Archive for the ‘Financing’ category

Refinancing available for loans maturing in the next 12-18 months with yield maintenance or defeasance.

July 14, 2010

Atlanta Ga- Tim Kinney the senior director of Mark One Capital just shared this information with me and I could not wait to share it with our clients.

Commercial Loans – Rates in The Low 5% Range

Rates are in the low 5% range for good quality commercial real estate with strong sponsorship.

  • Lender can forward rate lock up to 12 months in advance. No spread premium for the first 4 months. Average 7 basis points per month thereafter. This is a great option for loans maturing in the next 12-18 months with yield maintenance or defeasance.
  • Apartments – Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate
  • Prefer grocery anchored retail with strong sales. Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate. Other retail types also acceptable upon review.
  • Prefer Medical Office Buildings with a stable history. Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate.
  • Prefer Industrial Properties with strong tenants and a stable history. Loan-to-Value 70% – 75%%, 30-year amortization, 10-year term, 5.25% rate.
  • Prefer Owner-Occupied Properties with strong financials

Lower rates apply for lower leverage. This lender just rate locked their loan on an industrial property. 48% LTV with a 10 year term and 10 year amortization. The rate was below 4%!

If you have properties that fit the above criteria please contact me so that I can get Tim our in-house mortgage guru do a no obligation quote for you.

I am very happy to share this information with you.

Capital Markets Beginning to Loosen; CMBS, Life Insurance Companies Step Up Lending

July 11, 2010

Capital Markets Beginning to Loosen; CMBS, Life Insurance Companies Step Up Lending

§ Constraints on commercial real estate lending eased during the first half of 2010, a trend that should continue as more lenders re-enter the securitization market and life insurance companies pursue a broader range of deals. Unlike a year ago, financing has become available for properties over $10 million, and some lenders have re-engaged higher-quality, lower-risk transactions in noncore markets. In addition to greater availability of financing across property types, price ranges and markets, lenders also have increased loan-to-values (LTVs) on new loans by an average of 5 percent from last year. Despite these positive developments, potential borrowers continue to face tight underwriting standards and stringent lender requirements compared to historical standards.

§ While commercial mortgage originations during the first quarter remained depressed relative to figures reported from 2005 to 2007, conduits and life insurance companies drove up activity 12 percent from last year. During the first half of 2010, U.S. CMBS issuance reached $2.4 billion, approaching the 2009 total of $3 billion but still just a fraction of the $197 billion annual average reported from 2005 to 2007. Even when viewed against a less frothy period, such as 2000 to 2003, activity in the first half still pales by comparison. Recent CMBS issuance included multiple-borrower deals with subordinate tranches, a far cry from the ultra-safe, single-borrower transactions completed late last year, generating optimism the sector will soon offer increased liquidity.

§ New CMBS loans price in the 6.0 percent to 6.5 percent range for five-year mortgages, with lenders targeting deals of $10 million or more. While these interest rates may be at the higher end of the spectrum, CMBS borrowers can often negotiate 30-year repayment schedules versus an average of 25 years for life insurance companies, offsetting the impact of interest rates on monthly payments. In addition, LTVs for CMBS loans can push into the low- to mid-70 percent range, versus 65 percent to 70 percent for life insurance companies, assuming the debt-service coverage ratio (DSCR) still falls between 1.25x and 1.35x.

§ Next to the CMBS sector, life insurance companies made some of the most impressive headway over the past 12 months. This sector increased commercial mortgage originations by 131 percent during the year ending in the first quarter and recently began to compete more intensely for high-quality deals. While maintaining strict underwriting standards, life insurance companies have begun to actively pursue new business in major markets, increasing their scope to include nearly all price ranges and property types. This demonstrates a strategic shift from last year, when most life insurance companies focused on rewriting maturing loans already in their portfolios. As 2010 progresses, life insurance companies will increase lending as their commercial/multifamily portfolios outperform the broader marketplace; as of first quarter, this segment boasted a delinquency rate of just 0.31 percent.

§ Despite the recent delisting of Fannie Mae and Freddie Mac from the NYSE and expectations for government-mandated changes in the quarters ahead, their multifamily lending arms should remain operational, benefiting apartment investors. New loan originations by the GSEs slipped in early 2010 and may continue at depressed levels this year, however, due to a paucity of deals within their target criteria.

§ While commercial lending will increase this year, risks to this outlook remain. High and rising delinquency rates, particularly among commercial banks and within the CMBS sector, will drag on confidence. Maturities also pose significant challenges, as declining property values have turned many owners upside down on their mortgages, making it impossible to refinance without additional equity contributions. Approximately $535 billion of commercial mortgage debt will come due between 2010 and 2011, including $110 billion of CMBS. Of the CMBS loans slated for maturity during this period, more than 14.5 percent have DSCRs of 1.0x or less.

The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made. Sources: Marcus & Millichap Research Services, Marcus & Millichap Capital Corporation, Commercial Mortgage Alert, Moody’s Economy.com, Mortgage Bankers Association, Trepp. Additional contributions to this report were made by William E. Hughes, Managing Director, Marcus & Millichap Capital Corporation.

