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July 14, 2020 at 8:37 am · · Comments Off on The Outstanding Seven: MEREDA’s 2019 Notable Project Recipients

The Outstanding Seven: MEREDA’s 2019 Notable Project Recipients

PORTLAND, ME – July 13, 2020 –  Every spring, MEREDA recognizes the most noteworthy and significant Maine commercial development projects from the previous year, all of which embody the Association’s mission to support responsible development.

In keeping with tradition, MEREDA’s Board intended to honor the award recipients at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.

In 2019, these seven projects distinguished themselves in design, construction, land-use, and added benefit to their communities.

Hannaford Center, Good Shepherd Food Bank (Hampden) which renovated the former Bangor Daily News printing press building, allowing the Food Bank to purchase and distribute more food, more frequently and efficiently to northern, central, and Downeast Maine.

Cape Arundel Cottage Preserve, Arundel-Kennebunkport Cottage Preserve LLC (Arundel) for creating an overwhelming sense of place and cohesive design on a 300-acre project, using sustainable practices and natural landscapes.

62 Spring Street, Auburn Housing & Anew Development (Auburn), for its diversity and vibrancy, epitomizing the “Smart Growth” concept which successfully connects the dots between affordable housing, city walkability, economic energy, and downtown growth.

Founders Place Campus, Bangor Savings Bank and CJ Developers (Bangor), for the creative and extensive implementation of environmental systems and capacity to spur talented business growth to Bangor.

Southgate Avesta Housing (Scarborough), for the preservation and creative renovation of a 215 year-old farmhouse as a vibrant community of 38 safe, quality, and affordable homes through the incredible support of partners and donors.

Station Square, Great Falls Construction (Gorham), for the thoughtful and intentional preservation of Gorham’s historic identity as a railroad village, with equal emphasis on the community invitation to work, live, and play while employing Mainers.

WEX Global Corporate Headquarters, Jonathan S. Cohen & 0 Hancock Street LLC (Portland), for a statement of responsible development, innovation, and modernity, using lean construction principles kept work flowing and the project on track, and continuously emphasizing sustainability and energy efficiency.

MEREDA thanks its Membership for their continued commitment to responsible development in Maine, and looks forward to formally and tangibly recognizing these Notable Projects when it is safe to do so. In the meantime, each project will be recognized with its own article in the Maine Real Estate Insider e-newsletter published by Mainebiz, running Summer of 2020.

For more information on these impressive projects, please click here.

 

 

 

 

 

 

 

 

 

June 30, 2020 at 10:07 am · · Comments Off on Maine Issues COVID-19 Guidance for Town Meetings

Maine Issues COVID-19 Guidance for Town Meetings

Throughout the pandemic, MEREDA members have navigated participating in various town public proceedings conducted virtually. Now, with the opening of municipal buildings and the need to accommodate municipal matters requiring a public vote by town residents, Governor Mills and the Maine Department of Economic and Community Development (DECD) have released guidelines for holding town and public meetings during COVID-19, consistent with the Governor’s Executive Order 56 (Order 56).

For developers with projects that require ordinance amendments or contract zone approvals at town meeting, these provisions will affect how the town conducts the debate and vote on those matters.

The DECD guidance offers three options to allow towns to hold public meetings safely and effectively. The key requirements of each option are:

  1. Indoor or outdoor town meetings of 50 or fewer individuals. Under this option, town officials must limit the number of individuals that gather in a shared space. The town must have a backup plan to ensure that voters are not turned away in the event that the total number of participants exceeds 50, including voters, clerks, and town officials. Microphones should not be passed from person to person, and ballots should be collected by a ballot clerk with a collection receptacle rather than passed from hand to hand.
  1. Drive-in town meetings. If the number of attendees is anticipated to exceed 50 individuals, the DECD recommends organizing a drive-in meeting where individuals can remain inside their vehicles in an outdoor space where vehicles can be spaced a minimum of six feet apart. The outdoor space should have a clear entrance where voters check in upon arrival for voting, and voting should occur by distributing colored cards of sufficient size to allow “show of hands” voting through vehicle windows. Towns should ensure that there are appropriate social distancing procedures in place if an individual needs to exit their vehicle to use shared public facilities, such as restrooms, or to offer public comment.
  1. Indoor town meetings using multiple rooms within one facility. If the number of attendees exceeds 50 individuals, towns may choose to hold a meeting in different rooms within one facility, such as a school. Organizers should utilize technology to maintain the continuous ability for all voters in attendance to hear all discussions and motions, and to allow real-time voting in each meeting room. A deputy moderator should be present in each meeting room to facilitate voting. Gathering in common areas prior to or after the meeting should be discouraged.

