Meridian Capital Group’s Post

With everything you read in the news, it would be easy to think that developers and investors are waiting for rate cuts before looking at their next project... but I can tell you that is not the case! This week we've seen a large volume of funding requirements from new and existing clients who want commercial mortgages, portfolio refinances, business acquisitions, bridging and development projects. There is no perfect time to start the next project but as the saying goes, the second best time is TODAY! The key is having honest conversations about your circumstances and laying out the options available to allow you to make informed decisions. If you would like to talk through current or future financing needs, please get in touch with the team today. Derek Bradstock, Gurgit Basi, Matthew Anderson, Andy🏗 Gray🏠 Michael Smith, Laura Hayward #propertyfinance #propertydevelopment #commericalmortgage #bridging #finance #businessacquisitions #buytolet

Blackstone to issue mega CMBS to Finance AIR REIT Purchase This excellent story from Scott Carpenter highlights that the SASB CMBS market is alive and well. And potentially a driver of deals further afield from the CMBS market. SASB market volume is exploding and this article notes that Blackstone accounts for 50% of the market. This despite the obvious flaws revealed in the SASB CMBS market. This post has 2 parts – the first focuses on the SASB deal, while the second connects the dots between CMBS and Blackstone's strategy (and whether it make sense for the Limited Partners (LPs)). This SASB CMBS deal lacks diversity and generous release provisions will erode diversity over time (hence not worthy of AAA): On the surface, this deal may seem diversified given the number of properties, however 55% of the properties are located in FL and CA. Further, property release provisions are so generous that diversity is sure to erode over time: “… Borrowers may at any time release an individual Property or Properties, subject to the satisfaction of certain conditions including payment of a release price. The release price is 105% of the allocated Mortgage Loan amount until such time as 30% of the original principal amount of the Mortgage Loan has been repaid and 110% thereafter”. The bigger picture - Connecting the Dots to Blackstone: Below are a few points looking beyond the CMBS itself: 1. Connecting the dots back to Blackstone's $10B purchase of AIR. Blackstone's latest and largest ($30B) real estate fund (BREP-X) is the buyer of AIR REIT – at a 25% premium. Trying to understand from LP/investor perspective - 1/3 of my capital is now invested in one entity that I could have bought in the market the day before at a 25% discount, with no management or incentive fees and high liquidity. Does this make sense? 2. Notably, the advisers on the CMBS are largely the same as those advising Blackstone on the acquisition of AIR. Not very surprising, but I wonder if the advisers are also providing warehouse financing dependent on the takeout from the CMBS? What is plan B should this SASB deal fail? This isn’t farfetched as Blackstone recently pulled a large SASB CMBS deal at the last minute, even though ratings were issued and the RAs had issued press releases. 3. Was the premium paid for AIR, in part, based on sweetheart financing from CMBS? Blackstone Realty President Jonathan Gray specifically mentioned CMBS financing as key part of improved financing conditions: From Real Deal: “Gray said that there have been some encouraging signs for commercial real estate recently. The cost of capital has come down from where it was in late October and debt has become “much more available,” especially in the CMBS market, he said” #privateequity #cmbs #commercialrealestate #multifamily #ratins https://lnkd.in/dMadGaDc

#REIT Clipper Realty (CLPR) got downgraded this week due to losing the City of New York as a tenant in one of their buildings. That tenant accounted for 15% of the REIT's NOI. Lesson? Concentration of #Risk in an important consideration for real estate investors. If one #Tenant or client makes up a large chunk of your business, you've got a built-in risk to mitigate. https://lnkd.in/ecR_kxgN #Investments #CCIM #NNN #exchange

