Visit Brevitas at ICSC RECon in Las Vegas, May 23-25, 2016

Brevitas is changing the way private transactions are conducted in the commercial space. With over fifteen billion dollars in asset listings, we are the leading online platform dedicated to private investment sales.

Stop by our booth at ICSC REcon and discover firsthand how the Brevitas private marketplace can drive value to your CRE business by increasing your listing’s exposure to qualified investors, giving you access to thousands of exclusive investment opportunities and growing your network within our vetted pool of members. Our team will be onsite showcasing live demos of the product, and  guiding new users through the sites’ many useful features.

Premium Membership is absolutely free for anyone who signs up before January 2017 and can be done onsite at the show, or by visiting https://brevitas.com/apply/

Find us Here:

Marketplace Mall is located in the North Hall of Las Vegas Convention Center, easily accessible where Paradise Rd meets Convention Center Drive.  You can easily locate the Brevitas Booth #N1166 by clicking here and selecting “Add to My Show” in the far right hand column of the page.

 

5 Ways Blockchain Technology could Change Real Estate

Blockchain and bitcoin technology are still in their infant stage. However, the technology has made steady progress as it begins to disrupt major industries and the debate over the potential uses and impact blockchain technology could have on the real estate industry is also heating up.

Commercial real estate has been considered a slow mover when it comes to adopting new technologies. This may also be the case for the acceptance of blockchain technology within the industry. All that could change fast if it could improve the bottom line. There are several ways in which bitcoin could impact the real estate industry, and we’ll review a few of these ideas and point you in the right direction in case you’d like to delve deeper.

Smart Contracts

Blockchain technology not only represents a new way to exchange funds or track payments, but it also has the potential make contracts smarter. The Blockchain’s distributed ledger can trace a series of events in chronological order, being able to mathematically verify these events eliminates instances of tampering or fraud.

The secure cryptography ledger can record events and create digital IDs for a multitude of scenarios. Some usage examples of this type of ledger could be for mortgage payments, escrow, or deed transfers. To make things simple, they allow for if-then statements in contracts to be made, then demanded fulfillment

Imagine if you finished paying your mortgage or you completed escrow on a new home or building. The moment those funds and conditions were met the digital contract would instantly transfer that deed ownership. Some would argue the Blockchain is the most reliable transaction record system ever created.

Foreign Investment

Investment into any foreign market is difficult today. There are many government conditions and terms, exchange fees, taxes, and regulations. Each country is different. However, all of them have their friction points.

Blockchain technology can exchange any value funds to any party regardless of location, identity or government regulations. This occurrence could bring up many issues in the future, but the demand to transfer funds and take advantage of changing currency rates will always exist.

Reduce Fraud

Banks are already using funds to research how blockchain could change the way they transfer funds.  Creating a certifiable digital ID allows for funds to be fully tracked. In real estate, the use of a proof of funds document or a bank letter is often used to show purchasing capabilities. These documents can often be forged or outdated. Often these documents are saved as simple .pdf files and can even be emailed and forwarded on without consent.

Blockchain provides a certifiable and instant way to verify ownership of funds. Picture an instance where you have verifiable proof of funds and a digital transfer of a deed. The Blockchain could allow two parties to exchange large assets instantly, securely and even anonymously.

Crowdfunding

Blockchain technology could allow crowdfunding to be even more liquid than it is today. New start-ups have come into the real estate tech scene recently that operate as secondary markets for alternative real estate investments. Companies like CFX are already setting up marketplaces to exchange these assets.

Bitcoin and sidechains could allow for these assets or fractional ownership in real estate to be traded quicker, and at a more accurate market price.

The Internet of Things

Just like blockchain, the possibilities for the internet of things are endless. Similar to our above scenario where blockchain technology could allow for smart contracts, the same could be said for the internet of things. The sharing economy has already taken hold as a major player in the tech space. The opportunity to share rides, cars, apartments, and homes has rippled through our economy.  In these instances, people are stuck doing some of the process or transaction. That may be dropping off keys for an AirBnB, or needed to meet someone in person to exchange a Getaround. What blockchain could influence is how we use tokens to grant permission for certain things to take place. A blockchain token could be used to open that apartment or car, or maybe to unlock a computer or phone.

Startups like International Blockchain Real Estate Association are starting to populate the blockchain / real estate space, with so many potential uses, only time will tell if blockchain can emerge as the next everyday real estate technology.

