R EAL E STATE J OURNAL the most comprehensive source for commercial real estate news
ISSUE HIGHLIGHTS Volume 25 Issue 18 Sept. 27 - Oct. 11, 2013 Mid Atlantic R EAL E STATE J OURNAL F ALL P REVIEW 2013 FALL PREVIEW MidAtlantic RealEstateJournal— September28 -October12, 2012— 5A
$8.3m on nine cooperative buildings totaling 162-units in Freeport, NY Meridian negotiates $34.4m in financing for mixed-use, multifamily & Co-op
N
EW YORK, NY — Meridian Capital Group , LLC an -
Westend Ave. in Freeport. The loan features a rate of 3.63% and a 10-year term. Jacob Schmuckler negotiated this transaction. New mortgages totaling $6.75 million were placed by Meridian on two mixed-use buildings totaling 12 units and two retail spaces and two multifamily buildings totaling 26 units. The properties are lo- cated on Fifth Ave., East 125th St. and West 145th St.in New York. The loans feature rates of 3.65% and 10-year terms. Simon Rosenfeld and Kyle Friedland negotiated these transactions.
Meridian negotiated new mortgages totaling $6.15 mil- lion on two multifamily build- ings totaling 109 units located on 21st Ave. in Brooklyn and Charlton St. in New York. The loans feature rates of 3.08% and seven-year terms. Dan Blumenthal and Joseph Taub negotiated these transactions. A new mortgage of $1.85 million was placed by Merid- ian on an 18-unit, four-story multifamily building located on East 98th St. in Brooklyn. The loan features a rate of 3.00% and a 10-year term. Morris Diamant negotiated this transaction. ■
Anew mortgage of $9.25 mil- lion was placed by Meridian on a 32-unit, four-story multi- family build- ing located on Manha t t an Ave. in Brook- lyn. The loan f e a t u r e s a rate of 3.05% and a five- yea r t e rm. C h a r l e s Grussgott negotiated this transaction. Meridian negotiated a new mortgage of $8.3 million on nine cooperative buildings totaling 162-units located on
www.marejournal.com
nounced the f o l l o w i n g transactions: M e r i d i a n n e g o t i a t e d a new mort- gage of $2.1 million on a 45-unit, four- story multi-
E MILY B ECK EMCOR
E D B ROWN N ORTH M ARQ
S COTT C.B UTLER K APLAN S TEWART
D AVE F OURNIER T HE A ZTEC C ORPORATION
T RACEY G OLDSTEIN F EINSTEIN ,R AISS ,K ELIN &B OOKER ,L.L.C
M ICHAEL F ORTNA F ORTNA A UCTIONEERS
R ONALD C.K ERINS ,J R G REYHAWK
C OREY L ONBERGER R ITTENHOUSE R EALTY A DVISORS
5-19A D AVID O RBACH R EGAL B ANK J IM M ARTIN S ECURITY R ESOURCES , INC
M ARC T ROPP E ASTERN U NION
G REG W INKLER M ID -A TLANTIC P RECAST A SSOCIATION
INSIDE: ARCHITECTURE: David J. Fournier,TheAztecCorporation.........................................6A ATTORNEY: TraceyGoldstein, Feinstein,Raiss,Kelin&Booker,L.L.C...............7A AUCTIONEER: Michael Fortna, FortnaAuctioneers ..................................................8A CONSTRUCTIONMANAGEMENT&CONSULTING: RonaldC.Kerins, Jr,Greyhawk ........................................................9A ENERGYEFFICENCY: EmilyBeck,EMCOR........................................................................10A FINANCING: EdBrown,NorthMarq......................................................................11A
FINANCING: MarcTropp,EasternUnion..............................................................12A NNJ-MULTIFAMILYFINANCE: DavidOrbach,RegalBank.................................................................8A PHILADELPHIAMULTIFAMILY: CoreyLonberger,RittenhouseRealtyAdvisors ...............................15A PRECAST GregWinkler,Mid-AtlanticPrecastAssociation.......................16-17A RETAILREALESTATE: ScottC.Butler,KaplanStewart .......................................................19A SECURITY: JimMartin,SecurityResources, Inc.................................................18A
HEALTH CARE FACILITIES
Cary Pollack Jacob Schmuckler
family building located on Ocean Avenue in Brooklyn. The loan features a rate of 2.85% and a five-year term. Cary Pollack negotiated this transaction.
