Borrowers Are Not A Commodity

By Kevan McCormack Commercial Real Estate development by all accounts is a simple business concept (over simplified below): 1)    Find a Location; 2)    Design a Building; 3)    Secure Read more

Metropolitan Capital Advisors Arranges $5,375,000 Equity JV & Interim Construction Financing For A Retail Shopping Center in Huntsville, Texas

DALLAS, DECEMBER 2014 — Dallas, Texas-based Metropolitan Capital Advisors (MCA), a financial intermediary specializing in the exclusive representation of investors, developers and property owners Read more

Is Blackstone Calling the Top Again?

by Charley Babb Blackstone Group, the private equity giant, appears to be revisiting its pre-recession game plan of acquiring undervalued real estate assets and then Read more

Commercial Real Estate Investments and Phantom Income: More Than You Bargained For

By Brandon Wilhite Any prudent commercial real estate investor will take into consideration the tax implications as an important part of his or her investment Read more

Is Now the Right Time to Invest in Real Estate?

By: Justin Laub I recently sat down with a friend in the oil and gas industry who asked me, “Is it a good time to Read more

The Non-Basic Food Groups in Commercial Real Estate

By Sunny Sajnani As a real estate professional, we always hear about the four basic food groups of commercial real estate: multi-family, office, retail and Read more

Off-Market or Selectively Marketed in CRE Deals

by Hook Harmeling As we emerged from the Great Recession, there were “deals” everywhere. Excellent locations, quality buildings, good tenants and, yes, even good sponsors Read more

Paradigm Shift or Lack of Financing in the Red-Hot Apartment Demand Surge?

By Todd McNeill While perusing recent press on the strength of the market for new apartment developments, the following thought occurred to me:  Is the Read more

Metropolitan Capital Advisors Arranges $5,800,000 Land Loan and Subdivision Development Financing for Prestonwood Polo Club in Oak Point, Texas

Dallas, November 2014 – Dallas-based Metropolitan Capital Advisors (MCA), a financial intermediary specializing in the exclusive representation of investors, developers and property owners in Read more

Could Downtown Apartment Development Max Out in North Texas and Other Major Markets?

As featured in the November Newsletter from Bisnow.com There are 9,000 multifamily units in the pipeline in Downtown and Uptown, but skyrocketing land prices, rising Read more

Metropolitan Capital Advisors Closes A $10,950,000 Permanent Fixed Rate Mortgage For A Retail Shopping Center In Greeley, Colorado

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

Metropolitan Capital Advisors Exhibiting at International Council of Shopping Centers Texas Conference, Nov. 12 - 14, Booth 771

See the Metropolitan Capital Advisors Team at Booth #771If you are in the commercial real estate industry, you've most likely heard of or attended Read more

The Urban Renter: Who Art Thou?

By: Scott Lynn One trip down the tollway to Uptown/Downtown Dallas leaves me in utter amazement at the amount and quality of high-density multifamily projects Read more

Development Is As Hot As the Texas Heat

By Gabe Gonzalez It seems like construction cranes are part of everyone’s skyline these days.  Even secondary markets such as Waco, Lubbock, and El Paso Read more

The Local Bank vs. CMBS Boxing Match, Special Texas Edition

By Justin Laub             On one side of the ring we have your Local Banker from Texas. He’s wearing a polo shirt from the country club Read more

Metropolitan Capital Advisors Closes $5,560,000 Construction Loan For Speculative Industrial Project In Oklahoma City, OK

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

Thank the FDIC, OCC, and FINRA for Residential Increases Bringing CRE With it!

by Todd McNeill The rebound in home prices in the Dallas / Ft. Worth residential market has been record-setting during the last three years.  I 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. 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

Borrowers Are Not A Commodity

By Kevan McCormack

Commercial Real Estate development by all accounts is a simple business concept (over simplified below):

1)    Find a Location;

2)    Design a Building;

3)    Secure Financing;

4)    Build Building;

5)    Lease to Tenants;

6)    Collect Rent; and

7)    Pay Mortgage.

The most simple of plans often seem the most difficult to execute.  While most of the above seem straightforward and within the control of the Sponsor to go out and achieve with a good business plan, hard work, and determination, unless you are a modern day Rockefeller, there is one particularly significant step that often suffers at the whim of factors outside the Sponsor’s control.

Securing Financing…

“If you would know the value of money, go and try to borrow some .“ ̶  Benjamin Franklin

Most Sponsors have a pretty good handle on what their industry is doing and how money is priced for deals like theirs.  It is just human nature to think that “Your Deal” is a “Great Deal” and therefore should be priced at the best economic structure one might hear from your circle of industry professionals.  Sound familiar?

It is true that because commercial real estate is so efficient and competitive, many deals seem to require the highest leverage, the lowest rate, the longest amortization in order to provide enough cash flow for decent equity returns.  Those are tough deals, and not for the faint at heart!  Those high-risk deals require a very well-heeled Sponsor, who has an excellent track record of execution.  These deals often best lend themselves to a Sponsor with deep pockets, who will invest his money and de-leverage the transaction in order to realize a more sustainable return. A good example is the REITs who brought so much price compression into the commercial real estate markets over the last 15 years.

