CRE News Hour 6/21/2019
From the business desk at st broadcast news this is the c. arena news hour. I'm steve lubeck in this week on the sierra. Newshour new jersey future gave out at smart growth awards to app upstanding redevelopment projects. We'll have a report from the awards dinner. Speak with brian chandler of j. l. about trends in senior housing and nursing home development will report on last week's meet the developer panel at the philadelphia center city proprietors association. We'll have part two of our conversation with attorney lisa's arlanda about opportunities zone investing and a chat with scott martin of adelson young about the new way medical offices are being marketed and brandon. We'll be back with the top c._r._e. News stories right after these messages <music> turn earn your podcasting passion into profits the book the business of podcasting describes the business side of podcasting including how to become a professional national podcast. You'll learn about position your clients expertise who podcasting to plus the best business models how to find clients and much more visit the the business of podcasting dot com oh today you can't wait for the media to cover your company buzney. You have to be the media. Take advantage of the power of audio and video. It's the best way to showcase your expertise to prospective customers. Let the lupatkin you bet can media companies handled the technical side. We're award winning audio and video producers. We can help you produce podcasts and video programs remotely or in our fully fully equipped studio in cherry hill visit being the media dot com for more information. Welcome back to the c. r. e. news hour. We've got a jammed pack show for you this week so we'll get right to it as we always do with the news and headlines the leading off this week in germany properties has acquired a logistics just exploding at one hundred and fifty milford road in east windsor new jersey. The project has six hundred fifteen thousand square feet currently available for lease. It'll be ready for occupancy by twenty twenty. After derby properties completes building upgrades gene preston is the eastern regional partner for germany properties. This building represents one of the largest blocks of available space in the central new jersey industrial market. Ill location provides direct access to exit of the new jersey turnpike. The building located on fifty one and and a half acres was originally built in nineteen ninety eight. The warehouse expansion was added in two thousand three. The building has twenty eight trailer parking positions four hundred thirteen car parking working stolz forty one doctors and thirty six foot clear height in the warehouse addition new york based king penguin opportunity fund three is working with c._b._r._e. In pittsburgh for four twenty eight forbes avenue known as the pittsburgh got a bunch of new tenants there michael mckay look it is one of the managing principles of the king penguin opportunity fund b. have been working with c. E. r. leasing broker <hes> for the pittsburgh building and they have signed a number of new tenants. <hes> which include the veteran law firm anderson lebowitz data research approach <hes> and many other tenants including women's law project <hes> liederman law and envision. I care michaela. Michaela says that king penguin will continue to invest in for twenty eight and four twenty nine forbes avenue respectively known as the pittsburgh and the allegheny building as well as the center city tower hour at six fifty smithfield street in pittsburgh this summer approximately one hundred miami university hamilton students will move to the third in dayton project checked a mixed use redevelopment in downtown hamilton ohio the property owner industrial realty group will renovate three floors of one of the former ohio casualty z. buildings into apartments and a portion of the used for international student housing i r. g. will transform the sixth floor into twenty-six one bedroom apartments the seventh seventh floor into sixteen two bedroom apartments and the eighth floor into four two bedroom units and twenty two one bedroom units pre leasing will begin for market rate apartments. This full lauren chrome reina's industrial realty groups national director of marketing. We're incredibly excited about the momentum at third in dayton in the last year. Ir orgy has made so much progress in creating marketable apartments and this sense of community which we know will drive the further development onsite on site. We've had a great partner in the city of hamilton and just feels like the times right. These efforts are in line with an announcement from senator bill holy republican from liberty township ohio coli announced a new workforce education partnership for the university students who participate in the collaborative program will work parttime for participating companies and in return. They'll get a wage tuition and supportive. Housing here are some other headlines from around the world world. Mac kelly says its shareholders voted to elect four dissident nominees proposed by investment firm bow street. Seven nominees for the company were re elected elected to the board. It's regarded as rebuke of the company by shareholders and met kelly says it will set up a committee to evaluate strategic alternatives including a potential sale d._s._m. Group says it has acquired jefferson hill apartments in the thriving metro west region of greater boston the properties on twenty seven acres and consists of four six story apartment buildings and a clubhouse the unit mix includes on hundred and eighty studios five hundred fifty one one bedrooms and two hundred eighty nine two bedrooms jefferson hills is located on route nine a major east west thoroughfare running from downtown boston to the western border of new york state ten federal and mainstay global alert learn announcing an alliance to raise capital for ten federal's thirty million dollars self storage equity offering from china and us-based investors ten federal's pioneered a system system to acquire and convert self storage properties to automated unmanned operations using a proprietary technology platform mainstay globals and investment firm that provides provides marketing solutions for direct foreign investment through offices in china and the u._s. Shopping center owner preet named burlington is the lead replacement for or sears at the dartmouth mall in north dartmouth massachusetts predisposes in discussions with other large format retailers to complement burlington. You're listening to the sierra news hour from st broadcast news dot com surrounded by an amazing collection of artifacts and memorabilia at at the newark museum supporters of smart redevelopment