Genesis Capital - Private Client Services

8/3/2019 Genesis Capital - Private Client Services

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PRIVATE CLIENT

SERVICES

J a n u a r y

2 0 1 2

A Genesis Capital Special Report

101 California Street

Suite 2450

San Francisco, CA 94111

offmarketassets.com

t. 415.967.0709

f. 415.963.3537



Many commercial real estate owners are grappling with the question: SHOULD I HOLD OR SHOULD I SELL?

Private Client Services Page 2

A number of experts on the economy, real estate

markets and commercial markets are leaning

towards selling. WHY?

1 A TIDAL WAVE OF DEFAULTS IS APPROACHING:

While property values suffered dramatic losses

in 2008, 2009 and 2010, these losses were not as

severe as expected. In large part, this is because

banks delayed in pursuing foreclosures and

adopted an attitude of “extend and pretend.” In

light of the impending onslaught of maturing loans,

this attitude will be forced to give way. An

estimated $710 Billion in CRE loans will mature this

year. As most of these loans were written at peak

value, they will not qualify for refinancing without a

massive injection of borrower capital.

Over the next three years, $1.4 Trillion in CRE

loans will mature and estimates are that 65% to

75% will be underwater at 130% of Loan to Value,

or worse. As these borrowers have already lost all

of their equity position, it is doubtful they will be

willing to inject the additional capital required to

refinance and these properties will soon flood the

market.

The reality is, the oncoming wave of defaulting

loans will force property values down even further.

2 THE U.S. ECONOMY CONTINUES TO STRUGGLE:

Commercial real estate problems increase with

high unemployment rates, low consume

spending, government uncertainty, higher taxes

and general economic difficulties. Our economy is

currently checking all the wrong boxes.

Approximately nine million jobs are supported by

commercial real estate, including: construction

architecture, interior design, engineering, building

maintenance, landscaping services, janitoria

services, property management, brokerage

leasing, mortgage lending, accounting and lega

services. Projects that are stalled or canceled and

properties with high vacancy rates are leading to

increased layoffs.

Lower commercial property values and rising

defaults are also eroding retirement savings, as

institutional investors, such as pension plans

suffer losses in their commercial real estate

portfolios. Decreasing values also reduce the

amount of tax revenue and fees to state and loca

governments, which in turn impact the amount o

funding for public services such as education

and law enforcement.

To make matters worse, the credit contraction has

resulted in a “negative feedback loop” suppressing

economic recovery and slowing the return o

capital to the commercial real estate market

The fewer loans that are available for businesses

Leveraged Finance and Commercial Real Estate Refinancing Wall

$Bn

45

130

265

440

2455

114

246

106 1335853

56

97

131115

710

368

328

303

310 294

542547

646

498476

792

0

200

400

600

800

1,000

2011 2012 2013 2014 2015 2016 2017

LeveragedLoans H ighYield Commerc ial Real Es ta te Loans

Sources: Foresight Analytics, SNL, Intex, Trepp, Morgan Stanley, Bloomberg, LCD




is hampering employment growth and is

contributing to higher vacancy rates and

further problems in t h e commercial real estate

market.

A few other points about the state of our economy:

14% of our population is on Food

stamps;

43% of our families are broke, and

spend more than they earn each year;

Personal bankruptcies have doubled;

The average person (every man,

woman and child) in the U.S. has

$7,800 in consumer debt.

What has fueled these difficulties for the average

American is that consumer debt nearly doubled

between 2000 and 2007 to a high of $13.8 Trillion.

And consumer spending is the main source of US

economic growth.

The problem is, this rise in consumer debt was

based on inflated residential property values. When

the crisis hit, and property values plummeted, new

borrowing and spending dropped off sharply.

With a high rate of employment, lower wages

increased debt to income ratios, consumer

spending will require a good period of time to fully

recover.

The potential impact that this scenario could have

on owners of commercial real estate, loca

communities, small businesses, banks and

individuals is serious.

The financial crisis will simply not end anytime

soon.

The conclusion reached by many is that now may

be the best time to sell.

The problem is, how do you effectively sel

property in this market? Some have said that the

traditional commercial real estate brokerage firms

are broken. In fact, many firms have not been able

to survive the downturn. Commercial real estate

activity dropped as much as 90% in 2009. Rea

Capital Analytics says that in 2007, $522 Billion of

transactions occurred compared with only $51.9

Billion of transactions in

2009. Using the same old techniques, in a difficult

economic market, simply doesn’t work anymore.