Off-Market Deal Book | April 2016

The Brevitas Off Market Deal Book provides you with a curated, varied selection of recent off market commercial real estate transactions.

Why Asian Investment Dollars are Flooding into Australia in 2016

As the world continues to shrink (metaphorically, don’t panic), international real estate investment is becoming more popular than ever before. Improved communications, reduced transactional friction, and investment-friendly policies are drawing Asian investment to the U.S. market in record numbers. There’s also been intense activity in Australian real estate, particularly from Asian investors.

iProperty.com conducted a survey at the end of the year which showed that Australia was the first choice of investment location for international property buyers based in Singapore and Malaysia, second for Indonesian investors.

Experts suggest that these investors see Australian properties as a better investment than real estate in other countries. It is often relatively cheap, given currency fluctuations. The Australian dollar has fallen by about 30% in the last few years.

Asian investors arelooking at larger towns like Newcastle and Wollongong. Larger established towns (with) universities in place and also potential for growth from a commercial side of things,” according to a profile posted last summer.

There’s been a high level of investment from China as well. The Wall Street Journal recently reported that Chinese investment in Australian real estate has doubled in the past year. This segment accounts for 16% of the total sales of Australian real estate.  In fact, China invests 3 times the amount in Australian real estate that the U.S. does, and 6 times what Singapore invests. Prior to 2013, the U.S. was the leading investor in Australian property.  China is extremely important to the Australian economy. It is Australia’s largest export destination and also contributes to that country’s growing international tourism.

This is partly fueled by uncertainty surrounding the Chinese economy. Favorable trade agreements and a growing Chinese middle class also encourage the flow of investment to the Australian market. High net worth individuals in China find the Australian market attractive, both in terms of price and economic stability.

Actions by the Australian government at the end of 2015 put a bit of a damper on foreign real estate investors. The government cracked down on property owners who had not gotten the required approval for their investments. It also instated a new fee for international investors registering their Australian properties.  Rules governing newly built properties are less restrictive, and this has led to record participation from foreign investors in development projects.

The international impact is being felt most in the residential market, in part due to the small size of the commercial market, which is dominated by domestic investors. Still, foreign money is going into commercial properties as well as development plans.  Overall, in the past year, 50% of Australian real estate investment capital came from foreign investors, according to Australia’s Foreign Investment Review Board.

Observers predict that this high level of foreign interest will have an impact on all sectors of the Australian market. Demand is expected to grow in hotels and resorts and even in the rural land market. It’s likely that this trend in high demand will continue into 2016.

These 3 CRE Tech Trends are Fueling Capital Raises for Developers

Marketing approaches for CRE development projects have come a long way. Attracting strong buyers now involves strategic implementation of CRE tech tools that enhance and streamline the process. It’s worth incorporating new technology that brings projects to life, clarifying details and providing context.

Drones

An important new tool in many areas of the business, “unmanned aerial vehicles,” or drones, are changing the game in property tours and site selection. Drones can be used to photograph properties from new viewpoints to provide a clearer perspective on building size and location, as well as its proximity to transportation and other facilities. Through the drone’s camera, the context for proposed construction and renovation can be clearly established.  One look at the striking visual images and video provides extensive information and instantly communicates possibility.

There are rules for commercial use of drones, and these are still evolving as the FAA considers new uses that are being dreamt up. Usage is very restricted for Devices weighing over 55 pounds, and there are limitations on how high a drone is allowed to fly. Currently these small drones can only be flown during the day, and they have to always be within sight of the operator.  The FAA recently opened a site for registering these smaller drones.

Small drones are fairly inexpensive drones and easy to operate, but most firms leave that to specialists. Companies like Spark Aerial have come along in response to this need. They specialize in creating amazing marketing pieces for a variety of industries, including commercial real estate development.

Sensor Technology

Basing plans and marketing on data is an industry best practice, and sensor technology is becoming an important source of data in CRE. An electronic sensor can serve as a tireless assistant, gathering information and reporting round the clock from its designated location.

Traffic sensors have been around for years, and are extremely useful in city planning and evaluation of transportation systems.  The data on pedestrian and vehicle traffic patterns helps these agencies to optimize the use of space and also ensure public safety. In recent years, other industries have adopted these tools to inform decision making and increase efficiency.

