Commercial real estate

We have been asked to explain our product and services on multiple occasions.  For those interested, you may find this episode to be a good listen, as it fully explores our services and how our involvement can significantly benefit your client. While this particular episode deals with land sales, the concept is universal to the sale of personal property, business and other appreciated assets.

Hello XPX! If you or your Middle Market clients are not happy with their current banking relationship, I’m happy to discuss anything from solving day-to-day problems to complete acquisition financing.  Comerica is the largest bank headquarter in Texas.  We take a holistic business approach, always putting our customers and our community first, and providing our clients a very high-touch banking experience. Specialties Include: M&A Financing Traditional C&I Lending SBA Loans Owner-Occupied Commercial Real Estate Machinery & Equipment Working Capital Lines of Credit Leasing Treasury and Cash Management Services And if you’re in Austin, I’d also make a great 4th for Pickleball!

Our motto is “Speed is our weapon”.  Every day I see this come to life with my clients from day 1 to closing. Here’s how we can help: Pre-qual listings within 24-48 hours upon receipt of your CIM, 3 years taxes and YTD financials Pre-qual buyers with our approving credit manager within 48 hours from receipt of their complete package Underwriting completed in 7-10 business days Larger M&A deals exceeding SBA 7A cap of $5MM can be accommodated with our companion conventional loan up to $4MM, for a total of $9MM financing 100% expansion financing for established buyers with a similar business Closings within 45 days for non-real estate transactions, 60 with real estate We also pay referral fees upon successful closing of all 7A referrals.  Call me to discuss a specific transaction or for additional information.  203-461-5097

After a tsunami of a year facilitating 1031 Exchange transactions, we found there are many misconceptions among investors about 1031 Exchanges. Here are five of the most common areas of investor confusion. Reverse Exchanges Are Quick & Simple: Identifying replacement property in a hot market was a challenge for 1031 Exchangers this past year, causing many sellers to pursue a strategy of purchasing a replacement property before selling their relinquished property. Known as the Reverse Exchange, in this scenario, the investor first buys a new property of equal or greater value than the relinquished property and then has 180 days to sell their relinquished property. With a Reverse Exchange, you cannot own your replacement property and relinquished property at the same time, requiring an affiliated entity (a Qualified Intermediary) to hold the title of the relinquished property or the new replacement property. While Reverse Exchanges can benefit sellers in hot markets, they take longer to arrange, include more steps, and have, additional costs and fees compared to the more common Delayed Exchange. Vacation Homes/Secondary Homes Qualify for an Exchange: Residential property can only be considered “like-kind” if held for investment purposes. The rules are very specific. You can sell your vacation/secondary home through a 1031 Exchange if you rented it for more than 14 days per year and your personal use was no more than 14 days per year (and less than 10% of the total nights rented over the two years leading up to the sale). When renting a vacation home you purchased as part of a 1031 Exchange, you must charge rates at fair market value. You cannot rent to a “family member” for $1.00 per night! 1031 Exchanges are a “tax Loophole”: Since 1921, 1031 Exchanges have been a vital part of U.S. tax policy. Exchanges have been available in their current form since 1986. Like-kind exchanges encourage capital investment for the highest and best use of real estate, thus improving communities and increasing the local and state tax base. Section 1031 like-kind exchanges give businesses and entrepreneurs more incentive and ability to make real estate and capital investments. Far from being a tax loophole, the 1031 Exchange, which has enjoyed political support from Republican and Democrat legislators for decades, is a powerful economic tool that allows investors to grow and transfer their wealth to future generations in the most tax-efficient manner. Partners in an LLC Can Simply Separate in the Middle of an Exchange: The “Drop & Swap” alternative is an exit strategy for the sale of real property held in an LLC where two or more partners in the LLC have differing ideas about what to do with the proceeds in another property and continue deferring taxes to “drop” the partnership interests in the LLC and “swap” for Tenant-in-Common (TIC) interests. But the Drop and Swap strategy is not simple, and careful planning is required. It is recommended to prepare the property being sold for separate exits before signing a listing agreement with a real estate brokerage. Considering Replacement Property Options Can Wait Until Closing of the Relinquished Property: You’ve heard the adage, “timing is everything,” and that certainly holds true regarding the timeline requirements of a 1031 Exchange. Many first-time exchangers, aware of the 45-day replacement property identification rule, often wait too long to explore their options, only to discover their deadline passes before selecting a property. And their exchange fails. That’s why it’s critical that you work closely with your 1031 Exchange investment professional and Qualified Intermediary to ensure you take the necessary actions at each stage so that your exchange is successful. Get clear on conducting a proper 1031 Exchange, feel-free to contact me.     Disclosure: The commentary in this blog post reflects the personal opinions, viewpoints and analyses of the Safe Harbor Asset Management, Inc.’s employees providing such comments, and should not be regarded as a description of advisory services provided by Safe Harbor Asset Management, Inc.’s or performance returns of any Safe Harbor Asset Management Inc.’s Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this blog constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Safe Harbor Asset Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