The 67,535 s/f, supermarket anchored, shopping center Katz Properties acquires TownCenter at Twin Hickory in Glen Allen, VA for $16 million
GLENALLEN, VA — Katz Properties of New York has acquired the Town Center at Twin Hickory in Glen Allen for $16 million. The 67,535 s/f, supermarket anchored, shop- ping center, which consists of three retail clusters, was built in 2001 and expanded in 2006. The shopping center sits on 8.57 acres and is located at the intersection of Nuckols Road and Old Nuckols Road in Glen Allen, VA, which is part of the Richmond metropolitan area. Town Center at Twin Hick- ory is 98% occupied and an-
Urban Engineers 8-10B
6-7C
Plaza shopping center in Rose- dale, MD, earlier this summer. “We plan to continue acquiring new properties in this region going forward,” he said. Josh Katz , chief operat- ing officer of Katz Proper- ties, said, “We are eager to expand our operation in this region. The office we opened inMetro DC will allow us to ef- ficiently manage these assets and increase their value. The Richmond market is an excel- lent place to do business, and we are confident in the retail environment.” Town Center at Twin Hickory
Directory
Mortgage financing for Town Center at Twin Hickory was provided by Starwood Mort- gage Capital of NewYork and was arranged by Tim Breda of Goedecke & Co. Both Katz Properties and the seller were represented by Geoffrey Millerd and Justin Smith with Cushman & Wake- field’s Boston office, and by Eric Robison with Cushman and Wakefield|Thalhimer in Richmond, VA. Leasing and property management services will be provided by Winslow Property Management . ■
chored by a 38,000 s/f Food Lion. Additional tenants in- clude Starbucks, Cheeburger Cheeburger, and Home Team Grill. Daniel Katz , a principal of Katz Properties said, “With this acquisition we’ve contin- ued to expand our footprint in Virginia. Last year we planted our regional opera- tion in the DC Metro market and this year we’ve used that base to expand to the north and south.” Katz is referring to another of the company’s acquisitions, the Golden Ring
Auction News ......................................... 4A Owners, Developers & Managers..Section B Green Buildings ............................ 11-21B Shopping Centers .................. Section C
Upcoming Spotlight October 12, 2013 INSURANCE/TITLE
www.marejournal.com
Inside Cover A — September 27 - October 10, 2013 — Mid Atlantic Real Estate Journal
www.marejournal.com
CBRE & THE WINTER ORGANIZATION are pleased to announce two QHZRIÀFHOHDVHVDW Vantage Court, 200 Cottontail Lane, Franklin Twp, NJ
4,251 sq. ft. lease signed by a leading insurer
3,140 sq. ft. lease signed by Olsson and Company, CPAs, LLC
“The fact that these two tenants are relocating from within Somerset County speaks volumes about the high quality of the space and amenities available at Vantage Court.” - Joseph Sarno, Executive Vice President at CBRE
200 Cottontail Lane offers:
VTIWRIDYDLODEOHRIÀFHVSDFHDW%XLOGLQJ$ and ²VTIWDW%XLOGLQJ%
$SSUR[LPDWHO\VTIWÁRRUSODWHV
2QVLWHIRRGVHUYLFHPDQDJHPHQWDQGVHFXULW\JXDUG
$GUDPDWLFFHQWHUFRXUW\DUGZLWKVHDWLQJ
&RQYHQLHQWDFFHVVLELOLW\WR,DQGDVKRUWGULYHWRWKH %ULGJHZDWHU&RPPRQV0DOO &ORVHSUR[LPLW\WRQXPHURXVDUHDKRWHOVLQFOXGLQJ Double7UHH0DUULRWWDQGWKH+ROLGD\,QQ
Joseph Sarno +1 732 509 2890 joseph.sarno@cbre.com
Jeremy Neuer +1 732 509 2888 jeremy.neuer@cbre.com
Frank Foldetta +1 732 509 8923 frank.foldetta@cbre.com
Mid Atlantic Real Estate Journal — September 27 - October 10, 2013 — A
www.marejournal.com
A — September 27 - October 10, 2013 — Mid Atlantic Real Estate Journal
www.marejournal.com
A Greener New Jersey.................................................... 19B American Architectural Window & Door......................... 1B Aztec Total Architecture................................................... 6A Bayshore Recycling......................................................... 16B Bennett Williams............................................................ 10C Bill Boards Directory.................................................. IBC-A BL Companies................................................................... 9C Business Card Directory................................................ 23A Campanelli Construction................................................. 1A Capital Aerials................................................................ 14B Dare Living Associates..................................................... 8C Earth Engineering............................................................ 5C Eastern Union................................................................. 12A EMCOR Services............................................................ 10A Entech............................................................................. 12B Equity Retail Brokers....................................................... 2C Exchange Solutions........................................................ 15A FORTNAAuctioneers & Marketing Group................. 4, 8A FOWLER......................................................................... 24B FRKB Attorneys at Law................................................... 7A G&C Electronics............................................................... 6B Gebroe-Hammer Associates........................................... 21A Genova Burns Giantomasi Webster Attorneys at Law... 5B Gerard Construction....................................................... 18B Gilbeaux Associates, P.C.. .............................................. 14B Greyhawk.......................................................................... 9A Haftek CWS...................................................................... 2B Hollenbach Construction.................................................. 9B Hutchinson Mechanical Services................................... 13B Investors RE Agency......................................................... 3A IREM............................................................................... 23B JOTTAN Inc..................................................................BC-A JRS Architect, P.C........................................................... 10B Kaplin | Stewart Attorneys at Law............................... 19A Katz Properties.............................................................BC-C Kline’s.............................................................................. 12B Law Offices Ehrlich, Petriello, Gudin & Plaza. .............. 7B M. Miller & Son................................................................ 4B Mid Atlantic Precast Association................................... 17A NAI CIR. ........................................................................... 3C NAI Emory Hill............................................................... 16A NJSmart Start................................................................ 13B NorthMarq.......................................................................11A P. Cooper Roofing..........................................................BC-B Poskanzer Skott Architects.............................................. 3B Productive Painting.......................................................... 2B RD Management..........................................................IC-1C Regal Bank...................................................................... 13A REMCO Realty............................................................... 11C Retail Brokerage Directory....................................... 14-15C Retail Business Card Directory................................. IBC-C Revoltagen....................................................................... 16B Rittenhouse Realty Advisors.......................................... 14A Security Resources. ........................................................ 18A Singer Financial Group.................................................... 3A SUBWAY........................................................................... 3C Target Building & Construction.................................... 10C TRAIMAN RE Auction..................................................... 4A TTI Environmental, Inc.. ............................................... 15B Urban Engineers. ............................................................. 7C MAREJ A dvertisers D irectory