strategies recognized some of the leading development projects in new jersey with smart growth growth awards from new jersey future. This year was the seventeenth year. New jersey futures presented awards for smart growth. Your organization is nonprofit and nonpartisan promoting sensible growth redevelopment and infrastructure investments to foster vibrant cities and towns protect natural lands and waterways ways enhanced transportation choices provide access to safe affordable and aging friendly neighborhoods and fuel a strong economy. Tell i wouldn't tell me about the events smart growth awards. What's the purpose of it. Why does new jersey future. Do it sure this era eighteen th year doing smart growth awards and we love the event because it does a a couple of things for us one is it showcases some of the best projects and plans around the state so people get to look at these models look at examples of what really good plans and projects look glac but we also love the event because it brings all the people who are doing groundbreaking work together so they get to meet each other. They get to talk to each other inspire each other and it's a great opportunity for people to just take their work to the next level. Peter casa back is the executive director of new jersey future. What are some of the important takeaways for policy-makers and legislators developers for from from the award by the one we always lead with his smart growth is economic growth and and so the more that we do downtown development mixed use development mixed income housing more we mix all of these things we create walkable vibrant places. It helps our economy on a me it helps our environment and it helps our our communities and the ad has to be done intentionally. No it's not a haphazard process. How do you get people to cooperate and collaborate screening process well. I think we've been very successful so far and that's why we have such great projects that you see around new jersey right. Now is people are seeing the benefits of this kind kind of development so the more that you have projects that do mix uses that create walkable places they start to leverage each other and as they leverage each other property the values go up you get more economic development taking place and you create places that more people want to come and visit what are some of the best projects in your mind. What are the things that are most successful in redeveloping and reimagining new jersey. You know we really like to talk about mixed use these projects in downtown and so a project where you take an old historic building like the hanes building for instance where it's a complete renovation of a of a beautiful landmark and mark building in the downtown that brings a whole sense of new life to that area that's one category and other categories how we use our open spaces differently this year we're giving an award to the lawrence hopewell bike trail and it's how do we use our open spaces connect people and link people together get people out into the into our open spaces and get them to appreciate the more so it's those kinds of categories and then one of my favorites is how do we use <hes> green infrastructure better which is how do we use natural systems to capture stormwater and more and more projects plans are figuring out how they can do that so they can capture that storm water on site site and that doesn't just isn't just good for the environment and for preventing flooding but it also creates these great natural amenities like rain gardens and green in roofs. What are the technologies or techniques that you think are going to be important in the future. Why think the green infrastructure. You're how we manage. Storm water is going to be one of the most important ways that we move forward is just because we're in a built up. Environment doesn't mean that we can't use natural systems to manage our storm water better and create more green space in our urban areas. I think we're gonna see more density. I think people are now starting to understand that density drives economic development and it creates the excitement and the vibrancy of a place that you need and so i think we're going to start to see more density density taking place and more people willing to <hes> build higher and create more dense <hes> communities peter reinhard is is the director of the kislyak real estate institute at new jersey's monmouth university he chairs the new jersey future board of trustees new jersey future smart growth awards. What does it mean what's the value for the real estate community while the the new jersey future smart growth awards we established many years ago <hes> kind of to be a little something different in recognize development and redevelopment projects for what they do an overall community not just for the prophets it's or whatever but they they <hes> truly recognize benefits to the community and we have a panel of independent judges every year who truly are independent and evaluate them and it's really grown prestige. I mean we'll have. I don't know three or four hundred people here tonight and it's become one of those. One of our two must be at events. It's this one and the redevelopment forum in march. I think this year we had nine hundred people at that. Certain features really establish itself in the space. So what's the smartest growth that new maturity couldn't do it would be <hes> it would be a good question steve. I would say it's growth that is in the right place and at the right density the city that incorporates all the things that we need affordable housing good quality open space <hes> green infrastructure environmentally sensitive but at the same time fits the needs for the communities and the and the market. What should the state be doing that. It's not doing to encourage smarter undergrowth well. We really don't have a policy at all right now. We have mount laurel doctrine which is sort of just chaos. <hes> the state planning planning efforts have been largely abandoned since superstorm sandy that was house almost seven years ago and we we really needed more coordinated thoughtful approach to getting things done rather than project-by-project regulation by regulation and you know who gets mixed allowed us noise we we really don't have a good plan coordinated effort from the top projects that one smart growth awards range from youth center in plainfield old to a walking and cycling trail connecting lawrence hopewell townships in the western part of central new jersey. There were two awards for art deco office. This buildings that were restored one in newark called the walker house which is being re purpose to provide mixed income housing in the heart of downtown newark. The other was is a vacant but i- conic bank building in