Real Estate

Construction

Managing Partner – Real Estate and Construction

Real Estate Investors

Multifamily Housing

Lodging

Consulting

Opportunity Zones

Real Estate Valuation & Advisory Services

Managing Director

Transactions

Transaction Advisory Services

Valuations

Private Equity

Managing Partner, Managing Director – Baker Tilly Capital, CPA, JD

Authored by Brent Maier, Kevin Secrist, Nich Palkovic Baker Tilly’s third quarter 2020 report delves into the data and insight of the following specific sectors: multifamily housing, office, retail, industrial, senior housing and skilled nursing, and capital markets. Additionally, we include the results of a market survey regarding COVID-19 and its impact on commercial real estate. A second quarter that was defined by crisis and uncertainty gave way to a third quarter characterized by a disjointed recovery that had definite winners and losers. Economically, lower income workers and those in the hospitality industries and others directly impacted by COVID-19 continued to struggle, while technology companies saw their valuations soar given the role technology will play in everyday life and health delivery. Through a real estate lens, the industrial sector, which had been favored over the last five years, attracted even more attention and investment as large players such as Amazon push to expand their distribution and storage networks, while retail struggles were multiplied and accelerated. The office sector remains relatively stable for now. The reality is that the future of office is still uncertain. With subleasing activity increasing, coworking companies are breaking and terminating leases while many office employees are still working out of their homes, and the future of office is murky. The senior housing sector has been on the front line of COVID-19 and has seen its share of challenges – detailed further in the report.
Additional market reports
Commercial real estate market report: Q2 2020 For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

A Q3 2020 commercial real estate market report for the multifamily housing, office, retail, industrial, senior housing and capital markets sectors.

Healthcare & Life Sciences

Retail

Senior Services

Structured Finance & Capital Markets

Commercial real estate market report: Q3 2020

Authored by Brent Maier and Kevin Secrist Baker Tilly’s real estate market report provides a recap of 2020’s second quarter, including market insight, data and analytics on the following sectors: multifamily housing, office, retail, industrial, hospitality and capital markets. Significant global and domestic issues have caused a halt to the commercial real estate market that was humming along in the first quarter of 2020. Real Capital Analytics reported that sales of commercial property sank again in May to their lowest levels since 2010, with no sector avoiding the decline. The industrial space experienced the smallest decline while retail and hospitality exhibited the most significant decline. Real Capital Analytics also notes that the number of deals in the United States falling out of contract is increasing, reaching 2.9% in May up from 2.1% in April and 0.7% in March. Market participants have reported deals falling apart due to an inability to close financing or buyers giving up earnest money (and in some cases entity policies) to avoid a transaction for which the fundamentals are no longer appealing. Notably, in April Blackstone Group exited a potential $405 million deal, giving up a $20 million deposit in doing so. The same week and in the same city, Kaiser Permanente canceled plans for a $900 million headquarters.
Additional market reports
Commercial real estate market report: Q3 2020 For more information on this topic, or to learn how Baker Tilly specialists can help,  contact our team.

A commercial real estate  market report for Q2 2020, providing analysis and trends in multifamily  housing, office, retail, industrial, hospitality and capital markets  sectors.

Commercial real estate market report: Q2 2020

Presented by
Mike Kamienski, Partner, CPA, Baker Tilly 
David Jamiolkowski, Partner, CPA, Baker Tilly 
Brent Maier, Managing Director, Baker Tilly 
Dennis Power, CFO, Opus Group 
John Thomas, CEO, Physicians Realty Trust The economic disruptions from COVID-19 has had significant impact on the credit quality of tenants, building occupancy and demand from buyers resulting in substantial uncertainty in the valuation of commercial real estate and complexity in the accounting for lease modifications. John Thomas, CEO of Physicians Realty Trust, and Dennis Power, CFO of the Opus Group, share their experiences with tenant collections, lease concessions, market demand and the resulting impacts on real estate valuation across their market niches. Brent Maier provides his view on the impacts he has seen in his role as the leader of Baker Tilly’s real estate transaction advisory services team while Mike Kamienski and David Jamiolkowski, also from Baker Tilly, share their view of how these issues will impact financial reporting from a real estate impairment and lease accounting perspective. Listen to this discussion of critical topics so you understand the valuation and leasing impacts from COVID-19. This webinar is open for anyone to view, please register to access the webinar.  

Leaders in the real estate industry discuss the impact of COVID-19 on valuation and leasing.