The DECD also highlights a number of common practices that municipalities should follow across all three options described above, including:

  • All individuals should maintain six feet of distance at all times.
  • All individuals should wear face coverings at all times, but at a minimum during any interaction with an individual outside of their household group, such as during check-in. While the use of face coverings is strongly encouraged, officials may not turn away participants for failing to comply with the face-covering recommendation.
  • Individuals checking in voters and collecting and distributing ballots should wear a face shield in addition to a face covering.
  • Towns must provide a separate location for non-voters or members of the public to view and listen to the proceedings.
  • Towns should consider putting restrictions in place so that individuals who are at a higher risk of illness-e.g., those over age 65 or those with underlying medical conditions-are not responsible for checking in voters and/or collecting ballots. Towns should also train election workers on hand hygiene, social distancing guidelines, proper use of personal protective equipment (PPE), and cleaning protocols.
  • If a town hosts a meeting indoors, then it must provide a separate space for isolating an individual who becomes ill during the meeting. Towns should also take steps to improve indoor air ventilation and prop open doors where possible to decrease the spread of germs.
  • In general, meeting organizers should take steps to notify the public of all policies and procedures through signage and other means of communication, modify traffic flows and eliminate lines, and provide adequate supplies for personal hygiene, including hand sanitizer and disinfecting soap.

If a municipality cannot comply with the gathering protocols outlined in the DECD guidance, the governor’s executive order also authorizes municipal officials to hold a vote on a matter at the ballot box instead of at an in-person town meeting.

June 10, 2020 at 11:15 am · · Comments Off on The 2020 MEREDA Index: A Look at the 2019 Data and a Review of Current Conditions

The 2020 MEREDA Index: A Look at the 2019 Data and a Review of Current Conditions

On Thursday, June 4th, MEREDA unveiled its 2020 MEREDA Index, at a free-to-attend virtual event to discuss the 2019 data, and apply that knowledge to today’s constantly-shifting landscape and unpredictable future.  The event had nearly 150 registrants. In case you missed it, you can watch, or watch it again, here

This most recent release provides a review of 2019’s full calendar year. However, with the COVID-19 pandemic striking right before the 2019 Index unveiling, even recent history lost importance as global focus shifted instantly to the uncertain future. Insightfully, MEREDA leadership pivoted just as quickly, adding a preview of 2020 based on first quarter data.
This year marks the first year that we have revised the timing of the Index so that an entire calendar year is presented when the Index is unveiled.   The current MEREDA Index contains a measurement and presentation of the real estate market in Maine, and its various components for all of 2019.   Rather than presenting the Index through the third quarter of the preceding year at our annual January Forecast Conference, and then producing a second edition with a full calendar year of data, the Index is now presented once a year in the spring, with an entire year of data.

Because of the great changes that have occurred in a very short period of time beginning in March 2020, and because of the relevance of the 2020 data showing the initial impact of the virus, we asked Dr. Charles Colgan, the economist who prepares the Index, to include some first quarter 2020 data in a supplement to the Index that is included in the index presentation.

We have many people to thank!  Firstly, thank you to those involved in providing commentary found in our Print Edition and accompanying Video, which can be accessed on our website.  Providing insights into the residential sector was Mark Small of Landmark Realty, Jessica Estes of The Boulos Company spoke about the commercial sector, and Patrick Ducas of Ducas Construction spoke on construction.

Thank you also to those folks participating in our June 4th webinar.  In an effort to broaden the discussion even further, we asked additional MEREDA members to provide supplementary perspectives on the residential, commercial, and construction sectors. The webinar included Tim Soley of East Brown Cow discussing the commercial sector, Dava Davin of Portside Real Estate Group covered the residential sector, and the construction sector was covered by Kevin French of Landry/French Construction.

Many thanks also, to MEREDA president Gary Vogel, for taking the lead on the June 4th webinar as moderator, and to Dr. Charles Colgan, for always providing an incisive analysis for our members.

