www.marejournal.com
Real Estate Journal — Spring Preview — April 25 - May 15, 2014 — 17A
M id A tlantic
M ortgage L ending
By William Libercci, Baltimore Regional Office, NorthMarq Commercial Mortgage Lending— Has a borrower’s market returned?
H
as the debt capital pendulum for Com- mercial Real Estate
In the permanent loan market, a feeding frenzy occurs with lenders competing for the best loan opportunities. Good qual- ity, well leased assets with good borrowers can obtain very favorable terms. In addition to very aggressive pricing at spreads below 130 bps over corresponding U.S. Treasuries for lower leveraged (65% LTV or less) assets, these transac- tions will typically include some interest only at the front of the loan term and prepay- ment flexibility at the end of the loan term. Such terms and conditions start to remind us
of the lending environment circa 2005. While such attractive financ-
cific borrower issues can lead to conservative underwriting, less competition for the loan or an
specific market fundamentals that borrowers cannot control. Borrowers must proactively manage tenant rollover and control expenses to create a better loan opportunity ap- pealing to the most lenders. Borrowers should evaluate fu- ture loan maturities realizing favorable capital availability, pricing, loan terms, etc. may change as demand for capital increases with large maturing loan volume from 2015 to 2017. William Libercci is the vice president of North- Marq’s Baltimore Regional Office. n
(CRE) finally swung back to the bor- rower? The answer – a resounding “sort of.” Giv- en what all of us in Com- mercial Real
“Whilewe see improvement across the board for obtainingCRE loans, the terms of such loans vary greatly depending on deal specific and perceived risks, strengthof borrower andparticularmarket dynamics.”
ing gets borrowers excited, disappointment quickly ensues when borrowers realize their particular loan opportunity does not qualify for these ag- gressive lending terms. Second- ary markets, leasing risk, poor market fundamentals, or spe-
inability to obtain the type of capital needed. This dichotomy in the lending arena perplexes many borrowers. Loan un- derwriting suffers most from poor operating performance, near term leasing risk profiles lenders seek to avoid, or from
William Libercci
Estate went through starting with the Great Recession, the debt capital markets look bet- ter than they have in quite some time. While we see im- provement across the board for obtaining CRE loans, the terms of such loans vary greatly de- pending on deal specific and perceived risks, strength of bor- rower and particular market dynamics. The major markets on both Coasts saw continued resur- gence in CRE lending through 2013 and into 2014. Accord- ing to the Mortgage Bankers Association, total CRE debt outstanding increased to over $3.3 trillion at the end of 2013. In many respects 2013 consti- tuted a breakout year for CRE lending with the fourth quarter of 2013 seeing commercial and multifamily mortgage origina- tions at the highest level since 2007 according to MBA. Life insurance companies, pension funds, commercial banks and CMBS shops all significantly increased their commercial real estate loan production in 2013 with investment objectives for more of the same in 2014. Mul- tifamily loan volume at Fannie Mae and Freddie Mac reached all-time highs in 2012 and stayed near that level in 2013 with 10 percent reductions put in place to meet the objectives of the regulators. At North- Marq we see debt and equity deals increasing in most major markets in the U.S. but with continued emphasis by lend- ers on the best markets. Our experience recently encourages us for the availability of the right capital for the remainder of 2014. Non-recourse construction lending has returned for the right asset and right risk pro- file. Higher end multifamily assets in primary markets with significant equity in the deal or substantially pre-leased anchored retail or bullet proof office in NY, SF or DC can command highly competitive terms on a non-recourse basis.
We’ve got the capital connections to deliver the right results.
R E C E N T N O R T H M A R Q T R A N S A C T I O N S
$15,150,000 Ephrata Marketplace SIZE: 86,691 SF CITY: EPHRATA, PA LENDER: CMBS
$18,500,000 325 South Salem Church Rd. SIZE: 625,000 SF CITY: YORK, PA LENDER: NATIONAL BANK
$34,400,000 Merritt at Owings Mills
SIZE: 415,000 SF
CITY: OWINGS MILLS, MD
LENDER: LIFE COMPANY
Real Estate Capital
northmarq.com
34 OFFICES COAST-TO-COAST
BALTIMORE 410.296.6565
PHILADELPHIA 215.496.3000
NEW JERSEY 973.538.2330
RICHMOND 804.447.0433
WASHINGTON, DC 301.654.2400
Made with FlippingBook - Online catalogs