Mid Atlantic R eal E state J ournal Publisher ............................................................................Linda Christman Publisher ...............................................................................Joe Christman Section Publisher ................................................................Elaine Fanning Section Publisher ....................................................................Steve Kelley Associate Publisher ...................................................... Janine Hennessey Senior Editor/Graphic Artist ................................................ Karen Vachon Office Manager ....................................................................Joanne Gavaza Contributing Columnists ......................................................... Kyle Paisley 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. 24 Issue 18 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 The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
By Kyle Paisley Proposed Changes in Accounting for Qualified Affordable Housing Projects
O
n April 17, 2013, the Financial Account- ing Standards Board
(FASB) issued an exposure draft of an Accounting Stan- dards Update of Topic 323, In- vestment – EquityMethod and Joint Ventures - Accounting for Investments in Qualified Affordable Housing Projects. The exposure draft was issued in response to industry wide feedback to current accounting guidance that sets restrictive criteria, which has limited most investors in affordable housing projects that qualify for the low income housing tax credit (tax credits) from using the effective yield method. The exposure draft proposed certain changes to these cri- teria, which would allow for expanded use of the effective yield method for investments in affordable housing projects qualifying for tax credits (tax credit investments). Currently, the effective yield method can only be used, when, among other require- ments, a creditworthy entity guarantees the availability of the allocated tax credits. Due to the significance of such guarantees and eco- nomic criteria a guarantor would need to meet, very few tax credit investments have qualified to use this method. As a result, tax credit invest- ments are generally required to be accounted for using the equity method, since most tax credit investors can exercise
significant influence. The eq- uity method requires a tax credit investor’s share of in- come or losses to be presented separately from the realized tax benefits derived from an investment. In general, report- ing these items separately on the income statement misrep- resents the performance of tax credit investments by present- ing pre-tax losses on otherwise successful investments that are performing as intended. The proposed modifications outlined in the exposure draft would eliminate the above re- quirement and replace it with the following criteria: 1. It is probable that the tax credits allocable to the inves- tor will be available. 2. The investor retains no operational influence over the investment other than protec- tive rights and substantially all of the projected benefits are from tax credits and other tax benefits. 3. The investor’s projected yield based solely on the cash flows from the tax credits and
continued on page 20A Under the effective yield method, the initial cost of the tax credit investment, generally in the form of eq- uity contributions to a Limited Partnership or LLC, is am- ortized to provide a constant effective yield over the period that tax credits and other tax benefits are allocated to the investor. The amortized cost is netted against tax credits and other tax benefits as they are realized and presented as a component of the income tax provision on the income statement. This presentation provided other tax benefits is positive. 4. The investor is a limited liability investor in the afford- able housing project for both legal and tax purposes, and the investor’s liability is lim- ited to its capital investment. Based on the proposed revi- sions to the codification, many more tax credit investors may be able to adopt the effective yield method to account for tax credit investments.
To advertise, call 1-800-584-1062
Share with Social Media SiteS • StreaMing Video • direct traffic to Your webSite
Mid Atlantic Real Estate Journal — September 27 - October 10, 2013 — A
www.marejournal.com
M id A tlantic R eal E state J ournal C 886,826 s/f facility fully occupied by Pearson Education Cushman & Wakefield inks $98 million industrial sale RANBURY, NJ — Commercial real estate services firm Cush-
FOR LEASE IN YOUNGWOOD, PA YOUNGWOOD INDUSTRIAL CENTER
man & Wakefield , has com- pleted the sale of 258 Prospect Plains Rd. in Cranbury, an 886,826 s/f industrial facil- ity fully occupied by Pearson Educationandknownas Pear- son at 8A. The class A facility traded for $98 million. The Cushman & Wakefield Metropolitan Area Capital Markets Group (CMG) team of Andrew Merin, Gary Gabriel, David Bernhaut and GraceBraverman repre- sented the seller, Exeter Prop- erty Group. The buyer was an institutional investor advised by Seattle-based Bentall Ken- nedy (U.S.) LP. “This was a well-executed transaction for the seller, who just 24 months earlier had purchased the facility for ap- proximately $80 million and was able to unleash additional value by extending the Pear- son lease for a 10-year term and pre-paying the existing above-market indebtedness,” said Gabriel. “It was a great purchase forBentallKennedy’s client, which has acquired one of the finest industrial build- ings in Central New Jersey.” The facility was originally constructed in 2001 as the northeast distribution center for Pearson, an education ser- vices company that provides education solutions, publi- cations, and school support products and services, and the site remains a critical part of the company’s supply chain. Situated on 58 acres near Exit 8Aof theNewJerseyTurnpike, it is at the geographic center of the Boston-Washington, D.C. corridor. The site is also a designated foreign-trade zone (FTZ) and is just 34miles from the Port of Newark/Elizabeth and Newark Liberty Interna- tional Airport. “From an environmental impact perspective, this is an industry-leading facility,” said Gabriel. “Among other things, it generates solar panel rev- enue from a recently installed $8 million solar array on the roof.” Pearson at 8A, which pro- vides 468 parking spaces, offers 38-foot, six-inch ceiling heights and 55 dock doors. The facility includes a 51,000 s/f office component, and has both a fitness center and a cafeteria. n
LEASED AND MANAGED BY: MARK ALLISON INVESTORS REAL ESTATE AGENCY 724-925-0215 or mallison5 @ aol.com