Commercial real estate applies this technology as a source of data on any location.  It’s surprisingly easy and cost-effective to get set up and start gathering data. The hardware is very inexpensive and only requires an electrical outlet. This is a fairly trouble-free and low-maintenance technology. Support for these devices is provided by services like Motionloft, which also gather and aggregate the data for their clients. Property owners or managers can access this data at will and send useful reports to tenants and potential investors.

Sensor data are very valuable in setting the scene for proposed development. The level of traffic in a specific location helps to inform and justify all sorts of decisions related to demand, capacity, and potential returns.

Virtual Reality

Virtual reality is becoming widely used in CRE. It can be used by brokers, agents, and developers to create a remote customer experience that is very close to a physical tour of a property –and in some respects, even better.  Using headsets like the Hololens is making “augmented reality” a CRE term. Services like Foundry 45 are blazing a trail and expanding our idea of how VR can be used. Using VR, potential investors can be immersed in a speculative environment, and can be given a realistic picture of proposed construction or renovation.

Related tools can create 3D models that include incredible property details, and digital floor plans that can be shared in an instant.  These are powerful tools for collaboration and planning, and also expand upon the level of information that can be provided to prospective investors in a big way.  At sites like Floored you can find interactive 3D models, video fly throughs and other digital experiences.

Why Grocery Anchored Tenants are Replacing Big Box Tenants

Like every other segment of the commercial real estate market, retail took a major hit in the downturn. Vacancies soared as established franchises left the scene, and the industry was forced to step back and reassess strategies.

Added to the tough economy was the advent of e-commerce, which has had a profound effect on the brick and mortar properties in retail. Big box stores in particular began to reassess space requirements as more purchases were made through online services. That’s where opportunity arose for grocery anchored tenants.

This has caused a shift in the makeup of shopping centers across the country. Moving forward, the trend is away from the big box stores as anchor tenants. These are the key retailers and service providers that regularly draw customers to a shopping center.

Investment interest in retail remains strong. Real Capital Analytics reported that the retail sector’s sales volume increased by more than 30% in 2014, and that is after a 10% increase the prior year. Total volume was nearly $83 billion, and interestingly $12.8 billion of that went to shopping centers anchored by grocery stores.

Following the downturn, it became more difficult to fill anchor spaces in shopping centers as the big box stores struggled to recover. Meanwhile grocery stores recovered to pre-2007 levels in less than 2 years, making them the new anchor of choice in many cases. Other retail segments such as department stores, electronics, and sporting goods have still not fully regained their pre-2008 strength.

Grocery stores were also less affected by another factor: e-commerce. As many retailers added an online component and mobile apps to their range of services, their need for physical space changed. Many stores that would traditionally be considered anchor properties – Staples and Sports Authority, for example- have moved to reduce their footprint.

Grocery stores, on the other hand, have been expanding their offerings. Following the lead of chains like Whole Foods, many now include café space and incorporate on-site dining. The fresh foods movement encourages more frequent visits to the grocery as well, often drawing consumers to the center every few days. This is helping to make grocery stores an obvious choice for the anchor location.

And these centers are proving popular and successful. When offered for sale, these properties can command low cap rates of around 5 percent to 6 percent or less. The presence of an anchoring grocery store helps to keep the shopping center vibrant and though it changes the paradigm a bit, the decline of the big box store does not signal doom for retail.

As the former favorite anchors restructure to accommodate online sales, those big box stores require less physical space and even parking. This creates an opportunity to reconfigure outdated shopping centers, anchored by grocery stores and offering a more pedestrian-friendly layout in many cases.

The popularity of grocery-anchored shopping centers is a reaction to their resilience in the downturn. The need to fill vacancies made these businesses a good choice, and their appeal to consumers boosts surrounding businesses as well.  The configuration of shopping centers is ever-evolving, but there is no doubt that the current industry darling is the grocery-anchored center.

3 Big NYC CRE Deals Made by Foreign Investors

2015 was a massive year for CRE deals in New York. Sales of commercial properties in the city set a new record, totaling $70 billion. This is a 12.5% increase from the previous, record, set in pre-recession 2007.

One of the factors that are driving this market is the rate of foreign investment. Foreign investment has been strong all over the U.S. in recent years. Overall, foreign buyers spent more than $87 billion on U.S. properties last year, from less than $5 billion in 2009, according to Real Capital Analytics. Interest in U.S. properties is high among foreign investors, who see our economy as a stable place to stash wealth. In fact, some of the city’s most significant CRE transactions over the past year have involved international investors.

