1,023,000 s/f at 200 Technology Dr. in CenterPoint Commerce & Trade Park East Mericle is constructing record- breaking industrial spec building
ISSUE HIGHLIGHTS Volume 30, Issue 17 Sept. 14 - 27, 2018
ENKINS TOWNSHIP, PA — Mericle Commercial Real Estate Services is constructing a 1,023,000 s/f speculative industrial building at 200 Technology Drive in Cen- terPoint Commerce & Trade Park East, Jenkins Township, Pennsylvania. The project was announced by Mericle presi- dent Robert K. Mericle . The building is scheduled to be completed before the end of the year and will be the largest industrial facility ever constructed on speculation in Northeastern Pennsylvania. Robert Mericle said he de- cided to construct the building because of how popular Center- Point and Northeastern Penn- sylvania have become with companies seeking a strategic location for a new distribution center. Mericle listed Amazon.com, Home Depot, Lowe’s, Neiman Marcus, Corning, Kimberly Clark, Isuzu, Tailored Brands, Benco Dental, Jerry’s Sports Center, and FedEx Smart- Post as among the firms that J
Mericle also noted the project site has room for close to 1,000 trailers and more than 1,000 employee parking spaces. All major utilities serve the site including fiber and there is strong water pressure. More than 700,000 people live within 30 miles of 200 Technology Dr. “There are sev- eral excellent training grants programs available to help com- panies staff their operations”, said Mericle. Because the park is located immediately off of two inter- states just 10 minutes from Scranton and Wilkes-Barre – the region’s two largest cities – tenants are able to maximize labor draw. 200 Technology Dr. began as a ReadyToGo! ™ Site. For each ReadyToGo! Site, Mer- icle clears, grades, and com- pacts the property, installs all utilities, and obtains all permits and approvals neces- sary to begin work on footers and foundations immediately upon the signing of a lease agreement. upon renovation completion. “As part of KRE / Verde’s renovation plan, KRE’s pres- ident Jon Kushner and Verde’s president Jake Re- iter requested that Berkadia craft a unique solution that would allow the venture to renovate the asset while mini- mizing interest rate risk by allowing a rate to be locked for the entire term of the loan/ investment,” said Heath. “The Freddie Mod Rehab Loan Pro- gram was tailor-made for this type of redevelopment and investment strategy.” Located at 165 Thousand Oaks Drive, Thousand Oaks Village features units with one-, two- and three-bedroom floor plans. Amenities such as air conditioning, fully- equipped kitchens, large clos- ets, hard-wood floors and private patios and balconies
Pages 4-18A APPRAISAL SPOTLIGHT
MAREJ EVENTS September 20, 2018 NJ Apartment/Multifamily Conference
200 Technology Drive
have opened large distribution centers in the park. Altogeth- er, there are 51 tenants and 6,000 employees in nine million square feet in CenterPoint. “CenterPoint is less than one mile from I-81 and I-476 and is immediately adjacent to major facilities for FedEx Ground, FedEx Express, and UPS,” said Mericle. “The Wilkes-Barre/ Scranton Airport is just three miles away and many major trucking firms are within a 15-minute drive.”
More than 51 million people live within 200 miles of Cen- terPoint. Philadelphia, Harris- burg, NYC, and Port Elizabeth can each be reached in about two hours. “We have designed the build- ing to accommodate mid-size to large bulk industrial tenants that have very high trailer parking requirements, and e-commerce fulfillment opera- tions that need huge areas for employee parking,” continued Mericle.
October 5, 2018 NJ Leadership Conference
October 17, 2018 Delaware CRE Forecast Conference October 18, 2018 Philadelphia CRE Forecast Conference
Berkadia secures $52 million in financing for multifamily property in New Jersey
ATLANTICHIGHLANDS, NJ — Berkadia announced the $51.97 million financing for Thousand Oaks Village, a garden-style multifamily prop- erty in Atlantic Highlands, NJ. Senior managing director
For speaking and sponsorship information, please contact: Lea at 781-740-2900 or firstname.lastname@example.org
Financial Digest featuring Appraisal. ........................ 3 - 18A Business Card/Bill Board Directory................................23A CRE Organization Events................................................24A DelMarVa............................................................ 19 - 21A Northern New Jersey Spotlight.............................. 5 - 16B Pennsylvania featuring PA Experts Spotlight.......Section C
Thousand Oaks Village
property will undergo a sub- stantial renovation plan in- tended to upgrade units and improve overall performance as part of the investment strategy. Berkadia utilized the Freddie Mac Mod Rehab Loan Program, allowing the borrower to fix a long-term interest rate in at closing, float during the renovation period and automatically convert to the already locked fixed rate
Bob Falese and managing director Jeff Heath of the Philadelphia office secured the acquisition loan through Freddie Mac for the borrower, Delaware-based 165 Thousand Oaks Drive LLC. The deal closed on July 11. The sponsorship for this transaction was led by a joint venture between Kushner Real Estate (KRE) and Verde Capital Corp. The
www.marejournal.com Upcoming Spotlights Fall Preview Insurance/Title
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Real Estate Journal
CI 101: Financial Analysis for Commercial Investment Real Estate
September 24-27, 2018 | Philadelphia, PA
Session Dates, Time, and Location:
CI 101 is a bedrock class for real estate practitioners at a time when risk mitigation, pricing, and cycle assurance have become critical to investors. CI 101 introduces the CCIM Cash Flow Model, a tool for ensuring your investment decisions are based on wise finance fundamentals. During the course, you will learn how to use key financial concepts such as Internal Rate of Return (IRR), Net Present Value (NPV), Cap Rate, Capital Accumulation, and the Annual Growth Rate of Capital to compare different types of commercial real estate investments. This course will teach you how to: > make informed investment decisions using the CCIM Cash Flow Model; > measure the impact of federal taxation and financial leverage on the cash flow from the acquisition, ownership, and disposition phases of real estate investment; and > use real estate analysis tools to quantify investment return.
