In the commercial real estate investment world, an investor will more often than not make a mistake or two. They might be subtle errors, but over time the costs can be compounded and the entire real estate portfolio can be affected.

At Investment Analytics Group (IAG), we can help you see the big picture and we are your partner. We can help maximize the overall performance of properties by bringing knowledge and experience in property management, leasing, lease administration, acquisitions, and due diligence, enabling us to develop and implement ownership solutions to achieve the objectives in operating and leasing property. If you have a distressed commercial real estate investment property or just want us to look at the performance of your property please contact us at your earliest convenience.

Below are some common errors that in almost every case the cause can be traced to a lack of knowledge about a few simple precepts that form the ground rules of successful commercial investments.

1. Failure to mind the balance sheet – There are four ways to make money in real estate: cash flow, appreciation, equity growth, and tax benefits. The operating statement shows just one of those – the cash flow. The balance sheet shows the other three.

Just as one adjusts rents and expenses to improve operating performance, the balance sheet should be managed to best utilize the assets. The key measure, contrary to popular belief, is not ROI (return on investment); it’s ROE (return on equity). These decisions also affect the speed of wealth creation and tax efficiency.

That’s three of the four or 75% of the sources of profit! If you don’t understand your balance sheet, sit down with an accountant and get a lesson in the basics.

2. Bad deals and bad partners – It’s a given that we are not going to be right every time. We’re going to wind up with properties that don’t perform as expected, or that the market direction moved against, or ones we just don’t like. As Warren Buffet said, “the first rule of investing is to not lose.” Learn to spot a losing position quickly and get out.

This is not to advocate abandoning an investment plan because of minor setbacks. Every project has them, and that’s where perseverance is required. But a deal that goes sour on several fronts at once is a candidate for the “learning experience” pile. Don’t fall in the trap of being “married” to a position. The support payments will swallow you whole.

The problem may not be the property, but the people. When problems arise in partnerships, especially those that started as friendships, things can get sticky and uncomfortable. Pain may be required, but misery is optional. If your partners are driving you crazy, or if you’re all crazy, exercise a little civility and be willing to call it over.

If a good buy/sell arrangement was not included in your partnership agreement, make your own. One solution: You could write down a number that you will either pay for your partners’ interest or accept for your interest in the assets. That’s the same way my mom made my brother and me divide the last pieces of our favorite pie; one cuts the slices and the other gets to choose his piece. It instantly ends any haggling or jockeying for position.

Close the deal quickly and move on. Life is too short.

3. Over-reaching- Swinging for the bleachers in high-risk, home-run-type deals that require more capital or expertise than you have is a sure recipe for disappointment, frustration, and can end in disaster. Before you start “thinking outside the box” make sure you know how things work inside the box.

It takes hard work and perseverance to achieve success in any field, and real estate is no different. In addition to property-specific plans, it’s a good idea to also have a “big-picture” plan of your investments–where they need to take you, how, and when.

As you increase your knowledge and capacity, the big deals will come, and you’ll know you’re ready when you automatically focus on the pitfalls before the rewards.

4. “Dirt-rich, cash-poor” – This refers to the situation of having more land than cash to cover it and is a common outcome for an investor who accumulates a bunch of properties that have nothing in common but their owner.

If you have multiple properties and are using the gains from some to cover losses in others and losing the battle, it’s time to get off the treadmill, despite the temptation to hang on. Go through your portfolio in detail. Identify improvements that you can make immediately and do them. Dump losers and anything that has needs that can’t be funded in the next year.

Be merciless. Look at it like cutting diseased branches off of a tree: Serious cases may require aggressive pruning to save the core. Then focus your energy and resources on creating maximum value in the remaining properties that fit your big-picture investment goals.

5. Not using local market knowledge – We all read the national media and trade magazines and get a sense of what the “market” is doing. But in reality, all real estate is local. There is no national real estate market.

There isn’t a ticker at the bottom of the screen on CNBC that tells me what my buildings are worth. Their value is determined by local market conditions, for example: rental rates, occupancy levels, competitive space supply, demographic trends, etc.

Our existing investments provide a window on performance and needs of that market that is a competitive edge over other investors. But it is only an edge if it’s used.

