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ISSUE HIGHLIGHTS Volume 24 Issue 23 December 7 - 20, 2012 WCRE facilitates 100,000 s/f office complex sale
HILADELPHIA, PA — The Goldenberg Group announces P Project team includes Torcon, JPC Group, WRT, & Bohler Engineering The Goldenberg Group begins $100m mixed-use project at Temple University
The new student residence project team includes Tor- con/ Construction Man- agement , Inc. as general contractor; JPC Group, Inc. as demolition and site contractor; Wallace Rob- erts & Todd as lead archi- tect; and Bohler Engineer- ing as civil engineer. Asset Campus Housing has been selected as the property management company. Financing for the proj- ect was provided by M&T Bank as agent, with Na- tional Penn Bank and Susquehanna Bank as participants. The Golden- berg Group was awarded a $6 million Redevelop- ment Assistance Capital Program (RACP) grant in summer 2011, administered by Pennsylvania’s Office of the Budget for acquisition and construction of regional economic, cultural, civic and historical improvement proj- ects. Bridge financing was made available by the Phil- adelphia Industrial De- velopment Corporation . The original acquisition loan was provided by The
that construction has started on a $100 million new stu- dent residence project at the site of the former JohnWana- maker School, located at 12th St. and Montgomery Ave. near Temple University’s main campus. Redevelop- ment of the two acre site in- cludes plans for a 320,000 s/f, 14-story apt. building that will house 832 beds across 238 residences; 80 parking spaces; and 11,000 s/f of first- floor retail. A groundbreak- ing ceremony took place on November 19, 2012. “We are confident that this new complex will fill a criti- cal need for secure, stylish, and affordable residences for Temple University students,” said Ken Goldenberg , president and CEO of The Goldenberg Grp. “The Gold- enberg Group’s strong track record of completing develop- ments that have transformed neighborhoods and changed lives supports this vision.” Goldenberg added that the redevelopment is a commu-
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Show from left: Kevin Trapper, SVP, Development Director, The Golden- berg Grp. / Reverend Kevin Johnson, Bright Hope Baptist Church / Ken Goldenberg, Founder, President and CEO, The Goldenberg Grp. / Darrell Clarke, Philadelphia City Council President / Shirley Kitchen, PA Senate (3rd District) / Alan Greenberger, Deputy Mayor for Economic Develop- ment & Director of Commerce / Jose Miranda, PA House of Represen- tatives – elect (197th Legislative District) / Karen Stokes, Governor’s Southeast Regional Office Deputy Director / Ken Lawrence, Jr., SVP for Government, Community and Public Affairs, Temple University
Hinerfeld announces three industrial sales
nity effort, citing cooperation from governor TomCorbett , mayor Michael Nutter , city
council president Darrell Clarke , and state senator Shirley Kitchen .
CBRE Group sells state-of-the-art data center in Philadelphia for $65,000,000
the Byberry Industrial Park within the “Greater North- east” section of Philadelphia, Pennsylvania. Robert J. Fahey , executive vice presi- dent of CBRE’s Philadel- phia Investment Proper- ties Institutional Group along with Patrick Lynch , managing director within CBRE’s National Critical Environment Practice Group and Michael B. Harrell, CCIM , senior vice president within Invest- ment Properties in Jack- sonville, FL, represented the seller. Carter Validus Mission Critical REIT, Inc. of Tampa, FL acquired the property for a purchase price of $65,000,000, or $540 psf. Built in 1993, 2000 Kubach Road is a unique, single ten-
PHILADELPHIA, PA — CBRE Group, Inc. an- nounced the sale of 2000 Kubach Road located within
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MAREJ DIRECTORY
Auction News ............................... 4-5A People on the Move ...................... 18A Events ........................................... 20A New Jersey ............................ Section B Pennsylvania ......................... Section C
2000 Kubach Road
Upcoming Spotlight Annual Review — December 21 st
ant, purpose-built, hardened facility totaling approxi- mately 121,000 gross s/f on 25.6 acres. “2000 Kubach Road is a high-quality data center asset, with an intrinsically
valuable location and much sought-after security of a long-term cash flow secured by an affiliate of an interna- tionally-recognized tenant with significant net worth,” Fahey said. n
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2A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal MAREJ a dvertisers d ireCtorY Barry Isett & Associates, Inc.......................................... 10C Bennett Williams Realty Inc. ........................................... 7C Billboard Directory ......................................................... 19A BL Companies ................................................................... 5C Brasler Properties..........................................................IC-C Business Card Directory................................................. 17A Bussel Realty Corp............................................................ 1B Columbia Bank.................................................................. 7A Cooper Horowitz.............................................................. 13A D.F. Pray......................................................................... IC-A Earth Engineering Incorporated...................................... 3C Fitzpatrick Lentz & Bubba............................................. 10C Fortna Auctioneers & Marketing Group.......................... 4A Gerber/Somma Associates .............................................IC-B Greater Reading Economic Partnership.......................... 3C Griffin Land....................................................................... 2C Groundscare .................................................................... 10B Harvey Hanna & Associates............................................. 1A Heller Industrial Parks .................................................... 3B High Associates LTD......................................................... 8C Hinerfeld Commercial Real Estate .................................. 1C Hurley Auctions ................................................................ 4A Jottan........................................................................... IBC-B Kaplin Stewart .................................................................. 2A Keast & Hood Co............................................................. 11C Landcore Engineering Consultants, P.C.......................... 4C Landmark Commercial Realty Inc................................... 5C Lebanon Valley Economic Development Corporation ..... 