258 Prospect Plains Rd.
A — September 27 - October 10, 2013 — Mid Atlantic Real Estate Journal www.marejournal.com M id A tlantic R eal E state J ournal A uctions Mid Atlantic R eal E state J ourn N e w J e r s e y • P e n n s y lva n i a • D e l awa r e • M a ry l a n d • W a s h i n g t o n D . C . • V i r g i n i a • Auctioneers Directory
6.2± ac. Village Commercial Site Preliminary Approval for Development Other uses may be possible AUCTION REAL ESTATE 6.2± ac. Village Commercial Site Preliminary Approval for Development
P lace your B usiness C ard in our A uction D irectory T oday ! AUCTIONEERS P romote Y our C ompany and its S ervices in our T wice monthly D irectory E mail L inda T oday ! lchristman @ marejournal . com
The above image is an artist’s rendering
Traffic light intersection-heavily traveled highway, Bucks County, PA Real Estate Agents earn 3% commission with accepted offer prior to day of auction; 2% commission on or following day of auction. Subject to Broker Registration Terms Auction Date to be Announced
For property details, call 215-799-0655
Real Estate Auction Co.
527 Plymouth Road, Suite 416 Plymouth Meeting, PA 19462-1642
EQUALHOUSING OPPORTUNITY
215-799-0655
PA AY000040-L
Perkasie-MARJ.indd 1
9/18/2013 4:27:15 PM
212-213-9770 www.sheldongood.com/jerseycity.php
www.fortnaauctioneers.com 1-855-831-4242 Offices in: PA, DE, NJ, MD & Ft. Lauderdale, FL
©2008 Sheldon Good & Co. Auctions NE, LLC
AUCTIONS NE, LLC
5th_floor • CLIENTS • S-CLIENT • Sheldon Good • 18000 Jobs 18448 Sheldon Good_New York • 18448 SG-3x2_MAREJ Mid Atlantic Real Estate Journal / business card 3 x 2 (28 lines) • Proof 1 • 5/1/08 • Debbie Richard G. Warner, President NJ & PA Licensed Real Estate Broker Warner Real Estate & Auction Co., Inc. 109 East Grant Street, Suite B Woodstown, NJ 08098 Ph: (856) 769-4111 ext 710 Website: www.WarnerRealtors.com
Mid Atlantic R EAL E STATE J OURNAL F ALL P REVIEW 2013
Mid Atlantic Real Estate Journal — September 28 - October 10, 2012 — 5A
www.marejournal.com
E MILY B ECK EMCOR
E D B ROWN N ORTH M ARQ
S COTT C. B UTLER K APLAN S TEWART
D AVE F OURNIER T HE A ZTEC C ORPORATION
T RACEY G OLDSTEIN F EINSTEIN , R AISS , K ELIN & B OOKER , L.L.C
M ICHAEL F ORTNA F ORTNA A UCTIONEERS
R ONALD C. K ERINS , J R G REYHAWK
C OREY L ONBERGER R ITTENHOUSE R EALTY A DVISORS
D AVID O RBACH R EGAL B ANK
M ARC T ROPP E ASTERN U NION
G REG W INKLER M ID -A TLANTIC P RECAST A SSOCIATION
J IM M ARTIN S ECURITY R ESOURCES , INC
INSIDE: ARCHITECTURE: David J. Fournier, The Aztec Corporation......................................... 6A ATTORNEY: Tracey Goldstein, Feinstein, Raiss, Kelin & Booker, L.L.C. .............. 7A AUCTIONEER: Michael Fortna, Fortna Auctioneers .................................................. 8A CONSTRUCTION MANAGEMENT & CONSULTING: Ronald C. Kerins, Jr, Greyhawk ........................................................ 9A ENERGY EFFICENCY: Emily Beck, EMCOR........................................................................ 10A FINANCING: Ed Brown, NorthMarq. ..................................................................... 11A
FINANCE: Marc Tropp, Eastern Union.............................................................. 12A NNJ- MULTI-FAMILY FINANCE: David Orbach, Regal Bank ................................................................. 8A PHILADELPHIA MULTI-FAMILY: Corey Lonberger, Rittenhouse Realty Advisors ............................... 15A PRECAST Greg Winkler, Mid-Atlantic Precast Association....................... 16-17A RETAIL REAL ESTATE LAW: Scott C. Butler, Kaplan Stewart ....................................................... 19A SECURITY: Jim Martin, Security Resources, Inc. ................................................ 18A
A — September 27 - October 10, 2013 — Fall Preview — Mid Atlantic Real Estate Journal
www.marejournal.com
A rchitecture
By David J. Fournier, The Aztec Corporation What really drives change in the workplace?
