banks-bundled-bad-debt-bet-against-it-and-won: Personal Finance News from Yahoo! Finance:
"Banks Bundled Bad Debt, Bet Against It and Won
by Gretchen Morgenson and Louise Story
Thursday, December 24, 2009
In late October 2007, as the financial markets were starting to come unglued, a Goldman Sachs trader, Jonathan M. Egol, received very good news. At 37, he was named a managing director at the firm.
Mr. Egol, a Princeton graduate, had risen to prominence inside the bank by creating mortgage-related securities, named Abacus, that were at first intended to protect Goldman from investment losses if the housing market collapsed. As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits.
Goldman's own clients who bought them, however, were less fortunate.
Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employees with direct knowledge of the deals who asked not to be identified because they have confidentiality agreements with the firm."
Sunday, December 27, 2009
Sunday, December 20, 2009
Tax Treatment - Legislative Outlook
Tax Treatment of Carried Interest – Legislative Outlook
On December 10, 2009, the House passed a “tax extenders” bill (H.R. 4123), which includes extensions on a variety of tax breaks that are scheduled to expire at the end of the year. This piece of legislation has several provisions that are beneficial to the commercial real estate industry, such as a 15 year leasehold improvement depreciation extension until December 31, 2010, as well as an extension to the current 50 percent bonus depreciation, allowing property owners to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available. Moreover, the bill extends the current $1.80 per sq. ft. energy tax credit for commercial property owners who achieve 50 percent energy savings through energy retrofits.
The bill also provides an extension to Brownfields expensing provisions which allow real estate owners to recover environmental cleanup costs in the year they are incurred. While all of these elements of the bill are extremely beneficial to the commercial real estate industry, the House bill also included tax increase that could adversely affect many real estate partnerships in order to help pay for these and other extensions.
Under the House bill, income generated from carried interest could be taxed at a rate of ordinary income (at 35% or more), as opposed to the current capital gains rate (15%). Most general partners with existing carried interests will be penalized under the passed legislation. Extensive rules for carried interests in real estate partnerships are provided, so that some real estate general partners will continue to receive capital gains treatment, while many will face ordinary income treatment.
The loss of capital gains treatment for real estate investment partnerships would turn long-established taxation rules upside down. Real estate partnerships, from the smallest venture to the largest investment fund, have a carried interest component. Approximately $1 trillion of commercial and residential properties are held by partnerships. Changing the tax rates on carried interest from capital gains rates to ordinary income rates would be devastating to these businesses.
Such a tax increase clearly discriminates against real estate compared to other assets and puts it at a greater competitive disadvantage for investment dollars. Additionally, it puts more pressure on a fragile commercial real estate industry already facing a rapid rise in delinquencies and foreclosures, as well as a growing challenge to access credit.
Currently Senate Finance Chairman Max Baucus (D-MT) opposes an increase to the treatment of carried interests, making it unlikely that such a provision will be passed by the Senate. Additionally, the Senate will likely not introduce its own version of the House tax extenders bill until early next year due to the health care debate. Nonetheless, a tax increase could be slipped into any one of the bills that are currently before the Senate.
To prevent this from happening, CCIM Institute submitted a joint letter with NAR and CCIM Institute urging all 100 Senators to not change the current capital gains treatment of carried interests for real estate partnerships.Tax treatment of carried interest was one of the issues taken to the Hill last April by CCIM Institute members. CCIM Institute legislative staff continues to monitor legislation concerning tax treatment of carried interest and is in communication with members of Congress.
Click Here For More News
On December 10, 2009, the House passed a “tax extenders” bill (H.R. 4123), which includes extensions on a variety of tax breaks that are scheduled to expire at the end of the year. This piece of legislation has several provisions that are beneficial to the commercial real estate industry, such as a 15 year leasehold improvement depreciation extension until December 31, 2010, as well as an extension to the current 50 percent bonus depreciation, allowing property owners to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available. Moreover, the bill extends the current $1.80 per sq. ft. energy tax credit for commercial property owners who achieve 50 percent energy savings through energy retrofits.
The bill also provides an extension to Brownfields expensing provisions which allow real estate owners to recover environmental cleanup costs in the year they are incurred. While all of these elements of the bill are extremely beneficial to the commercial real estate industry, the House bill also included tax increase that could adversely affect many real estate partnerships in order to help pay for these and other extensions.
Under the House bill, income generated from carried interest could be taxed at a rate of ordinary income (at 35% or more), as opposed to the current capital gains rate (15%). Most general partners with existing carried interests will be penalized under the passed legislation. Extensive rules for carried interests in real estate partnerships are provided, so that some real estate general partners will continue to receive capital gains treatment, while many will face ordinary income treatment.
The loss of capital gains treatment for real estate investment partnerships would turn long-established taxation rules upside down. Real estate partnerships, from the smallest venture to the largest investment fund, have a carried interest component. Approximately $1 trillion of commercial and residential properties are held by partnerships. Changing the tax rates on carried interest from capital gains rates to ordinary income rates would be devastating to these businesses.
Such a tax increase clearly discriminates against real estate compared to other assets and puts it at a greater competitive disadvantage for investment dollars. Additionally, it puts more pressure on a fragile commercial real estate industry already facing a rapid rise in delinquencies and foreclosures, as well as a growing challenge to access credit.
Currently Senate Finance Chairman Max Baucus (D-MT) opposes an increase to the treatment of carried interests, making it unlikely that such a provision will be passed by the Senate. Additionally, the Senate will likely not introduce its own version of the House tax extenders bill until early next year due to the health care debate. Nonetheless, a tax increase could be slipped into any one of the bills that are currently before the Senate.