Blackstone Mortgage REIT Slashes Dividend By 24% As Distress Piles Up In CRE World. Blackstone Mortgage Trust, a real estate finance company that originates senior loans collateralized by commercial real estate across North America, Europe, and Australia, reported its second-quarter earnings on Tuesday. The report revealed a near-quarter reduction in its dividend due to rising defaults and increasing challenges with borrowers in making payments or refinancing office tower loans amid a worsening CRE downturn. Bloomberg was the first to report that the $3.4 billion real estate investment trust BXMT slashed its dividend to 47 cents from 62 cents. BXMT has been distributing the 62-cent dividend to shareholders since late 2015. #realestate #interestrates #REIT More details here: https://lnkd.in/g7F8nUSC

Recently Closed - $7,100,000 preferred equity M2 Equity originated a $7,100,000 preferred equity investment that was subordinate to $21mm bridge loan provided by a mortgage reit. The preferred equity, senior financing and sponsor/LP equity capitalized the acquisition and value-add business plan for a 1979 vintage, 256 unit multi-family property located in Tucson, AZ.  M2 is actively originating preferred equity opportunities in the $3-30mm range for value-add acquisitions, lease-up acquisitions, cash-in refinance/recaps, rate cap purchases and bridge loan rebalancings. Pref is structured to satisfy compliance with Agencies, HUD and all senior lenders and sized up to mid 80’s ltc with no going in DSCR constraints. #preferredequity #multifamily

In our inaugural #triple-net lease ABS newsletter, we recap rating performance and outlook for the sector: ◼️ The implementation of the updated criteria in 2023 resulted in 14 upgrades, 19 downgrades, and 60 affirmations. ◼️ We expect weaker collection trends driven by tenant bankruptcies and delinquencies to continue in 2024, while DSCR in most transactions remain well above performance triggers. ◼️ We believe the diversified retail-oriented master trusts will continue their annual issuance cadence and refinance near their anticipated repayment dates. Click the link below to learn more about our insights on the sector: https://ow.ly/LhPf50R6wqQ

It is promising to see the resurgence of new acquisitions in the industry. The collaboration between the Preferred Equity lender and borrower teams was instrumental in successfully navigating this process. Amidst changing treasuries and closing time frames for the first mortgage, the hard deadline before the holiday added an exciting twist. This closing exemplifies the power of setting aside egos to focus on a shared objective. GSP Deal Team: Thomas Butler Shuvo Hussain Chandana Reddy Justin Piasecki #CRE #PreferredEquity #CREFINANCE #Multifamily

Thank you Traded: Chicago 🙌 This was truly a rewarding deal to get through. The borrowers counsel made all the difference. From day one, they stood strong for their client, pushing key revisions that we ultimately achieved. We definitely stumbled a few times on the way to the closing table, but ultimately we achieved a first for the lender! Here's the story: Borrower had the building appraised. Based on that number, they wanted 75% LTV. Quotes came in between $2.1MM - $2.5MM, with rates scattered. We were adamant on achieving $2.9MM 💰. Whether that meant finding a lender with rock-bottom rates or accepting a lower DSCR. We don't back down 💪 Well, I think we hit the jackpot on this one 🎯 - Out of State Borrower - Low DSCR (Lender understood the deal story) - Great Rate - After approval, we further negotiated a 30-year amortization. - Zero Prepayment Penalty 🏆 The biggest win? After approval, we successfully struck the Confession of Judgement from the loan docs. 📃 ❌ Lenders Response: "We have never done this before. It is standard in our docs. No one has ever complained." ✅ Two weeks later the board accepted the revision! That is where having an amazing attorney and mortgage broker in your corner makes all the difference. We stood firm, challenged their docs, and protected the borrower every step of the way. Details Do Matter - Having the right team in place - from counsel to broker - can make all the difference. Don't settle. Especially when it comes to protecting your clients.

Some good news in the market. Things are stabilizing. Not where we all wanted them to end up, but at least they seem to be settling. Yes, there will be pain, but a clear picture is much better than a murky one. We signed up a construction completion loan last week with ~9% money. $11.5MM Loan. Another deal, mixed use, cash out refinance for $12mm. There is money in the market. Make a move. #commercialrealestate #constructionfinancing #constructioncompletion #debt Fortune Capital Group Michael Helmreich