B
usinesses today are increasingly trying to keep up with change
that they understand the past, present and future of technol- ogy, the workforce, and the workplace in their very basic elements. “Trends”, to which change is often referred, are really just current solutions developed to address change in vari- ous aspects of the workplace: technology, work/life balance, environmental concerns, and the like. Some are successful, and become part of the main- stream for some time while others fizzle out and become known as “fads”. What businesses should
consider when investigating all available information is the basics of what causes the need for change in the first place to help them determine in their own minds whether it will be a trend or a fad. Portability of office equip- ment, for instance, has prob- ably been the most influen- tial factor in redefining and reshaping today’s workplace needs. Hardwired comput- ers and monitors, multi-line phone sets, and cabled access to printers no longer dictate where we work, how we work, or when we work. In a sense,
the wired environment is a chain that ties us to one par- ticular workspace: the desk. Laptop computers, which have been in the workforce for some time now, made possible the ability for telecommuting or offsite communications from a client’s office to occur in a simple manner. The number of people working from home has increased immensely over the last decade, affording those who do so to define and create their own workplace at home or elsewhere. Add the smartphone, tablet, wireless printing, and video
conferencing capability to that, and you have the ability to do almost anything from anywhere! Phone calls, video conferencing, and communi- cating and collaborating with others have never been so easy…or so difficult to keep up with! To be successful in most in- dustries, the future workplace will be required to provide employees with a variety of workspaces, allowing people to work as they see fit. Gone is the need to have only a fixed desk and chair per employee. Portable equipment allows people to work anywhere they want, whether it be in a corporate cafeteria, at a con- ference table, on a couch, on the floor, at a collaborative work center, and so on. The types of collaboration and the type of work being performed will dictate the need, as will continued change in the tech- nological world. What employers also need to realize is that while em- ployees of past decades have had to adapt their work style to technological change over their years of employment, the new generation of workforce grew up with a work style due to having access to electronics from an early age onward. They therefore will perform much more successfully given a work environment that is familiar and adaptable to their past experience. The workplace of the future cannot continue to be the workplace of the past. And finally, employers should note that the workforce is about to become very complex, comprised of a multi-genera- tional workforce that will span larger age differences than ever before. Older employees are expected to work beyond traditional retirement age alongside two other genera- tions with differing thoughts on the workplace. Granted, their skillsets and method of working will differ substan- tially, but when given flex- ibility in how they conduct their job functions together, success can certainly be reached. David Fournier is one of the original founders of The Aztec Corporation. As a principal of The Az- tec Corporation, David is responsible for the man- agement of all aspects of the design process. n
in the work- place, if not be forward- thinking in t h e i r a p - p r o a c h t o creating an o f f i c e e n - v i r onmen t suitable for
David Fournier
their business to succeed and their employees to be happy. Knowing and understanding the constant changes in the office environment requires
NEVER COMPROMISE
YOUR ENVIRONMENT.
AZTEC. COMPLETE PROJECT MANAGEMENT.
From clients to employees, your environment has an effect on everyone. It’s often the first…and last impression they see. Can your image afford to let those opportunities pass without making the most of them? “Total Architecture” is our mantra at Aztec. Let it make a difference for you.
Base Building Architecture I Interior Architectural Design I Facility Master Planning Complete Project Management I Relocation Execution Management On-Going Facilities Management I Construction Execution Management
SM
Woodbridge Place, 517 Route One South, Iselin, NJ 08830
Call 732.636.8989 or visit www.aztec-architects.com
Mid Atlantic Real Estate Journal — Fall Preview — September 27 - October 10, 2013 — A
www.marejournal.com
A ttorney
ationwide, multi- f am i l y p r o p e r t y owners are fielding a By Tracey Goldstein, Esquire, Feinstein, Raiss, Kelin & Booker, L.L.C. Rising tenant smoking complaints: what’s a multi-family property owner to do? N with respiratory concerns, such as asthma, are especially vulnerable to THS.
The dangers of third-hand smoke (THS), the residue that permeates rugs, upholstery, walls, furniture and other surfaces long after the second- hand smoke has been cleared from an area, is also being rec- ognized as extremely harmful. According to the New Jersey Global Advisors on Smokefree Policy (GASP), THS may be more of a health hazard than SHS as it continues to emit particles long after the ciga- rette has been extinguished and the smoke has dissipated. Infants, children and those
unit. The issue of smoking in multi-family properties is further compounded when it comes to safety concerns beyond exposure to SHS and THS. Smoking paraphernalia can easily lead to accidental fires. Examples include a ten- ant falling asleep while smok- ing or young children start- ing fires when playing with matches or lighters. HUD Endorses Smoke- Free Public Housing and in Market-Rate Units There is no existing fed-
continued on page 9A eral or state law that prohib- its owners from instituting a 100-percent smoke-free policy. Furthermore, HUD has en- dorsed no-smoking policies since 2009, when the agency encouraged all multi-family owners, including public hous- ing authorities and landlords of private market-rate units, to adopt a smoke-free dwelling. In addition to public housing complexes, smoke-free build- ings seem to be most common in new construction. As Americans become more
rising num- ber of tenant complaints r e l a t ed t o smoking in i nd i v i dua l apartment- rental units. Wh i l e t h e cha l l enge s
Between SHS and THS, it is no surprise that property maintenance and unit turn- over costs are considerably higher for multi-family own- ers. Smoking is known to cause extensive property damages, from yellowed walls to discol- ored window treatments and ruined carpets. According to HUD, apartment turnover costs are two to seven times greater for a smoking unit as compared to a non-smoking
Tracey Goldstein
