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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Remington Does all in it’s power to secure Financing
I have observed that some clients get turned down for financing despite having very sound business plans. The reason that the requests are turned down often is as a result of a poorly prepared request. At remington we pride ourselves on creating financing requests that are presented in their most favorable light. Our industry experience has trained us to focus on the issues that our capital sources are most interested in.
Remington has an excellent capital markets group
I have found that as important as our access to capital is to our success that our ability to properly structure the capital stack can be just as important in getting transactions funded. Our capital structuring group is second to none. People often ask me how do we manage to arrange financing when others have failed. My response is simple. Deals fail for three reasons. 1) the deal is just a bad deal. numbers don’t make sense. We can’t fix these deals 2)good deal but poorly presented. We can fix that. Our expert capital restructuring group can present the deal in a way that a capital source will be able to see the merits . 3)good deal but poor access to capital- we can fix that. Our capital markets group has access to over 500 sources.
Distressed Owner Recapitalization options
For Close to two years, commercial real estate lenders have put off dealing with distressed loans. Although retail sales are on the rise, the amount of distressed owners in retail properties continues to grow. Until now, banks have spent most of their time resolving residential and construction loans. This year, they are turning their attention towards retail and office loans. Since this time last year, the amount of retail properties on bank balance sheets has more than quadrupled. The number of distressed properties has more than tripled. This is where Remington’s recapitalization program comes in.
Banks Begin to See Signs That the Recession is Easing
I think everyone from main-street to wall-street are starting to see signs that the recession is easing. In the commercial sector, your seeing money that was sitting on the sidelines through 09′, beginning to be deployed. This is a clear indicator that investors feel property values have bottomed out, stabilized, and will begin the upward trend. Still, the biggest issue facing commercial real estate is the $1.4 Trillion dollars that will be coming due in the next 3 years that will have to be refinanced. Unfortunately neither main-street or wall-street have figured out a viable solution for this.
I’m extremely confident in the individuals that work together to make up our Capital Markets Group here at Remington. In this challenging marketplace experience, work ethic, and relationships are the only things that separate you from the rest. It is our dedicated effort here at Remington to do everything in our power to make your project a successful one. To read more about our Capital Markets Group, please click the link below.
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!
Risky Commercial Real Estate Lending Costs Banks
It is no surprise that the aggressive commercial lending over the last 10 years is the main reason for bank failure. Its stated in a recent article that 140 banks failed in 09′ with over $170 Billion in assets. Please see the entire article below.
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