 2008 and again in 2011, the IRS issued separate sets of tempo-
picture on many formerly-ex- haustive compliance aspects facing taxpayers. Three key areas with pervasive changes are betterments, materials and supplies, and de minimis safe harbor elections. Within each of these topics, the IRS has defined its regulations and pro- vided broader, less-situational applications, which should help to alleviate some of the compli- ance burden. BETTERMENTS One portion of the repair and maintenance regulations that has been impacted greatly by the release of the new regu-
lations is the topic of better- ments. The definition of a betterment is the amelioration (the act of making something better) of a material condition or defect that existed prior to the acquisition of property or arose during the production of property. The betterment could result in a material addition to a unit of property (including a physical enlargement, expan- sion, or extension) or result in a material increase in the ca- pacity, productivity, efficiency, strength, or quality of a unit of property or its output. As ap- plied to buildings, an amount
results in a betterment to the building if it results in a better- ment to the building structure or any of the building systems. For example, a retail building that is undergoing a renova- tion project can have costs that constitute expenses, capitaliza- tion, or mixture of both. Gen- eral appearance maintenance (paint, etc.) and cosmetic or layout changes (not constitut- ing increase in production) would be expensed. Additions to a building (for example, a loading dock or an overhead door) and systems (upgrade to an electrical panel to accom-
modate a power door) would be capitalized as betterments. A unit of property is defined as consisting of all the compo- nents of property that are func- tionally interdependent. Spe- cial rules exist for determining a unit of property for buildings, plant property, network assets, condominiums, cooperatives, and leased property, and for the treatment of improvements (including leasehold improve- ments). A unit of property can be improved if it is adapted to a new or different use. For ex- ample, a drug store that remod- els to include a walk-in clinic would automatically qualify for capitalization. In contrast, if a grocery store opens a gelato counter, the intended use of the store is still to sell groceries so this would not be a new or dif- ferent use. Quantitative bright lines (i.e. dollar amounts) do not exist for determining the material- ity of an addition to a unit of property or an increase in ca- pacity, productivity, efficiency, strength, quality, or output of a unit of property. Instead, qualitative factors should be used to provide fair and equi- table treatment for all taxpay- ers in determining whether a particular cost constitutes a betterment. For example, while amounts paid for work performed on an office build- ing or a retail building may clearly comprise a physical enlargement or increase the capacity, efficiency, strength, or quality of such building, un- der certain facts, it is unclear how to measure whether work performed on an office building or retail building increases the productivity or output of such buildings, as those terms are generally understood. Thus, the productivity and output factors would not generally apply to buildings. On the other hand, it is appropriate to evaluate many items of manu- facturing equipment in terms of output or productivity as well as size, capacity, efficiency, strength, and quality. For ex- ample, if a hotel replaces 8 of 20 sinks in its lobby bathroom at a cost of $4,000 and the cost of the entire plumbing system is $200,000, the amount should be capitalized as the sinks qualitatively represent a sub- stantial structural part. The application of the im- provement standards to a building structure and the Continued on page 22A
rary regula- tions regard- ing repairs and mainte- nance expen- ditures. The long-awaited final regula- t i ons have
Rebecca Machinga
been released with an effec- tive date of January 1, 2014. The final regulations attempt to remove the intricacies of repair and maintenance treat- ment and aim to paint a clearer
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ATQTRRP Mid Atlantic Real Estate Journal — December 6 - 19, 2013 — 15A www.marejournal.com By Sefi Silverstein, CPA , Wilkin & Guttenplan, P.C. 1031 Exchanges of Property T ax I ssues & A ccounting W hen properly struc- tured, real estate owners can defer a like-kind exchange by allow- ing for the purchase/sale of the properties to occur at different times during an allowable ex- change period. The QI cannot be a related party or an exist- ing agent of the real estate owner (such as an accountant, attorney, employee, real estate broker, etc.). Deferred exchanges can be completed either as a forward exchange (the relinquished property is sold first; the re- placement property is acquired after) or a reverse exchange (the replacement property is acquired first; the relinquished property is sold after). The ini- tial step in a deferred exchange is to enter into a written agree- ment with a QI who will facili- tate the tax deferred exchange. Second, with respect to a for- ward exchange, the QI will contract to sell the property on the owner ’s behalf and receive the sales proceeds. The sales proceeds are deposited into an escrow account created by the QI. The funds will be used to acquire the replacement property. The seller will then need to identify replacement property within 45 days of the closing. In identifying the re- placement property, the seller has two options: 1) identify up to three properties the investor is considering, or 2) identify as many properties as desired as long as the cumulative fair market values of the identi- fied properties do not exceed 200 percent of the fair market value of the relinquished prop- erty. The second option works best when the seller desires to exchange their property for multiple properties. (One example for acquiring sev- eral replacement properties is if parents prefer that their children and grandchildren inherit separate properties instead of jointly inheriting one larger property). The final step to complete the exchange is to close on the replacement property. The closing must be completed within 180 days of the original sale. Although not as popular, in a reverse exchange, the replace- ment property is acquired first through the QI. After the acquisition, the owner will have 45 days to identify the property/properties they will sell to complete the exchange. The closing on the relinquished property will need to be com- pleted within 180 days of the acquisition date of the re- placement property. After the Continued on page 22A taxes on long term capital gains by en- tering into a like-kind e x c h a n g e transaction. Because o f the new tax laws in effect Sefi Silverstein as of 2013, there may be an even greater incentive to con- sider a 1031 exchange: long term capital gains tax rates have increased from 15% to 20% for taxpayers in the high- est income tax bracket; and there is a new 3.8% Medicare surtax on investment income, including long term capital gains. For many, these two tax changes alone can create an additional tax burden. Below is an overview of the mechanics of a like–kind exchange which would allow for the deferral of the gain. A like-kind exchange is a viable option for a real estate investor who is selling a prop- erty which has appreciated in value or, has a low basis from previous depreciation deductions, and is planning to reinvest the proceeds into one or more newly acquired properties. The IRS allows for this tax deferral when a real estate owner essentially “exchanges” one property for another “similar” property (or properties). In order to receive a full tax deferral treatment, the transaction must meet certain criteria: the cost of the replacement property must be equal to, or greater than, the selling price of the property relinquished; the net equity in the replacement property can- not be less than the net equity in the property relinquished; both properties must be either business or investment prop- erty. Cash and other non-quali- fied property (principal and secondary residences) cannot be included as part of the ex- change, otherwise it will result in a partially or potentially fully taxable transaction. Because investors can rarely, on their own, effectuate a direct exchange, IRS requires the seller in a deferred exchange to use an independent third party to facilitate the transac- tion. This facilitator is known as a qualified intermediary (QI). The QI allows for the real estate owner to complete In the real estate industry, they say location is everything. However, smart real estate owners know that it’s also important to have experienced advisors in their corner. The real estate group at Wilkin & Guttenplan has 30 years of experience helping our real estate clients achieve the best possible results for their properties. Our understanding of industry issues enables us to identify opportunities and provide guidance to commercial, residential and industrial property developers, owners/investors, managers and closely-held real estate enterprises. By applying knowledge that’s been acquired through years of experience, we’ll help you to meet your goals and work with you to create a plan of action that provides a comprehensive approach for your needs. For more informa ti on about our services and solutions contact , 6H¿6LOYHUVWHLQ&3$6KDUHKROGHUDWRUYLDHPDLODWVVLOYHUVWHLQ#ZJFSDVFRP 7LFHV/DQH(DVW%UXQVZLFN1-_ 3HQQ3OD]D WK)ORRU1HZ
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