In the latest CIRE (Commercial Investment Real Estate) magazine, coach and trainer Rod Santomassimo, CCIM offers commercial brokers a valuable resource: a plan to take charge of their careers. On pages 36-38, Rod offers insights to CMS and business management systems, marketing strategies and targeting prospects, investing in human capital (in a efficient, effective way) and leveraging your company's debt and equity. A point Rod took from my experiences and beliefs was: "A sales plan will consist of a targeted list, an approach to reach that list, and follow-up steps. Do you know who your ideal clients are and how you can secure a list of these ideal clients? Once you have your list, how are you going to contact them? Are you going to launch a mail/phone campaign, a phone/email campaign, or use a more personal approach? Ask Jim Tucker, CCIM, of NetWorksCRE in Richmond, Va., and he will tell you commercial real estate is a "belly-to-belly" business. He is correct. Jim has a specific sales plan for reaching his targeted audience. Jim is not an average broker. He is the CEO of NetWorksCRE." Rod Santomassimo, CCIM is president and founder of The Massimo Group, a professional coaching firm focused on commercial real estate, whom I have hired in the past to help me in my own professional goals. Rod can be reached at rod@massimo-group.com or through www.massimo-group.com. CIRE is the magazine of the CCIM Institute, published every other month.

1. COMMERCIAL
INVESTMENT
May | June | 2010
Retail
Rematch Investors emerge
Investors emerge
v m g
from their corners in search of
single-tenant opportunities.
Who’s
the Boss?
You Are!
Foreign
Investors Eye
U.S. Bargains
Healthcare
Reform for
Properties
www.ciremagazine.com The Magazine of the Institute

2. Introducing The New CCIM
P R E P A R I N G T O N E G O T I AT E
Online Self-Directed Interactive Course
In this economic environment, nothing is as important to your immediate and long-term success in the commercial
real estate industry as your ability to negotiate favorable deals and make impactful presentations.
The new Preparing To Negotiate online, self-directed, interactive course shows you how to incorporate CCIM’s
renowned three-step, interest-based Negotiations Model into your business — without taking valuable time away
from it. Developed by commercial real estate professionals for commercial real estate professionals, this course will
teach you the tools and strategies these successful practitioners are already using to effectively close their deals.
After completing Preparing To Negotiate, you will be able to:
Apply the CCIM interest-based Negotiations Model to your preparation for negotiations.
Interpret CCIM interest analysis chart elements, and consider creative solutions for identified interests and issues.
Assess risks and action plans for potential conflicts.
Don’t compromise on tomorrow: get the skills you need now to negotiate your way through the coming year!
Get complete details and register now at CCIM.com/preparing-negotiate
CCIM Institute
Equipping the world’s best minds
in commercial real estate

3. COMMERCIAL
INVESTMENT
May.June.2010 Vol. XXIX No. 3
6
26
Lenders say
¬
they will
open their
wallets this
year.
COVER
STORY
In the 22 Property
FEATURES
Retail Ring Prescriptions
Investors move off A little preventative medicine
may protect asset health.
the ropes to fight by Rich Rosfelder
for quality deals. 32 International Influx COLUMNS
by Beth Mattson-Teig Low prices attract foreign 2 President’s Desk
real estate investors. 12 CCIM Q&A
by Philip G. Skinner and 14 Financing Focus
Abe J. Schear 16 Investment Analysis
18 Legal Briefs
36 Step It Up! 20 Technology Solutions
Cover: Brand X Pictures/Photolibrary; Above: I Love Images/Corbis
Take your career in a new
direction. D E PA RT M E N T S
by Rod N. Santomassimo, CCIM 4 In This Issue
39 The Case for
6 Market Trends
42 Regional Outlook
Conversion 44 International Beat
Office makeovers add value. 45 Buyers Guide
by Reed Miller and Ken Boyle 46 Deal Makers
48 CCIM Connections
May | June | 2010 1

4. @
PRESIDENT’ S
DESK
Change the
Way You Work Only
m @
CCIM MEMBERS:
Mailed along with this magazine is the instruction book for the next gen-
eration of CCIM member benefits: the CCIMREDEX User Guide. Learn-
ing to use this commercial property data exchange is the best investment
you can make in your future. It will change the way you work.
“Te real value of CCIMREDEX is the third-party applications,” says
CCIMREDEX Director Todd A. Kuhlmann, CCIM. “You enter your What’s online with
property data once, and you can promote it, publish it, and analyze it in Commercial Investment Real Estate
many different programs.” Data entered into CCIMREDEX is pushed www.ciremagazine.com
magazine?
out to national commercial property listing services such as Catylist, • Cap Rate Crazy — Is direct capitalization
CommercialSource.com, CoStar, Property Line, RealUp, pushing values even lower? Appraiser
Brian D. Frank, CCIM, GAA, discusses the
TotalCommercial.com, and Proxio, an international real
underlying weakness of using cap rates to
estate platform where it is translated into 12 languages. determine property value.
CCIMREDEX also gives CCIM members access to
• Drop the Puck! — Native Minnesotan
several marketing and analysis programs. Turn to page and CEO of Chief Real Estate Co. Michael
20 to learn more about these services. And to understand Houge, CCIM, SIOR, compares the
the thought process behind CCIMREDEX, read Kuhl- commercial real estate market to a hockey
game. Buyers and sellers want to get back
mann’s interview on page 12. on the ice but lenders are frozen in fear.
CCIMREDEX was developed for CCIM members by CCIM mem-
• Retail Overstock — What do other CCIMs
bers. It is a service of the institute’s wholly-owned subsidiary, CCIM
around the country say about their local
TECH, which also operates STDBonline, CCIM’s most popular member retail markets? Read the comments that
benefit. Nearly 11 years ago, the institute committed time and resources didn’t make it into the cover story.
to developing STDB, one of the premier online real estate resources • CCIM Connections Continued — Find out
with more than 25 databases, including demographics, aerials, business how CCIMs leverage STDBonline and other
information, and mapping tools. Te institute is following the same member benefits for profitable deal-making.
path with CCIMREDEX, which is integrated with STDB, providing
Online. All the Time.
CCIM members with the industry’s most complete technology resource Only @ ciremagazine.com.
— at no additional cost.
You owe it to your business to take advantage of this tremendous
CCIM member benefit. COMMERCIAL
INVESTMENT
May | June | 2010
Richard E. Juge, CCIM
President, CCIM Institute Retail
rjuge@ccim.com Rematch Investors emerge
from their corners in search of
single-tenant opportunities.
Who’s
the Boss?
You Are!
Foreign
Only
Investors Eye
U.S. Bargains
Go to www.ccimredex.com to view Todd Kuhlmann’s video on
Healthcare
the benefits of CCIMREDEX and to sign up for a CCIMREDEX Reform for
Properties
@ Webinar. www.ciremagazine.com T
he Magazine of the
Institute
 May | June | 2010 Commercial Investment Real Estate

