18A —May 20 - June 16, 2022 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
Inflation is raging at levels not seen in 40 years and interest rates for lon producing properties are following the curve. Investors have flocked to trip the past five or ten years because they offer predictable income streams, management. The reward for sellers has been exceptionally low capitali analyzed what I believe is a run-of-the-mill NNN deal and determined what investor with a 10-year hold, the Base Case. The Base Case assumed a NNN tenant with a first-year rent of $250,000, fees of 1.0% each, a 4.25% going-in cap rate with a terminal cap rate 7 minimum DSCR of 1.25x, a mortgage rate of 3.75% Actual 360, and a total ac required was $2,729,300. The resultant Leveraged IRR and Leveraged E respectively. Michael Jean-Pierre If a seller demanded the same price for the property while the interest rate returns to the investor are reduced substantially, the Static Price Case. T permanent loan from $3,159,000 to $2,706,000, a reduction of $453,000. A increased by $446,100 from $2,729,300 to $3,175,400. The increase in eq down to 4.72% and 1.54x, respectively. If an equity investor demanded the same IRR and Equity Multiple from the on permanent debt, the price of the property must decline, the Static Return of the property must decline by $661,000 from $5,765,000 to $5,104,000. Th in cap rate from 4.25% to 4.80%, or 55 bps. I predict a lag between the increase in interest rates and a decline in the pric that the rate increases are temporary. However, if interest rates remain a investors will seek out properties with more advantageous returns and selle the investor requirement for higher leveraged IRRs and Equity Multiples. *Total acquisition costs in each case includes the value derived from a dire costs, third-party reports, title insurance, and a 1.0% loan fee. A summary follows of assumptions and metrics follows: Base Case Static Price Static Return Loan Interest Rate 3.75% 5.25% 5.25% 2023 Rent $ 250,000 $ 250,000 $ 250,000 Annual Increases 2.5% 2.5% 2.5% Underwriting Deductions 2.0% 2.0% 2.0% Initial Lease Term 20 20 20 Going In Cap 4.25% 4.25% 4.80% Terminal Cap 5.00% 5.00% 5.55% Discount Rate - 10 Years 5.25% 5.25% 5.80% Cost of Sale 2.50% 2.50% 2.50% Amortization 25 25 25 Impact of rising interest rates on NNN values and leveraged . . . Michael holds a Bachelor of Science and Master of Busi- ness Administration from Fordham Gabelli School of Business. Additionally, he has a Master of Science Degree in Real Estate Finance from New York University. MAREJ A summary of assumptions and metrics follows: Expansion of Capital Markets Team M&T RCC appoints Jean-Pierre as senior VP BALTIMORE, MD — M&T Realty Capital Corpora - tion (M&T RCC) has an- nounced the appointment of Michael Jean-Pierre as a senior VP in the NYC office. Jean-Pierre joins the cap- ital markets team and will be responsible for MBS Investor Relations, loan pricing, trading, and key capital markets initiatives to support originations across the platform. Jean-Pierre has over 10 years of experience in mul- tifamily financing. He joins M&T RCC from Capital One where he spent the past five years as a senior manager on the agency capital markets team focused on pricing and trading multifamily securities. Jean-Pierre was integral in the development of technology innovation for their agency team and led collaborative ef- forts across business lines. He was also an active member of Capital One’s Diversity, Inclu- sion and Belonging group and co-lead of the events work- stream planning panels and external speakers throughout the year. Prior to this, Jean- Pierre was a Freddie Mac multifamily producer in the Northeast Regional office, overseeing originations and the underwriting process for 8+ lender relationships, gener- ating $2B+ of annual volume. “We are excited about MJP joining the M&T Realty Capi- tal team. He is very well re- spected and has strong rela- tionships in the multifamily securities investment industry that will enable MTRCC to de- liver market leading rate lock executions to our customers,” said Mark Gould , national production manager.
