Managing Commercial Real Estate Before and During Economic Recessions The United States economy and real estate markets have been healthy for an unprecedented period of time. Unfortunately, national economies and real estate markets are subject to economic cycles. Now, due to the unforeseen COVID-19 pandemic in combination with underlying market conditions, the chances of a significant economic recession are increasing. Best practices for effectively managing commercial real estate holdings in the next several years will be different than those for the last ten years. While it remains everyone’s goal to maximize profits and yields, sometimes the short-term goal is to minimize losses. Both before and during a recessionary downturn, best management practices require specialized knowledge and experience in order to minimize losses. In their decades of professional practice, senior management at Federal Appraisal LLC has lived through several significant recessionary periods. This market experience allows them to advise businesses and investors on how best to preserve profits and minimize losses during challenging economic times. Federal Appraisal provides the following appraisal and consulting services to assist their clients with preserving value during recessionary periods and economic downturns: Property tax appraisal and consulting services during economic downturnsreducing property taxesproperty tax assessment appeals litigation/expert testimony Identification of potential surplus property for pre-transactional or re-positioning due diligence Analysis of opportunities for investment in distressed properties Appraisal and consulting services for gift and estate tax planning and reporting purposes Feasibility studies for development, renovation, and/or changes in real estate highest and best use Marketability studies for the impact of recession on demand (for multifamily, office, retail, industrial properties, and more) Case Study One – Concrete Pipe Manufacturer Federal Appraisal advised a regional manufacturer on the value of its various real estate holdings, identifying surplus property to be sold and for how much, and what property was to be preserved and maintained to maximize value to the company. The process identified millions of dollars in untapped, idle value which could be redirected to core business activities. Case Study Two – Property Tax Appeals on Commercial Real Estate Investment Portfolio The senior management at Federal Appraisal reviewed the investor’s portfolio, identified the properties deserving property tax reductions, completed property tax appeals, negotiated tax reductions for some properties, and provided expert testimony in trials for tax reductions for others. The process saved the client more than $10,000,000 in property taxes. Case Study Three – Opportunity Investor Federal Appraisal provided pre-acquisition appraisals and due diligence support to an investor buying a portfolio of troubled power plants, earning the investor yields greater than 25%. Read more at Impairment Studies.

Lease Audit/Analysis Federal Appraisal provides expert lease audit and lease analysis services. Commercial real estate leases are often very complex.  They often include unspecified rent and expenses beyond the base rent.  These include rent escalation clauses, operating expense passthroughs, real estate tax passthroughs, common area charges (CAM), electricity charges, other utilities charges, insurance charges and many others.  These rents and passthrough could have any number of methods of calculation, including a net passthrough, a pro rate share, a specified (non-pro rata) share, and the methods can change from year to year. They can have minimums and maximums and they can be based on changes over a base amount or index.  Even base rent calculations are often complicated, with periodic base rent adjustments such as steps, CPIs, and mark-to-market clauses. Analyzing leases is thus, difficult for the inexperienced.  Since lease payments can equal the market (sales) value of the real estate in as short as seven years, the consequences of not auditing a longer term commercial real estate lease can result in substantial losses. Services to Tenants Leased Fee or Leasehold Appraisal Federal Appraisal LLC provides appraisals of any type of lease interest, leased fee or leasehold interests, for any accounting or legal reasons. Lease Audit Lease audits examine the payments requested by landlords to determine their appropriateness.   Lease audits help identify errors and recover overcharges. Our process includes the analysis of the lease, the landlord's payment requests, the landlord's records to the extent permitted by the lease.  It can include a results presentation to and negotiations with the landlord to recover overcharges.   Lease Analysis Since the sum of the lease payments over a term of about seven to ten years can equal the market (sales) value of the real estate and since lease payments are often so complicated, all negotiations for longer term leases should be conducted with the counsel of expert real estate analysts, such as those at Federal Appraisal LLC.  We can provide buy/rent decision analysis, lease to lease cash equivalence comparisons, and other due diligence support and reporting. Services to Landlords Lease Audit Lease audits examine the payments requested by landlords to determine their appropriateness.   Lease audits help identify errors and recover undercharges. Our process includes the analysis of the lease, the landlord's payment requests, and the landlord's records.  It can include a results presentation to and negotiations with the tenants to justify the charges. Lease Analysis Since the sum of the lease payments over a term of about seven to ten years can equal the market (sales) value of the real estate and since lease payments are often so complicated, all negotiations for longer term leases should be conducted by expert real estate analysts, such as those at Federal Appraisal LLC.  We can provide buy/rent decision analysis, lease to lease cash equivalence comparisons, and other due diligence support and reporting. Services to Buyers and Sellers - Due Diligence We also provide and/or certify rent rolls, lease cash flow projections, and net present value calculations of lease income.