Norges

Norway’s sovereign wealth fund entered into a partnership with church-run Trinity Real Estate to buy a 44% share of the company’s 11-building downtown office portfolio at the end of the year, the Real Deal reports. The price- $1.6 billion.  Totaling nearly 5 million square feet in Hudson Square, the buildings are about 94% leased.

The property occupies 215 acres, and the largest of the buildings is One Hudson Square, with 1.2 million square feet.

Norges is a division of the Norway Central Bank, and also purchased interest in properties at 11 Times Square and Citigroup Center at 601 Lexington Avenue earlier in the year.

AXA

French insurers AXA Financial, in partnership with JP Morgan, made over $3.5 billion in the sale of two midtown office towers in the past year. The properties, at 1285 6th Avenue and 787 7th Avenue, were placed on the market in August.

Both properties comprise about 1.7 million square feet of space, and were sold to RXR Realty and CalPERS, the California public employees pension fund, respectively.

RXR reportedly beat out competition from Chinese and Canadian pension and sovereign wealth funds to secure the 6th Avenue property.

Anbang

Chinese insurance group Anbang purchased the iconic Waldorf Astoria in the most expensive hotel deal ever.  The deal was completed this past year, and Hilton Worldwide received $2 billion for the property, which it has agreed to continue running for the next 100 years.

Five Star hotels are popular with international investors. The Plaza is currently owned by the Sahara Group of India, and the Carlyle is owned by New World Development of Hong Kong. Anbang Insurance Group has announced plans for significant renovations to restore the historic structure, first opened in 1931.

In a year with several billion-dollar deals, New York’s commercial market attracted a record level of foreign investment. Looking at the pipeline, even more major deals are in the works, many involving sovereign wealth funds, pensions, and high net worth individuals from China, the Middle East, and other parts of the globe.  With 40% of commercial investment coming from outside the U.S., it’s likely that international players will be involved in some high-profile deals in the year to come.

Brevitas Announces Collaboration With Embassy Group

SAN FRANCISCO, April 6, 2016 – Commercial real estate marketplace, Brevitas, announced its collaboration with one of India’s largest development companies, Embassy Group. The collaboration serves to further expand Brevitas’ presence in one of commercial real estate’s emerging markets. Brevitas is the leading online platform dedicated to off-market commercial properties. Membership is limited to qualified investors and brokers of commercial real estate assets from around the globe.

The agreement cements the relationship between one of the world’s preeminent asset management and development firms with the most powerful resource for buying and selling commercial real estate privately. With an influx of activity throughout the primary American markets and Western Europe, Brevitas has seen rapid growth since launching this past September, now boasting over ten billion dollars in assets for sale. The collaboration with Embassy Group seeks to build on this growth to create new opportunities for Brevitas members.

“Working with Embassy Group gives us unheard of access to arguably the world’s most important real estate market. We see it as a win-win for both sides of our marketplace,” said Brevitas CEO, Ardian Zagari. “This allows us to connect our members with investment opportunities they would not otherwise have access to.”

The commercial real estate industry has been slow to embrace technology, therefore a vast majority of commercial assets are never sold online. This collaboration is representative of real estate’s biggest players arming up and preparing to adopt new, disruptive technologies in order to gain a competitive advantage.

“The Embassy team is led by forward-thinking individuals who are always pushing the envelope – it was part of why we felt this was such a natural fit. We are giving buyers and sellers of flagship real estate assets unprecedented opportunities to connect and build relationships; our agreement with Embassy Group serves to further these relationships,” explained Zagari. Details of the collaboration between the two companies are expected to be released in the coming weeks.

Foreign Investment in U.S. Commercial Real Estate Market: An Update

The American commercial real estate market has received a sizable shot in the arm from foreign investors in recent years, and indications point to continued growth there. With foreign capital representing about a quarter of all investment sales in the U.S., this activity has been important in enabling commercial developments here. As we settle into 2016, here’s a rundown of where things stand and where they’re likely headed.

Heavy Investors

Interest in the U.S. market is high across regions, with the highest levels of investment coming from Canada, China, and Australia. This hierarchy is shifting, though, as Chinese investment has surged over the past year with strong continued momentum. Regionally, the Asia-Pacific investors lead the field.

A factor driving increased activity is the lack of attractive options in the home country as well as some relaxation of restrictions on outbound investment. The U.S. commercial market continues to represent the most stable and secure investment option for many foreign buyers, although the European market is also likely to attract international attention. The Eurozone has stabilized over the last year and there are some distressed asset opportunities that will be attractive to investors.

