This article hit home as it directly effects the commercial real estate refinance market in the office sector. There have been two projects that we worked on recently where the concessions were much greater than the sponsor anticipated thereby modifying the loan proceeds. In both cases the commercial real estate mortgage interest rates have remained steady and we were able to cut costs in a few areas getting us close to the original dollars. We agree, as Homa notes, that base rental pricing hasn’t changed much so there’s been an ability for lenders to provide additional funds as the concessions burn off. Keeping an eye on each market is difficult and the article did a good job of spelling out which ones are more challenged than others.

-Adam Horowitz, Principal of Lever Capital Partners and President of the Real Estate Capital Alliance

Click here to read more about the oversupply problem and higher concessions in the office sector.

This article is very relevant for many of the commercial real estate loans we’ve been working on in both the market rate and affordable housing development markets. We’ve noticed that the material cost has been trending upwards for the last year but the increased labor costs have varied depending upon what market the project is located. This new pricing has created pressure on a few of our developers to either cut costs or increase the leverage to attain the same profit margin. While commercial real estate lending pricing for construction hasn’t increased much, higher loan to value loans have been hard to come by. That said, we’ve been able to accommodate many of our clients to help offset the additional costs.

-Adam Horowitz, Principal of Lever Capital Partners and President of the Real Estate Capital Alliance

Click here to learn more about the growing costs in the affordable housing development market.

​It’s good to read articles like this to keep things in perspective. Yes, there has been quite a run up in the commercial real estate space recently and the downturn will be inevitable. Having been through a few cycles already, some of the ideas they site are ​good ones. When the market is rising everyone seems to be a genius, but your real estate knowledge will be truly tested when the market moves against you. So getting ahead of the issues by negotiating long-term leases, pursuing rehabs, working on maintenance issues and embracing technology is sound advice. We can either help you in advance or when the poop hits the fan. The choice is yours.

-Adam Horowitz, Lever Capital Partners

Click here to read about how you can prepare for the inevitable real estate downturn

​As the cost of lumber, steel, other materials and labor increases, a strain is being put on the multifamily apartment developers​. For a group that raises capital like ours, this makes our job a little harder since the margins tend to decline in this type of environment. At this part of the cycle our job is to determine the strength of the borrower and work towards making sure they have the best team put together. Weaker developers will have a harder time getting financing. You’ll have to show a proven ability to develop similar projects at or below cost to get the lending and investing community excited about your deal.

-Adam Horowitz, Principal, Lever Capital Partners

Click here for more insight on apartment development projects becoming more expensive

There are going to be plenty of pivots regarding the short-term rental market. Many owners and developers are trying to take advantage of what they see as a way to capitalize on the increased use of services like Airbnb. Although markets like NYC and Las Vegas crack down on the use of short-term rentals in larger buildings or in residential neighborhoods, those cities and others are looking for ways to make it work within the legal system. I’ve seen transactions come across my office for whole buildings and condo type spaces that plan on catering to short-term rentals. I think the market will look very different in a few years as the various models sort themselves out.

-Adam Horowitz, Principal, Lever Capital Partners

Click here for more insight into short-term rental projects

​Ahhh Millennials, aren’t they the best.​ This article hit most of the key points in terms of what they’re looking for in the apartment rental market. I was hiking yesterday with a young millennial who said he never desires to own a car, wanted an apartment that was convenient to public transportation, and that he needed that apartment to be near food options that catered towards a more eco friendly young crowd (i.e. vegan or vegetarian). What does this mean for the apartment market? If the units in your building are tech forward so your tenants can work from home, and they have some of the amenities listed in the survey below, then you have the ability to draw millennials to your new or renovated property.

-Adam Horowitz, Principal, Lever Capital Partners

Click here to see the 2018 Consumer Housing Insights Survey conducted for the NMHC:

http://www.nmhc.org/uploadedFiles/Articles/Analysis_and_Guidance/2018-Consumer-Housing-Insights-Survey-One-Pager.pdf

Lever Capital Partners’ Amnon Cohen and other commercial real estate professionals spoke with Nicole Raz of the Las Vegas Review-Journal to discuss new construction projects being funded by out-of-state lenders.