passaic. That's being turned into an office in retail anchor. That's expected to revitalize passaic urban downtown passaic mayor hector laura. It's really a strong message to investors at the city of sake is a welcoming place to come into business with this particular investment cemented. Was it really revitalized the heart of our city right on main avenue. Obviously it was a building that had the lights turned off for decades and the message that was one that we didn't want going around our city but the very day that the lights were non. We felt the excitement and the energy come back into our city inside. We have an amazing fusion asian restaurant of asian food and latin food. We have the board of education on the top floors. We are blink gym fitness center right in the middle just the fact that people get to see the lights on on the tallest building of the city of say in maine avenue considering some of the other investments that are coming into our city including this new bus terminal no with four million dollars coming from the state in the county state of the art bus terminal as we continue to encourage more urban transit hub development and looked to capitalize relies on new opportunities with more incentives in offering tax incentives to developers. We're seeing the turnaround in the city. We have a wonderful relationship with investors strong council also <hes> really wonderful leaders in our community and we're very excited about this and we're very excited about the hanini their investment the state investment architects designers it really is a team effort. You don't turn around by simply working alone. You have to work collaboratively with the thought leaders of your community and <hes> the state new jersey future also recognized mercer county community college which reactivated long-dormant buildings in an overlooked part of trenton the the state capital with amenities that serve both students and city residents. John ping wang is president of mercer county community college. Tell me a little bit about the award jordan and what the school did and why it matters to your students in your community so the mercer county community college james kearney campus this is located in downtown capital city of trenton so i was students very much from the local trenton and we are a community resource center so it matters for us to to revitalize trenton as capital city and our all students and our residents and faculty and staff with very susastro about ring in the residence up bring bring trenton back to its glory so we're very delighted to have won this award because as part of the revitalization of our our capital city what were some of the challenges you faced in redesigning and redeveloping the campus. We have been faced with some doubts they. They wonder if we don't make any difference because there are so many needs for development in trenton but we believe it's one block at the time so we do our part and we hope to expire this join us and has proven to be working. More people are joining us. One word that had special interest for me was ironside newark edison properties transformed a former warehouse building along newark's central traffic artery mccarter highway into a modern office complex that houses a new headquarters for eminem wrigley the candy company and it links to mulberry he comments and urban park being created adjacent to the building that connects the workplace based to the prudential center ice hockey arena where the new jersey devils hockey team team makes its home. I worked in newark about forty years ago. When this building ironside newark house a printing company called the kenny press in my job as a commuter relations ends representative for conrail which at the time operated new jersey transit trains we had to walk down mccarter highway to the kenyan press building to bring the master copies of the letters we would send to commuters we called them seat notices and kenny presswood print about seventy thousand of them and make sure that they got out to the train yards for distribution on on the trains during the rush hour peice qualley serena works for edison properties and he talked about finding out how incredibly durable the construction of that building was because because of the kennedy press printing operation it was located in it perkins eastman and the rest of the consultants were excellent in designing the product because as with any gut renovation project very very difficult as opposed to a ground up where you create your own challenges this there were hidden challenges is that we didn't see until we were into it so <hes> credit to edison properties my employer to taking on that challenge to take one hundred and ten year old building and converted to what it is today. Hey <hes> i can tell you that edison's been in newark for over sixty years <hes> it believes in newark always has and this product this project is an example example of their commitment to the city and the deal that we made with mars wrigley confectionary to come in just shows the momentum. The city has in the direction that it's moving moving so together with the mayor edison the design team and everyone involved with the project. It's really a testament to where <hes> where the city can go if we put the heads together now. I'm old enough to remember when that building house to kenny press back in the seventies. I worked in newark and we use kenny press <hes>. What surprises did you find when you got into the print plant. There was anything yeah i mean. The structure that the the sheer structure of the of the building supported train cars that actually came in unloaded unloaded their cargo so the live low-capacity on the floor was tremendous in a typical offer an office environment. You'll see fifty pounds per square foot live load this building you had thousand pound per square foot live load so we removed large sections of the floor large section of the steel beams and concrete that were just build massively <hes> we cut in almost five hundred openings to create natural light and air into the building that wasn't there in a cast in place concrete facade which is very atypical typically. It's masonry brick <hes> so it was just very very tremendous and getting into it and understanding how to demolish segments sure them and then create a a new structure element to support what we wanted to do was very challenging howard the tenants taking to the new building of the enjoying the environment environment yeah so edison just moved into the building on monday. We are moving our headquarters. We moved our headquarters into the building mars confectionery. That's that's moving into. They couldn't be happier the atrium the front lobby is just tremendous. It's three levels. I they've got their own private