Friday, May 1, 2009

RECI Finally Finds Bright Spots in Capital Funding Marketplace

CHICAGO, IL—Good news today for the commercial real estate industry.

The Real Estate Capital Institute, a volunteer member, Chicago-based organization, reports bright spots in the capital funding marketplace are beginning to appear.

“More life companies, banks, pension funds and other sources not plagued with legacy deals are re-emerging,” says RECI Research Director Nat Zvislo.

“Initially, the pricing requirements are steep and leverage remains conservative, but some loosening is expected as these players start competing for transactions,” he says.

This is what RECI’s members are telling Zvislo:

Within the past month, rates have continually climbed for longer-term treasuries, nudging upward by more than a quarter point.

In the meantime, the most active lenders in the marketplace-- the Agencies (Freddie Mac, Fannie Mae and FHA/HUD) – correspondingly dropped mortgage spreads.

As a result, overall interest rates remain relatively competitive for multifamily properties, starting in the mid-five-percent range for 10-year debt.

Leverage levels of 75% of value are still available for this asset class.In contrast, other income properties, including office, retail and industrial assets are underwritten to extremely stingy standards.

Few lenders are actively seeking new origination funding opportunities as workouts and corporate viability issues overshadow mortgage lending goals.

Commercial loans are generally funded at levels of 65% or less with overall interest rates starting in the higher-6% range and climbing into the mid-8% range.

Full leverage funding opportunities still exist for credit-anchored projects in all income-property categories, as long as BBB or better-rated credit ratings are available with reasonable remaining lease terms.

As far as specific benchmarks for any funding opportunities within today's market, the following items are nearly universal minimum requirements:

* Lower Values: Property values continued declining as more investors realize operating losses and lenders foreclose on distressed assets.

* Limited Growth: Few, if any, markets are underwritten with any type of income growth. On the contrary, most lenders are forecasting flat or declining income conditions with expenses rising.

* Higher coverage: 125% debt service coverage ratio for nearly all properties is a minimum threshold.

* Greater Equity: For refinancings, borrowers must show at least 20% or more of "real" equity as cashouts are frowned upon.

* More Reserves: Effective property age concerns are forcing borrowers to set up larger reserves for maintaining and retaining competitiveness.
Barry Moss, a Real Estate Capital Institute Advisory Board member, notes, "Lenders, borrowers, investors, tenants, developers and nearly everyone in the real estate industry is in a defensive mode."

He suggests, "As TARP/TALP funds trickle into the financial system and lenders mark down legacy assets to current metrics and sell those assets, more badly-needed liquidity will return to the industry and transaction activity will increase."


The Real Estate Capital Institute(r), 3517 West Arthington Street, Chicago, Illinois USA 60624

Nat Zvislo, Research Director, Toll Free 800-994-RECI (7324)
MIAMI, FL-- Thomas D. Wood and Company, a Strategic Alliance Mortgage LLC member, secured financing on April 27, 2009, in the amount of $3,965,000 for the Cal Linda Freeport office/ warehouse buildings (top right photo) in Sparks, Nevada.

Steve Wood, (bottom left photo) Company Chief Operating Officer, along with Tony Castrignano of Sky-Mesa Capital, financed the 50-360 Freeport buildings in the amount of $3,000,000, and the 250 Cal Lane/1080 Linda Way buildings in the amount of $965,000, through Thomas D. Wood and Company’s correspondent relationship with StanCorp Mortgage Investors.

Both loans have a fixed interest rate of 6.50% and a 5+5+5+5+5-year term, based on a 25-year amortization.
The Cal Linda Freeport office/warehouses were built in 1977 and 1978 and are located at 50-360 Freeport Boulevard, 1080 Linda Way and 250 Cal Lane, Sparks, Nevada.

For further information, please contact:

Steve Wood, (305) 447-7820,
Jessica Gurtowski, (407) 937-0470,

Arbor Closes $807,100 Fannie Mae DUS® Small Loan ARM for Pine Forest Apartments in Pine Lake, GA

UNIONDALE, NY -- Arbor Commercial Funding, LLC (“Arbor”), a wholly-owned subsidiary of Arbor Commercial Mortgage, LLC, announced the recent funding of a $807,100 loan under the Fannie Mae DUS® Small Loan ARM product line for the 24-unit complex known as Pine Forest Apartments in Pine Lake, GA.

The 10-year loan amortizes on a 30-year schedule and carries a note rate of 4.95 percent.

The loan was originated by Patrick McGovern, (bottom right photo) Director, Corporate Accounts, in Arbor’s full-service New York, NY lending office.
“Utilizing Fannie Mae’s Capped ARM program, Arbor was able to provide the borrower with floating rate debt,” said McGovern. “This gave the client the ability to prepay the loan after the first year.
Ingrid Principe
Arbor Commercial Mortgage
333 Earle Ovington Blvd., Suite 900
Uniondale, NY 11553
P: 516.506.4298
F: 516.542.2555

HFF arranges $3.5M refinance of Austin, TX multifamily community

HOUSTON, TX – The Houston office of HFF (Holliday Fenoglio Fowler, L.P.) announced has arranged a $3.5 million refinancing for The Villas at San Gabriel, (above centered photo) a 26-unit multifamily community in Austin, Texas.

Working exclusively on behalf of 2410 San Gabriel, L.P., HFF managing director Susan Hill (top right photo) placed the 10-year fixed-rate loan with American National Insurance Company.

The Villas at San Gabriel are located at 2410 San Gabriel Street within walking distance to the University of Texas at Austin. (bottom left photo)

The property has maintained 100% occupancy since completion in 1998 and is currently fully leased to University of Texas students.

HFF (NYSE: HF) operates out of 17 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry.

HFF offers clients a fully integrated national capital markets platform including debt placement, investment sales, structured finance, private equity, loan sales and commercial loan servicing.


SUSAN L. HILL, HFF Managing Director, (713) 852-3500,

KRISTEN M. MURPHY, HFF Associate Director Marketing, (713) 852-3500,