The Loan Committee™

Commercial lenders are banking on the repeal of Dodd-Frank to improve the increasingly tight lending atmosphere in South Florida. While the pace of requests hasn’t slowed down, most lenders The Real Deal spoke to said they are not financing ground-up development at this stage in the real estate cycle. And they are much more selective these days about which ongoing projects they do give loans to.  Author:  Katherine Kallergis.  Source:  The Real Deal.  Read more…

The growth of all the REIT’s aggregate market capitalizations has increased 68,074 percent in 45 years. NAREIT reports that from 1971 (Market Cap = $1,494 million) to 2016 (Market Cap = $1,018 billion) the REIT industry has grown to an extremely substantial industry. Granted, this growth is highly skewed as the REIT industry has drastically changed in the last almost-half century, and there are considerably more REITs in existence today than at the genesis of the industry. But what if you did invest in the REIT industry at the beginning and continued to invest along the way? Would you have more of a generational investment outlook?  Author: David Sobelman, Founder & CEO, Generation Income Properties.  Source: Commercial Property Executive.  Learn more…

Professionals working with REITs now have a bit more of a framework to work with regarding what constitutes “real property” by the US Treasury Department. When the Proposed Regulations were published in 2014, the Treasury Department left open how “real property” would be interpreted for treatment of REITs.  For the past 50 + years, those interested in investing in REITs had to obtain IRS clearance whenever there was insufficient clarity to determine whether or not the property was considered “real property” to qualify for REIT status. Such determinations were published to individual taxpayers in the form of a Private Letter Ruling (PLR) and subsequent taxpayers could not rely on the prior PLR as support for claiming that their property is “real property”. Finally, with the promulgation of the Final Regulations by the IRS, this past August, there should be less need to obtain PLR’s each time a property type needs to be defined. While, of course, it will not eliminate the need for PLR’s, it should greatly reduce the demand.

The definitions for “real property” are to be used strictly for REIT purposes and not for any other tax related issues outside the purview of REITs. The definitions went into effect on August 31, 2016 and pertain to tax years subsequent to that date.  The IRS and Treasury Dept. consider any PLR which is inconsistent with the definitions contained in the Final Regulations as revoked.  Authors:  Thomas Humphreys, Michelle Jewett, Shane Shelley, Shiukay Hung and Clara Kim.  Source:  Morrison Foerster.  Learn more…

Like companies in other industries, banks are racing to take advantage of the opportunities and manage the risks that the digital economy creates. To do so, they will need computing platforms that provide greater agility at lower cost. As global head of Goldman Sachs’s technology division, Don Duet has led the development and execution of the firm’s private-cloud strategy, as well as its thinking about opportunities in the public cloud. “None of this marks a sudden or abrupt shift in strategy for the firm. It’s always been about making continual progress,” he says. In this edited interview conducted by McKinsey’s James Kaplan at Goldman Sachs’s headquarters in New York, Duet discusses the firm’s use of a private-cloud infrastructure—the challenges and risks it faced in conceiving of and launching the platform almost a decade ago and the benefits the firm is realizing through this technology.  Authors:  James Kaplan and Ishaan Seth.  Source:  McKinsey & Company.  Learn more…

There are plenty of pundits who offer advice on how to “invest like the pros”. However, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University.  The methodology behind HMC’s success is the application of what is known as Modern Portfolio Theory. Modern Portfolio Theory is a theory of finance that seeks to maximize portfolio returns by carefully allocating capital across multiple asset classes. Among those asset classes, Modern Portfolio Theory calls for 10% to 20% of a well-diversified portfolio to be allocated into hard real estate assets. Historical results show that strategy to be effective in posting above-market returns in both good and poor market conditions.  Author:  Ian Formigle.  Source:  CrowdStreet.  Learn more…