ccim e-perspective january-february...

January-February 2009

e are in the age of doubt and questions. It is easier to come up with questions today, than answers. How

long will this downturn last? What will hap-pen next? How should I plan? Why did this happen? Should I trust the gov-ernment? Uncertainty is the rule of the day for all of us. But is that really any different than we’ve experienced before? At what point in your life were you certain about anything, espe-cially in regards to the future? Maybe on your wedding day? When my wife and I had our first child, I was scared and uncertain as to how I would care for this new and needy being. And while I

now can’t imagine a day without my two children, the first child experience, and the next, were un-settling times for my wife and I. But we learned to cope and adapt,

just like every-one else before and after us and we still are learning. So uncertainty

is always going to be with us, even in these challenging economic times. If you think it’s difficult now, imagine what it was like to live during the Cuban missile cri-sis. America was uncertain if it was going to be provoked into war, and with the former Soviet Union behind Cuba, the stakes were high. Nuclear war was a very real possibility.

CONT’D ON PAGE 9

Tedd Rosenstein, CCIM 2009 Southern Nevada Chapter President

2 CCIM NEWS | JANUARY-FEBRUARY 2009

2009 CCIM Officers

Tedd Rosenstein, CCIM President (702) 362-4144 Carol Cline-Ong, CCIM, RPA President-Elect (702) 388-1800 Cathy Jones, CCIM Secretary/Treasurer (702) 968-7320 Devin Lee, CCIM Immediate Past President Wine Event Chair (702) 369-8618 2009 CCIM Directors

Gary Banner, CCIM Newsletter Chair Legislative Chair (702) 796-7900 Miriam Campos-Root, CCIM LEED AP (702) 363-7600 Garry Cuff, CCIM Candidate Guidance Chair (702) 796-7900 Christie Daugherty, CCIM Designation Promotion Chair (702) 400-1022 Sandy Fink, CCIM Membership Co-Chair (702) 898-4381 Andy Hantges, CCIM Membership Co-Chair Web Site Chair (702) 734-1549 Jan Hoback, CCIM Social Activities Chair Scholarship Liaison (702) 595-4467 Soozi Jones Walker, CCIM, SIOR Scholarship Chair (702) 316-4500 Ryan Martin, CCIM Programs Chair (702) 836-3780 Bobbi Miracle, CCIM Education Chair (702) 316-4500 Kathy Stubbs, CCIM, CPM Sponsorship Chair (702) 304-1947 Chapter Address Southern Nevada CCIM PO Box 97653 Las Vegas, NV 89193-7653 Phone: (702) 798-5156 Fax: (702) 798-8653 [email protected]

Management Company Alternative Management Katrina Bruce [email protected] Bradi Gianti, Coordinator [email protected] 6725 Via Austi Pky Ste 250 Las Vegas, NV 89119

CCIM Institute 430 N. Michigan Ave Ste 800 Chicago, IL 60611 Phone: (312) 321-4460 Fax: (312) 321-4530 Customer Service: (800) 621-7027 www.ccim.com

The CCIM Perspective is a bimonthly publication, (excluding November), of the Southern Nevada CCIM Chapter, Eric Tischler, Editor. All rights reserved. To submit an editorial, please contact Eric Tischler at [email protected]. The CCIM Perspective may contain controversial or unsubstantiated informa-tion by the authors. The contents herein are not necessarily the views of the Southern Nevada CCIM Chapter. The Southern Nevada CCIM Chapter cannot be held responsible for opinions, views, or facts expressed.

2009 Platinum Sponsor

2009 Gold Sponsors

2009 Silver Sponsors

2009 Bronze Sponsors

2009 Copper Sponsors

CCIM NEWS | JANUARY-FEBRUARY 2009 3

oth the Financial Stability Plan announced by Treasury Secre-tary Tim Geithner on February 10 and the $787 billion Eco-

nomic Stimulus bill signed by President Obama on February 17, contain provisions beneficial for commercial real estate. The Financial Stability Plan, included a major expansion of the Term Asset-Backed Securities Loan Facility (TALF) to include commercial mortgage-backed securities (CMBS). The TALF had been announced in November 2008 to address the credit shortfall in the consumer (credit card), auto, student loan and small business credit mar-kets. Originally, TALF was funded with $20 billion from Treasury’s Troubled Asset Recovery Program (TARP) that would support $200 billion in lending by the Federal Reserve Bank of New York to investors to purchase as-

set-backed securities. The Financial Sta-bility Plan increased this amount to $200 billion, which would support up to $1 tril-lion in lending by the Federal Reserve Bank of New York to investors for pur-chases of asset-backed securities, includ-ing AAA-rated CMBS. Inclusion of CMBS in TALF is expected to help re-store activity in the CMBS markets, which has been a major source of financing for commercial real estate. Currently, banks and the CMBS market represent 75% of all outstanding commer-cial real estate loans. However, banks have

tightened their credit standards and reduced loan volume in reaction to pressure to increase reserve levels and de-crease commercial real estate exposure. The CMBS mar-ket has ceased to function with respect to new issuance - in fact, the CMBS market provided approximately $240

