- Marcus & Millichap Multifamily Forum
- Valbridge Becomes Wealth Management Group's Preferred Provider
- White Paper - Fractional Interest Discounts Real Estate
- Air Ways
- Valbridge Opens Boston Office
- The Value of Property Taken
- NOTES FROM MBA CREF San Diego, California February 2017
- Valbridge Opens Baltimore Washington Metro Office
- Valbridge Opens Miami-Ft. Lauderdale Office
- Heckerling 2017
- Estate Planning & Valuation in the Age of Trump
- Notes From CREFC Miami, Florida January 2017
- Market Spotlights
- News & Views 2016
- News & Views 2015
- News & Views 2014
- News & Views 2013
NEWS & VIEWS
Marcus & Millichap Multifamily Forum
ATLANTA, Georgia - April 13, 2017 - Valbridge was in attendance at the Multifamily Forum. Thanks to M&M for putting on an informative event.
Keynote Speakers included:
Dennis Lockhart, Former President and CEO, Federal Reserve Bank of ATL.
Hessam Nadji, CEO, M&M
John Sebree, FVP of National Multi Housing Group, M&M
- Discussion centered around future of Interest rates, and their expected level trajectory for the next 12-18 months.
- True home ownership will / should be around 60-62%, down from the inflated numbers that approached 70% prior to the 2007/2008 Crash
- Demographics driving solid demand for many different MF products
- Loan volume expected to grow in 2017 as deal pipeline continues
- Demand drivers still remain job growth, Supply, age demographics
- Class B is the new Darling of the MF properties
- Spreads expected to come down between OARs and Treasuries as time goes on. Spreads now are some of the widest in recent memory.
Other speakers included Marvin Banks, M.Banks Realty Partners; Steve Carlson, Waterton; Jack Fiorella, Equity Resources;
Valbridge Becomes Wealth Management Group’s Preferred Provider
North America’s Largest Independent Commercial Valuation Firm Teams Up With FEI
NAPLES, Florida - April 18, 2017 - Valbridge Property Advisors (Valbridge), North America’s largest independent commercial valuation firm, is pleased to announce their selection as the preferred provider of appraisals and business valuation services for The Financial Engineering Institute’s (FEI) network of over 2,200 wealth management professionals.
"We are excited to add Valbridge to our Expert Sourcing Team," said FEI President and Managing Partner, Nick Gregory, ChFE, CEBA, ChFWA. "Accurate, compliant property appraisals and business valuations are a necessity when it comes to comprehensive wealth management. Valbridge’s national presence and expertise in this market make them a natural fit for our team."
Valbridge CEO Rick Armalavage, MAI added, "To achieve the wealth management goals of a family or business and remain fully compliant, you have to assemble a great team. We are honored to join one in FEI’s Expert Sourcing Team."
With this announcement, Valbridge joins an arsenal of best-of-breed expert sourcing firms to provide services to FEI’s network of wealth management firms, investment and insurance advisors, attorneys, and CPAs across the nation. The result is the fusion of advanced knowledge, experience, services, and products with sound engineering principles to create a synchronized hub for family and business wealth building.
Valbridge Property Advisors is the largest independent commercial valuation firm in North America, with 200 MAI-designated appraisers, total staff of over 675, and 68 locations. They offer comprehensive valuation services including all types of commercial property appraisals, market & feasibility studies, consulting/advisory services, litigation support, business valuations, and construction consulting. For more information about Valbridge Property Advisors, visit www.valbridge.com.
The Financial Engineering Institute (FEI), headquartered in Tampa, FL, serves over 2,200 wealth management firms, investment and insurance advisors, Attorneys, and CPAs across the nation. FEI helps these professionals harmonize the complex wealth of families and businesses through the organization’s WealthBlueprintingTM Process. FEI is also the governing body and grantor of the Chartered Financial Engineer (ChFE) professional designation. For more information about The Financial Engineering Institute, visit thefei.com or call 888.884.3332.
White Paper - Fractional Interest Discounts Real Estate
By: John D. Penner, MAI
A fractional (or partial) interest discount on the value of a real estate property is allowable by the IRS when there is less than a 100% interest in the business entity that owns the real estate. The discount relates to the fact that the ownership interest has a "Lack of Control" over the operation and disposition of the real estate and a "Lack of Marketability" due to the difficulty in selling an interest that is not publicly-traded and is not easily financeable.