associated with smoking are not new to seasoned owners and property managers, medi- cal studies focusing on the dan- gers of second and third-hand smoke have thrust this issue to the forefront. Adding further to this renewed focus is a promi- nent real estate firm’s recent announcement that it would ban smoking in its 40,000 rental units nationwide. As a result, the multi-family property smoking debate has been pushed firmly into the limelight. There are many well-docu- mented studies, including a 2010 report by the U.S. Sur- geon General, indicating that second-hand smoke (SHS) is a clear health hazard. Because of its migratory properties, smoke from one multi-family unit can infiltrate hallways, common areas and other resi- dential units. The U.S. Sur- geon General further asserts that there is no risk-free level when it comes to SHS. It is imperative that prop- erty owners educate them- selves regarding their legal obligations as well as how to properly handle a smoking complaint. In some states like New Jersey, if the smoke is emanating from one unit into another, and interfering with the “peace and quiet” of oth- ers, the landlord is obligated to take steps to remedy the situation. It is important to note that residents who smoke do not have the absolute right to do so in their private apart- ment if it interferes with the enjoyment of others. And, if an individual with a disability complains about SHS smoke, and requests a reasonable accommodation, the landlord must comply. Mandated by the Federal Fair Housing Act, the reasonable accommodation may include terminating a lease or provid- ing an apartment transfer. New Data on Third- Hand Smoke
ATTORNEYS AT LAW
Providing counsel to multi-family owners, property managers and institutional operators since 1991
&RPPHUFLDO5HDO(VWDWH6DOHV3XUFKDVHV5HÀQDQFHV and Lease Agreements • Landlord Tenant Law & Residential/Commercial Evictions
• Housing Discrimination Matters • Commercial/Contract Litigation
• Corporate/Business Law • Real Estate Tax Appeals
100 Executive Drive, Suite 360, West Orange, New Jersey 07052 Tel (973) 324-5400 • Fax (973) 731-4669 www.frkblaw.com
A — September 27 - October 10, 2013 — Fall Preview — Mid Atlantic Real Estate Journal
www.marejournal.com
By Michael Fortna, Fortna Auctioneers Benefits for brokers & realtors selling real estate using the auction method in the U.S. A uctioneer
T
he auction meth- od is a great way to sell real estate
tion method for both buy- ers and sellers that make it an attractive option. It´s extremely helpful for sellers who are ready to deal with a real estate transaction at that time, for a declared true market value. The auction team you choose to repre- sent your property is a very significant choice that will have a strong effect on your outcome. Benefits of the auction method for brokers and realtors in PA and the
surrounding states: • Competitive Bidding = Higher Prices. By working as a team, having an auction creates the competition of aggressive bidding, bringing top dollar for the property ultimately earning the realtor more money. Together, auctioneers and realtors can sell proper- ties at true market value where no money will be left on the table. • GetMarketWornProp- erties to Settlement . If having trouble with a
current listing that has been on the market for a period of six months or longer, by cooperating with Fortna Auctioneers & Marketing Group, we will be able to provide the seller with an of- fer and closing within 30-45 days, an accelerated selling process. • Auction is a Must for Time-Crunched Clients. You might have clients that must sell quickly for a multitude of reasons and cannot wait three or four months to receive an offer.
The auction method acceler- ates the selling process. • NoContingencies. One of the greatest advantages to selling real estate at auction is that each property is sold “AS-IS” with NO contingen- cies. This process eliminates wasted time and energy by not having to set up prop- erty inspections, negotiat- ing a new price and terms as a result of the inspection results, lining up financing for a buyer and the list goes on and on. Selling a property at auction brings a serious buyer for the seller. • It´s All about MAR- KETING! The auction method produces results with an explosive market- ing campaign designed spe- cifically for each seller and their budget. Marketing is the key behind any success- ful auction. As a team, we need to expose the property to as many potential buyers as possible. This corrals all potential buyers to com- petitively bid against one another on a specific date and time. Use Fortna Auctioneers to sell real estate by auction in Pennsylvania and the surrounding states. Fortna Auctioneers and Marketing Group, pays ex- tremely competitive rates to all cooperating Brokers and Realtors . Introduce Fortna Auctioneers to your clients and they´ll handle all of the marketing such as creating ads to submit to publica- tions, signage, open houses, and conducting the on-site auction. Once the property clears the settlement table, your commission check will be sent to your office. Or, if you are a broker or real estate agent and have a buyer for a particular property for one of Fortna´s auctions, download the “Broker Participation” form on the website to reg- ister the client. You´ll earn a commission if they are the successful bidder. Michael Fortna, presi- dent of Fortna Auction- eers has been in the auc- tion industry for over 35 years and is a graduate of the Certified Auctioneers Institute. n
The auc- tionmeth- od to sell real estate is for inno- vative bro- ke r s and realtors. It will add an additional
Mike Fortna
service to your business and will set you apart from your competitors. There are many benefits of the auc-
High End Auctions for Residential, Commercial, Condos, Land Development,
?I\MZNZWV\[7NÅKM[:M[WZ\[ Investments and Government
;MX\ 2WVM[\W_V8)