terrace on the seventh floor that oversees the new york city skyline couldn't be happier. New jersey future also recognized wendy kelman new chairwoman and ceo of the hugo new corporation she she got the organizations kerry edwards leadership award. It's named for a former new jersey state attorney general who played a key role in smart development efforts in the state news company company is redeveloping carney point of former shipbuilding complex. They're turning the sprawling industrial site into a live work. Play environment new spoke about the properties these transformation. This is a site that was built in nineteen seventeen in the midst of world war one and was built for war the war effort at the time. It's most productive period was in world war. Two where there were thirty five thousand people working being there to fight help fight the war effort in the maritime sector and it was the one of the most productive sites in this country <music> actually in the world and that they were launching ship every five days. I say that because it's very important that we remember that we remember that history and that we understand the economic engine that it once was and that we try to recreate that economic engine for the next century and that's what we're trying to do bryn away that is much more inclusive that doesn't leave people behind that we can share that prosperity with others because that's the only way we are going to become truly resilient to face those challenges challenges that are in front of us. You can read about all the new jersey future smart growth award winners and see videos about each project at nj a future dot o._r._g. Investors are still cautiously optimistic about the seniors housing market. Even after the sector experienced a slight dip and transaction volume twenty eighteen jones lang lasalle. 's spring twenty nine teen seniors housing survey included more than a thousand potential respondents who specialize in the senior housing and care space that survey points to a generally positive sentiment around the market notes that while transaction volume total just over thirteen billion dollars in two thousand eighteen the number of transactions was up forty one percent year-over-year brian chandler is the managing director of jails valuation and advisory services so brian. You have a cautiously optimistic outlook in the senior senior survey. There was a dip in transaction volume last year. What's happening this year. That makes investors more optimistic. What's going on. Steve is <hes> from an optimistic standpoint. <hes> some investors that we've surveyed are really looking into you <hes> or have greater interest into the independent and assisted living continuing care facilities and they're the most desirable arbel subsectors right now and what what is it about those sectors that make them more attractive than the other kinds of retirement homes or retirement communities communities. It's again it goes back to the <hes> continuum of care and <hes> aging in place for some of these as residents <hes> a lot of the adult children who who make <hes> some of these decisions <hes> want their parents in facilities like this <hes> so they can see edge in age in place properly are are there any particular things that you think investors. There's are looking for when they <hes> move in that direction is it is just that they they see seniors moving into those particular kinds of facilities at a greater rate eight or or what is driving the interest <hes> the interest is it's operationally based investors are looking for location station good location strong demographics of very good operator. <hes> who meet all the staffing needs <hes> in these properties <hes>. They're also looking when you go back into location. They're looking for <hes> high barrier to entry <hes> locations <hes> and again going back to the the strong demographics as well so in the survey <hes> use say that the respondents believe there's going to be a modest increase in value for seniors only apartments. That's a little bit more than half fifty. Seven point one percent forty point four percent say they see independent living assisted living in memory care facilities making modest gains and the respondents say that they expect a modest decrease in value for skilled nursing facilities abilities. Why is it that skilled. Nursing facilities are declining in value or at least that the respondents to your survey think they will decline in value well. They're probably go there. Dig declining in value because of the <hes> operationally intense <hes> skilled nursing <hes> atmosphere that is in these properties <hes> in terms of the of the care and <hes>. There's also a lot of labor intense <hes> issues that are happening across the still nursing a platform that makes him of these investors think that the values could <hes> decrease <hes> and when you talk about the the high barrier to entry markets what are the markets that you see as most attractive differ these kinds of facilities <hes> where they located. What we're seeing is <hes> based on our analysis in the work that that we've done we we've seen a lot in a new development <hes> in california <hes> obviously on the west coast there and in ashikaga metro area <hes>. There's a lot of new development in atlanta but that that area is is a little bit saturated <hes> also so some newer developments in the phoenix area <hes> that is very sustainable based on the supply and demand characteristics characteristics there and some areas of florida's what is well <hes> <hes>. There's there's been over development in some areas of texas obviously in <hes> san antonio in houston in parts of dallas fort worth metro <hes> but what we're seeing a lot of interest in really in california pacific north west <hes> denver <hes> outside denver as well and what are the kinds. It's of investors that you see looking at these properties. Is there any particular type of organization. That's making the investments as it private investors as it reads who who who who are the ones who are going after these kinds of properties it's common combination of of private equity <hes> and and reached an institutional investors as well. Is there any particular characteristics you are recommending. They look for in these properties as they make their their investment decisions. Yeah i would definitely look at the physical plant <hes> the quality of construction <hes> the the the operator a again. Go back to the point where <hes> operators is is very key for these assets <hes>. If you've got a good operator operator <hes> things should go pretty smoothly in very good a well built <hes> community <hes> you know again you got to look at the competition in the market as well but if you have a good operator they