Building Successful Relationships

Tag Archives: Jason Wolf


Remedies for Purchase and Sale Agreement Breaches

Let’s look at remedies for purchase agreement breaches and sale agreement breaches. What happens when a commercial contract buyer fails to purchase the property as required by the purchase and sale agreement (PSA) or otherwise commits a material breach?

Download Printable Article (PDF) >>>

Seller Remedies for Buyer’s Agreement Breaches

purchase agreement breaches and sale agreement breachesHere are specific remedy provisions to consider in the PSA, other than all “rights and remedies available at law or in equity”:

1. Liquidated Damages. The typical seller remedy for buyer agreement breaches is retention of the deposit monies posted at the time of signing the PSA. This is another reason for both seller and buyer to carefully consider the amount of the deposit when finalizing the agreement of sale, as this is not just an expression of buyer’s financial capability, but also the amount the buyer may forfeit to seller if it fails to close, after any contingency periods have expired. In NJ, liquidated damages provisions or stipulated damages provisions will be enforced so long as they are a reasonable estimate of the actual damages and not an impermissible penalty. Where the agreed upon amount is unconscionable, a court may refuse to enforce this remedy.

2. Specific Performance. An atypical remedy for a breach agreement breaches in favor of a seller is a court ordering that the purchaser buy the subject property. It is rare that a court will find that money damages are an inadequate remedy or that there are other equitable considerations, and therefore, the buyer must purchase the property.

3. Preserve Indemnity Obligations. While the liquidated damages provision is likely the exclusive remedy, a seller may also carve-out the buyer’s continuing obligation to indemnify seller for any damage caused by buyer or its representative in connection with buyer’s examination of the property. Given that the buyer entity may be a ne wly formed (and empty) special purpose entity (SPE), seller should confirm that buyer and its representatives have insurance in place to protect seller for personal and property damage. And, if the agreement of sale is assigned to a new SPE, seller should ensure that the original purchaser remains liable under the PSA.

4. Delivery of Due Diligence Materials. If buyer breaches the PSA resulting in termination, seller may demand delivery of buyer’s due diligence materials, including items like its title commitment, survey, environmental, property condition and zoning reports and any approvals, at no cost to seller. Buyer will want to be reimbursed the actual cost for these materials. A distinction should be drawn between delivery of the materials following a buyer breach versus following a termination under the due diligence contingency. An argument may be made that following a breach, seller should not have to reimburse the buyer for these costs.

A quick note about time being of the essence. While most South Jersey contracts contain a provision making time “of the essence” thereby setting a specific time frame for establishing a breach, many North Jersey PSAs do not. Where time is not made “of the essence” in the agreement of sale, a party can declare it to be so by delivering a written notice to the defaulting party after the date set for closing has passed. Following the failure to close, a written notice may be delivered demanding a new closing date, provided that it is reasonable in relation to the time that has passed. It should be no shorter than 10 days following the notice. The party ready, willing and able to close, will send this notice to the other to clarify whether there is a breach situation. Additionally, a party may declare time to be of the essence prior to the closing date where the other party has anticipatorily repudiated or breached the PSA. Notices and opportunities to cure may be included in the agreement of sale prior to a particular remedy being available.

Buyer Remedies for Seller’s Agreement Breaches

Seller’s Agreement BreachesSellers are guilty of breaching PSAs too. There are two general categories of seller agreement breaches: failure to close and breach of representations. For failure to close, the two most customary remedies are:

1. Termination, Return of Deposit and Compensation. If the seller does not complete closing, which sometimes happens when it is unable to deliver good title or when it changes its mind — perhaps due to a better offer — buyer is entitled to terminate the PSA and receive a refund of its deposit. Where this right is buyer’s only remedy, and savvy sellers are effective at making it so, the seller essentially has an option contract. If seller elects to breach (eg. to sell the property for a higher pric e or to take the property off the market), buyer may be limited to a termination right and the return of its deposit. In that scenario, buyer is stuck footing the bill for all of its diligence costs, attorneys’ fees and lender costs and expense. Therefore, buyers should seek to be reimbursed for these actual, out of pocket expenses (sometimes capped at a reasonable amount), in addition to the return of the deposit.

2. Specific Performance. If seller fails to close, buyer may be entitled to enforce specific performance against seller, provided that buyer has complied with its PSA obligations and commences the action within a reasonable period of time following the breach, say 45 days. Unlike the seller remedy which is extremely rare, a court is more willing to agree that the property is unique, and therefore buyer cannot be adequately compensated for seller’s breach with money alone. It is easier to convince a court to force the sale of the property to a buyer with “clean hands”, so buyer should make sure it has complied with its PSA obligations.

In anticipation of filing an action for specific performance, and perhaps as leverage in negotiating a settlement, the buyer may file a notice of lis pendens with the county recorder’s office indicating that it has a claim against title to the subject property. Doing so places the world on notice of the claim and essentially prevents sale of the property to another buyer or seller financing of the property. Some sellers will seek to prevent such filings by adding language which prohibits the filing of a lis pendens in the PSA. If specific performance is not available after being elected as a remedy, the PSA may state the buyer is able to recover all of its damages, without limitation.

For breach of a seller representation discovered post-closing the remedies may be based on parameters set for recovery in the PSA. The PSA may include language regarding: (i) a basket or deductible amount by which the damage must exceed for the claim to be actionable; (ii) a cap or maximum seller-liability amount; and (iii) a post-closing survival period for the representations and a period of time within which any claims must be made, which periods may be the same. Sellers will look to insert a high basket amount, a low cap on liability and a very short survival period. The dollar amounts will vary depending on the size of the transaction and the negotiating leverage of the parties. The survival period may vary significantly from PSA to PSA and may also vary within the PSA depending on the specific representation and its importance to the transaction. If the breach is discovered pre-closing and closing occurs, typically, no post-closing remedy will be available. Both buyer and seller should appreciate a prevailing party attorneys’ fees provision, like: “In the event either party employs an attorney in connection with claims by one party against the other arising from the operation of this PSA, the non-prevailing party shall pay the prevailing party all reasonable fees and expenses, including attorneys’ fees, incurred in connection with this transaction and the collection of any judgment.” This can significantly increase costs for a breach.

