Archive for October 1st, 2008

The Real Estate Capital Scoreboard® – October 2008

Yazan: realtycapital | 01 October 2008 | No Comments
Categories: Scoreboard

Chicago, Illinois, October 1, 2008 – It’s a good news/bad news real estate capital marketplace.  Mortgage markets are plagued by Wall Street market malaise and swooning prices, yet as far as commercial real estate debt is concerned, overall default rates and profit performance remain at historically favorable levels   Funding sources and borrowers alike are very [...]

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Chicago, Illinois, August 2, 2010 – Mid-year key economic indicators point to a more moderate recovery.  During July, benchmark treasuries moved within a quarter point range and settled lower by about 20 basis points for five-year notes, while ten-year notes moved down less than 10 basis points, respectively.  Mortgage spreads continued to barely tighten, netting slightly lower overall rates. Throughout the first half of the year, lenders have been scouring the realty markets in search of performing projects with stabilized cash flow.  Yet limited opportunities may be found.  Simultaneously, scant funding options are available for projects without cash flow performance.   Few capital sources reach for deals on longer-term cash flow projects, unless substantial equity exists.  With mortgage rates starting in the mid-4% range for longer term debt of seven years or greater, borrowers are migrating from floating-rate to fixed-rate debt.  As rates are at historical lows, focus on loan terms - other than pricing - include the following:  Loan-to-value sizing dominates underwriting funding limits, as debt service coverage ratios are relatively high due to low rates Subordination and non-disturbance agreements are more important to lenders as various players in the capital stack (e.g., mezzanine and preferred equity) take on new positions in situations where developer equity is reduced or eliminated Real estate tax and insurance collection conditions are more stringent, with lenders seeking tighter control in case of default Property insurance carriers must meet higher standards due to default within the industry Unauthorized transfers are no longer covered by most title policies, adding additional recourse carveouts Skip Perry, Real Estate Capital Institute advisory board member notes that "lenders want quality loans, and are willing to sacrifice yield in return for safety of principal."  He suggests, "conservatively underwritten income-property loans are precious commodities capturing premium pricing and terms.”