Archive for the ‘Mortgage Backed Securties’ Category

The Benefits of Credit Tenant Lease (CTL) Loans for Single Tenant, NNN Leased Real Estate

July 13, 2011
Credit tenant lease (CTL) lending has several distinct advantages over traditional commercial mortgage lending. No one type of financing is right for every situation but CTL should be considered whenever investors are buying, refinancing or building single tenant real estate that is , net leased (triple net (NNN), double net (NN) or bondable) to investment grade tenants.

Non Recourse – The sponsor / borrower is not underwritten and will not be on the hook if a loans defaults. If the tenant and the lease pass muster, the loan will close.

Click Our Logo to Apply for A Credit Tenant Lease (CTL) Loan

Speed – CTL loans have been known to close in 45 days from start to finish (60 days is typical). Conventional commercial mortgages can take 90-180 days to fund and close.

High Leverage – CTL bankers place no restrictions on loan-to-value (LTV) or loan-to-cost (LTC). If the debt service is covered (1-1.05x debt-service-coverage-ratio [DSCR]) by the rent CTL lenders will lend up to 100% LTV or LTC. CTL, without question, offers the highest loan balances in the commercial mortgage industry.

Fixed Rate – Rates on CTL loans are generally fixed for the entire life of the deal.

Self Amortizing – CTL mortgages are fully amortized with a term that is co-terminus with the lease. Borrowers won’t have to worry about coming up with large balloon payments or refinancing every 3, 5, 7 or 10 years.

Straight Forward Process – If the tenant is investment grade (BBB+ or better by S&P or Ba1 or better by Moody’s, or the equivalent), the property is stand-alone, single tenant and the deal carries a long term, net lease, CTL offers a very, very high degree of financing certainty.

Liquidity – There is no shortage of liquidity in the CTL sector of the commercial mortgage lending industry. Billions of dollars are available right now to finance single tenant, net leased, credit tenant real estate and bankers are actually eager to lend.


Fannie Mae; Scandal on a Monumental Scale – NY Times Op Ed and New Book Chronicle Massive Corruption

June 17, 2011

Fannie Mae, it turns out, is a bigger scam than Bernie Madoff could ever have dreamed of; a sad, expensive and disgusting example of corruption and cronyism that derailed the economy of our country. NY Times Op Ed columnist, David Brooks has penned an indispensible summery of an important and valuable book.

Read the Op Ed here. Get the book here.

Learn from history or be destine to repeat it.

Commercial Mortgage Lenders – Government Agencies Dominate Multi-Family (Apartment) Mortgage Sector

October 23, 2009

There is not much liquidity for commercial mortgages in the retail, office or hospitality sectors of the commercial real estate industry, but there’s plenty of capital available for multi-family (apartment) buildings. The good news is that the Government is lending massive amounts of money against apartment properties; the bad news is that no one else is.

Virtually all the institutional loans being made today to purchase, refinance or build apartments are being funded or otherwise supported by Fannie Mae, Freddie Mac, The Federal Housing Administration (FHA) or The Department of Housing and Urban Development (HUD).

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For almost 2 years now, these Government Agencies have been the primary lenders to the rental housing industry. They stepped in to counteract the liquidity crisis that was caused by the collapse in the commercial mortgage backed securities markets (CMBS) and, almost by default, have become the only game in town. Even the banks who claim to be lending right now are, in reality, just originating loans and selling them to Fannie or Freddie.

As the economy improves traditional multi-family lenders, such-as insurance companies, smaller regional banks and Wall Street investment houses, would like to re-enter the market place with their own commercial mortgage offerings.  Unfortunately for them, they are finding that they can’t compete with Uncle Sam who, of course, can simply print the money that it uses to lend.

Fannie and Freddie could maintain their dominance in multi-family finance indefinitely, but they won’t. They are lending at such levels because no one else can. As the economy improves and real, traditional banking becomes profitable once again, Government Agencies will retreat and allow the markets to provide the necessary capital. When that happens rates will be higher but the increased competition will mean more people will be able to qualify for loans.

Those lucky enough to meet the requirements of a Government Agency loan ought to apply now. When the time comes to lure lenders back into the market the Government will make itself less attractive by further tightening their underwriting criteria and lowering their loan-to-value ratios.