they know who the competent competition is and how well they can <hes> improve in any operations that they that they need <hes> to help bring more return and to <hes> these investments brian chandler managing director of j._o._l.'s valuation and advisory services brian. Thanks for joining us. You're listening in into the c._r._m. News hour. I'm steve lebedko with new developments. Redevelopments and construction construction projects underway philadelphia's experiencing an exciting period of growth as perceptions of center cities boundaries change the center said he proprietors association a local nonprofit serving philadelphia businesses with connections insight resources and community through programs programs and events hosts a periodic panel focusing on real estate development the c._c._p._a.'s latest meet the developers panel featured comments by five five of the city's most innovative developers builders architects and engineers della clark is the president of the enterprise centre which works with small and mid-size businesses creating jobs in low income communities throughout philadelphia. She's focused on bringing real estate development to west philadelphia. One of the city's these economically disadvantaged neighborhoods where positive local development is being stymied by out of town speculators buying up properties that could be redeveloped right now. I'm very excited about west philadelphia where the enterprise has been located about thirty years at forty-six market and and so one of the projects that we're taking on here's to revitalize the corners are along market street under a dresser. University is the nowak metro finance committee. You might remember jeremy no way and there's a gentleman there by the name of bruce castle who's with the brooklyn institute as he did a lot of work. He's done a lot of work around corners honors in neighborhoods and community as we're following his roadmap to develop the corners on our market street of and try to revitalize and bring them back so we're very excited about westwood of the only thing that we see this taking place is that there are a lot of new york real estate brokers that are coming into west west philadelphia and acquiring property and are sitting on it and so they're standing in the way of our progress so that's one thing that is a challenge for us. Another challenge for filadelfia is construction costs. Here's architect antonio feel silva from c._t._o. Architecture you know we have the same nearly sank assertion costs in some areas in washington in new york but we're between a rock and a hard place and we don't have the kind of rent structures that they have and that's the ongoing challenge and feel silva thinks that commercial real estate industry needs to modernize its use of technology industry really has to be modernized and some people think oh that means some wrong. It's gonna go winder build the thing by itself and sawn you know and i don't think it's really there what wh- -tunities that are screaming are really how buildings are procured how parnerships them and how you can invest smartly on how you purchase things on how you take the long view of things i think in that is the area that really how screaming for for different fresh approaches looking at economic trends for the market serena rose senior vice president of development and four post brothers thinks the next five years will mean more construction of multifamily housing. I can speak to the aspect of our our apartment's market is still underserved so we're gonna be building. The next five years in a row must lay hopefully that our community involvement we'll <hes> uh-huh we'll have some impact on trends to improve the schools under those kind of things and give these millennials choices as they grow or their families <hes> certainly were xining apartments to accept the modern lifestyle and how how families live today we're confident in our product and how it'd be received and that will be absorbed in the market as far as downturn looking at five years jason tucker vice president of acquisitions for the goldenberg group thinks the city sustained growth in the past twenty years as good but the challenge for the industry is to get that development started in neighborhoods that have not been targets of development up to now on a micro level. I think it's evident if you look at the cranes and everything that there's a lot of activity in the city but i'll tell you that the rains are always a lagging indicator of the economy on and i think that if you wanna talk about growth the city has had assam recently-sustained broken. It's fantastic. It's been as high as it's been twenty years the question we should all be asking ourselves is how are we going to expand and sustain that grow over the next swingers and so i think that we're the growth opportunities are for me would be in all of the parts of the city that haven't been part of that wider sustained group. How do you expand van into these buffer. Neighborhoods expanded communities where the city remains in deep deep poverty. Obviously we've gotten the core running the now. It's time to get the blood flowing in the traumatize so that's where the opportunities are depending upon scale and your attitude attitude attitude and appetite for little bits. You can purchase a complete audio podcast of the c._c._p._a. Meet the developers panel at st broadcast news dot com just click on the menu pick for e commerce for more information asian about the center said he proprietors association visit center city proprietors dot o._r._g. Lisa's czar langa is a partner at steptoe steptoe. The new york law firm where she represents public and private companies on federal tax issues. She's also an expert on the opportunities zone program in in last week's program lisa gave us an overview of the opportunities owned program in this second part of the conversation. Lisa talks about some of the requirements that that investors need to meet before they can qualify for establishing an opportunities fund. <hes> are there other requirements that investors or sponsors sponsors of opportunity funds need to meet before they can qualify for the o._c. Benefits i would say that <hes> one of the things that is apparently rules is there's some pretty tight. Timeframe has to be satisfied to make investments in the opportunity fund and for the fun to make his avoid capital title in the opportunities zone <hes> so investors are going to have to sort of pick their projects smartly. They're gonna have to make sure that they've got viable. Projects lined up before making their initial investments <hes> so just to kind of summarize these these timeframes and sort of realize how tight they can become investors generally have <hes> hundred and eighty days from