Temple University Real Estate Institute 1515 Market Street, Suite 215 Philadelphia, PA 19102
September 24-27, 2018
8:30 a.m. - 5:30 p.m.
William Overman, CCIM
Tuition: Member: $1,145 Non-member: $1,650 Register by phone at: (800) 621-7027, option 2
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Real Estate Journal — September 14 - 27, 2018 — 1A
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Real Estate Journal
Mid Atlantic Real Estate Journal
Mid Atlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Account Executive ........................................... Steve Kelley Account Executive ............................................. Kim Brunet Account Executive ........................................ Marisol Chase Senior Editor/Graphic Artist ..........................Karen Vachon Office Manager ...............................................Kerrin Devine Contributing Columnists .....Carteret Business Partnership Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 350 Lincoln St., Suite 1105 Hingham, MA 02043 USPS #22-358 | Vol. 30, Issue 17 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion 781-740-2900 | Fax: 781-740-2929 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
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Will Robots Take Over CRE?
C For commercial prop- erty, successful real estate offerings are likely to straddle uses. CRE players will need to focus on flexibility and efficiencies to adapt. Assets positioned to evolve along with technology will outperform others that do not keep pace. However, such flexibility may be costlier. Real estate categories likely to see growth include data cen- ters, manufacturing centers for new technologies, remote parking and recharging sta- tions and cybersecurity. Suc- cessful real estate offerings are likely to be those that ont. from the page 2A August 24th Edition NORTH PLAINFIELD, NJ — Levin Management Corporation (LMC) has se- cured six new shopping center assignments in New Jersey and Pennsylvania over the last six months, they include: Kearny Square in Kearny, a 138,895 s/f, fully-leased re- tail center anchored by BJ’s Wholesale Club. Additionally,
offer multiple/diverse uses: for example, office/hospitality hybrids that offer concierge services, single-family rent- als and conversion of retail into office and industrial. Most at-risk categories include gas stations, bank branches, non-experiential retail and garages. “The only way for CRE pro- fessionals to adapt to chang- ing paradigms brought on by LMC was selected to manage Oak Tree Center in Edison, a 189,000 s/f community shop- ping center anchored by India Grocers, and in Mt. Olive was named asset manager of power center ITC Crossing South. Garden State, LMC was re- tained by the new ownership of Festival Plaza in Edison to continue its role as managing
technology advances is to focus on flexibility and efficiencies – around asset use, lease and services and supply chains. However, flexibility does come at a cost,” Greenwood said. Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by put- ting ideas into action for real estate occupiers and owners.
agent at the grocery-anchored shopping center. Similarly, the new ownership at Wall Towne Center, a Wall Town- ship property has retained LMC to continue as exclusive leasing and managing agent. Harrisburg, PA, LMC was selected as leasing and man- aging agent for High Pointe Commons. Levin secures six SC assignments, growing portfolio to 15 MSF
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F inancial D igest F eaturing A ppraisal & 1031 E xchange
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Klein &Hew represent the borrower, Wheelock Street Capital in $40Macquisition financing Abod & Carey of the HFF debt placement team represent borrower in $104 million financing
YSONS, VA — Holli- day Fenoglio Fowler, L.P. (HFF) announces $104 million in financing for Greensboro Park, a two-build- ing office portfolio totaling 505,085 s/f in Tysons. The HFF team worked on behalf of the borrower, Velocis and Altus Realty , to secure the five-year, floating-rate loan through JP Morgan Chase & Company . Loan proceeds were used to acquire the property. Greensboro Park is located at 8180 and 8200 Greensboro Drive in the Northern Virginia submarket of Tysons. The prop- erty has superior connectiv- ity to the entire Washington, D.C. metropolitan area via the Greensboro Metro and Tysons Corner stations as well as Leesburg Pike and the Dulles Access Toll Rd. Additionally, Greensboro Park is proximate to many of the area’s sought- after retail locations such as T PHILADELPHIA, PA — D2 Capital Advisors , the transaction advisory affiliate of the D2 Organization has secured $70 million in bridge financing to complete developer Eric Blumenfeld’s vision for North Broad Street. The financ- ing was provided by Guggen- heim CREF , Susquehanna Investment Group , and the Philadelphia Redevelop- ment Authority . “We are thrilled to begin the next chapter of the North Broad Street story,” said Eric Blu- menfeld, president of EBRM , “over the next six to 12 months, this corridor is going to take off like a rocket ship! In addition to the residential component of the Divine Lorraine, we have six new amazing dining establishments underway with prominent locally-based mar- quis chefs to continue the vision originally started by Marc Vetri at 640 Lofts. Thousands of new office folks, residents, and visi- tors alike will be converging to this long awaited reawakening of this grand corridor. North
loan with a financial services company. The 13-story Hyatt Regency Dulles features the LEED Silver, and IACC-certified Ex- ecutive Meeting Center con- structed in 2014 that consists of 29,000 s/f of meeting and event space, including a ballroom and outdoor gazebo reception area. Situated on 6.38 acres at 2300 Dulles Corner Blvd., the hotel is adjacent to the Washington Dulles International Airport, which welcomed almost 23 mil- lion annual passengers in 2017, and 1,000 feet from the new In- novation Center Metro station, which provides direct access to the airport and downtown Washington, D.C. Additionally, the property has access to and visibility from VA-28 and 267. The HFF debt placement team representing the borrower included managing director Steven Klein and senior direc- tor Chris Hew .
