4-13-18

14A — April 13 - 26, 2018 — Financial Digest — M id A tlantic

Real Estate Journal

www.marejournal.com

F inancial D igest

Mortgage rates at a 4 year peak Treasury rate rise. Too much too fast?

WaterstoneDefeasance closes ona $28.5millionCMBSLoan

typically include the servicer, servicer’s counsel, borrower, borrower’s counsel, securities broker, custodian, accountant, rating agencies, and the suc- cessor borrower. “Like many of our clients, the borrower took advantage of higher yields and lower in- terest rates to refinance their Freddie Mac debt. The loan was secured by a 247-unit mul- tifamily property inMaryland. The borrower was very pleased with Waterstone’s service and worked with us on their next transaction as well,” said Carol Tillman , COO with Waterstone. n

Hyattsville, MD — Waterstone Defeasance recently closed a defeasance transaction for a $28.5 mil- lion CMBS loan, secured by a multifamily property in Hyattsville, MD. Waterstone guided the owners through the defeasance process coinciding with the owners’ refinance of their loan. As the defeasance consul- tant, Waterstone managed the activities of the numer- ous parties involved with the transaction in order to meet the borrower’s closing schedule. Parties associated with a defeasance transaction

T

he recent run up in 10 year rates from the lower end of the 2-3%

the mood was positive yet not jubilant as rates have been on the rise. The current rapid rate increases have generated a return to discussions of Con- struction Permanent Loan Products. Several Life and now banks are offering to pro- vide 24 month construction loans combined with a 10, 20, 30 or even 40 year fixed rate loan product. Thus, at Application, the rate can be locked for up to 12, 22, 32 or 42 years. Often lenders will allow additional proceeds to be funded as the properties cash flow increase over time. ”Another Bite at the Apple” as many borrowers call it. Although easing of the cash equity required of borrowers by HVCRE banking regula- tions are on their way, Life Companies today can give

borrowers credit for appreci- ated Land Values contributed as equity. This recognition of current land value and the ability to lock rate through construction into a perma- nent loan warrants investiga- tion by those (all) developers with a fear of higher interest rates. Volatility in the capital markets (Rising rates, fre- quent stock market gyra- tions) and the ever changing Washington DC environment suggest a review of such loan products prudent. Liquidity remains strong in the financ- ing market. Contact your mortgage banker to protect your new and current properties from future rate increases. Mark Scott is founder and principal of Commer- cial Mortgage Capital. n

range to the upper range (now about 2 . 85%) oc - curred fast. The r ap i d increase in rates have been fueled by expecta-

Mark Scott

tions of organic and tax re- form inspired growth. This growth, it is feared, will move inflation to 2% (The Federal Reserves indicated target) or higher. Higher rates and rapid change make the phones ring at Mortgage Banking offices….. I recently returned from the Mortgage Bankers CREF convention in San Diego. Attended by over 7,000 lenders and brokers SouthPlainfield, NJ — Commercial Mortgage Capital (CMC) announced that it recently arranged $5 million in financing provided by a Life Company for the refinancing of a 157,913 s/f industrial building located in South Plainfield. The loan was a fixed rate, long term, self-liquidating loan. 100 Ward Ave. was built in 1972 and is one floor industrial warehouse space. n of golf! In other words, we try and play as hard as we work. To that end, our income is di- rectly related to how much we work or produce so that gives a clear incentive to work hard. We have both found that the real estate valuation world has provided the best possible work-life balance while offering interesting, plentiful and ever- changing work. Finally, due to the variety of users and uses of appraisal services, we had job security even during the market crash of 2008. Banks needed to better understand the value of their declining portfolio collateral and apprais- ers were right there to assist! By applying the economic concepts of supply and de- mand, it is clear that there is a healthy demand for ap- praisers while the supply is

MeridianCapital Grouparranges $7.6M in construction-financing

Commercial Mortgage Capital secures $5M loan for industrial building in South Plainfield, NJ

51 North Walnut St.

enjoy direct access to an ar- ray of restaurants, shopping centers, and schools. East Orange is easily accessible via New Jersey Transit at both the Brick Church Station and East Orange Station and is just 20 minutes from midtown Manhattan by car. “In a time where construc- tion lending is becoming more and more conservative and lenders are tightening their underwriting guidelines, we were able to negotiate a con- struction loan that maximized the loan proceeds at 90% of the total project cost,” said Depasquale. “Additionally, the deal was structured with a per- manent loan conversion at the time of stabilization that will allow the borrower to recap- ture their equity up to 100% of the total project cost.” n affect significantly individu- als who own a home. The first is the home mortgage interest deduction which is now lim- ited to interest on $750,000. The second is that state tax deductions will be limited to $10,000. While the increased standard deduction has been increased, many individuals paying more than $10,000 in real estate property taxes will no longer get a deduction for payment of such amounts. Tim Malloy is an attor- ney in Barley Snyder’s Tax Practice Group. n

East Orange, NJ — Meridian Capital Group arranged $7.6 million in con- struction financing, which converts to an $8.2 million per- manent loan, for a multifamily property in East Orange. The 18-month construction loan, provided by a balance sheet lender, features a prime- based floating rate and inter- est-only payments. At stabili- zation, the financing converts to a five-year permanent loan in the amount of $8.2 million. Meridian senior managing director, Israel Schubert , senior vice president, Emil DePasquale , and vice presi- dent, Nathan Baldinger , negotiated the financing. Located at 51 North Wal- nut St. in East Orange, the property will be five stories, consist of 58 units and will continued from page 2A forward indefinitely, and a net operating loss arising in a tax year may only reduce 80% of taxable income in a carry- forward year. This provision will affect many business who have experienced gains in prior years and losses cur- rently. These taxpayers will no long be able to apply some of the losses to previous tax years. Personal real estate. There are two major provisions that are not necessarily specific real estate business but will

100 Ward Ave.

continued from page 7A Real Estate Appraisal Career FAQs . . .

on a decreasing trend. The decreasing trend is primarily due to the increasing age of the average appraiser, a figure which is now in the low 60s. However, with the prolifera- tion of online education, more possibilities to work remotely and the advancement of re- laxed regulations regarding licensure, we believe that there is an opportunity now more than ever for students as well as professionals who are looking for a transition into a second career. Finally, as members of the Candidate Guidance Com- mittee for the Philadelphia Metropolitan Chapter of the Appraisal Institute, we have visited multiple Philadelphia- area campuses to speak about the appraisal industry to the “next generation” of real estate appraisers. To date, we have

visited: the University of Penn- sylvania at Wharton (graduate and undergraduate), Temple University, Lehigh University, Saint Joseph’s University and the University of Delaware. These visits have translated into additional opportunities to speak in front of groups of real estate students and pro- fessionals. We have found a palpable increase in interest in the appraisal industry as a result of this endeavor and we are always looking forward to making connections whether you’re coming out of college or looking for a second career! Ed Falkowski III, MAI, SRA is associate director of Valuation & Advisory with Cushman & Wakefield. Walt Krzywicki is di- rector - certified general appraiser at Benchmark Appraisal Group. n

How the tax cuts and jobs act will . . .

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