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Accounting Issue 2014

Accounting Issue 2014

Berdon Partner Wayne Berkowitz Explains Tax Law to the Rest of Us

Wayne Berkowitz

Taxes, though a certainty in life, are complicated. They vary wildly by state and strain all but the most analytical of minds. For many real estate moguls, state and local taxes on their assets can mean millions of dollars at stake.

Enter Wayne Berkowitz, a partner at Berdon and head of the firm’s State and Local Tax Group, to disentangle the web of legal jargon and elucidate the complex stipulations mandated by municipalities. And he sometimes plays a role, albeit a modest one, in drafting reforms. (He was the head of the New York Multistate and Local Taxation Committee for the New York State Society of Certified Public Accountants.) Read More

Accounting Issue 2014

NYC Real Estate is Still the Safest Bet for Foreign Investors

Map

Last month the landmark Waldorf-Astoria’s owner Hilton Worldwide Holdings announced that it was selling the grand hotel to the Beijing-based Anbang Insurance Group for $1.95 billion. Hilton said it would retain a 100-year management contract at the hotel and the property would be renovated.

The purchase, slated to close on Dec. 31, marks the first real estate acquisition in the U.S. by Anbang, which is reportedly planning an initial public offering that could raise about $2 billion. Read More

Accounting Issue 2014

The 10 Commandments: Unbreakable Accounting Rules for Real Estate Pros

The Accounting Commandments

Real estate accounting manifests itself at the intersection of business, politics, family and, perhaps, everything else. With millions of dollars, square feet and jobs hanging in the balance, Commercial Observer asked a group of big-time accountants, insurance executives, lawyers and real estate professionals for their best guidance on all things financial.

The spiritual talks bestowed CO with a list of commandments ranging from the macro advice we expect and need from financial advisors, to Elijah-like warnings about keeping federal aid for terrorism insurance and tax-deferred savings from like-kind property exchanges intact. And perhaps likening fees on secondary homes, extra sales taxes and surcharges on foreigners who sell property to the 10 plagues would represent something of a hyperbole, but we are willing to take that risk. If not enlightenment, we hope you gain some insight from our somewhat (O.K. definitely) sacrilegious list. Read More

Accounting Issue 2014

The Rise of the LLC [Updated]

A rendering of 610 Lexington Avenue

Last week, the developer RFR Holding broke ground on 610 Lexington Avenue, a condominium tower that will be next to the Seagram Building. RFR partnered with China Vanke, China’s biggest public developer, which took a stake in its first New York development.

RFR also filed a $180 million deed that transferred the property from 610 Lexington Avenue LLC to 610 Lexington Property LLC. Read More

Accounting Issue 2014

Don’t Get Burned: Tax Pros Minimize Risk for Foreign Investors

us-money-burning-economic-disaster

As the city continues to roll out of the Great Recession and an optimism not seen in years permeates the real estate industry, foreigners from all over the globe continue to view New York as a safe haven for investment. 

From Europe and Asia to the Middle East and South America, individual investors from abroad, as well as foreign developers, companies and other entities, are not only drawn to New York, they are also incentivized to invest their money here. Read More

Accounting Issue 2014

Swapping Standards

Grace Singer, Berdon LLP.

Accounting for interest rate swaps by private companies is simplifying, but those real estate companies set to adopt new standards are being warned by some accountants: Buyer, beware. 

Private real estate companies in acquisition mode have often financed their activity in the market through floating-rate debt, which in most cases is cheaper and easier to obtain than a fixed-rate loan. In turn, those companies will enter into an interest rate swap that allows them to exchange a fixed-rate payment for the floating-rate payment. Read More

Accounting Issue 2014

The 1031 Exchange of a Lifetime

Owner-occupiers in neighborhoods like Long Island City, Queens (pictured) and Williamsburg, Brooklyn are incentivized to move out.

A CitrinCooperman client recently sold a building in the East Village for roughly $35 million, having entered the property decades ago on a much, much lower basis. 

As the neighborhood exploded, prices soared. The family wanted out of its old investment and into a new one, but with capital gains taxes now up to 20 percent, a 1031 exchange seemed like the only way to go. Read More

Accounting Issue 2014

Crimes Against Accounting

accounting_crime_cover

Accountant Irv Schwarzbaum is helping a 10 percent shareholder in a Brooklyn commercial property prove that the 90 percent shareholder is undervaluing the price of their building in a potential sale. While there is some pressure to pay off a loan that has come due at the property and the majority owner presented a third-party buyer, Mr. Schwarzbaum is skeptical. Read More

Accounting Issue 2014

Until JVs Do Us Part

Maury Golbert (Credit: Berdon LLP)

As investment sales figures creep ever higher, from hundreds of millions of dollars into the billions, real estate investors are increasingly searching for access to additional capital. One of the most trusted ways of increasing buying power is through a joint venture or partnering with another buyer or developer to bridge the gap.

From an accounting standpoint, joint ventures can be a tricky proposition. Like any relationship, when real estate entities join together without adequate communication and preparation, it doesn’t always go smoothly. Read More