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 45^th floor : 14,700 Sf at ‘Atelier’ Condo on 42^nd
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

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