May 12, 2020 at 9:44 am · · Comments Off on Construction Businesses: Navigating State and Federal COVID-19 Workplace Safety Requirements

Construction Businesses: Navigating State and Federal COVID-19 Workplace Safety Requirements

On April 28, Governor Mills released Restarting Maine’s Economy, which lays out a plan for re-opening non-essential businesses. Businesses that were previously deemed essential, including construction businesses, may continue operations – the Governor’s new plan does not impact them.

However, as the pandemic evolves, the State is shifting its attention to COVID-19 prevention and workplace safety. In light of this, this is a good time for construction businesses to review their workplace safety protocols to ensure compliance with the latest state and federal guidance on COVID-19 prevention.

Below are the compliance checklists and guidance documents that construction businesses need to follow as they continue operations and begin the summer construction season.

Maine

  • Department of Labor: Guidance for Construction Employers in Maine for Addressing COVID-19. This Department of Labor (DOL) guidance document provides recommendations and suggestions for construction businesses to implement COVID-19 prevention measures, including those in the DECD checklist. This DOL guidance includes, and overlaps with, much of the federal Occupational Safety and Health Administration (OSHA) recommendations for COVID-19, discussed below.

Federal

  • OSHA General Guidance: Preparing the Workplace for COVID-19. This comprehensive general guidance document covers OSHA recommendations for COVID-19 prevention for all business types.
  • This document classifies all job types for risk of COVID-19 infection. Most construction workers will fall under the low-risk category. OSHA has provided a useful one-page reference guide to understand worker classifications.  Construction businesses are expected to review the classifications and implement risk-appropriate controls and prevention measures.
  • OSHA Construction Business Guidance: COVID-19 Guidance for the Construction Workforce. This one-page guidance document provides an overview of the prevention controls and measures that all construction businesses need to implement based on the general guidance above.

To ensure full compliance, construction businesses are advised to refer to all four sets of guidance.  While there are overlaps among them, each one of them contains information that pertains to reducing workers’ risks of contracting COVID-19 on the worksite.

April 21, 2020 at 6:45 am · · Comments Off on Pandemic Leaves Landlords in a Difficult Position

Pandemic Leaves Landlords in a Difficult Position

by: Gary D. Vogel, Attorney, Drummond Woodsum, MEREDA President

The coronavirus pandemic is affecting everyone.  Many businesses are shut down, or are minimally operating.  The CARES Act recently adopted by Congress with over two trillion dollars of emergency funding will provide a lifeline for many businesses.   Especially important is the SBA Payroll Protection Program (PPP) loans that provide forgivable loans for an amount of up to 8 weeks payroll for qualifying businesses.   The program has proven so popular that as of April 16th, applications for the entire $349 Billion of PPP funding have been made and the SBA announced that it would not accept any more applications, unless Congress approves additional funding.    While the PPP loan program is enabling many business to survive, and to pay their staff, for many companies the PPP isn’t a good fit, because their business is too big, may not have enough payroll, compared to other essential expenses or may need more than 8 weeks of payroll covered in order for them to survive.

Left out of the discussion at Congress is the impact the shutdown is having on landlords.   MEREDA members include many residential and commercial landlords, and MEREDA has both heard from and reached out to members to be able to understand what is happening to landlords in this pandemic.    Property owners are businesses that are frankly essential to our economy, providing the real estate for businesses to operate.  Most property owners will not qualify for PPP loans, since they tend to not have employees, or if they do, the payroll cost is a very small percentage of their operating expense, when compared to taxes, mortgage payments, utility charges, insurance and the like.   The impact of the PPP loans and the ability of businesses receiving those loans to keep employees paid, as well as the impact of enhanced unemployment benefits for unemployed workers has enabled most residential tenants to pay their rent, and residential landlords in Maine in an informal survey report receiving 80 to 90% of April rent.   Commercial landlords report lesser amounts of April rent payments.   In addition, on April 16, Governor Mills issued an executive order prohibiting or limiting evictions for a period extending until 30 days after the expiration of the Covid-19 State of Emergency.     While few if any landlords will want to be evicting tenants who cannot pay rent due to disruptions caused by the coronavirus, many landlords are concerned that the prohibition on evictions may be viewed by tenants as a basis for not paying rent.    While the Governor’s executive order makes it clear that the order does not relieve tenants of their obligation to pay rent while the tenant continues to occupy the real estate, it does not address what constitutes “occupation of the real estate” in this circumstance and leaves several questions unanswered.

