featured in "2010 Broker Outlook: What's in Store for Commercial Real Estate?" compiled by Jaime Lackey

2010 will continue to bring record low transaction volumes for commercial real estate assets in New England. The lack of credit available to finance properties and shrinking NOI's (net operating income) will produce little incentive for property owners and lenders with REO on their balance sheet to consider selling.

For typical real estate owners, only property trades that are "stimulated" by a bankruptcy or foreclosure will create a sale. For lenders owning real estate, disposition of REO will be stimulated by a "regulator" actions (liquidity requirement), FDIC Bank takeover or if the bank is able to get out of asset for the par value of the debt or close to it.

Sales transaction volume will be off between 75% - 85% from the peak years of 2006 and 2007. Principal owners of real estate will look to "pretend and extend" loan term maturities and implement "work out" talks with existing lenders. Lenders who are able will acquiesce and extend term to "quality operators and owners", as opposed to proceeding with foreclosure actions and "balance sheet hits."

Look for signs of life on Q4, as declining rents flatten, as general leasing activity picks up. As bank balance sheets strengthen due to the improving macroeconomic environment, they will be more aggressive in foreclosure proceedings and selling assets. Furthermore, banks will look to liquefy 06' and 07' vintage loans, to make more profitable loans in late 2010 and 2011.

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In these uncertain economic times, Boston Realty Advisors is pleased to offer a unique real estate solution for corporations who own their facilities and/or other real estate assets:

Sale/Leasebacks. A Sale/Leaseback is a real estate transaction in which an owner/user sells the commercial property in which they occupy and subsequently structures a lease with the new purchasers.

1) The sale of real estate generates a substantial amount of cash into the business. If the company has sustained a loss from operations in the same year, then the gain can be off set by operating losses.

2) The cash can be used for operations and corporate growth without having to borrow the money from a bank. Bank financing related to working capital credit lines have tightened and credit is at less attractive terms at greater expense.

3) The expense of ownership is eliminated and replaced with the obligation to pay rent.

4) Depreciation expense which is over a 39 year period is replaced with rent costs.

5) The business is relieved of annual real estate valuation obligations to its shareholders.

6) The per share share value of the corporation is relieved of real estate market volatility. Per share value will be clearer as to the relation to business operations.

7) The tenant (seller) can structure favorable lease pricing due to the current slump in the real estate market. However, this will effect sales valuation. Depending on the existing basis, implementing sale/leasebacks allots for creative lease structuring.

“SALE/LEASEBACK CAN CREATE INSTANT LIQUIDITY WITHOUT EFFECTING CORPORATE OPERATIONS” -Jason Weissman, Founder & Principal

Boston Realty Advisors is fully equipped with the expertise, resources and experience to execute a successful sale/leaseback strategy to optimize your business’ assets from procuring an investor to structuring the lease.