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

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 independently owned commercial real estate finance intermediary firms. The firms are comprised of more than 70 producers located across the U.S. RECA allows members to better serve their clients by providing access to a wider range of financing relationships to follow transactions in markets across the country. Capital providers have certainly taken note of RECA. In 2016, RECA members closed a combined $4 billion of commercial real estate finance transactions; this represents a collective closed production level that puts RECA amongst the Top 15 finance intermediaries in the country.

RECA members are carefully recruited and evaluated by a Membership Committee to ensure they are highly experienced commercial real estate financiers who add value to the overall association through the following: experience of a variety of property types, deal structures, and capital provider relationships. Although most of our members have, at one time or another, been associated with large national platform brokerage or finance companies, they prefer to serve their respective clients through a more hands-on, entrepreneurial, and client-centric approach.

RECA member weekly conference calls feature guest speakers and provide immediate access to an audience of over 70 finance member brokers for capital providers to present their latest programs and deal structures to. RECA members share to-the-minute capital market information via a proprietary database. In addition, RECA members share transaction specific information to assure that all prospective financing requests are presented to the most viable sources of capital, whether they are a debt or an equity placement (or anything in between).

The best example of the power of the RECA network is seen when individual members reach out to the RECA Group for assistance on specific transactions. For example, MCA recently received a request to raise both the senior debt and joint venture equity ($15.34 million of total capital) for a client, to help them acquire an office building in a suburb of Philadelphia, PA.  As a Dallas based firm, we weren’t particularly familiar with the Philadelphia office market! Thankfully for us another member of RECA was ready, willing, and able to offer guidance. Gregg Wallace of AMA Financial LLC, based just minutes from the subject property, immediately offered his assistance. MCA decided that the best way to service our client was to enter into a co-brokerage agreement with AMA. MCA and AMA then brainstormed a list of capital sources and went out to the capital markets. Gregg had the ground level experience in Philadelphia that we needed to sell in the local market. He was available to tour the property at a moment’s notice. Working collaboratively, MCA and AMA were able to secure a 71% LTC acquisition loan for the amount of $11,440,000, as well as an additional $3,900,000 from a joint venture equity partner.

This is just one of several examples of collaboration throughout the RECA network of firms on a daily basis.

To learn more about the Real Estate Capital Alliance, visit the RECA website at www.reca.us, or contact Scott Lynn of Metropolitan Capital Advisors at slynn@metcapital.com or Gregg Wallace of AMA at gwallace@amafinancial.com.

Posted on by admin in Commercial Real Estate Finance, CRE Market, CREF Comments Off on The Power of RECA (Real Estate Capital Alliance)

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 exercising greater caution with lending practices. This isn’t necessarily however, a cause for concern – your deal can still go through. The financiers at Metropolitan Capital Advisors (“MCA”) understand how to dig deep, get creative, and still make successful deals in this changing market! In fact, we are currently working on a highly leveraged loan request to develop a large multi-family project in a secondary market in Utah. We consider this a request to tackle headfirst in the challenging current environment! We know that the capital is available if we are creative in our approach and look for it hard enough. We searched far and wide, showing this particular deal to over 50 capital sources including: local, regional, and national banks; life insurance companies; and, agency debt. We even considered sourcing a piece of preferred equity in our pursuit to complete the assignment.

If you are currently seeking a similar loan to facilitate the development of an apartment complex, you may want to think outside the box and consider the Housing and Urban Development (“HUD”) 221 (d) (4) loan program. Guaranteed by the U.S. Department of Housing and Urban Development, this category of loan is the highest leverage, lowest cost and least liability (non-recourse) fixed rate loan currently available. The leverage is far more aggressive than is available at conventional banks – most currently max out at 75%, (if you are lucky!)  where the 221 (d) (4) program leverage starts at 83.3% LTC for market rate properties and tops at an astounding 90% LTC for rental assistance properties.  Additionally, it offers a 40-year fixed and fully amortizing term with interest rates between 3.95% and 4.30% (as of March 2017).  Further sponsors are also given a three-year interest only period during the construction phase (making this effectively a 43-year loan).
HUD-SECTION-221D4

The single combined structure (construction + permanent) eliminates both the interest rate risk at takeout as well as the payment of additional fees upon conversion.  The program is not only available for development deals, but also for existing properties requiring substantial rehabilitation. It caters to all project sizes, starting from loans as small as $2 million. Although there is technically no limit, loans over $40 million are subject to more conservative leverage and DSCR restrictions. Another advantage of the 221 (d) (4) program is that the loans are non-recourse (subject to standard carve outs) during both the construction and permanent phases. This feature is rare amongst other sources of capital. Forty years is a long time to own a property and therefore sponsors are often concerned about disposition. Buyers are able to fully assume 221 (d) (4) loans subject to FHA approval and a small fee.

