Lee Francis’ Post

Terrific. What size loans bridge and permanent ?

Cracks in the Commercial Property Market Are Widening to Apartments : cracks in the commercial real estate market are widening from offices to apartment complexes, with more than $67 billion of the housing potentially distressed as borrowers struggle to repay loans “Collateral performance in CRE CLOs deteriorated throughout 2023 with stress and delinquency rates rising sharply the final two months of the year” “Owners who made purchases at record-high prices may have found their assets landing on servicer watchlists as assumptions used to underwrite their acquisitions proved overoptimistic” Arbor had about $7.3 billion of collateralized loan obligations outstanding last year16.5%of Arbor loans were past due in December, per Santander : Apartment loans emerging as problem area in CRE space

📰 Trepp, Inc. featured by Urban Land Institute : "Commercial real estate (CRE) loans totaling almost $1.8 trillion are set to mature before the end of 2026, according to Trepp. One sign of the accompanying stress is the CMBS special servicing rate, with its latest numbers inching up to 8.2%, the highest since June 2021." Lonnie Hendry, CRE, Chief Product Officer at Trepp added, "Outside of the office sector and a very small number of multifamily properties with floating-rate debt, the other CRE sectors are performing very well and have been able to refinance at a respectable clip, even with increased interest rates." "Over the next 12 to 18 months I anticipate increased transaction volume in the distressed asset space, but those volumes will be subdued when compared to 2021 and the first half of 2022." See the article by Beth Mattson-Teig here: https://hubs.li/Q02Kc9MV0 #Trepp #TreppWire #UrbanLand #CommercialRealEstate #CRE #CREDistress #Office

We're working with a developer who's completing a garden-style apartment in DFW. They financed the senior construction loan through a regional bank at modest leverage and layered in preferred equity to get to 72% LTC. This pref piece compounds monthly and has a minimum multiple that the investor must hit upon pay-off (refi/sale). The developer wants to pay off their preferred equity investor given the rising cost of compounding interest - not to mention softening rents, occupancies, and construction delays. We've identified multiple lenders targeting projects approaching Certificate of Occupancy or, ideally, in lease-up with some cash flow in-place. Terms are 24 or 36 months with one or two 6-12-month extension(s). These lenders are sizing to either a Y2 or Y3 stabilized NOI, burning off concessions from Y1 to Y2 and can underwrite up to 3% rent growth in years 2 and 3. They're looking to solve for a stabilized economic occupancy of 88-95% and a 7.75-8.50% debt yield. For projects still under construction, hold-backs or earn-outs may be available to achieve TCO. Pricing is S+285-425 - some groups are wider, but mid 300s seems to be competitive for market. An at-the-money cap is generally required, capitalized in the deal with SOFR floors ranging from 400-500bp (while term SOFR sits at 5.32% today). Prepay is generally 12-18mo minimum interest. 1% origination fee and 25-50bp exit fee - some can be higher but waived if refinanced with Fannie or Freddie. For developers who have expensive preferred equity or are facing pains with their construction lender (banks who want $ off their books, loan maturities, etc.), "construction-to-bridge" money is widely available. Although it may result in a cash-in or cash-neutral scenario, this strategy can achieve a lower blended cost-of-capital and provide additional term for developers, particularly those who do not wish to sell in the current environment and/or believe treasury rates will be materially lower in 2025 and beyond. Please reach out if we can be a resource in any way. #apartmentdevelopment #multifamilyinvesting #constructionfinancing #bridgeloans #capitalmarkets Greysteel

Fident Capital secured $29.0MM of bridge financing on a recently constructed mixed-use property with 52 apartments and ground floor retail. Loan proceeds funded the conversion of a multifamily asset, located only three blocks from the Ocean at the iconic Oceanside pier, into for-sale condos. The lender, a private debt fund based out of New York, provided non-recourse financing that allowed a cash-neutral refinance of the existing debt. Project Highlights: •Optionality from the original condo specifications and tentative map allowed for an easy pivot from, and back to, a for-sale strategy. •Experienced lender partner with deep expertise in all aspects residential housing, including conversions, offered pragmatic solutions reserve and incentive structures.  •Well-built mixed-use project in idyllic location three blocks from the beach. Non-recourse, cash neutral financing which capitalized all necessary reserves and conversion costs.      Challenges: •Complicated mixed-use wrap product surrounded a public-private parking garage with bifurcated access for residents. •Navigating perceived pressure on potential condo buyers from a rising interest rate environment. •Considerable cash flow analysis was required to plan for HOA, tax, operating, interest, and incentive plan reserves as revenue declined upon vacating rental units in order to sell them.  #commercialrealestate #mixeduseproperty #entrepreneurship #realestatefinance #sandiego

Another IMG project! Interesting asset stabilization strategy. Build to condo spec... initially for rent- then conversion to condos.

Big Refi. #WednesdayCRE #CommercialRealEstate #CommercialDebt #CommercialInsurance Florida East Coast Realty has secured a $419.6 million financing package to refinance an 85-story mixed-use residential, hotel and office building in Miami’s Brickell neighborhood. The debt package involves a five-year, $334.6 million Freddie Mac-backed senior loan with a 35-year amortization by Greystone Servicing Company. The deal also includes $85 million of agency-backed subordinated debt and an investment in tandem with CPP Investments and Harbor Group International, according to Greystone. #SourcingAndSelling #SellingAndSourcing #Retwit #2024 ~ Contact Us for Commercial Investments, Financing and Insurance. Multifamily, Industrial, Hotels, Office, Retail, Development Sites, Plus. #ListWithLance #LanceLoans #LetLanceInsureYou #CRE #Owners #InvestmentProperties #Multifamily #Industrial #Hospitality #Retail #Development #Construction #Commercial #CommercialTransactions #CommercialFinance #CommercialInsurances #CommercialTitleAndClosing #CommercialProp https://lnkd.in/gcGff2Rb

A big wave of new rent-controlled apartments is soon hitting the market. “After its lender sold off troubled loans tied to nearly one-third of Veritas Investment’s apartment buildings in recent months, the San Francisco mega-landlord will see its once vast real estate empire shrink even further.” Specifically, a total of 23 San Francisco buildings that collectively hold 762 rent-controlled apartments are being made available. Safe to say that many savvy investors will be trying to get their hands on these. #RentControlled #SanFrancisco #RealEstate

In addition to the hurdles that multifamily property owners are facing with re-financing on traditional loans that are maturing, CRE CLO bring additional risk to owners holding this kind of debt. Leverage our data to find acquisition opportunities at below market pricing. Feel free to reach out to me to discuss how you can access these opportunities jcummings@costar.com "46% of CRE CLO loans still aren’t generating the net operating income that was baked into the loan underwriting"

Our team recently closed another multifamily bridge loan which will help our client conduct major interior and exterior property enhancements. The 18-month fixed loan provides enough time for our borrower to improve property revenue and perm out this loan in a more favorable rate environment. The loan was structured at 77% LTV and no prepay penalty, with the borrower self-funding capital improvements and interest carry. Bridge products can still make a lot of sense for apartment deals as cap rates widen and interest rates contract. Special thanks to Sean Farag and MBI Equity Partners for your help in making this happen! #capitalmarkets #CBRE #debtandstructuredfinance #multifamily #bridgeloan #agencylending #realestate #realtor #developers #CRE #CREfinance #fixnflip #purchaseloan #refinance #commercialrealestate #mortgagebroker #closeddeal #capitalmarkets #1031exchange #investmentproperty #investmentrealestate #cashoutrefi #money #commercialloan #constructionloan