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2012 NC-CCIM Charlotte CommercialReal Estate Market Forecast
“Financing for Commercial Real Estate”
Loans are subject to credit approval
BB&T
Vital Statistics
Best Bank in Town Since 1872
Headquartered in Winston-Salem, North Carolina
One of the nation’s largest banks – 18th largest US bank by assets
NEVER recorded a quarterly loss during the “Great Recession”
Asset base of over $174 Billion
One of the first banks to repay TARP
New commercial real estate focus with Chris Cordisco and Buddy Thomas
Healthy, hungry, and ready to lend
Loans are subject to credit approval
Grandbridge Real Estate Capital
Vital Statistics
Headquartered in Charlotte, North Carolina
Subsidiary of BB&T
One of the nation’s largest commercial mortgage bankers
Closed $4.8 billion in financing in 2011
Servicing portfolio of over $25 billion
23 production offices in 16 states plus the District of Columbia
Approximately 30 CCIM’s on staff
Loans are subject to credit approval
Grandbridge Real Estate Capital
SERVICES
Permanent Loan Placements
Fixed Rate or Floating Rate
Acquisition/Interim Bridge Financing
Mezzanine Financing
Preferred Equity
Developmental and JV Equity
Loans are subject to credit approval
Grandbridge Real Estate Capital
Freddie Mac Seller/Servicer
Fannie Mae DUS Lender
MAP and Lean Approved HUD Lender
Insurance Company Correspondent
BB&T Real Estate Funding – proprietary bridge lending platform
CMBS origination and servicing relationships
Loans are subject to credit approval
Grandbridge Real Estate Capital
Charlotte Production
• 8 People
• 2 CCIM’s; 1 CFA; 1 CPA; 1 MAI
• $500 Million in 2011
• $1.8 Billion Past Five Years
Loans are subject to credit approval
MARKET
Loans are subject to credit approval
2007 -- $502 Billion of CRE
Loans are subject to credit approval
2009 -- $82 Billion of CRE
Loans are subject to credit approval
2010 -- $110 Billion of CRE
Loans are subject to credit approval
2011 -- $140 Billion of CRE (EST)
Loans are subject to credit approval
Source: MBA & GBRE Estimate
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
2006 2007 2008 2009 2010 2011 (Est)
$65,600
$105,300
$63,400
$42,400 $42,845
$55,200
$44,080 $42,700
$26,670 $16,380
$30,606
$50,000
$239,270
$258,830
$12,150 $6,010 $6,659
$35,250
Ori
gina
tion
Vol
ume
(Mill
ions
)Commercial & Multifamily Lending Composition Since 2006
Fannie Mae, Freddie Mac, FHA Life Insurance Companies CMBS / Conduit
Loans are subject to credit approval
Source: MBA & GBRE Estimate
$-
$10,000,000,000
$20,000,000,000
$30,000,000,000
$40,000,000,000
$50,000,000,000
$60,000,000,000
2010 2011 (Est)
$564,000,000 $4,600,000,000
$42,845,000,000
$55,200,000,000
Multifamily Lending Agency / Life Company Volume 2010 - 2011
Life Company Agency
Loans are subject to credit approval
Source: Trepp, LLC
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
2012 2013 2014 2015 2016 2017 2018
$2.44
$1.10 $0.98
$2.61
$4.82
$7.93
$0.41
$6.18
$1.58
$2.72
$4.67
$7.23
$10.71
$0.52
CMBS
Mat
uriti
es (
$ Bi
llion
s)Upcoming CMBS Maturities By DSCR
≤ 0.89x
0.90x - 0.99x
1.00x - 1.09x
1.10x - 1.19x
1.20x - 1.29x
≥ 1.30x
Loans are subject to credit approval
Source: Trepp, LLC
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
2012 2013 2014 2015 2016 2017 2018
$15.31
$1.66 $3.61
$7.19
$11.81
$16.41
$0.54
CMBS
Mat
uriti
es (
$ Bi
llion
s)Upcoming CMBS Maturities by Loan-To-Value
≥ 100%
95.0% - 99.9%
90.0% - 94.9%
85.0% - 89.9%
80.0% - 84.9%
≤ 80.0%