What should landlords be doing when faced with nonpayment of rent by tenants?  

  1. First and foremost, landlords should talk to their tenants to find out what tenants can do and what relief tenants need so that the landlord can understand what rent payments they can expect during this period.  Every situation is somewhat different, and there is typically no “one size fits all” solution.   Tenants need to understand that the rent obligation doesn’t go away just because they are unable to operate, unless the lease so provides, and that is highly unusual.   Tenants also need to understand that the rent obligation doesn’t go away during the period of time that evictions are limited.     Landlords have fixed expenses that don’t stop just because a business is temporarily closed.   If a tenant says that they are giving up and going out of business that is very different from a tenant who is just trying to weather the storm and to reopen when they are able.   If a tenant is going to close up for good, the Landlord should get the tenant to surrender the space back to the landlord, so that the landlord does not need to evict the tenant to be able to have the space available to rent to others.  This is especially important while the courts are closed to evictions.
  1. Landlords should find out what federal resources the tenants have been able to obtain, and whether the tenants plan on using some of those funds to pay rent.   Under the PPP, businesses can use 25% of the funds to pay rent, utilities, debt service payments and some other expenses while still having 100% of the loan remain forgivable.   For tenants that have not applied for PPP loans, the tenants should be alerted to do so if and when more funding is available.
  1. Once the Landlord understands the shortfalls in rent payments that the tenant anticipates, the landlord should talk to its lenders and explain the situation that the landlord is in.   Some landlords may have enough tenants who are paying rent to enable them to pay their mortgages; others may not.   Lenders understand what is happening and will work with borrowers.    Lenders will Lenders need current information in order to help.  That is part of the reason why getting good information from tenants is important.
  1. If necessary, Landlords can also apply for Loans using the SBA or FAME loan programs.    These loans are not forgivable, and landlords will not want to take on additional debt to provide support to their tenants, but for some there may be no other options.
  1. If Landlords know that Tenants will be unable to pay rent for the duration of a shutdown, the landlord may want to enter into a lease amendment with the tenant to provide when the unpaid rent will be due, which may have the unpaid rent payable over a period of months together with the rent due for those months.  For example, the deferred rent could be repayable 1/12 each month for a period of 12 Months once the shutdown ends, or 30 days after the shutdown ends, with the current rent for that month.  It is better to have an enforceable agreement that everyone can live with, rather than just leaving unpaid rent with a tenant in default.  This is better for the landlord, and it is also better for the tenant, so that the tenant can have an arrangement that is workable from a cash flow perspective.

In summary, landlords are placed in a difficult situation as a result of the impact of the coronavirus.   While more PPP funding may be available to tenants who may be able to use those funds to pay rent, the ability and willingness of tenants to use these funds for rent payments may vary widely, and landlords may not see a great deal of relief, directly or indirectly, from the CARES Act or from future federal relief.    Landlords need to work proactively with tenants and lenders to make sure that they can weather the storm.  If the coronavirus causes the real estate market to suffer greatly, that will only make recovery more difficult for everyone, including property owners.

Join MEREDA for a Virtual Event focusing on this topic on Friday, April 24, 2020 beginning at 9:00 AM.  The event is FREE of Charge, but registration is required.  For more information visit our Events Page at www.mereda.org. 

April 16, 2020 at 11:35 am · · Comments Off on Governor Mills issues Executive Order lifting in–person requirements for certain notarial acts and acknowledgements

Governor Mills issues Executive Order lifting in–person requirements for certain notarial acts and acknowledgements

On Wednesday, April 8, 2020, Governor Mills issued Executive Order 37 (EO 37), An Order Temporarily Modifying Certain In-Person Notarizations and Acknowledgement Requirements. This order relaxes certain legal requirements that may make it easier for MEREDA members to execute and close deals during the COVID-19 pandemic.

Specifically, EO 37 suspends the requirement that a person whose oath is being taken and the notary and any witnesses be physically present at the same location with some exceptions. This change is intended to enable notaries and witnesses to perform services over video conference by establishing a number of requirements which must be satisfied to result in a valid notarization. EO 37 also authorizes the Secretary of State to issue additional guidance, but it remains to be seen whether that will happen.