9C M. Miller & Son................................................................. 3A Marcus & Millichap Taylor Zang ............................... IBC-C Max Spann ........................................................................ 4A Mericle Commercial Real Estate Services...................BC-C Motleys.com....................................................................... 5A NAI Summit ...................................................................... 4C Nisivioccia, LLP .............................................................. 10A NorthMarq......................................................................... 6B Ondra-Huyett Associates, Inc........................................... 2C Penn’s Northeast............................................................... 2C Poskanzer Skott Architects ............................................ 11B Prism.................................................................................. 9B RBS Citizens .................................................................BC-A Regal Bank ................................................................. 9A, 8B Riker Danzig ..................................................................... 2B ROCK Commercial Real Estate ....................................... 6C RT Environmental Services, Inc. ..................................... 2C SEBCO Laundry Systems ................................................ 2B Sheldon Gross Realty, Inc................................................. 2B The Berger Organization.................................................. 7B The Kislak Company, Inc.................................................. 4B Warner Real Estate Auction Co........................................ 4A WCRE ................................................................................ 3B Wilken & Guttenplan, P.C. ............................................... 6A WRT ...............................................................................FC-C
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Mid Atlantic R eal e state J ouRnal Publisher ............................................................................linda christman Co-Publisher .........................................................................Joe christman Section Publisher ..............................................................michael campisi Section Publisher ................................................................elaine fanning Section Publisher ............................................................... Kevin maclean Senior Editor/Graphic Artist ................................................ Karen Vachon Graphic Artist/Social Media Specialist ............................ rachel rugman Office Manager ...................................................................Joanne Gavaza Editorial Consultant ............................................................. Ben Summers Guest Columnist ......................................................................rose evans 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 23 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY mare Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
By Rose Evans Good Preparation Key to Weathering Natural Disasters at SC Properties
H
aving been in the retail property management business for 60 years,
and with a 12.5 million-s/f, 90- shopping-center portfolio, our firm has seen just about every- thing when it comes to natural disaster emergencies. So when a crisis arises, we know what to look for and what to do. Yet when it comes to effec- tively and efficiently handling a natural disaster at a retail – or other – property, being proactive is just as important as implementing an effective post-event response. Natural disasters typically arrive with little – or no – warning. Day-to-day measures can keep a property ready for whatever may come along, and responsible management in- volves looking for problems be- fore they happen. As a rule of thumb, a property’s manager should inspect a center on foot weekly, while communicating with tenants and contractors who can serve as eyes and ears
on a day-to-day basis. Additionally, regular in- spections during foul weather events can help identify and mitigate clogged drains, bro- ken downspouts, and ponding on roofs and parking lots. Semi-annual roof inspections serve to examine the condition of the roofing material, and ensure that the surface is clear of debris and that drains are open. These measures work to minimize damage common with heavy rain, hurricane conditions or winter storms. In the case of weather events that do have “lead time,” extra preparations can be valuable
as well. For example, for days in advance of Hurricane San- dy, forecasters talked about the storm’s potential impact in New Jersey, New York and Pennsylvania – where the majority of Levin’s shopping centers are located. We had time to inspect roof drains and flush them out. We assembled a network of roofing contrac- tors to be on standby, and had teams ready to help clear trees or provide other services. In terms of support, property managers and owners have ac- cess to great resources. Their own experience; standard continued on page A
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M id A tlantic R eal E state J ournal To American Red Cross for disaster relief HQ Heller Industrial Parks donates warehouse space
They wrote the policy.
We make sure they write the check.
S
OMERSET, NJ — Hell- er Industrial Parks , one of the nation’s larg-
Industrial Parks. The space has served as the organization’s base of op- erations in New Jersey for its disaster relief effort, since the day after the storm hit. More than 100 American Red Cross volunteers gather daily at Heller’s industrial park in Somerset, where they break up pallets of food, water, cleaning supplies, blankets and comfort kits into smaller loads. The vol- unteers then assemble the cor- rect assortment of supplies for distribution by American Red Cross emergency responders from Somerset out to dozens of locations across New Jersey. On Tuesday, Oct. 30, just hours after Sandy hit, Frank Caccavo , executive vice presi- dentwithCushman&Wakefield brokerage firm, approached Milanaik, indicating that the Red Cross was in need of space Using Levin’s system as an example, each of our shop- ping centers has a dedicated property manager for whom tenants have a direct phone number. Additionally, during business hours we have at least one property manager in the office each day to back up the other managers in handling emergencies. Our answering service that takes calls after hours has live peo- ple with specific instructions on what to do and who to con- tact at any moment when the office is closed. Frequently when we pitch new business our potential cli- ent will ask us if we can have someone from Levin stationed seven days a week, 365 days a year. This requires the estab- lishment of a multiple-level response team.
