Joel's Twitter Feed
- Multifamily Lenders Share Their Biggest Concerns For The Road Ahead - http://nreionline.com/news/multifamily_lenders_biggest_concerns_0203/
- The Niche Report - Bridge Loans by Andrew Bogdanoff: http://bit.ly/8cL9Ig via @addthis
- CMBS Delinquency Could Peak at 12%: http://bit.ly/8GMPdG via @addthis
- Remington Financial Group, Inc. - New Distressed Owner and Debt Opportunities Program, http://hubpages.com/t/db8c6
- Remington Financial has two new webinars are available for brokers to help find and structure new financing options for distressed owners.
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There is a high rate of balloon risk maturities happening in the next few years. By 2013 the number of maturities will be more than ten times the number this year. With vacancies up, multifamily lenders particularly will be hit hard. Experts predict that this effect on the multifamily industry could last through the decade. Read More Here.
Wells Fargo & Co. and LNR Property confirm that they are each looking to sell some $1 billion of distressed commercial property loans and assets.
Read More Here.
Remington aims to combat this massive sell-off trend by offering Distressed Owner Recapitalization programs.
If you have a commercial project, I would like the opportunity to take a look at it.
Joel Nathanson
Senior Executive
Remington’s Capital Markets Provides Access to Capital
In today’s challenging credit markets it’s important to have a strong capital markets division sourcing your capital. With both institutional and private investors still leary when deploying new money, its important to understand each investors specific investment strategy and guidelines. Here at Remington, our capital markets group works closely with over 500 capital sources up and down the capital stack. Having multiple capital sources available for any particular transaction is crucial because its not uncommon to have to present a deal to 15 or 20 capital sources before one ultimately says “yes”.
It’s no surprise the medical office sector will be the forth front for new construction projects that are obtaining financing. Both debt and equity players are lining up to capitalize on the increase in demand for this property type. It is predicted that an additional 32 million Americans will now be covered by the Affordable Care Act that that was passed in to law, and the current industry won’t be able to handle the influx of demand.
It’s not surprising the Arizona real estate market is one of the hardest hit markets across the county. The aggressive expansion and over building has put a substantial amount of product on the market. This can be seen on both the commercial and residential sectors. So people are asking, when will property values stabilize, how much product is on the market, when will the credit markets recover? In my opinion, it will take 2-3 years for the surplus of product on the market to be fully absorbed. This makes 2010 – 2012 a great time to purchase real estate!
New Construction Loans from Remington Are Available
In my Remington newsletter this week I noted the availability from Remington of new construction loans. The positive news about the manufacturing sector brings hope that construction will increase, too.
Borrowers often require follon-financing when a construction loan comes due, and so lenders sometimes offer construction-to-permanent loan programs that provide construction loans during the building phase and longer-term fixed-rate financing that kicks in upon issuance of the certificate of occupancy. This two-in-one loan process tends to be more convenient and less costly for borrowers in that there is only one loan application and one closing, with associated fees, instead of two.
Because of the complexity of construction loan financing, borrowers may find it difficult to compare construction-to-permanent loan financing with the two-loan process. That’s where I can help.
The market-focused expertise of our Structured Finance Group at Remington and our Capital Markets Group with its global network of public and private capital sources takes the guess work out of construction lending. Our commercial real estate clients are able to more often secure the best possible rates and terms consistent with their objectives and market conditions at the time.
Please call me if you’re in the market for a construction loan – we can make your next project a success.
Thank you – Joel Nathanson, Remington
Remington Has Funds to Recapitalize Even CMBS Deals
Banks and commercial lenders will continue the deleveraging trend throughout 2010. The trend is starting to be seen in secondary and tertiary markets hardest hit with increasing vacancies and decreased cash-flow.
The CMBS market shows a 4.5% default rate on their entire portfolio, with lodging at 11%, and multifamily at 7%. CMBS transactions that are in risk of default are being turned over to special servicers to ultimately make a decision to either do a work-out or foreclose and auction off assets. The CMBS transactions will be the hardest to recapitalize due to the amount of red tape that borrowers will need to go through.
