M id A tlantic Real Estate Journal — COVID-19 & The CRE Industry — April 10 - 23, 2020 — 7A
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COVID-19 & T he CRE I ndustry
he CRE finance mar - ket is experiencing a big simi lari ty to By Brenner Green, Real Property Capital, Inc. The Current Commercial Mortgage Market (there still is one, sort of) T
in the short term. The bank balance sheet loan market is far more efficient than it used to be, and banks are quickly noting the reduced availability of capital and pricing accord - ingly. Maybe it goes without saying, but expect the bank to require that your tenants are paying rent at closing. R. Brenner Green is a 20- year veteran in commercial real estate finance and President of Real Prop- erty Capital, Inc., a full-ser- vice commercial mortgage banking firm based in the Philadelphia suburbs.
an unprecedented run in mod - ern times, leverage has largely been suppressed from reach - ing 2006 levels and borrower balance sheet requirements to qualify for a loan are more stringent as well. We exist in a more resilient system of capi - tal than pre-Great Recession. Don’t expect a bunch of assets to be dumped on the market overnight. Sorry for the digression, now the financing market. CMBS – Dead, maybe the big banks will begin quoting in a week or two with the hope of closing in June, and market
participation will DEFINITE - LY decrease (meaning people are going to go out of business). Fannie/Freddie – if you can post 18 months of debt service and handle getting zero credit for your retail income (yes that’s seriously what they are advertising) you might get a loan at 60-65% LTV…can we call that dead? I think so. Bridge/Non-recourse Con - struction – Hard to say yet but expect market participation to decrease by 60-75% as the ma - jority of these lenders funneled the loans into CLOs, which is basically a rebranded CDO
(think 2006) without all of the subprime resi bonds sprinkled in. That market is dead. Which gets us to… Banks – This is the bright spot. There are a number of banks across the region willing to lend. All loan types are gen - erally available if you know where to look. Market partici - pation is down 65% at least but if you have a good deal and are a “good” borrower you can get a loan. Rates have gone up, and will likely go up again before they go down. And you may have to sign recourse to get the rate you want, at least
2008 in the sense that this whole s i tuat i on, a l t h o u g h caused by completely d i f f e r e n t events, ba - sically boils
R. Brenner Green
down to a great big liquidity test, right down the chain from the banks to the borrowers to the tenants and the guys like us who make a living bringing borrowers and lenders, or buy - ers and sellers if you are the sales side, together. Outcomes are going to be varied and wildly unpredictable based on asset class, lender type and a whole bunch of other factors that we haven’t even thought of yet. It seems inevitable now that some people are going to go out of business. That’s where the similarities to 2008 end. The industry has enjoyed Pennrose Foundation creates COVID-19 Resident Relief Fund PHILADELPHIA, PA — The Pennrose Foundation announced that it has created a COVID-19 Resident Relief Fund to provide support to residents of Pennrose proper - ties who are facing adverse effects to the new coronavirus (COVID-19). The Foundation will match contributions to the COVID-19 Resident Relief Fund up to $25,000. The specific purposes and uses of fund resources will be determined based upon the needs of residents that are not met by other agencies and or - ganizations and as the impacts of COVID-19 become evident. All funds will be designated exclusively to reduce the bur - den on Pennrose residents due to the virus. “We are grateful for the nu - merous requests from various companies and organizations about how they can assist our residents,” said Mark Dam- bly , chairman of the Pennrose Foundation Board of Direc - tors. “As we begin to see how our residents are impacted, we hope that this Resident Relief Fund will be able to ease some of their burdens and get them through this difficult time.”
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