Archive for July, 2014

Real estate financing is in the perfect storm

Wednesday, July 30th, 2014

If you think acquiring financing for developers and investors is not getting any easier, you are right. Yet hope is on the horizon.

According to Ed Wlodarczyk, senior vice president and head of capital market services at DTZ, Americas, they are coming out of the abyss with the frozenness of the banks, and the lending environment.

“I think construction financing is still not at the levels that we remember it being,” he said. “I’m currently working on two large development projects out West, I am still having a difficult time with them, and these are great projects. One is a golf resort, single-family community south of Tucson in Arizona. The other is a mixed-use main street project. The lenders are still skittish on the developments.”

He continued, “I believe sponsor/developers who do not have a solid relationship and track record with a financial institution are more likely to seek out a private equity company. Although private equity may be a little bit more expensive, it will allow the project to commence. Private equity firms usually have an end game, whether it is a REIT rollup or an investment sale, private equity will be a short term fix.”

After 26 years in the business, Wlodarczyk knows the industry well, and says that multifamily has been on fire all throughout the United States.

“Due to Freddy and Fannie being very aggressive for multifamily housing financing, that market has been open for business the last five years without missing a beat,” he said. “A lot of people after the crash changed their strategy and started investing in multifamily because it’s easily financeable. Plus when you think about multifamily, when people were losing their homes due to foreclosure or credit lending, people had to live somewhere.”

He added, “Regardless of the economic situation we have to have somewhere to live, you have to eat, and you have to have clothes.”

Wlodarczyk says industrial comes next, retail follows, and then office is last.

“Development is taking a risk. So the lending communities of the world are sitting back and saying what are my greatest risks? Or what is my greatest risk? If my easiest risk is multifamily because the government’s allowing me to do it with the Freddy and Fannie type of financing that is available, then I should do that.”

Another aspect to financing people were looking towards, Wlodarczyk says even when the markets collapsed, was new market tax credits.

“New market tax credit allocation is the government’s approach to provide for redevelopment of communities and the re-gentrification of communities within the United States. A good friend of mine, Neil freeman of Aries Capital here in Chicago, has become a leader in this arena.”

Another form of financing that can be used for development is a credit tenant lease (CTL). Wlodarczyk said that is where the owner signs a lease for 20 years. The credit of the tenant must be investment grade or higher to be considered for a CTL. The lenders prepare a bond instrument out in the financial community, not using the value of the real estate, but on the credit of the tenant.

“Rates are very competitive with the right type of credit,” he added.

Also, there are several private equity funds available that are just doing construction lending for single-family, and there is a lot of activity in the residential multifamily arena.

“As it pertains to commercial real estate,” Wlodarczyk said. “If you look at our market in the Midwest, many long standing firms have survived by re-inventing themselves and adjusting to the marketplace. Because of that, when the lending community comes back and says we’re ready to go, they will be able to swoop in and do the things that they need to do.”

Interest rates are lower than they were at the high water mark commercial real estate in 2005 according to Wlodarczyk. As he reflected on conversing with a client looking to do a lease back, he says he told his client it was the perfect storm.

“It depends on the type of real estate and the credit of the tenant and borrower,” he said. “If it is a single tenant net leased property for 15 years to a Walgreens, one can achieve the lowest rate in the market, and if you choose to sell, don’t be surprised if the cap rate is lower than we achieved during the high water mark in 2005.”

So are we facing another bubble? Wlodarczyk says he does not know but he hopes not.

“I think there is a lot of runway left in this recovery. Originally when I did my forecasts for the firm in the fourth quarter of last year, I said interest rates would go up fourth quarter of this year. I am now saying that interest rates will most likely go up in the second or third quarter of 2015. If they do go up, they’ll go up marginally because the activity is promoting itself to move forward.”

CMBS is back, and the legacy 10 year mortgages are coming due next year, and the year to follow. Wlodarczyk says because the interest rates are low, most of those loans that need refinancing will be refinanced.

“The market place is completely different than it was six years ago,” he said. “Six years ago it was a churn and burn type of market, and there was no customer service. Today, customer service is better and life companies have better rates than the CMBS market does. Which six years ago, the CMBS market was easily 50 to 75 basis points lower in cost than the life company market.”

He says that there has been a shift, and it is okay, because it is a good one.

“Again, I still think we are in the perfect storm.”

So what do developers and investors have to be able to show lenders to improve their odds of getting financed? Wlodarczyk said there are four key components.

“If you’re looking for financing make sure you have a good handle on your project, you can show a track record which is important, you have to have skin in the game, and you will really have to prove your pre- leasing activity because it will be scrutinized by the lender.”

