Commercial Real Estate Market Shows Signs of Improvement

…The last couple of weeks have seen a slight improvement in transactions, according to Allen Smith, chief executive of Prudential Real Estate Investors.

‘Credible players are appearing and bidding on assets. We’d seen that earlier, but the people who were showing up to bid frankly weren’t terribly credible and often were really not prepared to close. We are now seeing people show up who fall into the institutional category and are clearly ready to close. We’re more prepared to act on that as a seller than we might have been in the past,’ he told the Reuters Global Real Estate Summit in New York…

CLICK HERE TO READ THIS ARTICLE AT PROPERTYWIRE.COM

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MasterPlan Capital LLC is actively seeking to underwrite and fund commercial mortgage loans from $1mm and up on all types of commercial real estate. Private and institutional funding is available for the purchase and refinance of income producing property.

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Commercial Mortgage Lending – Government Help? Thanks but No-Thanks

Investors Shun Federal Rescue Programs

In a sign of just how bad the commercial real estate market is, South Florida property owners and investors are all but ignoring new federal rescue programs that they say are confusing and beyond their reach. Some are calling instead for the government to scrap the programs and let the marketplace hit bottom. That way, they say, the recovery can really begin.

Even though some industry groups have touted the federal programs as a boon to commercial real estate, local and regional developers and investors figure they will get little help from the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF) and Public-Private Investment Program (PPIP). Instead, they’re forming their own funds to acquire properties or distressed loans, seeking refinancing on mortgages and loan extensions.

READ THE REST AT GLOBESTREET.COM

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Commercial Mortgage Loans – MasterPlan Capital LLC

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When Do Hard Money Commercial Mortgage Loans Make Sense?

Privately funded, often called “hard money” commercial mortgage loans typically carry annual interest rates of more than 10% and charge origination points of 2%-4%. These kinds of rates and terms may seem restrictive, but when the situation calls for it, taking advantage of private lending is a smart business move.

When Time is of the Essence

In the commercial real estate game time truly is money. Experienced property owners, investors and developers will tell you that often speed of execution can trump interest rates and points. When facing a looming purchase option expatriation date, a pending balloon payment that’s coming due fast, an unexpected cost overrun or, worse, a foreclosure scenario business people don’t have time to wait the 60-90 days it can take to close a conventional bank loan. Unfortunately, there are times when your property or you project are on the line and nothing short of quick cash can solve your problem. Hard money lenders can make on-the-spot decisions and can close fast. One week funding is very possible and any legitimate private lender can close almost any deal in less than 3 weeks. Hard money is relatively expensive but it’s a heck-of-a-lot less expensive than losing your deal.

When You Have Credit or Documentation Issues

Conventional lenders will insist on large amounts of documentation and that the borrower(s) have decent credit. To start with, real estate investors must produce 3 years tax records, profit and loss statements, copies of leases, bank statements, building maintenance records and much more. Details will be verified and a deal can be killed because of an “I” that was not dotted or a “T” that was not crossed. Private loans, on-the-other-hand, are usually equity based and not driven by the strength of the borrower. Your credit may not matter at all. Hard money lenders do not have the bureaucracy and the regulations that banks, Wall Street and the insurance companies do. They routinely do deals with minimal documentation, sometimes without even a property appraisal. If your record keeping is in disarray, if you are missing required documents, if you have poor credit or you simply don’t wish to share so much personal financial information, then hard money may be your best (and only) option.

When You Need a Bridge

Private lenders are among the most efficient and professional bridge lenders in the financial services industry. When a commercial property owner or developer finds themselves in need of a bridge loan (short term, interim financing) they are well served turning to private funding sources. Very often bridge loans are used to “bridge” the time gap that can exist between their permanent financing coming on line and their immediate need for cash, such as when they have a closing in days but their bank can’t close their loan for weeks. Bridge loans are also an important method of dealing with construction cost overruns, when a few million dollars can get the project finished and ready for sell-out quickly. There are many situations that call for bridge financing and many private lenders exist for the sole purpose of providing it quickly.

When You Need To Make an Attractive Offer

Cash is still king and having a reliable hard money lender on your team is like money in the bank. If you tell a seller you can close on a prize piece of property in 10 days with all cash, you will get that sellers attention. Your competition is likely asking for a 30 day due diligence period and as-much-as 60 days to close. If you can establish credibility with a dependable private lender and you know what their loan criterion is, you can bid with confidence and the cash to back it up.