for their base of operations. Within hours, Milanaik was on the phone with John Fouts , the disaster reserve logistics facilities manager handling the New Jersey Red Cross response to Hurricane Sandy. Milanaik said the space at the Heller Industrial Park in Somerset was perfect except the building had no power. Fortunately, just 10 minutes before the building was due to open on Oct. 31, power was restored. Mi l a n a i k a n d De v e n Schmitt , Heller’s construction manager, worked closely with Fouts andAmerican Red Cross officials to get the warehouse operational and to supply per- sonnel to assist in opening and running the warehouse. The organization anticipates being on site throughout the entire recovery effort. n at their property on a full-time basis. However, that level of investment is almost always unnecessary. Between the at- tention of a center’s dedicated property manager, and its ten- ants and contractors almost nothing – whether disaster related, or general mainte- nance and aesthetics – should go unnoticed. Taking a preemptive ap- proach to managing a retail property ensures that it will be an attractive, safe place for consumers to shop and for tenants to do business. And when it comes to the bottom line, this provides great com- petitive advantage. Rose Evans, CPM is VP of property management at Levin Management Corpo- ration in North Plainfield, NJ. n
est privately held owners and develop- ers of indus- trial real es- tate donated 2 0 0 , 0 0 0 s/f of ware- house space at Heller In-
M. MILLER & SON Public Adjusters Since 1960
1211 Liberty Ave., Hillside, NJ 07205 � Tel: 908-355-4800 adjuster@mmillerson.com � www.mmillerson.com
Jeff Milanaik
dustrial park in Somerset to the American Red Cross for 90 days, rent free. “As soon as we were ap- proached by theAmerican Red Cross, I knew the right thing to do was to give them much needed warehouse space in an effort to help millions of New Jersey residents who were suffering the wrath of Hurricane Sandy,” said Jeff Milanai k, president of Heller emergency planning manu- als; and pre-storm tips from local governments, insurance providers and even contractors can be helpful when it comes to battening down the hatches successfully. Establishing An Information Network Beyond taking physical mea- sures, a deep and carefully structured communication network is incredibly impor- tant in disaster preparedness. Because they are on site every day, tenants and contractors – including sweepers, trash service providers and others – often will be the first to no- tice an issue or potential issue. It is imperative that they be able to contact the shopping center ’s property manager at any time – 24 hours a day,
Good preparation key to weathering natural disasters at . . . continued from page 2A
We are inviting industry leaders to be a part of our “year book”. We will preview the top Headlines of the year along with photos of your top executives along with a special season’s greetings or thank you ads to your clients, brokers, owners, architects, and employees that helped make 2012 a winning year. SEND IN YOUR TOP EXECUTIVE HEAD SHOTS Please take this opportunity to review your year’s successes and congratulate all who helped make it happen! 2012 Year in Review
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A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal www.marejournal.com M id A tlantic R eal E state J ournal A uctions
Property fetches extraordinary local interest Delaware City’s Central Hotel sells at Max Spann auction
Micoley.com lines up several winter auctions
To help move properties dur- ing the cold winter months, Micoley.com has lined up sev- eral auctions. December 15th and January 19th auction events feature combined, over 100 properties. These properties are expected to move quickly, making time of the essence for buyers who are looking for the best real estate deals around. Most importantly, with online auc- tions such as Micoley.com, properties are available to be purchased prior to the sale date. Properties in both sales include commercial, condo, mixed-use, residential, and vacant land. Online property auctions give buyers a chance to ex- plore a wide range of prop- erties within a very short amount of time, while still obtaining all the necessary information and conducting one’s due diligence. For commercial developers or investors, there are many types of properties available ranging from undeveloped
land zoned for commercial use; retail centers; big box stores; office parks; restaurants; com- mercial office buildings; and large warehouses. With online auction firms, buyers are able to search for properties across the entire nation, rather than seeking a local Real Estate agent in each city they may be interested in. Because of the excitement and fast-paced nature of on- line auctions, buyers may be tempted to act quickly. Buyers are always encour- aged to do their due diligence and thoroughly investigate their potential investment before going through with the purchase. Conducting one’s due diligence includes reading the contract in full; physically visiting the prop- erty or having a third party inspect it; obtain knowledge on the property’s local area and market. If the property is multi-family or rental prop- erty, acquiring rental history and vacancy reports is highly recommended. n