5. For the first time ever, CCIM CCIM members are
Institute and CCIM TECH will invited to:
share a large booth in the Reserve a Table
Leasing Mall with plenty of Register for a
comfortable and functional Demonstration
space just for CCIM members. Participate in a Live
Deal-Making Session
As a CCIM member, you can:
Reserve tables for meetings and Mark your calendar to
doing deals also attend these CCIM
Attend demonstrations showcasing learning opportunities:
powerful technology tools (including the
new CCIMREDEX) Retail Decisions: Location, Timing and
Run STDBonline reports for ICSC Demographics Sunday, May 23, 9:45-10:45 am
RECon
Market and Financial Feasibility – Finding More
Participate in a deal-making session
Tenants Attaining CCIM Designation
Attend a cocktail reception
(co-hosted by CCIM and ICSC)
So come by Booth # C201 H ST (H Street right by 19th Sunday, May 23, 1:30pm to 4:30pm
Avenue and the Food Court) and see how CCIM and CCIM
Visit: web.CCIM.com/icsc to learn more.
TECH have created an environment at ICSC RECon for you
to make connections with the industry’s finest and access Be sure to stop by the CCIM TECH
all the resources you need to close a deal that day! Booth # S3813 in the Trade Expo
CCIM Institute
Equipping the world’s best minds
in commercial real estate

6. COMMERCIAL
INVESTMENT
Commercial Investment The CCIM Institute, an
Real Estate, the member affi liate of the National
IN THIS publication of the CCIM Association of Realtors, confers
ISSUE
Institute, reports on market the Certified Commercial
trends and analysis, current Investment Member
developments in the field, and designation to commercial real
successful business strategies. estate professionals who have
Reporter Beth Mattson-Teig found extensive training and industry
CIRE Staff
strong demand for single-tenant net-lease retail properties as she Interim Executive Vice President
experience and complete a
spoke to CCIMs for this issue’s cover story. Turn to p.26 to read why rigorous study program.
Susan J. Groeneveld, CCIM
investors are getting back into
¬
Senior Director of Communications Executive Officers
“Retail is down, but the game. How can you pro- Jennifer Norbut President
tect your asset’s health from jnorbut@ccim.com
by no means Richard E. Juge, CCIM
an epidemic of declining fun- Executive Editor Metairie, Louisiana
out.” p.26 Sara Drummond
damentals? Associate Editor President-Elect
Rich Rosfelder searches for sdrummond@ccim.com Frank N. Simpson, CCIM
the cure on p.22. Associate Editor Gainesville, Georgia
Rich Rosfelder First Vice President
rrosfelder@ccim.com Leil Koch, CCIM
Lahaina, Hawaii
FEATURED WRITERS
Contributing Editors
Linda Bryson, LEED-AP Treasurer
Sara Harris Craig Blorstad, CCIM
Dennis LaMantia Bloomington, Indiana
Co-authors of “International Influx” on p.32, Jonathan Littrell
Shawn Mayberry
Philip G. Skinner and Abe J. Schear are part- Editorial Review Board
Jennifer Tullius
ners in the law firm Arnall Golden Gregory in John W. Waldeck Jr. Adrian A. Arriaga, CCIM
Atlanta with extensive commercial real estate Donald G. Arsenault, CCIM
Design Consultant
Roger B. Broderick, CCIM
experience, including work-
David B. Eaton, CCIM
ing with foreign investors Jeff Engelstad, CCIM
Skinner
with U.S. holdings. Tey co- Commercial Investment Real Estate Paul G.W. Fetscher, CCIM
chair AGG’s cross-border practice group. (ISSN 1524-3249) is published Tony M. Guglielmo, CCIM
bimonthly by the CCIM Institute of Thomas E. Hankins, CCIM
If you’re
¬
the National Association of Realtors, James L. Helsel, CCIM
“The wave of foreign ready to 430 N. Michigan Avenue,
J. Howard King, CCIM
investment should jump-start Schear Chicago, IL 60611-4092.
Robert Knight, CCIM
Periodicals postage paid at Chicago,
your brokerage career, read George C. Larsen, CCIM
benefit depressed U.S. CCIM Rod Santomassimo’s
Ill., and additional mailing offices.
Kevin G. Lenze, CCIM
Ride-along mail enclosed.
real estate markets” p.32 no-nonsense advice on p.36 Postmaster: Send address changes
Mark L. Levine, CCIM
Charles A. Mack, CCIM
for elevating your brand and to Commercial Investment Real
Estate, 430 N. Michigan Avenue, Len Magnani, CCIM
your business. Rod heads up the Massimo Group, a professional Michael T. McLean, CCIM
Chicago, IL 60611-4092.
coaching firm exclusively focused on commercial real estate James J. Piro, CCIM
Subscriptions:
brokerage. $45 for nonmembers in U.S.; David L. Schank, CCIM
Reed Miller and Ken Boyle are managing part- $55 for nonmembers in Canada and Carol Rockhold Shoemaker,
ners of Hanover Real Estate Partners, which repo- Mexico. Call (800) 532-8633. For CCIM
reprints, call (312) 321-4460. Robert M. Stone, CCIM
sitions undervalued institutional-grade assets. On
The opinions expressed in signed
p.39, they explore remaking single-tenant office articles and materials appearing in Reader Services: All dues-paying
Santomassimo properties for multitenant use. Commercial Investment Real Estate, members of the CCIM Institute receive
including specific references to Commercial Investment Real Estate
products and services, are those of the magazine six times a year as a mem-
authors and not necessarily those of ber benefit. Subscribe, purchase back
Commercial Investment Real Estate,
issues, or order customized article
the CCIM Institute, or the National
reprints: www.ciremagazine.com or
Association of Realtors.
podcast
© 2010 by the CCIM Institute. (800) 532-8633 x4507. Make address
All rights reserved. changes: magazine@ccim.com or
Editorial address: 430 N. Michigan (800) 532-8633 x4507. Request
reprint permissions: rrosfelder@ccim.
Only @ http://podcast.ccim.com
Avenue, Chicago, IL 60611-4092;
(312) 321-4460; magazine@ccim. com. Submit articles and editorial
Marcus Millichap’s retail specialist Bernard Haddigan updates this issue’s com; www.ciremagazine.com. ideas: sdrummond@ccim.com.
look at the retail investment market. For advertising information, contact:
Kathleen Thomas at (202) 721-1497 or kthomas@ccim.com.
 May | June | 2010 Commercial Investment Real Estate