Consumer spending is the main engine of US economic growth

Consumer spending contributions to real GDP growth

% of total growth

77.374.1

70.366.0

71.0

54.4

2000-071995-20001990-951985-901980-851975-80

Source: US Bureau of Economic Analysis; McKinsey Global Institute analysis




OFF MARKET - “THE NEW

MARKET” If you are considering selling your commercial

property, consider doing so “off market.” Genesis

Capital is a firm that sources off market assets to a

closed network of qualified and proven buyers.

At Genesis Capital, we provide several benefits to

you, the seller of commercial real estate:

1. No Fees to the Seller: Our Fees are paid

directly buy the Buyer and are not

subtracted from the purchase price. The

price you agree upon with the Buyer is the

price you will receive.2. Your property is discretely off market:

We market your property directly to a

qualified and proven stable of Buyers. Your

name, your tenants’ names and the exact

location of the property are kept

confidential until a Buyer expresses further

interest. At that point, the Buyer also signs a

confidentiality agreement before receiving

your due diligence materials.

3. No long-term listing agreements. We

recognize that property listed for sale has a

shelf-life. We strive to move properties

quickly. If we can’t get it moved, you are not

obligated to continue using our service.

4. Vetted and Proven Buyers: Our buyers

are vetted real estate investment firms

such as REITs, Trusts, Funds, family

offices, sovereign funds and wealthy private

investors. These investors have the provenability to close.

Collectively, our Buyers represent approximately

$30 Billion in active demand.

HOW DOES IT WORK?When you agree to work with Genesis Capital, our

Area Manager will discuss your property with

you in detail. A general profile of your property wil

be prepared and placed into our passwordprotected online SHOWCASE. This general profile

does not reveal your identity, your tenants

identities, nor does it reveal the name or location of

your property. Our Buyers are notified of the new

opportunity and have the ability to search and

browse all property summaries 24/7. We also

directly market your property, via phone and email

to our Buyers whose acquisition criteria match your

property’s profile.

If your property’s profile sparks interest, the Buyer

signs a Confidentiality Agreement. At that point

more information and due diligence can be

released so that the Buyer can make an offer and

move into contract with you.

We protect your property information in a safe

encrypted, password-protected due diligence

room and only give access to those who havesigned our Confidentiality Agreement. Typically

your survey, title, title insurance, rent roll, appraisal

site plan, environments, etc., will be housed in this

area.

If your property is of interest to one of our Buyers,

this approach provides a quick transaction process

without the lengthy wait for a broker to locate

a buyer, and without you being locked into a

long listing agreement. You can move swiftly fromcontract to closing with the added benefit of

not being responsible for a brokerage fee. Our

Buyers are willing to pay our fee in exchange for

getting access to off market, non-listed properties.




We realize that price will be important to you, and

to the Buyer. It is important to understand that

buyers (especially all-cash buyers) in this market

will not overpay, and valuations can be difficult.

We ask both parties to be open to negotiations so

that the transaction becomes a win-win situation.

THE BOTTOM LINE:If you are looking to sell commercial real estate

you have come to the right place.

GENESIS CAPITAL - ANINNOVATIVE APPROACHTO TODAY’SCOMMERCIAL REALESTATE MARKETGenesis Capital combines web-based innovative

technology with personalized communication and

services. We facilitate the confidential purchase

and sale of commercial real estate assets and

notes between willing Buyers and Sellers. Our

Area Managers source property across the nation

from sellers like you. Our investment relations team

matches your property to those Buyers whose

acquisition criteria match your property’s profile

and work hard to get your property sold. Your

Area Manager will work with you every step of the

way.

Genesis Capital currently houses nearly $3 billion

of commercial real estate in our Showcase and

we match that with more than $30 billion worth of current buyer demand.

BENEFITS OF WORKING WITH GENESIS CAPITAL

Instant deal flow between buyers and

sellers on desirable properties.

Controlled, secure, password protected

environment.

Free encrypted virtual deal rooms.

Discreet, fast and efficient sales in an off

market environment.

No Cost to the Seller

No Long Term Commitment

START TODAY

Give us a call.

Terry Robinson Terry Robinson

CEO

(415) 506-9342

[email protected]

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Genesis Capital - Private Client Services