the time they recognize a capital gain to make their contributions to the opportunity fund and then the the opportunity fund has a limited amount of time to invest what it receives from the investors into off property whether it's either directly held property or <hes> a lower tier ah <hes> entity so the opportunity to hold at least ninety percent of its assets an opportunity own property and that's going to be measured twice a year at at the end of six months and at the end of the taxable year and so <hes> many people were concerned that if they had made the investment into the opportunity fund and shortly before the six month shortly before the year end that they would not have sufficient time to to deploy capital and the proposed regulations provided some relief relief by saying that the opportunity fund could elect to disregard cash or cash equivalents or short term debt that it holds for six months so it can receive a <hes> an fusion of capital it can basically ignore that if it continues towards cash until you know six months to give it additional time to deploy that <hes> basically gives them a minimum of six months and they'll have effectively till the next measurement date disatisfied ninety percent test so it could give them up to twelve months to play that capital so for example. If the opportunity fund receives money from the from a investor in august of twenty nineteen the fund can ignore the cash for six months until february of twenty twenty so that would mean that when it has its testing on december thirty first of twenty nine teen gene can ignore that cash <hes> and it would not necessarily have to meet the ninety percent test until the next measurement date of june thirty twenty twenty money so if the opportunity fund plans to substantially improve property. There's another time period in which it has chewy accomplish that the statute in the regulations provide a safe harbor period of thirty months to achieve substantial <hes> improvement which is basically the doubling of cost basis <hes> so the property doesn't have to be done in thirty months just have to double the basis and thirty months and then if the opportunity to invest capital in the lower here on business the odds business has the <hes> an additional thirty one month period. It's known as the working capital safe harbor to deploy its capital now. If the lower is businesses deploying its capital by making substantial improvements to property that thirty one month period and the thirty month they've harbor will run concurrently now. They're the rings do provide for an extension of the thirty one month safe harbor period if the delays are caused by government permitting so if the if the odds business applies for the permit and the government waiting on the government issue the permit delay those delays can be added a thirty one month period and and then the other thing to note is that there's a new thirty one month period for each infusion of capital which is which can be very helpful <hes> but the one thing to note here here is the proposed regulations appeared require that at the end of the first thirty one month period that the business has to be engaged in an active trader business. That's capable wolf generating revenue so it's this is still a really ambitious timeline thirty. One months sounds like a long time but <hes> you know i'm hearing a lot of clients. Say <hes> you know our projects are gonna take much longer than thirty one months <hes> and so we're trying to recommend to the clients that if they <hes> you know that they manage their cash infusions so they have three months to deploy it but at the end of the first thirty one month period they should try to do the the project in phases that there are at least maybe starting to generate leasing income <hes> at the end of the first three one month period now opportunity funds will are going to want to control the timing of capital hall to ensure that they can meet these investment timelines <hes> but the outside investors are going to need to make their coughing investments within the one hundred eighty day investment asmat window and that's gonna create a little bit of attention between the fund and the investors <hes> which we've been trying to resolving in the fund documentation for example the opportunity funding exact capital calls but then provide the investor their right to put the investment to the opportunity fund within a certain number days before the two hundred eight period expires another consideration for investors not only the timing of it is the quality of the investment <hes> although the tax benefits are significant for opportunity funds investors are still looking for return on their investments and we've seen you know there's more than eight thousand seven hundred opportunities around the country and in the in the u._s. possessions <hes> and some are <hes> less distrust and others <hes> and so you're starting to see capital flow into those you know the nicer opportunities owns <music> <hes> but the fact of the matter is the vast majority of the opportunity zones are in truly distressed areas and so they do present riskier investment opportunities <hes> i've been hearing i've been going to <hes> you know programs in panels where there's a collection of of local officials entrepreneurs and <hes> advisers and you know real estate developers and a lot of what i'm hearing is that the <hes> they really need to coordinate the operates at the local level in order to attract capital so for example local governments are starting to work with the developers burs and the entrepreneurs to effectively come up with a business plan that they can present to investors kind of on a united front to get capital flowing their way <hes> and that i think you're gonna see this. The more successful opportunities zones operate in that way. What are the anti-abuse additions and water companies. <hes> what what do companies need to know about them to keep from getting into trouble. The proposed regulations contain a very broad anti-abuse rule <hes> <hes> providing only that emma significant purpose of the transaction is to achieve a tax result. It's inconsistent with the purposes of section fourteen hundred zero dashed to which is the opportunities statue then the i._r._s. Can recast the transaction and doesn't provide anything else. There's no examples. There's no specifics on what kinds the things would violate the purpose <hes> and i think a lot of people fear that the rule could have a chilling effect on transactions and i think you're going to see a lot of the comments so the the government requested there be more specificity around <hes> what the anti-abuse rules provide <hes> the preamble to the proposed ranks does request quite comments on on whether