Dealmaking Today and The New Normal

“The future ain't what it used to be.”

Yogi Berra


Business owners expecting to ride out the current economic storm until things return to normal are beginning to listen to that little voice in the back of their head telling them, this is it, this is the New Normal.

So what does this mean to the deal making community?

In my world of midmarket mergers and acquisitions (ComReal’s typical deal structure is between $2 and $50 million) it means the smart money is stepping off the sidelines and into the game. They realize waiting to move until the market hits the bottom is a suckers bet.

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. "

Warren Buffett

Companies staring at zero or slightly negative organic growth are seeking acquisition strategies as a means to keep the revenues rising. Many also see an opportunity to pick up some competitors on the cheap who are faltering under market conditions. Because financing is so tight, only the well capitalized companies are pursuing this strategy, which actually increases the chances for making the deals work. All banks say they are lending, but per the New Normal, only to safe bets like a well capitalized company. It is times like these that good companies seize opportunities and become masters of their market.

On the flip side sellers who have positioned themselves to withstand the economic turmoil are in the catbird seat. In addition to the aforementioned strategic buyers, private equity groups are sitting on funds for buyouts. In their world it is use it or lose it and many are running out of time before they have to start handing money back to investors. So they are buying, albeit cautiously. And of course the weak dollar still manages to attract foreign investment.

There is a fundamental misunderstanding about declining valuations. Because most deals are structured as a multiple of net or gross revenue and because the market overall market has seen a reduction in this revenue, deals overall are reflecting lower price points. But the multiples themselves have remained relatively stable and in some cases have risen among those companies that have proven to be recession resistant. If you’ve worked hard to put yourself in this position strike while the iron’s hot to capitalize on it.

Of course another reality of the New Normal is that to truly attain maximum results requires the steady guidance of an experienced professional advisor. You can be sure the other side is using them. If you find yourself seeking a business or commercial real estate transfer strategy please call ComReal for a no obligation consultation.

Michael Weihl mweihl@comreal.com

Business Intermediary

ComReal Miami Inc. www.comrealmiami.com

CBS Interactive leases 34,622 sqft in LEED certified building!

As a strong proponent of LEED certification in Commercial Buildings, I am happy to share that CBS Interactive has signed a long-term office lease for 34,622 sqft of office space in the 1401 Crown Center building in Fort Lauderdale as reported to-day in the Daily Business Review. http://www.dailybusinessreview.com/news.html?news_id=58127

The broker quotes 3 major components to CBS's decision to relocate to Crown Center: minimal employee disruption during the move, more efficiency with the space, and a LEED certified building.

In the Cypress Creek market area vacancy is quoted in CoStar at 15.1% in Class-B buildings with an overall net absorption of -120,869.00 just in the Cypress Creek sub-market.

Lynn-Ann Ierna, the director of Property Management for Midgard Properties, can attest to the cost savings the Crown Center property has experienced as a direct result of pursuing LEED-EBOM (Existing Building Operations and Maintenance) on other Crown Center buildings. Now Midgard has bragging rights for having a fully leased LEED-NC (New Construction, Major Renovation) project on their campus in a very challenging market.

Louise Bendix, LEED-APOffice Specialist
ComReal Miami, Inc. Commercial Real Estate Services
T 786-433-2376 F 305-591-9704
lbendix@comreal.com www.comrealmiami.com

LEED and Commercial Buildings- Measuring up

The statistics to support change in the way develop building projects are compelling but the “do-good” rationality is not strong enough to bring forth a meaningful change in behavior.

What developers and building owners need are solid facts on ROI. How much will it cost to build green and what is the pay-off?
click here for more

It is looking like the meaningful pay-off is not only going to be in direct energy savings or in operating expenses but the real motivation is going to be in retaining higher lease rates and higher occupancy rates.

In a market with shrinking absorption rates and falling rents not just building green but retrofitting green looks like a win-win strategy to retain value and retain tenants.

A study by CoStar Group and University of San Diego found that green buildings outperform non-green peers across several categories, including occupancy, sale price and rental rates, sometimes by wide margins.

If you would like a copy of the power-point please contact me directly at:

Louise Bendix, LEED-APOffice Specialist ComReal Miami, Inc.
Commercial Real Estate Services
T 786-433-2376 F 305-591-9704 O 305-591-3044 X115 l
bendix@comreal.com www.comrealmiami.com

ComReal Miami and BBU Bank co-host CIASF luncheon

ComReal Miami and BBU Bank co-hosted CIASF's 2009 First Annual Retail Market Report this afternoon at 9500 Doral Blvd. in Doral. Steve Smith, president of ComReal and owner of the 9500 building, completed a remarkable renovation in 6 months and signed BBU Bank as the anchor tenant.

The 120 attendees enjoyed a delicious lunch, a round of "haves and wants", and a presentation on the 2009 Retail Report by David Dabby, JD, MAI, a well know real estate analyst. Following his presentation was a panel discussion by Steven Gretenstein, Chief Operating Officer, Dacra,and Mindy McIlroy, Executive Vice President, Terranova Corporation.

The bottom line for brokers representing retail tenants? If you have tenants bring them to the table to make a deal. Old rules do not necessarily apply today. Retail is driven by consumer spending and it seems as if consumer spending will take a while to recover.

Pictured: Rafael Saldana, President and CEO of BBU Bank

Gail Ackerman, President of Paradigm Interiors and CIASF representative

Steve Smith, President of ComReal Miami and owner/ landlord of 9500 Doral Blvd.

Louise Bendix, LEED-AP and Office Specialist

ComReal Miami, Inc.

786-433-2376

CCIM STDBonline Course in Miami

On September 29th 2009 CCIM Miami had the first STDBonline training course since the new and improved features were launched. The course was limited to 30 spaces and was lead by Jay R. Lucas, CCIM the current President and CEO of STDB Inc. which operates the Site to Do Business. STDBonline is the most comprehensive online resource available to commercial real estate professionals today.

The participants were able to familiarize themselves with all the new features of Site Analysis 3.0 with an emphasis on thematic maps, user points, map annotation tools and business lists.

Webinars are conducted weekly on various features within Site Analysis 3.0. To register, visit http://www.stdbevents.com/.

For more information visit us at: http://chapters.ccim.com/floridamiamidademonroe.