Real estate coronavirus resources

Coronavirus Resource Center

The Impact of COVID-19 on real estate valuation and leasing

The spread of COVID-19 created major disruptions to economies around the globe, including the U.S., which at the time of this writing has more confirmed cases and deaths due to COVID-19 than any other country in the world. The severe, but necessary, reaction in the U.S. has been to enforce social distancing and shelter-in-place orders, which triggered an abrupt economic meltdown of unknown duration causing surging unemployment, declining stocks and uncertainty across all sectors. Real estate, with its inherent reliance on people congregating, be it in a restaurant, shopping center, apartment complex or office building, has been particularly affected. In this whitepaper you will learn: How economic disruptions, such as COVID-19, has hit certain real estate sectors harder than others The three-step process for impairment testing for long-lived assets Example tests to walk you through the testing process
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

Long-lived real estate asset impairment: testing and fair value measurement in response to COVID-19

In December 2019, Baker Tilly leaders Roger Ledbetter, Thane Hutcheson and Brent Maier were joined by Houston real estate industry specialists Sonya Rosenbach, CFO with Allied Orion Group, and Rene Joubert, principal with i3, for a panel discussion on real estate industry trends and opportunities. Bob Charlet, publisher of the Houston Business Journal served as moderator for the discussion. The group discussed topics ranging from recent trends in the real estate market to best practices for Opportunity Zones to overlooked funding sources.  Some real estate owners hold many assets and may not have expertise in-house to assess and monitor their portfolio’s performance. In the following exchange, the group provides insights on the pros and cons of relying on in-house performance measures as compared to outsourcing these to a third party. Brent: A major benefit of performing this function in-house is the cost avoidance by not having to compensate an outside advisor, the costs are fixed and you can perform the function internally. We have many clients with this expertise who are sophisticated investors and operators who perform these functions themselves.  There are other situations where companies may be spread thin due to a growing business, lack of expertise in a certain area, regulatory changes or changes in staffing. In those cases, outsourcing may make sense. For example, we’ve worked with a private equity firm that wants to get into a particular asset class, but doesn’t have the needed expertise. In a case like that, we are co-advising with the private equity firm where we have the industry experience and knowledge to assist with their decision making. The downside of internal performance measurement is the real or perceived lack of expertise in an area. In these cases, companies may have some of their staff who, instead of doing their “day job,” get distracted by working on other things outside their expertise. The advantage to hiring an advisor is that, with the right advisor, they've had experience in other situations they can draw on and relationships they can leverage to help get to a solution or an answer to a complex situation. The downside, of course, is the cost, but the benefit hopefully outweighs the cost.  Rene: An advisory firm is a fully integrated company, which helps them mitigate their own cycle risk for other lines of business income. However, our biggest focus is “know your asset.” From our standpoint, controlling your assets is critical to knowing how you're going to do on a long-term basis.  Sonya: Our team has extensive expertise in-house, but we also know when to call in other experts to help evaluate performance. We regularly interact with various third-party experts, multi-family professional organizations, and our peers, making sure that we're connected to what's going on in the industry. We collaborate often, but that doesn't always mean you hire a consultant – you can also collaborate without incurring extra costs. Brent: It goes back to our earlier conversation about collaborating and connecting to people. I think my job is pretty simple; it's just connecting dots. I think we're all in a similar program; just connecting dots.  Roger: This is a great time in the market with cap rate compression prices. Companies have to reevaluate whether to use advisors to review your portfolio and non-core assets or do this in-house. This may be a great time to divest. 
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

Baker Tilly leaders joined the Houston Business Journal for a discussion  on on the pros and cons of relying on in-house performance measures as  compared to outsourcing these to a third party.

Real estate portfolio performance: the pros and cons of in-house performance measures vs. outsourcing

Healthy market conditions in Houston and throughout the country have led  to continued strength in the commercial real estate market. During this  time of marketplace expansion, portfolio management remains important  to optimizing your real estate property. The elements and sub-elements  of your real estate portfolio need to be tailored and adjusted to meet  investor objectives and adapt to market conditions. Given today’s  conditions – and talks of a possible economic slowdown – what strategies  should be used to help ensure efficient use of capital and continued  opportunities to maximize investments? Baker Tilly leaders Roger Ledbetter, Thane Hutcheson and Brent Maier  were joined by Houston real estate industry specialists Sonya Rosenbach,  CFO with Allied Orion Group, and Rene Joubert, principal with i3, for a  panel discussion on real estate industry trends and opportunities with  the Houston Business Journal. Topics discussed include: Recent trends in the real estate market Minimizing exposure of assets and taking advantage of opportunities during economic uncertainty  Best practices for Opportunity Zones Real estate portfolio shifts Attracting tenants to properties Overlooked funding sources
Real estate portfolio performance: the pros and cons of in-house performance measures vs. outsourcing Monitoring and assessing real estate portfolio performance can be a  challenge for any real estate owner, especially those that hold many  assets. Deciding between in-house performance measures compared to  outsourcing to a third party can be a difficult decision for many  reasons, including cost, expertise and resources. 

In this  segment of the panel discussion, the same group provides insights on the  pros and cons of relying on in-house performance measures as compared  to outsourcing these to a third party. 