As a business owner, have you ever thought about whether you should own or rent your company building? It’s likely you have since it’s one of the top most-Googled financial questions in the U.S. Every business has a big dream for their business and wants to make it happen. But, along the way many business owners question the money they’re paying in rent for their company building. Further, the combination of increases in rental rates coupled with lower-than-normal commercial mortgage rates (until recently) have caused many CEOs to ponder this question. Continue reading:

Live Oak Bank is the #1 SBA Lender in the Nation.  We provide M&A financing as well as owner occupied commercial real estate loans with attractive terms.  Please contact me to discuss specific financing needs.   Thanks, Michelle Orr Vice President, Sr. Loan Officer 203-461-5097 sba_general_commercial_real_estate_brochure

CSSI will be hosting a live, no-cost 1.5-hour CPE webinar on Tuesday, Nov. 9th at 11:00 CT on ‘Expensing & Depreciation Strategies to Counter Upcoming Tax Increases.’  CPE credits are for CPAs only.  Registration is open to everyone. Please indicate that Mark Gross invited you.  Copy and paste link below or click link on PDF to register. Tax Changes are on the way. Tax professionals are creating cash flow for clients through little known strategies on commercial real estate or tenant space. An example and scenario filled presentation with straightforward explanations will identify opportunities to advise your clients with confidence how to reduce or defer income taxes in connection with their owning a commercial building or paying for their own tenant space.  See PDF for more details about the webinar. Contact Mark Gross for a no cost preliminary analysis of cost segregation savings for any property nationwide. mgross@cssi-associate.com 630-329-9801  www.cssistudy.com  

My Profession is:  Tenant Representative / Office Leasing Broker / Commercial Real Estate Broker My Business is:  CREATING SOLUTIONS When it comes time to find an office space for the first time, renew a lease, renegotiate a lease, or relocate;  clients use me and my services to maximize their savings, increase their concessions and improve the value of their leases. My involvement creates a competitive environment, which puts pressure on a Landlord to improve the concessions package and lower the rent.  This happens because the Tenant, now has a real estate professional on their side leveraging the transaction to the benefit of the Tenant. My involvement will save a Tenant TIME, MONEY and STRESS.