To prevent this from happening, CCIM Institute submitted a joint letter with NAR and CCIM Institute urging all 100 Senators to not change the current capital gains treatment of carried interests for real estate partnerships.Tax treatment of carried interest was one of the issues taken to the Hill last April by CCIM Institute members. CCIM Institute legislative staff continues to monitor legislation concerning tax treatment of carried interest and is in communication with members of Congress.
Click Here For More News
Tuesday, November 10, 2009
The Auction Advantage
The Auction Advantage
Accelerated marketing gains traction in today's troubled market.
By Paul A. Lynn, CCIM, and Gordon Greene, CCIM
During the last 24 months, sold and closed commercial real estate transactions have been in short supply, while unsold properties seem to have increased exponentially. The last cycle in which CCIM practitioners experienced a somewhat similar market was the late 1980s and early 1990s. During those years, large property portfolios were timely and effectively sold by the Resolution Trust Corp., banks, and private sellers through real estate auction programs that came into vogue. While negotiated transactional sales were few or nonexistent, auctions and accelerated marketing programs established current true market value in a competitive bidding environment.
Why Auctions Work....
Click Here For Entire Story
Marketplace Commercial recently partnered with an nationally known Auction Company.
Please contact me to discuss this service!
Accelerated marketing gains traction in today's troubled market.
By Paul A. Lynn, CCIM, and Gordon Greene, CCIM
During the last 24 months, sold and closed commercial real estate transactions have been in short supply, while unsold properties seem to have increased exponentially. The last cycle in which CCIM practitioners experienced a somewhat similar market was the late 1980s and early 1990s. During those years, large property portfolios were timely and effectively sold by the Resolution Trust Corp., banks, and private sellers through real estate auction programs that came into vogue. While negotiated transactional sales were few or nonexistent, auctions and accelerated marketing programs established current true market value in a competitive bidding environment.
Why Auctions Work....
Click Here For Entire Story
Marketplace Commercial recently partnered with an nationally known Auction Company.
Please contact me to discuss this service!
Saturday, October 17, 2009
Commercial BPO's (Broker Price Opinions)
The Commercial Real Estate industry is following in the footsteps of the Residential industry.
The commercial market is seeing more property owners falling behind on their payments and ultimately banks are getting the commercial properties back.
A service that ALL BANKS are needing in today's market are Broker Price Opinions (BPO)
Here is a good layout for a BPO and websites that can help.
1. SUMMARY
2. INTRODUCTION
3. SUBJECT PROPERTY
4. DEMOGRAPHICS
5. LEASING ACTIVITY
6. COMPARABLES
7. BROKER PRICE OPINION
EXHIBIT "A" Demographics http://www.stdbonline.com/ (CCIM)
EXHIBIT "B" Leasing Activity http://www.costar.com/ or http://www.mncar.org/ (Minnesota)
EXHIBIT "C" Leasing Adjustments
EXHIBIT "D" Comparables http://www.costar.com/ or http://www.mncar.org/ (Minnesota)
EXHIBIT "E" Pictures and Maps http://www.stdbonline.com/ (CCIM)
The commercial market is seeing more property owners falling behind on their payments and ultimately banks are getting the commercial properties back.
A service that ALL BANKS are needing in today's market are Broker Price Opinions (BPO)
Here is a good layout for a BPO and websites that can help.
1. SUMMARY
2. INTRODUCTION
3. SUBJECT PROPERTY
4. DEMOGRAPHICS
5. LEASING ACTIVITY
6. COMPARABLES
7. BROKER PRICE OPINION
EXHIBIT "A" Demographics http://www.stdbonline.com/ (CCIM)
EXHIBIT "B" Leasing Activity http://www.costar.com/ or http://www.mncar.org/ (Minnesota)
EXHIBIT "C" Leasing Adjustments
EXHIBIT "D" Comparables http://www.costar.com/ or http://www.mncar.org/ (Minnesota)
EXHIBIT "E" Pictures and Maps http://www.stdbonline.com/ (CCIM)
Tuesday, October 13, 2009
Fed Ratchets Up Warnings on Commercial Real Estate Debt
CRE Under Pressure Due to Sharp Erosion in Fundamentals, Grubb & Ellis Economist Bach Less Bearish on Sector Outlook
By Randyl Drummer
Two officials from the U.S. Federal Reserve issued strong signals this week that the central bank is very concerned over the banking industry's exposure to commercial real estate loans and considers it to be a major stumbling block to the road to economic recovery.
Click Here to continue
By Randyl Drummer
Two officials from the U.S. Federal Reserve issued strong signals this week that the central bank is very concerned over the banking industry's exposure to commercial real estate loans and considers it to be a major stumbling block to the road to economic recovery.
Click Here to continue
Thursday, October 1, 2009
CIT collapse would be a mess, turnaround pros say
NEW YORK (Reuters) - If struggling U.S. commercial lender CIT Group Inc (NYSE:CIT - News) were to collapse it would be a "drastic mistake" as the small businesses that rely on it would have few alternate sources of funding, turnaround experts said at the Reuters Restructuring Summit this week.
Click Here To Continue
Click Here To Continue
Tuesday, August 25, 2009
Landlords find creative ways to fill retail spaces
When the Fort Lauderdale Children's Theatre first approached Galleria Mall about leasing rehearsal and classroom space, the organization knew it was a long-shot.
Would the prime regional shopping mall in East Fort Lauderdale be willing to rent space at a below market rate to a nonprofit organization?
Click Here
Would the prime regional shopping mall in East Fort Lauderdale be willing to rent space at a below market rate to a nonprofit organization?
Click Here
Subscribe to:
Posts (Atom)
Posts