7. Prudential Commercial Real Estate
They’re the three most important words
in commercial real estate right now.
Because in a challenging market, having a powerful and recognized name
can open a lot of doors. See why, now more than ever, your most valuable
asset is a name people trust.
Visit prudentialrealestate.com/commercial or call 866-224-8895 to find Commercial
out how to become part of the Prudential Commercial Real Estate network. Real Estate
Acquisition Disposition | Relocation | Lease Administration | Capital Services | Property Development
Market Research | Energy Sustainability | Location Site Selection
© 2010 Prudential Financial, Inc. and its related entities. An independently owned and operated broker member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license.

8. MARKE T
TRENDS
l Is Lending Back?
Lenders are ready to loosen the purse strings, according to Jones Lang LaSalle’s 1Q10 survey of
60 of the industry’s top loan originators. In a survey of life companies, CMBS originators, pri-
H. Armstrong Roberts/Getty Images
vate equity, commercial banks, and government agencies, 43 percent responded that their loan
production would range from $1 billion to $3 billion this year. Te number of lenders expecting
to lend more than $4 billion jumped from 9.3 percent in 2009 to 15.2 percent in 2010. Expected
loan-to-value ratios averaged between 50 percent and 70 percent and estimated debt coverage
ratios ranged from a high of 2.25 on hotels from life companies to 1.15 on multifamily from
private equity.
Teir preferred asset? Twenty-seven percent voted for multifamily, followed by 22 percent
for retail, 21 percent office, 15 percent industrial, 11 percent hotels, and 4 percent other.
Worth Quoting
Briefly Noted “In 2010, the United States should see sig-
nificant foreign capital coming from Asia
Hospitality — The number of major hotel sales fell 83 (especially China and Korea), German
percent in 2009 from the market’s peak in 2007, the
largest decline in 20 years, according to an HVS survey.
investment funds, and the Middle East. …
The majority of 2009 assets sold between $10 million and Industry organizations have been work-
$50 million. ing to assure that U.S. tax policy does not
Industrial — Texas, Ohio, Illinois, California, and Penn- discourage foreign investment.”
sylvania top the list of U.S. states that saw the most new
logistics and warehouse distribution facilities built in the — Deloitte 2010 Real Estate Outlook
Deloitte 2010
Deloitte Outloo
past two years, says Site Selection Online.
Multifamily — Local buyers will drive sales activity
among smaller private investment deals because lend-
ers continue to favor investors with experience manag-
ing apartments in their home markets, says Marcus
Millichap.
Office — In 16 of 18 office markets surveyed, all
participants said they offered a free rent concession,
according to the 1Q10 Korpacz Real Estate Investor
Survey. Average amount of free rent topped out at
7.8 months in Atlanta and Manhattan and 7.6 in
Chicago. The lowest amount was 3.7 months in
Los Angeles.
Retail — Retail development will reach just
William Whitehurst/Photolibrary
70 million sf this year, the lowest amount on
record, according to Marcus Millichap. On top
of 2009’s 107 million sf of completions, the
restricted supply may help fundamentals to start
recovering in 2011.
 May | June | 2010

9. The Most Respected Curriculum CCIM’s high-powered designation curriculum now has evolved to a whole new
location: online, anywhere you choose.
The Best Instructors
Online CI 101, 102, 103 and 104 are now open for registration. And with sessions
The Most Convenient Online scheduled twice a week for five consecutive weeks, you’ll have plenty of time to
Classroom reflect on the instruction and to ask questions.
All For An Affordable Cost You’ll also interact, build relationships and network with classmates and expert
instructors who are successful practitioners within the commercial real estate
industry.
Save the time and expense of travel and register for an online course today. Go
to CCIM.com/content/online-courses now.
Upcoming Online Course Schedule
CI 101 Session A: June 9 - July 14 Wed + Mon 12-2 pm CST exam open July 14 - 21
Session B: July 29 - Aug 30 Thurs + Mon 4-6 pm CST exam open Aug 30 - Sept 7
Session C: Aug 18 - Sept 22 Wed + Mon 12-2 pm CST exam open Sept 22 - 29
Session D: Oct 21 - Nov 23 Thur + Tue 4-6 pm CST exam open Nov 23 - Dec 1
Session E: Nov 16- Dec 21 Tue + Thur at 6-8 pm CST exam open Dec 21 - 29
CI 102 Session A: Aug 4 - Sept 8 Wed + Mon 4-6 pm CST exam open Sept 8 - 15
CI 103 Session A: July 8 - Aug 10 Thur + Tue 4-6 pm CST exam open Aug 10 - 17
CCIM Institute Session B: Aug 4 - Sept 8 Wed + Mon 2-4 pm CST exam open Sept 8 - 15
Equipping the world’s best minds CI 104 Session A: June 23 - July 28 Wed + Mon 4-6 pm CST exam open July 28 - Aug 4
in commercial real estate Session B: Aug 5 - Sept 7 Thurs + Tue 4-6 pm CST exam open Sept 7 - 14