Since the economic downturn, Wlodarczyk says many people have changed their practices, and the banks, lenders, and developers are all smarter today because of it.

“In 2011 all of a sudden there was some movement, in private equity primarily,” he said. “Raising capital, doing mezzanine funds, or short term bridge lending with really high interest rates. Yet for people that needed to facilitate and execute a transaction, those folks were accommodators, and the interest rates were high, but people had to do what they had to do.”

He added, “Today, I think they are trying to come back. Those who did not reinvent themselves are either out of business, or now are trying to reinvent themselves, and it’s too late. That is also okay because this business is evolutional.”

Tags | Commercial Real Estate, DTZ, Ed Wlodarczyk

copy; 2014 Real Estate Communications Group. Duplication or reproduction of this article not permitted without authorization from the Real Estate Publishing Group. For information on reprint or electronic pdf of this article contact Mark Menzies at 312-644-4610 or menzies@rejournals.com

Service helps small merchants, service professionals offer sales financing

Tuesday, July 29th, 2014

Large retailers often use special financing deals as a means of turning would-be buyers into customers. Toronto-based company FinanceIt has created a service that enables smaller merchants to do the same.

Currently used by more than 3,700 merchants in Canada, FinanceIt is a point-of-sale (POS) lending option that stores or small-business owners can use to create a palatable monthly payment schedule for customers without having to put up their own capital.

The service is scheduled for availability in the United States by the end of summer 2014, FinanceIt CEO Michael Garrity told me when we spoke in late spring. Its not our capital, we go to financial institutions that want to lend, he said.

FinanceIt raised $13 million in late 2013 from backers including TTV Capital, Inter-Atlantic Group, and Second City Capital to help build up its platform and prepare for the US launch.

The service basically helps shortcut the process of applying for a loan – something that used to require faxing back and forth, and something that many small storeowners just didnt have the resources to manage. The merchant uses the FinanceIT mobile application (initially on iPad but Android is coming) to collect information from the shopper (such as an image of a drivers license), which can help speed up sales financing approvals.

So far, more than $715 million in loan applications have been run through the platform in Canada, according to the companys Web site. Once an application is approved, the money is disbursed to the merchant, and not to the consumer.

Right now, most merchants using the platform fall into several primary categories including vehicle dealers, smaller retailers with big-name competitors, home improvement services contractors, and healthcare professionals (such as dentists or veterinarians, Garrity said.

The loans can range from as small as $500 to as large as $100,000 depending on the vertical market; the interest likewise vary from 6.99 percent to 12.99 depending on the length of the loan and the credit of the borrower.

The service doesnt cost a merchant anything unless it chooses to market this option in some way.

Legal Academic World Shaken by Shooting Death of FSU Professor

Tuesday, July 29th, 2014

The shooting death of Florida State University law professor Dan Markel is reverberating across the legal academic world.

Police say Mr. Markel, 41, a criminal law professor at FSU College of Law and founder of PrawfsBlawg, a pioneering network of law professor bloggers, was gunned down at his Tallahassee home on Friday morning.

Police were called to Mr. Markels home at around 11 am and found him with a gunshot wound, according to a statement released by the Tallahassee Police Department, which said the professor was rushed to a local hospital and later succumbed to his injury.

The police department said its violent crimes unit is probing the incident as a homicide and that its set up a tip line dedicated to the case. But as of Monday morning, it had released little other information about the circumstances behind his death. Heres the latest statement from police:

The initial investigation has provided no indication that this case is connected to a burglary or robbery and investigators are assuring residents there is no evidence this was a random act. Neighborhood residents should continue to be vigilant but it appears at this time that Mr. Markel was the intended victim in this incident.

As police investigate, Mr. Markels friends and colleagues have posted tributes to the professor.

FSU law school said in a statement that his contributions to the law school and broader legal community were pervasive and lasting.

The bloggers at Prawfsblawg posted a statement on the senseless loss of the sites founder:

All of us here on Prawfsblawg live in different places and come from different backgrounds. What we have in common, with many others, is Dan. His network of friends and loved onesand he had a great deal of love for all his many friends, as we did and do for himis enormous. His boundless energy was at the center of this community; it made it run, it gave it life. We are stunned and bereaved by his loss, and our thoughts go to his two little boys, who were precious to him, and to his family.

Doug Berman, a law professor at the Ohio State University who writes the Sentencing Law and Policy blog, reflected on Mr. Markels academic legacy:

Dan was a personal friend, and his extraordinary commitment and contribution to big ideas in criminal law and theory during his (much too short) life cannot be easily overstated. Of particular note, Dan was among the most active and forceful voices seeking to define and defend a modern conception of retributive justice. For that reason and many others, I hope those responsible for this shocking crime are brought soon to justice.