Conclusion

At the time of PSA negotiation, the parties rarely believe that either side will actually breach their agreement. Nevertheless, sufficient time should be spent considering the “what ifs” should the transaction go south. The parties will want to be clear on the respective remedies so that they can move on quickly following a breach. Since the deposit going to seller will often be the remedy for a buyer’s failure to close, care should be given in determining the amount. If the deposit is disproportionately high compared to the monetary damages the seller will actually suffer in the event of a buyer breach, perhaps only a portion should be delivered to the seller with the balance being returned to buyer. Conversely, if the deposit is too low relative to seller’s anticipated damages, perhaps the seller should receive additional compensation. Remedy provisions should not be considered boilerplate. The parties to a PSA should consult with experienced counsel to understand the rights and remedies, and their many variations, following a breach. The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

 

Share

Sale and Leaseback of Commercial Real Estate

Sale and Leaseback of Commercial Real EstateLet’s explore the sale and leaseback of commercial real estate. Confer with the professionals at WCRE or ask us for a seasoned real estate or tax attorney but here’s one technique Abo has seen work well with business clients. Although real estate is generally thought of as an illiquid asset, some liquidity can be achieved by taking out a loan backed by the property. Alternatively, a sale and leaseback may be used effectively if a company’s balance sheet is burdened with excessive debt or just having difficulty in obtaining new capital. Typically, the transaction involves the company owned property being sold to a third party and then leased back to the company under a long-term lease.

Download Printable Article (PDF) >>>

Sale and leaseback transactions may be on the rise but clients need to be aware that the IRS often focuses on transactions between closely-held corporations and their controlling shareholder to make sure that these transactions benefit the company as well as the shareholder. In one common type of sale and leaseback transaction, the company sells the land with a building on it to the shareholder and, in turn, the shareholder leases it back to the company. Some of the financial and tax benefits we’ve seen have included:

The rental deductions the company could take might be significantly larger than the former depreciation deductions if the property had been in service for many years.

After the sale and the leaseback transaction, the shareholder’s basis in the property will be its fair market value which is usually greater than the price paid for the property by the corporation. Thus, the shareholder’s depreciation deduction would be much greater than what was previously available to the corporation (also still need to consider the tax consequences of the sale to the corporation).

The sale and leaseback may enable the shareholder to generate passive rental income that could be offset
against passive losses of the shareholder.

The IRS would obviously be concerned that these transactions have economic substance and that they are
based on reasonable market conditions, and not just designed to generate larger tax deductions. Thus, for
a sale to be valid, the controlling shareholder should have taken an equity interest in the property and also
assumed the risk of loss. For the leaseback to be valid, four tests come to mind that really should be met:

1. The useful life of the property should exceed the term of the lease.

2. Repurchase of the property by the corporation at the end of the lease term should be at fair market value and not at a discount.

3. If the leaseback allows for renewal, the rate should be at a fair rental value (speak to WCRE, not necessarily the accountant).

4. The shareholder should have a reasonable expectation that he or she will generate a profit from the sale and leaseback transaction based on the value of the property when it is eventually sold and the rental obtained during the lease term.

I suspect one of the biggest risks for the seller-lessee is the loss of a valuable asset that could have substantially appreciated over its useful life. Also, the rental market could drop, leaving the seller locked into a rental rate in excess of fair value. On the other side of the table, the seller could move or default, leaving the buyer with unattractive real estate in a soft market.

Even if there are no other problems, the benefits of the deal could be substantially reduced if the IRS deems that it is merely a “financial lease.” In that case, the IRS will treat the seller-lessee as the true owner of the real estate, with all the appropriate tax assessed, and the buyer-lessor will be treated as a lender-mortgagee.

Since sale and leaseback transactions can be quite complicated and also have to pass IRS muster, as I stated earlier, whether you are a buyer, seller or investor, you are well advised to consult with WCRE and seasoned real estate/tax counsel about your financial and tax consequences and the manner of structuring and implementing them to withstand possible IRS challenge.

FOR MORE INFORMATION:
Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

 

Martin H. Abo, CPA/ABV/CVA/CFF
307 Fellowship Road, Suite 202
Mt. Laurel, NJ 08054
(856) 222-4723
marty@aboandcompany.com
For more information, contact:

Share

People-Centric Change Management

People-Centric Change ManagementPeople don’t change for policies or procedures, and they don’t change because they read a brochure. Rather, people change for other people—for each other or for themselves. This key insight is now shaping successful change management efforts, a concerted push toward a more people-centric inclusive model of change—a democratization of what has previously been conceived as primarily a top-down process.

Download Printable Article (PDF) >>>

This is a welcome evolution. In the past, change management projects in workplaces may have had a tendency to put the needs of leadership above those of the occupants themselves. These efforts could essentially be boiled
down to, “Convince people that what we’re doing is a good idea.” But that is not really a change management effort—it is an advertising campaign. It treats as a foregone conclusion that people actually want and need the proposed transformation to happen, and that the plan as presented is already as good as it can get. Broadly speaking, neither of those things tend to be true.

Effective change management is neither solely top-down nor bottom-up. Everyone in an organization has a contribution to make in co-creating workplace transformation, even if that role is just to convince the person sitting next to them. Leaders help steer the ship. Individual team members can play a role in advocating for the kinds of change they want to see. Managers stand in the middle, and serve the interests of those both above and below, hopefully both accurately and positively.

BUILD TRUST THROUGH ENGAGEMENT

Even if a transformation such as a move to Activity-Based Working is likely to improve the experience of employees, they may still resist. The problem is not that employees are stodgy sticks-in-the-mud who are unwilling to change. The problem is psychology. Most people exhibit some degree of loss aversion bias; they are generally more worried about losing what they have than they are excited about getting something new that may be even better.

People do have some reason to be skeptical of change. After all, a years-long downward trend in job security and people-centric investments such as training and benefits has already eroded some of the trust that once existed between employers and employees. When commenters accidentally (or wryly) refer to a “war on talent”, they
may not be wrong. Establishing trust is a prerequisite.

The starting point of any change effort must be empathy; it is the responsibility of those advocating for change to work to understand the source of resistance and address it, if possible. People also may have what Robert Kegan and Lisa Lahey call competing commitments. Those who are resisting change usually have some good reason for doing so, even if their rationale remains hidden from view. As the team at Unwritten Labs often points out, the culture of an organization is full of unwritten rules and codes of behavior, and violating those expectations can cause people to get upset. Simply arguing more forcefully will not make them suddenly decide to go along with the plan. They may, in fact, dig in.

