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Hedge Fund Executives Explore Trends in New ‘Wall Street South’

Hedge fund professionals gathered in Miami recently for the Miami Finance Forum’s exclusive power breakfast panel discussion  on the industry’s performance in 2013 and expected trends in 2014. The discussion also included a unique focus on the growing hedge fund industry in the new Wall Street South – Miami.
Raul Garcia, CPA, of Kaufman Rossin in Miami

I was honored to moderate the discussion on March 19th with panelists Steve Mason of Collins Capital, Michael Aronovitz of Gables Capital Management, Jesse Wachs of Powell Investment Advisors, Paul Schwarz of Lighthouse Partners and Marc D. Sarnoff, City of Miami Commission and Chairman of the Miami Downtown Development Agency (DDA).

The panel discussed three trends that are expected to continue during 2014:

  1. Continued operational cost efficiency
  2. Heightened regulatory environment
  3. Demand for liquid alternatives (i.e., 40 Act Funds)

Operating costs

Continued operating cost efficiency was of particular interest to the panel.  Margins continue to diminish due to an array of factors, so investment managers are looking for ways to slash costs. Many investment managers favor a reduction or elimination of state and local taxes, which can exceed 13% in some jurisdictions. Florida’s favorable tax environment is an advantage that the DDA has used to lure investment managers.

Case in point: Universa Investments is the first big catch for the DDA, who convinced the firm to move from California to Florida. “Florida’s business-friendly policies, which are different from California’s, offer the perfect environment for us as we expand,” said Mark Spitznagel of Universa Investments. Commissioner Sarnoff said there are four other large fund families that are currently contemplating a similar move to Miami.

Regulatory environment

The panel also discussed the heightened regulatory environment that the hedge fund industry is currently experiencing.  While there was a consensus that increased regulation is raising the costs of managing a fund, the higher level of investor confidence that results from increased regulation is a benefit that cannot be ignored.

Liquid alternatives

Lastly, one of the biggest concerns for investment managers is raising capital.  In the Kevin Costner movie Field of Dreams, he was told to build a field and they would come!  Unfortunately, as most managers have experienced, this is not the case with investors in the hedge fund world. Accordingly, hedge fund managers have started turning to 40 Act liquid alternative funds to attract more investors.

What’s a 40 Act fund?  It’s a pooled investment vehicle offered by a registered investment company – as defined in the 1940 Investment Company Act – that is not purely pursuing long-only investing in equities of debt instruments.  The 40 Act liquid alternative funds afford the regulatory protection of a registered mutual fund with the flexibility offered by an unregistered hedge fund.  The 40 Act funds have a relatively high entry point but open the investment manager to the 401(k) investor base in the U.S. – the Holy Grail!

The panel discussion concluded with an overall sense of enthusiasm for the recent trends in the industry, particularly, the maturation of the hedge fund industry in Miami – aka Wall Street South.

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Raul A. Garcia, CPA, is a financial services principal in Kaufman Rossin’s Miami office. Kaufman Rossin has been recognized as one of the best CPA firms in the U.S. Raul can be reached at rgarcia@kaufmanrossin.com.

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2014 Outlook, Trends for Commercial Real Estate in South Florida

More than 500 real estate developers, owners, investors, and other industry professionals attended the recent Marcus & Millichap CRE Forum. They shared insights, trends and outlooks for South Florida’s increasingly competitive commercial real estate market.

Foreign dollars keep flowing in

Marcus & Millichap CRE ForumNot surprisingly, Miami continues to be a hot spot for international investors. Great weather, favorable tax structures, diversity and openness to newcomers make this an attractive city for commercial real estate buyers. Investors from Latin America, Asia, Brazil, Russia and Germany have been pouring money into the market, and this trend shows few signs of slowing down this year.

The influx of foreign capital, as well as urbanization by young professionals, has created a comeback for the condo market. But it’s different this time around.

