Tag Archives: Commercial Real Estate Opportunity Tampa Bay

Impossible is Nothing………..

TMC-The Mahr Company : We define ourselves by the commitment, dedication and perseverance to overcome the impossible in the actualization of your goals. As such we count the moments when we dare to aim higher, to break barriers, to make the unknown, known, to make the imagined. real. These then become our proudest achievements, but we’ve barely begun. At TMC-The Mahr Company our greatest accomplishment for you is not behind us, it is yet to be. Your goals and commercial real estate needs, whatever they may be, wherever they make take us and whatever they may require are our commitment to you.

Impossible is nothing.

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Value added Commercial Real Estate Services based in Tampa primarily serving Florida markets TMC offers a unique blend of expertise and go to make it happen results.

Value added Commercial Real Estate Services based in Tampa | Statewide Emphasis | National Network |TMC offers a unique blend of expertise and go to “make it happen” results

TMC The Mahr Company shares: Proud of our city/region. Proud to be based in Tampa Bay; with its quality of life, business opportunities, and the platform Tampa Bay provides us, as we slide to market variances in your service all the while maintaining our commitment to Excellence, the Highest Level of Service and Responsiveness:
Your Goals=Our Goals

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Value added Commercial Real Estate Services based in Tampa with a Statewide Emphasis | National Network |TMC offers a unique blend of expertise and go to make it happen results.

Change Is A Constant – Office Space Requirements and Functionality

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Office space is smaller than ever, and getting smaller still, according to research from CoreNet Global. Of the 465 companies surveyed, 24 percent said their staff had less than 100 square feet of workspace to call their own, while 40 percent said space would shrink to that level by 2017. Workspace has shrunk from 225 square feet in 2010 to 176 just four years later.
A recent infographic from document management software company Contentverse compiles stats on our ever-declining workspace. A few highlights :
•In the 1970s, American companies planned on at least 500 square feet per worker.
•Some tech firms have worker-to-space ratios of seven workers per 1000 square feet.
•Other companies have workers share flexible work stations. This is calling “hoteling,” as workers check in to the office and get assigned to a workspace for the day.
•Telecommuting is on the rise, as well, with over 5 million people working from home on a daily basis.
•Companies who renew their leases often cut the square footage of their space. According to commercial real estate information provider CoStar, the average square footage of commercial rentals fell 7 percent during the past 10 years.
What’s to blame for our shrinking workspace? The desire to save money and the corresponding popularity of open-plan offices are part of the picture. But the other side of the story is more positive: thanks to smaller and more portable electronics, we just don’t need as much space as we did in the older days.

2014 As we approach the 2nd qurater of 2014 how are you positioned
TMC The Mahr Company is available to assist you in positioning your business model in 2014. As we approach the second quarter of 2014 how are you and your business model positioned to take advantage of the emerging trends in commercial real estate? We have the skill sets, market knowledge, experience, energy and determination to take a proactive approach to achieve your goals. If you are not engaged in the game, the sidelines only offer a spectator’s view.

Finding Solutions through Creative Problem Solving

How Many Squares are in the picture depicted below?

Most popular answer is 24…

TMC-The Mahr Company knows there are more..

Let us find solutions for you where you see there is a problem.

You stay focused on what you do best, run your business/practice. TMC will provide you with options and solutions.

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 Based in Tampa, primarily serving Florida markets, The Mahr Company offers a unique blend of expertise and disciplines. 
“Value added Commercial Real Estate Services”  
TMC utilizes years of experience and professional expertise to provide you with solutions to your real estate matters.   You remain focused on your business/profession with no diversions from a transaction you may only seldomly encounter.   We become a member of your team likened to your business’ Senior Vice President of Real Estate. 