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Depending on who you are talking to, Private Equity is either the Great Satan or the savior of small and mid-market companies in the United States. The stories depend a lot on the personal experience of the speakers. Once a vehicle for high-risk investment plays in corporate takeovers (see Bryan Burrough’s Barbarians at the Gate,) Private Equity has morphed into tranches where specialists seek opportunities in everything from a Main Street entrepreneurship to multi-billion-dollar entities. What is Private Equity? The term itself is relatively generic. According to Pitchbook, there are currently 17,000 Private Equity Groups (or PEGs) operating in the US. The accepted business model for our purposes is a limited partnership that raises money to invest in closely held companies. The purpose is plain. Well-run private businesses typically produce a better return on investment than publicly traded entities. The current Price to Earnings (or PE – just to be a little more confusing) ratio of the S&P 500 is about 27.5. This is after a long bull market has raised stock prices considerably. The ratio is up 11.5% in the last year. That means the average stock currently returns 3.6% profit on its price. Of course, the profits are not usually distributed to the shareholders in their entirety. Compare that to the 18% to 25% return many PEGs promise their investors. It’s easy to see why they are a favorite of high net worth individuals, hedge funds and family offices. As the Private Equity industry has matured and diversified, they have even drawn investment from the usually more conservative government and union pension funds. Private Equity Types Among those 17,000 PEGs the types range from those who have billions in “dry powder” (investable capital,) to some who claim to know of investors who would probably put money into a good deal if asked. Of course, which type of PEG you are dealing with is important information for an owner considering an offer. private equity moneyThe “typical” PEG as most people know it has a fund for acquisitions. It may be their first, or it may be the latest of many funds they’ve raised. This fund invests in privately held businesses. Traditionally PEGs in the middle market space would only consider companies with a free cash flow of $1,000,000 or greater. That left a plethora of smaller businesses out of the game. For a dozen years I’ve been writing about the pending flood of exiting Boomers faced with a lack of willing and able buyers. I should have known better. Business abhors a vacuum. Searchfunders Faced with an overabundance of sellers and a dearth of capable buyers, Private Equity spawned a new model to take advantage of the market, the Searchfunders. These are typically younger individuals, many of whom graduated from one of the “EBA” (Entrepreneurship By Acquisition) programs now offered by almost two dozen business schools. These programs teach would-be entrepreneurs how to seek out capital, structure deals, and conduct due diligence. Some Searchfunders are “funded”, meaning they have investors putting up a stipend for their expenses. Others are “self-funded.” They find a deal, and then negotiate with investment funds to back them financially. Both PEGs and Searchfunders seek “platform” companies, those that have experienced management or sufficiently strong operational systems to absorb “add-on” or “tuck-in” acquisitions. The costs of a transaction have bumped many seasoned PEGs into $2,000,000 and up as a cash flow requirement. Searchfunders have happily moved into the $500,000 to $2,000,000 market. In the next article we’ll discuss how PEGs can promise returns that are far beyond the profitability of the businesses they buy.

