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2012 NC-CCIM Charlotte Commercial Real Estate Market Forecast

2012 NC-CCIM Charlotte Commercial Real Estate Market Forecast. “Financing for Commercial Real Estate”. BB&T. Vital Statistics Best Bank in Town Since 1872 Headquartered in Winston-Salem, North Carolina

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2012 NC-CCIM Charlotte Commercial Real Estate Market Forecast

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  1. 2012 NC-CCIM Charlotte CommercialReal Estate Market Forecast “Financing for Commercial Real Estate”

  2. BB&T Vital Statistics • Best Bank in Town Since 1872 • Headquartered in Winston-Salem, North Carolina • One of the nation’s largest banks – 18th largest US bank by assets • NEVER recorded a quarterly loss during the “Great Recession” • Asset base of over $174 Billion • One of the first banks to repay TARP • New commercial real estate focus with Chris Cordisco and Buddy Thomas • Healthy, hungry, and ready to lend

  3. Grandbridge Real Estate Capital Vital Statistics • Headquartered in Charlotte, North Carolina • Subsidiary of BB&T • One of the nation’s largest commercial mortgage bankers • Closed $4.8 billion in financing in 2011 • Servicing portfolio of over $25 billion • 23 production offices in 16 states plus the District of Columbia • Approximately 30 CCIM’s on staff

  4. Grandbridge Real Estate Capital SERVICES • Permanent Loan Placements • Fixed Rate or Floating Rate • Acquisition/Interim Bridge Financing • Mezzanine Financing • Preferred Equity • Developmental and JV Equity

  5. Grandbridge Real Estate Capital • Freddie Mac Seller/Servicer • Fannie Mae DUS Lender • MAP and Lean Approved HUD Lender • Insurance Company Correspondent • BB&T Real Estate Funding – proprietary bridge lending platform • CMBS origination and servicing relationships

  6. Grandbridge Real Estate Capital • Charlotte Production • 8 People • 2 CCIM’s; 1 CFA; 1 CPA; 1 MAI • $500 Million in 2011 • $1.8 Billion Past Five Years

  7. MARKET

  8. 2007 -- $502 Billion of CRE

  9. 2009 -- $82 Billion of CRE

  10. 2010 -- $110 Billion of CRE

  11. 2011 -- $140 Billion of CRE (EST)

  12. Source: MBA & GBRE Estimate

  13. Source: MBA & GBRE Estimate

  14. Source: Trepp, LLC

  15. Source: Trepp, LLC

  16. Source: Trepp, LLC

  17. Source: Federal Reserve

  18. Source: Federal Reserve

  19. You CAN finance multifamily and commercialreal estate!!

  20. Lender Types Active Today • Insurance companies • Agencies (Freddie Mac, Fannie Mae, FHA/HUD) • Bridge lenders (BB&T REF, others) • Mezzanine lenders • Preferred equity providers • Banks (BB&T) • CMBS Lenders • Non-traditional lenders

  21. Loan Types Available Today • Immediate funding interim and permanent loans • Non-recourse; $1 Million and up……. • Acquisition, refinance, construction takeout • Fixed and variable rate • Bullet or self-amortizing • 3 to 20 year terms (30-40 for multifamily) • Amortization 15 - 30 years with some 30 - year schedules (FHA 35 – 40 yrs) and, yes, even some interest-only

  22. Loan Types Available Today • Forward commitments are returning (6-12 months) • Credit tenant lease (CTL) • Acquisition / bridge loans • Mezzanine and preferred equity • Construction financing • Construction mezzanine • Institutional (life company) equity and JV money

  23. CHARACTERISTICS

  24. Loan Characteristics • Borrower continues to be the key • Primary, secondary and tertiary markets • Four major food groups PLUS • Fundamentals must all be in place • Amortization continues to be important – pre or post

  25. Loan Characteristics • Underwriting • Submarket vacancy or actual • Above-market rents may be adjusted downward • Lease rollover underwritten, reserved, or both • Market and U/W cap rates are being used • LTV’s range 60 – 80% • Collections, debt coverage and debt yield • 1.20 - 1.45x DCR • 9% -- 12% debt yield (NOI divided by loan amount)

  26. CMBS Structuring • $5 million minimum size range, but can go lower • 4 food groups PLUS; will go to smaller markets • 70 -- 75% LTV • 1.25x DCR • 5 and 10-year term; 30-year am; lock rate at closing • Escrow for taxes, insurance and reserves • May or may not reserve for TI and commissions (but will underwrite) • Cash management or lockbox features

  27. Permanent Rates 3/01/12 • 5-year money in the 3’s to 4’s (T = 0.85%) • 7-year money in the low to high 4’s (T = 1.35%) • 10-year money in the low 4’s to low 5’s (T = 1.93%) • Low leverage causes the rates to come in significantly • Some insurance companies have floors

  28. Conclusions • More capital sources returning to market • LT debt availability continuing to increase substantially in 2012 • Underwriting moving up the LTV, DCR curves • Pricing more attractive/competitive • Equity requirements greater and new construction is returning • CALL GRANDBRIDGE and BB&T !!!

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