Download The Charlotte Regional Commercial Real Estate Capital Conference

Welcomes you
to the
2010 NC-CCIM Triad Commercial
Real Estate Market Forecast
Grandbridge Real Estate Capital
Vital Statistics
• Headquartered in Charlotte, North Carolina
• Subsidiary of BB&T
• One of the nation’s largest commercial mortgage
bankers
• Servicing portfolio of $24.5 billion
• 26 production offices in 16 states plus the District of
Columbia
Grandbridge Real Estate Capital
SERVICES
• Permanent and Interim Loan Placements
» Fixed Rate or Floating Rate
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Acquisition/Bridge Financing
Mezzanine Loans
Preferred Equity
Developmental and JV Equity
Note Purchase Financing
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
• Access CMBS and “non-traditional” lenders
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Grandbridge Real Estate Capital
• Charlotte Production
» 6 People
» 2 CCIM’s
» $2.4 Billion 2000 – 2009 in 383 deals
Review
Where have we been?
What Happened?
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Capital adequacy questioned
Liquidity evaporated
True asset value incalculable
Transactions stalled
» Inability
» Unwillingness
What Happened?
• 2007 - CMBS Issuance
= $230 Billion
• 2008 - CMBS Issuance
= $14 Billion
• 2009 – CMBS Issuance
= nil
• 2010 – CMBS Issuance
= re-hiring, limited lending, priming the pump
What Happened?
• 2007 – Insurance Company Commitments
= $42.7 Billion
• 2008 – Insurance Company Commitments
= $24 Billion
• 2009 – Insurance Company Commitments
= $16 Billion
• 2010 – Insurance Company Commitments (Expected)
= $32 – 36 Billion
Can you finance
multifamily and commercial
real estate??
SURE! (cautiously…..)
Lender Types Active Today
• Insurance companies
• Freddie Mac; Fannie Mae; FHA/HUD
• Bridge lenders
• Mezzanine lenders
• Preferred equity providers
• Banks
• CMBS Lenders
• Non-traditional lenders
Loan Types Available Today
• Immediate funding interim and permanent loans
» Acquisition, refinance
» Fixed or variable rate
» Bullet or self-amortizing
» 3 to 20 year terms (30-35 for multifamily)
» Amortization 15-25 years with some 30year schedules and limited interest-only
Loan Types Available Today (cont’d)
• Forward commitments are tough (3+ months)
• Credit tenant lease (CTL)
• Acquisition / bridge loans
• Mezzanine and preferred equity
• Note acquisition financing
Loan Characteristics
• Tighter underwriting
• Submarket vacancy or actual
• Above-market rents may be adjusted downward
• Higher cap rates
• Lower LTV, although some recovery
• Collections, debt coverage and debt yield are king
• 1.20 - 1.25x DCR
• 11% debt yield
Loan Characteristics
• Borrower is key
• Primary and secondary markets
• Fundamentals must all be in place
• Amortization is critical
• Recourse is back in some instances
Rate Comparison
• Pre-meltdown
10 year Treasury = 5.26%
Spread = 100 basis points
Coupon = 6.26%
Rate Comparison
• Present day
10 year Treasury = 3.76% (as of 3/12/10)
Multifamily Spread = 190 - 220 basis points
Coupon = 5.65 - 5.95%
Commercial Spread = 225 - 325 basis points (+/-)
Coupon = 6 - 7%
Conclusions
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LT debt loosening in 2010
Uncertain regulatory environment
Banks may apply pressure or bifurcate loans
Borrowers may be forced to choose asset
capitalization
• Equity requirements greater and new
construction will be slow
Panel Discussion
• Don Dibble, Lincoln Financial Group
• Rich Martinez, Freddie Mac
Panel Discussion
Rich – What’s up with the GSE’s? Are
Freddie and Fannie going to be around in
the future, and how has your
conservatorship with FHFA affected how
you do business?
Panel Discussion
Rich – What is your near term view of the
multifamily sector and what is your
focus for 2010 and 2011?
Panel Discussion
Panel Discussion
How are you underwriting loans today? What
factors are the most important to you? What
are the hot buttons? How has this changed
over the past 12-18 months? Don? Rich?
Panel Discussion
Don -- How easy is it for you to ascertain your
cost of capital; how has it changed over the
past 12 months; how volatile is it and how has
this impacted your lending activities?
Panel Discussion
When you quote a spread or rate, for how long
is the pricing good? Rich? Don?
Panel Discussion
Don – What advice can you give to a
borrower who finds him/herself in financial
trouble, either on a particular deal or in
general?
Panel Discussion
Rich – Freddie and Fannie have had an 80%
market share of the multifamily finance
arena over the past 12-18 months. Do you
expect this to continue; do you have any
concerns with this concentration?
Panel Discussion
Don, what aspects of a loan should a
borrower consider beyond just loan
amount and interest rate?
Panel Discussion
Rich, does Freddie Mac have any
new products on the horizon?
Panel Discussion
Don – Several conduits started hiring and
talking about quoting deals. Can this market
get back off the ground, and what do you
think it will take in order for that to happen?
When? What will the deals look like?
Panel Discussion
Will you permit secured secondary debt,
mezzanine loans or preferred equity behind
loans or preferred equity behind your first
mortgage? Why and why not, and if “yes” with
what parameters? Rich? Don?
Panel Discussion
Rich – How has your North Carolina portfolio
performed; how do you feel about our
markets in general and Greensboro, High
Point and Winston-Salem in particular?
Panel Discussion
Don – What property types and markets in
North Carolina are most appealing to you?
Which are not and why?
Panel Discussion
What impact will deleveraging play in the
viability and valuation of real estate
markets?
Panel Discussion
What keeps you up at night?
Panel Discussion
What is it that you do best that helps you
compete and win business, and why should
borrowers borrow from you?