Commercial Real Estate Blog by Madison
Tag Archives: SPE

Parking Arrangements in Reverse Exchanges – Part 3

By Lee David Medinets, Esq., Chief Counsel, MCRES, Madison Exchange a/k/a Madison 1031, and affiliates

In my last post, we looked at how a safe harbor reverse exchange works under Rev. Proc. 2000-37. Either the relinquished property or the replacement property is “parked” with an “exchange accommodation titleholder” or “EAT”. We also discussed the restrictions on a safe harbor reverse exchange that must be included in a “qualified exchange accommodation agreement” (a “QEAA”) in order to have the benefit of the safe harbor. In this post we will examine the difference between parking a replacement property versus parking a relinquished property.

There are usually some significant advantages to parking the replacement property instead of the relinquished property. Here are five advantages. Continue reading

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Independent Directors of SPEs – Satisfying Best Practices in Commercial Lending

By: Daniel Kasten, CPA, CFO, Madison Commercial Real Estate Services

Best practices are a useful tool for real estate owners and managers to operate their business successfully by providing a framework for the professional delivery of CRE services. When it comes to commercial real estate lending, lenders often approach a transaction with their own set of best practices and requirements. In order to qualify for a loan, lenders expect adherence to these regulations, and consistent adoption of best practices.

One of these best practices is the establishment of a Single Purpose Entity (SPE). While many real estate owners wish to comply with lender’s regulations, establishing bankruptcy remoteness with an Independent Director can be difficult for some. Members of the real estate industry are often hesitant to include an unrelated third-party in their private transactions. Why is that, and why are lenders increasingly requiring SPEs? Should real estate owners worry about SPEs? Continue reading

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