Early last month, the Occupational Safety and Health Administration (OSHA) proposed the Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings rule. The aim is to curb heat related injuries or death which OSHA identifies as “the leading cause of death among all hazardous weather conditions in the United States.” The proposal places new responsibilities on employers: establishing heat thresholds, developing Heat Injury and Illness Prevention Plans, regularly monitoring temperatures, and establishing safety measures when heat thresholds are met. This rule is yet to be finalized however, it is a sign of what’s to come. The standard applies to all employers except for the following: Work activities for which there is no reasonable expectation of exposure at or above the initial heat trigger. Short duration employee exposures at or above the initial heat trigger of 15 minutes or less in any 60-minute period. Organizations whose primary function is the performance of firefighting and other certain emergency services. Work activities performed in indoor work areas or vehicles where air conditioning consistently keeps the ambient temperature below 80°F. Telework (work from home). Sedentary work activities at indoor work areas that only involve some combination of the following: sitting, occasional standing and walking for brief periods of time, and occasional lifting of objects weighing less than 10 pounds. Heat Thresholds There are two heat thresholds which will trigger employer action: An “initial heat trigger” means a heat index of 80°F or a wet bulb globe temperature (defined below) equal to the National Institute for Occupational Safety and Health (NIOSH) Recommended Alert Limit; and A “high heat trigger” means a heat index of 90°F or a wet bulb globe temperature equal to the NIOSH Recommended Exposure Limit. The “heat index” is calculated by measuring the ambient temperature and humidity. Wet bulb globe temperature is a heat metric that considers ambient temperature, humidity, radiant heat from sunlight or artificial heat sources and air movement. Employers may choose either method of measuring the temperature.   Heat Injury and Illness Prevention Plan (HIIPP) Requirements If an employer does not fall under the exceptions, it must develop a HIIPP with the input of non-managerial employees and their representatives for occasions when the heat threshold is surpassed. This plan may vary on the worksite but must be written if the employer has more than 10 employees and use a language employees will understand. The HIIPP must contain: A comprehensive list of the type of work activities covered by the HIIPP Policies and procedures needed to remain compliant with the standard. Identification of which heat metric the employer will use heat index or wet bulb globe temperature. A plan for when the heat threshold is met. Along with creating the HIIPP, employers must designate one or more “heat safety coordinators” responsible for implementing and monitoring the HIIPP. The HIIPP must be reviewed at least annually or whenever a heat related injury or illness results in death, days off work, medical treatment exceeding first aid, or loss of consciousness. Employers must seek input from non-managerial employees and their representatives during any reviews or updates. The definition of “representative” is not defined; if this is broadly defined, this could be a major complexity employers must face. Identifying Heat Hazards Employers must monitor heat conditions at outdoor work areas by: Monitoring temperatures at a sufficient frequency; and Track heat index forecasts or Measure the heat index or wet bulb globe temperature at or as close as possible to the work areas. For indoor work areas, employers must: Identify work areas where there is an expectation that employees will be exposed to heat at or above the initial heat trigger; and Create a monitoring plan covering each identified work area and include this work area in the HIIPP. Employers must evaluate affected work areas and update their monitoring plan whenever there is a change in production processes or a substantial increase to the outdoor temperature. The heat metric employers choose will affect the thresholds. If no heat metric is specified, the heat metric will be the heat index value.  Employers are exempt from monitoring if they assume the temperature is at or above both the initial and high heat trigger, in which case they must follow the controls below. Control Measures When Heat Triggers are Met When the initial heat trigger is met, employers must: Provide cool accessible drinking water of sufficient quantity (1 quart per employee per hour). Provide break areas at outdoor worksites with natural shade, artificial shade, or air conditioning (if in an enclosed space). Provide break areas at indoor worksites with air conditioning or increased air movement, and if necessary de-humidification. For indoor work areas, provide air conditioning or have increased air movement, and if necessary de-humidification. In cases of radiant heat sources, other measures must be taken (e.g., shielding/barriers and isolating heat sources). Provide employees a minimum 15-minute paid rest break in break areas at least every two hours (a paid or unpaid meal break may count as a rest break). Allow and encourage employees to take paid rest breaks to prevent overheating. At ambient temperatures above 102° F, evaluate humidity to determine if fan use is harmful. Provide acclimatization plans for new employees or employees who have been away for more than 2 weeks. Maintain effective two-way communication between management and employees. Implement a system to observe signs and symptoms of heat related problems (e.g., a Buddy system). When the high heat trigger is met, employers are additionally required to: Provide employees with hazard notifications prior to the work shift or upon determining the high heat trigger is met which includes: the importance of drinking water, employees right to take rest breaks, how to seek help in a heat emergency, and the location of break areas and water. Place warning signs at indoor work areas with ambient temperatures exceeding 102° F. Other Requirements Training: all employees and supervisors expected to perform work above the heat thresholds must be trained before starting such work and annually.   What’s Next? The rule is yet to be published in the Federal Register. Once this happens, there will be a 120-day comment period when all members of the public may offer OSHA their opinion about the rule. Whether this rule comes to fruition may also depend on which party wins the White House. Furthermore, if finalized this rule would likely be challenged in the courts, which now have more discretion to overrule agency rules following the US Supreme court case of Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce (overturning the Chevron deference decision). Employers should review their heat illness prevention policies to maintain compliance with regulations. If you have questions, call competent labor and employment counsel. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560  