D
ELAWARE CITY, DE — A haunted piece of Delaware City his-
prospect of reestablishing retail activity along the waterfront as well.” The property, located at 85-93 Clinton St. in Delaware City, is listed on the National Register of Historic Places and was in- vestigated recently by a local paranormal research team. While some think the property is haunted, others remain skep- tical. Nevertheless, Dann said the property was available to any potential buyers, earthly or otherwise. “We looked for bids from other auras, but we couldn’t find them,” he joked. The property was sold by order of the city. Delaware City Council unanimously approved the sale immediately follow- ing the auction. Delaware city manager Richard Cathcart made a special announcement, thanking Glen McDonald , Max Spann’s regional business manager, for promoting and selling this property. The circa-1840, three-story,
hip-roof, Flemish bond brick building served a variety of uses over the years as Dela- ware City grew up around it. Located at the Delaware Bay entrance to the original Chesa- peake & Delaware Canal, it is a prominent attraction on the revitalized historic Delaware City waterfront. Also known as the Van Am- ringe building, it was built by Samuel Van Amringe to store grain. Interestingly, the upcom- ing auction isn’t the first time the building has been on the auction block. In 1834, the New Castle County took possession of the building, selling it at sheriff ’s auction for $2,500 to merchant Robert Polk. For the rest of the 19th Cen- tury, the building was used as a store and warehouse. Begin- ning at the turn of the Twen- tieth Century, it began its life as a hotel and tavern, first as The Central Hotel and later as Sterling’s Tavern. n
tory, recently the subject of paranormal i n v e s t i g a - tions, is now in the hands of a private buyer after a successful auc t i on by Max Spann Real Estate & Auction Co. The former Central Hotel on Delaware City’s waterfront sold for $473,000 following bids by six suitors. Bidding started at $150,000 and quickly rose to the final sale price. “That is the first haunted ho- tel I’ve ever sold in my life and probably the last,” said Bob Dann , executive vice president and chief operations officer of the firm, following the sale. “We know about the paranormal ac- tivity, but the buyers loved the Bob Dann
Mid Atlantic R eal E state J ournal N e w J e r s e y • P e n n s y lva n i a • D e l awa r e • M a ry l a n d • W a s h i n g t o n D . C . • V i r g i n i a • Auctioneers Directory NJ-PA-DE-NY-MD-VA DE, PA, NJ PA-MD-VA-W.VA
Richard G. Warner, President NJ & PA Licensed Real Estate Broker Warner Real Estate & Auction Co., Inc. 109 East Grant Street, Suite B Woodstown, NJ 08098 Ph: (856) 769-4111 ext 710 Website: www.WarnerRealtors.com
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Mid Atlantic Real Estate Journal — December 7 - 20, 2012 — 5A M id A tlAntic R eAl e stAte J ouRnAl A uctions
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AUCTION
ADJACENT TO SOUTHPARK MALL, COLONIAL HEIGHTS
16,341± SF Former New Car Dealership on 5.9± AC TRACT 1: Commercial Building 16,341± SF & 2.47± Acres TRACT 2: 2.01± Acres TRACT 3: 1.42± Acres 3 Tracts offered separately & as an entirety. t 3FUBJMGMFYDPNNFSDJBMTQBDF[POFE #VTJOFTT$MBTT t #BZEPPSTFOUSBODFT t -PDBUFESFHJPOBMTIPQQJOHBSFB t .JMFTUP'PSU-FF DSPTTSPBETBU* *3U NBLFTQSPQFSUZBDDFTTJCMFUPSFUBJMFST CVTJOFTTFT & travelers
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TUES,DEC11@2PM SALE HELD: 445 Charles H. Dimmock Pkwy., Colonial Heights, VA 23834 & Online
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 P LEASE F ILL O UT C OUPON B ELOW A ND F AX I T T O 781-871-5299 OR E MAIL LCHRISTMAN @ MAREJOURNAL . COM
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A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal
www.marejournal.com M id A tlantic R eal E state J ournal Brandywine Realty Trust leases Management Analysis The Ezra Co.’s Martin & Rothman negotiate 95,610 s/f H ERNDON, VA — Two executives with The Ezra Company
See Your Name in Print 2013 MAREJ Calendar 2013 FORECAST January 11 ........................................ Deadline Dec 28 ECONOMIC DEVELOPMENT January 25 ........................................ Deadline Jan 11 PA’S ENGINEERS WEEK 2013 PROPERTY MANAGEMENT IREM CONFERENCE & EXPO February 8 ........................................ Deadline Jan 24 Contact Linda 800-584-1062 x 202 or lchristman@marejournal.com
have negotiated a more than 80,000 s/f lease in Northern Virginia for the world’s largest credit union. The Washington, D.C. based Ezra Company has negotiated on behalf of Navy Federal Credit Union in an 80,582 s/f lease extension at 12851 Worldgate Dr. In this long-term lease, The Ezra Company princi- pal/executive vice president Gene Martin and senior vice president Damon Rothman
