Archive for November, 2009

Commercial Mortgage Lenders Will Lend Again and Commercial Real Estate Will Recover

November 7, 2009

The commercial real estate sector has been in a slow motion collapse for a year-and-a-half now. Plummeting property values, driven by the economic slow-down, have dissolved huge amounts of equity that had existed prior to the recession. Now, although the buildings do have an inherent, underlying value, a large percentage of commercial real estate acquired in ’05,’06 and ’07 are virtually worthless to the investors who bought them.

They can not be refinanced, they can not be sold and few are willing to inject enough capital into them to make them financially healthy again. An already battered market finds itself facing a virtual tsunami of offices, retail outlets, warehouses, hotels and apartment buildings that are about to be abandon by, or repossessed from the investors who borrowed hundreds and hundreds of billions to buy them.

The problem is massive and the resolution will involve massive financial pain and suffering. Banks will fail, developers and investors, large and small, public and private will go out of business, misguided legislators will attempt to shift much of the burden onto the taxpayers in doomed, budget busting bailout attempts and much wealth will evaporate. All this will happen over an extended period of time.

In the mean time huge amounts of money are amassing on the sidelines. REITs, wealthy individual investors and private commercial real estate firms are all successfully raising large amounts of capital and getting ready to jump in when the time is right. They are waiting for two things; lower prices that reflect undeniable value and a dependable credit market.

Prices are getting lower every day as property owners, deal sponsors and the lenders who enabled them, slowly come to accept the true magnitude and direness of their situation. A flooded market will seek out bargain hunters and entice them with bargain prices. Weak and/or foolish banks will be taken over by the FDIC and placed in more responsible hands.

The surviving strong banks will find themselves bolstered with all the assets but none of the liabilities of banks they were compelled to buy. The new loan applications they will receive will be supported by healthy down payments and reasonable purchase prices and they will be sponsored by successful business people with impressive wherewithal. The banks will lend and the recovery will be underway in earnest.

We can have confidence that the markets will work but we have to realize the working of the markets involves extracting a price prior to conveying a benefit. The price is about to be paid and the benefit, while distant, is forthcoming.

Visit Commercial Mortgage Lender, MasterPlan Capital, online.


Yes You Can Get a Commercial Mortgage Loan From a Hedge Fund – Here’s How – A Wall Street Pro Explains

November 6, 2009

Most investors know that hedge funds make commercial mortgage loans, but few know how to approach a fund or exactly how secure an approval.

The first and most important thing to remember about hedge fund managers is that they have a Wall Street mentality; they are stock traders at heart. A trader wants to get into a trade at the right price, see results quickly and exit the trade at a profit. Hedge funds that commit capital to commercial real estate lending are no different. They want to lend at a low LTV (loan-to-value) and get out quickly. Profit takes the form of interest and points, but the general mindset of the decision maker on the loan committee is no different from a member of the stock selection committee.

It is imperative that you present your loan as an opportunity for them to make good money, quickly and safely, not as a way for you to reach your goals. Do not talk about your problems; money managers will be empathetic but will not be sympathetic. Emphasize the strong points of your deal, your past successes and your strengths as the deal’s sponsor. Keep the conversation optimistic. We all know it’s tough out-there; sophisticated hedge funds want to fund people who are capable of overcoming obstacles.

The large majority of private lenders, including hedge funds and private equity firms are equity lenders. Hard equity in the real estate is the lenders downside risk protection. This is extremely important to big money hedge funds because they generally do not recover their capital by selling their loans to the government or to the bond market. Hedge funds are usually “portfolio lenders”, meaning they use their own money to finance deals and hold the mortgage paper until it matures. Do not expect any loan offers from private funds to come in over 65% LTV (loan-to-value). If your deal does not meet this criterion, be prepared to inject more of your own cash or find a partner who can bring money to the closing table.

Your exit strategy is a paramount concern to hedge fund managers. Funds make “bridge” loans; short term, interim financing. They will need to know how you will pay them back and will need to be convinced that your exit will work. You must have a detailed, viable and credible exit strategy worked out before you approach a private funding source. It helps a-lot if you have an “in”. For good or for ill, Wall Street works like a private club. They have their own language, their own traditions and their own ceremony’s. If you are not member of the club getting their attention is much more difficult. For those on the outside of this specialized niche, it may be necessary to retain the services of a professional intermediary with Wall Street experience to get you in the door.

The banks, insurance companies and brokers are not lending like they used to. For many good quality commercial mortgage loans, private money is the only-game-in-town. Hedge funds are flush with cash and are hungry to make deals. If a real estate investor can develop a relationship with these unique lenders they will enjoy a seemingly endless source of funds.

MasterPlan Capital LLCCommercial Mortgage Lender, Private and Institutionally Funded Commercial Mortgages- Equity Financing – Asset Management – EZ Online Commercial Mortgage 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.

Commercial Mortgage Lender has Capital Available for Bridge Loans Against Commercial Real Estate

November 4, 2009

Commercial mortgage lender, MasterPlan Capital, wants to remind all our clients and all commercial real estate investors that we have plenty of money available to lend for “Bridge” financing against quality commercial property.

Loans are short term, between 9-36 months and are generally interest only until maturity. We can lend up to 65% LTV (loan-to-value ratio) for stabilized properties and can close deals very quickly.

Rates for bridge loans start at 10.99% for the very best deals but are usually priced in the teens.

With the banks, insurance companies and Wall Street brokers turning away even the good deals, it may be time to consider a privately funded commercial mortgage loan with MasterPlan Capital.

Borrowers can use our simple, 1 page commercial mortgage application and will receive a response the very next business day. All inquires will receive prompt and professional service.