Today we are highlighting the FIREPOWER Owner Sweet Spot Sessions! We’re about to embark on a game-changing conversation that will revolutionize the way you approach your business. It’s time to shift gears and start envisioning the future of your company in a new personal role. The Small Business Universe: Common Concerns of Owners Similar concerns echo throughout the small business universe. Maybe you feel like you’re lacking the right leadership, or worse, you don’t have any leadership at all. Perhaps your workforce has hit a plateau, or you’re dealing with the frustrating challenge of high turnover. And let’s not even get started on the never-ending cycle of decision-making, where it feels like you’re carrying the entire load on your own. What is the Work that Only You Can Do? We’re here to share a secret to successfully moving your business into the future. It all starts with a simple question: What is the work that only you can do? It’s time to tap into your natural talents and abilities that have fueled your business success from its inception and then refocus your efforts in a new way. Now, brace yourself for a little revelation that’ll bring a smile to your face. The answer to that question is much less than what you’re currently doing. Yes, you heard it right. You’re probably sporting way too many hats, it’s time to bid farewell to those unnecessary responsibilities and rediscover your true sweet spot. Enter the FIREPOWER Owner Sweet Spot sessions. These sessions are crafted to help you pinpoint those burdensome responsibilities that are holding you back from doing the work your company desperately needs from you. We’re here to lift that heavy weight off your shoulders and set you free to focus on what truly matters in achieving your future goals. Deciphering the best use of your time is the key to solving both short-term challenges and long-term business goals. It allows you to stay fully engaged in the work that only you should do, helps your teams to know your true superpowers, and ultimately unleashes your full potential to lead your company into the future. At FIREPOWER, we truly get the challenge, we live it every day. We understand the struggles you face as an owner.  Juggling numerous roles and tasks can be incredibly overwhelming and downright draining. But here’s some fantastic news – it doesn’t have to be that way. By identifying your unique strengths, you can reclaim your valuable time, restore your energy reserves, and reignite your enthusiasm for your business. So, are you ready to unlock your Owner Sweet Spot? Then it’s time to bid farewell to all the hats you’ve been wearing, delegate those unnecessary responsibilities, and rediscover the true value you bring to your company. Our owner-focused approach led by Maria Forbes, will expertly guide you through the process, empower your team, and take your business to unprecedented heights. Conclusion Remember, sustainable growth flourishes when you harness the potential of your team and become laser-focused on the work that only you can do. The number of hats you wear will shrink, while the quality of your life expands. It’s time to embrace the FIREPOWER within you and achieve the success you’ve always dreamed about. Together, we can make it happen! Fuel your people power, Maria Forbes with FIREPOWER Teams