Jay Michaelson, a prominent Jewish writer, mourned the loss of his friend in a column for the Forward newspaper:

Dan really was a mensch. And a damn fine legal scholar[He] was also the primary instigator behind the Prawfsblawg group blog, one of the best legal-academic blogs on the Internet. Under his leadership, Prawfsblawg was intellectual, funny, topical, irreverent, and diverse in membership.

Over at TaxProf Blog, Pepperdine University law professor Paul Caron has compiled links to other tributes.

A 2001 graduate of Harvard Law School and native of Toronto, Mr. Markel taught criminal law and procedure at FSU. He co-authored a 2009 book exploring the intersection between crime, punishment and family. He also wrote opinion pieces for the New York Times, Slate, and the Atlantic, among other publications.

His research interests were eclectic. One of his last works was a piece he co-authored for the Harvard Journal of Sports and Entertainment Law that floated the idea of using crowd-funding to give sports fans more influence over where professional athletes decide to play.

Mr. Markel is recently divorced from Wendi Adelson, a clinical professor at FSU law school. The couple had two young sons.

FSU said a local memorial service will be held in Tallahassee at noon on Sunday at Congregation Shomrei Torah. The school is also planning a memorial event in the fall.

Synlogic Secures $29.4 Million Series A Financing Led by Atlas Venture and …

Monday, July 28th, 2014

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Synlogic, Inc., a biotechnology company focused on the development of
therapeutic microbes, today announced the company raised $29.4 million
in a Series A financing led by Atlas Venture and New Enterprise
Associates (NEA). Synlogic plans to use the proceeds from this financing
to further develop its first-in-class proprietary microbial engineering
platform for the development of therapeutic microbes and advance its
preclinical pipeline across several clinical applications.

“Synlogic leverages the most advanced technology platform available for
the creation of synthetically engineered, therapeutic microbes with the
potential to make significant advancements in the treatment of disease,”
said Ankit Mahadevia, MD, Venture Partner at Atlas Venture and
Co-founder of Synlogic. “Our patent estate, coupled with the scientific
leadership of our founding team and our financial resources provides an
unparalleled foundation for the rapid transformation of this fundamental
science into breakthrough benefits for patients.”

Synlogic was co-founded in Fall 2013 by Dr. Mahadevia, Atlas Venture;
Jim Collins PhD, William Fairfield Warren Distinguished Professor,
University Professor, Professor of Biomedical Engineering, and Professor
of Medicine at Boston University; and Timothy Lu MD, PhD, Associate
Professor of Electrical Engineering and Biological Engineering at the
Massachusetts Institute of Technology (MIT). The company was incubated
as part of the Atlas Venture seed program. Peter Barrett, PhD, Partner
at Atlas Venture, Ed Mathers, Partner at NEA, and Dr. Mahadevia will
serve on the Synlogic board of directors.

“The unique features of the Synlogic platform enable us to develop high
potential therapeutics today; in addition, the evolving understanding of
the microbiome creates opportunities for us to apply the platform to
create novel therapeutics for many years into the future,” said Peter
Barrett, Chairman of Synlogic.

“We believe that with our further understanding of the microbiome, the
time has come to fulfill the promise of synthetic biology for patients,”
said Ed Mathers. “We’re thrilled to be working with the Synlogic team to
build the company that will make that promise a reality.”

Drs. Collins and Lu are leaders in the field of synthetic biology and
have advanced an array of tools that enable bacteria to sense
physiologic conditions, perform a therapeutic action, and deactivate
themselves after completing that function. Their tools, supported with a
substantial estate of issued and filed patents, now serve as the
technology engine for Synlogic’s proprietary pipeline of therapeutics.
This platform offers a unique modality to treat diseases where
traditional, systemically delivered pharmaceuticals have not been
successful and an approach targeted to the GI system could have merit.

“Synlogic is at the forefront of developing novel engineered bacteria
for therapeutic use. Bacteria have been shown to be an ideal vector for
the production and delivery of drugs for many diseases – many bacteria
already exist in a commensal or even mutualistic relationship with the
human body, they already contain compounds and metabolic pathways that
can release or produce drugs and a large proportion of diseases are
bacterial,” said Dr. Collins. “Our goal is simple – use the amazing
potential of synthetic biology to play a critical role in the
development of therapies that lead to improved clinical outcomes for
patients.”

