Article prefaced and provided by Chris Shaheen, Associate Broker for Saurage Commerical Real Estate
“This is an article sent by ICSC referring to H.R. 5943 designed to help get an infusion of private capital to invest into commercial real estate. It is important for all commercial real estate practioners to contact your Congressperson and support this bill.” —Chris Shaheen, Associate Broker for Saurage Commercial Real Estate
Earlier this year ICSC unveiled a legislative proposal to help draw private capital off the sidelines to invest in and de-leverage commercial real estate assets. Yesterday, that proposal was introduced as legislation in the U.S. House of Representatives by Representatives Shelley Berkley (D-NV) and Devin Nunes (R-CA) as the Community Recovery and Enhancement (CRE) Act, H.R. 5943.
As you undoubtedly know, the last few years have been very difficult for the commercial real estate industry, with values down 30% to 40% nationally and tens of thousands of properties “underwater.” Compounding this problem, the Congressional Oversight Panel of the TARP estimates that $1.4 trillion dollars of commercial real estate debt is expected to come due within the next three years. As property values fall and lenders adopt more restrictive lending standards, the commercial real estate industry needs to find vast new sources of equity capital to remain afloat.
H.R. 5943, the CRE Act, will help the market by providing a temporary tax incentive to attract new equity for existing real estate projects. The incentive is simple: 50% bonus depreciation on the new investment equity and deduction of losses that are not subject to passive loss limits. A key condition of the proposal is that at least 80% of the invested capital would be directed to reducing the outstanding balance of the commercial mortgage debt with the remainder going toward capital improvements. The immediate infusion of equity capital dedicated to paying down debt will lower loan-to-value ratios on existing loans and improve debt coverage ratios, easing debt market concerns and favorably impacting the broader economy.
As Members of Congress prepare to head back to the their Congressional Districts, we are asking you to reach out to them at home to educate them about the problems facing the commercial real estate industry and ask them to become co-sponsors of H.R. 5943, the CRE Act. For more information on this legislation please visit the ICSC Global Public Policy Website at http://www.icsc.org/government/news_events.php. [original e-mail dated July 30th, 2010, Enhanced Depreciation Proposal Introduced in Congress written by Betsy Laird, Senior Vice President of ICSC]
Thank you for your continued involvement in this issue.
Chris Shaheen is a graduate of Louisiana State University where he obtained a Bachelor of Science in Business Management. Shaheen obtained the Louisiana Real Estate Sales License in 1995 where he began work as a consultant with Saurage Company Inc. as a specialist in development, land valuation, and financing.
Saurage Company, Inc dba Saurage Commercial Real Estate was founded in Baton Rouge in 1991 with the purpose of providing exceptional real estate services with an emphasis on commercial property and property management. Saurage Commercial Real Estate offers to its clients a full range of real estate services including brokerage, investment advising, development consulting, REO disposition specialists, asset management, fee based consulting, tenant representation, and buyer representation. The staff of professionals includes combined experience of 50 years, as well as CCIM Designees and Candidates and recipients of Master of Business Administration.
