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01/23/2019

Nationwide Arena spaces for rent to include Continental Office-created meeting room

Nationwide Arena is adding a space to host small-business meetings as part of a new deal between the Columbus Blue Jackets and Continental Office. The new multi-year sponsorship between the Columbus-based office furnishings provider and the National Hockey League team includes a new rentable space called The CO Lab on the south side of the arena along Nationwide Boulevard. The space will be able to fit groups of up to 20 and will be available to rent beginning in mid-February. The space will… Nationwide Arena spaces for rent to include Continental Office-created meeting room

01/23/2019

Private Capital Formation Hits All-Time High in US

New layers of financial regulations make unregistered securities more attractive, and the general trend toward private wealth continues. Thank you for sharing! Your article was successfully shared with the contacts you provided. It’s no surprise that private capital formation has outpaced public market fundraising since the financial crisis. New layers of financial regulations make unregistered securities more attractive, and the general trend toward private wealth continues. A new report from the U. S. Securities and Exchange Commission released before the government shutdown confirms as much and more. The report analyzes private capital formation between 2009 and 2017, specifically looking at non-publicly traded securities offered by issuers relying on Regulation D of the federal Securities Act. The vast majority of private capital is raised in the Reg D market, including by real estate syndicators and operators who conduct so-called “private placements” to secure equity and debt. The SEC report focuses on the whole market, of which real estate is a part—the third largest sector behind financial and technology. The report doesn’t disaggregate the results by sector, but the data and analysis are illuminating for real estate market participants. Some key takeaways: In 2017, the number of Reg D filings hit an all-time high. There were 37,785 offerings reported on Form D filings, accounting for more than $1.8 trillion of new capital raised. New filings represented 24,476 of the total volume of filings. Issuers in non-financial sectors (primarily operating firms, including commercial and multifamily property operators) raised $105 billion in 2017. Among financial issuers, hedge funds raised $382 billion and private equity funds raised $582 billion, a portion of which was directed to real estate. The median offering size was less than $1 million. Investors made 398,000 bets on Reg D offerings in 2017. This appears to be an all-time high, though the number is not net of duplicates, in other words, people who invested in more than one offering. Nonaccredited investors participated in only 9 percent of Reg D offerings. The use of more recently created and amended exemptions under the JOBS Act has been light, but the number of alternative filings is growing. The report, first and foremost, confirms how massive and fast growing the market is for private equity and debt investment. This is how capital gets raised in the U.S. While the report addresses crowdfunding, it doesn’t explore the extent to which capital is being raised online per se. Yet, we know from participants in the market that more operators and sponsors are moving their fundraising online and automating investor relations using cloud-based software, which may partially explain the growth of the market. Related, the report suggests that the number of people investing in private placements is growing faster than the number of offerings. There is not sufficient data in the report to draw this out conclusively, but the data clearly points in that direction. The data also suggests that more people are making multiple investments, presumably at least in part because of the ease with which investments can now be identified and consummated online. The slow growth of the crowdfunding market for nonaccredited investors is not entirely surprising. First, despite the JOBS Act and resulting regulatory policy changes, fundraising to nonaccredited investors still carries a pretty big disclosure and compliance burden, which translates into cost and risk. Second, and perhaps more important and obvious, if a sponsor can raise more money from fewer wealthier (accredited) investors, why wouldn’t he or she? Stay tuned for updates to these numbers… hopefully soon after the government reopens. Cary Brazeman, a former executive with CBRE, is a principal of CRELIX Marketing Partners. CRELIX is a national marketing public relations firm that specializes in real estate, finance and technology, including the online real estate investing market. The views expressed here are the author’s own and not that of ALM’s Real Estate Media Group. This Year’s Winners and Losers In The Multifamily Markets Shute has completed nearly 500 sales and lease transactions, totaling more than five million square feet in his 16 years of industry experience. In a GlobeSt.com interview, K2 Intelligence explains how integrity monitoring works to cut down on fraud in the real estate world. The industry has been slow to adopt disruptive technologies and construction productivity has become stagnant but a change is beginning to take place. Due diligence can be a daunting requirement to navigate in CRE transactions. Learn about the different Property Condition Assessment types, including those tailored to support acquisitions. Subscribe Today and Never Miss Another Story. Don't miss another update on commercial real estate industry trends, analysis, news, and best practices to help you grow your business from the industry experts. Sign up FREE now, for any/all of our GlobeSt.com Daily and Weekly Newsletters. Private Capital Formation Hits All-Time High in US

01/23/2019

Encore Presentation of the DNA of #CRE Webinar

Register for today's encore replay of the DNA of #CRE webinar! Featuring @BuildoutInc's Ewa Baska and @theBrokerList's Linda Day Harrison. Special Guest Appearances by Andrew Bermudez @GetDigsy and Melissa Swader @azPRninja and more! 3:00 pm EST Encore Presentation of the DNA of #CRE Webinar QuantumListing