§ Constraints on commercial real estate lending eased during the first half of 2010, a trend that should continue as more lenders re-enter the securitization market and life insurance companies pursue a broader range of deals. Unlike a year ago, financing has become available for properties over $10 million, and some lenders have re-engaged higher-quality, lower-risk transactions in noncore markets. In addition to greater availability of financing across property types, price ranges and markets, lenders also have increased loan-to-values (LTVs) on new loans by an average of 5 percent from last year. Despite these positive developments, potential borrowers continue to face tight underwriting standards and stringent lender requirements compared to historical standards.

§ While commercial mortgage originations during the first quarter remained depressed relative to figures reported from 2005 to 2007, conduits and life insurance companies drove up activity 12 percent from last year. During the first half of 2010, U.S. CMBS issuance reached $2.4 billion, approaching the 2009 total of $3 billion but still just a fraction of the $197 billion annual average reported from 2005 to 2007. Even when viewed against a less frothy period, such as 2000 to 2003, activity in the first half still pales by comparison. Recent CMBS issuance included multiple-borrower deals with subordinate tranches, a far cry from the ultra-safe, single-borrower transactions completed late last year, generating optimism the sector will soon offer increased liquidity.

§ New CMBS loans price in the 6.0 percent to 6.5 percent range for five-year mortgages, with lenders targeting deals of $10 million or more. While these interest rates may be at the higher end of the spectrum, CMBS borrowers can often negotiate 30-year repayment schedules versus an average of 25 years for life insurance companies, offsetting the impact of interest rates on monthly payments. In addition, LTVs for CMBS loans can push into the low- to mid-70 percent range, versus 65 percent to 70 percent for life insurance companies, assuming the debt-service coverage ratio (DSCR) still falls between 1.25x and 1.35x.

§ Next to the CMBS sector, life insurance companies made some of the most impressive headway over the past 12 months. This sector increased commercial mortgage originations by 131 percent during the year ending in the first quarter and recently began to compete more intensely for high-quality deals. While maintaining strict underwriting standards, life insurance companies have begun to actively pursue new business in major markets, increasing their scope to include nearly all price ranges and property types. This demonstrates a strategic shift from last year, when most life insurance companies focused on rewriting maturing loans already in their portfolios. As 2010 progresses, life insurance companies will increase lending as their commercial/multifamily portfolios outperform the broader marketplace; as of first quarter, this segment boasted a delinquency rate of just 0.31 percent.

§ Despite the recent delisting of Fannie Mae and Freddie Mac from the NYSE and expectations for government-mandated changes in the quarters ahead, their multifamily lending arms should remain operational, benefiting apartment investors. New loan originations by the GSEs slipped in early 2010 and may continue at depressed levels this year, however, due to a paucity of deals within their target criteria.

§ While commercial lending will increase this year, risks to this outlook remain. High and rising delinquency rates, particularly among commercial banks and within the CMBS sector, will drag on confidence. Maturities also pose significant challenges, as declining property values have turned many owners upside down on their mortgages, making it impossible to refinance without additional equity contributions. Approximately $535 billion of commercial mortgage debt will come due between 2010 and 2011, including $110 billion of CMBS. Of the CMBS loans slated for maturity during this period, more than 14.5 percent have DSCRs of 1.0x or less.

Fannie Mae, Freddie Mac Continue to Lead Multifamily Lending; Delisting From NYSE Likely to Have Little Impact

June 19, 2010
  • Fannie Mae, Freddie Mac Continue to Lead Multifamily Lending;

    Fannie Mae, Freddie Mac Continue to Lead Multifamily Lending;

    Fannie Mae and Freddie Mac have provided much-needed liquidity to the apartment investment market through the credit crunch and recession, helping to offset the void left by the stagnant CMBS sector. Since the federal government took control of Fannie Mae and Freddie Mac in the third quarter of 2008, the amount of multifamily mortgage debt outstanding in the GSEs’ portfolios and federally related mortgage pools has increased by more than 10 percent, or approximately $33.5 billion. During the same period, other major sectors, including commercial banks, CMBS and life insurance companies, registered decreases in multifamily debt outstanding, curbing their exposure to real estate debt.