By systematically collecting just a few local demographic statistics (job growth, population growth and income) and property performance fundamentals, we can get ahead of the curve. We see trends coming rather than trying to catch the last one; we create our own opportunities and reduce our vulnerability to competitive projects.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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The ideal time to invest in commercial real estate is 2010 – that’s when commercial property prices will hit bottom, according to a recently published survey of industry experts, including investors, developers, lenders, brokers, and consultants.

The Emerging Trends in Real Estate 2010 study, released last week by PricewaterhouseCoopers LLP (PwC) and the Urban Land Institute (ULI), says commercial real estate (CRE) players predict vacancies to continue to increase and rents to decrease across all property sectors before the market hits bottom next year.

The consensus is that property values will ultimately drop 40 to 50 percent on average from 2007 market peaks, making 2010 and 2011 the opportune time for investors to buy at or near cyclical lows.

The survey data also indicates that investors believe capital will slowly begin to flow back into commercial real estate markets by the end of 2010, led by all-cash investors.

The research firm Real Capital Analytics, Inc. estimates that commercial real estate loans in default, foreclosure, or bankruptcy now total roughly $130 billion. By being selective on offers from both distressed sellers and banks that are clearing out bad loans and real estate owned portfolios, investors will score bargains on premium properties, according to the study.

The CRE property market recovery will most likely begin to gain traction before 2012, and survey participants believe that the markets performing well before the crash should be the top-performers coming out of it, with investors continuing to favor global gateway markets on the East and West Coasts.

According to the survey, Washington, D.C. ranks number one as the “recession-proof” city. Value declines there have been less than other markets as employment is buffered by the federal government.

Long-term confidence holds for New York and Boston despite financial industry downsizing. West Coast gateways – San Francisco, Seattle and Los Angeles – have all suffered ratings declines, but remain among the survey’s top major markets. Texas markets also continue to show strength, according to survey participants.

As prices hit their floor, the PwC and ULI study predicts that lending will be conservative, expensive, and extended only to the most-favored banking relationships. Real estate investment trusts (REITs), private equity funds, and even refashioned mortgage REITs will start to provide loans to battered borrowers but at a steep price, the companies said in their report.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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A great commentary from National Real Estate Investor about how many investors in their elusive quest for the lowest price, are letting opportunities sail by.

Amid an avalanche of pessimistic commercial real estate forecasting, many investors continue to wait for a market bottom before buying distressed notes, properties and securities. Buyers are often grossly undershooting price targets, while sellers are overshooting. And the result has been the stalemate that — combined with the credit crunch — has gripped the industry for the past 15 months.

Rather than continue their elusive search for a market bottom while letting opportunities go by the wayside, investors should consider shifting their focus and identify viable real estate investment strategies tailored to meet their needs.

Case in point, Prudential Mortgage Capital launched a $1 billion commercial lending program in February, and since then has deployed about half that capital in its account. Prudential and the other active lenders today have little competition, allowing them to dictate underwriting terms and seize the best lending opportunities available. Such dominance was not possible in the previous real estate up cycle, due to an abundance of competing capital.

Prudential recently stated in its third-quarter earnings report that its return on capital from real estate lending activity is in excess of 7%, a rate of return that is quite superior to the safe bet of the 3.5% return on 10-year U.S. Treasury bonds.

In another case, S.K. Hart Properties based in Newport Beach, Calif. recently bought the Bayview Corporate Center office complex, the former headquarters of failed Downey Savings & Loan. S.K. Hart purchased the asset from the FDIC for $53 million in an all-cash deal.

Totaling about 332,000 sq. ft., the two, six-story towers represent the largest FDIC asset sale to date from its portfolio of failed bank assets. Bayview Corporate Center was only 23% occupied when the deal closed.

These transactions represent distinct real estate investment programs with distinct investment objectives. When other prudent investors find their ideal opportunities, the question of price discovery — which is keeping many buyers on the sidelines — will eventually become an irrelevant one.

To be sure, property sales and refinancing activity are still occurring, even though the pace has slowed significantly. The Mortgage Bankers Association reports that commercial and multifamily loan originations fell 12% in the third quarter compared with the second quarter. On a year-over-year basis, the drop in the third quarter was a whopping 54%. But be that as it may, a number of lenders and their loan intermediaries are beginning to announce that more deals are closing, particularly in the small- to mid-cap multifamily and credit-tenant markets.

Even though forecasts for further deterioration in commercial real estate fundamentals continue unabated, many investors are still in search of returns that are simply not realistic in today’s environment. Private equity funds and their participants have grown accustomed to returns in excess of 40%, with anything less than that viewed as disappointing. This group is among the greatest pool of potential distressed asset buyers, but to date it has spent more time on the sidelines than anything else.

