Fortune Capital Group

The ECB lowered rates by .25% today and raised inflation projections from 2 to 2.2%. Our economy obviously does not follow that path, but each government looks to other governments methods to see how it plays out, so this should be an interesting process to watch. Ultimately though, if at this point in the cycle, you are still playing the “rates will drop soon” game, I strongly recommend you reconsider. Depending on the Fed to change policy as your economic strategy has proven out to be the wrong strategy. Continue to monitor the rate progress, but continue to plan for rates being elevated for a long time.

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What we’re seeing in the market Fortune Capital Group - CMBS seems to be the only lender that can get even remotely close on proceeds - There are banks still in the market. Generally banks that historically have been more conservative, so haven’t been hit with the issues the more aggressive lenders are facing, so terms are more conservative and they are more cautious. - Fehps is still a solid cash flow play - Treasuries are up this week. Keep that in mind for debt cover issues in regards to proceeds - Construction lending is available and something banks are leaning into right now - Agencies still want business Michael Helmreich Jake Gluck

CMBS Underwriting There are many different factors that play into how a lender determines how much debt they are willing to lend you. One of the factors is your debt service coverage ratio, a factor of your amortization, interest rate, and NOI. In a market like today, where clients have loans coming due with 3% interest rates, this can become a significant issue, being that NOI growth couldn't possibly keep up with an increase of at least double on the debt payment side. An interesting solution that has become prevalent in the market is CMBS and funds. Where most banks determine your debt coverage based on a 30 year amortization, CMBS can offer full term IO, and actually underwrite to that number. For example, on a $20MM loan, at a 3.25% interest rate and a 30 year amortization, your mortgage payments would be $87,041 monthly. At a 6.25% rate, it would be $123,143. That would mean you would need to have grown your NOI by at least $500k if you are UW to a 30 year amortization. Underwriting based on IO however, your monthly payments would be $104,371, and your NOI would only need to have grown around $300k. CMBS lenders, and some funds we work with, have become the go to option for clients that are in this position and trying to reach their highest capitalization.

Fortune Capital Group along with our partner, Alpha Realty , is a corporate sponsor of the ReDeal Conference . We would love to connect with lenders, brokers, owners, and anyone else that we can align with in the industry. Shoot us a message to set up a time to meet. Michael Helmreich Lev Mavashev

I wanted the first post on our Company Page to be a quick blurb about what we do. Future posts will be educational for anyone involved with or looking to get into the industry. Fortune Capital was founded on the belief that Commercial Mortgage Financing is a relationship business. We are focused on the $1-100MM space, and have executed on asset classes nationwide excluding hotel and Healthcare. We recently updated our lender roster, and it includes close to 1,000 lending relationships we have cultivated over our combined 24 years in the industry. Agency, CMBS, ground up construction, construction completion, renovation, land, and shockingly we still have banks that are actively lending in NY and nationwide. Please, at any time, feel free to DM for business or industry advice. We believe that there is enough business for everyone, and that giving is the foundation for success. If you are a broker, either sales or debt, we are happy to assist with any questions you may have. Looking forward to connecting with all of you in a productive and meaningful way.