10. MARKE T
TREND S
Import-Export Percentages
Since 2008
Port % Imports % Exports
Los Angeles/ 70.1
Long Beach, Calif. 29.9
New York/
New Jersey 35.7
64.3 Export Advantage
Te decline in global trade hit the nation’s industrial markets hard, but
Seattle/ 59.3 not equally hard, according to a Colliers International report. Dur-
Tacoma, Wash. 40.7 ing the global slowdown of the past two years, vacancy rates in port
city industrial markets climbed faster than in the overall industrial
51.6 market. Tis points up the clear correlation between trade and indus-
Savannah, Ga.
48.4
trial demand. For every 1 percent change in port TEUs, the standard
52.1 measure of shipping trade, industrial demand changes 0.33 percent. So
Charleston, S.C.
47.9 the recent 15 percent decrease in TEUs resulted in a 5 percent decline
in port city industrial occupancy. But not all port cities experienced
Houston 42.1 the decline equally. In fact, those focusing on exports fared better
57.9 than those concentrating on imports, as exports to foreign countries
0 10 20 30 40 50 60 70 80 remained fairly stable throughout the recession.
Source: Colliers International
à Funds Smart Reads
Target Negotiauctions pretty much describes the commercial real estate
deal-making process — continually rearranging the deal until it
Andrew Unangst/Getty Images
Hotel Buys works for all parties. It’s the deal-making mechanism for the future,
says author and Harvard professor Guhan Subramanian, who adds:
From Magna “Sophisticated deal makers … engage in a carefully thought-
Hospitality s
Hospitality’s $75 through sequencing strategy: Get all the pieces lined up to the
Una
million to Blackstone point where, when you go in the room, it’s basically a done deal.”
Equity’s $10.9 billion,
some 38 equity groups
are devoting dollars to
picking up hotel assets
Cap Rates Stabilize
this year. To access Geographically, 16 markets reported a decline in capitalization rates, while 12 reported
the complete list of increases, according to the 1Q10 Korpacz Real Estate Investor Survey. Going forward, inves-
fund names and target tors in 19 markets expect cap rates to hold steady for the next six months, up from two
property types go to markets in 4Q09.
www.hotelnewsnow.
PROPERTY TYPE 1Q10 AVERAGE CAP RATE (%) CHANGE FROM 4Q09 (BP)
com.
Apartment 7.85 –18
CBD office 8.35 +11
Strip center 8.49 –4
Warehouse 8.73 –7
Medical office 8.78 –13
Net lease 8.86 –8
Aggregate 8.42 –7
Commercial Investment Real Estate

11. Let others react to market conditions with a bunker mentality. Right now
is your perfect opportunity to become stronger, faster and more effective with the new,
evolved CCIM curriculum. The advanced learning methods and applications will put you light
years ahead with knowledge that can be put to work the day you finish the course. Register now
by visiting CCIM.com/CourseSchedule or calling our Solution Center at (800) 621.7027, ext. 3100.
CI Intro CI 101 CI 103 To learn more about all
Pittsburgh PA May 17-18 Birmingham AL May 17-21 Houston TX Jun 7-11 the career launching
San Diego CA May 17-18 Orlando FL Jun 14-18 Pleasanton CA Jun 14-18 benefits that come from
Lansing MI May 19-20 Baltimore MD Jun 21-25 Albany NY Jun 21, 22, 24-26 being plugged into the
Mississauga ON May 19-20 Chicago IL Jul 12-16 Glendale CA Jun 25, 26, 28-30 world’s most powerful
Washington DC May 25-26 Addison TX Jul 19-23 Austin TX Jul 19-23 network, go to CCIM.com
Las Vegas NV May 27-28 Las Vegas NV Jul 26-30
Fishkill NY Jun 3-4 CI 104
Indianapolis IN Jun 7-8 CI 102
Chicago IL May 17-21
Mission Viejo CA Jun 9-10 Austin TX May 17-21 Scottsdale AZ Jun 7-11
Addison TX Jun 17-18 Minneapolis MN Jun 7, 8, 10-12 Stamford CT Jun 10, 11, 14-16
Gulfport MS Jun 24-25 Santa Ana CA Jun 7-11 Addison TX Jun 14-18
Pembroke Pines FL Jun 24-25 Boston MA Jun 7-11 Louisville KY Jun 14, 15, 17-19
Los Angeles CA Jul 8-9 Denver CO Jun 10, 11, 14-16 Madison WI Jun 14, 15, 17-19
San Francisco CA Jul 14-15 Charleston SC Jun 14-18 Washington DC Jun 14-18
Memphis TN Jul 22-23 Atlanta GA Jun 21-25 Atlanta GA Jul 19-23
Port St. Lucie FL Jul 29-30 Nashville TN Jun 21-25 San Antonio TX Jul 21-25
CCIM Institute
Tampa FL Jul 19-23
San Francisco CA Jul 26-30
Schedule subject to change without Equipping the world’s
notice. For the most up-to-date schedule, best minds in
visit CCIM.com/CourseSchedule. commercial real estate