For example, think of a tech-enabled flexible work environment—perhaps even an unassigned environment using something like hot–desking. Before adopting this way of working, an occupant of a traditional desk can only think about what they’re giving up: a place of their own with their name on it. Attached to this furniture may be their sense of privacy or feelings of status within the organization. When someone tries to take it away, their very identity can feel threatened. On the other hand, with the current setup, they have learned to ignore the fact that they might have a filing cabinet on either side of them, or that they cannot see a window, or that they are surrounded by cube dividers that are only a few feet wider than their elbows.

Reminding people of the many ways they have adapted to a non-optimal situation helps to create what change management expert John Kotter calls the “burning platform”—it motivates those who are reticent to make the leap. This is necessary because people differ in the propensity to accept change. An adjustment that seems insignificant to one person may be upsetting or even alienating to someone else. Though it’s often invoked in discussion of technology adoption, Roger’s diffusion of innovations curve applies to workplace change as well. A relatively small number of early adopters will naturally be interested in trying something new, but the majority will wait until they can clearly see the benefits of doing so.

PRACTICE PARTICIPATORY DESIGN

Things often go wrong at the very beginning of change a project—perhaps even before what most people would consider to be the beginning—with unvalidated assumptions about what people want. Success requires that one start by asking the simple questions that are too often given short shrift: Is this actually good for our people? Would they also think so? Has anyone asked what they think?

For an example from outside the world of workplace, look to a recent story from Boston. To save money and reduce travel time for public school students, administrators enlisted experts from MIT to design an algorithm that would optimize the routes of school buses. They incorporated a huge set of parameters, even accounting for the need of
teenagers to get more sleep and start school later. Though it succeeded in lowering projected costs and would have made life easier for the kids, the solution was ultimately rejected by the community.

What went wrong? The team’s solution was, by many measures, a brilliant one. The critical misstep was that they did not have buy-in from some of the people who would be most impacted: parents. The good news is that they caught this oversight before actually implementing the plan, and have a chance to incorporate that constraint going forward.

START SMART, GET EVEN BETTER

START SMART, GET EVEN BETTER

START SMART, GET EVEN BETTER

In most cases of change, the optimal solution is probably an option that isn’t visible from the starting point. The way to find it is to get into a collaborative exchange, and to take feedback from stakeholders seriously. While leaders may think or even say that they are already doing this, many employees feel otherwise. A recent survey from Quantum Workforce found that almost a third of employees don’t even know why changes are happening; their ability to engage with the change is therefore fairly limited. Whether or not a project is adjusting in response to feedback is one of the clearest ways to see if a change management effort is actually helping people. If the plan doesn’t evolve at least a little during implementation, it’s likely that it isn’t so much managing change as demanding it.

A pilot program can make all the difference, giving people an opportunity to practice the new way of doing this before they are expected to embrace it. This is not the same as a model or mockup. A drawing is better than nothing at all, but actually spending time in a space is essential. As people try the new environment, researchers can gather data under conditions that are fairly close to the proposed future state. There’s no reason that the pilot needs to be limited to one idea, either.

Whether through providing multiple protoypes in a portion of the company’s existing space or by harnessing the flexibility of coworking, piloting provides people with an opportunity to try out different work settings before they commit.

There are a couple of big caveats when it comes to piloting. It is critical that people be given the freedom to explore the new environment independently and by choice—otherwise it’s just another obligation. It is also important that a researcher is either physically present to observe or is otherwise actively soliciting feedback. Tram members often have trouble articulating what they do or do not like about a new environment.

EMPOWER CHANGE LEADERS

EMPOWER CHANGE LEADERSWhen contemplating a major workplace shift, organizations often suffer from a breakdown in productive communication. Leaders may hesitate to share plans with staff before the idea is fully baked. People on the front lines might have concerns or feedback, but lack an established forum in which to voice them. Managers may feel pulled toward either toeing the leadership line or speaking up in solidarity with their reports. The result is that people often end up feeling confused or anxious and filling the information gaps with rumors or speculation. Much of this can be mitigated with the right approach.

One of the most important things leaders can do is to practice transparency from the beginning of a change project. Even if there are still many unknowns, it is important to communicate clearly using all of the organization’s communication channels; newsletters, meetings, webinars, and informal conversations all can and should be leveraged.

Employees at every level should be educated in both the business case for the change and on how it will affect them personally. Once they know what the plan is, people usually have something to say about it. Embrace this feedback from day one. In our 12-point guide to change management effort, we highlight the need to create change leaders within an organization. Savvy managers can usually spot these people and help make them part of what Kotter calls a “guiding coalition”.

Whether or not they are empowered by the formal hierarchy, there are employees who would like to actively participate in shaping the change. Make sure they have a seat at the table. This group can support the change in two important ways. The first is that they show others how to make the change successfully. The second is that they provide constructive criticism that will challenge and ultimately improve the proposal.

In order for this to work, people need leadership support and some grounding in the basics of workplace transformation.  We developed materials to support a train-the-trainer approach to change management efforts in our work with the U.S. General Services Administration (GSA), the agency that manages the federal government’s real estate portfolio. This was a unique project, since the GSA is involved in some capacity with the change efforts of many other agencies throughout the federal government, one of the largest and most complex organizations in the world. It would be impractical to design a change program that accommodated the needs of so many unique stakeholders. Instead, we worked with architect Marble Fairbanks and the agency leadership to package this information in an easily distributable form, with the goal of democratizing the change process. By identifying key roadblocks common to many change efforts, as well as peoplecentric ways to address each one, the project aimed to empower change makers at every level of the agency.

CHANGE IS ABOUT PEOPLE

We often define an organization’s culture as the sum of all of its people, their values, and moment-by-moment actions taken on those values. The way the organization practices change management is included in that definition. A well conducted change effort offers an opportunity to act out some of the parts of culture that are often preached but less often practiced—things like transparency, collaboration, honesty, and empathy. The key to a successful change process to engage with people as often and as genuinely as possible. They must be given an opportunity to have a real impact on what is going to happen to them and, when possible, to take a leadership role in the transformation. Practitioners who take the time to do this right will be rewarded when their team emerges more resilient, capable, and trusting than they were at the beginning.

