Kyle Matthews’ Post

Waffle House in Oklahoma! We were looking for a breakfast place and my son said he had never been to a Waffle House and I said “well you’ve never lived!!!” Smothered, covered, chunked, diced, peppered, capped or topped…

While depreciation and the ability to shelter income is one of the many modern miracles in commercial real estate, beware of the very important, not often discussed, and often overlooked consequence that is created through this process called: Depreciation Recapture.   Unless you are going to do a 1031 exchange, when you go to sell your investment property, the IRS will tax you at ordinary income rates up to 25% of the total amount of depreciation you’ve taken over the life of your ownership of the asset.   This becomes especially punitive if you have come close to fully depreciating the asset in a short period of time by way of using cost segregation.   While cost segregation is truly a great IRS approved tool to shelter income many owners are unaware of depreciation recapture and the financial implications and complications it creates when considering selling an asset.   *Disclaimer* I’m not a CPA or tax advisor, but I strongly encourage you to speak to one before making any decisions relating to this topic.

“I came for the winter but stayed for the summer.” So happy to have been able to spend some time with the family in such a beautiful place as Telluride, CO. If you haven’t yet visited here, you owe it to yourself to check it out. It’s one of America’s best kept secrets, partly because it's not as convenient to get to as other ski/mountain towns.

$20 is the new $5. I gave two of my kids $20 each for lunch at camp today, thinking it would be more than enough. Drink, sandwich, snack. They came back with no change. Not a good sign for a lot of folks living paycheck to paycheck.

I think people may have overlooked a very subtle but significant pivot in Jerome Powell's comments today. While he still referenced needing to see more "good data" on the inflation front before rate cuts begin, he spent materially more time talking about Labor Market risks than any previous presser. In my opinion, this is him recognizing that there are clear cracks beginning to show in the labor market as evidenced by the unemployment rate rising from 3.4% to 4.1%, amongst many other indicators (JOLTS, falling wage inflation, etc.), I believe he is laying the foundation for a message pivot in late July, and a rate cut in September, but given the reaction to the last time he very erroneously discussed the possible beginning of the rate cut cycle last December, he is taking a much more cautious and calculated approach to this incredibly important coming policy shift. JPow is in front of the House Committee tomorrow, keep an eye on this subtle change in messaging.

Not everyone reaches the top fast. Whether it is a hike up to an alpine lake, or a climb to the top of your profession. Success has its own timeline, and whether you reach the top in your 20’s and 30’s, or it takes you longer, the destination is worth climb. The harder the climb and the higher up it is, the more spectacular the experience is when you get there, so keep climbing!

Shotgun CRE 7.5.24

Gang gang gang

🎙️The final podcast recorded at ICSC will be released tomorrow. I had the pleasure of speaking with Brad Hutensky CEO and Founder of Hutensky Capital Partners. Listen tomorrow on all platforms to hear the insights from a seasoned vet in the industry