It is not a secret that many commercial real estate loans standon shaky foundations. In-fact it has been recently estimatedthat a “sizable amount of the additional $700 billion in commercialreal estate loans coming due during that time frame are loans thatcould not get refinanced at existing levels in the current lendingenvironment”. This of course will lead to many foreclosures andcreate an investment opportunity for CRE buyers. However, for theunfortunate holder of the original asset there may be a potentiallyhuge tax consequence. There may also be a glimmer of hope in theform of a Zero-transaction.
Simply speaking a zero transaction is the acquisition of aproperty using a highly leveraged loan (loan to value usually 88%plus) with all rental income dedicated towards debt service, thusproducing “zero income” for the property owner. One of thevehicle’s applications is to defer tax liabilities incurred in acommercial foreclosure.
The Problem
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