FOR MORE INFORMATION:

PLASTARC is a social science-based workplace consultancy. Blending qualitative and quantitative research with design expertise, PLASTARC is dedicated to shifting the metrics associated with workplace from “square feet and inches” to “occupant satisfaction and performance.” Through a holistic approach that incorporates workplace anthropology, analytics, and change management advisory, they recommend evidence-based interventions that make the built environment more people-centric and responsive, promoting both individual wellness and business success.

 

Melissa Marsh, Founder & Executive Director
melissa@plastarc.com

Share

Landlord Issues from Tenant Bankruptcies

Landlord Issues for Tenant BankruptciesTenant bankruptcies are creating headaches for landlords. RadioShack. Brookstone. Toys R’ Us. Sears. With fifteen major retail bankruptcies filed last year in 2018, the toppled retail behemoth has almost become a cliché, and brands once courted by commercial landlords have become major sources of risk. With no sign of a slow-down, this article provides a refresher on your rights, as a commercial landlord, in commercial tenant bankruptcies.

Download Printable PDF>>>

Commercial Tenant Bankruptcies 101: THE BASICS

• Ipso facto clauses in a lease, which trigger default or acceleration upon the filing of a bankruptcy case, are generally unenforceable under the Bankruptcy Code. Thus, you cannot terminate a lease or stop performing your obligations under the lease on account of the bankruptcy filing.

• The filing of a bankruptcy case triggers the automatic stay, which requires all actions to enforce the lease, evict the tenant or collect a debt (including unpaid rent) to cease. Unless you have a judgment to possess the subject premises, or the lease has otherwise expired by its terms, you must not continue to pursue collection or enforcement activities.

• A commercial debtor may assume a lease and assign it to a third party, in most circumstances without your consent, even if the lease requires the consent of the landlord to assignment.

• A commercial debtor may reject a lease based on its business judgment, and you have very few (virtually no) grounds on which to object to a lease rejection.

Commercial Tenant Bankruptcies 201: WHEN WILL I GET PAID AND HOW MUCH?

The Bankruptcy Code requires bankrupt tenants to continue paying rent under the lease during the pendency of the case (post-petition rent). If a debtor does not assume a lease within 210 days of the commencement of the bankruptcy case, the lease is deemed rejected.

Depending on whether the lease is assumed or rejected and the financial health of the bankruptcy estate, rent that was unpaid as of the date of the filing (pre-petition rent) may be paid in full, in part or not at all. Tenants under assumed leases must cure all breaches under the lease, including to pay in full all unpaid pre-petition and post-petition rent and any damages incurred as a result of the breach of the lease. The cure amounts must be paid at the time the lease is assumed by the debtor or its assignee.

Landlords under rejected leases, on the other hand, are entitled to a claim against the bankruptcy estate, which, depending on the financial health of the debtor, may be paid in full, in part or not at all. While unpaid postpetition rent constitutes an administrative (or dollar-for-dollar) claim against the estate, all other pre petition rent and damages caused by the rejection of the lease constitute unsecured (often, cents-on-the-dollar) claims, and will be paid pro rata with other unsecured creditors. Further, while rejection damages include the amount of rent remaining in the life of its lease, damages are statutorily capped at the greater of one year of rent or the rent for 15% of the remaining term of the lease, not to exceed three (3) years. Landlords who successfully mitigate their damages and re-let the premises may not be entitled to any claim if the rent received under the new lease is greater than or equal to the rent under the existing lease. Payments on unsecured claims are typically paid, if at all, after the debtor has confirmed a plan of reorganization.

Commercial Tenant Bankruptcies 301: DO I HAVE TO ACCEPT A RENT REDUCTION?

Bankruptcy affords the debtor tenant a unique opportunity to re-negotiate its leases. On one hand, the Bankruptcy Code prohibits the debtor from cherry picking which provisions of a lease it wants to assume and which provisions it would like to reject; instead, the Code requires the debtor to assume or reject the lease in its entirety. On the other hand, many debtor tenants leverage the specter of potential rejection to obtain significant rent concessions from landlords. Rent reduction negotiations often begin in the pre-bankruptcy period and continue in the early days of the case, with landlords being told that failure to negotiate will result in certain rejection.

You do not have to negotiate with the debtor tenant or accept a rent reduction, though doing so may increase the possibility of the assumption of your lease. Debtor tenants are more likely to reject leases:

• Not essential to the continued operation of the business,
• With above-market rent,
• In areas saturated with other debtor locations, or
• With low-performing stores.

If your lease falls outside of these categories, then the debtor may assume the lease even without obtaining a rent (or other) concession.

Commercial Tenant Bankruptcies THE BIG PICTURE

As soon as a tenant shows signs of financial weakness, consider actively pursuing remedies under the lease, including termination or eviction proceedings. If the lease has expired or you have already obtained a judgment for possession when your tenant has filed for bankruptcy, tear up this article! (after confirming with your attorney that the lease is, in fact, properly terminated).

If the lease has not expired or terminated at the time of filing, be sure to engage bankruptcy counsel to review the proceedings and protect your interests in the case. Bankruptcy counsel will object to any insufficient cure amount, file a proof of claim for your damages and review any plan of reorganization to advise you of your
anticipated recoveries. Even though retail bankruptcies have become commonplace, sound counsel will ensure
that your rights are protected and help you get paid.

Finally, engage competent real estate professionals, who can provide an accurate assessment of current market
rent and assist in finding a replacement tenant to satisfy and requirement that you mitigate your damages
after rejection/termination of the lease.

The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

 

Share

WCRE ADDS FORMER DALLAS COWBOY TO TEAM

Phil Costa to Serve Philadelphia & Southern NJ Markets

Phil CostaWolf Commercial Real Estate (WCRE) is pleased to announce the hiring of sales associate Phil Costa. Costa comes to WCRE from the sales and customer service field at Abbott, where he worked after a four-year NFL football career. 

Download Printable article (PDF) >>>

Costa will focus and specialize in commercial and multifamily assets in the Southern New Jersey and Philadelphia regions. Phil has developed a wide network of business and corporate relationships throughout the area and will focus to help landlords, investors and users develop strategies to achieve their commercial real estate goals. 

Costa, a Holy Cross Preparatory Academy and University of Maryland alumni, recently finished his MBA at Columbia University. His areas of expertise include multi-family, investments and relationship development.   

“Costa will be responsible for advising and supporting a diverse client base throughout their various commercial real estate transactions and needs.  His hiring brings WCRE, which is approaching their 8-year anniversary, to a team of 26 outstanding commercial real estate service providers”,

said Jason Wolf, founder and principal of WCRE. 