12. MARKE T
TREND S
Beyond the Beltway:
Where the Government Works
Top General Services Administration leasing markets outside
of Washington, D.C., Maryland, and Virginia
State 2009 leased office sf Change from 2008 (sf)
Mauricio Simonetti/Getty Images
California 10,266,025 146,887
Texas 9,351,863 650,863
Florida 6,542,955 566,499
New York 6,405,228 204,598
Georgia 5,843,917 52,236
Source: Jones Lang LaSalle
Trending
Upward Dallas-Fort Worth is poised
to become a world capital
Apartment transactions in the well-populated
greater than $500,000 future due to available
land for development and
$116,420
pro-business attitudes,
says Joel Kotkin, author of
The Next Hundred Million:
Ã$88,859
America in 2050. The
$101,661
growing U.S. population
— estimated to reach 400
million by 2050 — may be
just the engine that keeps
the U.S. economy chugging
along. Kotkin sees the
$73,233
demographic diversity of
Weighted New York and other major
average gateway cities spreading
price
throughout the country.
per unit
Vacancy Forecast (%)
Property 2009 2010 2011
Office 15.7 17.3 17.4
1Q10
Industrial 13.2 14.6 14.5
1Q09 Retail 12.0 12.7 12.7
1Q08
1Q07
Multifamily 7.4 7.0 6.1
Source: PPR, A CoStar company Source: National Association of Realtors/CBRE Econometric Advisors
 May | June | 2010 Commercial Investment Real Estate

13. THE NEW CCIM ‘SAVE YOUR SEAT’ PLAN
IS THE PERFECT WAY TO:
■ Manage your cash flow: lock in your class with an initial deposit of just $100 then wait
to pay the balance until you actually take the class
■ Plan ahead without paying ahead: add your next class without worrying about paying for
the entire cost now
■ Be flexible: if your plans change you have the option of applying your deposit to any
upcoming class or to next year’s dues
Don’t miss this chance to interact and build relationships with classmates and expert
instructors who are successful practitioners within the commercial real estate industry.
Sign up for your next class and Save Your Seat today with a simple
deposit of only $100.
To find out more, go to web.CCIM.com/SaveaSeat or call toll-free
now: (800) 621-7027, ext. 3100.
CCIM Institute
Equipping the world’s best minds in commercial real estate

14. CCIM
QA
REDEX
Rolls Out
o
by Jennifer Norbut
On March 31, CCIM TECH launched CCIMREDEX, an online prop-
erty listing and marketing database that is poised to revolutionize Todd Kuhlmann, CCIM
the way CCIM designees and candidates do business. Commercial
Investment Real Estate asked Todd Kuhlmann, CCIM, vice presi- creating their own personal property data-
base, and select individual CCIMREDEX
dent of Dallas-based CCIM TECH and director of CCIMREDEX, to users to collaborate on a property.
share his insights on this new member benefit and the opportuni-
ties it provides exclusively for CCIM members. CIRE: How does CCIM’s other top
technology tool, STDBonline.com,
CIRE: What will CCIM members gain CIRE: What advantages does integrate with CCIMREDEX?
by using CCIMREDEX? CCIMREDEX offer over other local, Kuhlmann: STDB provides CCIMs with
Kuhlmann: The top three benefits of regional, and national commercial tools to analyze markets, determine the
CCIMREDEX will be different for each user, information exchanges? demand for real estate and products in those
depending on whether they are owners, buy- Kuhlmann: Most CIEs allow brokers, and markets, and track their growth and trends.
ers, or listing brokers. CCIMREDEX is ideal in some cases, the general public, to search CCIMREDEX users can maintain specific
for owners and managers who want to track for commercial properties within a spe-
their properties and buyers who are com- cific area. However, CCIMREDEX was not
paring multiple properties for acquisition. designed to replace or compete with CIEs.
Listing brokers greatly increase exposure It was designed to be a members-only data
for their listings when they submit them to exchange for CCIM designees and candi-
CCIMREDEX because they are pushed out dates that integrates with third-party appli-
to numerous listing services, commercial cations such as CIEs and marketing and
information exchanges, and syndication analysis tools.
sites. Most importantly, CCIMREDEX com- property information, perform detailed anal-
pletely streamlines and maximizes the ysis and marketing for a property, and dis-
listing process for CCIM members. For tribute the property information to multiple
REDEX RESOURCES example, many brokers spend a great deal listing services. In other words, STDB helps
CCIMREDEX LEARNING CENTER of time entering property information into our members identify demand for the market
(www.ccimredexlearningcenter.com) provides: numerous listing services and CIE systems and CCIMREDEX complements this with
• Online Flash tutorials to increase their exposure opportunities. the supply that is available in the market.
• Training videos But with CCIMREDEX, CCIM members
• On-demand instructional Webinars enter their property listings one time and CIRE: Tell us more about
• Online Quick-Start Information Guide the listings are automatically pushed to an CCIMREDEX’s property marketing
• Schedule for on-site classroom training in array of integrated listing services and CIEs features.
select cities nationwide. Our users also can choose not to Kuhlmann: The marketing tools allow
publish their records and listings, effectively users to create brochures, fliers, and Flash
 May | June | 2010 Commercial Investment Real Estate

