6C — June 24 - July 14, 2016 — Mid-Year Review — M id A tlantic

Real Estate Journal

L oans By Kathy Anderson, Progress Capital Advisors — Game of Loans —

A n immense amount of Commercial Real Estate (CRE) debt will

are collateralized by Office and Retail • 20% to 50% of these loans will face challenges when re- financing with conventional lenders • $183 Billion of CRE loans held by non-bank lenders (bridge and hedge funds) are set to mature • $11 Billion in Agency loans will come due over the next 12 months • $26 Billion in Life Insur- ance Company debt is coming due • $30 Billion of Credit Union debt will mature by the end of 2017 Most of the CMBS debt set to mature is collateralized by

Retail and Office properties which suffer from vacancy issues or maturing leases resulting in substandard DSC/debt yield and a LTV in excess of lender expectations. It is projected that the CMBS market will only absorb 25% of the $300 Billion maturing. So the question is – who will Bridge the GAP? The traditional lending sources such as regional banks, credit unions and in- surance companies will take their fair share of the credit- worthy assets. If you are fortunate enough to have a stabilized multi-family prop- erty, Freddie and Fannie are a terrific alternative and the

Agencies are open for busi- ness and being very aggres- sive. The non-traditional lenders will be the sources of capital that step in to Bridge the Gap . Who are these lending sources? Each day we are introduced to another “Bridge Lender” offering terms rang- ing from lows of 6% to highs of 14% to help alleviate the refinance pressure if the col- lateral is not quite stabilized at loan maturity for whatever the reason. Progress Capital recently closed a $16 Million two-year bridge loan for a 300,000 SF retail center in PA which suffered partial fire damage

just before the CMBS loan matured. The cash flow was still excellent, but a non-con- ventional loan was needed to bridge the gap during renova- tion. Progress also arranged a $68 Million construction loan with Procida’s 100 Mile Fund when borrower history prevented a bank from step- ping up. Many prominent NYC real estate owners are selling assets and entering the lending market specifi- cally to fill this gap, opting for yield instead of chasing low cap rate CRE. What should you be do- ing NOW? 1) If you have a loan maturing in the next 12 months, pull out your loan docs to see what your options are regarding open prepay- ment windows and potential penalties upon maturity. 2) Compile an accurate rent roll with lease expirations and option periods along with a 2016 Proforma of expenses. 3) Schedule an appointment with your finance consultant/ mortgage broker to discuss your options. At Progress Capital, we are meeting with and educating our clients on their rights and options as their loans are nearing maturity. Lend- ers are taking longer to make credit decisions so it’s really important to stay ahead of the Wall of Maturities. Kathy Anderson is the founder of Progress Capi- tal Advisors, a commer- cial mortgage banking firm that has closed over $40 Billion in commercial loans and directly funded over $100 Million in in- terim financing. n

mature over the course of the next 12 months whi ch was largely cre- ated by the 2006 - 2007 l e n d i n g craze . You

Kathy Anderson

know it’s serious when in- dustry experts actually give this event a name – Wall of Maturities . • $300 Billion of CMBS loans will mature by the end of 2017 • 50% of these maturities


PROGRESS + CAPITAL + ADVISORS = (Forward) (Financing) (Experts)

Mid-Year Review

a section of the Mid Atlantic Real

25 Years of Solutions | $40 Billion in Financing | $100 Million in Direct Loans Fixed Rate Loans | Construction Financing | Specialty Financing | Direct Funding

Estate Journal Phone: 781-871-5298 Fax: 781-871-5299

www.marejournal.com S ection P ublishers Barbara Holyoke bholyoke@marejournal.com Alissa Aronson aaronson@marejournal.com S ection E ditor Julie King jking@marejournal.com

620 Tinton Avenue Building B, First Floor Tinton Falls, NJ 07724 Phone: (732) 389-9701 www.ProgressCapitalAdvisors.com

Progress Capital Advisors The Funding Source

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