Remington Capital

Here is a great article about the retail segment of the commercial real estate market. http://bit.ly/fMTW2H Because of low interest rates, even retail properties with vacancies (other than the anchor) are attracting investors.

Since I brought it up last week, I figured I’d better talk a little bit about Joint Venture financing. This is the financing option that many borrowers will really need when they contact you looking for hard money. Since hard money lenders will only go up to 60% LTV at best, clients looking for higher LTVs will have to look at engaging a joint venture partner. With a Joint Venture, the investor generally contributes 80-90 percent of the required equity (though we have arranged deals that were 100%) and in exchange the investor shares in the profits and loss of the business. Most joint ventures usually include a buy/sell agreement that allows your client to buy out the investor within a specified period of time. One important thing for clients to consider when seeking a joint venture is this: What value they are bringing to the deal that would attract an investor to provide 90% of the necessary capital?

In many cases, when a borrower with bad credit seems to have a good deal in hand, their first thought is that they need hard money. This is not always true. Hard money deals are fast moving and are based on the value of the collateral. Typically, the LTV on a hard money deal is between 50-60% and they always come with a higher interest rate. If your client has credit challenges and is seeking financing over 50%, joint venture financing could be a better road to go down than hard money. But I’ll save the topic of joint ventures for another day.

An interesting and often little-known function of hard money is that it isn’t exclusive to real estate; hard money can also be used to secure financing on other assets such as minerals and gemstones.

If you’re not sure if hard money is right for your clients’ projects you can call or email me, or ask a question below.

The return of the hotel transaction market has taken longer than expected, but a splash of high-profile acquisitions and a potential wave of distressed assets coming to market have many believing the dam is about to burst.

Jones Lang LaSalle Hotels, which tracks asset sales $10 million and higher, reports more than $1.1 billion of hotel sales in the United States in September alone. To put that figure in perspective, consider there was only $2.2 billion transacted in all of 2009. Given that the velocity of transactions is accelerating, Jones Lang LaSalle Hotels has boosted its 2010 forecast from the just surpassed $4.5 billion to $6.5 billion.

The buying opportunity of a lifetime many expected has not arrived, but several recent trophy assets acquired in major markets for top dollar indicate the paralysis of the past 18 months is over. A schizophrenic climate has developed, though, as many distressed assets haven’t come to market and some stabilized properties in secondary locations have drawn little interest from buyers.

U.S. commercial real estate investors expect more property sales next year as lenders step up foreclosures to meet the hunger for distressed properties, an influential survey said on Wednesday.

Respondents expect well financed lenders, such as insurance companies, to be able to negotiate good rates. They also expect well-capitalized borrowers, such as real estate investment trusts, to be among the top buyers.

About $1.4 trillion of mortgages on U.S. commercial real estate — including apartment buildings, hotels, office buildings, distribution centers, malls and shopping centers — are expected to mature between now and 2014, according to Trepp, a real estate loan data provider. Those borrowers will have to find new loans to replace the maturing ones and they will likely face less generous lenders.

That means the cash will have to come from other investors, higher cash flows from properties, or out of the borrower’s pocket. If not, those borrowers could face foreclosures from lenders willing to face the write downs on their loans.

Private equity funds raised an estimated $57 billion in the third quarter of 2010, a 16% increase over the $49 billion raised in Q2.

The $57 billion figure is but a fraction of the rate the industry was pacing from 2006 to 2008. And while Preqin notes that the industry is still facing serious challenges, it expects funds to see improvements in the fourth quarter and into next year. Fundraising should rise slightly – 10% to 20% – in the fourth quarter and into the foreseeable future.

Multifamily properties in major metro markets remains the asset of choice for many commercial real estate investors, with momentum fueled by a number of large late-summer sales transactions following a solid first half of 2010.

Public and private REITs have landed the largest deals of late, but private equity, pension funds, insurance companies, owner-developers and even private individuals are all getting into the action for both core and distressed multifamily projects in large metros around the country, according to CoStar Group sales data.

Continuing along a track of bouncing along the bottom that has prevailed thus far in 2010, US commercial real estate prices took their second consecutive monthly decline in July. The index is now only 0.9% above the recession low recorded in October 2009, and 43.2% below its October 2007 peak.

In response, many economists lowered their growth expectations for the domestic economy. Commercial real estate markets were therefore caught in a “downdraft” that is reflected in the “relatively large” declines in the index over the past two months.

Commercial real estate investors who have not seen enough distressed properties come available in the third quarter are keeping the pent-up capital in quality assets, according to PricewaterhouseCoopers’ Korpacz Real Estate Investors survey.

Investors expect cap rates for the core assets they’re invested in to either hold steady or decline through the rest of the year as interest rates remain low and debt markets continue to facilitate property trades.

Multifamily property in major metro markets remains the asset of choice for many commercial real estate investors, with momentum fueled by a number of large late-summer sales transactions following a solid first half of 2010.

Public and private REITs have landed the largest deals of late, but private equity, pension funds, insurance companies, owner-developers and even private individuals are all getting into the action for both core and distressed multifamily projects in large metros around the country, according to CoStar Group sales data.