“Our people have always been our biggest asset and differentiator in the marketplace.”

Said Chris Henderson, Vice president and principal of WCRE.  

Phil was a Team Captain and two-time Academic ACC student at the University of Maryland and spent four years with the Dallas Cowboys as an Offensive Lineman. Most recently, Phil co-authored the book, “The Transition Playbook for Athletes”. He lives in Philadelphia, PA.

Costa is a licensed salesperson in New Jersey and Pennsylvania license candidate. 

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.

Learn more about WCRE on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com, and www.phillyretailspace.com.

Share

Common Commercial Leasing Mistakes

Common Commercial Leasing MistakesLet’s look at 10 common commercial leasing mistakes and how to avoid them. Commercial leasing transactions are among the longest term contracts parties will ever enter into, yet many often take the cavalier attitude that “it is just a lease.” That lack of focus and attention to detail often leads to mistakes that can haunt the parties for years and waste valuable time and money.

Download Printable Article (PDF) >>>

Ten Common Commercial Leasing Mistakes and Suggested Tips:

1. Incorrect Names of the Parties
The parties’ names must be clearly and precisely listed but have errors a shocking number of times, as either the landlord’s name, the tenant’s name or both are often incorrect. These mistakes cast potential doubts regarding the validity and enforceability of the lease agreement and raise possible defenses. If you end up in such a situation, a lease amendment should be signed that expressly ratifies all of the lease terms and acknowledges the prior error(s). Avoid such situations by verifying the parties’ names by searching New Jersey and Pennsylvania corporate websites, which can be completed within a minute free of charge. Obtaining copies of filed certificates of incorporation, certifications of formation and the like will also help verify that the parties’ names are correctly shown. Further, a short form good standing certificate or a  subsistence certificate can be obtained online in a few minutes at a nominal cost.

2. Parties No Longer Exist
Entities to lease transactions (whether landlord or tenant or their successors or assigns) may be dissolved. Thus, the parties should conduct basic due diligence and verify the facts on an ongoing basis. Obtaining good standing or subsistence certificates could be helpful in this regard. If, for example, a good standing certificate indicates that annual reports and related fees are overdue, that party should be compelled to file such reports and pay such fees to avoid being involuntarily suspended by the State. If a party has already been dissolved voluntarily or involuntarily, they should be required to get their “organizational house” in order, and then lease instruments can be signed.

3. Your Lease is Actually a Sublease
Tenants should consider obtaining title searches to verify ownership of the property by the landlord indicated in the lease documents, or at the very least by asking for copies of deeds, tax records and title polices from their landlords. Otherwise, a tenant may not know that its lease is actually a sublease, which is more common than one might think. If you are a subtenant and not a tenant, your landlord cannot grant to you any rights that do not exist under the master lease and, therefore, you cannot understand your rights unless and until you review the applicable master lease.

4. Authorized Parties Do Not Sign or Incorrectly State their Title
Only an individual authorized to bind an entity should be signing documents on its behalf, and the signer’s name and title should be clearly shown. Such basics are commonly disregarded and the parties simply assume that whoever has signed the lease is an authorized signer. You should consider requesting copies of Operating Agreements, Shareholder’s Agreements and applicable consents and resolutions to confirm that an authorized person is signing. The lease documents should also explicitly represent that the person signing this lease document on behalf of each party is duly authorized to bind such party. If an agent is signing on behalf of the landlord, ask for evidence of authority in the form of a signed agency agreement granting such powers. Finally, make sure that the title of the signer matches the type of entity that is being bound. General partnerships have General Partners; limited partnerships have General Partners and Limited Partners; corporations have officers (i.e. typically President, Vice President, Secretary and Treasurer) and limited liability companies most commonly have Managers or Managing Members.

5. Premises Size Not Indicated
The size of the premises should be indicated, especially when the lease document indicates a rental rate on a square foot basis or requires pass throughs based on a proportionate share of the building or center.

6. Blanks in the Documents
Do not leave any blanks in the documents. Aside from simply looking sloppy, such blanks may be crucial in terms of triggering contractual milestones (e.g. lease commencement date, rent commencement date, timing to complete landlord’s work and the timing for the tenant to submit plans and to open for business). In a worst case scenario, document blanks could give rise to questions and disagreements regarding enforceability.

7. Lender and Other Required Approvals Were Not Obtained
Landlord’s loan documents may require lender’s approval prior to entering into any lease or lease amendments, and it is easy to forget to obtain such approval. Landlords should reach out to their lender(s) as soon as the lease is agreed upon so that the deal does not get derailed by delays. Tenants should ask for evidence of such lender approvals and representations that all required third party approvals have been obtained (or are not necessary). The parties should also check for rights of first refusal (ROFR), rights of first offer (ROFO), use and building restrictions in leases granted to other tenants.

8. Unclear if Prior Tenant Parties and Guarantors Remain Liable After Assignment
Original tenant parties and guarantors often remain liable for lease obligations even after there has been an assignment of a lease, barring negotiated releases. However, such continuing liability is often unclear to the responsible parties, including tenants that sold their businesses. Lease assignment and consent documents should clarify the scope and extent of the parties’ liability.

9. Unexpected Zoning Board, Planning Board or Other Approvals
It is not uncommon for leasing parties to discover after signing that unanticipated approvals are needed (such as from the zoning board or planning board), which can delay occupancy by months or longer and result in significant expense. Signage and other approvals may also be necessary. Ideally, the parties would perform due diligence of the zoning code and obtain copies of prior approvals granted prior to entering into the lease, and then allocate their respective responsibilities, obligations and related costs between them.

10. Failure to Utilize Professionals
There is no such thing as a standard lease, and the parties must ensure that the documents being negotiated and signed reflect their mutual understandings. Landlords and tenants would be wise to utilize experienced and qualified professionals such as commercial real estate brokers with local knowledge to assist in the leasing process. They would also be prudent to choose an attorney with significant leasing experience, good judgment and a reputation for getting deals done.

