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Categories: Real Estate

Refinancing Tax Problems for TIC Owners with CMBS Financing

TASA ID: 1813

On Tuesday, June 19, 2012, at 2 p.m. E.T., The TASA Group, in conjunction with real estate expert Bruce Coin, presented a free, one-hour, interactive webinar, Refinancing Tax Problems for TIC Owners with CMBS Financing, for all legal professionals.

In the go-go days of 2004 - early 2007, billions of dollars of TIC - (tenant in common) owned commercial income properties were purchased using 1031 tax deferred exchanges. The majority were financed with highly leveraged, often full or partial interest only, debt via the Commercial Mortgage Backed Securities (CMBS) market.

The recent great economic recession officially began in December of 2007. By January of 2008, over 50% of the world’s investors in mortgage-backed securities withdrew from investing in those securities, and what had become the single largest source of mortgage money in the U.S. totally collapsed. Some banks were allowed to fail, some banks were bailed out, and Fannie Mae and Freddie Mac went into government conservatorship.

Since then, rents and property values have fallen. At the same time, the remaining active lenders have become more conservative with their loan underwriting.

Those owners who rolled their previous equities into a 1031 exchange to acquire an interest in a larger property and/or to diversify their investment are now facing disaster as their loans come due. With today’s lower property values and more conservative loan underwritings, it is virtually impossible for a TIC-owned commercial income property to obtain refinancing that fully covers what they owe.

During this program, the presenter covered the following:
  • The players
    • The TIC owners
    • The bondholders
    • The trustee
    • The Master Servicer
    • The Special Servicer
  • 1031 Tax Deferred Exchanges
  • TIC Ownership and Problems
  • CMBS Financing and Problems
  • The Role of the Special Servicer
  • Problems with the Special Servicer
  • Potential Solutions

About the Expert

Bruce Coin has over 40 years of full-time experience in the interrelated disciplines of commercial income property financing, valuation and development. He co-founded and for 35 years ran Pro-gressive Mortgage Corp., a commercial mortgage banking, brokerage, appraisal and consulting firm and regional commercial mortgage loan and servicing correspondent for a number of major insurance companies. In 2007, he sold Pro-gressive to the Philadelphia office of U.S. Realty Capital, LLC.

Bruce has personally closed in excess of $1.5 billion of commercial mortgage financing on all types of income-producing real estate. Structures included 1st and 2nd mortgages, construction loans, permanent loans, immediate and forward commitments, joint ventures, participating mortgages, wraparound mortgages, standbys to lend, standbys to purchase, mezzanine loans and credit enhancements. He has sold, leased, managed and foreclosed a variety of income property types. In 1970 he was instrumental in the formation of Fidelco Growth Investors, the first commercial mortgage R.E.I.T. in the Philadelphia region.

Between 1973 and 2007, he assisted a business partner with the planning, development, financing, management and leasing of two, one-story office developments totaling over 550,000 square feet.

Mr. Coin has lectured to joint undergraduate and MBA classes at the University of Pennsylvania’s Wharton School, as well as to classes at Temple and Weidner Universities. His work has been published numerous times, including articles in the NY Times, The Real Estate Review, The Appraisal Journal and other publications. He is an IDECC-Certified Distance Education Instructor (CDEI) and has written four 7-hour, one 4-hour and one 30-hour IDECC, ARRELLO and AQB-approved online commercial real estate education courses.
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Tasa ID1813

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