12851 Worldgate Dr.
represented Navy Federal Credit Union, which operates
1900 Gallows Road
its support services at 12851 Worldgate Dr. Inland Amer i can Real Estate Trust owns 12851 Worldgate Dr., which is part of the four-building, 322,325 s/f complex known as Worldgate Plaza. In a separate transaction, Martin and Rothman negoti- ated on behalf of Management Analysis a 15,028 s/f lease relocation at 1900 Gallows Rd. in Vienna. “We’re excited to have com- pleted this transaction for Management Analysis, which is receiving strong lease terms from the landlord and will only have to move about a mile from its present corpo- rate office,” Martin said. Brandywine Realty Trust owns the eight-floor, 210,632 s/f building at 1900 Gallows Rd. n York, PA — MBA Hotel Brokers, Inc. announce sale of the Wingate by Wyndham. John Downes associate bro- ker with MBA Hotel Brokers represented the seller, Prime Hotels Inc., in the $6.1 million sale; Charlie Fritsch, CHB , president of MBA Hotel Bro- kers Inc. procured the buyer, Shree Sai Siddhi York, LLC in this transaction. The Wingate is located at 105 State St. Shree Sai Sid- dhi York, LLC will continue to operate the property as a Wingate by Wyndham. n MBAHotel Brokers arranges sale of the Wingate in York, PA
F inancial D igest F eaturing T ax I ssues /A ccounting
Mid Atlantic Real Estate Journal — December 7 - 20, 2012 — A
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10 yr. loan is secured by shopping center G.S. Wilcox & Co. closes $13.25m in financing
Grossberg, Yochelson, Fox and Beyda close loan Cassidy Turley secures $27.8 million for 1666 K Street, NW
Cinnaminson TWP., NJ — G.S. Wilcox & Co. an- nounced that it has arranged $13.25 million in financing through ING Life Insurance & Annuity Company. The 10 year loan is secured by a 100% leased, class “A” shopping center located in Cinnamin- son Township. The 330,000 s/f center is anchored by Wal- Mart and Sam’s Club, both Morristown, NJ — Janet Proscia and David Turley of Cronheim Mort- gage partnered to place an $8 million floating rate debt financing on an 86,182 s/f professional office building at 10 Madison Ave. The borrower was an un- disclosed pension fund that wanted to take advantage of historically low short term rates while maintaining max- imum flexibility to pursue a future sale of the asset. To that end, the three-year initial term was extended by two one-year option terms to allow for an extended exit window. The loan was placed with one of Cronheim’s banking relationships. “While New Jersey suburban office has struggled to find its footing PHILADELPHIA, PA — Guardian , a national real estate investment bank, recently closed on a portfolio of loans for Fulton Bank. The portfolio included resi- dential homes, restaurant, office building and recreation center. The first asset was a col- lection of C class Section-8 homes located in northeast Philadelphia. Guardian used its real es- tate technology platform, Guardian MarketMaker, to specifically target a database containing low-income hous- ing investors. Due to unavail- able HUD contracts, it was impossible to validate the duration, requiring buyers to underwrite the asset as short
of which are on long-term ground leases through Janu- ary 2028. The borrowing entity is a wholly-owned subsidiary of National Realty & Devel- opment Corp. , one of the northeast’s leading real estate development and manage- ment firms with a portfolio of over 140 projects totaling over 22 million s/f in 14 states. n in the recovery, we were able to demonstrate why this asset deserved special consideration,” said Turley. “Conservative leverage, at- tractive tenant roster, and strong occupancy history helped us justify compelling debt terms.” Proscia said, “When the pension fund advisor approached us with this assignment, they wanted options and that is what we delivered. The market is flush with diverse debt sources ready to deploy capital for strong assets, resilient mar- kets and experienced spon- sors. With our best-in-class combination of expertise and relationships, we are able to provide thoughtful and thorough market coverage for each assignment to deliver solid results.” n
W ASHI NGTON , DC — Cassidy Tur l ey , a com- mercial real estate services provider, announced that it secured a $27.8 million loan for 1666 K St., a 12-story, 286,000 s/f office building located on Farragut Square in Washington, DC’s Central Business District. The 15-year fixed-rate loan was provided by The Pruden- tial Insurance Company of America. Christian Miles , Philip Mudd and Bradley Geiger secured the financing on behalf of 1620 K Street Associates L.P. The loan was closed by Grossberg, Yochel- son, Fox and Beyda, owner’s counsel. 1666 K St. is located at the southeast corner of the inter- section of 17th and K Streets, overlooking Farragut Square. The property is surrounded by world-class shopping, res- taurants and hotels, and is Red Hill, PA — The Annapolis office of Tremont Realty Capital arranged the debt for the refinance of Red Hill Estates, a 61-lot MHP located in Red Hill. John Chase , senior direc- tor, arranged the $2.345 mil- lion loan which was funded by a private investment firm. The 10-year, fixed-rate loan provided for roughly 70% loan to value with a 4.62% interest rate. According to Chase, “Through Tremont’s close relationship with the lender, we were able to leverage a small mobile home park with an aggressive Fannie STAMFORD, CT — Silo Financial Corp. announced the recent closing of four real estate financing transactions totaling $4.76 million. In the first transaction, Silo Financial funded a $2.55 million first mortgage for the acquisition and rehabilita- tion of two single-family homes in the Greater Green- wich area.
Cronheim Mortgage arranges $8m financing for office building
1666 K St.
just one block from both the Farragut West and Farragut North Metro stations. 666 K Street is currently 100 percent leased to law firms, financial institutions and personal services. Ad- ditionally, McCormick & Schmick’s is located in the ground-level retail space.