The main differences in this cycle are:

  • Diversified international investment from many regions, not just Latin America
  • Buyers using more cash and lower leverage to purchase
  • Urbanization of the region is driving demand
  • And on the developer side the capital stack continues to shift:
    • Lower loan-to-value ratios and, in some cases, lenders have been completely sidelined
    • Financing via equity and deposits is considerably more prevalent
    • Equity is more patient and resilient to downturns in the market

Retail, retail, retail

It’s all about retail, said panelists during the “The Miami Story: Outlook for Commercial Real Estate 2014” session. Matthew Whitman Lazenby, president and CEO of Whitman Family Development, was one of those panelists. He said his company, which specializes in retail development, management and leasing, is coming off a great year and looking forward to another successful year.

The session titled “The Next (RE)volution: Miami Retail Comes of Age” looked more closely at the retail segment, which is undergoing a paradigm shift.

International buzz about the opportunity for retail development in Miami has led to higher demand for space; that coupled with increased urban density means land prices are going up. As a result, commercial real estate developers have realized they must start using land more efficiently. And larger retailers are starting to downsize their footprints because online shopping has shifted a significant part of their sales from brick-and-mortar locations to digital storefronts.

The traditional model of a large anchor tenant and a sprawling parking lot is being replaced by mixed-use plans with multi-family housing on upper levels, retail on the ground floor and built-in parking.

South Florida also benefits from relatively good employment numbers and a steady stream of tourism, which keeps the local retail segment healthy.

Nitin Motwani, a principal at Miami Worldcenter Associates who was a panelist in the outlook session, is very optimistic about South Florida’s commercial real estate market. Retail demand is strong, the high speed rail is helping, and hotels want to be here, he says.

There are still some questions to be answered, such as what’s the real value of these new mixed use assets and who will buy them (REITs bought the old model). However, the overall sentiment at the CRE Forum about the local commercial real estate market was mostly positive with real estate industry professionals looking forward to the opportunities and challenges 2014 will bring.

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Marc Feigelson, CPA, is an assurance and advisory services principal and real estate industry practice leader in Kaufman Rossin’s Miami office. Kaufman Rossin is one of the top CPA firms in the country. Marc can be reached at mfeigelson@kaufmanrossin.com.

Tim Rubin is an assurance and advisory services manager and a director of client services for Broward County at Kaufman Rossin. Tim can be reached at trubin@kaufmanrossin.com.

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Kaufman, Rossin in the Community: Camillus House and Junior League of Miami

Kara Stearns Sharp and Yaury Jattin talk about their community involvement:

 Junior League of Miami at Camillus House

Even the youngest volunteers help the Junior League of Miami feed those in need at Camillus House’s Thanksgiving lunch.

Which organization are you involved in and what is its objective?

We are involved in Camillus House through Junior League of Miami. Junior League volunteers provide women who are homeless with self-esteem building activities, nutritious meals and personal improvement activities. Activities are hosted at the Martha and Mary Wing of the Beckham Hall Emergency Shelter, where the women reside. In addition, Junior League members coordinate drives to include: clothing, underwear, bras, towels, sunglasses, flip-flops and walking shoes, and personal care kits with items such as soap, toothpaste, wash clothes, and deodorant.

Junior League’s vision, mission and focus areas are as follows:

  • Our vision: To empower Miami’s women, children and families to conquer tomorrow’s challenges and to build a united community.
  • Our mission: The Junior League of Miami, Inc. is an organization of women committed to promoting voluntarism, developing the potential of women, and improving communities through the effective action and leadership of trained volunteers. Its purpose is exclusively educational and charitable.
  • Our focus areas: Families at risk with projects involving homelessness, family violence, children’s and women’s health, early childhood education and foster care.
 Camillus House is one of our community projects.

What is your role with the organization?

We are both members of the Camillus House Committee, which Kara has co-chaired for the past two years.  We have each held other positions in the League during our tenure with the organization, but we both feel that the Camillus Committee has been the most fulfilling.

Why did you decide to get involved?

YAURY: I wanted to make a difference in the community. I realize that most of us are very lucky and take our lives for granted. I feel it is everyone’s responsibility to make our community a better place. Most of all, I wanted to set an example for my daughter. My daughter comes to Camillus House with me to volunteer. I want to teach her to be compassionate and to appreciate what we have.  Most importantly, I want her to learn the responsibility of giving back and helping make this world a better place a little bit at the time.