there should be additional details or examples and things like that and so so the hope is that there will be more more meat on those bones <hes> <hes> come to propose come the final rags <hes> the proposed regulations do identify a couple of <hes> uses of land dan as potentially abusive in a couple of places <hes> the government seems pretty concerned about land banking and there's a couple of shot across the bow in the rags that kind you've got to that you don't bring sample the preamble notes that the use of land and a traitor business such as an agricultural business <hes> without the investment of any new cabinet on the land could violate the anti-abuse rules and there's an additional area where the the proposed rigs have a rule that says that land does not need to meet the requirements armaments for original use or substantial improvement <hes> but then they contain this interesting effective date rule that says that you can't rely on the proposed rule if the land is unimproved or minimally improved and the opportunity fund or is business purchases the land with the expectation that they're not going to improve the lamb by more than insubstantial amount within thirty months of the date of purchase <hes> i think when you work through all those double triple negative <hes> you get a combination of rules that basically says land doesn't have to be substantially improved but it has to be improved by more than is substantial amount <hes> and and so i think i think all of these jobs across abou- are intended to you know to to protect against land banking but hopefully the final regulations. We'll see a little bit more. <hes> got clarity around that now. Are there any dates that people are watching for for additional clarification of the rules or are we pretty much at a point where the people just have to go ahead and start doing stuff and the rules may evolve over time you mean as far as the timing of the rule yeah yeah i mean are are they is the government expected to amplify or change what it's put out so far <hes> or are people basically basically free to move around the opportunities own world at this point <hes> given all of the caveats you've described <hes> or is the government going to be the adding to the clarification that it's already provided i think in the little bit of both the government plans to finalise the propose rigs it puts out out and it's going to respond to comment in doing so so i think you'll see some changes from the proposed to the final rags to provide more clarity around some of the areas that are confusing <hes> <hes> in the meantime the government has given tax payers the ability to rely on the proposed regulations and so they anticipate that that deals are going to move forward in reliance on these propose regulations and they kind of have to because there's a limited window of opportunity here <hes> if if you wanna take full advantage of of the five year the seven year tenure step up then you need to invest by the end of this year to get all of that <hes> unless congress steps in in and changes changes the dates or extended by a period of time and so we're starting to see more deals move forward after the second set of proposed regulations ends was issued because it did provide a lot more clarity even though we expect you know we expect hopefully more clarity when the regulations nations are finalized. I should note also that the the reliance on number post regulations. There's one section that doesn't grant reliance and not is the exit <hes> the special rules for exiting funds and the reason why the government didn't give reliance on that piece of the proposed regulations is because because it's not effective for ten more years and so they didn't think they needed to <hes> but what we're seeing is a lot of investors are a little squirrelly and want to know what their exit strategy looks like now <hes> and so a lot of people are planning to comment to the government that they provide that reliance now <hes> not require investors to wait until final regulations or out great lisa. Thanks very much for taking the time to lay all this stuff out. <hes> obviously the opportunities -tunities zone investors and developers need to have their calendars at their fingertips and <hes> keep their legal and financial advisers close at hand. I think that's right. We'll be back in a minute shalom. 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We're award winning audio uh-huh and video producers we can help you produce podcasts and video programs remotely or in our fully equipped studio in cherry hill visit being the media dot com for more information with patients today treating healthcare like shopping providers providers have to focus on branding and making their offices more convenient and accessible. A vison young's scott martin who earlier this year joined coming to philadelphia offices. A principal says growing competition means healthcare providers have to focus more on the patient experience than ever before. Martin specializes is in the medical office sector. He tells his healthcare clients. They should locate in buildings that make the patient experience as pleasant as possible. It's obviously done very differently than it was was a number of years ago yeah yeah you know so i was. I go back to forty eight years old. I was i grew up in the east side of cherry hill in south jersey and i was raised by my stepfather and my stepfather was a o._b._g._y._n. Fertility specialist and <hes> <hes> you know he had a as specialist. The was affiliated with a bunch of different hospitals throughout the region especially back in that day for tilleke specialists. It was were a little bit of an anomaly <hes> but you know he had an office in executive news which is off route seventy which <hes> most people who lived in south jersey for years have no idea where that is <hes> and then not only that when you get into complex like that you have. It's very difficult to find people so it's just a very different way of thinking. There was no branding no sign age. That's the way doctors offices offices were done and lawyers as well absolutely absolutely and it's it's you know it's if you were a good doc or you know. If you're defamation inspired people were just gonna find you and hear about you and if you know days before g._p._s. and cell phones and you know so they found her <hes> but you know very different today. <hes> you know you mentioned along route seventy branding the penn medicine deal. I was involved with several years ago <hes> in the former sim side and the and the penn cardiology building. I saw <hes> right on seventies well which is now owned by a pain management. Benjamin crew called relieve us so they obviously one of the things that was very attractive to that being