Public Private Partnerships…What are They Good For?

By Duke Dennis Over its 25-year operating history, Metropolitan Capital Advisors (MCA) has worked on numerous Public Private Partnership (PPP) transaction financings. PPPs have increasingly Read more

The Power of RECA (Real Estate Capital Alliance)

By: Scott Lynn and Andrew Hanzl Metropolitan Capital Advisors (“MCA”) is a member of the Real Estate Capital Alliance ("RECA"), a professional association of 18 Read more

Getting Creative: HUD 221 (D) (4)

By: Andrew Hanzl Take notice! The landscape is shifting: In anticipation of a market slow-down, commercial real estate lenders are dialing back their leverage and Read more

Private Lenders: Filling the Void

by Roger Wyche There will be approximately $96 billion of CMBS loan expirations during 2017. CMBS lenders, therefore, have been counting on refinancing  Borrowers to Read more

A Bridge (Loan) to Everywhere

By Charley Babb Do you remember John McCain’s famous “Bridge to Nowhere” speech from 2005? As the Arizona Senator, and then later as the Republican Read more

Limited Service Hotels are, well…limited!

By Todd McNeill In recent times, the Limited Service Hotel sector’s reputation has steadily declined in the eyes of the finance industry. Once the darling Read more

TrumpCare and the Effect on Healthcare Commercial Real Estate Market

By Kevan McCormack Since Donald Trump has taken office as President of the United States, he has been very busy “making good” on his campaign Read more

What is the TRUMP Effect on Commercial Real Estate? 4 Key Points

— By Sunny Sajnani There is no doubt that Donald J. Trump in the White House is a game changer for the real estate industry. Read more

Whither CRE Construction Lending?

By: Justin Laub The mantra of commercial real estate developers around the country when speaking of the state of construction lending these days might be: Read more

The Good, the Bad, the Texas High-Speed Rail Line

By Duke Dennis Brady Redwine of Texas Central Partners (TCP) recently addressed a group of Texas A&M real estate professionals about the high-speed rail line Read more

UT Ranked #1 in Commercial Real Estate Yardage

-By Scott Lynn Every fall season, the University of Texas at Austin McCombs Real Estate Finance & Investment Center (REFIC) sponsors the National Real Estate Read more

2017: Not a Forecast (Just Some Thoughts to Ponder) for the CRE Market

By Brandon Wilhite Accurately forecasting the commercial real estate market’s performance is a nearly impossible task. There are far too many variables to assess and Read more

What is PACE Financing?

By Andrew Hanzl Global warming is now a widely accepted concern. As real estate professionals, what role can we play to ensure environmental sustainability? One Read more

Banks Reign in Leverage in Effort to Curb Apartment Construction

By Charley Babb My real estate career spans over three decades. Yet for the very first time, I have witnessed lenders exercise prudence and consequently Read more

Risk Retention in CMBS Starting to “Sink” in

By Todd McNeill The early signals of Risk Retention are reverberating through the commercial real estate capital markets.  Several conduit shops, including MC Five Mile Read more

Risk Retention, Risky Business?

By Scott Lynn Basel III, HVCRE…all these new lending regulations that mean lenders are loaning me less and charging me more. Good grief!!! And now, Read more

It’s Senior Living Not Senior Dying

By Kevan McCormack Everything in life and real estate evolves.  Static retail shopping centers evolved into vibrant entertainment venues where a family could spend an Read more

Metropolitan Capital Advisors Arranges $5,512,000 Acquisition Loan For A 9.77- Acre Lot In Frisco

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a land acquisition loan for a 9.77-acre tract located in Frisco, Texas at the northeast corner of Read more

Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a $4,700,000 construction loan for UC Health Emergency Room, located in Arvada, Colorado. The 0.69-acre site is Read more

Ground Leases-Friend or Foe?

On the surface, a ground lease seems like a simple concept: a landowner grants permission for a tenant to use their land in exchange Read more

What Do Baby Boomers and Millennials Have In Common & Why It's Important in Commercial Real Estate

By Charley Babb What do Baby Boomers and Millennials have in common? They both like to spend money. While they may spend their money on Read more

The Economic Benefits of Walkability

By: Brandon Wilhite Starting with the Federal-Aid Highway Act of 1956, the way cities were developed in the United States began changing. Although it was Read more

Brexit – Immediate Effect on Commercial Real Estate?

— By Sunny Sajnani In late June 2016, a historic referendum was voted on approving the British withdrawal from the European Union (EU).  The immediate Read more

Hotels: What Inning Are We In?