,MJ\8WZ\NWTQW.MLMZIT*IVSZ]X\Ka 7K\/TMV:WKS8) 7K\/TMV:WKS8) Our years of experience, marketplace knowledge and success work to the client’s advantage. We strive to make the auction process as easy as possible, with complete tactical ÆM`QJQTQ\aNWZTQ^MWZWVTQVMI]K\QWV[IVLIXZWKM[[\PI\ITTW_[NWZJW\P\WJM engaged simultaneously. We can open the bidding for you on a global level. Total customer satisfaction is at the core of our quest to drive the real estate auction revolution. 7K\4MJIVWV8) 6W^ 5IZ\QV[J]ZO?> Mid Atlantic Real Estate Journal — Fall Preview — September 27 - October 10, 2013 — 9A www.marejournal.com c onstruction M gMt . & c onsulting By Ronald C. Kerins, Jr, Greyhawk 2013 - 2014 commercial, industrial, and retail real estatemarket forecast W result, we have seen specialty contractors closing their doors leaving owners with incom- plete projects awaiting rescue. If the project is supported by bonding there is some hope that this rescue is assured. The private sector owners often find themselves at risk without the support of a surety. In recent years we asked each other how far into the fu- ture are we able to project, and the answer has been one quarter at a time, so to be look- ing two or three quarters out is an improvement and glimpse of sion, which should translate into construction spending. A factor in this projected move to spend could be that, in gen- eral, U.S. businesspeople are simply tired of the downturn and feel that if construction costs remain depressed, the time is right to build. The healthcare sector has continued to sustain growth with many organizations mov- ing to developing acute care and express care facilities to lessen the burden placed on Emergency Rooms by non- critical cases. Educational funding for New Jersey Colleges and Universi- ties tops the list of stimulus packages that have created opportunities for construction. This coupled with ROD grants for K-12 school projects keep the public market moving. Due to the longevity of the recent prolonged downturn in the economy, many contrac- tors are finding themselves in financial difficulties. The subcontractor market contin- ues to bear the brunt of this as the entity at the end of the payment trail line. As a optimismwe all so desperately need. As the economy turns, and our planning horizons are lengthened, we can begin to fo- cus on more long range growth in the construction sector as we look ahead to 2014….small steps in recovery! Ronald C. Kerins, Jr., CCM, LEED-AP, MBA is a principal with GREY- HAWK, an award winning international construc- tion programmanagement and consulting firm with headquarters in Moore- stown, NJ. n hat is your forecast for the commercial, industrial, retail real estate market for the balance of 2013 and first quarter 2 0 1 4 ? A l - though we proceed with cautious op- timism that r e c ent up - Ronald Kerins, Jr continued from page 7A By Tracey Goldstein All sources point to a ‘pent- up demand’ in many construc- tion sectors. Corporate Amer- ica is sitting on large cash balances. Some estimates have these balances in excess of $2 trillion. Several markets, in- cluding healthcare and retail, appear to be poised for expan- health conscious, smoking complaints within multi-fam- ily buildings are expected to gain even greater momentum. For owners without smoke- free policies, the ramifications of smoking by residents and visitors alike in private units or community spaces will con- tinue to take its toll, both in terms of the physical space and with regard to tenant complaints. Because of smoke’s migratory properties, it can and will continue to interfere with the “peace and quiet and enjoyment” of others – a fact not lost on today’s educated tenant base. Tracey Goldstein is a partner with the West Orange, NJ based law firm Feinstein, Raiss, Kelin & Booker, L.L.C. n ticks in construction spending are sustainable, we feel that through the end of 2013 and the first quarter of 2014 the construction market appears to be heading in the right direction. The numbers aren’t drastically rising, but the sustainability and continuing upward movement is encour- aging. Federal Government spend- ing on construction and infra- structure is trending down- ward and the overall public sector has pulled back from recent spending campaigns, with the exception of funding for higher education projects and recovery efforts as a result of natural disasters, so there is a need for the private sector to get off the sidelines. GREYHAWK Construction Managers & Consultants Founded in 1996, GREYHAWK is an award-winning construction management and consulting firm that provides comprehensive construction consulting services. These services include, but are not limited to: Program Management Project and Construction Management Construction Claims Management Cost Management Surety Consulting Mediation, Arbitration, Litigation Support Alternate Dispute Resolution [ADR] Integrity Monitoring Owner’s Representative Schedule Management Commissioning Services Building Condition Assessment Our professional staff is comprised of construction managers, engineers, architects, certified cost engineers, schedulers, commissioning specialists, roof inspectors and technology experts. Some of our professionals are recognized expert witnesses who prepare expert reports on virtually all of the typical entitlements and associated damages. GREYHAWK provides expertise to stakeholders invested in a variety of projects including educational, healthcare, hospitality, residential, transportation, infrastructure, environmental, industrial, commercial, cultural and correctional facilities. 888.280.HAWK (4295) www.greyhawk.com 10A — September 27 - October 10, 2013 — Fall Preview — Mid Atlantic Real Estate Journal www.marejournal.com E nergy E fficiency By Emily Beck, EMCOR Services Fluidics he City of Philadelphia has implemented a new law (Bill #120428) Philadelphia energy benchmarking law -- an opportunity to create energy efficiencies T are subject to a $300 fine for the first month that the data is late, and a $100/day penalty thereafter. The benchmarking data will be publicly shared, with the intent to drive improved en- ergy efficiency and building performance in Philadelphia. In a news release, Mayor Nut- ter said: “In order to make Philadelphia the greenest city in America and improve the city’s energy efficiency and cost savings, we need to make a concerted effort across the city to reduce energy use in buildings.” While the mandate to com- pile, organize, and submit the necessary benchmarking data might seem to be overly burdensome and expensive, the process actually can be done at a modest cost and can potentially result in significant cost savings. In other words, benchmarking can be an op- portunity for owners to gain a better understanding of their buildings’ energy usage and may very well identify energy efficiencymeasures that can be implemented at minimal cost. Cleary, benchmarkingdoesn’t need to be complicated nor time consuming for the client. EMCOR Services Fluidics has performed hundreds of benchmarks for clients, us- ing a streamlined process to benchmark a building quickly, accurately, and very competi- tively, long before Bill #120428 was passed. What’s needed are 12 months of prior year utility bills (in this case, for 2012, in order to address meeting the deadline for Bill #120428), and some basic building informa- tion, which gets compiled and formatted in a software pro- gram to meet the city’s bench- marking requirements. If the building qualifies for Energy Star certification, an in-house team can also perform the Energy Star application and validation process. Energy Star certified buildings and plants are proven tomeet strict energy performance standards set by EPA; the designation can be a great marketing tool in a highly competitive leasing environment. As a case in point, Fluid- ics recently completed the