Jun
6
Last updated: June 4, 2009 12:25pm
New Tax Credit Strategies Possible
By Erika Morphy
WASHINGTON, DC-For the last nine months or more the use of tax credits to help finance development, namely New Markets Tax Credits and Low Income Housing Tax Credits, have been characterized by the following: The capital markets crunch has prompted more developers to look anew at these tools as good alternatives to bridging gaps in financing for projects. At the same time, the recession has significantly narrowed the option, by killing the demand for such credits. After all, banks have little need for tax credits when they are not making a profit against which to offset them.
There are signs, though, that this situation is about to change thanks to government measures, starting with the American Recovery and Reinvestment Act that passed in February. Included in that legislation was a clause that allows states to use these funds to cash in unused Low Income Housing Tax Credits.
Developers then will receive grants in lieu of, or in addition, to the tax credit program. As states receive stimulus funds, many housing agencies are now putting in place new tax credit programs based around grants instead of LIHTCs.
“This has been a big focus for developers and states – how to administer the grant program,” Greg Dahlgren, an attorney with DLA Piper’s Real Estate practice, tells GlobeSt.com. “Every state is coming up with its own program on how to use those grants.” He says the preference for many appears to be a combination of grants and credit, so there is some equity investment in the deal.
The need for grants instead of credits is clear: buyers of these credits have all but disappeared from many, but not all, markets. Besides the banks, Fannie Mae and Freddie Mac were key purchasers; they have all but ceased such operations.
“We do have some syndicated clients that have investors they work with, some mid sized banks that haven’t been touched the economic crisis, they are still making money and LIHTC satisfy community investment requirements,” Dahlgren says. “But the market is not good and prices are very down.”
This is not to say deals are completely dead. Tom Sestanovich, partner at Ervin Cohen & Jessup’s Real Estate Department, tells GlobeSt.com that LIHTC usage in California is still active. “The market and the prices change every day. There is still demand for these credits.”
A separate but related category are New Markets Tax Credits, which cannot be used for large scale residential projects, essentially if 80% or more of the income from a project comes from housing NMTC cannot be used, Lee Sheller, also a partner at DLA Piper, tells GlobeSt.com.
NMTC have garnered more interest from developers since the start of the crisis but paradoxically from a practical sense they have only been used by the strongest of developers, he explains. As it LIHTC it has been more difficult to tap outside investors for these projects. So developers have had to kick in more money themselves if they wanted to leverage these credits, typically structuring it as a loan to the investment fund that lends to the project, rather or in addition to taking an equity position in the deal.
At the end of May, though, the Treasury Department announced $1.5 billion in New Markets Tax Credit awards for 32 organizations throughout the country, awards that should ease some of the constraints for developers. The awardees announced in May are planning investments in renewable energy projects, charter schools, health care facilities, manufacturing companies and retail centers. Enterprise Community Investment in Columbia, MD, for instance, received $95 million in NMTC authority from Treasury last month. It will be using its new allocation to create a fund for sustainable commercial development.
Jun
6
First-Time Home Buyer Tax Credit for Closing Will Move Market
Posted by NATIONAL ASSOCIATION OF REALTORS 06/03/09 10:20 AM EST
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(WASHINGTON, DC) — Consumers across the country can now take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home. FHA will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger downpayment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.
By – Charles McMillan
“A true housing recovery depends on buyers returning to the market and reducing inventory,” said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Since many of the homes available are lower priced starter homes, the ability for individuals to use the tax credit at closing should have a meaningful impact on home sales and values and will allow thousands of families to achieve the dream of homeownership.”
Shaun Donovan, secretary of the Department of Housing and Urban Development, announced the change today. In an address to several thousand Realtors gathered two weeks ago at NAR’s Real Estate Summit: Advancing the U.S. Economy, Donovan announced HUD’s plan to offer the tax credit as downpayment assistance. Donovan detailed the modifications to that original proposal and announcement.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table.
NAR has supported monetization of the tax credit, which was part of an Obama administration housing stimulus plan enacted earlier in the year. NAR petitioned HUD to allow home buyers to use the $8,000 tax credit to help them cover downpayment or closing costs to bring new home buyers to the market and stimulate home sales.
