Real Estate Journal — Spring Preview — April 25 - May 15, 2014 — 21A

M id A tlantic

C ommercial B anking By R. Brenner Green, Real Property Capital, Inc. The current commercial mortgage market


slowdown in the US. Perhaps the most unprec- edented and unpredictable of events over the last 7-10 years is the growth in China and the perceived Chinese real estate bubble that has sprung up as a both a cause and a byproduct of that growth. Much has been written about the danger of a crash in Chinese real estate prices, however very little has been written about why exactly this is a danger to us and what the exact cause and effect scenario might be. I am not an economist, and I amnot interested in pontificating on

this further other than to say if you have not watched the 60 Minutes on the Chinese real estate bubble and its ghost cities you really need to Google it. China is the scariest thing out there in terms of a threat to the domestic investment real estate market and it is something that I constantly think about and try to under- stand. However, I cannot help but come to the conclusion that the US economy has been surprisingly resilient relative to other developed nations since the “Great Recession”

and that so far these “unprec- edented events” seem to have a remarkable way of working themselves out, just like in the QE example above. Just this week, it was announced that US unemployment is at its lowest level since 2007 and the Congressional Budget Of- fice announced that the 2014 deficit will be 5% less than estimated just two months ago due to an improving economy and increased tax collections. So as we do need to continue to look out for threats both seen and unseen and monitor them in terms of what it might

mean for our business, we can all sleep a little better know- ing that we are the world’s largest and strongest economy and we have made it through the really hard part. It’s a good time to be right here in the USA and most investors around the world seem to think so too. R. Brenner Green is a 15 year veteran in commer- cial real estate finance and President of Real Property Capital, Inc., a full ser- vice commercial mortgage banking firm based in the Philadelphia suburbs. n

s we roll through 2014, it continues to be “all ahead full” in

the commer- cial real es- tate financ- ing market. Si nce l as t June when the ten year T r e a s u r y bond sho t up around

R. Brenner Green

80 basis points in 30 days, we have experienced nearly a year of a very stable and con- tinuously improving financ- ing environment where more and more capital continues to enter the market pursuing assets in every sector. But, for whatever reason, I guess it is my nature, I cannot help but take a minute to look around and ponder what the risks are to this bull market and ask “what can possibly go wrong?” Because of the amount of economic intervention that occurred in developed nations around the world between 2008-2011, we find ourselves in an unprecedented time in terms of monetary policy. A great example of this that we are all familiar with is the Federal Reserve’s balance sheet swelling from less than $1B in 2008 to over $3B by 2011, which included all sorts of assets it had never held previously. The point is that as we move back to “normalcy” with a recovering economy and an improving employment market, we find ourselves in unprecedented territory as the Fed attempts to begin shedding assets and reducing its balance sheet to “normal” size. An example of just how unpredictable this will be would is what happened late last year following the Fed’s announcement of its inten- tion to taper and ultimately end the quantitative easing or “QE” program of purchas- ing US Treasury bonds and mortgage backed securities. Many if not most predicted that when this day came it would result in a sharp and sudden rise in rates. However, this announcement had the opposite effect and sent US rates lower and drove up rates of weak economies around the world as global markets perceived that fragile global economies would be ham- pered by a reduction in asset purchases and an impending


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