In addition, TMC can provide the following services:  
User Representation for Office, Commercial, Medical, Legal/Attorney & Investment Properties 
Landlord Representation for Office, Commercial, Medical, Legal/Attorney & Investment Properties 
Acquisitions and Dispositions 
Land and Site Selection 
Real Estate Advisory and Consulting 
Real Estate Investment Sales & Marketing 
Asset Value Enhancement 
Special Projects for Clients 
Equity Positions for Tenants through Leasing 
Sale/Leasebacks 
Broker Opinion Of Value (for Lenders, Asset Managers and Owners) 
Expert Witness for Litigation regarding Leasing and Commercial Real Estate matters 
Broker Price Opinion BPO 

Finding Solutions through Creative Problem Solving

Understanding Cash on Cash Return in Commercial Real Estate

Cash Fow

By: Robert Schmidt
Cash on cash return in commercial real estate is important when you are evaluating investment real estate transactions. What is the cash on cash return and how do you calculate it for a commercial property? What are the limitations of using this method? In this article we’ll tackle these questions and also provide some detailed examples of the cash on cash return.

Cash on Cash Return Formula

Before diving into some cash on cash return examples, it is important to have a sound understanding of exactly what the term means. So, let’s start with the basics. First, here’s the cash on cash return formula:

cash_on_cash_return_formula

As shown in the cash on cash formula above, the cash on cash return is a simple measure of investment performance that is calculated as cash flow before taxes divided by the initial equity investment. The cash flow before tax figure for each year is calculated on the real estate proforma, and the initial equity investment is simply the total purchase price less any loan proceeds.

Cash on Cash Return Example

Next, let’s take a simple example to illustrate the cash on cash return. Suppose you are evaluating an office building with an estimated Year 1 Cash Flow Before Tax of $60,000. Also, assume that the negotiated purchase price of the property is $1,200,000 and you are able to secure a loan for $900,000 (75% Loan to Value). What’s your cash on cash return for year 1?

cash_on_cash_return_example

The calculation itself is pretty simple – your cash on cash return for year 1 would be the Year 1 cash flow divided by your total cash out of pocket, which equals 20%. So what does this simple measure of investment performance tell you? Using only the figures above, the cash on cash return tells you that your year 1 return on investment is 20%. This of course assumes that your initial equity investment figure and also your cash flow projection is correct.

Cash on Cash Return Limitations

The cash on cash return is a simple measure of investment performance that is quick and easy. It can be a good starting point for quickly filtering out potential investment properties. But don’t be fooled by the many limitations of the cash on cash return.

Consider the following series of cash flows:

cash on cash return limitations

The year 1 cash on cash return in the levered example above shows a 3% cash on cash return. To find this simply take the end of year (EOY) 1 cash flow of $15,805 and divide it by the initial equity investment of $515,000.

But as you can see in the table above, the internal rate of return (IRR) is 10.71%. This suggests that according to a discounted cash flow analysis, the investment is actually much better (almost 4x better) than what’s indicated by the cash on cash return. If you were only using the cash on cash return as an investment filter, then you’d pass up this opportunity to earn nearly 11%.

The reason why the cash on cash return is so much lower than the IRR in the example above is because the cash on cash return ignores the other 9 years of operating cash flows in the holding period. Plus, it also ignores the reversion cash flow at the end of year 10 that comes from the sale of the asset. Without taking into account these additional cash flows that occur over the holding period, it’s impossible for the cash on cash return to accurately reflect the return characteristics of the property.

The same is true when looking at the unlevered example above. The cash on cash return in the unlevered series of cash flows above is 6.2% ($95,000 divided by $1,515,000), and the IRR is 7.51%. This series of cash flows doesn’t produce as big of a gap as in the levered example, but it’s still a difference. Without taking into account all cash flows over the holding period, the gap between the cash on cash return and the IRR will be unknown.

As a side note – keep in mind that this can work in reverse too. In the above examples the IRR was higher than the cash on cash return because operating cash flows grow over the holding period and the sales proceeds of the asset are favorable. But it could also be the case that many leases will expire a few years after acquisition, causing operating cash flow to decline and the final reversion cash flow to be lower. This could produce the opposite result where the cash on cash return ends up being more favorable than the IRR.

