What Do Bank Consolidations Mean for Commercial Real Estate Investors?

The pending merger between BB&T and SunTrust banks represents the largest banking industry deal since the start of the “Great Recession” in 2008 and a potential signal that more consolidation could be on the horizon. The combination of these two southeastern U.S. banks brands will create the nation’s sixth-largest bank holding company and result in a significant number of branches closing or being sold off. Rather than wringing their hands over the loss of good quality tenants, property owners and investors should instead focus their attention on repurposing those prime locations for other tenants and uses as well as potentially longer lease terms and higher rents. Examples include food and restaurant services, pharmacies and convenience stores or even urgent care centers and healthcare clinics. Investors can more easily adapt to industry consolidations and turn those potential lemons into lemonade when they work with commercial real estate professionals with local market knowledge, deep relationships with a national network of potential replacement tenants and the experience to build-out, repurpose and market properties for other uses.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What Does the Fed’s Interest Rate Cut Mean for Commercial Real Estate?

On July 31, the Federal Reserve Bank announced its first interest rate cut since 2008, leaving investors to wonder if this is the beginning of the end of the decade-long economic expansions that has helped fuel investment in commercial real estate (CRE) and appreciation in property value. According to the Fed chairman, the quarter percentage point reduction represents a precautionary measure to support and sustain already favorable economic conditions, including GDP growth, historically low unemployment and strong consumer confidence.

For commercial real estate investors and property owners, the reduction in the federal funds rate will have minimal impact. On one hand, minor changes in already historically low interest rates will not necessarily impact real estate values. On the other hand, signs of global uncertainty can help to boost international investment in U.S. commercial real estate, giving owners of long-held property a timely opportunity to sell appreciated assets and use the proceeds to reinvest in newer property in booming areas.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

The Positive Impact of Ecommerce on Restaurants

At a time when pundits are blaming e-commerce for the rash of retail store closings, the Internet of things is fueling new growth opportunities for businesses in the food and beverage industry.

According to the National Restaurant Association’s 2019 State of the Restaurant Industry, customer-facing technologies, such as online and app ordering, mobile payments and efficient pick-up services, are enhancing the importance of brick-and-mortar locations, driving traffic and bolstering positive in-store sales growth in 2019. Moreover, the annual report found restaurant operators, in general, to be more optimistic about both sales growth and the economy in the months ahead. However, to keep up with consumers’ increasing demands for convenience and delivery services, forward-thinking chains and independent restauranteurs will need to rethink their sales strategies. They may consider partnering with third-party delivery-service companies, such as Postmates, DoorDash and Uber Eats, add more delivery-friendly menu items and/or they may need to repurpose their stores and parking lots for easier ordering and quicker pick-up services.

Currently, only 5 percent of all food and beverage purchases occur online, but that number is expected to grow. CRE investors need to understand which chains and locations are best prepared to leverage these opportunities in the future.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

The State of International Investment in U.S. CRE

Overseas investors made up 16 percent of commercial real estate (CRE) deal volume in 2018, pumping more than $92 billion into U.S. commercial properties through the end of the year, according to Real Capital Analytics (RCA). The majority of foreign capital (34 percent) went to retail properties, including restaurants, grocery and convenience stores and banks, primarily in secondary markets. Although global trade tensions have had a slight impact on international investment during the first half of 2019, a robust U.S. economy and the long-term nature of CRE investments continue to maintain their safe-haven status and attract foreign capital into U.S. commercial properties.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Meet Orion Executive at ICSC’s Florida Deal Making Conference this August

The Orion Real Estate team will be exhibiting at Booth 2924 at the ICSC’s Florida Conference and Deal Making, August 25 through 27, at the Orange County Convention Center in Orlando, Fla. More than 4,500 commercial retail, restaurant and shopping center professionals are expected to attend the annual event, which features expert-led sessions on current industry issues and countless opportunities for attendees to network, generate new business and make deals.

Stop by Booth 2924 to learn about Orion and meet with our executive team, including Chairman Joe Sanz, President Kevin Sanz, Executive Vice President Chris Sans and Senior Vice President Norman Buhrmaster.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Understanding the Risks of REITs

Not every investor has the funds to purchase one or more commercial buildings on their own, nor do they have the time to manage all the responsibilities associated with buying, selling and managing commercial real estate (CRE). Thankfully, investors have options, including pooling funds with other investors to purchase a debt or equity stake in a particular property or properties or buying shares in real estate investment trusts (REIT) that borrow money to make investments in multiple properties specific to a particular sector, such as retail, industrial, office or multi-family residential apartments.

Although (REITs) have been capturing the news headlines over the past few years, they are not without risks. Here are seven REIT risks that investors should consider.

1. REITs that are publicity traded on the equity markets are subject to not only real estate portfolio risks but also a broad range of global and domestic economic events, changes in interest rates and other evolving conditions that result in market swings.
2. Non-traded REITs are not required to registered with the SEC and are therefore not bound by the same compliance standards, disclosure requirements and investor protections of their publicly traded counterparts.
3. Portfolio diversification within a particular REIT typically is limited to a specific asset class and geographic area. Moreover, because the full portfolio of a REIT’s properties may be unspecified, investors may not have full knowledge of all of their investment risks.
4. Investors do not have a say in or control over the properties in which the REITs choose to invest or the way in which those properties are managed.
5. There are no guarantees that the securities offered by a REIT will have an established trading market, adequate trading volumes or sufficient liquidity.
6. Because REITs borrow money to fund their operations, they are subject to leverage risks and a potential lack of sufficient cash flow and access to additional financing.
7. REITs do not provide investors with opportunities to defer or eliminate capital gains tax on the sale of assets nor do they pass tax losses onto their individual investors to be used to offset taxable gains.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

CRE Continues to Shine

According to Real Capital Analytics’ (RCA) U.S. National All Property Index, pricing continues to increase across all sectors of the commercial real estate sector and have been matched by rising net operating income.

These factors, combined with cap rate compression, are a great sign for investors who are looking to sell their current properties and diversify their portfolios with different assets classes. While some properties are performing better than others, occupancy and rent growth remain strong across the board, and the speculation of an interest rate cut by the Fed supports further pricing growth into the remainder of the year. Property owners and investors should work with experienced CRE professionals to assess the risks and rewards associated with buying or selling properties during market swings.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

According to Real Capital Analytics’ (RCA) U.S. National All Property Index, pricing continues to increase across all sectors of the commercial real estate sector and have been matched by rising net operating

Investors Continue to Play it Safe with Opportunity Zones

Despite all of the hype surrounding the tax benefits of Opportunity Zones (OZs), many taxpayers are still sitting in the sidelines awaiting further guidance from the IRS before putting their money and their trust into these new investment vehicles in unproven markets. Instead, cautious investors are playing it safe and continuing to pursue 1031 like-kind exchanges to provide them with an opportunity to yield tax-deferral benefits by investing in higher-quality assets, with strong fundamentals and proven income consistency.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.