- Repayment Options
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When defeasance became standard call protection for average commercial mortgage backed securities loans in 1998, the timing could not have been worse for borrowers. Yields on government securities declined steadily in 2001 and 2002 making defeasance increasingly more expensive as
- Rising Rates
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Recent commercial real estate capital market demand has caused capitalization rates to decline significantly, which has inflated real estate values despite poor fundamentals. Yet most experts believe that cap rates soon will climb. Investors should assess their properties to ensure
- Sale-Leasebacks Provide Capital for Core Business Investment
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The market for sale leasebacks — transactions in which companies sell and then lease back real estate assets — is growing at an estimated $10 billion to $15 billion annually. Continued increases are expected due to today's difficult real estate
- Separation Anxiety
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In February the White House published a report to Congress mandated by the Dodd Frank Financial Reform Bill. The white paper indicated a significantly reduced role for the government sponsored entities Fannie Mae and Freddie Mac, winding down their conventional
- Financing Fusion
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Many areas of the U.S. have an oversupply of office and industrial property, tight access to capital, and fewer and shrinking local businesses to sustain property absorption. During this turbulent period, the ownership leasing hybrid approach may provide an attractive,
- FHA Facts
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In today’s tight credit market, multifamily owners and developers are challenged with finding financing that works now as well as in the uncertain future. In such turbulent times, the Federal Housing Administration loan programs serve as good, reliable sources of
- Looking for Leverage
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Small apartment properties can be an excellent way for first time investors to enter the commercial real estate market. Apartment properties with between five and 50 units are attractive investments because there is less competition for them. Buildings with five
- Know Your REITs
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Today's almost instantaneous access to financial information along with corporate governance improvements have dramatically altered the commercial real estate landscape for investors interested in diversifying through real estate investment trusts. This additional capital has put non exchange traded REITs on
- IRA Investments
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Purchasing residential property using retirement funds has received a lot of press, but what's still new to many investors is the fact that commercial real estate also can be bought this way. In fact, the Internal Revenue Service allows individual
- It's A Wrap
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While condominium demand outpaces supply in many markets, some lenders are starting to tighten their financing parameters in anticipation of a possible market slowdown. To maximize their opportunities in this changing environment, commercial real estate developers must carefully manage potential
- Mobile Investments
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Investor demand for multifamily properties has driven up prices and lowered returns, causing many multifamily investors to seek niche product such as mobile home parks as an attractively priced alternative to traditional apartment buildings. These less familiar properties can offer
- More Money
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Commercial real estate developers often use federal, state, and local tax incentives, including historic rehabilitation credits, brownfield redevelopment programs, and tax increment financing, to reduce their projects' costs. However, the arsenal of tax incentives is much more extensive than many
- Cover Your Assets
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Lenders holding commercial real estate secured loans want to ensure that, if a borrower goes bankrupt, the collateral property will not be consolidated with the borrower's other assets. To ease such fears, borrowers use "bankruptcy remote" single purpose entities, or
- Fast Funding
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Traditional financing is suitable for a multitude of commercial real estate transactions, which often allow several months of lead time to secure funds. But what happens when funding for a property transaction is required immediately or when borrowers are inexperienced?
- Loan Liaison
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Appraisers and underwriters are involved in the commercial real estate financing process as objective sources to ensure that buyers and lenders do not let optimism for projects result in unfavorable transactions. However, sometimes these professionals base their assessments on data
- Mind the GAAP
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GAAP is widely used. It is required for public companies such as publicly traded real estate investment trusts, and often it is demanded of private real estate companies by institutional investor partners. But GAAP is not the only choice for
- New Funding for Affordable Housing Encourages Public/Private Partnerships
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Affordable housing is a critical socioeconomic issue in many regions, and demand is rising nationwide. Yet financing and developing affordable housing can be challenging. Many affordable housing projects involve more planning and entail greater risks than similar market rate projects
- Pre-Underwriting Helps to Sell Properties
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Residential homebuyers often get pre qualified to facilitate their negotiating and purchasing process. Commercial property brokers can use a less common but similar process for their income property listings — although it's the property that gets pre qualified, or pre
- Private Mortgage Loans Provide a Short-Term Financing Alternative
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Private mortgage loans are made by private lenders instead of traditional financing sources such as banks, lending institutions, or government agencies. They usually are short term (6 months to 3 years) hard money or asset based loans, and the decision
- Redefining Debt
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Downsized operations and scarcity of tenants have temporarily left many business owners and developers with too much real estate and too much debt. Refinancing often is the solution of choice, but doing so isn&rsquo t always viable. Owners or developers
- Federal Historic Tax Credit Aids Adaptive Reuse Developers
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For adaptive reuse projects involving historic buildings, developers often tap into a federal tax incentive program known as the historic rehabilitation tax credit. This program generates a credit that directly reduces taxes rather than offering a tax deduction such as
- Lenders Talk TICs
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Tenancy in common transactions involve a number of unique features. While currently there are no clear cut guidelines on how TIC deals must be structured, lenders that finance such projects are careful to impose certain requirements that usually are not
- Loan Language
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Commercial real estate finance remains in a state of flux. Lenders are re entering the market with new policies and underwriting criteria. Many lenders have toughened the terms of their form loan documents. It is important for borrowers to understand
- Lenders Tighten Loan Standards in Reaction to Uncertain Economy
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With interest rates at record lows, demand for new mortgage loans remains strong. However, in today's anemic economic climate, lenders face increased risk of making non performing loans. Although it is impossible to eliminate this risk entirely, commercial real estate
- Making It Work
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Investors soon may feel the effects of a cooling real estate market through subtle and not so subtle shifts in the way lenders view commercial real estate loans. The industry experienced strong surface growth last year National overall vacancy rates