To secure the most favorable rates, terms and conditions that Government sponsored lending has to offer, a borrower must have decent credit (640 or better FICO) and a sound balance sheet that includes some liquidity (cash in the bank). Fannie and Freddie will lend up to 80% LTV but most loans that they are accepting now are in the 70%-75% LTV range. The property must be able to pay its own mortgage with a debt-service-coverage ratio (DSCR) of 1.2% or better and the building has to be stabilized (history of profitability). It goes without saying that the property must also be in good condition with little deferred maintenance necessary. The Government is sponsoring loans in all 50 states in-order to benefit the rental markets nationwide.

Loans typically come with 3, 5, 7 or 10 year terms and are amortized over 25 years. Currently rates are at historic lows due to the weak economy.

Apartment owners can get Agency backed loans through their local banks, larger national banks and through many other commercial mortgage lenders who enjoy direct and indirect relationships with Fannie, Freddie, FHA and HUD.  You can’t apply directly to the Government.

Property owners who don’t qualify for agency loans will have to pay more to a private lender or work to meet Government requirements.

It’s good to know that there is liquidity for multi-family investing, but it is disconcerting to realize that the only willing and able lender is the US Government. As things improve this should change.


Commercial Mortgage Lender; MasterPlan Capital LLC – EZ Online Application – Fast Response

Commercial Mortgage News – CMBS Delinquency Rates Continue to Climb – Hotels and Apartments are Worse Performers

October 21, 2009

New CMBS delinquency numbers via Fitch show that hotel loans are the worst performing category of commercial mortgage paper.

The general delinquency rate for all CMBS (again according to Fitch) was 3.58% as-of September ’09. That represents a 54 bps up-tick in troubled loans compared to August and a whopping 2.4% jump YTD. The trend is unmistakable and disturbing.

Along with hotels (5.83% delinquent in September), multi-family loans are fairing poorly with a September delinquency rate of 5.72%.

Currently, the biggest debacle in multi-family is a non-performing $195mm loan against the Babcock and Brown portfolio that contains about 14 equity hemorrhaging properties in NV, FL and other locations in the Southeast. Colum Financial made that loan to B&B and, not surprisingly, they are now out of business.

The ever helpful IRS has changed its rules to allow loan services to modify CMBS loans before they default without the huge tax penalties that used to exist. But it takes capital to restructure loans and the capital markets, especially the mortgage bond markets, are still dysfunctional. In-other-words, not only is there no liquidity for new loans but there is no liquidity to fund modifications of the old loans.

It seems that all loans are troubled loans now.

If other sectors worsen we can expect overall delinquencies to hit 5% by the second quarter of next year.  


Private and Institutionally Funded Commercial Mortgage Loans – Online, by MasterPlan Capital LLC

Commercial Mortgage Loans – Institutional Funding vs. Private Funding (Banks vs. Hard Money)

October 16, 2009

It is more difficult to get a commercial mortgage loan today than it was two years ago. The credit crisis has prompted many commercial real estate investors to look into alternative sources of capital. Private lenders, often called hard money lenders, have gained popularity recently as banks and Wall Street brokers have refused to make loans. It is true that privately funded commercial mortgage lenders can be more flexible and can close loans in just days, but that does not mean they are easy to get. Before a property owner applies to a hard money lender they should understand the differences between institutional funding and private funding.


Traditional lenders like banks, insurance companies and Wall Street investment houses are all highly regulated. Banks carry FDIC or other government insurance, insurance companies are watched over by each State Insurance Commission and Wall Street is governed by the Securities & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA). There is a tremendous amount of bureaucracy, red-tape and rules involved in originating conventional, institutional loans. All this regulation means that bank loans are slow, banks are not flexible and there are loads of paperwork and documentation involved.

Private lenders are, by definition, private entities. They might be organized as LLCs or Limited Partnerships (LPs) or they might be a single, wealthy individual who makes money by making loans, but they do not fall under the prevue of banking regulation. They must, of course, adhere to all anti-fraud laws as-well-as all laws against un-fair and deceptive business practices, but they don’t have to report their specific lending activity to Government Agencies and are not subject to Government licensing or chartering. Hard money lenders can be highly flexible in their underwriting criteria; they can change their own lending policies as they wish for their own reasons. They don’t have to require large amounts of documents if they don’t want to and they can move very quickly if they like a deal.