15. “CCIMREDEX is like the iPhone—it Tese may include more e-mail marketing
tools such as CCIM’s MailBridge tech-
integrates property information with nology and listing services such as local
third-party applications.” CIEs.
Web presentations for their listings and with multiple third-party applications. As Jennifer Norbut is senior director of com-
allow users to distribute property informa- we receive feedback from our members on munications for CCIM Institute. If you have a
tion using postal and e-mail services. Te how they use CCIMREDEX, more third- story worth sharing in CCIM QA, send it to
analysis tools also allow users to complete a party application tools will be integrated. jnorbut@ccim.com.
financial or lease analysis of a property and
obtain an environmental summary report.
(Read Technology Solutions on page 20 for
more details on CCIMREDEX tools.)
CIRE: What’s the best way for
CCIM members to learn how to use Weathering the Storm.
CCIMREDEX?
Kuhlmann: The more members know
about how to use this exciting product, the
Resilient. Reliable. Ready.
more they will see the tremendous value it
provides in their business. To assist CCIMs,
we have established the CCIMREDEX
Learning Center (www.ccimredexlearn-
ingcenter.com), which includes detailed
tutorials for each CCIMREDEX function.
(See sidebar.) A series of instructional on-
demand Webinars and Flash video tutorials
also are available for members in the online
Learning Center. CCIM Technologies also
has a full-time support staff available by ...reliable through tough economic times, Grandbridge remains strong. Our unique market position and
phone — (469) 232-2615 — and e-mail wide variety of business platforms, mixed with our broad investor base and stable, secure ownership, enables
(support@ccimredex.com) to assist mem- Grandbridge to structure and execute the right loan for our clients—for each and every transaction.
bers who have questions.
Grandbridge — your source of commercial
and multifamily real estate funding in today’s $18,147,500
CIRE: You’ve said that CCIMREDEX Lewisville, TX
technology is evolving all the time. turbulent financial environment. 270-Unit Multifamily
What types of features might CCIMs Re nance
• Fannie Mae DUS® Lending Agency
expect to see in the future?
• Freddie Mac Program Plus® Lending
Kuhlmann: CCIMREDEX was designed to $5,900,000
integrate and evolve. A good analogy is to • Freddie Mac Targeted Louisville, KY
think of CCIMREDEX like the iPhone — it Affordable Housing Lending 244,750 Sq.Ft. Industrial
was built to integrate property information • MAP- and LEAN-approved FHA Lending New Loan Origination
Insurance Company
• Insurance Company Lending
• Proprietary Lending
• Bank Lending
INTEGRATED CIE S AND
LISTING SERVICES
Property listings entered into CCIM- grand opportunities
REDEX can be distributed to Catylist,
Atlanta 404.602.1389 • Birmingham 205.978.1840 • Charleston 843.886.4391 • Charlotte 704.379.6900 • Chicago 312.322.1220 • Columbus 614.358.4100 • Dallas 214.346.0200
CommercialSource.com, CoStar, Ft. Lauderdale 954.389.7822 • Greenville 864.288.5396 • Houston 713.993.1300 • Indianapolis 317.237.5370 • Jacksonville 904.652.2206 • Kansas City 913.677.2001 • Louisville 502.589.1233
Proxio, TotalCommercial.com, Madison 608.827.7747 • Milwaukee 262.785.8440 Minneapolis 612.341.7880 • Mobile 251.473.1831 • Naples 239.947.5077 • Nashville 615.377.8989 • Norcross 678.906.4070
Norfolk 757.625.8181 • Orlando 407.772.0750 • Pittsburgh 412.391.3366 • Raleigh 919.871.6300 • Tampa 813.281.8767 • Washington, D.C./Baltimore 703.677.3900 • www.gbrecap.com
PropertyLine, and RealUp.
Loans are subject to credit approval.
ciremagazine.com May | June | 2010 

16. FINANCING
FOCUS
Equity Injection
Tax credit programs boost funding for qualified properties.
by John W. Waldeck Jr.
t The dominos continue to fall in
the commercial real estate mar-
ket, leaving lenders exceptionally
conservative in making loans
for new projects. Loan-to-value
ratios in the 50 percent range
are not uncommon. In fact,
some would say that outright
rejections are the norm.
But not all news is bad. Opportunities exist
in segments that can take advantage of exist-
ing and evolving federal and state tax credit
programs, such as historic tax credits and new
markets tax credits. Qualifying projects have
the advantage of significant equity creation,
which bridges the difficult loan-to-equity gap
in today’s market.
Tere is a catch, however: Not all projects
will qualify. For federal and state historic tax
credits, as the name implies, an existing, qual-
ifying property’s restoration must conform to
standards issued by the U.S. Department of
the Interior. For new markets tax credits, proj-
ects must be located in a low-income census
tract (many urban centers qualify). Renewable
and green energy credit programs also may
generate credits at the state and federal level.
Steve Allen/Getty Images
Historic Tax Credits
Developers may use federal historic tax
credits to raise equity equal to either 10 per-
cent or 20 percent of the project’s rehabilita-
 May | June | 2010 Commercial Investment Real Estate