“The key feature of this loan was finding attractive 15-year fixed-rate financ- ing, which was important to the sponsorship,” said Miles. “Accordingly, Pruden- tial offered the kind of flex- ibility and speed of execution that aligned with the owner’s interest,” he continued. n
Chase of Tremont Realty Capital positions $2.345m loan
Guardian concludes East Coast loan sale term or “market rate.” The condition of the collateral, both actual and perceived was another major concern to potential buyers as the buy- ing community was unable to ascertain the status of the HUD required repairs.
Red Hill Estates
Mae loan structure that pro- vided a competitive long-term
interest rate on a non-recourse basis with cash out.” n
The second asset was a restaurant located in a NJ suburb of Philadelphia. The third asset was a 25,000 s/f partially leased of- fice building in Metro DC. The last asset was a recre- ation center located in NJ. A local buyer with intimate knowledge of the asset and problems associated with it was identified and Guardian was able to procure an offer, exceeding Fulton Bank’s ex- pectations. n
Silo Financial completes more than $4.7 million in financing
Silo Financial also pro- vided a $1.225 million first mortgage loan to acquire a Shell-branded gas station and convenience store in Yaphank, NY. The third closed deal was a $735,000 bridge loan for the acquisition and reconfigura- tion of a three-story multi- family building on Manhat- tan Ave. in NYC – just five
blocks from Central Park. Once complete, the 2,400 s/f property will house two one- bedroom apartments and a three-bedroom duplex. The borrower is a private real estate investor. Lastly, Silo Financial closed a $250,000 small equity loan secured by membership in- terest in a class-Aoffice prop- erty in Scarsdale, NY. n
A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal
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T ax I ssues /A ccounting
eginning with the 2013 tax year, individuals invested in real es- By Karen A. Schirmacher, CPA, MST, Wilkin & Guttenplan PC The impact of the new 3.8% Medicare Tax on RE “Investors” versus RE “Professionals” dividends, capital gains, rental and other passive income Real estate investors with payers and $250,000 for mar- ried taxpayers) may see the new tax imposed on their net
B
the new law. The new tax is equal to 3.8% of the lesser of (a) net investment income or, (b) the excess of modified ad- justed gross income over the threshold amount. While the tax applies to the net rental income of real estate “inves- tors”, as the law is currently written, it does not apply to the net rental income of real estate “professionals”. A real estate professional is an individual who 1) spends more than 750 hours working in real property trades or busi- nesses; and 2) spends more than 50% of their total work-
ing hours including their other professions) in real property trades or businesses. Addi- tionally, in order for the hours spent in any activity to count towards the satisfaction of both these tests, the individual must meet a time sensitive material participation stan- dard for each separate activ- ity, otherwise the hours are ignored. Individuals owning multiple rental properties may find it virtually impossible to meet the real estate profes- sional requirements. While it’s unfair that an individual who spends all of their time working in rental real estate is subject to the new Medicare tax, relief could come in the form of a tax elec- tion to aggregate all rental real estate activities into a single activity. If the material participation standard is met with regards to the aggregated activity, it is likely that the individual will qualify as a real estate professional and thus not have their net rental income subjected to the 3.8% Medicare tax. The election is made by at- taching a specific statement to the first tax return in which you qualify as a real estate professional. Without the elec- tion, rental income and losses will continue to be treated as passive and not only subject to the strict passive activity rules, but the new Medicare tax as well. While the benefits of making this election are clearly evident more so now than ever, there are disadvantages that need to be considered as well. If you are planning on disposing of one or more of your properties, careful consideration must be given to whether the election should be made prior to the disposition particularly if it is likely that you will realize a loss. Making the aggregation election prior to the disposition could delay the recognition of any tax benefits resulting from the loss for many years. Your professional tax ad- viser can help you navigate these complex rules as well as analyze the costs and benefits to the election and provide you with guidance as to the docu- mentation you should keep to support your status as a real estate professional. Karen A. Schirmacher, CPA, MST is a principal with Wilkin & Guttenplan PC. n
tate may see their tax bill increase as a result of the n e w 3 . 8 % M e d i c a r e tax. This new tax will be imposed on income that was histori- cally exempt
While it’s unfair that an individual who spends all of their time working in rental real estate is subject to the newMedicare tax, relief could come in the form of a tax election to aggregate all rental real estate activities into a single activity.
Karen A. Schirmacher
from the Medicare tax – net investment income. Invest- ment income includes interest,
income over a certain thresh- old ($200,000 for single tax-
rental income, as it is consid- ered investment income under
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The real estate group at Wilkin & Guttenplan has nearly 30 years of experience helping our real estate clients achieve the best possible results for their properties. Our understanding of industry issues enables us to identify opportunities and provide guidance to commercial, residential and industrial property developers, owners/investors, managers and closely-held real estate enterprises. By applying knowledge that’s been acquired through years of experience, we’ll help you to meet your goals and work with you to create a plan of action that provides a comprehensive approach for your needs.