Examples of ownership entities that own a fractional interest include:
- Limited Partnerships (LP)
- Limited Liability Partnerships (LLP)
- Limited Liability companies (LLC)
- Tenants in Common (TIC)
The two instances where this discount generally applies are for the gifting of a fractional interest or upon the death of a person that owns a fractional interest in real estate.
Courts have held that discounts for lack of control and marketability exist in the market and should therefore be considered when valuing a fractional ownership interest. The amount of the discounts can vary depending upon the:
- Particular ownership entity to be valued
- Percentage of ownership
- Rate of return on the investment
- Amount of debt
- Market time and conditions in which it is to be considered
Based on our experience in the market we have seen discounts as low as 15% and as high as 67%. The majority of these transactions ranged from a discount of 25% to 40%. In each instance, the ownership interest needs to be valued based on its own specific merits.
Finally, it is noted that upon submission, the IRS requires support in the form of an appraisal for the determination of a discount pertaining to a fractional interest. Per IRS guidelines, the appraisal must consist of a "qualified appraisal" and be completed by a "qualified appraiser."
Valbridge Property Advisors is the largest independent commercial valuation firm in North America and includes a proprietary national database of fractional interest sales. Our appraisals are the most comprehensive in the industry and will help your client sleep better at night.
For more information or questions contact the National Director for Fractional Interest Valuation John D. Penner.
Phone: (714) 449-0852
An appraiser floats several options to determine highest and best use for a dirigible hangar
By Jeffrey S. Harris, MAI
The nation’s only steel hangar for blimps remaining from World War II stands near Elizabeth City, North Carolina. The building is massive, measuring 960 feet by 328 feet and standing 190 feet tall, and its steel construction allows it to flex several inches to withstand wind forces. The property is zoned for industrial use, and improvements total 317,500 square feet of net leasable space
Valbridge Opens Boston Office
North America’s Largest Independent Commercial Valuation Firm Expands
NAPLES, Fla. - March 21, 2017 - Valbridge Property Advisors (Valbridge), North America’s largest independent commercial valuation firm, is pleased to announce the opening of a new Boston office. Located in Sudbury, MA, the office will be led by James J. Marotta, MAI, a 30+ year appraisal veteran in the area, and Matthew Merrill, a 15+ year veteran.
The new office will offer Valbridge's full scope of independent commercial real estate valuation and advisory services, with particular expertise in affordable housing.
Mr. Marotta on the announcement: “I could not be more excited to join the Valbridge family. Becoming part of a team of over 200 MAI-designated appraisers and having access to Valbridge’s state-of-the-art appraisal technology means there is no job too big for us to handle.”
"James’ wealth of experience in such an important market reinforces the Valbridge philosophy of having a national reach while maintaining local knowledge," added Valbridge CEO, Rick Armalavage, MAI.
Valbridge Property Advisors is the largest independent commercial valuation firm in North America, with 200 MAI-designated appraisers, total staff of over 675 and 68 locations. They offer comprehensive valuation services including all types of commercial property appraisals, market & feasibility studies, consulting/advisory services, litigation support, business valuations, and construction consulting.
James J. Marotta, MAI
The Value of Property Taken
Appraising real estate acquired through eminent domain
By Kenneth Cantrell, MAI
A typical appraisal provides an opinion of market value and is required for lending and other real estate purposes. However, in cases where eminent domain is involved, the market value is essentially an interim step leading to the final conclusion of just and adequate compensation.
NOTES FROM MBA CREF San Diego, California February 2017
Earlier this week, more than 3,000 commercial real estate professionals descended on San Diego for the MBA CREF conference.
Valbridge Property Advisors was pleased to be an exhibitor at the event, and enjoyed meeting current and future clients. We were represented by professionals from California, Texas, Georgia, Virginia and South Carolina. In addition to visiting with so many professionals, education sessions were also on the schedule. Below are a few highlights from the perspective of a life insurance company panelist.
Multi-Family Product Class
The life company panelist stated they were focusing more on Class B apartments because they have historically had lower volatility than Class A or Class C apartments. Class A is strong when the economy is good, but suffers when tenants step down to Class B during bumps in the economy. Class C does better when economic times are uncertain, but suffers when the economy turns and tenants move up to Class B.