17. additional layers of financing from commu-
¶ nity development sources. Getting a hotel
The number of renewable energy and green tax deal done in the current environment is vir-
tually impossible, yet with the twin engines
credits continues to grow. of HTC/NMTC bolstering the financing it
became a reality.
tion expenditures. Land and purchase costs in a number of respects. As contrasted with
do not count, and rehab expenditures must HTC, NMTC are available to the taxpayer Other Credit-Based
exceed the developer’s basis in the project. over a seven-year period in an amount equal Financing
Te majority of projects use the 20 percent to 39 percent of the qualified investment (5 The number of renewable energy and
credit, which is available for certified historic percent per year for three years; 6 percent per green tax credits continues to grow.
structures or qualifying structures that are year for the next four years). Developers on the cutting edge of afford-
in certified historic districts. Additionally, Also, NMTC are allocated annually on a able housing tax credits have successfully
such funding requests require a three-part competitive basis, requiring the developer used solar panel technology to qualify for
application, which is approved by the state to approach a successful allocatee with the tax credits or outright grants to reduce
historic preservation office and the National project request.
Park Service. Te federal credit is automatic. Tese allocatees may
If developers follow the proper guidelines include banks, com-
and application, the 20 percent credit may munity develop- Where to Go Next
be taken in the year in which the project is ment corporations, • www.nps.gov/history/hps/tps/tax/index.htm
placed in service. State programs may be port and develop- • www.cdfifund.gov
automatic or based on competition. ment authorities, • www.dsireusa.org
HTC equity comes into the project in the and the National
form of a capital contribution made by an Trust for Historic
investor in the project, usually C corpora- Preservation.
tions with taxable income — many still are Investment may be direct or through a lev- energy costs to tenants and pay for other-
very active in the market. Tese investors eraged structure. Due to the structure’s com- wise cost-prohibitive installations, giving
contribute at the rate of 75 cents to 95 cents plexity, fees and expenses can be significant; hope that commercial real estate projects
for each dollar of credit passed through to the the project’s size needs to be large enough to could also be suitable candidates for such
investor. Te investor remains in the project justify the costs incurred. installations.
for the five-year tax-credit-recapture period, The beauty of NMTC in a real estate For commercial and industrial projects
during which time there can be no sale or project is that these credits can be com- that generate jobs, the more-traditional
disposition of the property. bined with HTC in an appropriate project enterprise zone tax abatements and jobs
Numerous HTC projects would never (residential components are significantly creation tax credits ofen are available at the
have been completed, let alone limited) to further boost the state or local levels. Te tax-burden reduc-
realized, without this program. equity component to the point tion changes the pro formas of such projects
For example, in Cleveland much Tudor that the equity gap is nearly for the better, increasing appraisal numbers
of the nationally publicized East
Fourth Street District (which
Arms filled. A developer’s typical in a time when every dollar is critical.
equity contribution would not Prospects are dim for near- or even
includes the House of Blues in a Financing be sufficient. But with the push mid-term restoration of more customary
¶
former Woolworth building and given by the tax credit equity loan-to-value ratios. Tis means only those
Iron Chef Michael Symon’s Lola pieces, the project will green- projects with significant equity to plug the
Restaurant) was restored and light, notwithstanding a con- gap will be built. Because such development
converted to an urban mixed- $3.3 million servative loan-to-value ratio. doldrums often translate into developer
use retail and residential devel- in federal HTC A recent example is a Cleve- demise, it’s time to take a look at tax credit
opment, employing a combina- $4.4 million land hotel financing that closed programs and qualifying development to
tion of federal and state HTC. in state HTC in early fall 2009. Te project, generate some lifeblood in the commercial
$4 million the conversion of the 1930s-era marketplace.
New Markets NMTC Tudor Arms into a Doubletree
Tax Credits Hotel, featured HTC, NMTC, a John W. Waldeck Jr. is a partner and prac-
While new markets tax credits $8.9 million conventional construction loan tice head of the real estate section at Walter
also may fill equity gaps, they mortgage at approximately a 50 percent Haverfield LLP in Cleveland. Contact him at
differ from historic tax credits Source: Cleveland.com loan-to-value ratio, and some jwaldeck@walterhave.com.
ciremagazine.com May | June | 2010 

18. INVESTMENT
ANALYSIS
Physical Fitness Equity investors need a
tougher due diligence workout.
by Linda Bryson, LEED-AP
c Commercial real estate investors conduct many types of due
diligence, such as financial, legal, and physical. Regarding
the latter, many investors assume that if they follow the
current physical due diligence standard, ASTM guideline
E2018-08, Standard Guide for Property Condition
Assessments: Baseline Property Condition Assessment
Process, they will be adequately protected. What
you and your clients should understand is that
this standard represents the lowest common
denominator of physical due diligence and is
only appropriate for investors with a high risk
approach, equity investors should elect
to enhance the percentage of repre-
sentative observations conducted
by the field observers, since,
in ASTM’s standard, the field
observer does not survey 100
percent of a given repetitive sys-
tem or component. ASTM’s
minimum threshold is
10 percent of repeti-
tive systems such as
apartment units,
common areas, or
tolerance. Investors whose risk tolerance is lower retail spaces. Such
than, for example, that of a commercial mortgage- observations should
backed securities issuer, will want to ratchet the be carried out to the
investigation up several notches. extent that the field
observer can offer
Inadequate Observation ofen takes a team a confident opin-
At least 90 percent of all CMBS and balance- approach, much ion as to the general
sheet lenders’ due diligence complies with in the same way condition of recur-
E2018-08, but because the standard was buildings are designed. ring components. For
designed as a baseline it is rarely adequate At a minimum, the an equity deal, this might
for those taking an equity position. The team should include involve observing perhaps
standard describes a “walk-through” sur- an architectural engi- 25 percent or more of spe-
vey of a building’s readily observable and neer, a mechanical cific areas.
easily accessible components and systems. It engineer, an elevator
was never intended to be sufficient for par- consultant/technician if Record Research
ties with a lower risk tolerance for incur- applicable, and a roof- Off-site research is another
ring costs to remedy undisclosed physical ing technician or consultant. area not required by the
deficiencies. ASTM’s standard specifically Depending on such factors ASTM standard, but it is ofen
acknowledges these limitations. as the asset’s age, design, just as important as the walk-through
An ASTM baseline survey typically is con- materials, and scope, the survey. Interviews with building ser-
ducted by a field observer, who is described team also may include a vice firms about various systems,
SAKIstyle/Getty Images
as a “generalist” having knowledge about curtain wall consultant, including conveying, roofing, heating,
various building systems. However, due a fire/life-safety code consultant, ventilation, and air conditioning,
diligence conducted on behalf of equity and other technical specialists. fire suppression/sprinkler, build-
investors — those in a first-loss position — In addition to insisting on a team ing security, building automation,
 May | June | 2010 Commercial Investment Real Estate