Clearly the program has a lot of upside for sponsors, however, it does come with some disadvantages. Like with most things that involve the Government, the process is time consuming, thorough, paperwork intensive, and, comes with additional fees. Let’s take the example of the timing for affordable and rental assisted properties: it is typically a 5 to 7 month timeline from loan start to close.  For market rate properties the timeline is closer to a year (8-12 months). It usually takes 90 days just to secure a soft commitment that basically says they ‘like’ your deal! Unlike bank loans, HUD loans are absolute asset based, which require a longer time to scrutinize the location, pro-forma rents and expenses, and the experience of the sponsors. Another issue with the program is that it is fee intensive, 5.3% of the total loan amount is paid up-front.

Nonetheless, despite the higher fees as compared to traditional bank financing, the attractive structure and low interest rate is well worth the additional costs. Furthermore, the properties are carefully monitored to ensure they are performing on an ongoing basis. HUD loans require an annual audit of operations. The tighter monitoring of the cash flow results in less frequent distributions to equity investors; restricted to every 6 months or annually – where banks permit distributions monthly or quarterly.

Although not often considered for multi-family development, the HUD 221 (d) (4) program offers tremendous benefits for sponsors willing to wait for approval. Navigating the process can be overwhelming, but an experienced mortgage broker can help and simplify the process tremendously. If you would like more information about HUD financing, or help securing other forms of capital please contact Andrew Hanzl at ahanzl@metcapital.com.

Posted on by admin in Commercial Real Estate Finance, Construction, CRE Market, Multifamily Comments Off on Getting Creative: HUD 221 (D) (4)

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 Presidential nominee (2008), McCain denounced a transportation bill with earmarks that included federal funds for an $80 million bridge to an island in Alaska with 50 inhabitants. Hence, the nickname a ‘Bridge to Nowhere’.

After returning from the 2017 Mortgage Bankers Association Commercial Real Estate Finance Conference “CREF/MBA”, I am here to tell you that there is in fact capital out there for just about every flavor of “value add” deal in the commercial lending world – a bridge loan to everywhere! There are several lenders offering loans for the acquisition and repositioning of commercial real estate assets of every class. The basic premise is to provide the debt capital to get an investor from point A (acquisition) to point B (stabilized and enhanced value): thus, the term “bridge loan”.

The lending space in the capital markets has become somewhat crowded and therefore competitive. We can now procure loans for most clients in all the main groups of asset type: multifamily, office, industrial, self-storage, retail and hospitality. Previously, size mattered; smaller deals were shunned, but today bridge debt is available for balances as small as $5 million. A broader scope of both asset quality and location is also able to attract this financing; deals no longer necessarily require a going-in debt service coverage which allows for financing either partially or completely vacant properties. However, the ability to demonstrate that the property’s performance will underwrite a reasonable takeout of the loan via refinance and/or sale of the asset is a key criterion that must be met.

Though each lender has specific metrics for underwriting and quoting a loan, one can generally expect the following range of terms:

  • Loan amounts between $3 to $100 million;
  • Loan-to-cost ratio between 65-85%;
  • Loan-to-stabilized-value of 60-75%;
  • Primary loan terms of 1 to 3 years;
  • Extension options up to a total loan term of 5 years (for a fee);
  • Floating interest rates of 30 day LIBOR + 475 to 700 basis points;
  • Interest only for the term of the loan;
  • Future funding opportunities for capital improvements and other accretive expenditures;
  • Lender origination fees of 0 to 2 points;
  • Lender exit fees of 0 to 2 points;
  • The prepayment flexibility will likely be subject to some level of minimum interest earned; and,
  • Non-recourse, with standard carve-out provisions.

We currently serve several clients by procuring loans of this nature for investment opportunities. Therefore, we know that now is a great time to capitalize on the liquidity in the bridge lending space of the debt markets.

bridge loan denver

Charley Babb is the Managing Principal of Metropolitan Capital Advisors Denver office and can be reached via email – cbabb@metcapital.com. We seek to assist our clients with their commercial real estate financing needs and welcome the prospect to evaluate your opportunities with you.

Posted on by admin in Capital Providers, Commercial Real Estate Finance, CRE Market, CREF Comments Off on A Bridge (Loan) to Everywhere
1 2 3 4 5 6 7 8   Next »