Click the link to read the article and view a video of Amnon Cohen sharing his insight on local lenders and construction projects: https://www.reviewjournal.com/business/many-new-nevada-construction-projects-funded-by-out-of-state-cash/

​”It was a pleasure to sit down with Travis ​Scribner of WestPac Wealth Partners. I’ve been listening to his podcasts recently and always enjoyed his interviewing style where he digs into the professional, personal and community aspects of his guests. During my podcast I was able to talk about my path to the creation of Lever Capital Partners, knowledge of the Las Vegas market, involvement in the Entrepreneurs’ Organization and being the President of the Real Estate Capital Alliance.”               – Adam Horowitz, Principal, Lever Capital Partners

Click here to listen to Lever Capital Partners’ Principal, Adam Horowitz, talk with Travis Scribner:

http://lasvegasmoneyresource.libsyn.com/adam-horowitz-principal-of-lever-capital-partners

Loved this article from Michael Episcope titled “Avoid These Four Common Commercial Real Estate Investing Mistakes”. He did a good job of highlighting some of the pitfalls when buying commercial property. These are good tips once you’ve decided to jump into the deep end, but you might want to ask yourself “Why am I going swimming at all?”. Being a real estate owner isn’t easy and you need to make sure you’ve identified your desired outcome from the beginning. Are you trying accumulate wealth through holding assets long-term or do you feel like there’s a “bargain” here that you can flip and make a profit in a shorter time frame. Whatever you decide to do, make sure you’re buying it right and are willing to outwork your competition…as there are NO shortcuts.

Click here to read more about the four common mistakes to avoid when investing in commercial real estate: https://www.forbes.com/sites/forbesrealestatecouncil/2018/01/05/avoid-these-four-common-commercial-real-estate-investing-mistakes/#16e2c8f65fcc

October 31, 2017 | BY CAPSTACK

So can you get that 60-day close and beat the Jan. 1 deadline that threatens to kill your deal?

Maybe — probably — but it’s going to require a committed deal team, nimble organizations prepared to move quickly and an unwavering focus on the finish line.

And don’t forget that “60-day close” is a misleading concept in the holiday-filled final weeks of the year.

“Two months is two months except when those two months are November and December when two months really are 50 days,” says Adam Horowitz, founder of Lever Capital Partners, a New York-based investment banking firm that specializes in structuring complex commercial real estate transactions.

Making matters even more challenging, the time available to close a transaction becomes even more squeezed as these 60 days come to end. Just when more time may be needed, less time is available because participants close up shop for the holidays.

And remember that you’re not alone. A rush of deals is hitting lenders, lawyers and other professionals as the year-end deadline looms.

So how are you going to pull this off?  Start by being honest with yourself, says Heather Goldman, founder and CEO of Capstak, Inc., and a long time industry capital markets executive.

“Have realistic expectations,” Goldman says. “Understand that the underwriting process is about lenders being able to protect their principal through an accurate valuation of your project and its cash flows, and establishing a long-term business relationship with you, the borrower. This is not about you selling a rosy, best-case scenario in a one-off trade.”

This isn’t the time for extended back-and-forth about the underlying economics of the project. It’s a time for quick agreement.

A good advisor will provide a clear-eyed view of the project, ensuring that your team isn’t blinded by its own optimism. A good advisor, Goldman notes, also can ensure that you’re not leaving money on the table by helping optimize your capital structure and who understands the current market.

“Go with the advisor who challenges your business plan,” she says.

Horowitz says the entire deal team — lenders, lawyers, appraisals and other professionals — needs to be committed from the start to closing the transaction by the end of the year.

“Only certain lenders can close within a 60-day time frame,” he says. “So make sure that your expectations are established up front, and make sure everyone understands their responsibilities.”

It’s equally important that the advisor keep numerous options open.

“Go into the deal with an advisor who can manage multiple term sheets for potential back-ups,” Goldman says. “Have a well-considered plan if your lender isn’t able to fund at closing, or not able to close on the same deal terms.”

An accelerated closing may be more costly than one completed on a conventional schedule. Lawyers and lenders may appreciate working on a highly efficient schedule that reduces the risk that deals will fall apart, but as Horowitz notes, lawyers who are called into work over a weekend during the holiday season are likely to charge premium rates.

The need for efficiency begins with your own organization.

“You don’t want to be the reason that things get delayed,” says Goldman. “Be immediately responsive to lender requests for information. Understand their internal process so that you are prepared to meet due-diligence requests, able to clear any legal conflicts early and ready to meet the requirements of the lender’s credit committee.”

Throughout the process, keep a close eye on the potential risks associated with moving too quickly — risks that range from typos and math errors to the loss of negotiating power and major strategic errors.

Take a deep breath, suggests Horowitz, and give your desire for a year-end close a fresh look. Make sure the effort of trying to close in 2017 clearly outweighs the ease of closing in Q1 when you can take your time and possibly negotiate a better deal.

“Know when you are cutting too many corners which could be costly in the long-run,” says Goldman.

If the costs and risks make sense, time is ticking.

Today is the day to inspire your organization, put together a deal team committed to a year-end close and get to work.

https://www.capstak.com/news/blog/how-to-close-a-deal-in-60-days