The following is an overview of some key requirements and exceptions in the Order. There are additional specific requirements in the Order and we strongly recommend members review all requirements carefully or speak with an attorney to ensure compliance.

Requirement Highlights

Some of the requirements include that:

  • The signatory, the notary and any witnesses must be physically present in Maine when performing the notarial act;
  • The notarization must allow for direct contemporaneous interaction between the parties via two-way audio-video communication technology;
  • The signatory must initial each page of the document and send an electronic image of each page as well as the hard copy of the document to the witness or to the notary, if no witness was required;
  • The witnesses and notary have to meet certain timeframes to complete the notarization, which will be deemed to have occurred on the date of the contemporaneous interaction; and
  • A recording of the contemporaneous interaction must be preserved for 5 years.

EO 37 will ensure that documents notarized “in the presence and hearing” of a signatory, in compliance with this order will be deemed to have been notarized in the presence and hearing of the signatory.

The order also provides that notarization will not be deemed invalid or impaired if one of these conditions is not met, so long as the notarization was performed in substantial compliance with the order.

EXCEPTIONS

EO 37 does not apply to the following notarial acts:

  • Solemnizing marriages;
  • Administering oaths to circulators of state or local direct initiative or referendum petitions and nomination petitions of candidates for electoral office; or
  • Absentee ballots in state and local elections.

EO 37 does not change any other requirements under Maine law pertaining to the taking of sworn statements and acknowledgements.  Unless it is sooner amended or rescinded, this order will expire 30 days after the COVID-19 state of emergency terminates – in a proclamation issued April 14, Governor Mills extended the state of emergency to May 15, 2020.

April 14, 2020 at 6:11 am · · Comments Off on Maine Home Prices – Where do we go from here?

Maine Home Prices – Where do we go from here?

by: Dava Davin, Principal, Portside Real Estate Group

When I presented at the 2020 MEREDA Real Estate Forecast Conference in January, I was full of good news and positivity in the residential market. I shared that 2019 represented the eighth straight year of rising home prices in Maine resulting in a record-breaking year with the median price for a single-family home topping out at $225,000. In 2019 prices rose 5.4% in Southern Maine. The highest home prices in Maine’s history!

I predicted that prices would continue to rise in 2020 at a rate of 3%-5%. I also forecasted that this spring we would see buyers battling for homes and houses selling for over the list price as a result of multiple offers. The low inventory would make home buying for first time home buyers and folks looking in the median home price range (around $300,000 and below in Southern Maine) very competitive. I spoke about the election having little effect on Maine’s real estate market. I thought we might see more price reductions this year as sellers attempt to test the market, and that overall, 2020 was poised to be another great year for sellers as well as buyers with low mortgage rates giving buyers more buying power!

And then…the world was flipped upside down in what felt like an instant as Covid-19 crept into every aspect of our lives. The Southern Maine real estate market has been, and will continue to be, adversely affected for the near future. My forecast has changed but this time I don’t have data and trends to back up the shift caused by something of this nature and magnitude.

Here is my take…

As of today, April 8th, for the most part we are seeing a real estate “pause’’. We will experience a temporary slowdown as people practice social distancing protocol and wait to see if their job situation changes over the next few weeks. This will most likely create pent up demand for when the crisis ends. People may wait now, but the need won’t go away. People will take action when things return to normal. What will help Maine’s real estate market is the trend of stock market volatility leading people to invest in real estate as they diversify their portfolios. We will also see new reasons for Mainers to list their homes and search for new ones as feelings toward their home may change (weeks of sheltering in place) and desires for home offices, home gyms, and more or less space. We are also expecting to see in-migration to Maine from more densely populated areas.

Sadly, we will also see temporary and permanent job loss or job shifts causing Mainers to list their homes. Maine has seen a tremendous amount of job losses very quickly and it could get worse, but once the crisis is over many jobs will be restored. Nationally, economists are projecting the unemployment rate to be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year, and then just over 6% percent by the fourth quarter of 2021. A quicker turnaround than we have seen with other financial crises.  This should benefit the housing market rebound.  We have had more buyers than sellers in Maine for several years, so this shift may create a balance in the market that has been overdue.