01/23/2019

Tesla Might Solve Its Cash Woes with Franchise Dealers

Last week, Elon Musk, Tesla’s CEO, notified employees that the company needed to improve its profitability to become a “viable company.” This meant a 7% reduction in hourly and salaried staff, the elimination of its sales referral program, and an increase in its Supercharging pricing. But despite changes, Tesla has a record of costly and capital-intensive decisions, in part because the company prides itself on doing things differently. For example, Tesla opted to build commoditized components, such as seats, in-house, rather than relying on global seat suppliers that can produce more efficiently. Tesla also assumed that automation would reduce labor costs and speed up production, but as the legacy auto industry already knew, robots cannot yet replace human hands for every function. And while this last item might surprise some, one major area where Tesla has received very little return on its investment is its direct sale model. It’s no secret that Tesla does not want franchise dealers. The company’s stance is based upon the notion that franchised dealers cannot properly sell electric vehicles (EVs). So, Tesla spent billions of dollars on its own retail locations, service centers, call centers, and the personnel to populate them. As a result, despite its high gross margin, Tesla has the highest selling, general, and administrative (SG&A) expenses of any of its established competitors (on a per unit basis), expenses that have not meaningfully reversed even as Tesla’s sales volume increases. Tesla operates a U. S. network of 125+ retail locations, 75+ service centers, as well as multiple call centers. To build this network, Tesla procured the land or space for these properties, then designed, constructed, and equipped these locations. It then hired, trained, and staffed local salespeople to sell and deliver vehicles and hired skilled technicians and service-related staff. But with a franchise model, all of these tasks (and the associated financial debt and liability) would be left to Tesla’s dealers, who would have to build and staff Tesla retail stores, call centers, and service centers in accordance with its brand standards. This reality holds true with any automaker today that requires its franchise dealers to provide facilities and staff in accordance with its unique standards, including prohibiting the sale of other makes. New vehicle inventory management is another area where automotive incumbents have a lead over Tesla. Traditional automakers are instantly paid by dealers as soon as a vehicle leaves the factory floor. Thus, automakers are not liable for the cash (or balance sheet debt) for vehicle inventory, including vehicles that are used for test drives at the dealership. Tesla could eliminate the expenses and balance sheet debt associated with new cars, even with its build-to-order model (which was intended to reduce inventory). As Tesla continues to increase sales, especially with its goal of 500,000 units or more, new car inventory carrying costs will prove even more burdensome. Revamping used vehicle inventory management also poses a significant benefit to Tesla. The automaker is currently responsible for the residual risk of vehicles at lease maturity as well as reselling them after lease-end. These tasks include inspecting and readying these units for retail sale, while also paying the interest expense to inventory them. So, for example, if a lease for a Tesla Model S is based on the vehicle being worth $60,000 at lease-end, and it’s only worth $50,000 when retailed, then Tesla is responsible for the $10,000 difference plus all the costs it incurred to sell the vehicle. These are responsibilities generally reserved for franchise dealers, so it’s no surprise that Tesla is struggling with used vehicle remarketing to the point that it cannot fulfill the bare necessities, such as fixing cosmetic repairs or even providing photos of its inventory. According to U. S. Tesla inventory consolidator, EV-CPO.com, Tesla currently has over 1,500 used vehicles for sale in the U.S., some of which are more than two years old and have had price reductions in excess of $50,000. If Tesla had dealers, they, not the automaker, would carry the expense burden and price risk associated with selling used vehicles by the creation of a certified pre-owned program that is similar to those currently offered by several automakers. For example, most new vehicles that are leased from BMW Financial Services (BMW’s captive lender) will be immediately sold to a BMW dealer at lease maturity. BMW dealers are required to purchase a high percentage of off-lease units at either the lease contract’s residual price or the current wholesale market price even if they do not wish to retail them. By increasing the number of independent sellers in the market that are obliged to buy off-lease inventory, BMW has greater control over residual values, which lowers its depreciation costs and associated liability. To handle the flow of incoming vehicles, BMW dealers have been forced to develop efficient remarketing processes that generally sell these units within 30-to-45 days after lease-end, while lowering the overall per unit selling expenses and also turning inventory more quickly. Incidentally, via customer satisfaction scores, BMW penalizes dealers that do not perform cosmetic repairs or provide accurate photos of their vehicles. Many skeptics have argued against an indirect franchise model, stating that Tesla would need to increase prices in order to support it. But the average gross profit per new vehicle retailed by franchise dealers in the U. S. is only $2,231, a slim margin for Tesla to consider given that most of its model variants sell for over $70,000. Moreover, Tesla’s low maintenance requirement but highly technical vehicles are an ideal profit center for a dealership. Tesla service shops, operated by franchise dealers, could benefit from a high throughput for vehicles needing maintenance, and for technical repairs, they are less likely to lose repairs to independent shops as Tesla vehicles are highly specialized. And since dealers make a profit on service, they would be incentivized to build the capacity to meet their local customers’ needs. This is especially relevant to the automaker’s growth strategy as many Tesla owners have complained in online forums that current customer pay maintenance and repair costs are excessive, never mind long wait times. While Tesla currently has a high gross margin, it gives it away with the highest SG&A among the major automakers. As the automaker grapples with its latest cash issues, it might consider that several Chinese automakers (many of which are producing EVs at lower price points than Tesla) have concluded that the franchise dealer model is the most effective method to sell their vehicles in the U. S. market. As Tesla continues to scale its model and is forced to act and compete more like a traditional automaker, it will need to consider options that allow it to invest in building better vehicles at lower prices, rather than investing in low margin and capital-intensive ancillary services. This reality is becoming increasingly pressing to the automaker as it now faces intense EV competition from both the Chinese and incumbent automakers while also losing the benefit of tax credits. Tesla Might Solve Its Cash Woes with Franchise Dealers

01/22/2019

Top 5 Predictions for Facilities Management 2019

Which of the latest trends will reign in 2019 and going forward in facilities management? Read Facilio's 'Top 5 Predictions for Facilities Management 2019' Top 5 Predictions for Facilities Management 2019 FACILIO INC.

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