Discounted Cash Flow Analysis

As shown in the example above, a discounted cash flow analysis provides a much more complete return profile of an investment property. Sure, simple measures of investment performance like the cash on cash return work as a starting point in your evaluation. But as your interest in a property becomes more serious, so should your analysis.

A discounted cash flow analysis uses concepts of the time value of money to value a commercial real estate asset. When looking at a time period extending out over a number of years, a DCF analysis estimates future cash flows and discounts cash flows back to the present. Using the discounted cash flow analysis will require forecasting future cash flows (incoming and outgoing), determining the necessary total return, and then discounting the forecasted cash flows back to the present at the necessary rate of return.

Sourced By: Property Metrics

Top 10 Reasons to Move to Tampa Bay

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Top 10 Reasons to Move to Tampa Bay

Sourced By: Image

1. WORKFORCE

Tampa Bay ranked among the top 10 large metro areas for college-educated young talent on the move. The latest Census data reveals that young people aged 25 to 29 are increasingly more mobile and willing to move to new cities, very often in new states, in search of jobs.

2. K-12 EDUCATION

Florida leads the nation in high school seniors taking Advanced Placement exams at nearly 50 percent. Florida also ranks sixth in the nation for the percentage of students who score a 3 or higher on the AP exam at 23.9 percent, compared to the national average of 18.1 percent.

3. PROGRESSIVE TRAINING

An independent analysis of the CareerEdge Funders Collaborative by Urban Market Ventures found that the investments made by the nonprofit workforce-development program is producing millions of dollars in new wages and economic impact for the Tampa Bay region.

4. MILITARY INVESTMENT

Tampa Bay is home to MacDill Air Force Base, the only military installation that hosts two, four-star Combatant Commands, the U.S. Central Command and U.S. Special Operations Command. MacDill contributes $5 billion annually to the greater Tampa Bay economy.

5. AMAZING PARKS AND RECREATION

Tampa’s Curtis Hixon Park was named among America’s Best New Parks by The Atlantic Cities. Completed in 2011, the waterfront park serves as a more natural connection between the water, downtown, and the new Children’s Museum and Tampa Art Museum. Tampa Bay’s beloved public spaces spread throughout the region provide gathering places for families, friends, colleagues, and events from small to large scale.

6. PROMISING AND ADMIRED COMPANIES

Some of America’s most promising companies are located in Tampa Bay. Sarasota-based Internet communication systems and service provider, Star2Star Communications was named among America’s 100 Most Promising Companies by Forbes. The company also made the 2011 Inc. 500 list of fastest growing private companies.

7. INNOVATIVE UNIVERSITIES

The University of South Florida is ranked 50th in the nation for research expenditures by the National Science Foundation among all U.S. universities, public or private, joining the ranks of Johns Hopkins, Stanford, Yale and Harvard.

8. EXPANSIVE MEDIA REACH

The Tampa Bay region is the 14th largest television media market in the country, with 1.79 million TV households, according to Nielsen Media Research. That means Tampa Bay has 1.6 percent of all television households in the United States. It is the largest market in Florida – surpassing Miami. If you’re looking for media exposure, you’ve found it.

9. LOW COST OF DOING BUSINESS

According to a KPMG business cost study, the Tampa Bay market is the nation’s lowest cost large market for Corporate Services, International Financial Services and Shared Services – a testament to strong business, financial and data services sector in Tampa Bay.  KPMG’s 2012 Competitive Alternatives study measured 26 significant cost components over a 10 year planning horizon.  Bottom line – Tampa Bay is a great place for business.