19. cooling towers, water treatment, plumbing, buyers in this down market. Most bargain his own due diligence to renegotiate the pur-
and electrical, provide significant informa- hunters correctly recognize that they are chase price.
tion that would not be discovered during a purchasing properties below replacement cost However, depending on the exit strategy and
walk-through. Tese firms also have access and as is under adverse time constraints. Teir length of the intended hold, most sellers will
to service records indicating the frequency emphasis, many times, is simply to secure the expend minimal monies for conducting their
of certain repairs and costs, chronic call- asset under contract. Due to the competitive- own due diligence, if they conduct any at all.
back problems, pending repairs or replace- ness of the market in identifying such prop- Almost always, the scope of disclosure reports
ments, proposals submitted to ownership erties, the Property Condition Report — the is reduced. For example, it usually is conducted
but never executed, equipment obsolescence product of a Property Condition Assessment by a single field observer, and it is not unusual
(both functional and economic), upgrades — cannot be used to renegotiate the purchase for sellers or their agents to forego interviewing
necessary to comply with local codes or price as a result of discovering physical defi- on-site building maintenance personnel and
revised applicable standards, and more. ciencies. Terefore, the discovery of physical off-site building service firms or to keep quiet
Researchers also should conduct interviews deficiencies ofen is moot unless they will about known physical deficiencies.
with local building and fire code enforce- materially impact tenancy. Te scope and intensity of due diligence
ment officers and look into building depart- Property Condition Reports prepared on varies with the objectives of the entity retain-
ment files for open building code violations behalf of sellers, also referred to as disclosure ing the due diligence services. It’s a business
or mandated improvements to comply with reports, have become quite common over the decision. Due diligence exercised for one
recent or pending code upgrades. past five years. Sellers use them to present party might not be sufficient for another.
While generalists may be knowledgeable an asset to potential buyers with physical Make sure your clients know the difference.
about certain systems due to their educa- deficiencies disclosed along with the ask-
tional background or work experience, they ing price, which takes the deficiencies into Linda Bryson, LEED-AP, is a principal for IVI
may have minimal, if any, knowledge about consideration. Tis technique ofen is used International and manager of its due diligence
other building systems or components. Some to prevent a potential buyer from using a group. Contact her at linda.bryson@ivi-intl.
investors say they will only bring in specialty deficiency discovered during the course of com.
consultants if the generalist spots something
significant or questionable. However, it is
very probable that a generalist may not be
able to recognize the existence of a signifi-
cant physical deficiency in certain building
systems because many are simply too com-
plex. No architect or engineer is knowledge-
able about all building codes or systems.
Cleared
What’s Sufficient?
A paradox among balance sheet lenders
today is the more conservative the under-
writing and the higher the appraised value
for Takeoff.
Business today is all about speed to market. With the zoning, infrastructure
of the collateral, the less physical due dili- and improvements already in place, we can help your ideas take flight by
gence exercised regardless of the asset’s
locating on one of our outlots or setting up shop in a former Walmart
physical size. As an example, a lender who
recently took a first mortgage position on a or Sam’s Club.
250,000-square-foot Midtown Manhattan Why choose anywhere else? Call today and let’s get down to business.
office building was emphatic that the physi-
cal due diligence budget not exceed $3,000,
even though the asset had an appraised
value of about $100 million. Absent inter-
nal guidelines, it is common for lenders
to require the same level — and spend the
same amount — for physical due diligence
on assets as varied as a 30,000-sf strip center
and a 20-story hotel. walmartrealty.com | 479-204-2020
Not only are lenders conducting minimal
due diligence, but so are many opportunistic
ciremagazine.com May | June | 2010 

20. LEGAL
BRIEFS
Receiver’s Role
Who plays this part in the
distressed property drama?
by Jennifer Tullius and Jonathan Littrell
w Within the chaos of foreclosures and deeds in lieu, lenders are
utilizing receivers to minimize losses, maximize property values,
and reduce potential liability on properties in default. It is no great
surprise that an ever-growing number of commercial real estate
professionals are expanding their résumés to include receivership to
capitalize on this trend. What is surprising, however, is the apparent
lack of understanding of the actual role, benefits, and drawbacks of
appointing a receiver over real property.
Landing the Part erty that serves as collateral for a loan in
Tat amount is then added to the borrower’s
principal loan balance.
Learning the Lines
A receiver’s primary duty is to secure the
property, prevent waste, and collect rents.
In general, the receiver is required to follow
the court’s order, which may include specific
authority to manage the property, collect
rents, and provide monthly accountings.
In some instances, the court may grant the
receiver authority to enter into leases and
In most states, a real estate receiver is a default. Once appointed by the court, the position the property for sale.
court-appointed individual who is given receiver completely displaces the borrower Once appointed, the receiver must take
custodial responsibility over real prop- and becomes responsible for the tangible custody of the property, which may include
and intangible assets changing locks, securing operating accounts,
related to the property. and retrieving property-related documents
Owing a fiduciary duty from the borrower. Depending on the situa-
to the court and parties tion, obtaining control can be rather simple
involved in the litiga- or very difficult. Te key for the receiver is to
tion, the receiver makes act quickly so that the borrower cannot cause
all decisions regarding harm to the property.
management and opera- Afer securing the property, the receiver
tions, including leasing, should promptly inspect it and prepare a
improvements, and in report summarizing the property’s general
some cases, positioning condition and itemizing personal property of
the property for sale. the borrower. Te receiver also should send
Receivers’ fees and a letter to the tenants notifying them of the
fees for third-party pro- change in control, providing a new point
fessionals hired by the of contact, and, ideally, arranging a time to
receiver typically are paid meet with them individually to establish a
out of available cash-flow relationship and discuss areas of concern.
Image Source/Photolibrary
from the property’s oper- Other items that generally require the
ations. If the property is receiver’s immediate attention include the
cash negative, the lender transfer of utility bills, placement of prop-
ofen will advance funds erty insurance, hiring of a third-party man-
to pay the receiver’s fees. agement company, maintaining or entering
 May | June | 2010 Commercial Investment Real Estate