benchmarking process for George F Kempf Supply Com- pany, a distributor of building materials for contractors in Pennsylvania, New Jersey, and Delaware since 1950. Its 260,000 s/f headquarters in Southwest Philadelphia at 5200 Grays Avenue includes 35,000 s/f of office space and 225,000 s/f of warehouse space. The benchmarking process not only enabled Kempf Sup- ply to comply with the new Philadelphia law, but revealed an exceptional Energy Star rating of 95 out of 100, meet- ing the requirements to qualify for Energy Star certification. Specific energy performance metrics were also identified that will enable the company to implement future energy ef- ficiency measures and further cut energy costs. According to John Savelloni, vice president of finance at Kempf, “The en- tire benchmarking process al- lowed us to accurately evaluate the energy performance of our building and lay the ground- work for developing strategies that will ultimately result in greater energy savings in the future.” With the October 31st dead- line approaching, building owners need to move quickly to comply with the benchmark- ing mandate. The process can be done at a relatively low cost and might bring about a signifi- cant payoff, including a greater awareness of energy efficiency measures that can be taken and which will help lower energy costs for years to come. Emily Beck is an account manager for EMCOR Ser- vices Fluidics. Fluidics is a Philadelphia-based me- chanical, electrical, energy, and facilities services con- tractor, which is a wholly- ownedsubsidiaryofEMCOR Group, Inc. n that requires all buildings 50 , 000 s / f and larger to benchmark energy and water con- sumption an- nually. The deadline for Emily Beck assembling and submitting energy and water use data for 2012 is October 31, 2013. Buildings that miss this date Bill #120428 is a new Philadelphia law requiring all buildings 50,000 square feet or more to benchmark their energy and water consumption annually. With years of benchmark experience, Fluidics can streamline the process for you and benchmark your building quickly, accurately, and very competitively. Benchmark Your Building by the October 31 deadline! • HVAC, Plumbing, Electrical Installation and Maintenance • On-site Building Operations and Maintenance • Energy Savings Solutions • Building Automation Systems Installation & Maintenance 215. 671.7900 • www.fluidics.com 9815 Roosevelt Blvd., Philadelphia, PA 19114 What Can We Do For You? • Certified Air Balancing • Design-Build Services Mid Atlantic Real Estate Journal — Fall Preview — September 27 - October 10, 2013 — 11A F inancing www.marejournal.com By Ed Brown, NorthMarq High leverage dequity emerges as another capital option W 80% for other property types. Recent fixed rate quotes for a 10 year, 85% loan to value, multifamily funding range from 5.75% to 5.90%, 30 yr. amortiza- tion with 1 to 2 years interest only. These Lenders typically securitize the senior debt and hold the subordinate piece on their balance sheet. Regardless of the desired source or structure, all of these transactions require signifi- cant levels of due diligence regarding the capabilities and historic track record of the capital source. An understand- continued on page 14A hen I set out to write this article about the availability of fund- ating decisions for the property. Dequity functions as straight debt, albeit with comprehensive covenants and remedies. It is subordinate in preference to the senior debt but superior to any distributions to any equity partner. The established pay rate(s) are commensurate with the underwritten risk as mea- sured by total leverage level, property type and location (as usual strong multifamily con- tinues to attract the best rate structure), total debt yield and debt service coverage. There are also some sources that are will- ing to employ these structures for value-add repositioning or new ground up development at higher fixed returns. Examples of Dequity include a group of approved preferred equity lenders who can go behind existing or newly origi- nated agency debt up to 90% of the total capitalization with an immediate pay rate of 9% on the subordinate piece and an addi- tional accrual up to a 12 or 13% total return. The term ranges from 3 to 10 years, co-terminus with the senior debt. These Lenders will often employ cash sweeps or some split mecha- nism during the latter stages of the term to avoid having the entire accrual due at loan maturity. Agency parameters usually require these Lend- ers to secure their investment through direct participation in the ownership structure as a preferred capital partner (or Member if an LLC). Likewise we have sources that provide a seamless com- bination of senior debt plus subordinate debt with a fixed rate structure that mimics an ordinary commercial mortgage loan but can go as high as 85% leverage for multifamily and select credit anchored retail and ing options at the higher end o f t he capital stack, I envisioned an organized summary of some of the competitive s t r u c t u r e s Ed Brown we have executed regionally and nationally. These include joint venture equity, mezzanine financing, preferred equity and hybrid combinations of senior and subordinate debt. However it quickly became apparent that the framework of this forum is not adequate to comprehensive- ly review all of these capital op- tions and their respective legal and economic structures. Leaving a detailed treatment of JV Equity and it’s myriad of co-investment options and mul- tiple return waterfalls behind for another article and another day, I decided to focus on the increased liquidity available to fund the top end of the capi- tal stack through mezzanine loans and hybrid high leverage combinations of senior and subordinated debt. This fund- ing segment typically occupies a space between from 70% to 80% up to a maximum of 90% of the total capitalization. It reduces the required amount of Sponsor equity and may replace a potential need for third party equity. Traditional JV equity and Preferred Equity are interjected directly into the ownership structure of the Borrower. How- ever Capital Sources providing this debt that acts like equity (sometimes called “Dequity’) may chose to lend against a secured interest on the owner- ship entity with an inter-credi- tor agreement with the senior Lender or directly participate as a Capital Partner in the ownership operating agreement through a preferred equity structure. Regardless of the le- gal structure these fundings ec- onomically resemble debt with both a preferred monthly fixed pay rate and an incremental accrual to a higher total fixed rate or in some cases a simple fixed monthly pay rate. The aforementioned JV Equi- ty transactions often provide a little higher total capitalization but also participate directly in both the profits and major oper-
Made with FlippingBook flipbook maker