Institutional investors with massive pools of capital to invest have helped to boost prices in primary U.S. markets, and foreign investors are looking beyond those to secondary cities like Seattle, Philadelphia, Miami, and Dallas.

Decreasing Friction

The time seems right for international investment, with governments easing restrictions on both ends. Thanks to the Real Estate Investment and Jobs Act of 2015, the tax burden imposed on foreign investors by FIRPTA (Foreign Investment in Real Properties Act-1980) may be considerably lighter. FIRPTA’s original purpose was to discourage cross-border transactions, and it imposed heavy taxes on foreign investors. The JOBS Act goes a long way toward eliminating that barrier.

This legislation increases the percentage of publicly traded stock that a foreign shareholder may hold without incurring FIRPTA withholding and tax upon sale of the stock from 5 percent to 10 percent. It also exempts from tax certain gains on the sale of REIT stocks and capital gain distributions from REITs.

In addition, The Protecting Americans from Tax Hikes Act of 2015 (PATH) heads off the potential for tax increases down the road, and also makes it easier for foreign buyers to invest in development projects in the U.S. Price-Waterhouse recently outlined the changes that impact international investments in U.S. CRE.

These changes are expected to facilitate the flow of capital into the U.S. commercial market from global investors.

Pulling it Together

Overall, international investors are drawn to the U.S. market for safety rather than yield, attracted to the reliable, low-risk options to be found in our primary cities. Those who venture into the secondary markets are looking for better pricing and higher potential yields.

Meanwhile, foreign investment is driving up prices in major markets and competition for properties is high. Supply is not meeting demand. This opens the door for increased investment in commercial development projects.  

On our end, facilitating foreign investment in the U.S. market requires establishing partnerships that are mutually beneficial and assist international buyers in navigating regulations and tax law. It’s critical to understand the objectives of these buyers, and offer expertise in local markets and regulations that help them to achieve those goals.

4 Successful Vetting Strategies for Off-Market Deals

Off-market deals can be a terrific investment opportunity, often providing access to high-dollar properties that are not listed on any publicly accessible source. This private real estate marketplace is beginning to open up, with opportunities for a wider range of investors to participate.

Once an off-market property has been identified, the work that must be done upfront to evaluate or “vet” the deal is essentially the same. It is important to cover your bases and gather the information you need to make the best decision. This data is available to you, whether the property is officially “for sale” or not.

#1: Do your own property valuation

When considering an off-market investment, it’s important to come to your own conclusions on the value of a property. The timeframe for these deals can be different than with listed properties; it may be the case that a quick sale is important to the owner, or that a more conventional timeframe can be used. Either way, don’t skimp on diligence in valuation, or take the seller’s word on the value of the property.

You’ll want to establish a reasonable price for the property, and know what you’re willing to offer, based on hard facts. Whether you complete this work yourself or have a service gather the information, determine the Net Operating Income for any commercial property you’re considering (income minus operating expenses), and make sure that you can expect a fair rate of return on your investment.

It is often the case that a property is nearly suitable, but will require some modification or renovation after purchase. Evaluate the potential improvements needed on the property, and ask a trusted contractor to price those for you. Include those figures in your financial analysis as an important consideration for developing your offer.

#2: Review important documents

Looking into any real estate deal should include a thorough review of relevant documents. Due diligence should include collecting and evaluating these items:

  •         The deed
  •         Information on current tenants/lease terms, etc.
  •         Zoning documents indicating allowable uses of the property
  •         Land and improvement surveys
  •         Copies of any property bills
  •         Service contracts
  •         Any notice of pending legal and/or government action
  •         Environmental assessments
  •         Any special assessments or taxes
  •         Any seller inspections
  •         All construction plans and warranties in the seller’s possession
  •         Current title insurance and other insurance

       

#3: Get independent data

For some property information, it’s necessary to generate new data for yourself. A current land survey and a professional property inspection must be done to ensure that what is being sold accurately reflects the reality on the ground.

Gather information on the market and local trends that may influence the future value of the property.

#4: Know the players

The people involved in a deal are good indicators of its overall quality. Look into the record of the seller or developer of the property. Consider the success of previous projects as well as their reputation. Reach out to colleagues and partners who’ve had dealings with the seller and find out about their qualifications.  If these don’t match your expectations, move on to a property that does.