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7LFHV/DQH(DVW%UXQVZLFN1-_ 3HQQ3OD]D WK)ORRU1HZ Mid Atlantic Real Estate Journal — December 7 - 20, 2012 — 9A www.marejournal.com t Ax i ssues /A ccounting By Bruce J. Coin, Bruce Coin Consulting The current commercial mortgage market lows through the mi dd l e of 2015 lend- ers as well as borrowers ar e a lways contemplat- ing the poten- tial for future interest rate W ith interest rates at and likely to re- main at all time a specific calendar date such as the one currently targeting mid-2015. Apparently many FOMC members were of the opinion that adopting a quan- titative threshold could, in the right circumstances, help the Committee more clearly com- municate its thinking (publicly) about how the likely timing of an eventual increase in the fed funds rate (and the Fed’s out- look) would shift in response to unanticipated changes in economic conditions. Their difficulty will be in es- tablishing and agreeing upon a formula as some disagreement was stated about whether thresholds should be expressed in terms as a specific number, such as the unemployment rate, or in a qualitative descrip- tion. It is possible by their January or February meetings that they will have reached consensus and can announce their decision. This year’s last FOMC meet- ing occurs on December 11-12, too late to be addressed in this issue. With the unemployment rate still hovering around 8.0 percent it is highly likely that the “Fed” will continue purchas- ing mortgage backed securities and long term treasuries under its Operation Twist (QE III). Intended to reduce and keep long term interest rates low, the policy is working. In other news, Mary Shapiro is stepping down as chairperson of the SEC. She is responsible, among others, for giving an indefinite exemption from the Volker retention provision of the Dodd Frank Act to lenders. As 2013’s CMBS production is estimated to increase by about 20 percent, will her successor be a conservative and try to rein in Wall Street’s activities or be a liberal and re-open the flood gates? No matter what time of year, such questions needing contemplation and answers always exist. As we head into the New Year, the economy and com- mercial real estate markets are continually improving. Accord- ingly, I wish all participants in the Commercial Mortgage and Real Estate industry a Joyous Holiday Season and a Healthy and, what all current evidence suggests will be, a More Pros- perous New Year. Bruce J. Coin is director of Bruce Coin Consulting, Inc. n Bruce J. Coin increases. That probability is impacting income property underwriting and mortgage lender retention decisions. • Is it prudent for a lender to make a long term fixed inter- est rate mortgage at say 4.50 percent and keep it on book or should it sell the mortgage before rates rise and the face value gets discounted? • Should a borrower secure a short term (fixed or floating rate) mortgage and gamble that interest and cap rates are higher when wanting to refinance? • Should a construction lend- er underwrite its estimate of future value upon completion and lease up of a property applying cap rates and debt service coverage ratios based on today’s rates or should it apply higher rates to insulate against potential rate increases that may occur by the time the property seeks replacement financing? Steps now being envisioned by the Federal Reserve, as, if or when implemented, are in- tended to enable all parties to better monitor and anticipate future “Fed” actions. When chairman Bernanke was appointed, he promised to bring more transparency to the Fed’s actions and thinking. He has done that. He introduced a 2 percent inflation goal, he holds press conferences after every other meeting and he publishes the policy maker’s forecasts for economic growth, unemployment and the future path of interest rates. As more transparency, the chairman is proposing to link the “Fed’s” outlook for interest rates to measures of employ- ment and inflation. According to the FOMC’s October meet- ing’s minutes, policy makers “generally favored the use of economic variables” to provide guidance about when they are likely to approve their first in- terest rate increase since 2008. Such measures may replace or supplement their targeting Who can Your Business count on today? Just like your customers can count on you to give them “service with a smile,” you can Count on Columbia, the Business Bank of New Jersey, to give you the financial products and services you need to succeed. And you can always Count on Columbia to remain true to the principles of community banking. To LEARN MORE ABOUT OUR BUSINESS BANKING SERVICES CALL OR visit your nearest Columbia Bank office. 3"! ,OANS s ,INES OF #REDIT AND 4ERM ,OANS s #ONSTRUCTION &INANCING s Business Checking s Online Banking s Retirement Plans Convenient Offices Throughout New Jersey -AIN /FlCE