Greensboro Park, Tyson, VA
Hyatt Regency Dulles
The Boro, Tysons Central, Tysons Galleria and Tysons Corner Center. Renovated in 2015, the 11- and 14-story tow- ers feature a premier amenity package, including a fitness center, conference facilities, tenant lounges, on site café and concierge service. Greensboro Park is anchored by BB&T and
is collectively 83 percent leased to 59 tenants. The HFF debt placement team representing the bor- rower consisted of managing director Cary Abod and direc- tor Robert Carey . In a second statement, HFF announced the $40 million acquisition financing for Hyatt
Regency Dulles, a 316-room, full-service hotel adjacent to Washington Dulles Interna- tional Airport in the Wash- ington, D.C.-area suburb of Herndon, Virginia. The HFF team worked on behalf of the borrower, Whee- lock Street Capital , to place the five-year, floating-rate
D2 Capital Advisors Secures $70M Bridge financing to help complete Eric Blumenfeld’s Vision for the North Broad Street Corridor in Phila.
Divine Lorraine interior
Street will become the model for bringing people together from all walks of life by creat- ing new jobs in a flourishing community that now has some of the best living and entertain- ment amenities that the city has to offer. ” The Divine Lorraine Hotel is an eleven-story building that has been transformed into 101 class A apartments and will in- clude 20,000 s/f of ground-floor retail facing North Broad St. Located just south of the Divine Lorraine is the Studebaker – a three-story mixed-use office building that was originally built in 1916. The restoration of
each building has contributed to the ongoing revitalization of Philadelphia’s North Broad cor- ridor, which has been pioneered by Blumenfeld. “It was important for us to partner with lenders that un- derstood the developer’s grand vision for North Broad,” said Keith Delaney , president of D2. “We knew the sub-market very well, having recently se- cured financing for The Met and Mural Lofts, and we are very optimistic about how all of EBRM’s properties along North Broad will work in col- laboration to enhance the com- munity.
Broad Street is about to hit its stride with lights on at every block as we become a 24 hour community that is as diverse as any community in the nation. Our story is as holistic as they come both architecturally and communally; it was a vision
originally started by Pastor Herbert Lusk, invigorated by chef Marc Vetri and with the introduction of the federal op- portunity zone, we now have a recipe to accelerate the attrac- tion of capital in urban America and I expect that North Broad
4A — September 14 - 27, 2018 — Appraisal — Financial Digest — M id A tlantic
Real Estate Journal
By Woody Fincham, Valucentric, LLC (a Trice Group company) Why “Just Any” Appraiser Will Not Do
use work. It’s the appraiser’s responsibility – and in his or her best interest – to remind non-lender clients that hir- ing a designated appraiser is worth their time …and, most importantly, their money. Attorneys, financial ex- perts, homeowners and other non-lender consumers and users of appraisal services should tread very carefully when selecting appraisers to make sure they are compe- tent in the type of valuation assignment. Non-lender valuation is a
market niche, often best suit- ed for experienced appraisers who think outside the box. These assignments include appraisal reports performed for situations such as wealth- management, divorce and other litigation related needs. Often, intended users need to find the most qualified and experienced appraisers. Well-vetted experts are most applicable when testimony is a possibility or when looking at unique properties. Select- ing an appraiser limited to only experience with lender
related work could result in less than optimal results. Take attorneys, for ex- ample. They need someone who can write reports well enough to be seamless and defensible, but also handle cross-examination in a trial or the craziness that can be a pre-trial deposition. It takes a good professional to write the report, but an even bet- ter one to be effective on the stand or to help with pre-trial preparation. Often, during the interview process in pre-trial or in court
testimony, the appraiser must be able to communicate complex valuation theory to a jury or a judge who may have no understanding of such things. In other words, the appraiser must become an effective teacher in addition to being a good report writer. Many appraisers who work primarily with lenders − es- pecially since the housing crisis emerged in 2007 − are required to stay confined within a limited scope of work. Lenders often require appraisers to utilize com- parable sales within a very narrow window of time, a small geographic area, and to not exceed lending guidelines when adjusting comparables sales. This can be problematic when dealing with situations that often, or may, end up in court. The cost for an attor- ney to reorder a better report, or to pay a well-qualified ap- praiser to assist in pre-trial analysis, can get expensive quickly. Even worse would be finding that across the court- room, the opponent hired the appraiser he or she should have hired. What is the Takeaway for Consumers? • Ask for a resume and check references. • Take the time necessary to make sure the appraiser is well qualified, beyond just the minimum qualifications. • Look strongly at profes- sional designations such as the MAI, SRPA and SRA designations. • If you are looking for pre-trial consulting that in- volves the review of another appraiser’s report, the Ap- praisal Institute ReviewDes- ignations are a great place to retain talent: o AI-RRS for residential reviews, and o AI-GRS for non-residen- tial reviews. Woody Fincham, SRA, AI-RRS, is the regional vice president of Resi- dential Valuation with Valucentric, LLC in Char- lottesville, VA. He spe- cializes in residential non-lender valuation and review work. Follow him on Twitter, and like him on Facebook.
