percent of the business plan needs to be achieved to pay off the debt?” Putting too much debt on a property can cause an asset to go into distress. If revenues fluctuate or underwriting criteria change, you can be left with a building that is no longer worth the debt amount. The seventh reason is rising interest rates . As far back as Moses, the lower the interest rates, the higher the price. If interest rates increase for commercial loans, that will affect the ability for the operator to refinance out of a bridge loan into a permanent loan. The industry’s term for this is “capital restraints.” So, when capital to refinance debt is constrained and the loan matures, you may be unable to refinance the property. When markets fall, banks and traditional lenders become more selective, almost prohibitively so. The home run in commercial is refinancing all of your equity out and keeping the cash-flowing asset. However, when that emergency door is slammed shut, you sell. And here’s the risk: Can the other guy get financing to buy it from you? The eighth and final reason is operating costs . The property must be operated at a market cost. Over-operating the property causes returns to decline. The profit and loss (P&L) is the soul of the asset. It talks about how it’s being managed. First- time operators not only overpay but usually redline their P&L very high on the expense side. Of course, there are good operators who can turn troubled, distressed opportunities into winners. This is how the wealth transfers between market cycles. However, when the market becomes unstable due to some chaotic events happening in the marketplace, the problems already caused by distressed deals can further be exacerbated. For instance, in August this year, President Trump started the first domino of student loan forgiveness by pardoning completely or permanently disabled U.S. veterans. In principle, this could affect multifamily dwellings, as it may force millennial students to buy homes and vacate apartments and shared-living spaces. This unexpected jolt can bring some instability to a market that appears relatively stable and growing.
US Hybrid War Against Russia Continued from Page 4
The incident of the Ukraine woke China up to see that the real purpose of the destruction of Russia was to take control of Russian natural resources as a means of exercising total control of China through the United States’ control of its access to natural resources by sea and by land from Russia. China therefore followed its strategic interest by allying with Russia. An infuriated U.S. found itself back in 1949 with a strengthening Russia, in a military sense, allied with a colossal China of its own making. If the GDPs of each were analyzed the same way, it would show that China is a much larger industrial power than the U.S. The U.S. will not believe that it is too late to stop China from becoming the most powerful economy in the world, as that’s what it is right now. And it is more advanced in commercial technologies than the U.S., which will become visible over the next two years. This accounts for the massive hysteria of the U.S. against Russia and China that must be taken very seriously. What happened with the Ukraine in the last election was not a change at all. It was clear that the Trotskyite oligarch Poroshenko had served his usefulness, and so a change had to be made as with France. After all, what can you do with a man who has a 3% approval rating? It is not too dissimilar to the creation of Macron to steal the thunder from Le Pen and create a new party on the heels of dissolution of the previous government. The problem with Marine Le Pen was that she was pro-Russian. We have to say it was done rather brilliantly as the Kiev coup. Only, as the French say, “Plus ça change, plus c’est la même” — the more that changes, the more it’s the same thing. There was no change. Nor will there be any change under Zelensky controlled by the Trotskyite Kolomoisky. The mass stealing goes on. There is a history of these moves against Russia that traces back to the end of World War II and even before it was planned by the OSS to move against Russia. Listen to the Operation Gladio video on pre-1945 plans against Russia and that of CIA Steve Pieczenik, which gives us the true picture of how 9/11 was organized into a false-flag operation to go to war in Afghanistan for the heroin and Iraq for the control of oil. There were no Arabs involved, as the boarding tapes were doctored.
To be continued in the November 2019 edition.
3 www.TheCommercialInvestor.com
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