The New Markets Tax (NMTC) Program was created in 2000 under the Community Renewal Tax Relief Act to attract private capital to those projects benefiting low-income communities and persons, create jobs, and encourage additional economic development. Projects in these communities have historically had trouble finding such investment, resulting in a lack of resources to meet …
To a developer, affordable housing means lower rents than a market-rate project, lower net operating income, and thus lower returns on their investment. Accordingly, without any outside incentive a developer has little motivation to build affordable housing. Unfortunately, the need for affordable housing is significant. According to the National Low Income Housing Coalition, “in 2013, for …
A commercial real estate sales contract can be one page or one hundred pages. There are no rules, and every term, every word, is up for negotiation. Nonetheless, there are provisions that are typically included in most CRE purchase agreements, and understanding these provisions is essential for both buyer and seller to protect their interests. …
We recently asked our readers what they’d most like to read about on our Blog. Apparently you’re not getting your fix of nightmare material from the movies, because for many of you, your answer was, “CRE deals gone bad and horror stories!” You asked to hear about commercial real estate deals that didn’t pan out as …
Defeasance, in its simplest terms, is the substitution of collateral. In the world of commercial mortgage-backed securities (CMBS), the substitution involves a borrower replacing the real estate securing its a loan with a portfolio of U.S. securities. The portfolio is designed to generate the same debt-service through the term of the loan as the original …
You’ve done well investing in real estate, and are looking to grow your portfolio. Your broker just called and gave you the “hot-tip” of the week: That sparkling Class A office building at Main and Main, the one you have coveted since investor-infancy, will be coming to market in three months. Now your firm has …
While no one is happy when a foreclosure occurs, it does allow a lender to recoup funds it may lose when a borrower defaults. Unfortunately, because the foreclosure process takes time, and the borrower stays in control of the property and its income stream during that time, foreclosure also poses significant risks to the lender. …
Market leasing assumptions define what happens after a tenant lease expires in a commercial property. Since it’s unknown whether the tenant will renew its lease or not, there are two sets of assumptions. One set of assumptions is used if a new tenant needs to be found. The second set of assumptions is used if …
A borrower facing foreclosure is in a bad spot. Loss of their property, litigation costs, damage to their reputation because of the lawsuit, and damage to their ability to borrow money in the future. A lender facing foreclosure is in a bad spot too. The risk that a foreclosure sale won’t bring enough proceeds to …