Loans are subject to credit approval
Source: Trepp, LLC$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
2012 2013 2014 2015 2016 2017 2018
$19.62
$1.28
$2.50
$5.24
$9.71
$12.64
$0.29
Mat
uriti
es ($
Bill
ions
)
CMBS Maturities by Delinquency Status
Delinquent
Current
Loans are subject to credit approval
Source: Federal Reserve
2012
2011
2010
2009
2008
2007
2006
0.000%
1.000%
2.000%
3.000%
4.000%
5.000%
6.000%
0 5 10 15 20 25 30 35
Historic Yield Curves (2006 - 2012)
2/27/2012 2/23/2011 2/23/2010 2/23/2009 2/22/2008 2/23/2007 2/23/2006
Loans are subject to credit approval
Source: Federal Reserve
0.290%0.400%
0.840%
1.350%
1.920%
3.040%
0.240%
0.490%
0.000%
0.500%
1.000%
1.500%
2.000%
2.500%
3.000%
3.500%
0 5 10 15 20 25 30 35
Yield Curve - February 27, 2012
UST LIBOR 30 / 90
Loans are subject to credit approval
You CAN finance multifamily and commercial
real estate!!
Loans are subject to credit approval
Lender Types Active Today
Insurance companies
Agencies (Freddie Mac, Fannie Mae, FHA/HUD)
Bridge lenders (BB&T REF, others)
Mezzanine lenders
Preferred equity providers
Banks (BB&T)
CMBS Lenders
Non-traditional lenders
Loans are subject to credit approval
Loan Types Available Today
Immediate funding interim and permanent loans
» Non-recourse; $1 Million and up…….
» Acquisition, refinance, construction takeout
» Fixed and variable rate
» Bullet or self-amortizing
» 3 to 20 year terms (30-40 for multifamily)
» Amortization 15 - 30 years with some 30 - year schedules (FHA 35 – 40 yrs) and, yes, even some interest-only
Loans are subject to credit approval
Loan Types Available Today
Forward commitments are returning (6-12 months)
Credit tenant lease (CTL)
Acquisition / bridge loans
Mezzanine and preferred equity
Construction financing
Construction mezzanine
Institutional (life company) equity and JV money
Loans are subject to credit approval
CHARACTERISTICS
Loans are subject to credit approval
Loan Characteristics
Borrower continues to be the key
Primary, secondary and tertiary markets
Four major food groups PLUS
Fundamentals must all be in place
Amortization continues to be important – pre or post
Loans are subject to credit approval
Loan Characteristics
Underwriting
– Submarket vacancy or actual
– Above-market rents may be adjusted downward
– Lease rollover underwritten, reserved, or both
– Market and U/W cap rates are being used
– LTV’s range 60 – 80%
Collections, debt coverage and debt yield
– 1.20 - 1.45x DCR
– 9% -- 12% debt yield (NOI divided by loan amount)
Loans are subject to credit approval
CMBS Structuring
$5 million minimum size range, but can go lower
4 food groups PLUS; will go to smaller markets
70 -- 75% LTV
1.25x DCR
5 and 10-year term; 30-year am; lock rate at closing
Escrow for taxes, insurance and reserves
May or may not reserve for TI and commissions (but will underwrite)
Cash management or lockbox features
Loans are subject to credit approval
Permanent Rates 3/01/12
5-year money in the 3’s to 4’s (T = 0.85%)
7-year money in the low to high 4’s (T = 1.35%)
10-year money in the low 4’s to low 5’s (T = 1.93%)
Low leverage causes the rates to come in significantly
Some insurance companies have floors
Loans are subject to credit approval
Conclusions
More capital sources returning to market
LT debt availability continuing to increase substantially in 2012
Underwriting moving up the LTV, DCR curves
Pricing more attractive/competitive
Equity requirements greater and new construction is returning
CALL GRANDBRIDGE and BB&T !!!