ith so many ap- praisers vying for appraisal manage-
ment com- p a n y a n d l e nd e r - r e - lated work, many AMC- centered ap- praisers are starting to compete for non-lender work.
Most consumers don’t un- derstand the need for ex- perienced and designated appraisers outside of lender
Commercial Real Estate Appraisers
Providing Professional Real Estate Appraisal Services to Lenders - Attorneys Government Agencies and Private Individuals For over 35 years
Albert F. Chanese, MAI
Jennifer E. Barany, MAI, SRA Michael Nwosu, SRA 178 Main Street Woodbridge, New Jersey 07095 (732) 853-0271
Real Estate Journal — Financial Digest — Appraisal — September 14 - 27, 2018— 5A
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The Virginia Commonwealth Chapter Presents:
September 20, 2018 » Valuation Resources for Solar Photovoltaic Systems * This class will focus on solar photovoltaic system information that will bridge the gap of knowledge not already offered in educational offerings today. Participants are encouraged to take additional educational offerings to acquire sufficient background in this growing topic to produce a credible appraisal report.
» 3Q 2018 Chapter Business Dinner Meeting October 9, 2018 » Valuation by Comparison: Residential Analysis and Logic *
This seminar revisits valuation fundamentals and illustrates why you need data collection and analytical skills more than ever. The seminar uses and is based on the 2018 updated 2nd edition of Valuation by Comparison. You’ll learn why clients need an appraisal, why you must have appropriate market data, and why it is imperative that you know your market. You’ll discover how to find the information you need in markets where data is scarce, inconsistent, or misleading. And you’ll explore techniques to accurately interpret and then anticipate the actions of buyers and sellers in today’s market. October 16, 2018 » 2018 VCCAI Social Event – Scott’s Addition: Brews & Values October 17, 2018 » Evaluating Commercial Leases: The Tenant and the Terms Both Matter * This 7-hour seminar introduces participants to how the terms of a lease and the risk profile of the tenant influence the valuation of commercial real estate. Participants will see how the business features of commercial leases affect the quantity and the duration of the income stream that a property will generate and the development of the property’s income statement. Non-traditional sources of income, the proper period to use in measuring the income, measuring the real vacancy rate, expenses that might not be recoverable by a landlord if a CAM formula is incorrect, and how other special clauses in a lease can all affect the property’s income stream will be examined. The second part of the seminar discusses tenant credit risk issues and explains why understanding a tenant’s financial strength is key to assessing the quality of the income stream. October 22-26, 2018 » Advanced Market Analysis and Highest & Best Use * Combining the analytical processes of market analysis, highest and best use, and income valuation, this course is intended for those who have taken and passed the General Appraiser Market Analysis and Highest & Best Use course and have a thorough understanding of the mathematical and financial principles necessary to perform appraisals of income-producing properties. Building on the Level B marketability studies that were applied in General Appraiser Market Analysis and Highest & Best Use, you will perform Level C marketability studies using fundamental demand analysis and study several real estate markets in a fictional city. The economic base of the community is explored, and it is used as the subject and example for both physical and economic forces that affect all communities and consequently all real estate. The remainder of the course consists of four case studies (apartment and condominium conversion, retail, industrial, and land with potential for mixed-use development) that are intended to demonstrate both the power of fundamental market analysis and its application to highest and best use decisions. November 15-16, 2018 » Residential Report Writing and Case Studies * This course engages appraisers in practical writing exercises necessary to produce convincing appraisal reports in daily practice. Course objectives are achieved through the discussion and application of residential valuation procedures, grammar rules and writing techniques, and specific writing assignments based on a residential case study. Participants will practice writing effective narrative comments for form appraisal reports and learn how to explain valuation procedures and conclusions to users of reports. The techniques applied in this course are useful in real-life situations that complicate routine assignments. December 7, 2018 » Solving Land Valuation Puzzles * Learn how to solve a variety of land valuation and feasibility problems using less commonly used land valuation techniques in this one-day seminar. Interactive case studies and discussion topics cover highest and best use considerations, land residual analysis, contamination, impacts of tax increment financing on feasibility, condemnation, subdivision analysis, unit of comparison selection, and alternatives when inadequate land sales exist. Problem identification, assignment conditions, scope of work decisions, and standards of practice are reviewed in each problem and solutions are discussed. Lively class discussion and interaction will result as problems are explored. REGISTER TODAY! http://www.myappraisalinstitute.org/education/VirginiaCommonwealth.aspx
2018 Officers and Directors
336-297-9511 email@example.com www.vccai.org @virginiacommonwealthchapterai
Congratulations! 2018 New Designees
Rob Duke, MAI, AI-GRS 2018 Chapter Secretary
Woody Fincham, SRA, AI-RRS 2018 Chapter Treasurer
Heather Placer, MAI, SRA 2018 Chapter President