By: Justin Laub I recently returned from the Urban Land Institute’s national conference on hotels and resorts. The last time ULI held this event was Read more

Choppy CMBS Market Hoping For Resurgence

By Charley Babb CMBS issuance for the first quarter of 2016 was roughly half of the production for the same period in 2015. This has Read more

Commercial Real Estate Finance

Condos: They’re Back

By: Justin Laub

Remember when condos were getting built all around the country and we had overzealous banks, liar loans and no down payments? That was a long time ago. So what type of condo projects are getting financed these days? Surprisingly, quite a few and they’re not just the marquee projects located in New York, Miami and San Francisco. The capital markets are robust for condominium developments throughout the US, in strong secondary markets and cities where there is a movement toward urban infill living and a lack of available housing.

condos are back

One of the hurdles to getting condominium projects financed is (was) the fact that the project would need a certain amount of sales in order for the remainder of the units to qualify for FHA financing. That was a hurdle a few years ago, but the bank lending market for single-family residences has grown immensely and there are now local and regional banks that will make on-book loans on condominium units, some with the intent to sell the loans to the GSAs at a later point.

Knowing that, commercial banks have become more open to lending on condominium projects and institutional equity investors are more keen on the sector. A couple of the condo deals that I financed recently highlight this change in the market. These deals were both in a major Texas metro area and were located in infill urban locations.

On the debt side, I was able to source a non-recourse construction loan for the first of my client’s projects. That’s right: a non-recourse construction loan from a traditional bank with all the other terms you would expect from a bank, not a hard money lender. How was I able to do this? For one, my client was a strong sponsor, both in terms of track record and financially speaking. Additionally, the project was located in a popular, rapidly developing urban neighborhood within a metro area featuring just a 2-month supply of for-sale housing. All that being said, it took a deep marketing effort to find the lenders that were willing to provide a non-recourse construction loan that had high enough leverage to be acceptable to my client. A big part of the sale to the banks was the back-end LTV on the loan, which took some in-depth discussions with the appraiser to justify.

On the second deal, I sourced both the debt and equity for the project. On the debt side, my clients wanted higher leverage. I was able to get them 75% LTC with only partial recourse, again in part due to the various factors mentioned above. I also brought in the JV equity partner, a cross-border investment fund that specifically targets condominium investments and understands that condo investments generate high IRRs, but relatively low equity multiples. The JV partner was able to close before all the building permits were in place, with the understanding that the permits would be issued within a 2-month timeframe.

One of the major keys to success in condo projects is to deliver the units while the market is hot. If a developer takes too long sourcing capital, drawing up plans, etc., for his/her project, then he/she runs a substantial risk of missing the market. Don’t miss the market because you are having trouble finding the right capital for your deal.

For your next condo project you can reach Justin Laub, Senior Director, at jlaub@metcapital.com. Or, visit the Metropolitan Capital Advisors website at http://metcapital.com.

 

The author, Justin Laub, is a Senior Director in the Dallas office of Metropolitan Capital Advisors.

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The Power of RECA (Real Estate Capital Alliance) Rides Again

By Scott Lynn

Metropolitan Capital Advisors is a member of the Real Estate Capital Alliance (RECA www.reca.us).

RECA is a professional association of 18 independently owned commercial real estate finance intermediary firms located across the U.S. The purpose of RECA is to allow our members to better serve their clients by providing access to a wider breadth of financing relationships that can follow a transaction to any market in the country.

RECA members share transaction-based, real-time capital markets information via a proprietary database. Moreover, RECA members exchange specific transaction information to assure every prospective financing request is presented to the most viable sources of capital, whether the assignment is debt or an equity placement (or anything in between).

RECA members are carefully recruited and evaluated by our membership committee to ensure that they are veteran commercial real estate financiers that add value to the overall association via experience with a variety of property types, deal structures, and capital provider relationships. Most of our members have, at one time or another, been associated with large national platform brokerage/finance companies, but otherwise prefer to serve their respective clients via a more hands-on, entrepreneurial, and client-centric culture versus the national operators.

The RECA independently owned member firms include:

Company Name City/State Principals
AMA Financial Naberth, PA Greg Wallace
Balboa Financial Aliso Viejo, CA Scott Duntley
Brama Asset Management Marina Del Rey, CA Brent Makaus
Dockerty Romer & Company Delray Beach, FL Bob Dockerty &Craig Romer
Fident Capital Del Mar, CA Kevin Choquette
George Elkins Mortgage Los Angeles, CA Jeff Hudson, Kevin Dinneen

Bryan Gortikov

Highland Realty Capital San Francisco, CA Jeff Eliason, Brad Sevier

Mike Guterman

Hunneman Capital Group Boston, MA Andrew Kaeyer
JMB Financial Advisors Chicago, IL John Pascal
Knightsbridge Realty Capital Newport Beach, CA Bill Campbell, Jeff Tomei

Curt Fleming

Legacy Capital Advisors Phoenix, AZ Jim Pierson, Keaton Merrell
Lever Capital Partners New York, NY & Las Vegas, NV Adam Horowitz
Mansfield Equities Los Angeles, CA Phil Cohen
Metropolis Capital Finance Bethesda, MD Cliff Mendelson
Metropolitan Capital Advisors Dallas, TX & Denver, CO Scott Lynn, Todd McNeill

Sunny Sajnani, Charley Babb

MS&F a Real Estate Capital Co. Columbus, OH Jeff Morris
Nebo Capital Los Angeles, CA Dave Blitz
Target Rock Partners New York, NY Rich Berlinghof

The best test of the “Power of RECA” comes when individual members reach out to the RECA group for assistance on specific transactions. For example, Jeff Morris of MS&F, located in Columbus, Ohio, was introduced to a regional bank in Arkansas via fellow RECA member Metropolitan Capital Advisors in Dallas.  The bank is providing debt side financing for a hotel project in South Carolina.  Now that’s powerful!