Baker Tilly leaders joined the Houston Business Journal for a dynamic  panel discussing trends and opportunities in today’s real estate market.

Project Finance

Real estate outlook 2020: trends and opportunities

Providing real estate developers, owners, operators and investors with valuation and advisory services for real estate entities, property portfolios, and complex developments.

The need for specialized valuation services is ever increasing in today’s business and regulatory environment. The valuation of business interests and related assets in the context of company advisory, financial and tax reporting, portfolio valuation, estate planning, insurance valuation and due diligence is at the center of many important strategic and financial decisions, making the selection of a valuation consultant a critical choice. Baker Tilly’s dedication to all aspects of real estate valuation means you can count on our experience, knowledge and objectivity to address your business needs.

Real estate valuation is a complex and disciplined process that requires deep understanding of properties and broader market trends. Our real estate valuation and advisory services professionals work closely in the context of transactions on a regular basis, which allow them to apply holistic, strategic insight encompassing the entire transaction lifecycle.

Due diligence
– Financial due diligence
– Tax due diligence and structuring
– CAM reconciliations
– Lease review and abstraction
– Argus and roll diligence

Decision support and analysis
– Fairness opinions
– Solvency opinions
– Rent studies
– Transaction structuring
– Deal modeling and assumption testing
– Valuation assistance

Integration
– Interim management assistance
– Project-based accounting and financial services
– Project management
– Systems implementation

Purchase agreement
– Working capital/closing date balance sheet
– Earn-out calculation support
– Dispute or claims support

Valuation
– Purchase price allocation, impairment analysis (ASC 805 and ASC 350)
– Periodic fair value reporting
– Tax matters

Our accurate and reliable real estate valuations paired with strategic advisory services encompass the entire transaction lifecycle.

Innovative solutions for developers, owners, investors and property managers. 

Baker Tilly leverages deep industry knowledge and operational experience to offer private equity clients value from the fund level down through the entire portfolio. 

Deep experience with private equity firms, portfolio companies and investment firms means Baker Tilly can help with your tax, audit, reporting and regulatory compliance

We bring insight across the supply chain to improve efficiencies, reduce risk and offer solutions as market disruption continues.

We deliver innovative and sustainable results through our collaborative approach across the provider, health plan and life sciences spectrum. 

Baker Tilly’s healthcare and life sciences professionals can help you navigate the future of the complex healthcare industry. 

Advisory, tax and assurance services for real estate investment funds, REITs, private equity real estate, institutional investors, family offices, endowments and foundations.

Transaction, tax, assurance and advisory services for hotel owners, developers and investors.

Transactions, tax, audit and advisory services for multifamily housing developers, owners and investors.

Baker Tilly’s consulting, assurance and tax services help healthcare providers minimize cost and increase revenues while balancing healthcare reform and patient demands

Baker Tilly’s senior services team provides solutions for life plan communities/CCRCs, skilled nursing, assisted living, and home- and community-based service providers as well as affordable housing communities for the elderly and people with disabilities.

Baker Tilly’s valuation professionals provide supportable, defensible and unbiased valuation opinions that can stand up to the highest levels of scrutiny.

Baker Tilly provides a wide range of companies with information on a broad range of valuation matters that are critical to their strategic and financial decisions.

Middle-market business owners, investors and corporations rely on our sell-side, buy-side and financing solutions to execute their growth strategy.

Whether it is for an acquisition, sale or refinancing, Baker Tilly provides due diligence services tailored to meet your specific needs.

Individuals and companies that build, purchase, remodel or expand any  kind of real estate can benefit financially from using cost segregation.

Baker Tilly’s skilled cost segregation specialists conduct studies to help our clients increase not only the amount they can deduct on state and federal returns, but also their cash flow.

When the numbers don’t add up, we cut through the clutter to deliver independent financial analysis that sets the record straight. 

We advise clients throughout the entire lifecycle of a legal dispute — and when it comes to the courtroom, there is no one better to have on your side

Real estate valuation and advisory services

Real Estate Valuation & Advisory Services

Commercial real estate market report: Q3 2020

Commercial real estate market report: Q2 2020

The Impact of COVID-19 on real estate valuation and leasing

Long-lived real estate asset impairment: testing and fair value measurement in response to COVID-19

Real estate portfolio performance: the pros and cons of in-house performance measures vs. outsourcing

Real estate outlook 2020: trends and opportunities

Real Estate

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Healthcare & Life Sciences

Real Estate Investors

Lodging

Multifamily Housing

Hospitals & Health Systems

Senior Services

Valuations

Mergers & Acquisitions

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Cost Segregation

Complex Disputes & Litigation

Providing real estate developers, owners, operators and investors with valuation and advisory services for real estate entities, property portfolios, and complex developments.

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