Nancy Dove, MAI, SRA 2018 Chapter VP
Brian A. Korach, MAI – Richmond Wesley Woods, MAI – Madison Heights
2018 Directors: Will Sanford, MAI; Billy Hansen, MAI; Kelly Yeatts, MAI; Todd Ohlerich, MAI; Dan Bird, MAI, SRA; Vicki Bridger, SRA
6A — September 14 - 27, 2018 — Appraisal — Financial Digest — M id A tlantic Real Estate Journal
By Abbey Tucker, Barley Snyder Appraisers, this is how you should work with attorneys
our service to our clients as be- ing able to provide referrals to appraisers, so our group keeps an ongoing list of appraisers we have worked with. We also take note if an appraiser has any special expertise. Our clients own properties ranging from continuing care retirement communities to industrial op- erations to hotels to residential properties, so a quick way to rise to the top of our list for projects is to make your exper- tise known. Our clients also often own property outside of our geographic footprint, so let us know if you do work in other regions. Be Professional. Attorneys have very little vested interest in the actual fair market value you determine a property to be worth, but are generally look- ing for qualifications, profes- sionalism, and reliability over any other qualities. Your work product and responsiveness reflect back on the attorney, so don’t sacrifice these qualities if you can avoid it. The better you can make the attorney look, the more likely they are to recommend you for work in the future. Abby Tucker is a an as- sociate in the Real Estate Practice Group at central Pennsylvania law firm Bar- ley Snyder, which has nine offices throughout Penn- sylvania and Maryland, including a new office in Columbia, MD. NKF ’ s Mano t t i , achieves MAI Designation PHILADELPHIA, PA — Newmark Knight Frank (NKF) announced that Valu- ation & Advisory (V&A) first vice president Peter Manotti of the Philadelphia office, has obtained the prestigious MAI designation awarded by the Appraisal Institute . “Pete truly embodies the traits that make him highly deserving of this designation,” said Joseph Pasquarella, MAI, CRE, FRICS, V&A senior managing director and market leader for eastern Pennsylvania and Delaware. “Akin to his focus and acumen when playing college football, Pete brings the same work ethic to his appraisal business – al- ways improving, always trying something new and never being content with status quo!”
tell us that at the outset. While you may not get a full fee if we decide not to pursue an appeal, you will certainly be on our call sheet for the next client. Communicate. Attorneys’ practices are built on securing good results for our clients, and offering superb client service when doing so. When we engage a third party – an appraiser, engineer, broker, or someone else – to help us achieve the results our clients want, we can’t sacrifice the service aspect of our profession. Don’t be shy about enlisting the help of your office staff to keep an attorney
up to date on any progress. We are accustomed to working with paralegals and administrative assistants so we understand if you can’t personally return our call. Lawyers also like to keep a written record so we can keep our client in the loop, so follow up on voicemails with an email message. Let us know your special- ties. Many people only interact with appraisers in connection with lending, so when a client needs a recommendation for an appraiser, their first call is often to their real estate at- torney. Our firm views part of
and offer a courtesy first look. Unlike with appraisals completed in connection with financing, when a client is con- sidering an assessment appeal it may or may not make sense for the client to expend the re- sources to appeal. The apprais- ers who offer to do an informal valuation at a discounted rate, to give us an idea whether the appeal is worth pursuing, are the ones I turn to time and time again. In the instances where the assessed value appears reasonable, our clients save significant time and resources when an appraiser is able to
s a real estate attorney, I frequently engage ap- praisers to value prop-
erties for as- sessment ap- peals. These appeals come up on an an- nual basis, so attorneys can be a recur- ring source of work for ap-
praisers. Here are some tips for working with attorneys when engaged to appraise property for assessment appeals. Understand the project,
Our dedicated real estate attorneys provide comprehensive legal services to assist clients in every stage of the real estate transaction. We regularly represent developers, businesses, public entities and individuals. We Know REAL ESTATE Negotiation • Due diligence • Permits & Approvals Title insurance • Entity formation • Settlement Tax assessment appeals • Land development • Environmental
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Real Estate Journal — Financial Digest — Appraisal — September 14 - 27, 2018— 7A
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Allowable building height HousePassesFAAReauthorization, includingRound- table-backed “One Engine Inoperative” language L
The proposed 2014 policy change would alter decades- old standards by compelling the FAA to consider whether a building or other structure poses a hazard to navigable airspace if a plane engine fails on takeoff. The FAA’s current funding and revenues are set to ex- pire this September 30. With the House’s passage of FAA reauthorization today, the Senate is expected to follow suit and aims to have long- term reauthorization in place by August. 2 ( Roll Call , April 16 and CNN, April 27)
According to a study of the issue, approximately 4,000 buildings near 380 airports throughout the U.S. could become “non-conforming” if such OEI policies were ever to take effect. The proposed standards would modify take- off and landing flight paths in a manner that restricts allowable building heights and development potential in growth centers and transpor- tation hubs surrounding the nation’s airports. When the FAA proposed the policy change, it explained it was not due to any public
