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Financing Strategies for Today’s Market

Financing Strategies for Today’s Market. Tom Detienne David Woida Investors Community Bank NorthMarq Capital 860 N. Rapids Road 250 N. Sunny Slope Rd., # 300 Manitowoc, WI Brookfield, WI (920) 686-5626 (262) 787-4997 tdetienne@investorscommunitybank.com dwoida@northmarq.com.

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Financing Strategies for Today’s Market

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  1. Financing Strategies for Today’s Market Tom Detienne David Woida Investors Community Bank NorthMarq Capital 860 N. Rapids Road 250 N. Sunny Slope Rd., # 300 Manitowoc, WI Brookfield, WI (920) 686-5626 (262) 787-4997 tdetienne@investorscommunitybank.comdwoida@northmarq.com

  2. Agenda • Industry Summary • Rates and Options • Key Differences between lenders • Underwriting 201 • Examples • Q & A

  3. Industry Summary • Expanded options for CRE finance • Conventional Banks / portfolio lenders • Conduit Lenders (CMBS) • Insurance Companies • Government-Sponsored Agencies (Fannie Mae and Freddie Mac) • Mezzanine • Equity

  4. Commercial Mortgages

  5. Holders of Commercial and Multifamily Mortgage Loans 1990 2006 Q1

  6. Yield Curve

  7. Capitalization Rates

  8. U.S. CMBS Issuance and Interest Rates Source: Commercial Mortgage Alert and Federal Reserve

  9. CMBS Rates

  10. Percent of CMBS Loans that are Interest Only or Partial Interest Only

  11. Key Differences Between Lenders • Banks – Portfolio Lender, flexible terms, good $’s, shorter terms, typically recourse • Conduits – Securitized Lender, little flexibility, aggressive terms • GSE’s (Freddie & Fannie) – Could be either portfolio or securitized, flexible terms, attractive rates • Life Companies – Portfolio Lender, very flexible, conservative terms • Private Money – Portfolio Lender, flexible and attractive terms, very selective on deals

  12. Lender Comparison

  13. Underwriting 201 • Cash flow (Debt Service Coverage) • Leverage (Loan-to-value) • Lease analysis / Underlying asset • Interest only periods (or full term) • Reserves / Escrows • Costs of issuance • Personal guarantees • Prepayment penalties (Defeasance) • Assumptions

  14. EXAMPLES • New Construction • Stabilized retail, office, industrial & hotel • Multi-family

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