About Atlas Venture

Atlas Venture is a leading early-stage international venture capital
firm that invests in technology and life sciences businesses. Since
inception in 1980, its partners have helped build over 350 companies in
more than 16 different countries. Atlas Venture is currently investing
from its ninth fund which closed in May 2013. For more information,
visit www.atlasventure.com.

About NEA

New Enterprise Associates, Inc. (NEA) is a leading venture capital firm
focused on helping entrepreneurs build transformational businesses
across multiple stages, sectors and geographies. With more than $13
billion in committed capital, NEA invests in information technology,
healthcare and energy technology companies at all stages in a company’s
lifecycle, from seed stage through IPO. The firms long track record
includes more than 180 portfolio company IPOs and more than 300
acquisitions. In the US, NEA has offices in the Washington, DC
metropolitan area; Menlo Park, California; Boston, Massachusetts and New
York City. In addition, New Enterprise Associates (India) Pvt. Ltd. has
offices in Bangalore and Mumbai, India and New Enterprise Associates
(Beijing), Ltd. has offices in Beijing and Shanghai, China. For
additional information, visit www.nea.com.

Delhi University’s new academic session begins after FYUP episode

Sunday, July 27th, 2014

Fresh out of school, students were accorded warm welcome by their seniors, faculty members and members of various student unions.

The new academic session 2014-15 marks a transition as it commenced after the recent scrapping of the Four Year Undergraduate Programme (FYUP).

Orientation classes, which briefed the students about courses, class schedules and university rules and regulations, were held across colleges.

While many colleges restricted these classes only to students there were few like the Hindu College, which allowed parents to participate in the orientation lectures.

It was a good experience. Everyone was welcoming and warm-hearted, said Vrinda Sethi, a first-year student, pursuing History (Hons) from Gargi College.

As the freshers seemed excited with the reception they received, the second-year students who were admitted under FYUP and now transferred into the three-year programme seemed relaxed but curious about their academic future.

A lot of students came to attend their classes but not many classes were running. There were teachers holding normal communication but there was hardly any studies today, said Arnav Jain, a second year student at the Hansraj College.

Many second-year students also complained that there was no communication regarding restructuring of the FYUP course, which they were admitted under earlier.

Student unions too welcomed the new students across all colleges of the university with their members assisting the new entrants by providing necessary information to them.

We welcomed them with a traditional teeka. Our activists also distributed sweets among students, ABVP Delhi State Secretary Saket Bahuguna said.

ABVP has also formed an anti-ragging squad of their own to deal with any incidents of ragging, Bahuguna said.

Arunoday, the ABVP cell specially formed for students from north-eastern parts of the country, was also at work guiding and informing students with all the information.

We welcomed the students with flowers and chocolates. We tried to co-ordinate between students and teachers to minimise confusion regarding various issues that troubled them, NSUI national spokesperson Amrish Pandey said.

Around 2.7 lakh applicants had applied for admission in academic session 2014-15 in Delhi University for 54,000 seats in 61 affiliated colleges.

PTI

LLC? S Corp.? Which Business Structure Is Right For You?

Saturday, July 26th, 2014

One of the most important decisions youll have to make when starting a business is what type of legal structure it should be. There are a few different choices, and the one you pick can greatly affect the way you run your business.

The most important thing is to understand your options, saidJennifer Friedman, CMO of the small business segment ofCT Corp., which provides legal, compliance, incorporation and trademark solutions to businesses. There are a few different lenses to look at when thinking about whats right for you. Each structure has a different impact on the liability the business owner will face.

The most common types of business entities are asole proprietorshipor partnership, where one or more individuals are personally liable for the business; a corporation, which is owned by shareholders; and a limited liability company(LLC), a hybrid structure that allows owners or members to limit their personal liabilities while enjoying the tax and flexibility benefits of a partnership.

The 4 Essential Traits You Need to Build Your Own Business

Friday, July 25th, 2014

Soon after I started my own business, Fortune Cookie Advertising, I began to identify crucial qualities that were fundamental if I wanted to succeed. While I had all of these four traits to some degree at the outset, I also had to consciously develop them over time.

Freelancers, Here’s How To Protect And Structure Your Business

Thursday, July 24th, 2014

This is the fourth in a series of articles on managing your finances as a freelancer. Read part 1, onbudgeting for freelancers, part 2, ontaxes for freelancers,part 3 on how to save for retirement, pay down debt and handle splurges.

Working for yourself and being your own boss can be exhilarating, but unless you prepare ahead of time for potential pitfalls, you can be rudely awakened to the fact that self-employment doesn’t come with its own safety net .