safety concerns but rather to allow airlines to carry more passenger and freight cargo. The language passed by the House would require that any changes to current OEI policies must first go through a full public rulemaking process. Additionally, the White House Office of Management and Budget would be compelled to conduct a full cost-benefit analysis of any such FAA ac- tion. The Roundtable, the Na- tional Association of Real Es- tate Investment Trusts (NA- REIT), and other real estate
trade groups have long urged Congress to include the OEI rulemaking and cost-benefit language in any FAA reau- thorization bill. (Roundtable Weekly, Feb. 12, 2016). The Roundtable will contin- ue to monitor the Senate’s ac- tions on FAA reauthorization and urge inclusion of similar provisions as the legislation now moves to the other side of Capitol Hill. 1 w w w . c o n g r e s s . g o v / bill/115th-congress/house- bill/4/text 2 www.rollcall.com/news/pol- itics/regular-order-faa-bill
egislative language that could affect the allow- able heights of build- ings near airports passed the House today (393-13) as part of a bill ( H.R. 4 ) 1 extend- ing authorization of the Fed- eral Aviation Administration (FAA) for five years. The so-called One Engine Inoperative (OEI) language included in the House-passed FAA bill addresses an Obama- era proposal that could affect land development and prop- erty values near U.S. airports. AI opposes bills seeking to raise SBA 7a/504 Appraisal Thresh- old Level The Appraisal Institute in a July 19 letter to the House Committee on Small Busi- ness expressed concern over HR 6347 and HR 6348, leg- islation that would increase to $500,000 the appraisal threshold level for commercial real estate loans for the Small Business Administration’s core lending programs — SBA 7(a) and SBA 504. In its letter, AI noted the increased risk to the SBA and to taxpayers that likely would be caused by reducing risk management at the expense of loan production. Specifi- cally, AI said the legislation fails to fully align the SBA requirements with those of the federal financial institu- tions regulatory agencies as it relates to commercial real estate appraisal and evalua- tion requirements. The plan to increase the SBA threshold level is largely based on the agencies’ decision earlier this year to increase to $500,000 the appraisal threshold level for commercial real estate loans. However, the new legislation fails to include a requirement for the completion of evaluations. The agencies require banks to obtain an evaluation on a commercial real estate loan when an appraisal is not re- quired — an element missing from SBA risk management activities that could create a sizable loophole. Both bills were reported fa- vorably to the House floor and are expected to be considered by the full House this session. No companion legislation was introduced in the Senate.
Fortuna & DiFlumeri is a full service Commercial, Industrial and Residential Real Estate Appraisal firm located in Center City Philadelphia and serving Pennsylvania, New Jersey and Delaware Our Services Include: Narrative and Form reporting, Consulting, and Expert Witness Testimony for the Public, Private and Municipal sectors
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8A — September 14 - 27, 2018 — Appraisal — Financial Digest — M id A tlantic
Real Estate Journal
By Michael Tucker CRE executives report 'balanced and stable' conditions, concern for future
ommercial real es- tate executives see "balanced and stable" market conditions despite growing concerns the market could be nearing the end of its current cycle, the Real Estate Roundtable reported. The Roundtable's third quarter Economic Sentiment Index registered at 52, up one point increase from the second quarter. The current- conditions index score in- creased four points from the previous quarter to 56, up 5 points from a year ago. "As we move into the sec- ond half of the year, we C
Recent AppRAisAls The report said the positive snapshot of current commer- cial real estate markets re- flects a g eral absorption of recent interest rate increases and overall economic stimula- tion from tax reform. But looking ahead, there is growing sentiment the in- dustry is nearing the end of continue to see robust mar- kets, with debt and equity available and asset values strong," said Roundtable CEO and president Jeffrey DeBoer. "The commercial real estate industry remains confident for the remainder of 2018."
its current cycle, the report said. The future conditions in- dex score, 49, is seven points below the current conditions index. Most respondents sug- gested asset values have reached their peak for many property types, especially in major gateway cities. Though debt and equity cap- ital sources remain plentiful, respondents expressed some concern about the amount of debt available and the ramifi- cations of the mounting time pressure some lenders have to invest their capital. Survey respondents said they view property supply
and demand metrics as bal- anced at the moment. Some cited "pockets" where the balance is slipping but felt general market conditions remain positive barring an unexpected event, the report said. Nearly half--49 percent--of survey participants reported seeing asset prices as about The Appraisal Institute attended and hosted several meetings this spring concern- ing the government-sponsored enterprises’ appraisal policies.
the same as one year ago and 47 percent said they expect values to be nearly the same in another year, reflecting the view that primary markets will likely maintain peak pricing for many property types. But the industrial sec- tor still has "room for growth" through 2019, the report said.
