MCA Closes Two Single-Tenant Government Office Loans Totaling $19,900,000 in Oklahoma

Metropolitan Capital Advisors, Ltd. (MCA) has closed long-term debt financing for two separate office buildings leased to government service tenants. Lincoln Plaza, a 154,085 SF Read more

The CMBS Market is on FIRE!

By Sunny Sajnani, Senior Director The CMBS credit market is vital for the commercial real estate industry, providing leverage on assets that typically banks or Read more

Basel III: What Is This, and Why Do I Care?

By Kevan McCormack So maybe you have heard about this thing called Basel III, and maybe you haven’t.  For those of you wondering what Basel Read more

GSA Leases – Lucrative but Risky?

By Sunny Sajnani, Senior Director The General Services Administration (GSA) is probably the largest tenant in the United States, providing space for more than 400 Read more

The Main Drivers of the Single Tenant "Build-to-Suit" (BTS) Fever.....

by Gabe Gonzalez The single tenant Build-to-Suit (BTS) market continues to be one of fastest growing sectors in terms of development, acquisition, and financing activity.  Read more

Development Cycle Already?

by Hook Harmeling It does not seem that we have been out of the Great Recession for all that long. If you blinked, you probably Read more

Preferred Equity – What the Heck Is It?

by Charley Babb We were recently engaged by clients to help monetize some of their trapped equity in an appreciating asset on which they had Read more

Credit Tenant Lease (“CTL”) Financing

By Brandon Wilhite At Metropolitan Capital Advisors (“MCA”), our clients’ financing requirements range from conservative low-leverage to more aggressive high-leverage and everything in between.  Due Read more

Seeing into the Future of Commercial Real Estate Interest Rates

By: Justin Laub                 You’ve come to the right place, folks. I’m going to give you exactly what you’ve been asking for. I’m going to Read more

REIT’s Are Upgrading and Entrepreneurs Are Reaping the Benefits

by Todd McNeill In the last 24 months the REIT’s have been busy adjusting their portfolios.  During the depths of the recession, REIT’s had access Read more

Variety (in Commercial Real Estate) is the Spice of Life

by Scott Lynn Four years ago, at the height of the Great Recession, a commercial real estate financier would have been hard-pressed to find a Read more

Using a Tax Equity Partnership Structure in Real Estate Development

A powerful tool for real estate developers is tax optimization. However, without a proper understanding of tax incentives, these benefits may not be utilized Read more

The Nuances of Underwriting Retail Real Estate

By Brandon Wilhite Every commercial property type has its own unique set of underwriting and investment criteria. While some of those criteria are common to Read more

Hospitality Financing in 2014

by Charley Babb The cold, harsh winter weather that has covered the country has finally begun to subside, and the hope of spring is on Read more

Senior Housing: Don’t Stop Till You Get Enough

By Kevan McCormack The Senior Housing Industry has been on a tear the last several years and shows no signs of slowing down.  The senior Read more

Chasing the Texas Oil Patch

By Brandon Miller Exploration and drilling are in full swing these days in the oil fields of the Permian Basin of West Texas and the Read more

Non-Recourse Construction Loans

By: Justin Laub “What’s the difference between Santa Claus and a non-recourse construction loan?” The answer: the non-recourse construction loan actually exists. That certainly wasn’t Read more

Office Construction Has Come Back Full Swing

By Gabe Gonzalez 2014 has started off with a bang.  We came back from the annual Mortgage Bankers Association Convention with a myriad of new Read more

Art of the Cash-Out Refinance

--By Sunny Sajnani, Senior Director In today’s credit environment, most borrowers are taking advantage of attractive interest rates... which remain very close to the all-time Read more

Commercial Real Estate Capital Providers….. Getting & Keeping Their Attention

By Scott Lynn Capital Providers, whether on the debt or equity side of the transaction, inherently have short attention spans...especially when it comes to receiving Read more

Equity Friendly Market in 2014

By Hook Harmeling It has been a long road back from the lows of 2009 in the Real Estate Equity Markets. We have gone from Read more

The Fed’s QE Exit – A Few Thoughts to Consider

By Todd McNeill The Federal Reserve’s announcement that it would begin curtailing its bond-buying stimulus program received a positive reception from the capital markets, but Read more

MCA Closes a $6,000,000 Self-Amortizing Financing Package For a 19 Property Leasehold Retail Portfolio

