On March 20, 2020, the CRE Finance Council hosted a great conference call entitled, “The Impact of COVID-19 on the Commercial and Multifamily Real Estate Property & Finance Markets.” Like many of us in the commercial real estate world, I’m anxious to get my arms around what impact, both short and long term, the COVID-19
Finance Issues
Mission Possible: Combining HUD Construction Financing with Historic Tax Credits
Combining HUD-insured multifamily construction financing (like Section 221(d)(4) loans) with historic tax credits (“HTC”) can seem like an impossible feat given their respective mazes of rules and requirements. Notwithstanding, each are valuable sources of capital for developing multifamily projects, and, if you can manage through those mazes, HUD financing and HTCs can be successfully combined.…
Capitalization Rates Across the United States
Thank you to Integra Realty Resources, Inc. for the above analysis relating to 2014 Cap Rates in the major U. S. metropolitan areas. As you will see the secondary markets like (Cleveland, Cincinnati, Columbus and Dayton) remain strong performers and attractive for investment. We believe that…
Real Estate Crowdfunding
By now you have heard of Kickstarter or Indiegogo as tools for the creative class with little available capital to fund their ideas and dreams. But have you heard of Fundrise, Realty Mogul, RealtyShares or CrowdStreet ? Think of these and other real estate crowdfunding websites as the marketplace where small investors can…
Hotel Financing Seminar
Please join us for this informative webinar today. If you can not participate you can access the webinar through our sponsor. The link is the title to the webinar.
Hotel Financing Structures and Options in the Hospitality Industry Upswing
Leveraging CMBS Capital Market Financing, Preferred Equity, Tax Credit Funds and EB-5 Financing
The hotel industry is in an upswing as this cyclical industry continues to heat up and is one of the most active real estate segments in today’s economy. How can counsel pave the way for hotel clients to identify and negotiate financing deals?
While financing from traditional lenders is relatively scarce, savvy industry insiders are finding additional sources of financing and are driving a new era of innovation in real estate finance. Preferred equity investments, tax credit funds and EB-5 financingare common.
Commercial mortgaged-back-securities loans, historically an important hotel financing source, came back into play in recent years. New CMBS loans are more complex and difficult to navigate than before, but can be a critical source of financing for certain deals.
Listen as our authoritative panel of real estate finance attorneys guides you through the various financing tools and sources of money available for hotel financing, including CMBS financing, tax credit funds, EB-5 financing and preferred equity investments. The panel will also address legal issues that can present financing challenges in this post-recession environment.
Outline
- Pre-recession/recession
- Easy money
- Cleaning out the distressed properties and loans
- Current available sources of financing
- Private investor dollars (preferred equity)
- Tax credit funds (new market/historic tax credits)
- EB-5 financing
- CMBS capital market financing
- CMBS type loan structures and requirements
- Collateralizing the management and franchise agreements
- Comfort letters
- Subordinations
- Collateral assignments
- Bankruptcy remote organizational structures and covenants
Faculty
Bradley Kaplan, Partner
Ulmer & Berne, Cincinnati
Mr. Kaplan assists owners, operators and receivers of hotel, office and industrial properties with their real estate, finance, leasing, construction and organizational challenges; specifically, negotiating and drafting hospitality, purchase, sale, financing, leasing, construction, franchise and management agreements. He serves as general counsel and national real estate counsel to several domestic and internationally based public and privately held companies.
The Exception that Swallowed the Rule
Nonrecourse loans are popular among commercial real estate owners because the Lender agrees only to seek recourse against the real estate and other collateral securing the loan in a default or loss situation. Unless the loss is caused by a “bad boy act”, the borrower and/or principal will not be held personally liable. Bad boy…
Opportunities in the Housing Market
2012 is likely to be similar to 2010 and 2011 in many segments of the real estate industry. However, the residential rental market is frequently mentioned as a bright spot. There is more demand than supply to meet the needs of the market place. Apartment communities and apartment buildings will surely meet most …
A Receiver’s Authority to Sell Property Free and Clear of Liens and Encumbrances Gaining Momentum in Ohio
As the filing of Chapter 11 cases continues to be rare, state court alternatives for liquidation of assets continue to grow in popularity. State court alternatives typically provide a more expeditious and less expensive forum for secured lenders to direct the liquidation of their collateral—for example, state court receivership sales avoid the United States Trustee…
Foreclosed from Foreclosure?
Purchasing foreclosed real estate has never been easy or risk-free. In Ohio, all purchases are “AS-IS” and purchasers generally do not have an opportunity to inspect the property. A 10% cash deposit is due upon bidding and payment in full is due within thirty days with the threat of contempt of court if the purchase price is not paid. And the risks to purchasers are increasing.
Recently several banks have elected to stop residential foreclosures due to questions about their internal procedures. The attorneys general of all 50 states are now conducting a joint investigation into possible false or unverified information contained in affidavits and improper notarization of affidavits. Remedies for homeowners whose homes have been wrongfully foreclosed are determined by state law, but may include an unwinding of the foreclosure and returning legal title to the borrower. But what happens when that home has been purchased by a third party at foreclosure sale? Or flipped to another owner?
ELIMINATING OFF-BALANCE-SHEET ACCOUNTING OF LEASES
Remember Enron and off-balance-sheet accounting scandals? The efforts to clean up these accounting practices are still in the works and are about to hit the world of commercial real estate—arguably at the worst possible time. The Financial Accounting Standards Board (FASB) (which is endowed with the power to decide U.S. generally accepted accounting principles) and its international counterpart, the International Accounting Standards Board (IASB) are hoping to enact a new lease accounting standard by 2013. The Securities and Exchange Commission in a 2005 report to Congress estimated that the current lease accounting standards which went into effect in 1976 allow tenants to keep about $1.25 trillion in future liabilities off-balance-sheet.
Currently, a lease may be shown on a tenant’s balance sheet as either a capital lease which is treated on the balance sheet much like a finance transaction or as an operating lease which is mostly off-balance sheet. The FASB and IASB believe that investors are not getting a full picture of a tenant’s obligations when the lease is treated as an operating lease because the lease payments are recognized as an expense when they are incurred or paid rather than all of the rental payments for the term appearing as a liability on the balance sheet.
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