10. HOT ENTREPRENEURIAL ENVIRONMENT

According to FastCompany Magazine, Florida’s start-up environment is soaring high. From the HuB in Sarasota to Tampa Bay WaVE’s First WaVE program to large events such as Start-Up Weekend and initiatives like the Tampa Bay 6/20 Plan, Tampa Bay’s entrepreneurial environment is setting up for start-up success.

Difference Between Cap Rate and Discount Rate

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Difference Between Cap Rate and Discount Rate

By propertymetrics

What is the difference between a cap rate and a discount rate? Because these concepts are often confused, this article will discuss the difference between a capitalization rate and a discount rate in commercial real estate, and leave you with a clear understanding of the two concepts.

First, let’s go over a couple of definitions, and then we’ll dive into a specific example.

Cap Rate

The capitalization rate, often just called the cap rate, is the ratio of Net Operating Income (NOI) to property asset value. So, for example, if a property was listed for $1,000,000 and generated an NOI of $100,000, then the cap rate would be $100,000/$1,000,000, or 10%.

 

cap rate

 

What is a cap rate in commercial real estate useful for? Because individual properties differ greatly in size and magnitude, it’s helpful to talk about property prices and values in a common language. Thinking of property value per dollar of current net income achieves this objective.

The cap rate is simply a measure that quantifies property value per dollar of current net income. Another way to think about the cap rate is that it’s the inverse of the popular price/earnings multiple used in the stock markets.

Discount Rate

The discount rate is the rate used in a discounted cash flow analysis to compute present values.

When solving for the future value of money set aside today, we compound our investment at a particular rate of interest. When solving for the present value, the problem is one of discounting, rather than growing, and the required expected return acts as the discount rate. In other words, discounting is merely the inverse of growing.

What is the discount rate used for in commercial real estate analysis? In commercial real estate the discount rate is used in a discounted cash flow analysis to compute a net present value. Typically, the investor’s required rate of return is used as a discount rate, or in the case of an institutional investor, the weighted average cost of capital. This ensures that the initial investment made in a property achieves the investor’s return objectives, given the projected cash flows of the property. The intuition behind IRR and NPV is that it allows us to determine how much an investor should pay for a property, given his required rate of return, or discount rate.

Cap Rate vs Discount Rate

So, back to the original question – what’s the difference between the cap rate versus the discount rate? The cap rate allows us to value a property based on a single year’s NOI. So, if a property had an NOI of $80,000 and we thought it should trade at an 8% cap rate, then we could estimate its value at $1,000,000.

The discount rate, on the other hand, is the investor’s required rate of return. The discount rate is used to discount future cash flows back to the present to determine value and account’s for all years in the holding period, not just a single year like the cap rate.

If a property’s cash flows are expected to increase or decrease over the holding period, then the cap rate will be a misleading performance indicator. Consider the following two investment alternatives:

cap rate vs discount rate

Both properties have a cap rate of 10% based on the NOI in year 1. But clearly the cash flows are better for Building B and it therefore provides a higher rate of return. The exact rate of return can be quantified using the Internal Rate of Return (IRR). Also, assuming equal risk, any rational investor should be willing to pay more for Building B because its future cash flows are expected to grow more than Building A’s. But how much more could you pay for Building B while still achieving your required return?

By completing a multiyear discounted cash flow analysis we could quantify exactly how much we can pay for this property with a Net Present Value (NPV), given an investor’s discount rate. The cap rate, on the other hand, will not be able to answer this question for us. In short, while the cap rate and the discount rate may appear similar, they are two different things used for different purposes.

“Explore Dream Discover……..”

Forbes
 
John Greathouse, Contributor 1/28/2014 @ 12:03PMn

If you want to live a personal and professional life with no regrets, follow these 43 life lessons, penned by H. Jackson Brown.

In the Fall of 1990, Mr. Brown sat at his kitchen table, pulled out a pad of paper and began writing advice to his son, who had just entered college. Mr. Brown’s aphorisms eventually evolve into twenty one books, including four New York Times bestsellers. With Life’s Little Instruction Book, Mr. Brown became the first author to simultaneously hold the number one positions on both of the NYT’s hardback and paperback lists.