Preqin, a London-based alternative asset investment firm, recently reported that fund raising and investment activity at 46 private equity real estate funds was suspended through the first three quarters of 2009. This number is running well ahead of 2008, when a total of 27 funds were put on hold for the entire year. The company expects this trend to continue well into the fourth quarter, and possibly into 2010.

This trend suggests that because high-yield investors are unable to easily meet their lofty investment objectives in today’s market, they are opting to wait for others to discover a market-clearing price before they will jump in and buy.

The problem with that strategy is most other investors share a similar view. They continue to hold out for a commercial real estate Armageddon — one that has yet to materialize.

Investors like Prudential and S.K. Hart Properties that have realistic expectations in place will reap the benefits of either above-average yields or a lease-up program that they can control. These are by far preferred investment objectives to the all-consuming task of chasing the absolute lowest price.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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The goal at Investment Analytics Group (IAG) is to provide the best professional services available for the sophisticated real property buyer. Every day we set out to build trust, nurture relationships, and give our clients a tangible benefit as they seek real property investment. IAG exists largely because our values and skills form a foundation for exceptional team work and results. In what we do every day, our business philosophy rests upon four critical elements:

Vision – We pride ourselves on pioneering creative, customized solutions and product offerings. We will strive to be the very best at what we do, everyday, while maximizing investor returns.

Dedication – Understanding the complex needs of the customer and staying true to the investor’s objectives is paramount. IAG is committed to building client wealth, trust, and long term relationships.

Integrity – Staying true to ourselves and serving our clients’ needs with the utmost in honesty, professionalism, and reliability.

Results – Delivering an unwavering and inspiring solution that yields tangible benefits and lasting value for our clients and investors.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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An asset that is not generating an expected or necessary return is considered an underperforming asset, and is not exactly going to give you nights of peaceful sleep. While the asset may produce income for the company or person possessing it, the income may not be sufficient and is certainly less than expected causing even more restless nights.

If you have an underperforming asset, the team at Investment Analytics Group (IAG) can assist in finding the most profitable and sensible solution to your underperforming asset. Some possibilities that we will proactively engage in include:
– Avoiding lender liability suits. We will assist in the negotiation of a pre-workout agreement to minimize risks that can arise due to misunderstood verbal statements made in workout negotiations. Often times institutions find themselves the victims of claims that oral agreements, representations or waivers made in the course of a workout entitle the borrower to rights or damages never contemplated by the lender upon entering workout negotiations.
– Analyzing and summarizing all relevant information on the loan, the borrower, the collateral and relevant documentation and history. In addition to gathering all loan documents, promissory notes, guarantees, evidence of advances and notices, a complete written history of the loan will be prepared including the borrower’s financial statements, tax returns, litigation history, and credit rating.
– Working with your legal counsel, Investment Analytics Group will work with your in-house legal department or outside counsel to protect information gathered from being used as evidence in any future litigation.
– Determining the value of the project or property. IAG’s property valuations include: DCF modeling, NOI analysis, cash flow projections, risk and return analysis, occupancy cost and marketing opportunity analysis, budgeting updates and reconciliations, and cap structure evaluation. We also take a close look at the project viability, including non-financial factors such as the debtor’s track record, integrity, character, and business planning ability.
– Documenting the transaction completely. Once negotiations have resulted in a restructuring or workout, all aspects of the agreement will be thoroughly and fully documented.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Nothing is as simple as it seems, and hiring the right advisory firm is no different. Aside from the obvious requisites such as knowledge, experience, personality, a strong support team, a broad sphere of influence, market savvy, etc., the key to engaging the right firm is defining the relationship in such a fashion that goal alignment is achieved out of the gate. Productive professional services relationships insure that there are no conflicts of interest, and that the advisory firm’s loyalty and fiduciary obligations are to the owner and no other third party. Creating a certainty of execution in this market goes far beyond sales ability.

If you want to know if a commercial real estate project (new or existing) is viable, you need to know whether or not it is positioned, or can be repositioned properly in the market place … Put simply, any property you acquire needs to have a strategic competitive advantage in the market. Put even more simply, it has been our experience that when a sponsor will make the decision to engage a qualified commercial real estate advisory firm at the time a project is first being conceptualized, it is the single best form of insurance an owner can purchase.