CONCLUSION:

A leasing transaction is one of the longest term contracts most parties will ever sign, typically lasting five years or longer. Some landlords and tenants take the attitude that “it is just a lease” (and therefore not a big deal) and do not pay requisite attention to the key basics of any contract, and those basic deal terms are wrong in an astonishing number of deals. The most common commercial leasing mistakes, such as incorrectly naming the parties, leaving blanks that potentially impact the rent commencement date and other key milestones and incorrectly stating a signer’s title are shockingly common. Landlords and tenants should take their time to get the deal as reflected in the lease documents precisely right, and avoid common mistakes such as those listed above, the majority of which can be avoided without significant expense by simply paying attention to the details.

Kenneth M. Morgan is an experienced leasing attorney licensed in Pennsylvania and New Jersey.

The contents of this article are for informational purposes only and none of these materials offered are, nor should be construed as, investment advice, legal advice or a legal opinion based on any specific facts or circumstances.

Share

WCRE HELPS FEED THE COMMUNITY WITH 6th ANNUAL THANKSGIVING FOOD DRIVE

Wolf Commercial Real Estate (WCRE) wrapped up its sixth annual Thanksgiving Food Drive today by delivering over 100 bags of food and $1,525 in supermarket gift cards and donations to the Samost Jewish Family and Children’s Service food pantry.

As in previous years, the firm spent the past several weeks collecting food and grocery store gift cards from friends, clients, and colleagues throughout the region. More than thirty-five area businesses contributed to the effort.

Download Printable Article (PDF) >>>

“Over the past six plus years, WCRE has become an integral charitable partner in our efforts,” said Marla Meyers, MSW, executive director of Samost Jewish Family and Children’s Services of Southern New Jersey. “We thank the entire WCRE team for their generosity and leadership today and throughout the year.”

The food drive is part of WCRE’s Community Commitment program, which also includes donating a portion of the proceeds from transactions to one of several local charities.

In 2016, WCRE formed The WCRE Foundation to manage and oversee our community fundraising efforts and donations.  To date, The WCRE Foundation has successfully raised approximately $315,000 from its community efforts.

Currently, WCRE and The WCRE Foundation support Bancroft, CARES Institute at Rowan University, the American Cancer Society, Susan G. Komen Foundation, Samaritan Healthcare & Hospice and the Jewish Federation of Southern New Jersey. We also offer our clients the option to designate the charitable portion of their transaction to a charity of their choice.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.

About JFCS

To learn more about JFCS’ efforts, visit https://jfcssnj.org/

Share

Avoiding Exposure for Commercial Real Estate Developers

Avoiding Exposure for Commercial Real Estate Developers

Commercial real estate developers and owners of recently completed development projects should be aware of a few things that can be done after the ribbon cutting to prevent headaches later on, avoid exposure to potential penalties for failing to comply with certain development conditions, and possibly put some money back in the till. Attention should be paid to these three issues after a project is completed.

Download Printable Article (PDF) >>>

OBTAIN AN AS-BUILT SURVEY OF YOUR PROJECT.

An as-built survey is a detailed land survey that includes exact locations of subsurface infrastructure such as pipes and foundations. Sometimes owners rely on contractor notes that have been scribbled on design plans in the field during construction to serve as an as-built. Incorporating these notes in a clean and accurate as-built survey is well worth the time and expense as it will save headaches trying to piece information together later.
An as-built survey should be prepared immediately after the project has been completed. A purchaser might also consider procuring an as-built if one is not available. Some might view this an unnecessary expense; however, consider the following:

1) what is actually built by the contractor in the field doesn’t always line up exactly with the engineering design plans;

2) preparing a clean survey to document as-built conditions immediately after construction eliminates the time consuming and often costly effort required to piece together the information at a later date; and

3) if, at a later date, you want to make improvements or put an addition on the property, having an accurate as-built survey of existing conditions shows exactly where everything is on your site and expedites the process.

As an example of how an accurate as-built survey can save time and money, consider a scenario in which an owner wishes to construct an addition to an existing building and tie a new sewer lateral into an existing underground sanitary sewer force main. The design plans for the addition are developed based on the original design plans for the main building rather than an as-built survey, because the owner never had an as-built survey completed after construction. The design plans for the addition referenced an ‘approximate’ location of the force main, as the ‘exact’ location was never documented. What if that force main was not in the location indicated
on the design plans? If not, it would require a lot of digging and an expensive subsurface utility investigation to locate the pipe to determine the exact location. This costly delay could be avoided if the owner invested in a complete and accurate as-built survey of the property immediately after construction, including the location of all underground infrastructure.

MAKE SURE YOUR NJDEP PERMITS (INCLUDING YOUR WETLANDS LOI) WERE RECORDED WITH THE COUNTY CLERK

Many landowners and commercial real estate developers understand the need to obtain permits from the NJDEP to make improvements to land in New Jersey. However, compliance with administrative permit conditions is sometimes overlooked. One of the conditions of all permits that are issued by the NJDEP under the Freshwater Wetlands Protection Act Rules (Rules), N.J.A.C. 7:7A, is that permits must be recorded with the Office of the County Clerk (or the Registrar of Deeds and Mortgages, if applicable) where the site is located. Permits must be recorded within 30 calendar days of receipt (for activities taking place in only one county) and within 90 calendar days of receipt (for activities within two or more counties). A copy of the recorded permit must be forwarded to the NJDEP. Recently, as of July 2019, NJDEP has also required that freshwater wetland delineations and verifications must also be recorded. As
stated in the Rules, within 90 calendar days after the NJDEP issues a wetland delineation or verification letter of interpretation on a privately owned lot, or on a publicly owned lot other than a right-of-way, the recipient of the delineation or verification shall submit certain information to the Office of the County Clerk or the registrar of deeds and mortgages in which the site is located, and shall send proof to the NJDEP that this information was recorded on the deed of each lot referenced in the delineation or verification letter of interpretation.

It is important that this condition is not overlooked, as the NJDEP has the authority to take enforcement action if permit conditions are not met. As stated in the Rules, any noncompliance with a permit constitutes a violation of the NJDEP rules and is grounds for enforcement action under N.J.A.C. 7:7A-22, which includes potential penalties and suspension and/or termination of a permit. In the case of a wetland delineation or verification letter of interpretation, termination of a permit may mean having to re-delineate the wetlands which can be expensive, time-consuming, and subject to a new interpretation.