Bank and other institutional loans typically take 90-180 days to close. Private loans can close in a matter of just days if they have to (a virtual impossibility when dealing with a bank) but generally take about 21 days. Rates Conventional loans are usually based on an established benchmark rate such-as the 10 year US Treasury Bond. The bank takes the base rate adds an index and comes up with a loan rate. Treasury and other rate indexes are historically low right now (Fall ’09) and commercial mortgage loans (for those who qualify) rates are being priced at between 5.5%-7.5%

Private lenders generally hold the loans they issue in their own portfolios as-opposed to institutions who generally sell their loans to Government Enterprises or the secondary market. Hard Money lenders make their profit on rate and points so they charge significantly more. Most private loans today are being quoted at between 10%-16%


It is rare to see a bank charge more than 2 origination points on any loan.

Private lenders will typically charge at least 3 points and as many as 5.


Traditional lenders usually offer 3, 5, 7 or 10 year fixed terms on loans amortized over 10-25 years. A balloon payment or a refinance is usually necessary at the end of the term, although more and more banks are offering adjustable rate products that don’t require refinance.

Private loans are almost always short term, bridge type loans. Most charge interest only payments rather than amortize. The average private loan term is about 18 months and hard money lenders rarely write a loan for more than 36 months. The loan must be paid off in full at the end of the term.


Regulated institutions are now universally full documentation, full underwriting lenders. Every “I” must be dotted and every “T” must be crossed. They will fully underwrite the property first then the borrower. Both must pass muster or the loan will be denied.

Private lenders are equity lenders. They lend primarily based on the amount of equity in the target property. Investors will find hard money loans require much less paperwork and documentation. Private lenders will be careful and won’t lend to just anyone, but the underwriting is much more straight forward.

Loan-to-Value (LTV)

Banks used to lend up to 80% of a buildings value and allow a 10% second position loan, allowing sponsors to borrow as-much-as 90% of a deals value. Those days are gone. Now even the largest, strongest banks won’t lend more than 75% LTV and they discourage second loans. 65% is typical unless a borrower has a very strong balance sheet and a large liquidity position.

Private lender will not exceed 65% LTV even for properties that have excellent cash flow. Underperforming or vacant buildings will receive offers in the range of 50%-60% and land loans will come in at well under 50% LTV.

In a perfect credit environment bank loans or loans from other large money centers are the most desirable. They offer the best terms, lowest rate and fewest points. Any one who can qualify should seek funding from these powerful institutions. However, we are not in a perfect credit environment. We are in a mess.

Banks have tightened their standards, property values are dropping and the secondary mortgage bond market has completely collapsed. These circumstances have made it difficult or impossible for people to secure a conventional loan. Private lenders are more expensive and offer only short term financing, but they are filling a vital need and should be considered by borrowers if the bank has turned them away.


Private and Institutionally Funded Commercial Mortgage Loans – Borrowers and Investors can Apply Online – Simple 1 Page Commercial Mortgage Loan Application – Answers in 1 Business Day – MasterPlan Capital LLC; Commercial Real Estate Investment Banking

Commercial Mortgage Loans – Lenders to Fed: “We Won’t Lend and You Can’t Make Us!”

July 16, 2009

It is anticipated that, for the second month in a row, the Feds program to restart the commercial mortgage bond market will fail to produce any sales. 

Bloomberg has the story.


Privately Funded Commercial Mortgage Loan from $1mm +

EZ Application – Quick Closings.   MasterPlan Capital LLC

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

June 24, 2009
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.



Commercial Mortgage Loans – MasterPlan Capital LLC

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

June 18, 2009

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.

Article Source:—What-Rates-Do-Hedge-Funds-Charge-For-Commercial-Mortgages?&id=2489357



Maguire defaults on Quintana Mortgage; A Forced Sale Likely

June 18, 2009

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

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.


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

Commercial Mortgage Originations Down 70%

May 14, 2009

The Mortgage Bankers Association just released results of its quarterly commercial mortgage origination survey.

 Here are the depressing take-aways:

  • Originations down 26% quarter over quarter and down 70% year over year
  • CMBS conduit volume down 96% year over year.
  • GSE (government sponsored entities) down 17% for the quarter.
  • Life insurance companies origination down 7%


MasterPlan Capital; Commercial Real Estate Investment Banking