In both scenarios, Class B apartments are buffered from changes in demand.
Production Forecast for 2017
Life companies are continuing to have record production years, due to struggles in the CMBS world, and expect 2017 to be another strong year. However, many forecasts are for loan production to temper in the near future due to decreases in loan renewals, interest rate increases and unforeseen world events that affect financial markets.
Valbridge Opens Baltimore Washington Metro Office
Nation’s Largest Independent Commercial Valuation Firm Expands
NAPLES, Fla. - February 7, 2017 - Valbridge Property Advisors (Valbridge), the country’s largest independent commercial valuation firm, is pleased to announce the opening of a new Baltimore Washington Metro office. Located in Marriottsville, MD, the office will be led by David H. Brooks, MAI, a 30+ year appraisal veteran in the area, and Michael Haller, MAI.
The new office will offer Valbridge's full scope of independent commercial real estate valuation and advisory services, with particular expertise in commercial real estate and fractional interest valuations throughout Maryland, Washington, D.C., Northern VA, and Delaware.
Mr. Brooks on the announcement: "Opening a new office can be a challenge. Thankfully, we're in an area we know and love, and have the amazing Valbridge team to help make this a smooth transition."
"David’s wealth of experience in such an important market reinforces the Valbridge philosophy of having a national reach while maintaining local knowledge," added Valbridge CEO, Rick Armalavage, MAI.
The office will include two MAI appraisers, two certified general appraisers, and two associate appraisers, as well as support staff.
Valbridge Property Advisors is the largest independent commercial valuation firm in the country, with 200 MAI-designated appraisers, total staff of over 675 and 68 locations. They offer comprehensive valuation services including all types of commercial property appraisals, market & feasibility studies, consulting/advisory services, litigation support, business valuations, and construction consulting.
David H. Brooks, CRE, MAI
Valbridge Opens Miami-Ft. Lauderdale Office
Nation’s Largest Independent Commercial Valuation Firm Expands
NAPLES, Fla. - February 7, 2017 - Valbridge Property Advisors is pleased to announce the opening of its new office in the Miami / Ft. Lauderdale area. The new office is located at 8200 N.W. 41st Street, Doral, Florida and serves the Broward, Miami-Dade, and Monroe County markets. Geri F. Armalavage, MAI, CBA, CVA, CMEA will manage the new location.
Ms. Armalavage, a 30-year appraisal veteran and Chairwoman of the Board of Directors of Valbridge Property Advisors says, "We’re excited to be a part of the dynamic Miami-Ft. Lauderdale market. Our new location provides greater reach for us in Southeastern Florida and will better serve our existing client base throughout this flourishing real estate market."
"This new office strengthens our commitment to be the industry leader for independent commercial real estate valuation services across the U.S. while having a local presence," added Valbridge CEO Richard L. Armalavage, MAI.
Valbridge Property Advisors, headquartered in Naples, FL, is the largest independent commercial real estate valuation and advisory services firm in the country, with over 200 MAI-designated members of the Appraisal Institute among over 675 professionals and 69 offices nationwide. The company’s proprietary technology platform allows for proficient and secure delivery of services nationwide.
Valbridge Property Advisors was again a gold Sponsor of the 51st Heckerling Institute. Held in Orlando the Week of January 9-13, it is the premier conference for estate planning professionals providing unparalleled educational and professional development opportunities for all members of the estate planning team, including the task of Real Estate Valuation and Appraisals.
This year’s speakers covered topics of timely interest to attorneys, trust officers, accountants, charitable giving professionals, insurance advisors, elder law specialists, wealth management professionals, educators and non-profit advisors.
- a focus on the issues surrounding intra-family wealth transfers including planning with portability, obtaining greater divorce/creditor protection, using GRATs and other freeze techniques, planning for the retirement accounts of married couples, and business succession planning
- an update on international planning including recent developments and trends in global tax transparency, planning for non-U.S. persons investing in the U.S., and advising clients seeking U.S. tax deductions for international charitable donations.
- Discussion of tax aspects of fiduciary litigation, recent cases involving fiduciaries, the role of an attorney as an expert witness, how to identify critical pressure points in the estate plan, and how to avoid malpractice liability.