“We think this is a good program; our members have been getting many inquiries from potential buyers about it,” McMillan said. “NAR is pleased that this enhancement has been made to the administration’s housing recovery program. As we have heard before, there can be no economic recovery without a housing recovery. With an abundance of inventory, reduced home prices, historically low interest rates and now the availability of the tax credit at closing, we expect to see the housing market further stabilize and improve.”
The National Association of Realtors, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Jun
19
Commercial real estate transactions
12:00 AM CDT on Friday, June 19, 2009
Sales
Equity Based Services Inc. bought self-storage properties in Arlington at 5500 U.S. Highway 287 and at 1800 Sublett Road.
General Datatech LP purchased 999 Metromedia Place, a 69,552-square-foot industrial building in Dallas, from Metromedia Investments LLC. Greg Cannon and Ward Richmond of Transwestern arranged the sale with David Cooke of Stream Realty Partners.
Shake the Nations purchased a 3,400-square-foot property at 1818 Storey Lane in Dallas. Eric Morgan of Capstone Commercial negotiated the sale.
Anvil International leased 218,000 square feet of space for a regional distribution center in Proterra Properties’ Valley View Business Center Four at FAA Boulevard and Valley View Lane in Irving. Gary Lindsey of Grubb & Ellis Co. negotiated the lease with Dan Lawson of Proterra.
Hilex-Poly Co. leased 126,882 square feet of industrial space at 1440 LeMay Drive in Carrollton. Conrad Madsen and Greg Nelson of Lee & Associates negotiated the lease with Jacob Milligan of Prologis.
Oilfield Equipment Rental Co. leased a 45,000-square-foot office and industrial building at 1001 Blue Mound Road in Blue Mound. Pete Richardson and Drew Richardson of Henry S. Miller Brokerage negotiated the lease.
Qual X Serv LLC leased 14,513 square feet of office and warehouse space at 1421 Champion Drive in Carrollton. John Lancaster of NAI Robert Lynn Co. negotiated the lease with Gary Lindsey of Grubb & Ellis Co.
Travel Group LLC, a global travel management company, leased 12,012 square feet of space for its headquarters from KBS Realty Advisors. The space is in Gateway Tower at the intersection of the LBJ Freeway and North Central Expressway in Dallas. Chris Morrow and Cody Crossman of FinleyMorrow handled lease negotiations with Kim Brooks and Fletcher Cordell of Transwestern.
Studio 22 Dance Studio leased 6,181 square feet of space at Pepper Square Shopping Center at the southeast corner of Preston and Belt Line roads in Dallas. Henry S. Miller IV of Henry S. Miller Brokerage negotiated the lease with Nathan Denton of Lee & Associates.
Real estate editor Steve Brown compiles this list.
Jun
19
| Survey: Overseas Buyers Will Be Back in the USA | |||||||||||||||||||||
WASHINGTON, DC-The confidence level of overseas investors has gotten a boost in the past six months, according to the first-ever mid-year survey from the Association of Foreign Investors in Real Estate. More than two-thirds of respondents to the survey, conducted among the association’s nearly 200 members and released on Wednesday, say they plan to invest some debt or equity in US real estate before 2009 is over, although about 75% have not yet done so this year. Foreign real estate investors say they expect to see a recovery in the US real estate market by the end of the second quarter in 2010, the survey says. AFIRE chief executive James Fetgatter tells GlobeSt.com that expectation dovetails with investors’ outlook for the remainder of ’09. “If they assume that the recovery will begin in the second quarter of next year, then logically they would start to start pooling their money this year,” especially if they want to get a jump on some attractive prices, Fetgatter says. “There is capital sitting on the sidelines–apparently quite a bit.” How much of that foreign capital will actually be spent in the US would be “speculation” at this point, though.
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Jun
19
Foreign investors root for D.C. even more
Wednesday, June 17, 2009, 5:28pm EDT
Foreign Real Estate investors still check D.C. as the top U.S. city to lead recovery in the U.S. real estate market, but Boston has now squeezed its way into the top five, according to a new survey from the Association of Foreign Investors in Real Estate.
Investors expect to see the U.S. property market getting over the economic bug by the end of the second quarter of 2010.
The D.C.-based association’s near-200 members from 20 countries — who hold hundreds of billions of dollars in U.S. real estate — responded to the survey in the past month.