CLOSE OUT YOUR ESCROW ACCOUNTS AND REQUEST RELEASE OF PERFORMANCE GUARANTEES

Under the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq. (MLUL), there is a specific process for closing out escrow accounts and requesting release of performance guarantees. For application review escrow accounts, once the approving authority has signed the subdivision plat or site plan, or for inspection escrow accounts, once the work is completed, the commercial real estate developers are to send a written notice by certificated mail to the chief financial officer (CFO) of the municipality, to the approving authority, and to the relevant municipal professionals. After such notice is transmitted to the appropriate parties, the professionals are to submit a final bill to the CFO of the municipality within 30 days, with a copy to the developer. The CFO of the municipality must render a written final accounting to the commercial real estate developer on the uses to which the deposit was put within 45 days of receipt of the final bills. Any balances remaining in the deposit or escrow account, with any interest, must be refunded to the developer along with the final accounting. See N.J.S.A. 40:55D-53.2.

For performance guarantees, upon substantial completion of all required street improvements (except for the top course) and appurtenant utility improvements, and the connection of same to the public system, the commercial real estate developers may submit a request by certified mail to the governing body to the attention of the municipal clerk, with a copy to the municipal engineer, for the municipal engineer to prepare a list of all uncompleted or unsatisfactory bonded improvements. That request should specify which of the bonded improvements have been completed or remain uncompleted in the opinion of the developer. In response to the request the municipal engineer is to inspect all bonded improvements and submit a detailed list and report, in writing, to the governing body, with a copy to the developer, within 45 days after receipt of the request. Simply put, depending on the outcome of the inspection, the performance guarantee may be either released or reduced by a specific amount, commensurate with the remaining work. If the municipal engineer fails to send or provide the list and report as requested within 45 days from receipt of the request, the commercial real estate developer may seek a court order compelling the engineer to provide the list and report within a set time and may also be reimbursed for the cost of applying to the court, including reasonable attorney’s fees. See N.J.S.A. 40:55D-53.

Following up on these three issues after a project is completed can save time, money and headaches. For more information on any of these topics, contact Rod Ritchie or Bob Baranowski for assistance.

Share

Just What is Title Insurance Anyway

Just What is Title Insurance AnywayWhat is title insurance? Title insurance has been around for hundreds of years, yet most people still do not truly understand the what is title insurance, what is its purpose and what is it there for. You know you need it to buy or refinance a property. It can cost a lot depending on price of your property or loan amount. But what does title insurance really do for you and do you really need it?

You should always protect yourself by purchasing a title insurance policy. Title insurance is an agreement to indemnify against damage or loss from a defect in title as evidenced by a policy of title insurance to a specific parcel or real property.

Just What is Title Insurance Anyway (PDF Download) >>>

What is Title Insurance and How Does It Function?

There are two types of policies available: Owners Policy and Loan Policy. An owner’s policy insures an owner of any type of real property against loss by reason of those matters covered under the policy of insurance for as long as they own that property. A lender’s policy insures the lender has priority by way of a security instrument that protects them over claims that others may have in the property.

For example, let’s say you are looking to buy a property that has an old mortgage showing up on public records that was given to the current owner 20 years ago. Mr. Seller is saying it was paid off a long time ago. If you purchased your property without title insurance from that seller and the lender whose mortgage was still showing up on title comes knocking on your door for final payment because Mr. Seller lied, guess who will be losing their home to a potential foreclosure? YOU.

You see, with title insurance, we review the history of public records that include mortgages, judgments, liens, and other encumbrances that may affect your property after you purchase it. We minimize the risk by addressing all the potential issues that could become claims and eliminate them so that we can provide free and clear title to you, the buyer.

Title companies provide a number of services to all of the parties in a real estate transaction. Not only do they provide the final title policy which is the ultimate proof of insurance on the property, they also provide assurances that the transfer of title takes place in a timely manner and that the interest of the buyers and lenders are protected under the terms and conditions of the policy. One major responsibility of a title company is ensuring that all parties receive their funds efficiently and securely.

Title insurance is different from other lines of insurance that most people are familiar with (homeowners, car insurance, etc). These other types of insurances assume risks providing financial protection for losses that may arise from an unforeseen future event such as a fire, theft or accident. With title insurance, you pay a one-time premium at the time of closing, unlike the other types of insurance which are typically paid on an annual basis.

For more information on title insurance, please visit our website at: www.deedsearchers.com

Nicole Malcolm

 

Share

Depreciation Tax Breaks: Time to Take Advantage

bonus depreciation

100% first-year bonus depreciation is available for qualified new and used property that is acquired and placed in service in calendar-year 2019. That means your business might be able to write off the entire cost of some or all of your 2019 asset additions on this year’s return. So, consider making additional acquisitions between now and year-end. Contact your tax professional for details on the 100% bonus depreciation break and what types of assets qualify.

Download Printable Article (PDF) >>>

Other Uses for 100% bonus depreciation

Not just for your properties but the 100% bonus depreciation provision can have a hugely beneficial impact on first-year depreciation deductions for new and used heavy vehicles used over 50% for business. That’s because heavy SUVs, pickups, and vans are treated for tax purposes as transportation equipment that qualifies for 100% bonus depreciation. However, 100% bonus depreciation is only available when the SUV, pickup, or van has a manufacturer’s Gross Vehicle Weight Rating (GVWR) above 6,000 pounds. The GVWR of a vehicle can be verified by looking at the manufacturer’s label, which is usually found on the inside edge of the driver’s side door where the door hinges meet the frame. If you are considering buying an eligible vehicle, doing so and placing it in service before the end of this tax year could deliver a juicy write-off on this year’s return.

You can also claim first-year depreciation deductions for cars, light trucks, and light vans you use in your business. For both new and used passenger vehicles (meaning cars and light trucks and vans) that are acquired and placed in service in 2019, the luxury auto depreciation limits are as follows:

• $18,100 for Year 1 if bonus depreciation is claimed.
• $16,100 for Year 2.
• $9,700 for Year 3.
• $5,760 for Year 4 and thereafter until the vehicle is fully depreciated.

Note that the $18,100 first-year luxury auto depreciation limit only applies to vehicles that cost $58,500 or more. Vehicles that cost less are depreciated over six tax years using percentages based on their cost. You should cash in on generous Section 179 deduction rules. For qualifying property placed in service in tax years beginning in 2019, the maximum Section 179 deduction is $1.02 million. The Section 179 deduction phase-out threshold amount is $2.55 million.