The Institute is also the home of the nation’s largest exhibit hall dedicated entirely to the estate planning industry. Valbridge was also a booth exhibitor, giving us the opportunity to meet and interact with many Estate Planning Professionals. And congratulations to our Allen Brothers Steaks give away winner, Heidi Bitterman with US Trusts.
Estate Planning & Valuation in the Age of Trump
In the not-so-distant past, taxes drove everything in estate planning. Today, a new administration, recent changes in tax laws, and the fact that less than .02% of Americans pay any estate taxes have many people rethinking their estate plans. No matter what the new president does, however, there are still many issues on the table that should drive clients to your door, and many of them require an accurate, independent valuation of the assets involved.
President Trump may work to repeal federal estate taxes, but that still leaves the issue of estate taxes at the state level. With state rates as high as 20% (Washington state), individuals will have plenty of reasons to need estate planning services. Currently, fourteen states and the District of Columbia have an estate tax, six states have an inheritance tax, and Maryland and New Jersey have both.
New Capital Gains Tax?
One idea the new president has floated is a new capital gains tax if he is successful in repealing the federal estate tax. There are few specifics, but an exemption of at least $10 million to protect small businesses and farm owners has been discussed. The application of the tax is unclear however, particularly regarding whether it would apply to unrealized gains or only when the assets are sold. Regardless, as stated by Adrienne Penta of Brown Brothers Harriman,
"If the estate tax is replaced by a capital gains tax, it could be even more complex to administer and to produce the documentation on cost basis."
Benjamin Franklin’s well-known phrase that an ounce of prevention is worth a pound of cure could not be more true than when applied to estate planning. Far too often, people leave estate planning and its related issues until it’s too late to take advantage of the benefits available to them and their heirs. Regardless of where estate-related rules and regulations are headed, do yourself and your clients a great service by having an accurate, independent valuation of estate assets completed.
The Valbridge Estate Planning Specialty Group can help you with any of your estate valuation needs, including:
- Valuations for 706 and 709 filings for all types of real estate
- Fractional interest valuation/discount studies for LPs, GPs, LLCs, and TICs
- National Database of Fractional Interest Sales
- Expert witness/litigation support
- Partition actions
- Business valuations
Notes From CREFC Miami, Florida January 2017
For the 3rd consecutive year, a Valbridge Property Advisors contingent attended the annual CREFC conference. The meetings were held the first week of January at the Loews resort in sunny Miami, Florida; except for the unwelcome day of rain, wind, and cool temperatures.
Following are a few notes that might be of interest.
- Multifamily debt exceeds $1 trillion
- GSE’s account for 44% of the debt
- Freddie believes their business can increase 5% in 2017
- About 50% of Fannie loans in 2016 were for purchases
- Fannie is projected to have a volume of $54 billion in 2017
Rent growth is expected to slow to 3%, down from 4.5%
Markets that may see 5% growth include Portland and Seattle
Appreciation in value is also slowing
New York City is adding 13% new inventory to the market. NYC will join overbuilt markets such as Dallas, Atlanta and Nashville.
US is the number 1 place for safe investment
Favorite foreign investments are multi-family and industrial
There is foreseen change in this trend
A survey of CBRE brokers says prices have adjusted 25 basis points since the rise in interest rates. So far, very few deals have been re-traded or terminated.
Marty of CREFC indicated tax reform in inevitable. It could be radical on the commercial side, but not as much on the personal side. There is some support for the elimination of the interest deduction.
There will be GSE reform in Q3 or Q4 of 2017.
Risk to special servicers of not being enough funds in event of unexpected expenses or litigation
Advance Committees are being established to assist with expenses to alleviate special servicers from taking a hit.
Insurance companies have shown the lowest losses of all lenders
Banks are now lending in every market, and on all property types. There is no over leveraging as in past cycles. Smaller banks have been pulling back, primarily due to regulatory concerns.
Portfolio transactions are down significantly
Life companies were up in volume for the first two quarters of 2016, while CMBS is down. Bank lending also increased
Forecast for 2017 is for bank lending to be flat, CMBS to be down, and life companies to increase.
The CMBS implementation of the 5% risk retention will have a negative impact. CMBS is pulling back from the higher leverage deals. This is creating uncertainty on takeout’s (maturing loans)
A great number of refis will require a capital infusion due to higher equity requirements.
There will likely be a broadening of cap spread between asking price and contract price.