D.C., New York, and San Francisco are still the top three cities for foreign investors’ dollars — the same order in the association’s January survey — but Boston is now No. 4 and Los Angeles is No. 5. That means Houston has been edged out of the top five and Boston is in for the first time since 2001.
The mid-year survey also finds that investors have more faith in D.C. now than at the beginning of the year.
“The perception that Washington, D.C. will be the first to recover has risen dramatically since the Annual Survey,” said James Fetgatter, CEO of the association. “Twice as many respondents named Washington as their city of choice over second-place New York.”
Respondents say the office sector will recover first and is the preferred property type to dump their money into, followed by the multi-family sector. That is a switch from their picks earlier this year, when investors marked multi-family as the No. 1 type their dollars like.
Jun
19
DC Is (Still) the Favorite City of Int’l Real Estate Investors
The Association of Foreign Investors in Real Estate (AFIRE) today published results of a survey of its membership that bodes well for American real estate in general and the DC area in particular. According to aggregate data collected from the association’s nearly 200 members, they believe that the US real estate market will “see a recovery” by the end of the second quarter of 2010 — which happens to be exactly one year away.
The survey also asked AFIRE members about their preferred cities for Real Estate investment. DC ranked number one, followed by New York, San Francisco, Boston, and LA. DC also ranked number one back in January when AFIRE conducted a similar survey, but in the interim six months the nation’s capital has only solidified its position. From the press release:
“The perception that Washington, D.C. will be the first to recover has risen dramatically since the [January] survey. Twice as many respondents named Washington as their city of choice over second-place New York.”
Jun
17
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Jun
15
Working capital tends to be in short supply for new or growing businesses, and that is why many entrepreneurs and business managers devote lots of time and stress into coming up with capital for their business. The good news is that locating capital for a business isn’t as difficult as one may think. Using account receivables or invoices a business can obtain instant capital by selling them off to a “factor” for a small discount. This process is known as an account receivable credit line because most of the time the “factor” will give the business a type of “credit line”.
Account receivable credit line financing works great because most of the time startup and growth companies, in particular, simply can’t afford to wait for customers to pay on invoices, or they get in a bind if the customer pays late. It is much easier to get approved for this sort of financing than for a standard business loan from a bank. The flexibility of account receivable credit line financing is attractive to businesses in need of capital.
Your business could choose to factor only a few invoices or all invoices. You are by no means required to factor all account receivables. Since you are actually selling the invoice to the factor you have the freedom to choose which company to sell the account receivables to, and you of course control when you sell them. You would sell the account receivables for a discount to the factor.
The company you sell your invoices to would then be in charge of collecting payments from your clients, processing the payments, and also generating reports. This is another positive for businesses that decide to factor invoices. Your client would be notified of the billing address change.
There are some requirements laid out by the factors who offer an account receivable credit line. Since they are taking on a risk for your clients they will want to make sure that your client is creditworthy. Your businesses credit won’t need to be established to qualify, but your client will need good credit and references as to their payment history. Many new businesses don’t have business credit scores established, so an account receivable credit line allows younger businesses to get capital without long application processes.
This is also the only form of capital that grows as your business grows. As your sales grow, so does the amount that you can factor, or the amount of capital your business has access to for faster growth. Your business could take advantage of supplier specials or other special deals to save money, or the money could be used to pay your bills early to receive an early payment discount with some suppliers. The list of benefits goes on and on.
It is important to know your business capital options.
Paul Counts
http://www.articlesbase.com/finance-articles/account-receivable-credit-line-provides-instant-capital-for-your-business-134620.html
Jun
15
Hi, this is my first time going America. I will be staying lancaster PA for quite some time, would like to know what are the available transportation from columbia, Lancaster PA to Washington DC and New york City? And lastly how long will it take to reach the cities and the price for the transportation? Thanks a million.
It's your lucky day
Amtrak will get you from Lancaster PA "LNC" to Union Station in Washington DC" WAS " via a connection at the 30th St Station in Philadelphia
"PHL"
Once you reach either PHL or WAS then getting a train into NYC "NYP" is easy
The route between WAS and Boston "BOS " is Amtrak's most heavily traveled route and as such it gives you the greatest amount of trains to select from.
Amtrak offers something called a USA Rail Pass that you may find to be a good value.
http://tickets.amtrak.com/itd/amtrak/selectpass
Enjoy America