When you’re first starting out, this becomes evident in small ways — when you catch the flu, you’re not just bedridden for a few days, you’re rendered incapable of earning money for that time. If you want to take a three-week vacation and you receive most payments by check, you need another plan for replenishing your account while you’re gone.

At the other extreme are people who run sole proprietorships, never incorporate, and then have their personal assets wiped out when their business goes under. If the business’s creditors bring lawsuits against the owner and are successful, it’s her or his personal money that will be used to pay them.

On the flip side, if your business grows, you may begin paying more taxes than necessary — a problem you can resolve by filing taxes as what is called an S-corporation.

Gateway and STELLAR Provide Academic and Cultural Enrichment

Wednesday, July 23rd, 2014

Gateway and STELLAR Provide Academic and Cultural Enrichment

Posted by Pengxeu Thao 15, Roseville on Monday, Jul. 21, 2014

The University of Minnesota, Morris welcomed 29 students for the Gateway program and 31 students for the Summer Transition for English Language and Liberal Arts Readiness (STELLAR) program on Monday, July 21. For the next four weeks, these students will take summer classes, attend campus workshops, and participate in a variety of activities for a successful transition to Morris.

Gateway participants from 2013

The Gateway program was created in 1995 by the late Joseph Latterell, professor emeritus of chemistry, the late Thomas McRoberts, director of continuing education, and William Stewart, former Multi-Ethnic Student Program director. Each summer the program exposes students to a meticulous pre-collegiate experience and an abundance of campus resources that prepare them to enter and persist in college.

STELLAR participants from 2013

Since 2011 the STELLAR program has provided international students a welcoming introduction to the Morris campus. Students work with Morris professors and staff members to improve their English skills, learn about American campus life and academic culture, gain a better understanding of a liberal arts education, and earn college credits. The experience cultivates academic and cultural enrichment through a variety of activities in and out of the classroom.

Both programs will run until August 15. For more information on the Gateway program,, visit morris.umn.edu/equitydiversity or call the Multi-Ethnic Resource Center at 320-589-6095. For more information about the STELLAR program, please contact the International Student Program at 320-589-6094 or intlumm@morris.umn.edu.

Pictured above: Students participating in the Gateway 2013 Closing Banquet

vCita Goes End-To-End For Small Business Customer Engagement

Wednesday, July 23rd, 2014

I first heard of vCita a few years ago when I was in Israel. At the time it was creating an online scheduling tool – similar to that offered by Tungle (since acquired by Blackberry and shuttered) and ScheduleOnce. vCita however was focused more on small and mid sized businesses – the beauty salons, hairdressers and dog walkers of this world. The other day vCita’s founder Itzik Levy contacted me to brief me on the extended product direction that vCita is taking. vCita has grown since I first met Levy, the company now has a headcount of 25 with an even split between Tel-Aviv and Bellevue, WA and with more than 100,000 businesses on board as customers.

The company is launching what it calls a web engagement platform. Essentially that’s a term for software that aims to incorporate all the processes that these sorts of micro-businesses have – from scheduling appointments, to invoicing and online payment provision. From file sharing to calendaring. The idea being that gluing together standalone cloud applications is just too hard for SMBs and these businesses want one tool to solve all their problems.

vCita’s LiveSite offering takes a traditional website and turns it into an interactive platform – inbuilt messaging, appointment booking and the like all happen within the single website. LiveSite also creates a customer self service portal so when an existing customer returns to the site, they can see their past communications, appointments and invoices and directly connect with the employee who they usually deal with. Features of the LiveSite Web Engagement Platform include:

  • Client Portal – LiveSite offers small businesses a branded self-service portal, providing returning clients full access to their history with the business, from first communication to final payment
  • Mobile-Ready Site – LiveSite highlights the key call-to-actions on customer’s site for a mobile-optimized view
  • Online Scheduling Software – Clients can set and reschedule appointments anytime, based on the small business staff’s up-to-date availability, which syncs with their online calendar
  • Invoicing and Online Payments – vCita enables small businesses to send invoices to clients, while clients can access past invoices, easily make online payments and receive immediate notification of a new invoice
  • File Sharing
  • Business Dashboard – Small businesses can manage client’s information, communication, appointments, documents and payments
  • Client Management and Business Operations – Automated responses, and text-message notifications about new client requests, appointment reminders to clients and follow-up reminders to the business team

i’ve written before about the hassle for small businesses trying to manage a multitude of different cloud applications and integrations. This new vCita offering looks like a perfect fit for the small service organizations – there are a huge number of dog walkers, massage therapists, beauty salons and window washers who will love what vCita does for them

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