There is no denying that private loans are more expensive than conventional loans but consider that they are usually short term and can often make the difference between a deal closing and a deal falling through. A successful commercial development project or a profitable income producing building can make an investor millions over its life cycle. When all factors are considered, and your deal is on the line, hard money can be down-right cheap.
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Commercial Mortgage Lender; MasterPlan Capital LLC

Commercial Mortgage Lending – Green Projects Get Funded

Like it or not, environmentally conscious, or “green” principles have come to dominate the field of commercial real estate development and commercial mortgage lending. Green building and sustainable design are now the standard in new commercial construction and residential developments. And, with local and national governments getting greener all the time, look for energy and resource efficiency to become mandatory, with green mandates being placed directly into building codes. Funding sources such-as banks, Wall Street brokers, insurance companies and hedge funds, are following suite and these principles are rapidly becoming a part of the commercial mortgage industry.

The US Department of Energy’s Center for Sustainable Development recently reported that 40% of the entire world’s energy supply is used by buildings. That’s a huge number. And, in the United States, construction accounts for our largest manufacturing sector, representing a staggering 13% of US GDP and nearly 50% of total wealth creation. Even tiny percentage gains in efficiency can amount to massive over-all energy savings.

Both institutional and private lenders as well as the REIT, (Real Estate Investment Trust) hedge fund and private equity industries have all embraced the environmental building movement. Green is the color of money and green is the color of commercial mortgage construction lending now and into the future. Lenders love green construction because good for profits as-well-as being good for the planet. Energy costs money, resources cost money and cleaning up messes’ costs money. Saving energy, saving resources and sustaining a site all save money, during construction and throughout the operational life of the property. Lenders know that green means efficient and, when they evaluate a project for financing they want to be assured that the funds they invest will be used cost-effectively and that the building will be economically viable.

Environmentally sound buildings can cost substantially less to operate than comparable buildings that disregard such efficiencies and tenants and their clients report higher customer satisfaction rates when doing business in them. To a lender, whose capital is secured by the building, this translates into higher quality collateral and makes their investments more secure.

As a commercial real estate investment banking professional, I can attest to the fact that developers who choose designs that are not green will find it very difficult to raise capital or secure loan approvals for their projects. We are in the midst of a sever liquidity crisis; construction money is in short supply. Lenders are giving priority to green development leaving very little capital available for conventional construction.

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The Federal Government’s LEED (Leadership in Energy & Environmental Design) rating system awards silver, gold and platinum certification to buildings that reduce waste and save energy and lower costs. LEED certification is almost (although not officially) a mandatory requirement in-order-to get a big construction project funded today. 

Being green is no longer just the passion of the activist anymore; it is the new emerging standard in commercial construction as-well-as commercial real estate finance. Investors and developers who need commercial mortgages will do well to pay attention to this trend

Real Estate Leads Sansex Higher

Some experts have predicted that India will help lead the world out of this global recession. To day the Sansex exchange seems to agree. Real estate is leading that market higher today.

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Private Commercial Mortgage Loans – Hedge Funds Embrace Commercial Mortgage Lending

High flying hedge funds and sophisticated private equity companies are known for playing the capital market fast and loose. They pile on leverage and make big bets on stocks, bonds, options and futures, or, at-least they used to.

Over the course of the last 24 months the traditional equity and debt markets have been crushed. Money managers all across Wall Street have lost billions for their wealthy clients. The markets are showing signs of recovery but hard, costly lessons have been learned.

Even big money hedge fund investors hate to lose money and many are seeking a more conservative way to make high returns on their capital.

Money managers are increasingly embracing private commercial mortgage lending as a way to enhance yield and decrease the overall risk of a portfolio. The credit crisis has greatly reduced the availability of commercial mortgage capital and, at-the-same-time, made it harder for borrowers and buildings to qualify for financing. The result is a glut of good deals that should be funded but can’t be funded.

Some hedge funds are stepping in and helping fill this “funding gap”. This unprecedented move by private investment funds into commercial real estate finance was prompted by the demands of unhappy investors. When wealthy business people put several hundred thousand in a fund and pay a hefty management fee, they have the right to expect results. After being promised double digit yields, many investors lost large amounts of money and actually had trouble accessing the money they had invested.

Faced with disgruntled and disenchanted clients, fund managers were desperate for a high return investment that offered at least some measure of real security. For many, private commercial mortgage loans have proved to be the answer. Unlike residential lending, commercial mortgage banking is largely unregulated and posed no barrier to entry for private investment funds. The credit crunch was (and is) keeping real estate investors, large and small, from obtaining the capital they needed to refinance their buildings or buy any new ones. Thousands of excellent deals with very reasonable risk parameters were (and are) going unfunded and the lack of institutional credit drove private lending rates high enough to pique the interest of even the most sophisticated and return hungry fund managers.

Hedge funds and private equity firms are finding that they can charge annual rates of 12% or more on the money they lend while their investment capital is fully secured by valuable commercial real estate. Most private lenders require a direct 1st mortgage lien on any property they lend against allowing them to take possession of an asset if the borrower defaults. They can then sell the real estate on the open market to recover some or all of their principle. Very few hedge funds will lend more than 65% of the value of the target property, so their capital is very well collateralized.