  • The government takeover of Fannie Mae and Freddie Mac came after the companies reported massive losses tied to their residential mortgage portfolios. Losses have continued to mount in the quarters since, and the government has provided $146 billion to aid the struggling GSEs, taking a massive toll on their values and shareholders. By June 15, the day before it was announced that both companies would voluntarily delist from the NYSE, Freddie Mac’s share price was only slightly greater than $1, and Fannie Mae’s had fallen below the same threshold. The companies remain registered with the SEC and will be traded on the over-the-counter market. The delisting should have little impact on their day-to-day operations but highlights the precarious positions of both firms.
  • While soft housing market conditions and related losses have battered Fannie Mae and Freddie Mac’s balance sheets, the GSEs’ multifamily portfolios have performed relatively well through the recession. As of the first quarter of 2010, Freddie Mac reported a multifamily delinquency rate of 0.24 percent, while Fannie Mae’s came in at just under 0.8 percent. These rates compare favorably to commercial mortgage performance trends in the banking and CMBS sector, where delinquency rates have reached 4.24 percent and 7.24 percent, respectively.
  • Despite problems surrounding Fannie Mae and Freddie Mac and the expectation of government-mandated changes in the quarters ahead, it remains probable the GSEs’ multifamily lending arms will operate with few changes. Apartment loan originations by the GSEs may continue at depressed levels this year when compared to activity in early 2009, however, reflecting a paucity of attractive deals in the marketplace rather than a shortage of available debt capital. Last year, GSE originations volume received a boost from apartment owners refinancing ahead of loan maturity to avoid further erosion in fundamentals and values.
  • The GSEs will remain selective, employing strict underwriting standards and shying away from riskier deals. At present, however, Fannie Mae and Freddie Mac continue to offer competitive terms and pricing on new multifamily loans. Loan-to-values range from 55 percent to 75 percent, with five-year loans pricing in the 4.5 percent to 5.0 percent range and 10-year rates averaging 5.25 percent to 5.75 percent.

Bank Watch: Capmark Financial Pours $600 Million into its Ailing Bank

October 12, 2009

CoStar.com

October 7, 2009

Capmark Bank, the wholly-owned Utah industrial bank subsidiary of Capmark Financial Group Inc., agreed to a cease and desist order with each of the Federal Deposit Insurance Corp. (FDIC) and the Utah Department of Financial Institutions. The orders require Capmark Bank to maintain a Tier 1 leverage ratio of at least 8% and a Total Risk-Based Capital ratio of at least 10%.

Within 45 days, Capmark Bank must also submit a capital plan to the regulators and may not make any extensions of credit, or increase the amount of its brokered CDs.

In order to support the capital position, Capmark Financial Group said it has made a $600 million capital contribution to Capmark Bank — $494.2 million in cash and $105.8 million in servicing advances.

Capmark Bank reported $11.1 billion in assets as of June 30 and net loss of $261.3 million.

Capmark Bank’s nonperforming loans and foreclosed property assets increased by nearly $240 million from the first quarter to the second quarter and now totals nearly $631 million. About 78% of those assets are related to commercial real estate.

Netleased Financing after the Near Zero Fed Rate cut!

December 17, 2008

Neil C. Efron, CCIM

10 year treasury 12-17-08: 2.12%; 1 month ago 3.38%, 6 months ago, 4.15%; 1 year ago 4.12%

5 year treasury 12-17-08: 1.21%; 1 month ago 2.41%, 6 months ago, 3.57%; 1 year ago 3.49%

Wall Street: At this point it is likely that the Wall Street conduits will be gone for at least the next 12 to 24 months if they ever return at all. Well Fargo continues to be the only lender still willing to do conduit oriented deals with non-recourse. The underwriting criteria have become more stringent and their upper limit of loan to value is only 65% versus 75% 2 months ago. They are still doing 2, 3 or 5 year fixed rate deals. Today the rates range from the mid 5% range for the 2 year deal, the upper 5% range for the 3 year deal and the upper 6% range for the 5 year deal. I purposely do not list the spreads. It is best to just focus on the overall interest rate. The debt coverage requirement is 1.30 times and 30 year amortization is relatively standard. Wells also now offers a program that will fix the interest rate at loan application with a 1% deposit with no hedge risk whatsoever. The premium on the rate is about 40 basis points though. The other Wall Street lenders like NATIXIS and CIBC are continuing to focus on larger (in excess of $15MM) short term floating transactions. For 65% loans the spread over LIBOR ranges from 500 to 600 (mid to higher 8% range), For 75% the spread has ballooned to over 800 (mid 9% or higher).

Life companies are effectively out of the market through the end of 2008. More life companies are reporting that there may be cash flow issues for investment in 2009. With the dramatic decrease in the value of their stock portfolio the percentage of real estate has grown beyond the targeted allocation and therefore they will have less money for real estate investment. They may not even have enough money for renewals in their own portfolio.

Credit Tenant Lease Transactions got even worse since the last newsletter but have started to recover somewhat. The levels though are not nearly what they had been before. Walgreen’s deals can get done today at an overall rate of 7.9% for a fully amortizing 25 year loan (it is a hefty spread and no where near the spreads of 250 from 3 months ago). GSA deals are getting done in the mid 7% range for long term lease deals. The good news is that the underwriting has not changed. There is no loan to value constraint and the debt coverage can be as low as 1.0 times.  GE Capital continues to be on the sideline.

FANNIE MAE AND FREDDIE MAC: Fannie Mae continues to be an active lender for multi-family product. Florida has been put on the Fannie pre-screen list which likely means maximum loan to value of 65% to 70% and debt coverage of 1.35 times. The overall spreads have increased in the past 60 days but the decrease in the US Treasuries mean that the 10 year rates are in the upper 5% to low 6% range. Freddie Mac is now only looking at deals $10MM and over.

Neil Efron, CCIM is the Senior Vice President at Atlantic Bank in Fort Lauderdale Florida and can be reached by email NEfron@BankAtlantic.com  or phone 954-940-5313.