L Designation signifies expertise in the CRE profession PA/NJ/DE CCIM Chapter honors new CCIM designees
tion, commercial real estate professionals must complete more than 160 hours of case- study driven education cover- ing topics such as interest- based negotiation, financial analysis, market analysis, user decision analysis, in- vestment analysis, and ethics in commercial investment real estate. Candidates must also compile a portfolio dem- onstrating the depth of their commercial real estate expe- rience and pass a comprehen- sive examination. CCIM Institute is a global community of 13,000 mem- bers, more than 50 chapters, and 30 countries that edu- cates and connects the world’s leading experts in investment strategy, financial analysis, and market analysis. He joins FNRP with over 13 years of leasing experience, most recently serving as di- rector of leasing with Kin Properties. “We have built FNRP as a company dedicated to creating outstanding value for our peo- ple, investors, vendors, and re- tail tenants,” said Padavano. “We are uniquely equipped to provide world-class invest- ment opportunities and to offer retailers access to ex- ceptional markets and white- glove management service. This approach continues to yield tremendous results for FNRP’s investors and allows us to offer unlimited career advancement and opportuni- ties to our employees.” MAREJ Tonney Insley. Prior to joining SVN | Miller Commercial Real Estate, Rice served as a contract specialist for Hill International, Inc. in Washington, DC. “I worked alongside the late Tom Knopp for the past 12+ years at SVN Miller. He was my mentor. Since Tom’s mar- ket was Delaware, specifically Sussex County, I hope to honor Tom and continue working in Delaware with Sussex Cty. be- ing my primary focus. I intend to focus on commercial land as well as office and warehouse,” said Rice. MAREJ
EMOYNE, PA — The PA/NJ/DE CCIM Chapter has recog- nized four chapter members who recently earned the Cer- tified Commercial Invest- ment Member designation, the global standard for pro- fessional achievement, from the CCIM Institute. The following PA/NJ/DE CCIM Chapter members were among 166 industry profes- sionals who recently earned the CCIM designation. • Lisa Lord Edmonds, CCIM, SVN | Ahia Com - mercial Real Estate, Lang - horne, PA • John Kallimanis, CCIM, Coldwell Banker Commer - cial, York, PA • Jimmy Koury, CCIM, RSR Realtors, Lemoyne, PA • Scott Warren, CCIM, KW Commercial Real Estate, Binghamton, NY “We are proud of these four individuals for their commit-
Lisa Lord Edmonds
John Kallimanis
Jimmy Koury
Scott Warren
ment to excellence in their field” said Dominic Janidas, CCIM , president of the PA/ NJ/DE CCIM Chapter. “This designation, combined with their knowledge and talent, will ensure their future suc- cess and continued growth,” Janidas continued. To earn the CCIM designa- our firm and for our team,” said FNRP COO Kurt Pada - vano . “We continue to increase our market share across the country, which means that our leasing volume is growing exponentially as well. David is a key addition as we work to retain existing top-tier tenants and add new brands and cat- egories to uphold and enhance our shopping centers’ market- leading positions.” A resident of Delray Beach, FL, Roth, who reports to FNRP managing director Fred Bat - tisti , will play a vital role in sourcing new tenants, can- vassing markets, negotiating lease parameters, analyzing leads, creating letters of intent, and closing lease transactions.
The PA/NJ/DE CCIM Chapter drives the profes- sional success of designees and candidates within our commercial real estate mar- ketplace. MAREJ FNRP appoints Roth as VP of leasing
RED BANK, NJ — First National Realty Partners, LLC (FNRP) has appointed
David Roth as VP of leas- ing. With this addition, the real estate investment firm has hit a key mile- stone with its 100th team member.
David Roth
Founded in 2015, FNRP experienced explosive growth in 2021, growing from a team of 38 to 84 employees – with additional new hires across multiple departments to date in 2022. “This is an exciting time for
Property Valuation
$ 5,765,000 5,765,000 $ $ 5,104,000 $ 5,888,325 5,881,417 $ $ 5,213,807 $ 3,159,000 2,706,000 $ $ 2,706,000 $ 2,729,325 3,175,417 $ $ 2,507,807
Total Acq Cost
Loan Amount 1.25x DSC
Cash Equity
Leveraged IRR
5.96%
4.72%
5.97%
Insley and Rice of SVN Miller CRE expand into Delaware
Leveraged Multiple Unleveraged IRR Unleveraged Multiple
1.71
1.54
1.70
4.93%
4.94%
5.65%
Pennsylvania. Rice is licensed in Maryland and Delaware. Rice began her career with
SUSSEX COUNTY, DE — Tonney Insley , senior advisor, and Christina Rice , advi-
1.50
1.51
1.58
prices reluctantly to meet the investor requirement for higher leveraged IRRs and Equity Multiples. *Total acquisition costs in each case includes the value derived from a direct cap, 1.0% transfer tax, legal & closing costs, third-party reports, title insurance, and a 1.0% loan fee. David L. Church, CCIM is managing director at U.S. Realty Capital, LLC. MAREJ
SVN Miller in 2007 as an executive assistant to Brent Mill - er . Over the last 15 years she has pro- vided Admin- istrative and
sor with SVN Miller Com - mercial Real Estate have earned their Delaware RE License. Insley and Rice have teamed up to
continued from page 2A going-in cap rate from 4.25% to 4.80%, or 55 bps. I predict a lag between the increase in interest rates and a decline in the price of NNN properties, as sellers maintain that the rate increases are temporary. However, if inter- est rates remain at current levels or continue to increase, investors will seek out proper- ties with more advantageous returns and sellers will reduce
Tonney Insley
Christina Rice
Business Support services to select SVN Advisors. In 2021, she transitioned to an advisor position working alongside
cover the Delaware real estate market in Western Sussex County. Insley is now licensed in Maryland, Delaware and
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