CONT’D ON PAGE 8

LEGISLATIVE UPDATE STABILITY PLAN & ECONOMIC STIMULUS BILL BENEFITS COMMERCIAL REAL ESTATE

By Gary Banner, CCIM Commerce CRG

Cushman & Wakefield Alliance


Time of the Essence provision is an essential part of both residen-tial and commercial real estate contracts. If a contract does not contain a Time of the Essence

provision, it can be problematic for both the buyer and seller. Time of the Essence provi-sions are critical if the seller wants escrow to close by a certain date. Without the provi-sion, a seller must give a buyer “reasonable” time to complete the transaction before ter-minating an agreement. By ensuring the Time of the Essence provision is in the sales contract from the outset, many problems can be avoided. Time of the Essence Clauses and Real Estate Contracts Recently, the Nevada Supreme Court clarified the rights and responsibilities of the buyer and seller in real estate con-

tracts that do not con-tain Time of the Es-

sence provisions. In Mayfield v. Koroghli, the Court analyzed a commercial develop-ment in Henderson, Nevada where the seller wound up terminating the purchase agree-ment1. Of the two contracts between the buyer and the seller, the second contract failed to include an escrow closing date or a Time of the Essence provision. Both parties contemplated commercial subdivision ap-proval as part of the agreement. Three years after entering into the agreement, the seller terminated it. The buyer represented that they were ready, willing and able to complete the transaction, but the seller re-

fused to sell the property and the buyer filed suit. The Court concluded that even though the original contract had pro-vided for an anticipated closing date, the second contract contained neither an escrow closing date nor a Time of the Essence provision. Because there was no Time of the Es-sence provision, the seller must afford a reasonable amount of time to complete the transaction.

CONT’D ON PAGE 7

LEGAL BRIEFS WHEN TIME IS NOT ON YOUR SIDE: THE IMPORTANCE OF TIME OF THE ESSENCE CLAUSES AND REAL ESTATE CONTRACTS

By Erik W. Fox, Esq. Marquis & Aurbach

1124 Nev. 34, 184 P.3d 362 (2008).

THANK YOU RICHARD LEE - Since 1989, Richard Lee, Vice President and Director of Public Relations for First American Title Company, has been the in-dustry’s “go-to guy...” informing and guiding the Las Vegas real estate commu-nity on development and growth.

Chapter luncheons are held the fourth Wednesday of every month (excluding Novem-ber). Check the Chapter website at http://chapters.ccim.com/southernnevada.


JANUARY 2009 LUNCHEON

2009 Southern Nevada Chapter President Tedd Rosenstein, CCIM and Richard Lee.


To Register for a Course call 800-621-7027 or visit www.ccim.com/education

2009 CCIM EDUCATION

CI INTR - Introduction to Commercial Investment Real Estate Analysis

June 18, 2009 - June 19, 2009

After this course, you will be able to: • Solve investment problems using

a financial calculator.

• Understand basic real estate in-vestment analysis tools.

• Perform basic mortgage calcula-tions using compounding and dis-counting techniques.

• Know how to compare similar properties, project vacancy rates, and estimate absorption figures.

• Identify other ways to make a profit in commercial real estate besides brokerage.

CI 101 - Financial Analysis for Commercial Investment Real Estate

July 20, 2009 - July 24, 2009

After this course, you will be able to: • Estimate the value of a property using

sales comparison approach, direct capitalization, and discounted cash flow analysis.

• Measure before- and after-tax invest-ment performance of a property using a variety of measures.

• Understand the components and structure of commercial real estate loans.

• Use the basic cash flow model to com-pare commercial real estate invest-ments to other types of investments.

• Apply commercial real estate invest-ment fundamentals and tax regula-tions to real-world applications.

CI 103 - User Decision Analysis for Commercial Investment Real Estate

May 18, 2009 - May 22, 2009

After this course, you will be able to: • Calculate the value of commercial

leasehold and sub-leasehold interests from the user's perspective.

• Evaluate the risks of sub-leasing from the primary tenant's perspective.

• Use leadership skills to guide the transaction management process from start to finish.

• Use effective quantitative and qualita-tive comparative lease analysis tech-niques to decide between various locations.

• Conduct a sale leaseback analysis to determine the best alternative for con-tinuing to occupy currently occupied space.