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columbiabankonline.com Count on Columbia. Member FDIC 10A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal www.marejournal.com T ax I ssues /A ccounting Also arranges financing for newly constructed Northern New Jersey office property HFF secures construction financing and joint venture equity for Bell Del Ray in Alexandria, VA A lexandria , VA — HFF has secured construction financing s/f of retail and dining, 3,200 residential units, a 300-room hotel and more than 60 acres of park land. Fund IV. In addition to the 276 apart- ment homes that average 843 s/f each, the five-story com- munity will include 3,513 s/f of ground-floor retail. Com- munity amenities will include a courtyard swimming pool, outdoor fireplaces, state-of-the- art fitness facility, club room and gaming/theatre room. Bell Del Ray will be located at the south end of Alexandria’s 167- acre master-planned Potomac Yard, a mixed-use community that when complete will in- clude more than four million s/f of office space, 1.1 million and joint venture equity for the development of Bell Del Ray, a 276-unit, classAmulti-housing community. HFF was engaged by a joint venture between Woodfield Investments , Arsenal Real Estate Partners, LLC and The Davis Companies to secure equity and debt capital- ization for development of the project. The debt for the project was secured through Sover- eign Bank while the equity was provided by Bell Partners The HFF team representing the borrower was led by senior managing directors Dave Na- chison , Alan Davis and Sue Carras , and managing direc- tors Walter Coker and Brian Crivella . “Located within the already successful Potomac Yard proj- ect, Bell Del Ray will enjoy unique advantages including its location within easy walking distance of both the Braddock Road Metrorail station and the very desirable Del Ray neigh- borhood, which provides access to an appealing assortment of independently-owned specialty food shops, art galleries, cut- ting edge restaurants and cof- fee houses,” said Nachison. “Location and market-proven sponsorship are vitally im- portant in capitalizing devel- opment sites today and the market clearly responded to the strong examples of these elements at Bell Del Ray,” added Coker. Woodfield Investments is a premier developer of Class A multifamily communities in the Mid-Atlantic region. The part- ners at Woodfield Investments share more than 140 years of experience and have developed 38 apartment communities representing 11,506 units at a value exceeding $1.4 billion. FLORHAM PARK, NJ – HFF arranged financing for Summit Executive Center, a 62,188 s/f, newly constructed office property in Summit. HFF worked on behalf of MRY Associates and Nor- mandy Real Estate Partners to secure the 10-year, fixed-rate permanent loan through Can- tor Commercial Real Estate (CCRE). Loan proceeds are tak- ing out an existing construction loan that HFF had previously arranged. Completed in 2012, Summit Executive Center is a LEED Certified office building with a two-level, 196-space parking garage. The property is fully leased to tenants including one of the world’s leading consult- ing companies, Pennant Capi- tal Management, Merrill Lynch Wealth Management, Callan Associates and Amlin. The HFF team representing MRYAssociates and Normandy Real Estate Partners was led by senior managing director Jon Mikula . n Bell Del Ray Construction and real estate companies require more from a firm than traditional accounting and tax services. Let our experts help you manage the more complex issues and regulations impacting your business, so you can succeed. All successful projects begin with a well-defined plan. Mid Atlantic Real Estate Journal — December 7 - 20, 2012 — 11A www.marejournal.com While other banks are pulling back, our customers are pulling ahead. Why? D iscover open minds as well as open hands. We understand a local businesses’ financial needs. I t calls for support, not reserve. That’ s why, for all your business deposit and lending needs, Regal Bank offers a wide array of commercial products and services. We’ re locally owned and operated, so we better understand the challenges and opportunities your business faces every day. • C ommercial R eal Estate and Multi -F amily L oans • C ommercial L oans • Business L ines of Credit • F R E E B usiness C heck ing • R emote Deposit Capture • Merchant Ser vices • Fast Approvals F or more information contact Monte or Sean at 973-716-0600 570 W. M t. Pleasant Avenue L ivingston, N J 07039 973-577-7160 504 S. L ivingston Avenue L ivingston, N J 07039 973-577-7161 30 Columbia Turnpike Florham Park, NJ 07932 973-210-4115 180 E agle R ock Avenue R oseland, N J 07068 973-228-3951 www. regalbanknj. com Equal Housing Lender. Equal Opportunity Lender. Member FDIC 12A — December 7 - 20, 2012 — Mid Atlantic Real Estate Journal www.marejournal.com t Ax i ssues /A ccounting Need commercial real estate help? If you are a lender, attorney, developer or realtor, we can provide it. Education Webinars, classrooms and eLearning Custom and off-the-shelf programs Topics • Analyze, Underwrite and Value Income Property (apartments, office, retail, industrial flex, other) • Income Property Lease Analysis • Direct Capitalization and Yield (DCF) Capitalization • Typical Mortgage Commitment Clauses • Construction Lending Basics • Structuring Joint Ventures and Participating Mortgages • Financing Properties with Prior Ground Leases • Net Leased, Single Tenant Credit Financings • Credit and Non-Credit Tenant Financial Statement Analysis • Commercial Appraisal Review Bruce Coin is the former co-founder and CEO of Pro-gressive Mortgage Corp. He is an acknowledged commercial mortgage financing and property valuation expert with over 40 years of experience. He has lectured to classes of the University of Pennsylvania’s Wharton School, and has written for, taught, and addressed many special interest groups including banks, law firms, appraisal organizations, commercial real estate organizations and private real estate companies. He is an IDECC Certified Distance Education Instructor (CEDI) and has written numerous courses about commercial real estate, finance and appraising. Bruce currently holds Certified General Real Estate Appraiser certificates in PA, NJ and CA. Expert Services • Investigative reports – appraisal reviews • Consultation and case analysis • Deposition and court testimony • Individual property or portfolio analysis brucecoin.com (856) 906-8240
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