While money might seem like a commodity to many Sponsors who are searching for it, those, who have the money, do not view Sponsors as Commodities.  Each Sponsor is unique with his set of risks that when combined with the risks of a real estate deal create a global picture for the financing source to consider.  It is the global view of the sponsor that capital providers contemplate when they make a decision to provide financing or more commonly when they price and structure their money.  The factors are too numerous to consider in a mere essay/blog, but some include existing relationships, industry experience, past performance, tenant information, market conditions, specific capital market conditions, and the financial / balance sheet concerns every lender highly stresses.

Adequately describing the Sponsors global economic picture for capital providers to see is part of what a good real estate finance intermediary brings to the table.  Exactly how the financier presents the sponsor’s story is often the “Jump Ball” on whether a deal proceeds or not.   Knowing the business behind the company of a Client/Borrower is crucial for the financier’s ability to execute CRE transactions.  The last thing you ever want is to make a Borrower look like a commodity.

The author, Kevan McCormack, is a Senior Director in the Dallas office of Metropolitan Capital Advisors.  Contact Kevan at kmccormack@metcapital.com

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Metropolitan Capital Advisors Arranges $5,375,000 Equity JV & Interim Construction Financing For A Retail Shopping Center in Huntsville, Texas

DALLAS, DECEMBER 2014 — 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 estate capital markets, has successfully secured JV Equity and Construction Financing for the development of Ravenwood Crossing—a 24,000 square foot to-be-built shopping center located in Huntsville, Texas.   The Sponsorship, Brand Capital Partners, had significant pre-leasing at the time of closing and will begin construction on the Property in December 2014 with an estimated completion of August 2015.

Retail shopping center JV and Interim Construction Financing

The Property is located along Interstate 45 in the heart of Huntsville’s primary retail corridor.  The Property will be built on a 3.26 acre pad site directly in front of a newly constructed Power Center anchored by SuperTarget, Kroger, Academy, PetCo, Ross and Marshalls. Additionally, the Subject Property will be located less than ¼ miles away from other prominent retailers such as Walmart Supercenter, JCPenney and Sears.

MCA arranged approximately $1,125,000 of JV Equity and $4,250,000 of Construction Financing.  The Construction Financing was provided by a regional bank at 80% LTC with a rate of Prime + 1% (4.25%) fixed for 5-years.  The JV Equity was provided by a Private Investor.  MCA Senior Director, Sunny Sajnani was responsible for structuring the transaction.

Since 1992, Metropolitan Capital Advisors has closed in excess of $10 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 completed over $500,000,000 of commercial real estate financing during 2014.

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Is Blackstone Calling the Top Again?

by Charley Babb

Blackstone Group, the private equity giant, appears to be revisiting its pre-recession game plan of acquiring undervalued real estate assets and then selling them off. Well-known as an opportunistic investor in commercial real estate, Blackstone is signaling a shift in its view of the markets. According to Jon Gray, Blackstone’s global head of real estate, the company is accelerating sales of the real estate it has acquired since the early months of the recession to realize gains from the capital it has invested.

Just this month, Blackstone announced a deal to sell its IndCor Properties portfolio of industrial assets to sovereign wealth fund GIC for $8.1 billion. When added to the $13 billion in cash in its coffers, it will have over $20 billion for opportunistic buying opportunities. In addition, it is in the process of raising an additional $13 billion through the introduction of its eighth real estate fund, BREP XII.

In 2007 Blackstone acquired Sam Zell’s office REIT, Equity Office Properties Trust, for $36 billion. It made enormous profits selling off most of the portfolio at the peak of the office cycle prior to the recession. At a recent investor conference, Gray said that the company has nearly $21 billion in unrealized gains from existing real estate holdings. Over the next couple of years, Blackstone intends to divest itself of investments in Brixmor, La Quinta Inns and Suites, Extended Stay America, and Hilton Worldwide. This would indicate that it thinks the market is about to peak for hospitality companies and assets.

Furthermore, Gray indicated that Blackstone desires to acquire public companies that it can privatize to control debt and assets that require repositioning or recapitalization. Blackstone’s assessment of the U.S. REIT market is that companies are trading at a discount to their net asset value (NAV). Investors’ fears of rising interest rates have driven REIT prices down about 18%. Interest rates should begin actually rising in 2015, which will likely put further downward pressure on REIT prices. As such, one can expect Blackstone to employ a similar strategy to the 2007 acquisition of Equity Office and subsequent disposition of assets as it looks to acquire undervalued REITs and make them private.

So what does this mean for the rest of us, who might not have $21 billion to throw around? While past results are not necessarily an indicator of future performance, I am not sure that I would bet against Blackstone Group. If you can find true opportunistic real estate investments, now is likely the time to act. Look for global investors to be buyers, albeit at a smaller scale, who are seeking safe shelter in U.S. assets. Be careful of overpaying for hospitality assets. If you own them, consider selling in the near future as the market may likely be peaking. Finally, remember that all markets cycle. While it is difficult to predict the absolute top of any market, Blackstone Group might be an excellent leading indicator.

Metropolitan Capital Advisors seeks to assist clients with their commercial real estate financing needs, regardless of market cycles. Should you have a chance to take advantage of “value add” situations, we would welcome the prospect to evaluate your opportunities.

The author, Charley Babb, is a Senior Director and Principal in the Denver office of Metropolitan Capital Advisors.  Charley can be reached at cbabb@metcapital.com

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