The good news is that Remington has funds that are being deployed to recapitalize these types of transactions. Please give me a call and let’s discuss. In addition to our expert advisory services, we are your best access to commercial capital.
Thank you – Joel Nathanson, Remington
More on Mezzanine Financing from Remington
We are actively deploying funds for mezzanine financing opportunities. Please contact me for more informatioin about these new opportunities.
Mezzanine financing falls between senior bank financing and equity financing. It can serve brokers well in a variety of situations. Mezzanine financing is semi-permanent capital like equity, so the borrower does not have to make monthly or quarterly payments of principal. It usually has a 5 to 7 year term.
Senior lenders like banks look at mezzanine financing as equity because it is semi-permanent capital and subordinated to bank debt. The bank gets paid first in the case of a problem.
Mezzanine financing looks like debt to owners because it often does not dilute the ownership of the company like selling stock would do. So a new investment of mezzanine debt can pay off some of the burdensome other bank debt with a more patient capital that doesn’t come with a reduction in ownership like selling equity brings.
Mezzanine lenders that Remington works with are extremely busy these days because their product is a perfect fit for this market. A well-structured mezzanine investment will reduce an owner’s leverage, improve immediate cash flow, and preserve the equity of a business for a sale down the road.
Mezzanine loans are a little expensive. Compared to a bank loan, mezzanine financing carries an interest rate in the range of 12% to 14% depending on the deal. That’s more expensive than a bank, but the cash flow is often better because the principal does not need to be repaid until the end. And those interest rates are less expensive than selling ownership shares in a company with depressed valuation. Sometimes mezzanine transactions include an “equity kicker” that gives the lender options to buy stock at a fixed value so that there’s an extra return when selling down the road. That’s not a bad thing because it brings in an experienced investor who shares the goal of a good exit event.
If your bank is making you nervous, or if you are making them nervous, or if you just want to strengthen your balance sheet as you wait for the market to recover, mezzanine financing could be the answer. Let me know if you have questions, and let’s talk about whether a mezzanine solution is in your future.
Thank you! Joel Nathanson – Remington www.remingtonfg.com
In today’s market I continually see positive signs. I’m pleased to report that our Capital Markets Group at Remington has successfully secured funds that we are deploying to clients. It is a welcome change from 2009, and I’m bullish on 2010 not only because of our fast start but because of several factors.
One factor that points to a much better 2010 is the help we’ll receive from foreign investors. Did you see this article in MBA Newslink? http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=10327#full
There will continue to be a strong flow of foreign money into the U.S. commercial real-estate market over the next 3-5 years. This is happening for a number for reasons.
One reason is that property values in the US are down anywhere from 35-50% from the peak in late 2007, creating many excellent investment opportunities in prime markets.
Another reason is that the US currency continues to be devalued against other world currencies, making investing in the US relatively even more valuable for them.
According to the article, foreign capital will be dispersed mainly via equity plays, but many foreign investors will consider some debt opportunities.
Remington has a significant position in the US and around the world. Whether you’re a broker here or there, let’s talk about the opportunities to get your transaction completed this quarter.
Thank you – Joel Nathanson, Remington
It’s never been a better time to approach Remington because we know so many brokers and owners NEED HELP to find the right financing to hold onto their investments. Our access to capital is unmatched, and our DOR (Distressed Owner Recapitalization) Program provides a lifeline to our community to get the needed financing in a difficult time.
Now when you thought things couldn’t get worse, they are. Insurance companies will be increasing premiums, applying additional pressure to struggling property owners.
Since 2006 insurance companies have cut their rates 6-16 percent for policy holders with premiums higher than $1M. Due to all of these cuts it has greatly affected the profitability of these companies. With declining vacancies in almost every sector of the industry, it’s putting ever increasing pressure on the property owner to service its current debt.
This development can only increase delinquencies and force more properties into foreclosure or in need of non-traditional sources to recapitalize their deal. That’s where Remington comes in – we can help!
Thank you. www.remingtonfg.com