Dallas, Texas-based Metropolitan Capital Advisors (MCA), a financial intermediary specializing in the exclusive representation of investors, developers and property owners in the commercial real Read more

A Look at 2013 in Commercial Real Estate and Beyond

By Scott Lynn As the end of 2013 quickly approaches what better time to take a "Perspective Snapshot" of the commercial real estate capital markets? Read more

The Power of RECA (Real Estate Capital Alliance)

By Kevan McCormack Metropolitan Capital Advisors is a member of the Real Estate Capital Alliance ("RECA"). RECA is a professional association of 14 independently-owned commercial real Read more

MCA Closes Two Single-Tenant Government Office Loans Totaling $19,900,000 in Oklahoma

Metropolitan Capital Advisors, Ltd. (MCA) has closed long-term debt financing for two separate office buildings leased to government service tenants.

commercil real estate oklahomaLincoln Plaza, a 154,085 SF single-tenant office building located in Oklahoma City, Oklahoma, is 100% leased to Oklahoma Healthcare Authority (“OHCA”).  OHCA is an agency of the State of Oklahoma and is responsible for providing health insurance benefits for the state’s SoonerCare (Oklahoma Medicaid) members. The Authority is the state-level counterpart to the federal Center for Medicare and Medicaid Services.

The Client/Borrower purchased the vacant property out of foreclosure in 2011, secured a Lease Agreement with OHCA in 2012, and commenced the redevelopment project in 2013. MCA secured a non-recourse fixed-rate loan in the amount of $18,120,000, which equated to 70% LTV.  The rate was fixed at 5.06% and carried a 30-year amortization.  The loan proceeds were used to pay off the existing recourse bridge financing and return a portion of the equity to the Sponsor.

commercial real estate oklahoma mcaLincoln Plaza is located at 4345 N. Lincoln Boulevard on the northwest corner of N. Lincoln Boulevard and NE 42nd Street, less than four miles northeast of Downtown Oklahoma City. The property is positioned on the N. Lincoln Boulevard corridor in close proximity to both the Oklahoma State Capitol (1.5 miles from Subject Property) and the Oklahoma City Medical District (2.5 miles from Subject Property). The Subject Property is in close proximity to the I-44/I-235 interchange, making it easily accessible from any area within the city.

Veterans Administration Building, a 9,713 SF office building located in Vinita, Oklahoma,  is 100% leased to the Veterans Administration (“VA”) clinic, a division of the Government Services Agencies (“GSA”), which has approximately five years remaining on its lease.   The building was financed with a regional bank that supplied an 80% Loan–to-Cost mortgage that equated to $1,780,000 with a small hold back for future Tenant Improvement and Leasing Commissions.  The 5-year term loan carried an interest rate of 4.25% fixed with a 25-year amortization.

MCA Senior Directors, Todd McNeill & Sunny Sajnani were responsible for arranging the financing on both properties.

Since 1992, Metropolitan Capital Advisors has closed in excess of $9.3 billion of debt and equity transactions. National Real Estate Investor Magazine has consistently ranked MCA as one of the top CRE Financial Intermediaries in the US.   MCA has already closed over $300 million of commercial real estate financing during 2014.

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The CMBS Market is on FIRE!

By Sunny Sajnani, Senior Director

The CMBS credit market is vital for the commercial real estate industry, providing leverage on assets that typically banks or life companies will not finance.  CMBS lenders offer very attractive debt in terms of a nonrecourse, high-leverage loan, but conversely, there is minimal flexibility once securitized.  That being said, the market is ripe for borrowers to take advantage of this favorable leverage at extremely low interest rates.

shutterstock_145669814Metropolitan Capital Advisors (“MCA”) has closed over $300mm of CMBS financing over the past thirty-six months and has been tracking loan terms, which have drastically changed since the CMBS market rebounded in 2010.  Everything is getting more “borrower friendly.”  Spreads have tightened, debt yields have decreased, required reserves have become more relaxed, and interest-only periods have lengthened.