LEGAL BRIEFS CONT’D FROM PAGE 4

The seller was not entitled to terminate the agreement without first giving the buyer reasonable time to complete the deal. This is true even though the project had essen-tially been dormant for a three year period with a total pur-chase price never being funded to the seller. It is critical, therefore, that any seller provides a buyer a reasonable amount of time to complete the transaction where no Time of the Essence provision exists in the contract. What Real Estate Professionals Can Do to Avoid Time of the Essence Problems The offshoot of the Mayfield opinion is that the Time of the Essence provisions are enforceable when included in agreements. These provisions can be critical to helping a seller enforce rights and ensure that their property is sold on time or they do not lose rights in that property. They also aid in helping the buyer clearly understand its obliga-tions under the purchase agreement. However, if the buyer will not agree to a Time of the Essence provision, it may be difficult to estimate what a “reasonable” amount of time is in relation to closing es-crow on a purchase agreement. Your legal counsel can assist with determining what is a reasonable amount of

time to permit the buyer to complete the transaction. Some of the factors to evaluate are: 1) whether the prop-erty is commercial or residential; 2) whether any contin-gencies exist in the purchase agreement and 3) whether any specific zoning or other governmental approval issues are inherit in the agreement. It is best to resolve these issues early on as litigation over failed property closings usually not only tie up the property itself, but can be costly and last for several years. The seller does not want to be in the position of fighting to retain the property be-cause they cancelled the contract but eventually losing the property and having to pay attorney fees or costs as a re-sult. The best option is to seek clear closing dates and ensure the Time of the Essence provisions are included in any purchase agreement. In the event that a buyer does not agree to include Time of the Essence provisions, be sure to evaluate giving appropriate “reasonable” time before terminating any such agreement. The rights to a seller’s property may in fact depend on it. Erik W. Fox is an associate with the Las Vegas law firm of Marquis & Aurbach. He can be reached at (702) 382-0711 or visit the firm’s web site at www.marquisaurbach.com


LEGISLATIVE UPDATE CONT’D FROM PAGE 3

billion in financing in 2007 (nearly 50% of all commer-cial lending), but provided less than $13 billion in issu-ance in 2008, despite demand from borrowers. Hundreds of billions of dollars of commercial real estate loans from a variety of sources are expected to mature in 2009 and over $1 trillion in the next few years. However, un-der current conditions, there is insufficient credit capac-ity to refinance this wave of loan maturities. With no liquidity, commercial real estate faces a growing chal-lenge of refinancing maturing debt and the threat of ris-ing delinquencies and foreclosures, which could result in a second tsunami in real estate prices. Economic Stimulus Package: The $787 billion eco-nomic stimulus bill signed by President Obama on Feb-ruary 17th (the American Recovery and Reinvestment Act of 2009) also included tax and spending provisions helpful to commercial real estate. Among the most im-portant of the tax provisions was the extension of the 50 percent bonus depreciation provision that had been in-cluded in the 2008 stimulus legislation, for another year, through the end of 2009. Businesses are allowed to re-cover the cost of capital expenditures over time accord-ing to a depreciation schedule. Last year, Congress tem-porarily allowed businesses to recover the costs of

CONT’D ON PAGE 10


PRESIDENT’S MESSAGE CONT’D FROM PAGE 1

My father was a World War II veteran. I could not imag-ine how difficult and terrifying it would have been to be shipped off to that war, or any war. We currently have hundreds of thousands of U.S. troops stationed and fighting overseas. I have to believe our life here is easier than theirs. We face differnet realities, but where would you rather be?

So follow me this year, as I am your Chapter President, into the uncertain desert. Much like the adversity that faced the generations before us, we too, can't imagine our out-come on the other side. We will have challenges along the way, but isn't that what life really is about? Aren't we just the sum or our experiences on this spinning earth? The journey may be long and arduous, but we will not go it alone. We will not be without some of the greatest assets we humans possess – faith, love, pursuit of freedom, com-passion, and a sense of justice. We just can’t afford to lose these along the way.

Tedd Rosenstein, CCIM 2009 Southern Nevada Chapter President

capital expenditures made in 2008 faster than the ordinary depreciation schedule would allow by permitting these busi-nesses to immediately write-off fifty percent of the cost of depreciable property acquired in 2008 for use in the United States. The bill would extend this temporary benefit for capi-tal expenditures incurred in 2009. Also included in the stimulus bill was a cancellation of debt income provision that provides tax relief for businesses that discharge debt obligations from 2009 through 2014. Current law provides that any discharge in debt is considered income taxable in the year it was discharged. The provision would allow tax on such cancellation of debt income to be deferred until and payable over a five-year period from 2014 through 2018. The bill also included major increases in spending on transportation and infrastructure. Under the stimulus pack-age, states and local governments would play a significant