For cities like New York, new real estate transactions have come to a screeching halt.  In southern Maine, real estate professionals are placing all of their virtual strategies into extra high gear, in order to prevent that from happening. Real estate is deemed an essential business in Maine with most aspects able to be done virtually – negotiating, signing of contracts, video tours, etc. The showings, closings and inspections are being done with strict guidelines for safety. We have seen a significant slowdown but new properties are still hitting the market and some are still selling quickly and in multiple offers.

We are entering what is typically the busiest season for real estate, that usually lasts through the end of the summer. I am confident that the busy season will extend through the fall, and possibly through the winter.

Momentum is building: once the stay at home mandate is lifted and our world begins to shift back into normalcy, the demand will be strong. We are bracing for a tough Q2, with an improving Q3, and ending the year with a strong Q4.

April 7, 2020 at 7:19 am · · Comments Off on Message from MEREDA’s President

Message from MEREDA’s President

To our Members:

What a challenging time we find ourselves in!  First and foremost, I hope this email finds you, your family, loved ones and coworkers safe and healthy.   We hope that you are coping with all of the changes that have been thrust upon all of us.   We are all in this together!   Here at MEREDA, we are working remotely, taking things day by day, and hoping that things return to “normal” very soon!   I am trying to appreciate the benefits of learning to use technology better to be able to work remotely, and to transact business without putting our clients, employees and others at risk.   I am also cognizant of the tremendous hardships that the near shutdown has created for many Maine businesses and am also grateful for our healthcare workers who frankly don’t get nearly enough recognition or support for the work they do.

MEREDA has responded to the Coronavirus pandemic as most organizations have by postponing our events, at least through May.  Understanding that things could still change, in the event that the CDC lifts its restrictions by this time, we have established a new date for the 35th Anniversary Gala – June 25th, still at Ocean Gateway.  We are hopeful that we will be able to hold the 35th Anniversary Gala on June 25th, but we are prepared to push the event back again if the conditions require.  Same for our May events.  We have just rescheduled MEREDA’s May 7th Strikes for Scholars Bowl-a-Thon Fundraiser to September 16th, and MEREDA’s May 21st Annual Spring Conference, to September 3rd.

We’ve also cancelled our board and committee meetings, at least through April.  With the Maine Legislature shutting down early, our Public Policy Committee was able to wrap up its regular work.   The Legislature accelerated its session schedule and adjourned sine die on the evening of Tuesday, March 17.   Before adjourning, the Appropriations and Financial Affairs Committee, Leadership and the Governor’s office worked together to develop a supplemental budget and other emergency legislation to provide supports for individuals and businesses in the face of the challenges posed by the Coronavirus pandemic.  All legislation that did not reach final disposition has been carried over until a special session is convened.  No date for that session has been set. But we expect that it will be held in the fall.  Our Public Policy Committee will reconvene when the legislature schedules its special session but may conduct virtual meetings to address important current issues affecting our members if those matters are appropriate matters to address with lawmakers.

Behind the scenes, we are still doing advocacy, as needed or when called upon, and have participated in discussions for matters such as executive orders to establish ways to revise certain state laws to enable Mainers to transact business remotely and safely.

Lastly, as we do our best to carry on business as usual during this difficult time, MEREDA will continue to send out membership renewal packets as scheduled.  If your business has been adversely impacted by this pandemic, and you need additional time to make your payment, please contact Shelly R. Clark to discuss payment terms.  It’s helpful for us as we also plan and budget, and we are more than happy to work with you. We know that a MEREDA membership is valuable to your business, and we want to make sure that our members don’t have to give up their MEREDA membership over what we hope and expect will be a short term disruption.

We look forward to getting back to work with you in the near future!

Sincerely,
Gary D. Vogel, MEREDA President
Attorney at Drummond Woodsum

March 31, 2020 at 7:10 am · · Comments Off on Successful CEO’s Look Back to Prepare Forward

Successful CEO’s Look Back to Prepare Forward

by George E Casey Jr., Chief Executive Officer, Stockbridge Associates, LLC

General Patton said he hated paying for the same real estate twice.   You should feel the same about paying for the same business lessons again in the future.

Right now, things seem pretty ugly from a business and economy standpoint.   That’s what bothers me.  Three months ago, they looked great, but now the world looks like it will never get back to normal.

It is when things are going well that you should actually be thinking about what to do when they start to turn.