KARA: We chose Camillus as our project as we both feel committed to helping the homeless in our community and our work at Beckham hall allows us that opportunity in an environment we can make a difference.  We both have daughters and feel that we need to teach them how important it is to give back to the community they live in, and through the involvement of Junior League in the Camillus House, we are able to teach and share that lesson with our kids.

How has Kaufman, Rossin contributed to your success with this organization?

For the past two years, Kaufman, Rossin has helped the Junior League of Miami raise funds to enable our committee to get extra funding for our shopping day at Camillus.  The Shopping Day is for the women of Camillus to get some much needed personal items that they may not have the financial means to obtain, such as undergarments, shoes and toiletry items.  Additionally, a toiletry drive for Camillus House is being held.  At Thanksgiving, although it was a Junior League event at Camillus, many of our co-workers and clients came out to give a helping hand to feed the entire facility – not just the women residing there but the approximate 70 men as well.

What is your advice for others who are thinking about getting involved in the community?

In the community where you live and put down roots, you get to know the people and hear about areas that need help and change. There are many ways to volunteer your time and energy to help make your community a better place. Furthermore,  the satisfaction that comes from helping others is invaluable. When you commit your time and effort to an organization or a cause you feel strongly about, the feeling of fulfillment can be endless.

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Kara Stearns Sharp, CPA, CFF, CFE, is a forensic, advisory and valuation services principal in Kaufman, Rossin’s Miami officeKaufman, Rossin & Co. is one of the top CPA firms in the country. Kara can be reached at ksharp@kaufmanrossin.com.

Yaury Jattin, CPA, is a tax manager in Kaufman, Rossin’s Miami office. Yaury can be reached at yjattin@kaufmanrossin.com.

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We’re One of the 2012 Best Accounting Firms to Work for!

Kaufman, Rossin is a 2012 Best Accounting Firm to Work forKaufman, Rossin & Co. was recently named one of the 2012 Best Accounting Firms to Work for. This annual list is created by Accounting Today and Best Companies Group to identify, recognize and honor the best places of employment in the accounting industry, based on an employee survey and evaluation of each firm’s workplace policies, practices, philosophy, systems and demographics.

The Best Accounting Firms to Work for list is made up of 100 companies from around the country. Our firm is one of just eight companies in the large company category. We will find out our exact ranking in late October — we’ve been ranked #1 for the past two years. Stay tuned for the results and wish us luck!

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Lisa Cawley Ruiz is a brand journalist at Kaufman, Rossin’s Miami office. Kaufman, Rossin & Co. is one of the top CPA firms in the country. Lisa can be reached at lruiz@kaufmanrossin.com. Connect with Lisa on LinkedIn.

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Kaufman, Rossin named among nation’s Top 100 firms by INSIDE Public Accounting

Top 100 firms - INSIDE Public AccountingKaufman, Rossin, one of the largest independent accounting firms in Florida has been recognized as a Top 100 firm nationwide by INSIDE Public Accounting (IPA).

The firm ranked 56th with a net revenue of $53.3 million. The Top 100 list is published annually by IPA and names the highest net revenue producing accounting firms in the U.S.

“We are honored to once again make IPA’s list of top 100 firms nationwide,” said Jim Kaufman, founder and CEO of Kaufman, Rossin & Co. “Despite a challenging economy, we continue to grow and employ top notch talent with the skills to provide specialized services that add value to our clients.”

INSIDE Public Accounting is a respected industry newsletter that provides information about best practices in the accounting industry. The publication reviews firms’ revenue, number of locations and percent of growth in developing its Top 100 list.

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Lisa Cawley Ruiz is a brand journalist at Kaufman, Rossin’s Miami office. Kaufman, Rossin & Co. is one of the top CPA firms in the country. Lisa can be reached at lruiz@kaufmanrossin.com. Connect with Lisa on LinkedIn.