Weekly News (May 23, 2018)

1. Palisades Park Administrator, Lorenzo might be involved with embezzlement 

  • Jesse Wolosky (Sparta resident, Civil activities) reviewed reimbursement doc released from Palisades Park town according to OPRA
  • $67,783 reimbursement for legal fee paid to Lorenzo on 12/20/2017
  • Wolosky pointed 1. Request twice for the same item
    2. Two law firms request payment for the same case
  • Lorenzo denied as false claim: Every payment has to go through the city council approval, claiming it is political tactic

2. Manhattan Condo New Listing at $85 Million 

  • Entire 45th floor : 14,700 Sf at ‘Atelier’ Condo on 42nd
  • 10 Bedrooms, 11 Bathrooms (+ 2 Tickets for trip to Universe , 2 Rolls Royce, 1 Lamborghini, Summer Mansion house in Hampton, resident super, personal chef)

3. Home owner might have to register to NYC in order use AirBNB 

  • Home owner Registration law is being made: Address, # of Br, Owner name & address
  • AirBNB is impacting rent increase and shortage of rental housing
  • Current # of house using AirBNB: 52,653 → Will be reduced to a half with the new law
  • In fact, houses using AirBNB was reduced with a similar law in San Francisco (10,000 last year → 5,500 in Jan 2018)

4. Korean RE broker closed the mixed-use Building at $12.8 Million in Bayside, NY 

  • 34-43, 34-57 Francis Lewis Blvd, Bayside – 2 buildings (38,200 SF)
  • Charles Jang and Josh Goldflam with HighCap Group did brokering the deal
  • Buyer: Vision Enterprises / Seller: Indian heritage
  • 21 unit Apt, 4 Retail store including Dollar Tree, 2 Offices with 52 parking
  • 80% of tenants are Korean

5. Commercial Property bubble might be burst soon?

  • Warning to commercial property’s price hike
  • Total loan to commercial property → $4.3 Trillion (11% higher than peak time 10 years ago)
  • Regional Banks are big hands in commercial loan → Big impact with small loss
  • May 2009, commercial property hit the bottom and price dropped by 40%
  • Sep 2017, commercial property price rose more than double (2017 CPPI rose by 26.9%, compared to 2009)
  • Sep 2017~Mar 2018: dropped by 1.7% (May 2016~Mar 2018: 2.1% dropped)
  • According to CPPI chart, commercial property has 8 year cycle
  • Warehouse is still ok
  • Apartment Complex: Close to warning signal
  • Motel/Hotel: dropped since 2015 (Due to AirBNB partially)
  • Office: CPPI dropped from 2018
  • Strip mall: dropped after the peak in 2016. March CPPI dropped by 5%, compared to a year ago. Strip mall with anchor tenant’s CPPI dropped by 14% for last 12 months → most dangerous

6. If 1031 Exchange becomes difficult → Alternatives??

  • DST (Deferred Sales Trust): Seller give ownership to Trust (Owner Carry) → Trust gives Promissory Note to Seller → Trust distributes profits to seller or new investment / Business together → Seller pays tax only for the received profits
  • MIS (Monetized Installment Sales): Same as DST, but seller does not receive profits. Instead, seller can receive a loan (Typically 30 years) with the profits being collateral up to 95% of profits → Seller pay tax after loan period
  • DST/MIS can be used for business transaction

7. ‘Tesla’ needs additional funds $10B to survive 

  • According to Goldman Sacks, they need $10 Billion within 2 years
  • They might have to pursue multiple ways: Bonds, stock transfer, new stock issuing, etc.
  • Goldman Sacks says Tesla stocks might be dropped to $195 (31% drop) within 6 months period
  • Tesla did not respond for Goldman Sacks forecast
  • Tesla has been lost for 6 consecutive quarters / Model 3 production problems created big negative impact and Model X’s battery burning problems added
  • On 5/20, Tesla Model S ran into the private lake in Cal and driver died (34): Do not know yet it was auto-pilot mode

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