Ultimately, a commercial real estate deal is in the details. No one understands that better than the industry’s top accountants.
They remember the good times, when they finessed the cents in million-dollar deals. Now they also see impending forces that could undermine the market’s delicate recovery one decimal point at a time.
Nearly $1.4 trillion of commercial real estate debt will mature in the next several years, meaning that if companies, including brand-name landlords, can’t repay or refinance their loans, the market could be flooded with new properties.
“Banks are becoming more aggressive in not pretending and extending,” says Marc Wieder, head of the real estate group at Anchin, Block & Anchin LLP.
Meanwhile, many American companies will also be required to adopt international accounting standards starting in 2013. This will eliminate off-balance-sheet leasing and could cause a major shake-up if these companies start buying properties instead of leasing them.
“Suddenly, companies may have billions of dollars of real estate and debt on their books,” says Maury Golbert, a tax partner at Berdon LLP.
However, since most private companies already use income-tax-based financial statements, most accountants say the effect will be limited. Chances are, Mr. Golbert added, “the market vomits all over it, and people yawn.”
Suffice it to say, these are interesting times to be a number cruncher in commercial real estate.
Behind every good deal there stands a good accountant, and in this city there’s a decent chance that accountant is Maury Golbert.
Mr. Golbert, 44, is a tax partner at Berdon LLP, a 400-person firm with one of the city’s largest real estate practices. Mr. Golbert recalls with particular pride his work with one major client, RFR Holdings, on such boldface deals as the Seagram building, Lever House and Stamford Plaza in Connecticut.
But, really, it’s hard to name a major player in the real estate industry that Berdon hasn’t worked with in its 90-plus-year history. A mere sampling includes SL Green, Cushman & Wakefield, Jones Lang LaSalle, Forest City Ratner, RFR Holding, Tishman Development and Vornado Realty Trust. (Berdon has also worked with the Kushner Companies, a principal of which publishes The Commercial Observer.)
After a slow couple of years, Mr. Golbert says the big deals have started to trickle in again. But he says the difficulties obtaining financing and tax constraints mean there are no easy deals anymore. “Getting anything done that satisfies all the parties’ needs and requirements is always a challenge,” he says.
Shahab Moreh’s favorite painting is more than 100 years old, capturing the Flatiron Building when it was still just a dream covered in scaffolding.
“You first have to be a real-estate-minded person,” says Mr. Moreh, whose office is covered with pictures of the city’s buildings, some gifts from grateful clients. “Every deal is different and every solution has to be different.”
As the partner in charge of WeiserMazars LP’s real estate group, Mr. Moreh, 41, has worked with some of the city’s largest real estate investors. His clients include the Related Companies, with an operating portfolio of more than $12 billion, along with DRA Advisors LLC, Westbrook Partners and GTIS Partners, with more than $20 billion of assets between them.
One-quarter of the 90-year-old firm’s practice is the real estate group, which Mr. Moreh says is its “differentiator.” The firm also recently partnered with Mazars Group, adding expertise working with wealthy investors from around the world.
Now, the real question is how Mr. Moreh will find space when his satisfied clients give him more pictures.
Rosen Seymour Shapss Martin & Company LLP
Accountants are supposed to pay attention to detail, but it’s not often they worry about your toilets.
Neil Sonenberg and Marty Greenberg, of Rosen Seymour Shapss Martin & Company LLP, obsess over even the smallest ways their clients can save money–from a special tax credit for buildings with security guards, to, yes, low-flush toilets that can shave more than $100,000 off a building’s annual expenses.
But this is much more than just your friendly neighborhood accounting firm. Messrs. Sonenberg and Greenberg have landed such major clients as Jeffrey Gural and the Gural family; Newmark Knight Frank, where Mr. Gural is a top executive; and the residential powerhouses Prudential Douglas Elliman and Brown Harris Stevens. They’ve also counseled property managers Goodstein Management and Gumley Haft.