The next best thing is that when they do start to turn, you are forced to focus and quickly.

By looking at lessons from the past, both from your own experience and from the experiences of others, a good leader can think about what to do if the operating environment changes unexpectedly

Here are some of my lessons learned from the past that might help in the future.

  • Find reality and deal with it fast. Have a source of good and dependable numbers and act on them.   Spend time walking around and talking with everyone in your company.   Talk directly to your customers.   From all of this, develop a viewpoint of the reality that is facing your business.   Then, act quickly on that information.   Those who acted quickly tended to do better than those who just waited and wished for a return to normal.
  • You can’t cut too deep too quick. It is the hardest thing a leader has to do, but restructuring people and costs to deal with the reality at hand allows you to survive as an organization and have the opportunity to bring back valued team members as the market comes back.
  • Whether it is with employees, investors, lenders, customers, vendors, or friends.   Communicate truthfully and honestly.   In tough times people most value reality and what it means to them both short term and long term.
  • Cash is King. Businesses need cash just like humans need oxygen.   If you are not managing cash and projecting cash regularly in good times and bad, you can get in danger quickly.   Forget the GAAP stuff.   If you run out of cash, you die.   A 13 week rolling cashflow, updated and re-extended every 6 weeks is the must-have tool here.
  • No Sell, No Eat. Revenues from sales give you cash.   When it gets tough, you have to focus the organization on selling and bringing cash into the business.  There are always sales to be made, even in the worst of times.   Having weak (or no) salespeople and de-motivating them is just plain stupid and ignorant.
  • Don’t be afraid to change the organization. Organizations tend to do the things they are organized to do. What needs to be done in troubled times and is critical to do is different than in good times.   To think that the old organization can just shift to the new tasks without change flies in the face of Einstein’s observation that the definition of insanity is doing the same thing over and over and expecting to get a different result.   You need different results, so you need fundamental change to make it happen.
  • Multiple perspectives are better than one. As the leader, you do not have all of the answers.   Seeking out and considering the experiences of others and using those perspectives to come to better decisions is a key to navigating a downturn.   Building the network of trusted people to provide a variety of perspectives takes a long time.   Start when times are good.
  • The only thing you can truly control each day is your attitude. The attitude that you use to approach each day and its challenges and rewards is entirely within your control.  The positive people seem to have better organizations around them, and that edge can be the difference in both good and bad times.

General Patton said he hated paying for the same real estate twice.   You should feel the same about paying for the same business lessons again in the future.

It is a smart thing to do.

George E Casey Jr, Chief Executive Officer, Stockbridge Associates, LLC, https://myvistage.force.com/sites/s/chairs?username=george.casey

 

 

March 24, 2020 at 7:17 am · · Comments Off on Vital Ideas – The 1031 Dominoes

Vital Ideas – The 1031 Dominoes

by Brit Vitalius, Principal, Designated Broker, Vitalius Real Estate Group

In 2019, we saw 1031 exchanges used even more frequently than in past years. Interestingly, the variations in the transactions illustrate a number of different ways the 1031 exchange can be used to accommodate different investment transitions. The following is an example of a domino of 1031 exchanges we strung together for clients recently.

3 unit to 3 unit – A divorced couple decided to sell the jointly-held 3 unit. The husband wanted to stay invested in property, so he took his portion of the sale proceeds and purchased another 3 unit.

3 unit to 6 unit – The seller of the second 3 unit wanted to expand his portfolio and was willing to sell his 3 unit in order to do so. In addition, we helped negotiate his sale contract with an extended closing date in order to give him more runway to find a replacement. We eventually located an off-market 6 unit which he purchased.

6 unit to a new project – The seller of that 6 unit is now looking for a project. He had renovated the 6 unit, and there wasn’t much left to do other than hold it. Being a more active investor, he is looking for opportunities to find either a) something larger or b) a project that could be renovated, converted, etc. Incidentally, this property had been the 1031 exchange years ago so this investor will be highly motivated to find a replacement as he is 2 or 3 transactions deep in deferrals.

Remember, a 1031 exchange is a powerful tool, but it is only a deferral of the taxes owed. Consult with an experienced real estate broker and a Qualified Intermediary (QI) before performing one. Make sure you set up the exchange with the QI BEFORE the sale of your property. Once the transaction closes, it is too late.