In previous communications, we’ve discussed the significant changes brought about by the SECURE 2.0 Act. Effective implementation of many provisions within the act relies on guidance from the IRS and DOL. IRS Notice 2024-02 and IRS Notice 2024-55 offered clarification on several crucial aspects of SECURE 2.0. Guidance is helpful as plan sponsors make decisions regarding both required and optional provisions in the act. Here are some key provisions to consider: Automatic Enrollment Requirement  SECURE 2.0 mandates automatic enrollment features for 401(k) plans established after December 29, 2022, effective in 2025. The IRS guidance clarifies that a plan is deemed to be established when the employer adopts a 401(k) plan, regardless of the plan’s effective date. The notice also provides further clarity for plan mergers and spin-offs. Mergers: If a plan established after December 29, 2022, merges into a 401(k) plan that was established prior to that date, the ongoing plan will generally be subject to the automatic enrollment mandate unless the merger is: 1) a result of a business acquisition, and 2) the plans are merged by the last day of the plan year following the year of the transaction. Spinoff plans will be treated as a pre-December 29, 2022 plan as long as that portion of the plan had been established before that date. Higher Salary Deferral Catch-up Limits for Ages 60-63  For 2024, the salary deferral contribution limit is $23,000. If a 401(k) plan permits catch- up contributions, those age 50 and older can also make catch-up contributions up to $7,500. Those limits are expected to increase in 2025 based on cost-of-living adjustments to be announced later this year. Beginning in 2025, plans may also take advantage of a provision in SECURE 2.0 that would permit participants age 60-63 to make higher catch-up contributions. For those plan participants, employers may increase the catch-up limit to the greater of: * $10,000 (which will be indexed for cost-of-living adjustments in later years) or * 150% of the regular age 50 catch up deferral limit. De Minimis Financial Incentives  Employers can now provide “de minimis” financial incentives to encourage employee retirement plan contributions. These incentives must not exceed $250 and are available only to employees who have not previously elected to defer contributions. The incentive can be provided incrementally over time, contingent on the employee’s continued participation. Employees receiving these incentives are subject to regular tax, withholding, and reporting requirements. Terminal Illness Distributions  SECURE 2.0 introduced a new exception to the 10% penalty on early distributions for terminally ill employees. The IRS notice defines a terminally ill individual as someone who has been certified by a physician to have a condition or illness that can be reasonably expected to result in death in the next 84 months. This exception does not create a new type of distribution; rather, employees must still qualify for another permissible distribution from the plan. While this provision will be optional for employers, if a plan opts out, employees may categorize a distribution as a terminal illness distribution on their own tax return. If an employer does elect to recognize terminally ill distributions, the plan must obtain a specific certification from the physician rather than relying on an employee’s self-certification. Hardship Distributions with Self- Certification Most plans that permit hardship withdrawals allow such withdrawals only if the hardship satisfies one of the “safe harbor” reasons. Such reasons include the purchase of a principal residence, amounts needed to prevent eviction or foreclosure on a personal residence, qualifying medical expenses, tuition, funeral and burial expenses, certain expenses to repair the employee’s principal residence, and expenses and losses related to a federally – declared disaster. SECURE 2.0 provides that a plan can adopt employee self-certification rules. That means a plan sponsor may rely on an employee’s written self-certification that the distribution is for one of the plan’s safe harbor hardship reasons and is not more than the amount required to satisfy the financial need and they do not have alternate means that are reasonably available to satisfy the hardship need. The participant is expected to maintain records that support the hardship. Many plan sponsors are adopting self-certification.  Emergency Personal Expenses Distributions SECURE 2.0 permits a 401(k) or other defined contribution plan to offer emergency personal expense distributions. If the option is offered, eligible employees can withdraw up to $1,000, or their vested balance (if less) for “unforeseeable” or “immediate” personal emergency expenses once each calendar year. Self-certification is available. The distribution is not subject to the usual 10% tax on early distributions. Also, emergency expense distributions can be repaid to the account within a three-year window. Another emergency expense distribution can’t be made within the three-year window unless the previous distribution is fully repaid or contributions equaling the distributed amount are deposited.  Domestic Abuse Victim Distributions SECURE 2.0 permits a plan to offer domestic abuse victim distributions. This type of distribution may be made to a participant within a one-year period beginning on the date when a participant becomes a victim of domestic abuse by a spouse or partner. The maximum distribution is the lesser of $10,000 or 50% of the participant’s vested account. The $10,000 limit is subject to future cost of living adjustments. Self-certification is available. The distribution is not treated as an eligible rollover distribution for tax withholding purposes; however, the participant may repay the distribution any time during the next three-year period. The distribution is taxable, but there is an exception from the 10% early withdrawal penalty. (Note that plans which are subject to the spousal consent requirements for distributions may not be able to adopt this provision.) The IRS has also delayed the deadline for SECURE 2.0, SECURE, and CARES amendments until December 31, 2026. This gives them additional time to issue further clarifying guidance. As always, we are committed to keeping you informed as things develop.

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