Commercial mortgage lending will never replace traditional stock market investing by hedge funds or leveraged-buy-out strategies by private equity companies; lending money just does not offer the incredible upside potential that is possible in the capital markets. However, money mangers are finding that they can earn very respectable, double digit returns with much more security.

If a public company goes out of business its stock can go to zero; an equity investor can be wiped out. A lender, on-the-other-hand, will always have the ability to repossess the real property and recover at least some of their investment.

In recent months hundreds of millions of dollars have been committed to commercial real estate lending by private hedge funds and private equity firms. This trend should continue as the credit crunch drags on and borrowers search for alternative sources to refinance or purchase commercial buildings.

MasterPlan Capital LLC – Commercial Mortgage Loans, Privately Funded – Equity Financing – Asset Management –EZ Online Application – Quick Answers – Close in 10 Days.

The author, Glenn Fydenkevez is President of MasterPlan Capital, he has more than 20 years experience in the financial industry and has been a officer at one of the world’s largest investment banks. He uses his financial resources, banking contacts and extensive industry knowledge to finance commercial real estate deals quickly and efficiently.

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Commercial Mortgage Loans – What Rates Do Hedge Funds Charge For Commercial Mortgages?

The ongoing credit crisis has made it much more difficult for investors to qualify for an institutionally funded (bank, broker, insurance company) commercial mortgage loan. Underwriting standards have become significantly tougher and loan parameters have tightened. Very few deals are being accepted by the banks, and even fewer are actually closing. Many good loans that should receive financing are being rejected out-of-hand. We call this situation the “funding gap.” Recently many hedge funds and private equity companies have recognized that opportunity exists for firms that can help fill the funding gap by offering private commercial mortgages to quality borrowers who have been shut out by their banks. Over the last 18 months money managers have committed hundreds of millions of dollars to the commercial real estate finance sector. They are buying distressed mortgage paper directly from troubled lenders and they are very willing to write new loans against commercial buildings and development projects. But before commercial real estate investors seek a loan from a hedge fund or other private lender there are some important things they should know. Private commercial mortgage lenders are opportunistic investors; a hedge fund is in business to earn high returns for its investors in a timely and efficient manner. The loans they offer will be short term in nature (rarely more than 36 months) and will carry significantly higher interest rates and origination points than a bank or Wall Street broker would. Further, hedge funds will be very aggressive in foreclosure situations; they will take your property if you fail to perform. Funds and private lenders that we work with are currently charging 10%-15% annual interest with 3-4 points. This means that borrowers can expect to pay a 13%-19% APR. On top of that, borrowers are responsible for the cost of any third party reports that may be required such as appraisals, environmental assessments and feasibility reports. On the positive side, there is capital available for these private commercial mortgage loans and deals can be closed very quickly. Most funds prefer income producing, investor owned commercial buildings like apartment complexes, office buildings or self storage facilities. They will generally lend up-to 65% of a properties value and underwriting is equity based not credit driven. They will lend for both purchase and refinance, but private loans are “bridge” loans and a viable, realistic exit strategy needs to be in-place. In-other-words they will need to know exactly how they are going to be paid back. This credit squeeze has been devastating to the commercial real estate industry and the problems are not going away. As we all wait for the situation to improve private lenders, including Wall Street hedge funds and private equity firms, have cash and are willing to lend it.

MasterPlan Capital LLC – Commercial Mortgage Loans – Privately Funded – Equity Financing – Asset Management – Simple, 1 Page Commercial Mortgage Application Online – Quick Answers – Quick Close- The author, Vincent Remealto, is a commercial real estate valuation and underwriting analyst for MasterPlan Capital.

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Larry Kudlow is not Impressed with the President’s Proposed Regulatory Reforms

Conservative economist, Larry Kudlow, belives that putting the Fed in charge of “Systemic Risk” is like putting the fox in charge of guarding the hens. Read Mr. Kudlow’s take here.

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Maguire defaults on Quintana Mortgage; A Forced Sale Likely

We all know the FDIC took-over Washington Mutual. What you may not know is that the FDIC relinquished almost all the leases WAMU had with landlords and commercial real estate owners across the country.

WAMU had leased an entire office building In an Irvine CA office complex known as Quintana, now the place is practically empty and Quintana’s owner is not collecting any rent from the defunked bank.

Quintana; Soon to be Auctioned

The complex in question was owned and managed by a group that includes Maguire Properties, based out-of Los Angeles and Macquarie Office Trust of Sydney.

 Predictably, Maguire/Macquarie have missed their June (’09) mortgage payment and have stated that they “are not willing” to inject anymore equity (read cash) into the building.

 They are said to be discussing options with the special servicer of the mortgage.

The only real option is a sale. It’s “worth” $106mm, I’ll bet an auction could fetch $75m.

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Commercial Mortgage Loans, Equity Financing, Asset Management; Visit MasterPlan Capital Online and apply for financing.