Commercial real estate should be approached like any other business in that you need create a clear vision, a sound strategy, and demand precise execution to come out on top. Examine any successful commercial real estate investor and to the one you’ll find that they have surrounded themselves with professional advisers whose sound counsel they rely upon to avoid the ever increasing number of mistakes that can be made in this market.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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If you answered yes to that question then you should call Investment Analytics Group (IAG) immediately. National distressed commercial real estate totaled $97.4 billion in early June, including foreclosures, lender-owned properties and those headed in that direction, according to a new report from Delta Associates.

Distressed commercial real estate volume has doubled every three months since December 2008 with retail properties representing the largest segment in June, at $29.7 billion. Commercial mortgages had a 3.2 percent delinquency rate in the first quarter, up from 1.8 percent in the first quarter of 2008.

So how can IAG help? Investment Analytics Group (IAG) sees the big picture and we are your partner. IAG can help maximize the overall performance of properties by bringing knowledge and experience in property management, leasing, lease administration, acquisitions, and due diligence, enabling us to develop and implement ownership solutions to achieve the objectives in operating and leasing property.

Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Whether you are engaged in a transaction of a single asset or an entire portfolio, Investment Analytics Group’s (IAG) experienced team can provide you with great resources including strong financial, accounting and legal backgrounds. Investment Analytics Group (IAG) will also ensure that financial records reconcile with historical performance and projections. Investment Analytics Group provides the following services as well:
• Audit operating statements and reconcile tenant billings to lease terms
• Analyze collection issues
• Conduct capital expenditure analysis
• Review expense trends and adjust for deferred maintenance
• Perform complete lease file review and default analysis

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Investment Analytics Group (IAG) was formed December 2006 to provide integrated commercial real estate advisory services for investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services for both income producing and land assets. Our business model and services are not reactionary to what many other firms consider “opportunity” in the current distressed environment.

IAG’s team is not new to this business. With combined experience in managing and operating commercial real estate exceeding 65 years, the IAG team comprises decades of relevant experience including the management of tenant-in-common investments, land assets, and development product. The IAG team includes personnel with a 25-year history in banking and finance with specific, relevant focus on commercial assets and development lending. Additionally, we have lender workout experience both on behalf of lenders and borrowers.

As Asset Managers, IAG can effectively manage assets in any geographic location across the country, and does so for its clients today. We presently manage more than $35 million in raw and entitled land assets slated for commercial development in several markets around the country.
IAG is committed to providing TIC owners consistent communication, transparency in all of the services and functions we perform, and access to all asset level information, providing round the clock access to all members of our team including IAG’s Principals.

IAG will work side-by-side with legal counsel in this current state of turmoil to determine where property cash reserves have gone and ensure property tax, insurance, and relevant lease obligations are protected; provide workout strategies and options in addressing LLC entities; maintain your investment’s 1031 Exchange status; ensure any applicable loan maintains a “performing” status.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Once Investment Analytics Group (IAG) is contractually engaged as your Land Manager, we take responsibility for the following:
• The strategic planning and oversight of your investment: The IAG strategic plan includes all market research and statistics which are customized for the specific property and the surrounding area. This research and our valuation results are provided to investors and are paramount to the sound strategic plan for the property.
• Maintenance of LLC’s and annual reporting; coordinating an LLC replacement Manager
• Coordinating TIC Owners and LLC Member communication and decision making including annual budget, lease administration (if applicable), potential sale of assets
• Coordinating easement purchases / municipal administration / eminent domain matters
• Disseminating and maintaining organizational documents
• Preparation and filing of tax returns and distributing K-1’s to LLC Members
• Assistance with property tax filings and payments
• Preparing year-end tax letters summarizing income and expenses for the owners
• Assistance in maintenance of individual TIC ownership structures (e.g., SPEs)
• Properly maintaining certain tax exemptions (like agricultural)
• Providing convenient and consistent access to property status communications, quarterly and annual reports and financials, annual budgets, reporting for taxes, the annual strategic plan and approved budget
• Facilitation of approvals for new leases, sales of assets and other services as mutually agreed or as needed.
• Administering any current leases-in-place, performing basic accounting.
• Hiring and supervising local brokerage specialists, when requested, or as needed.
• At the owners’ direction, introducing potential, select development partners to bid the continued entitlement and enhancement of land assets.

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