As this article goes to press, the clock is ticking on two of the first significant deadlines connected to Opportunity Zones. The countdown is on to Dec. 31.
“The first issue is the 15-percent step-up in basis, which effectively gives you a 15-percent discount on your initial Capital Gains taxes that would be
due in December 2026. An example would be the sale of Netflix stock,” explains Craig Bernstein, Principal and Chief Investment Officer at OPZ
Bernstein, a Washington, D.C.-based real estate private equity fund that specializes in Qualified Opportunity Zone fund investments (“QOF”). That step-up in basis is a huge selling point of the Opportunity Zone program, created by the 2017 Tax Cuts and Jobs Act. By reinvesting Capital Gains in Qualified Opportunity Zone funds, investors are able to defer, reduce and, in some cases, eliminate any Long-Term Capital Gains taxes on the Opportunity Zone Fund investment. Click to read more at www.rednews.com.
Topline: WeWork parent firm We Co is considering slashing its share offering by half, which could take the company’s valuation to $20 billion in its anticipated IPO and far below the $47 billion that the fast-growing real estate firm, with hundreds of office-sharing spaces worldwide, was valued at in January.
- According to reports, the company’s financial advisors could seek a valuation of $20 billion to $30 billion in its initial public offering. It is not yet known whether We Co will advance with its IPO this month as planned following its filing in August, or delay it.
- Concerns around corporate governance and the nine-year-old firm’s business model have been previously raised, including founder and CEO Adam Neumann borrowing millions of dollars from the firm at a low interest rate, to buy property for WeWork to lease. Click to read more at www.forbes.com.
WeWork – now rebranded as The We Company (WE) – filed its initial S-1 on August 14, and the company reportedly plans to go public in September. There isn’t official pricing information, but the company’s most recent funding round – a $2 billion investment from SoftBank in January – valued the co-working company at $47 billion. At this valuation, WeWork would be the 2nd largest IPO of 2019, trailing only Uber (UBER). WeWork might not be the largest IPO of 2019, but it is easily the most ridiculous, and the most dangerous. At least, Uber and other recent big-money IPO’s offered some legitimate innovation in their business models even if their valuations were far too high. WeWork has copied an old business model, i.e. office leasing slapped some tech lingo on it, and suckered venture capital investors into valuing the firm at more than 10x its nearest competitor. Click to read more at www.forbes.com.
HOUSTON – Local multifamily occupancy (90.2 percent) and rents ($1.17 per square foot) significantly rose over the year in the second quarter 2019, improving on the flat rent and occupancy growth in the prior quarter. Year-to-date net absorption reached 10,094 units, which means Houston has already absorbed more in two quarters than it had all of last year. Deliveries (3,303 units) are up compared with last year, as is the number of units identified as under construction (22,094 units). High-wage job growth has remained strong thanks to manufacturing and professional services jobs. Click to read more at www.recenter.tamu.edu.
The retail sector faces well-documented struggles today. But despite these challenges, several grocery store chains are thriving. Some are doing so well, that they not only provide a boost to the retailers around them, they are helping to increase the value of neighboring homes. ATTOM Data Solutions recently studied the financial impact of grocery stores on nearby homes. To do this, ATTOM researched 1,859 U.S. zip codes that had at least one Whole Foods, Trader Joe’s and ALDI store. ATTOM found that homes located near a Trader Joe’s saw an average home seller return on investment of 51 percent. Homes near a Whole Foods saw an average home seller return on investment of 41 percent. That figure stood at 34 percent for homes near an ALDI. Click to read more at www.rejournals.com.
The median sale price of a single-family home in Austin was $407,400 in May—up 5.8% year over year, according to the Austin Board of Realtors. However, it is not just the residential housing market that is changing in the city. Here are six Central Austin trends to watch in 2019. Builders divide office space into separate classes: Class A is a premier space and Class B is more functional space. In East Austin, an increase in Class A square footage over the course of the last year has driven an increase in rent prices. Source: JLL/Community Impact Newspaper.
- Office rent prices on the rise in Austin as new buildings open on the East side According to reports from commercial real estate firm JLL, average rents asked by landlords for office space across the city of Austin are up to $45.22 per square foot in the first quarter of 2019, up from $37.85 per square foot at the same time last year. Click to read more at www.communityimpact.com.