Capital providers have taken note of RECA. In 2015, RECA members closed a combined $4.2 billion of commercial real estate finance transactions.  This represents a collective closed production level that ranks RECA as one of the Top 10 finance intermediaries in the country.  With over fifty (50) active financiers spread out amongst the eighteen member firms, RECA closed an average 25 transactions per month during 2015.

To learn more about how Metropolitan Capital Advisors can help you harness the power of the RECA network, visit our website at www.metcapital.com.

The author, Scott Lynn, is the Founding Principal of Metropolitan Capital and can be reached at slynn@metcapital.com.

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5 Takeaways from 2016 Commercial Real Estate Finance Conference (MBA/CREF) In Orlando

By Todd McNeill

The annual Mortgage Bankers Commercial Real Estate Finance (CREF) Conference held in Orlando last week does not need an introduction.  After three days, 30 meetings and two sore feet, here are my top 5 takeaways from the gathering:

  • Turmoil, Turmoil, Turmoil was the buzzword when discussing the CMBS market. There are a number of securitizations currently in the market that are getting kicked around by the B-Piece Buyers, causing some conduit shops to have their stomachs tied in knots.  The new rules pertaining to risk retention” have all of the CMBS forecasters predicting many of the current players will exit the market.  Some believe the new risk retention policies will have a significant impact on the industry while others believe it will only move pricing slightly higher (say 5 – 10 bps)!  It will be interesting to see how this unfolds; however, one consensus amongst almost all the CMBS shops was that a flurry of securitization activity is expected during the 3rd and 4th Quarter to allow as much production as possible before the risk retention rules take effect in December 2016.  Moreover, “Balance Sheet” or “On-Book” lenders are seeing a spike in loan requests as Borrowers decide not to subject themselves to the uncertainty of the current CMBS market.
  • Oil Prices – Most all lenders expressed concern over areas in the country whose fundamentals are driven by oil and gas. Houston office is a taboo topic to bring up to traditional lenders, which made for some interesting “pitches” by private lenders willing to finance these deals at higher rates or less leverage.  Midland/Odessa, the Dakota’s and Oklahoma are all showing up on the radar screen as areas to proceed with caution or avoid altogether.  FNMA has recently listed Oklahoma City and Tulsa as “pre-review” markets, which constrains the max LTV to 65% unless FNMA provides a waiver, which is done on a case by case basis.  Houston seems to have the most draconian perception of all the “oil patch” markets from the lending community.  The ramp up of office construction over this latest cycle has caused worries; however, this Texan’s view of Houston is that while there will be stress on some projects and in some areas, Houston is not about to fall off the cliff; the fundamentals will stabilize.
  • Commercial Real Estate Finance conferenceMaturities Galore – During 2006, the CMBS market enjoyed a banner year securitizing just over $200 Billion of mortgages, with 10-year maturities. Each CMBS shop wants to get their hands on these opportunities.  Many CMBS shops are promoting some type of mezzanine product to go along with their senior loan products to deal with the wave of expected refinances that may not size in today’s world where the debt yield has become a mainstay in the underwriting criteria (debt yield wasn’t even a word back in 2006).  In addition, there are several mezzanine shops that are seeking these opportunities as well and they are promoting the ability to do a 10-year mezzanine product tailor-made to go behind a new conduit mortgage.  There should be no shortage of mezzanine and/or “gap” financing available in 2016 to work through all the refinances that may still be slightly underwater when the loan matures.
  • Secondary MarketsWith cap rates in major markets at all-time lows, we are seeing both buyers and lenders willing look at deals in secondary and tertiary markets. To substantiate this, MCA just received an aggressive cash-out loan application on a retail center in a tertiary market that has JC Penny as one of the main tenants.  Several CMBS lenders and balance sheet lenders expressed interest in seeing more deals in these markets as the cap rates and yields provided more favorable underwriting, debt yields, and loan per square foot metrics.
  • Office Fundamentals – Setting aside the Houston market and other “oil patch” related submarkets, the general perception is that the office is poised for a huge run similar to what the multi-family markets have witnessed over the past four years. In many CBD’s across the country, office markets are tightening and vacancy rates are low.  This is a result of significant leasing momentum along with older obsolete buildings being converted to alternate uses of either hotels or multi-family.  We met with a variety of capital sources that are focused on office acquisition, redevelopment, permanent debt and even development in special situations.

Indeed, the MBA/CREF was well-attended, there is plenty of capital in the market and providers are willing to look at a variety of opportunities.  As usual, it is just a matter of price and structure.  See you next year in San Diego!

The author, Todd McNeill, is a Senior Director and Principal of Metropolitan Capital Advisors and can be reached at tmcneill@metcapital.com.

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