Appraisal Institute weighs in on modernization of GSE Processes, Forms
Fannie Mae and Freddie Mac separately are making chang- es to their appraisal policies and procedures while working together on changes to their standard appraisal forms, as mandated by the Federal Housing Finance Agency. Representat ives from Fannie Mae attended the AI Government Relations Committee meeting in May in Washington to gather in- formation on current issues affecting appraisers and to find out what future issues may lie ahead. Following the meeting, the AI GRC prepared a written response to their questions. Concurrent and separate from that meeting, the Se- attle and the North Texas AI chapters hosted listen- ing sessions with Freddie Mac officials to discuss the modernizing processes at the GSE. AI’s Greater Ten- nessee Chapter will host a similar listening session on Aug. 1. Separate from those meet- ings, AI officers and AI GRC members met with and talk- ed to officials from both GSEs to discuss updates to appraisal forms, which is a joint undertaking — unlike those for processes and pro- cedure policies. AI offered suggestions on a range of issues, including ways to re- vise the forms so they focus less on rules and process and more on appraiser analysis and how to reduce appraiser and lender liabilities. Both projects — which could take several years to complete and implement — have the potential to signifi- cantly impact the valuation profession and those who use appraisal services.
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Gary M.Wade, MAI, principal ofWade Appraisal, LLC, gives his personal supervision to every client project. He has been appraising commercial real estate since 2004.
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Real Estate Journal — Financial Digest — September 14 - 27, 2018 — 9A
M id A tlantic
F inancial D igest
Skladany Valuation, LLC Commercial & Industrial Real Estate Appraisal
Real Estate, Business, and Machinery & Equipment Turning words and numbers into meaning and value
Leo Skladany, ASA Nick Skladany, MAI, CCIM We are a leading provider of real estate appraisals for commercial and industrial real estate in the South Central Pennsylvania market. With 35 years of experience in the business, we have a proven track
For various purposes and uses, including • General and Complex Real Estate • Utilities and Power Plants • Businesses • Legal o Litigation/Expert Testimony o Property Tax Appeals • Accounting and Tax o Estates and Gift Tax o ASC 805 Tax Reporting • Investment, Due Diligence • Financing Mark Pomykacz, MAI, ASA 1.908.534.3595
record of valuation accuracy, credible time management, and prudent costmanagement in the appraisal process. In 2015, Nick Skladany, MAI, CCIM was awarded the MAI designation from the Appraisal Institute.
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Your 1031 Exchange Resource We work with you to construct a customized replacement portfolio through the use of Delaware Statutory Trusts (DSTs) and/or actively managed properties.
JB Real Estate Valuation & Advisory is a full-sERVicE AppRAisAl fiRm offering cliEnt-focusEd VAluAtion suppoRt for Commercial & Residential Properties in PA, NJ & DE.
christopher K. Bourland, mAi is a Certified General Real Estate Appraiser in PA, NJ and DE. Chris has experience appraising a wide variety of property types, including shopping centers, hotels, residential sub- divisions, offices, industrial properties and multi-family properties. Chris has worked
on assignments with property value indications exceeding $300M and has appraised more than $10B in assets in his career. He also has experience providing consulting services to Accountants, lenders, investors and Attorneys on a wide variety of matters relating to real estate. www.jbvaluation.com
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10A — September 14 - 27, 2018 — Appraisal — Financial Digest — M id A tlantic
Real Estate Journal
Regulations requiring appraisals of real estate for certain transactions Appraisal Threshold
he OCC, Federal Re- serve Board, and FDIC (collectively, the agen- cies) have adopted a final rule to amend the agencies' regula- tions requiring appraisals of real estate for certain transac- tions. The final rule increases the threshold level at or below which appraisals are not re- quired for commercial real es- tate transactions from $250,000 to $500,000. The final rule defines commercial real estate transaction as a real estate- related financial transaction that is not secured by a single 1-to-4 family residential prop- T
erty. It excludes all transactions secured by a single 1-to-4 family residential property, and thus construction loans secured by a single 1-to-4 family residential property are excluded. For com- mercial real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking prac- tices. Per the Economic Growth and Regulatory Paperwork Reduction Act the Federal
bank regulatory agencies have been reviewing whether to raise the appraisal threshold levles, which currently stand at $250,000 for real estate loans and $1 million for busi- ness or owner occupied loans. Testimony on September 28th by Federal Reserve Chair Janet Yellin to the House Financial Services Committee signaled the agencies' intentions to pro- pose a reduction in appraisal re- quirements, perhaps before the end of 2016. This would reduce fundamental risk management requirements at a time when the housing market has only re-
cently recovered from the larg- est real estate related financial crisis in several decades, and in the face of alarm bells transmit- ted by the regulators about the commercial real estate market. Background FIRREA, enacted in 1989 in response to the savings and loan crisis, authorized Federal bank regulators to require appraisals for real estate loans made by federally regulated financial institutions. • In 1994, the bank regula- tors exempted wide swaths of loans from appraisal require- ments, including real estate