Federal Appraisal advises on Acquisition and/or Disposition Due Diligence Buying property is often the largest purchase for private citizens.  Buying and selling property is often the largest financial endeavor of larger entities and governments, as well.  Federal Appraisal provides Acquisition and/or Disposition Due Diligence valuation services to our client to ensure optimal outcomes.  In addition to market value appraisals, we provide offering price valuations, negotiated price valuations, and low/high risk price valuations.  We also provide fairness opinions, feasibility studies, and market studies.

Corporate Real Estate Each corporation has its own unique business requirements. That’s why Federal Appraisal, LLC was formed. Many of the appraisal and consulting needs of corporations can only be solved with complex and non-traditional appraisal and consulting services. Federal Appraisal specializes in those services. We understand that each investor requires different analyses and reporting. We tailor each of our engagements to the needs of the individual corporation and to those investing in the corporation. Our services to corporations include: Business Appraisal / ValuationGoing ConcernGood Will & IntangiblesMark to MarketLiquidation Damages and Lost Income Small and Mid-Sized Corporations and Businesses Site selection Acquisition and disposition due diligence services and support Transaction assistance Executive Summary reports and other report formats Lease Auditing and Analyses, net lease analyses Market reviews and real estate research Financial and sensitivity modeling Portfolio reviews Fairness Opinions and Comfort Letters International transaction/multi-lingual capabilities Management information systems and technology applications IRS and State Tax ReportingCost SegregationPurchase Price Allocation Impairment Studies SEC / Investor Reporting Portfolio and single asset appraisals, valuations Portfolio analysis and strategy Real estate department management review Advisor compliance reviews Property manager compliance reviews Market studies and research Feasibility Studies Development analysis Internal and external appraisal reviews Expedited services for time-sensitive projects Property Tax See Business Valuation/Asset Type, Accounting and Legal issues pages, for more information on Federal Appraisal. Management Consulting Issues and Solutions for Corporations & Private Owners Federal Appraisal provides user-defined scopes of services and agreed upon procedures services relating to Corporations & Private Owners. Securities and Exchange Commission (SEC) Federal Appraisal, LLC provides the real estate appraisals and valuation reporting support required by the SEC. See our SEC page for more information. Internal Revenue Service (IRS) Federal Appraisal, LLC provides the real estate appraisals and business valuation reporting support required by the IRS. See our IRS page for more information. Corporate Headquarters and Campuses While a corporate headquarters may entail one large specially built office building, a corporate campus typically comprises multiple buildings or a variety of occupancy types (office, research, manufacturing, processing) at one location that act together as one economic unit in support of the corporation.  They frequently have centralized support, amenities, and other internal functions.  Frequently, headquarters and campuses have sizable buildings and frequently cover dozens sometimes hundreds of acres of land.  They frequently have expensive-to-build special improvements and finishes, and therefore, their cost new can be unusually high.  Consequently, if their highest and best use remains as a headquarters or campus, then their values will likely be high.  Conversely, if the company that developed the headquarters or campus no longer needs it, given the nature of the special purpose improvements, the headquarters or campus may suffer substantial functional and or economic obsolescence. Therein lies the basis of appraisal challenge and of valuation disputes.  Federal Appraisal regularly testifies to its appraisals on these types of issues for corporate headquarters and campuses. Federal Appraisal has appraised dozens of corporate headquarters and campuses in the United States for a variety of purposes and uses. Federal specializes in appraising corporate headquarters or campus that include: Research and development Wet/dry laboratory space Warehouses and manufacturing buildings Office Buildings of all different types Power Plants and Power Plants that serve corporate campuses Excess and surplus land, water frontage, water rights, rights of way and easements