In fact, we have a retail shopping center deal that I marketed last year to the CMBS market that was stalled due to an unforeseen co-tenancy issue.  Eighteen months later, we are back in the CMBS market on the same deal and getting superior offers compared to previous efforts.  Here is a brief chart to show how terms have shifted in favor of my client:

  Today (Aug 2014) Last Year (April 2014)
Loan Amount $10,800,000 $10,000,000
Interest Rate Spread S+195 S+245
Term 10-years 10-years
Interest Only Period 2-years None
Amortization 30-year amort 30-year amort
Max LTV 75% LTV 75% LTV
Cash Management Springing Lockbox Lockbox
Upfront Reserves None $200k TI/LC
On-Going Reserves $0.75/sf for TI/LC/Capex $1.20/sf for TI/LC/Capex
DSC Trigger Event 1.15x DSC 1.20x DSC

Rest assured, my client was ecstatic when we told him how we improved virtually every aspect of the proposed financing on his deal.  So, what does this tell us?  Is the market back to the highs of pre-recession? Are lenders becoming reckless in their underwriting?  At MCA, we don’t think so… not yet at least!

Pre-recession, some CMBS lenders were lending based on proforma rather than historical performance.  Also, senior financing is currently capped at 75% LTV… whereas leverage was creeping up to 85% on the first mortgage in the previous CMBS cycle.  With these disciplines in mind, we think lenders are still acting responsibly.   But, the market is red hot right now, so lenders may start to push even harder to get deals into their securitizations.

With this being said, MCA is constantly in the credit markets monitoring conditions.  Right now is the prime time to lock in permanent financing at low long-term rates with other favorable terms.  Interest rates are bound to increase, and there are always bumps in the CMBS markets.  If your deal needs new financing (either acquisition or recapitalization), consider taking advantage of the CMBS debt market while it’s chugging along!

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Basel III: What Is This, and Why Do I Care?

By Kevan McCormack

So maybe you have heard about this thing called Basel III, and maybe you haven’t.  For those of you wondering what Basel III is, keep reading.

Basel-III-capitalBasel I was originally established in 1988 by the Basel Committee on Banking Supervision (“BCBS”) in Basel, Switzerland.  G-10 countries enforced this accord as law beginning in 1992.  Basel II was agreed to in June 2004 but has since been essentially replaced by Basel III.  Basel III, agreed to on September 12, 2010, is a voluntary, global regulatory standard on bank capital adequacystress testing, and market liquidity risk.  As an expansion of the Basel I and Basel II deliberations, Basel III was formed as a direct response to the financial crisis of 2008.  Basel III’s main focus is intended to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage, thus minimizing the risks associated with potential “bank runs” while helping the global financial market become more resilient to future system shocks.  Both of these goals do two things: they reduce the amount of money available to be loaned and create an upward pressure on the cost of borrowing.

These new regulations can have a significant impact for small and medium businesses’ access to capital, but as it directly relates to commercial real estate, there a couple of important items for real estate investors and developers to keep in mind as these regulations become fully implemented in our capital markets over the next few years.  Commercial real estate loans are categorized as High Volatility Commercial Real Estate (“HVCRE”) for all development, acquisition, and construction commercial real estate loans except:

i.            1-4 family residential loans; and

ii.            commercial real estate loans that:

  1. meet applicable regulatory LTV regulations;
  2. have at least 15% cash equity based on “as-complete value”;
  3. have the cash equity required to remain in the deal until loan converts to permanent loan, is sold, or is retired.

Banks classifying commercial real estate loans as HVCRE will have to change their risk-weighting for those loans from its current level of 100% to 150%.  This will impact banks’ Solvency Ratio and potentially reduce their overall lending capacity, leading to credit rationing amongst bank clients.  The end result is a tightening of market liquidity and, ultimately, reducing GDP potential.  A recent OECD study estimated that these regulations could be responsible for a decrease in GDP of 0.05% to 0.15% annually.

While these standards will be phased in by many countries over varying degrees of time, for the U.S. banking system, Basel III will not be fully implemented until 2019; however, there are some pretty significant standards taking effect on January 1, 2015.  Keep this in mind when you visit the capital markets again next year and wonder why there may be less willingness to push leverage for your new development.  We also expect there to be more importance placed on deriving a proper “as-complete value” where achieving a higher value may not be in the Borrower’s best interest.

For the past twenty-three years, Metropolitan Capital Advisors has completed over $5.5 billion of loan placements with banks.  MCA understands the intricacies of the bank debt markets and is well-equipped to advise our clients on the best available capital offered by the banking community.  To further discuss your CRE capital requirements, please contact our Senior Directors, or visit our website at www.metcapital.com

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