loans below $250,000 and owner occupied business loans below $1 million. More than 20 years later, a majority of residential real estate loans still do not require an appraisal under the existing exemption. • The recent financial crisis witnessed widespread problems with bank management of ap- praisal requirements, includ- ing adherence with the 1994 regulations. A vast majority of failed banks from the financial crisis were shown to have been cited by federal bank regula- tory agencies for lax appraisal management. • In addition to establishing the two appraisal threshold levels in 1994, the agencies exempted loans sold to Fannie Mae and Freddie Mac. This al- lowance was granted based on a determination by the bank regulatory agencies that the government sponsored entities would maintain equivalent appraisal requirements. Over time, the government sponsored enterprises loosened their ap- praisal requirements. • Ultimately, nearly 1/3 of loans received an “appraisal waiver.” Coupled with poor underwriting and review re- quirements, the policies of the government sponsored enterprises drove them into conservatorship by the federal government. • Since the crisis, the GSEs have required appraisals more often. A 2011 GAO Report found that 85% of mortgages purchased by the GSEs in 2010 were accompanied by ap- praisals. Today, nearly all first purchase mortgages require a full interior inspection ap- praisal completed by a certified appraiser. Concern As independent evidence of the market value of a property, appraisals protect both consum- ers buying homes and taxpayers who stand behind the GSEs and FDIC-insured institutions. Raising the appraisal threshold above $250,000 would under- mine both consumer protection and safety and soundness: • It would increase the odds that a home buyer will wind up “under water” in a house – ow- ing more in mortgage debt than the home is worth. View the National Associa- tion of Realtors letter to FFIEC on the appraisal threshold. www.appraisalinstitute.org/ file.aspx?Document=AI_2014_ comment_letter1.pdf
Real Estate Journal — Financial Digest — Appraisal — September 14 - 27, 2018— 11A
M id A tlantic
ndustrial developers seek- ing a high quality, afford- able site in an emerg- By Carlo L. Batts, MAI, Rittenhouse Appraisals RittenhouseAppraisals assistsGSA indisposition of a former military installation in Oldmans Twp., NJ I for the area is $56,805, which is 86% of that for the overall region, which is $65,368. within planned industrial parks, which are about 75% developed. the subject market area only accounts for 0.55% of indus- trial space on the market, the area has captured 3.66% of all new absorption.
velopment Zone, has good frontage and visibility from Rte. 130, and excellent access, as the entrance is wide with a turning lane. It was previously operated as Sievers Sandberg Reserve Center for the U.S Army Reserve training instal- lation. The installation was originally utilized as an Army Air Defense Command Post. It closed in 2012. The site is generally flat at street grade. The site is improved with 18 buildings, totaling 101,283 gross s/f of building area. However the continued on page 22A
Over the last 20 years, the immediate area has transi- tioned into a primary area for warehouse distribution, due to location and access to primary interstates. Newly developed warehouses in this area includes regional distri- bution warehouses for Jet. com, Home Depot, Five Be- low, Goya Foods, UPS Supply Chain, Albert Organics, Unit- ed Natural Foods, and Tech Data Distribution Center. These warehouses are located
The market area represents only a small portion of the re- gional industrial market. The 5.94 million s/f of industrial space in the county only ac- counts for 0.55% of all space in the region. Currently, there is no new industrial space under construction and no new industrial space has been delivered year to date. Vacancy within the County is currently indicated to be 4%, which is 109 basis points below the region as a whole. Though
ing market might want to take a look at an aging former mili- tary installa- tion in Old- mans Town- ship, NJ. The Siev-
The average rental rate within the Philadelphia indus- trial market is $4.85 psf. The average rental rate in Salem County is $3.15 psf This dif- ferential is likely due to the Salem being on the suburban fringe in an area that is tran- sitioning from an agricultural use into a warehouse market. Our Analysis of the Site The Sievers-Sandberg site, located in an Industrial De-
Carlo L. Batts
ers-Sandberg U.S. Army Re- serve Center was closed in 2012, and the federal govern- ment is looking to sell the land for private development. Rittenhouse Appraisals, LLCwas recently retained and tasked with determining the value of the 35-acre site, and making a recommendation for its highest and best use. Though the condition of the site and some environmental issues made this process a challenge, Rittenhouse be- lieves this parcel could serve as a catalyst for the industrial market in Salem County. The Location Salem County is located on the suburban fringe of the Philadelphia Market Area. The county’s western portion is more densely populated and serves as a bedroom com- munity to the employment centers to the north and south. The eastern portion is largely agricultural, with the major- ity of the land area actively in production. As the population of the region has grown south- ward over the last decade, agricultural uses have steadily given way for suburban de- velopment pushing further southeast into the county. This trend is anticipated to continue into the future, but at a lower rate, due to a desire to live closer to the urban core. The subject property is lo- cated along Rte. 130, an 83- mile highway that runs north- south through New Jersey and was once the primary artery for traversing the state. The highway allows easy access to Interstate 295 and the NJ Tpke., and convenient access to Baltimore, Washington, DC and NYC. Philadelphia is easily reached by Interstate 295 by crossing either the Commodore Barry or the Walt Whitman Bridge. This trans- portation network provides access to 6.1 million people within a 90-minute drive, and more than 210,000 businesses. The median household income
When it comes to getting deals done in today's fast-paced market, time is more important than ever. We think waiting 4-5 weeks for an appraisal is unconscionablePage 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72
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