The Pro Forma: Garbage In, Garbage Out

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2172

I clearly remember one speaker’s comments from a 1985 NAIOP conference. His claim was this: One of the worst things that ever happened to the real estate business was the personal computer. How Can This Be? For those who can remember prior to 1980—before the personal computer and in the early days of the financial calculator—real estate pro formas were done by hand. Income-producing properties were evaluated based on current income, and development pro formas rarely went beyond three years. With the onset of high inflation in the early 80s, pro formas showing annual increases in income became common to achieve high future evaluations, so real estate could compete with high bond rates. Even then you had to get the numbers (rents, expenses, cap ex, etc.) right on the first try because changing them after the initial projection was cumbersome and time-consuming. Enter the Financial Calculator and the Personal Computer. With

Amazon’s Bold Purchase of Whole Foods: Why Exactly?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2307

Jeff Bezos has done it again. He’s managed to set the retail world on end with his unexpected, and possibly risky, move to purchase Whole Foods. And the move has left a trail of analysts wondering exactly why he did it. So, I guess I will chime in. Stan’s Prediction Amazon bought Whole Foods because it now has 431 convenient pick-up points for existing and future customers to pick-up more Amazon stuff. It’s my thought that future home delivery will only be available for the best of customers, and if you don’t rank, you will be picking up your Amazon shipment, still conveniently, at your local Whole Foods store. That may be one of the main reasons the transaction happened, but let’s look at other factors influencing this just under $14 billion-dollar transaction which recently lit up the retail market. Why Whole Foods? Organic food market becomes flooded. At one

The Show Will Go On In Georgia

By Steve Rothschild in Tax Credits

7 years ago

7 years ago 0 0 2265

We’ve all heard the adage “if it bleeds, it leads” in news today, and Georgia’s burgeoning film industry is no different. We’ve also heard lately about Netflix’s return to LA and now Captain Marvel has chosen not to film in Georgia – a move that wounds some who take pride in its presence here. As ominous as it sounds, the truth is that Georgia maintains one of the most competitive film tax credit programs in the country, and as long as it continues to do so, Georgia’s film industry will continue to flourish. With Georgia’s robust film industry comes an array of job and economy-stimulating needs that drive the economy, beyond just the revenue from film production. Remember, the actors, actresses, producers and other staff all have to eat, sleep, shop and be entertained in the cities in which they’re working. And while that doesn’t hit the “bottom line” for

Development: Unpredictability in the Process

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 1893

Development: Unpredictability in the Process My last blog, “The Importance of Timing on Real Estate Investment,” focused on the unpredictability in investment, on what can happen over time once you own a property. In development, there is the added unpredictability during the process. For a broker selling a property or an investor buying a property, the complete process can be done in 90 days or less. But that is not the same with development, not even close. Process Derailment Developers have many considerations—they need time for inspections, site tests, neighborhood forums, entitlement or zoning processes, permitting, and soil boring tests, to name a few. While some of these can be controlled, others cannot. For example, everything could be moving forward smoothly and one ruffled neighborhood group at a zoning hearing or one difficult inspector could stop the project dead or at least create a significant delay, with the developer having

Using Historic Tax Credits to Increase Profit

By Steve Rothschild in Tax Credits

7 years ago

7 years ago 0 0 2248

In every community across the country, enterprising developers are scooping up historic structures as investment properties. These old mills, factories and turn-of-the-century buildings exude character – and have a lot of potential for modern day uses. Whether it’s a new retail center, residential property, office space, hospitality property or government complex, existing, historic structures are popular options for development projects. Historic restoration projects repurpose aging and unusable buildings and structures for today’s uses, often creating new urban centers out of dilapidated and unsafe eyesores. They capitalize on a community’s nostalgia for the original structure, which typically boasts inimitable personality features and context within the neighborhood. These intangible assets increase community buy-in for a historic renovation project, which promises to preserve the integrity of a structure while making it usably modern or functional for the current population. An excellent example of this is Ponce City Market (PCM). Originally the Sears Building

