November 2011

Refinancing: Properties Under Pressure

Real estate markets continue to struggle in the current recession, with weakness primarily due to lower demand rather than large new supply coming to market. As a result, many owners' income properties may be experiencing significantly lower operating income and be close to the point of distress, where current rental income is insufficient to pay operating expenses and debt service. A property owner in this position should consider whether to seek a restructuring of existing mortgage loans that carry interest rates significantly higher than current levels. How should an owner proceed in this situation? Read more...

Investments: Net-Lease Partnerships

Net-lease deals always generate much interest when there is concern about the economy, because net leases combine an assurance of a safe return with the prospect of some growth if conditions are favorable. Now is such a time, and investors have a choice among a number of public net-lease real estate programs. A net lease partnership is one in which the lessee pays all operating expenses so that the rent received by the lessor is entirely net. What should an investor look for in choosing one program over another? Read more...

Investments: Timberland

Timberland is defined as a forested area capable of growing 20 cubic feet of timber of merchantable quality per year and where timber production is not barred by legal or regulatory rules. Approximately 504 million acres, about two-thirds of the total forest lands in the United States, is considered timberland. Relative proximity to timber consumers - most often pulp and lumber mills - is a key consideration affecting the value of timberland due to the reduced transportation costs of the cut timber. Read more...

Leases: Negotiating Subordination Provisions

Commercial lease agreements are often long and complex, containing numerous clauses that neither party expects will ever be triggered by events. But sometimes they are triggered. One such agreement is the lease subordination clause, by which the tenant agrees the lease will be subordinate to any present or future mortgage the landlord may put on the property. Accordingly, foreclosure of the mortgage loan (depending on the law of the state involved) either automatically terminates the lease or entitles the lender, at its option, to terminate the lease. Read more...

RESPA: Supreme Court to Review Act

The Real Estate Settlement Procedures Act (RESPA) will be debated before the Supreme Court in a case that could shield banks and other lenders from extensive litigation under a variety of state and federal statutes. The court will decide this fall whether a consumer who purchased title insurance through a referral arrangement that allegedly violated the anti-kickback provisions of RESPA can bring a suit in federal court even if no monetary loss resulted. Read more...

Somerset Real Estate Team News

Welcome New Associates. We have added several new associates in the past few months--Craig Hittle, Rachel Torkelson, Chris Hirschfeld, Elizabeth Curley, Brandon Lucas, Theresa Pierce, Rex Biggs, Jon Schwander and Craig Todderud. Visit our Somerset News blog to learn more about them...

What's It Like to Work at Somerset? We recently recorded a few videos of our associates talking about what it's like to work at Somerset. Check them out on our YouTube channel...

Somerset Tax Strategies Blog. Our Tax Team members post information about tax issues regularly. Recent topics include sales tax on Internet retailers, COLA limits, health plan fees, Indiana adjusted gross income determination and more. Visit the blog now...

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