Is the CMBS Market Returning?

There is a glimmer of hope - -

http://retailtrafficmag.com/news/spark_cmbs_market_06082010/

Commercial Real Estate Carnage Continues - FOXBusiness.com

Commercial Real Estate Carnage Continues - FOXBusiness.com

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CRE Financing Improving???

There is still a long way to go for typical investor real estate, but there is a glimmer of hope that things are beginning to improve. Currently prime, low LTV, institutional quality real estate in strong markets with good sponsors are slowly finding the doors opening for conventional financing. It may not sound like much, but it is a big change from 12 months ago.


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Signs the CRE Market may be improving

All Signs Point to Improving Commercial Real Estate Investment Market

Let's share any good news!

Cliff DuBois
Catalina Mortgage

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CMBS Volume

If you want to see the history of the CMBS volume, spreads and defaults, we have complied three charts that really tell the story-

Even the excesses were excessive. Forecasts are that the defaults on CMBS Loans in 2010 will exceed 11% of the total $700 billion outstanding - and even a huge percentage of those still performing are not worth the loan amount.

The volume collapsed - the spreads soared - and the defaults began their rise. The charts show a pretty clear picture.

But rest assured - CMBS will come back (and that's a good thing - really - we need the capital).

see the charts

Commercial Real Estate Market

The Commercial Real estate Market still has some pretty hard times ahead, but there are signs that many problems may work themselves out. http://www.costar.com/News/Article.aspx?id=CB58F9797974B3A09990193DBF51EC19&ref=100&iid=179&cid=823E87987951E3FC1AF10C00A81E40CD

Apartment Financing

APARTMENT and MOBILE HOME PARK FINANCING
Loan Size $500,000 to $5,000,000
Loan to Value up to 75%
Amortization up to 30 years
Fully Amortizing Available
Fixed Rates for 5, 7, 10 or EVEN 15 Years!!
Flexible Prepayment Terms
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Property not stabilized - consider a Bridge Loan!
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Why 2012 Will Be The Year For Commercial Real Estate Trade Volume

Why 2012 Will Be The Year For Commercial Real Estate Trade Volume

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Retail REO projected to increase

Bankers are preparing for increased REO in the retail sector. while this may be good news for buyers looking to acquire retail assets, it is continued bad news for borrowers attempting to finance or refinance. Even performing projects will experience tighter underwriting.

Read more at:
http://retailtrafficmag.com/news/bankers_prepare_increase_retail_reos_04202010/

Underwater CRE Loan Maturities High and Still Rising

More than 36% of the $270 billion in commercial real estate loans maturing in 2010 are under water, meaning the mortgage balance is greater than the value of underlying property, according to data from Oakland, Calif.-based research firm Foresight Analytics. And the worst is yet to come.

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Interest Rates Have Nowhere to Go but Up

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

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Bank problems may continue for some time

SAN FRANCISCO (MarketWatch) -- The continuing fallout from bad loans made in good years means even more U.S. banks will fail in 2010 than 2009, despite a recovering economy.

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Catalina Mortgage has conventional financing for small apartments.


Small Balance Apartment Loan Program
Loan Amounts from $250,000 to $5,000,000
Amortization/Term 25 to 30 years
Fixed Rates for 5,10 or even 15 years
Current Rates*
5 years - 6.55% to 6.75%
10 years - 7.70% to 7.90%
15 years - 8.00% to 8.25%

After the Fixed Rate period, the loan adjusts over LIBOR for the balance of the Term.
Loans have a 5% declining Prepayment Penalty for the Fixed Period.


Call us if we can help in financing your apartment project.

Cliff DuBois
cdubois@catalinamortgage.com

Opportunity Funding - Bridge Loans - Hard Money

Catalina Mortgage has a variety of funds providing bridge loans for a wide range of interim financing needs:

• Your bank has just offered you a discount if you can pay them off quickly?
• You have the opportunity to acquire a property for a really good discount?
• Your property is under-performing and needs time to re-stabilize?
• There are just no lenders today for your loan that matured?
• Your bank has just closed you bank lines?
• You are facing foreclosure - or need to get out of bankruptcy?

For these and more, the solution is an interim bridge loan.

I know - they are expensive, but if the opportunity or need is worth more than the cost, it is a good business decision.

Take an real example - our borrower owed $14,000,000 on performing retain center. The bank had to get the loan off the books and offered a 50% discount. We put on a bridge loan and the 5 points and 12% interest didn't seem bad to pick up $7,000,000 real equity.

Another example is a client who needed some working capital to complete tenant improvements for a new tenant in his shopping center. Even though he owner another property free and clear and had good credit, none of the commercial banks were open to providing the necessary financing. A two year bridge loan quickly provided the funds for the tenant improvements and get the tenant in in time.

If you have a need - call or email.

Cliff DuBois
cdubois@catalinamortgage.com
(800) 757 - 0265

We always appreciat the opportunity.

CMBS MARKET SHOWS INCREASING ACTIVITY

CMBS MARKET SHOWS INCREASING ACTIVITY

The commercial mortgage-backed securities (CMBS) market appears to be on the mend, with a spike in issuance compared to the same period a year ago...

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Discounted Note Payoff

DPO - Discounted Loan Payoff - (some notes)

There are several scenarios where you may be offered a discount to pay off your current commercial real estate loan:

1. Your current loan is maturing and the debt is more than can be refinanced.
2. The current lender has some outside pressure to reduce their CRE exposure.
3. Your property is no able to service the debt.

All the above assume that either the loan is non-recourse (so you don't HAVE to put additional cash into the property), or you do not have additional capital to contribute - and you can't raise new equity with the current level of financing.

Scenarios will vary a lot depending on the specific lender and loan servicer, but in general it should be (should be) an honest and logical assessment of the options available to the lender. If the best option to minimize the loss to the lender is to offer a discounted payoff, then there is a good chance you will get that option - and you will probably have to move quickly.

Don't expect that another conventional lender will want to step in and finance a payoff that just caused a loss to another lender. You will almost always need to use a bridge loan (Hard or Semi Hard Money) to provide some distance between the payoff and the ultimate conventional refinance.

UNDERSTAND THAT ALMOST EVERYONE WILL CONSIDER THE DISCOUNTED PRICE AS YOUR NEW BASIS. Don't expect that you will convince someone to lend you 100% of the payoff "because the value of the real estate is so much higher" - The payoff is the new "cost. That means you will need to put fresh cash into the transaction and that can range from 15% on really strong transactions to 50% on weaker transactions.

Also - just because you have a discount that is way below replacement cost (or what you originally paid), you will need a realistic and viable exit strategy.

Last Note - evaluate your discount very carefully. Some properties will never make sense, and a lot of discounts are still over-valued considering the risks of the market and specific real estate. Don't be afraid to walk away from a bad deal.

I hope these notes help and we have a number of programs to hale take advantage of properly structured discounted payoffs or acquisitions of REO.

Cliff DuBois
cdubois@catalinamortgage.com

Small Banks work to shed commercial real estate loans

Small Banks are working to get rid of their Commercial Real Estate Loans.


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