role in project selection and funds allocation, particularly in the areas of transportation and infrastructure. In order to cre-ate jobs and advance the economy, the stimulus bill set out to quickly fund “shovel ready” projects through existing trans-portation and transit programs. According to the admini-stration, the stimulus legislation specifically included a total of $144 billion for state and local relief and $111 billion for transportation and science with each state receiving different levels of funding based on their current fiscal condition, economy and transportation ready projects. As CCIMs, we’re trained to recognize the importance of events such as infrastructure investment and the possible effects on future real estate trends. Personally, I hope the passage of this bill will result in the funding of a high-speed mega real project that travels between Southern California and Nevada. As such funding could produce hundreds of jobs for our local economy. To find out what the stimulus bill means for Nevada, please visit the Democratic Policy Committee website at: http://www.dpc.senate.gov/docs/fs-111-1-24-states/nv.pdf. Gary Banner, CCIM is Senior Director of Commerce CRG/Cushman & Wakefield Alliance, Las Vegas; and RCA-National Legislation / Regulation Committee Member. He can be reached at (702) 688-6947 or [email protected].


LEGISLATIVE UPDATE CONT’D FROM PAGE 8

TO MAKE A DEALMAKERS’ SUBMISSION: *Publications are limited to designees who are Chapter and Institute members in good standing. Announcements are for publication in The Perspective, but submissions may also appear on the website. All parties are aware that space is limited and are accepted and published by largest dollar volume within each submission session. Please contact Tedd Rosenstein, CCIM for the submission form at [email protected] or 702.362.4144.

COMMERCIAL LENDING Andy Hantges, CCIM of Access Commercial Mortgage procured financing for Winona Trust, LP for an 80% cash out refinance of a limited service, 112-room Quality Inn Hotel located at 956 Mankato Avenue, Winona, MN for $2,900,000.00. The proceeds were used for the acquistion of another property.

Andy Hantges, CCIM of Access Commercial Mortgage procured financing for Winona Trust, LP for an 80% LTV acquisition of a 50-room Best West Hotel located at 24075 Highway 16A, Keystone, SD for $3,100,000.00.

Adam Gregory, CCIM of Access Commercial Mortgage procured financing for Randco, LLC for 10,528 square feet of industrial space located at 4111 Oquendo Road, Las Vegas, NV for $1,072,500.00. The loan is for five years fixed with a 25-year maturity and a 6.16% interest rate. Interstate Batteries of Las Vegas will occupy the property.

LEASES

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Highland Industrial Park in a 1-year lease of 3,000 square feet of industrial space located at 2901 South Highland Drive, Las Vegas, NV with a value of $15,600.00.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented SPOAKS, LLC in a 5-year lease extension of 1,200 square feet of retail space located at 3540-3620 West Sahara Avenue, Suite 110, Las Vegas, NV with a value of $100,934.16.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented SARA, LLC in a 5-year lease of 576 square feet of retail space located at the Sahara Rainbow Center, 2550 South Rainbow Boulevard, Suite E-10, Las Vegas, NV with a value of $53,654.40.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Highland Industrial Park Partnership / Barden Gaming in a 3-year lease extension of 7,200 square feet of industrial space located at the Highland Industrial Park, 2901 South Highland Drive, Units 7C, D & E, Las Vegas, NV with a value of $108,869.00.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Highland Industrial Park Partnership / Reno Tahoe Speciality, Inc. in a 2-year lease extension of 16,800 square feet of industrial space located at the Highland Industrial Park, 2901 South Highland Drive, Units 14-D, 15-B, C & 4-B, Las Vegas, NV with a value of $310,817.92.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Silverado Center, LLC / Capriotti’s Sand-wich Shop in a 5-year lease extension of 1,325 square feet of retail space located at Silverado Junction Center, 9620 South Las Vegas Boulevard, Suite E-5, Las Vegas, NV with a value of $138,330.00.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Silverado Junction Center / SMASH (Stars Elite) in a 1-year lease extension of 4,260 square feet of retail space located at Silverado Junction Center, 9620 South Las Vegas Boulevard, Suite N-9, Las Vegas, NV with a value of $43,452.00.

Tedd Rosenstein, CCIM of Nevada Development & Realty Co., represented Laredo Professional Plaza / Foxcor, Inc. in a 1-year lease relocation of 960 square feet of office space located at the Laredo Professional Plaza, 7040 Laredo Street, Suite E, Las Vegas, NV with a value of $23,040.00.

Southern Nevada CCIM Chapter Mission Statement

“Position the Chapter as the

premier commercial real estate organization for Southern

Nevada by enhancing the value of the CCIM designation and

increasing the number designees and candidates through

professionalism and educational excellence.”

Southern Nevada CCIM Chapter P.O. Box 97653 Las Vegas, Nevada 89193

“The Commercial Real Estate Voice for Southern Nevada”

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