Commercial Real Estate Finance

Posts Tagged ‘refinance’

Mensch:

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel:

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser. 

Mensch of the Week:  

CrowdMason

A couple weeks ago, in one of our Week in Review posts, I discussed an article that explained how last year’s Jumpstart Our Business Startups Act (JOBS Act) might influence commercial real estate investment. This securities law, intended to bring increased investment capital to start-ups of all kinds, is expected to promote a more “democratic” investment community.

How?

By lowering the capital requirements for “accredited” investors, so that one doesn’t have to be a bona fide millionaire in order to invest in a CRE or other venture. Now, fund managers don’t have to rely on high net worth, corporate, or institutional investors, but can amass needed equity through lots of smaller contributions from investors in lower tax brackets. This “crowdfunding” approach (similar in structure to “crowdsourcing”) will hopefully strengthen the investor base of companies and funds not lucky enough to have Blackstone Group or a Saudi prince in their Rolodex.

Not that anyone uses Rolodexes anymore.

We asked our readers whether or not they approved of crowdfunding in a Llenrock poll. While the response wasn’t overwhelmingly positive, the Yay’s beat the Nay’s with well over 50%, showing some promise for this new investment tool.

Which brings me to CrowdMason, an online start-up working to promote commercial real estate investment on a more public level. Read the rest of this entry »

As they say, timing is everything. Homeowners who sold their properties in 2007 showed impeccable timing. Likewise, real estate investors and developers who started working with multifamily properties before multifamily became such a prosperous asset class showed incredible foresight–or luck.

The financial and investment industries–with real estate very much included–have a different relationship to time than other industries. Sales and acquisitions can’t be judged on their present values, but their future performance. At risk of inspiring a bit of paranoia among my readers, one might say we won’t know what long-term effects our CRE decisions are causing until years later when we’re forced to confront these consequences. After all, a “bubble” is really only a bubble once it has burst.

Which brings me to the subject of commercial mortgage-backed securities. Because of their long-term nature, such debt instruments as CMBS have created aftershocks since the 08/09 financial downturn (and without a doubt, smaller Recession-induced ripples will appear in the CRE market in coming years). Even though CMBS issuance has picked up in recent years, CMBS issued in 2007 are creating problems for banks and borrowers in 2012:

Read the rest of this entry »

Week in Review for December 31-January 6:

- Jon Cheigh, portfolio manager of the Cohen and Steers Realty Fund (CSRSX) goes to unusual lengths in researching potential REIT investments, including posing as a shopper or an apartment applicant

- A Singapore investment firm and a Canadian pension fund agree to pay $1.2 billion for Charter Hall Office REIT (CQO)

- Some investors are confident in CRE for 2012, particularly when it comes to multifamily and office properties in tech-oriented markets

- Chicago-based Heitman buys a class A office tower in Slovakia as part of its ongoing efforts to acquire European properties

- Allstate’s real estate equity branch plans to grow its portfolio by $3.1 billion

Read the rest of this entry »

Peter Schiff debates why banks may not want to refinance your property….and why more bank failure is imminent.

What are the taxation consequences of mortgage defaults?

The debate on Washington over taxes can trigger strong emotions. Insight with Tony Fratto, deputy press secretary; David Rubenstein, The Carlyle Group and Greg Valliere, Potomac Research Group.

World Cup fever has struck here at Llenrock.  With all this talk of England vs. USA, another great rivalry that has surfaced this week may be about to boil over, under the radar: is the other commercial real estate shoe going to fall off or not? There were two opposing views offered up this week by Jones Lang LaSalle’s (NYSE: JLL) James Koster, and Venable’s Gregory Cross. Let’s examine who had the upper foot…I mean hand. Read the rest of this entry »

Want to refinance your home to take care of historically low interest rates?  Hold your horses. Read the rest of this entry »

When I first started my career as an investment sales broker, a mentor taught me an effective method to have property investors reconsider their position in their properties.  While my goal was essentially to coax them into a selling frame of mind, there were myriad instances where selling simply did not make sense.  Yet, that didn’t mean there was no opportunity to do business with such a client. Instead of focusing on cap rates and price per square foot numbers, I could instead shift their focus from the stability of cash flow to the meager return they were receiving on the equity they had invested in the property.

“Mr. Property owner, I understand your building is full, you are free and clear of debt, the property is cash flowing well, and you want to pass the property down to your grandchildren.  But what is your return on equity?” Read the rest of this entry »

The credit crisis is beginning to mirror Congress.  Good ideas and solutions to problems are getting muddled by bureaucracy.  Much like global warming, or any other potential disaster, the government must act before its too late. And really there are only two outcomes to the credit crisis…what happens if market liquidity returns, and what happens if it doesn’t.

If market liquidity returns, real estate values will stabilize, in turn stabilizing banks’ balance sheets.  More balance sheet lenders would return to the market, which would cause CMBS yields to normalize, causing a restart to the CMBS market, which would make the spreads on refi’s fall.  With the glut of debt coming due over the next few years, this would be essential to providing more normalcy, and averting disaster.  However, if market liquidity doesn’t return, real estate values would fall even further, banks balance sheet would deteriorate, borrowers would fail to be able to refinance and banks would de-lever.  This would cause forced loan extensions as well as loan defaults, which would wipe out equity positions, and force distressed sales. So what’s the solution to providing liquidity to the market? Read the rest of this entry »

We’ve all heard the tired cliche about real estate: Location Location Location.  And while it does still hold true, perhaps now more than ever in regards to asset value, there is an interesting trend regarding the financing of those spectacularly located assets.  The desire of owners big and small is to refinance current debt with local or regional institutions.  Even if it means going from a non-recourse CMBS loan to a full recourse one.  Why? Let’s take a look. Read the rest of this entry »

Earlier this week, there was an article in the Washington Post outlining how GE outsmarted the system, because their failure would pose a “systemic risk” to the market if allowed to fail.”This was crisis management on steroids,” said a person familiar with the process. “A lot was made up on the fly.”

Read the rest of this entry »