The Importance of Timing on Real Estate Investment

By Stan Sonenshine in Real Estate Investing

7 years ago

7 years ago 0 0 2090

A dollar today is worth more than a dollar tomorrow. So, the farther into the future one expects income or a sale to occur, the less it is worth in today’s dollars. In my opinion, investors don’t contemplate this factor enough when considering a real estate investment. Factors that are commonly considered for real estate investments include location, market, available financing and current cash flow. But when you invest and how long you plan to hold can strongly impact how well you do. The Effect of Timing + Buying Let’s look at some examples: Those who bought properties at the market peak in 2006-2008 with 3- and 5-year loans know the pain of debt maturing in a down market. While it is always prudent to buy in a down market, it is possible to buy too early. This could result in debt maturing before the market recovers or in anticipated

Film Tax Credits Put People to Work

By Steve Rothschild in Tax Credits

7 years ago

7 years ago 0 0 2392

Film Tax Credits Put People to Work: Intangible Benefits to Tax Credit Programs Film tax credits have propelled the economy forward for a number of states like Georgia, whose generous incentive program has elevated the state to the third in the country for film and television production. As highlighted in this recent CBS story on the lackluster box office performance of Ghostbusters, filmed in Boston, states like Louisiana and Massachusetts have been scrutinizing their tax credit programs with an eye towards potentially scaling back or discontinuing them. I think it’s unfortunate that this is the case, given there are sizable intangible benefits that don’t precisely impact the film’s bottom line– but certainly are of benefit to those states. Measuring the value of film tax credits needs to account for the peripheral benefits such productions provide as new businesses are established and existing businesses expand to support ongoing film production in

Old Malls, New Opportunities?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2742

Lately, it seems that one retailer after another is announcing massive store closings or potential bankruptcy. It’s no secret that Macy’s is closing stores, Sears is contemplating bankruptcy and JCPenney’s is struggling. But what happens when a mall anchor closes or the mall itself dies? It affects everyone. Dying malls, especially in small towns where they are the central economic hub, impact the community that live and shop at the mall; the employees that work at the mall; the small tenants that rely on the larger anchors’ foot traffic; the properties surrounding the mall; the investors and developers that own the mall; and the lenders that hold loans on the mall. A dying mall can absolutely create an economic hole in the center of a small town or suburb that once relied on its vibrancy for tax income and as a social gathering place. Last year, in my blog “How

The Atlanta Beltline: Will the Westside Trail Match the Eastside Trail’s Success?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 1 3102

In a recent blog, I introduced the current sensation that is the Atlanta Beltline. The official website defines the beltline as “a sustainable redevelopment project that is transforming the city… [and will] ultimately connect 45 intown neighborhoods via a 22-mile loop of multi-use trails, modern streetcar, and parks – all based on railroad corridors that formerly encircled Atlanta.” The completed Eastside Trail has already enjoyed tremendous success as most visionaries and developers expected it would. Now, the Westside Trail is being developed, which is indeed exciting, but has led some developers and investors to question whether it will garner the same success and reception as its Eastside counterpart. Let’s take a look at both projects. Eastside Trail Since its inception, $860 million has been invested within a half-mile of the Eastside Trail, which is a two-mile segment that connects Midtown and Old Fourth Ward neighborhoods. The Eastside Trail has gained

Georgia State University Spurs Downtown Atlanta Development

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2987

Georgia State University (GSU) has been experiencing unprecedented growth. It’s recent acquisition of Georgia Piedmont College has boosted the student population from 36,000 to 50,000. And as we know, with any population growth comes development. A recent Atlanta Business Chronicle article states, “And during the past two decades, roughly since Atlanta’s 1996 Centennial Olympic Games, the school’s evolution has been accompanied and exemplified by sustained growth of GSU facilities in Atlanta’s core.” Let’s take a look at the impact GSU’s population and development growth has had in downtown Atlanta. The growth impacts many different real estate types, including: Student Housing Student housing is a major component of GSU’s facilities growth. The same Atlanta Business Chronicle article notes that GSU recently added 1,152 with the opening of Piedmont Central in August 2016, located on the corner of Piedmont and John Wesley Dobbs Avenue. Private developers are active in GSU student housing

Previous page Next page

The Pro Forma: Garbage In, Garbage Out

Amazon’s Bold Purchase of Whole Foods: Why Exactly?

The Show Will Go On In Georgia

Development: Unpredictability in the Process

Using Historic Tax Credits to Increase Profit

The Importance of Timing on Real Estate Investment

Film Tax Credits Put People to Work

Old Malls, New Opportunities?

The Atlanta Beltline: Will the Westside Trail Match the Eastside Trail’s Success?

Georgia State University Spurs Downtown Atlanta Development

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