The 50-year-old firm has grown from handling $50,000 worth of accounts to almost $45 million today, with more than 200 people. Between them, Mr. Sonenberg, the head of the real estate group, and Mr. Greenberg, the firm’s managing partner with a background in tax, have more than 60 years of experience. “We’ve been around the block,” says Mr. Greenberg. “No firm does this kind of humanistic type of approach.”
All of their hard work has been rewarded, as they’ve recently added a new client who’s buying up 160 properties around the country, a transaction valued at more than $1 billion. No doubt they’ve already got a plumber on the phone.
Not even a major downturn can slow Ken Weissenberg down.
Recently, Mr. Weissenberg, co-chair of Eisner LLP’s real estate practice, helped guide his group through a merger with Amper LLP in August, making EisnerAmper the 14th-largest accounting firm in the U.S. In the past six weeks, the newly expanded real estate group has added two very large clients, a REIT and a major construction company.
Until then, Mr. Weissenberg was hardly sitting in his office sharpening pencils, however. Recently, he’s been involved in the sale of a family-owned real estate portfolio worth more than $4 billion. He’s also advising on a complex merger between Hanover Capital Mortgage and Walters Industries Inc. Additionally, the firm represents such major public funds as Lightstone Value Plus Real Estate, Armour Residential and First Real Estate Investment Trust of New Jersey.
Mr. Weissenberg, 53, completed an LLM in tax law at New York University, and became interested in real estate when the New York Transfer Gains Tax was enacted. “My experience in dealing with that tax opened the doors of some of the largest developers in New York,” he says.
In the past year, Mr. Weissenberg has somehow also found time to lecture the New York State Bar Association about the move toward international accounting standards and sit on a charity board.
Anchin, Block & Anchin LLP
“Our clients are typically deal junkies,” says Marc Wieder, chairman of the real estate group at Anchin, Block & Anchin. “They’re a little bored.”
The firm’s “bread and butter is the quiet, wealthy real estate families you don’t necessarily read about all the time,” Mr. Wieder says. Real estate is Anchin’s second-largest industry concentration, with nine partners and a staff of about 50 devoted to it.
Mr. Wieder is a University of Buffalo-educated accountant with 25 years of experience, who also publishes prolifically on the industry, including a regular column for Real Estate Weekly. His predictions for the next couple of years are sobering: namely, that banks will start foreclosing much more aggressively.
Meanwhile, Mr. Wieder says he doesn’t see things getting exciting for his own clients anytime soon, either.
“Investors are waiting for banks to take action on properties and for them to become available,” he says.
Call Fred Berk the coroner in chief of the flailing real estate market.
Lately, Friedman LLP has been doing much more forensic accounting work, he says, as “a lot of complicated transactions aren’t hitting the benchmark that the lending institutions are projecting.”
Mr. Berk, a 51-year-old partner and member of the firm’s real estate group, specializes in calculating damages from failed investments and restructuring debt long before they became accountants’ new bread and butter. “We see what happened, and what’s supposed to happen,” he says.
About one-third of the firm’s 325 people are dedicated to real estate, making it one of New York’s largest real estate practices. Mr. Berk also says they’ve been getting more overseas clients, specifically from Ireland, who are eying some of the city’s most coveted trophy properties.
“Most of the foreign investors are very interested in trophy properties because they consider it a safe haven,” he says, though he declined to provide further details.
Citrin Cooperman & Company LLP
For Citrin Cooperman & Company LLP, it’s about being not too big, not too small, but just the right size.
Recently, the firm, which is the 31st largest in the country, has been scooping up clients that have left the Big Four, says Mike DeVito; he and colleagues Richard Zendel and Vic Mizarro each bring more than 20 years of experience to the accounting business. Mr. DeVito says the new clients are mostly owner-operated properties in search of lower fees.
The challenge for Citrin Cooperman is to show they can handle the new volume of work, when a single company may need 100 tax returns filed by March every year. That should be no trouble for the firm, which has consistently aimed big, including a major recent transaction to turn a private owner with 80 to 90 properties into a REIT.
“Every two or three big real estate clients we get,” says Mr. DeVito, “we open up to new opportunities out there.”