U.S. POT LEGISLATION SUDDENLY SEEMS MORE LIKELY: CANNABIS WEEKLY

The article deals with the fact that even though Biden is less disposed towards legalization, he may be pressured by the left of the Democratic Party to enact legalization if he wins.
If the Democrats win the White House and the Senate, the route they may take is decriminalization at the Federal level, then allowing full legalization at the option of each State.

Social unrest, and criminal justice reform are the arguments that the left will use to push for full legalization. And allowing minorities who really suffered from social injustice and unrest to participate in Cannabis businesses.

https://bloom.bg/3iIfxkN

Neo recently got approved for their Cannabis License from Massachusetts State. Check out the interview with CEO Adam Patti.

COMMERCIAL MORTGAGE DELINQUENCIES NEAR RECORD LEVELS

Commercial Mortgage delinquencies are near record levels. They’ve actually come off record levels as the Federal Reserve Stimulus has bolstered that market.
CMBS for hotels and accommodation – the occupancies are expecting to level off at about 41% compared to where they were before!

Of the $18 billion distressed Retail CMBS, $11.4 billion is from bankrupt JC penny.
Multi family has hung in there, stimulus certainly helped keep rent checks flowing. Especially for the lower demographic, but the future is a little uncertain with no new stimulus appearing on the horizon!

Industrials have been the all-out winners due to e-commerce during the coronavirus – warehousing & logistics.
Geographically, distressed CMBS is centered around all the big money centers – they have been the ones to suffer. Places like New York, Minneapolis, L.A & Chicago – no surprised that we are seeing an Exodus from those metropolitan areas.

Commercial Mortgage Delinquencies Near Record Levels

REAL ESTATE: THE CARES ACT HANDED CRE THESE 3 ‘WISH-LIST’ TAX BENIFITS

The CARES Act handed commercial real estate these three tax benefits.

– Net Operating Losses , the Tax Cut Jobs Act (TCJA) of 2017 limited net operating losses to 80%, and you could only offset future profits not previous years. The CARES Act. Now allows you to write off net operating losses going back five years. It created an instant refund for some real estate companies , so the IRS is expecting a big flood of refunds resulting.

– Qualified Improvement to Properties (QIP), the TCJA allowed $10 million accelerated depreciation, BUT when they came to write the bill they forgot to put in it. And the bill was written to allow over 39 years. Due to partisan politics they weren’t willing to come back and fix it, but the CARES Act. took care of it (excuse the pun). This is for commercial non-residential property only. So, if you’ve made a $10 million improvement, you can write it off that year. So that’s a huge bonus.

– Interest expense limitation – the TCJA limited deductibility to between 30-50% of interest expense. That was painful for highly leveraged real estate. You could have made an election as to whether you want it to cap your interest expense, or to use your qualified improvement accelerated depreciation. The CARES Act. allows you to change your election retroactively for 2018 and 19.

You can now go back and see if it was better to use the QIP accelerated depreciation or to cap your interest expense, and then you can make the election going forward, so you’re getting the best of both worlds. Plus its very unusual for the IRS to allow you to change an election in the past.

The optimal solution is based on the holding period of the property and there are a lot of combinations, but commercial non-residential real estate certainly has benefited immensely from the CARES Act.

https://insights.christinala.com/news/the-cares-act-handed-cre-these-3-wish-list-tax-benefits

BUYING STOCKS TRADING ABOVE 10X SALES-A GOOD IDEA?

The last article talked about buying stocks trading about 10 times sales.

Jack Vogel Ph.D. has created a universe consisting mostly of 10 times price to sales multiple stocks and then compared it to the Russell 1000.

Performance over one year 16% versus Russell 1k 9.3%, three years, 21% versus 13.5%, five years, 16% versus 10.6%.

What stocks made it into the ten-time sales universe? Mostly tech & biotech’s such as Visa, Netflix, Adobe & Illumina.

I would say,” this is quintessential data and factor mining, Growth has been outrageously fantastic , also growth normally trades at a higher multiple of price to sales”.

Not sure if this will persist or not.

https://alphaarchitect.com/2019/05/09/buying-stocks-trading-above-10x-sales-a-good-idea/

Distressed CMBS, technology, biotech growth stocks and other hedge fund strategies.
The State of the Hedge Fund Market and Trading Opportunities – with Infinity Capital.