you know having essentially retail branding and retail signed just to drive by and a lot of people may not understand what releases but you know with technology and the internet and google and you know just it makes much easier easier the <hes> kinda find people in get your branding out there and you know one of my longtime clients who i've been <hes> worked with for many years probably ten plus years. <hes> is the rothman institute and you know that was kind of <hes> dick rothman who died this past year. You know that was kind of his his <hes> <hes> model more than anything else in that you know not make everyone one come into the city to get their healthcare services. You know especially in his case where the p._t._a. But bringing out to the suburbs and you know make you're that you have the proper branding proper sign it and you know obviously it's very important that you want your patients to be able to find you but you you know they almost want their non patients to be able to find them so that when you drive by for example a rothmans toot office we expect the same finishes issues expect the same quality hair the same service <hes> you know and and mike west is the c._e._o. Of often <hes> is really as well as michael sharon the essentially the senior vice president there. You know but especially really mike west that was you know kind of idea that you know when he got there. <hes> let's let's create our name spend money on marketing and branding and <hes> so the reason why wii here about for example often. It's a tutor you know everything they're doing and where they are and they're branding everywhere. So how does this the way you as a commercial real estate professional position the properties or look for properties for investors <hes> <hes> who might be looking for this kind of <hes> this kind of property would it well. You also like you know in the in the you know call it. Call it ten plus years ago or even longer than that. I was much more concerned with the footprint of the building you know and and can it really accommodate if it's a great building and it you know it's one or two streets off the main street then it's okay. It's a great building. It's almost the the opposite you know when i'm in many cases not with everyone but with in many cases when i'm out there looking for building. It's you know there's a little bit tongue in cheek. It's almost like the building doesn't matter that much <hes> it does but you know if i have an opportunity to from representing someone one and you're and you're looking for a medical office building to open up a site whether it's something the least or something to purchase having big traffic counts and having giving the opportunity to promote your branding is really important <hes> more important than it ever has been. I feel <hes> and you know that's and that's really that's really evolved over the last few years. <hes> you know one of the attractive things about a lot lot of retail sites also as they generally have larger parking ratios so you know good healthier parking is typically got five for one thousand <hes> square foot ratio and in many cases when you're going to more retail focused sites the ratios who's gonna be at least that it's not if not larger would you still had to put in a parking deck over at the same site they did and and <hes> and that was really more. I think township based <hes> i think the township really pushed that more than anything <hes> <hes> <hes> but <hes> yeah i mean it just it. It's there was a lot of things i won't believe with all the details everything think that went behind getting that approved and done and nor was i involved in a lot of that. That was really kinda more fred my former former company <hes> was involved mostly in that he was kinda toy person from the the real estate side <hes> but yeah i mean it's it's you know put parking's very important. You know same thing with jefferson. Slash kennedy is doing right now. In seoul flash washington township entre new jersey and they just finished adding a. I think it's a seven story eight hundred car parking lot expansion because they needed the parking as well sixty new private patient rooms there so if you're <hes> advising a client <hes> what are the things you telling them to look for in in a property like this yeah. I just you know when i look at buildings that just you know when i'm driving by. If i'm searching for for buildings for someone i'm representing you know i've the one of the first things as i mentioned this kind of all ties together that are looking for you. Now is really the angles of what i'm gonna swear. I'm gonna see the building on the road you know and and and the and the traffic patterns letters and one day occur and <hes> you know. Is there an opportunity what what is the township light as it pertains. It's too branding insiders because certain towns are very you know very very strict on that. You know town like princeton. Worm working on deals right right. Now is is very strict on their side. It's the same thing with you. Know towns like bucks. Ca you know certain towns in bucks county like like new hope or or or new town <hes> but i'm always looking for you know something that is going to be highly visible <hes> <hes> <hes> you know that that potential patients and existing patients are going to say yes so. It's a it's basically more like retail today than ever before yeah yeah yeah. I would say i would say it. Is i mean it's it's <hes> but still i don't think most people with that way i think most people are kind <hes> used to the old system and you know and and it's might be a little bit complicated to find your doctor to find services but you know once you've had an experience of kind of going to war of a retail focused site that has retail branding. I mean it's so much easier to kill a few birds with one stone <hes> and it's not the convenience of having it <hes> you know in in retail oriented oriented locations with retail branding just it's it's convenient as well which kind of drives a lotta healthcare scott morton is a principal in the philadelphia office office of ableson young scott. Thanks for taking the time appreciate it absolutely and that'll wrap things up for this edition of the c._r._e. News hour you can send your comments suggestions story ideas to steve at st broadcast news dot com where you can leave an audio comment for us using the voicemail icon on the homepage at st broadcast news dot com and we tape this program in studio a at st broadcast news in cherry hill new new jersey join us again for the next episode of the c. R. e. news our next friday eight a._m. Eastern time at st broadcast news dot com or wherever you get your pod guests. This is steve abedin. We'll see you out there on the net. Take good care.