Some of Mr. Brown’s quotes have become so well known that they are often mis-attributed to historical figures, including the following, which is widely credited to Mark Twain: “Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

 

I came across a special edition of Mr. Brown’s Life’s Little Instruction Book (Volumes I – III) while waiting in line at a FedEx store. I almost never make impulse purchases, but after flipping through a few pages, the following paraphrased quote jumped off the page: “Live your life so that your epitaph boldly states, ‘No regrets.’” I promptly purchased the book as a Christmas gift for my teenage son.

As James Clear notes in The #1 Regret Of Dying Patients, far too many people spend their final stage of life regretting their youthful choices. Mr. Brown’s advice will help you to, “live a good, honorable life which you can enjoy a second time when you are old.”

When read nearly twenty-five years after they were penned, some of Mr. Brown’s musing are anachronisms (e.g., “Don’t sit while ladies are standing”), while others are banal (“Turn off the tap when brushing your teeth”). However, the vast majority of the 1,560 quotations in Volumes I – III of Life’s Little Instruction Book, are clever, relevant and inspirational.

Below are 43 quotes in bold text which are relevant to business executives who want to live a regret-free life. I categorized the quotes by: aspiration, kindness, leadership, success and happiness. In a few instances, I have slightly paraphrased Mr. Brown’s original text – my apologies to Mr. Brown and his purist fans. My brief annotations follow each quote.

Aspire

1. Never give up when you truly believe. The person with big dreams is more powerful than the one with all the facts – the smartest person in the room seldom beats the one with the most passion.

2. Believe in love at first sight – be open to instant infatuation with respect to both people and business ideas.

3. Never laugh at anyone’s dreams – no one has the right to opine upon someone else’s desired future because no one can attest to the validity of an unrealized dream.

4. Find a job you like and you add five days to every week – I often tell my children), “I never worked at day at my startups because we were having too much fun.” Admittedly, not every day was a carnival, but I certainly enjoyed the majority of my startup workdays.

5. Every so often, let your spirit of adventure triumph over your good sense – good judgment arises from mistakes, mistakes arise from bad judgment. Thus, a bit of occasional bad judgment is good for you.

6. Great love and great achievements involve great risk – nothing ventured, nothing gained. Go venture.

7. Never let the odds keep you from pursuing what you know in your heart you were meant to do – entrepreneurs never calculate probabilities, even if the chances are one in a million, “one” is all you need to win.

Commercial Real Estate Agents- Start Your Own Firm/Join A Large CRE Firm/Be Entrepreneurial And Part Of An Established Team ?

Commercial Real Estate Agents -Start Your Own Firm/Join Large CRE Firm/Be Entrepreneurial – Excerpts from Article by Michael Bull, CCIM as modified

January 8, 2014

Some commercial real estate brokers like the idea of owning their own company and some do hang their own shingle. They soon find the combination of the required time, costs and risks create less income and value than remaining a productive broker at an existing firm.  Why does this continually happen and is there an alternative for brokers to benefit from company synergy, equity in deals and an override commission structure without the detriments?

Economies of scale come into play, as well as capture of market share. It can be difficult to compete, as the expense of the tools and resources needed to be competitive can be difficult to budget . There are many other aspects that create issues for the broker turned business owner including the fact that productive sales people do not typically enjoy or make good managers.

The perfect situation for a broker would be the benefits of company synergy, equity in deals and an override commission structure, but without any of the detriments. It would be nice to have a prestigious title ownership,  plus an opportunity to participate in equity deals, team synergy and override commission structure each year.  Can a broker in a commission based industry achieve this without the requisite risks, costs and hassle of running a firm? Contact us confidentially to explore the possibilities and see if you qualify to be a part of the growth and opportunity of TMC-The Mahr Company going forward for 2014.