The Section 179 deduction may be claimed for personal property used predominately to furnish lodging or in connection with the furnishing of lodging. Examples of such property include furniture, kitchen appliances, lawn mowers, and other equipment used in the living quarters of a lodging facility or in connection with a lodging facility such as a hotel, motel, apartment house, dormitory, or other facility where sleeping accommodations are provided and rented out.

Section 179 deductions can also be claimed for qualifying real property expenditures. Qualifying real property means any improvement to an interior portion of a nonresidential building that is placed in service after the date the building is first placed in service, except for expenditures attributable to the enlargement of the building, any elevator or escalator, or the building’s internal structural framework. The definition also includes roofs,

HVAC equipment, fire protection and alarm systems, and security systems for nonresidential real property. To qualify, these items must be placed in service after the nonresidential building has been placed in service. Here is another area where the advice and skill of your CPA and your tax lawyer, can make a difference in your business. Leasing or buying/selling real estate? Well, add WCRE to the team.

FOR MORE INFORMATION:

Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

Share

WCRE EXPANDS REGIONAL TEAM WITH ANOTHER TRIO OF NEW HIRES

Team Members to Serve Philadelphia and Southern/Central New Jersey Markets

Wolf Commercial Real Estate (WCRE) is pleased to announce the hiring of three new professionals serving its southeastern Pennsylvania and Southern/Central New Jersey teams.

The new hires are Christopher Jerjian, who joins WCRE as Business Advisor & Consultant, Sean Kelly, a new sales associate, and Victor DeJesus, Senior Associate with a focus in the Central New Jersey market.

Download Printable Article (PDF) >>>

Christopher JerjianChris Jerjian specializes in office and other commercial properties in Southern and Central New Jersey and the Philadelphia Region. He has developed a wide network of business relationships over a thirty-year career as a CRE landlord and investor. His focus is to help landlords, investors and users develop strategies to achieve their goals.

He is also the founder of Kiwi Offices in Mount Laurel, New Jersey. Kiwi Offices provides flexible and move-in ready office suites focused on small businesses, professionals and satellite offices for corporations. He is currently developing a second location in Cherry Hill, with a longer-term plan to roll out more locations.

Previously Jerjian was responsible for strategy development and leasing of office space as a co-founder, principal, and managing director of the Ibis Group. He has closed more than 300 office space deals with local, regional, and national companies as a commercial landlord. His completed deals span large multi-million dollar transactions with Fortune 500 companies to small independently owned businesses. He has served on several corporate boards over the years and is a member of the Hamilton Partnership in New Jersey. He also worked with multiple non-profits over the years, including Catholic Charities.


Sean KellyAs sales associate, Sean Kelly will focus on the Pennsylvania and New Jersey markets. He specializes in sales and leasing, tenant and landlord representation for office, investment sales, and industrial properties. Previously, Kelly sold medical devices at Stryker Orthopedics, where he was responsible for growing their trauma orthopedic business in the Philadelphia region. Working with all major health systems in the area, he was responsible for driving growth, customer engagement, account management, and operational efficiency.

Kelly was also a pitcher for the Rutgers University baseball team between 2014 and 2016. During his time as a student athlete, he contributed four years of volunteer services to St. Peters Childhood Cancer programs.


Sean KellySenior Associate Victor DeJesus previously worked at KW Commercial, out of their Princeton and Moorestown, New Jersey offices. Victor has also worked for major public relations and advertising companies. Victor was a top 1% producer and has helped many of his clients reach the next level in business performance. As a senior sales associate, Victor will focus on the Central New Jersey market. He specializes in sales and leasing, tenant and landlord representation for office, investment sales, and industrial properties.


“Our entire firm is excited to have such talented new team members servicing our clients in the region,” said WCRE Managing Principal, Jason Wolf. “Our people have always been our biggest asset and our biggest advantage in the marketplace.”

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.

Learn more about WCRE on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com, and www.phillyretailspace.com.

Share

Why Smart Buildings Matter to Commercial Real Estate Owners

smart buildings energy consumptionLet’s look at why smart buildings matter to commercial real estate owners. Energy cost savings are top of mind for every commercial building owner, operator, and facility manager, but it’s time to be proactive. On average, a U.S. office building spends nearly 29% of its operating expenses on utilities, and much of this expenditure goes toward HVAC operation.

Download Printable Article (PDF)

Researchers at Massachusetts Institute of Technology (MIT) estimate commercial buildings account for 20% of all the energy used in the U.S. and conclude that as much as 30% of that energy is wasted. Wasted energy will only increase over time without intervention. Imagine a solution that prevents waste and saves 15-30% on energy expenses? That’s possible to achieve with smart buildings.

Smart buildings are any facility that have complete automated controls and systems in place that are integrated together to form an intelligent data collection application, usually via a building automation system (BAS).
BAS offers reduced operation and energy consumption, improved building efficiency, preventative maintenance, comfort for workers and building occupants, and better use of resources.

At Pennoni, we offer our Utilities Watch (UW) solution, a combination of best-in-class energy analytics/fault detection software and engineering expertise that optimizes buildings, reduces costs, and minimizes environmental impact.

Through UW, our software continually analyzes data from diverse systems: BAS, energy, water, and other resource metering systems to identify opportunities for cost reduction. The fault detection and diagnostics application within the software drills down into patterns to identify issues, deviations, and opportunities for operational improvements and cost reduction.

Utilities Watch Key Benefits

Reduce costs

  • Optimize buildings and reduce energy consumption
  • Increase control and visibility of energy budget
  • Decrease maintenance and capital costs through proactive and predictive maintenance
  • Increase lifespan and reliability of HVAC systems

Validation and M&V

  • Performance goals
  • ECM’s, LEED

Commissioning

  • MBCx – automated ongoing commissioning

Risk Management

  • Disaster recovery (information supports better identification of issues)

Improve sustainability strategies, goals, and metrics

  • Full integration to EnergyStar Portfolio Manager
  • Earn additional LEED points for existing buildings

Improve portfolio management

  • Benchmark buildings and compare performance
  • Performance accountability

Deploying smart buildings software is only half of the equation. Our energy analysts and engineers write custom algorithms to automate analyses that traditionally required constant manual effort. From there, our team of engineers interprets the data to make it meaningful and actionable with custom dashboards and notifications that ensure the facility manager has full visibility and can readily prioritize activities, ensuring much greater efficiency.

For more on smart buildings and Utilities Watch, contact Tony Lepre at (609) 214-5520 or TLepre@Pennoni.com.

tony lepre

Share

Share

Share