Commercial Loan News

Commercial Loan Rates for 06.30.09

2009-06-30T15:52:00.000-07:00

New rates posted today with some significant drops especially in the $1.5M To $10M+ range for office and retail, although the actual funding of deals in this sector is still quite slow. Multifamily continues to show the most activity on a relative scale and qualified apartment loans are still receiving some funding. We'll keep you posted.

Recovery Signs for Commercial Real Estate?

2009-06-29T15:46:00.000-07:00

SOURCE: Fool.com

Some commercial real estate business is stirring again. The deals seem to be starting small, but never-the-less they are happening.

"Until a couple of transactions settled, you didn’t have a floor in the market," says Jeff Pacy, a broker with Preston Partners in Lutherville, MD.

According to Pacy and other commercial real estate insiders outside of Baltimore, they are seeing a "sudden burst of business." For commercial property under $10M, the pricing now seems to be right. Institutional buyers are also treading softly back into commercial property from the sidelines.

Read full story »

Hard Times for Southern States in Commercial Real Estate

2009-06-25T15:42:00.000-07:00

SOURCE: DallasNews.com

Commercial real estate values are continuing their downward spiral, dropping 8.6 percent in April, according to a report released Wednesday by Moody's Investors Services and Real Estate Analytics.

That's the largest one-month nationwide decline on record.

And the Southern region of the U.S., which includes Texas, is seeing the worst declines. Prices for investment properties in the Southern sector of the country are off more than 20 percent in the last year, Moody's researchers said.

U.S. commercial real estate values are down 29.5 percent from their peak in late 2007.

The biggest declines have come in the office sector, where prices are down about 29 percent nationwide from a year ago. And shopping center values have fallen 18.5 percent.

Another recent commercial property report predicts that the Dallas area will have the largest decline in office prices in the country during the coming year. That forecast last week by PricewaterhouseCoopers predicts that the commercial real estate market won't begin to recover until 2011.

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Opportunities Growing for Some Buyers

2009-06-24T15:50:00.000-07:00

SOURCE: CoStar

Although the future of commercial real estate remains murky, current operating conditions are crystal clear: There is very limited capital, extremely tighter underwriting, shrinking net operating incomes, shrinking space demand and declining property values. For companies today, that means leaner and more efficient operations and more focus on tenant retention rather than tenant attraction.

The bigger question may be how long will these current conditions remain in effect. And while they are far different than what conditions were just three years ago, the smart money is starting to act as if it expects the current operating environment will be in effect for some time and is starting to look for opportunities that match the times.

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Commercial Loan Rates for 05.12.09

2009-05-13T11:13:00.001-07:00

New rates posted today with minor fluctuations, with banks and conduit lenders showing little signs of loosening their extra conservative capital market strategies. Apartment loans are still receiving some funding. We'll keep you posted.

Commercial Real Estate Loans Impact Regional Banks

2009-05-13T10:56:00.000-07:00

Source: LA Times

According to this recent article from LA Times, delinquencies are snowballing on construction loans and mortgages for office buildings, malls and apartments. The trend is particularly worrisome in Southern California.

The slumping market for commercial real estate -- viewed by many as the next big shoe to drop on the economy -- now threatens to drag down regional banks as they struggle to collect on loans made against shopping centers and office buildings.

Seriously overdue loans against commercial developments have shot up dramatically in recent months, as delinquencies snowball on construction loans and mortgages for office buildings, malls and apartments.

Read the full story »

Banks Still Face Challenges in 2009 and Beyond

2009-05-12T11:20:00.000-07:00

Source: The Motley Fool

With the banking stress tests now completed, investors are finding it more sensible than it's been in months to invest in banks. Clarity, they'll tell you, is returning to the industry. We can now make informed estimates as opposed to the blind guesses we were stuck with in months past. Not only do we have a roadmap of a bank's future, but heck, the stress tests prove that no big bank will completely bellyflop and go under, right? Kinda. Sorta. Not really.

Read the full story »

San Francisco Commercial Real Estate Market Softens

2009-05-09T11:28:00.000-07:00

Source: SF Gate

Another wave of real estate defaults is rapidly gathering strength - this time in the office sector.

Owners of several small commercial buildings in San Francisco already are behind on payments, and local industry observers are laying odds on which large property could be the first to be seized by a lender.

The mix of industries in San Francisco might make it better fortified than places like Manhattan, where the commercial sector is sharing the fate of the ravaged financial services industry, said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley.

"But we're not immune," he said. "San Francisco will lose 30,000 to 40,000 jobs this next year. That's a big number, and vacancy rates are going up, no doubt about it."

Two distinct but intertwined problems face owners of office buildings.

First, the lower occupancy and rental rates mean it's increasingly difficult for landlords to make their debt payments, forcing more and more to default - and some into foreclosure.

Second, tighter underwriting standards, declining cash flow and plummeting asset values mean that many of the loans coming due will be impossible to refinance without substantial equity injections.

Read the full story »

Small Banks Worry About Commercial Real Estate

2009-05-05T11:37:00.000-07:00

Source: Wall Street Journal

In the worst-case scenario, federal regulators examining the 19 largest U.S. banks are projecting losses of up to 12% on commercial real-estate loans over two years, according to a document viewed by The Wall Street Journal.

The regulators are likely to cite commercial-property debt problems as a major reason why at least some of the large banks need additional capital.

Such losses likely would cause even deeper misery, and risk of failure, at small and medium banks because they tend to have disproportionally more exposure to commercial real-estate loans than giant institutions.

Analysts already had been forecasting hundreds of bank closures in the next five years. The stress-test assumptions, including a 10.3% jobless rate at the end of 2010, raise the specter that some of the failures could occur sooner.

Read the full story »

Commercial Loan Rates for 04.31.09

2009-04-30T07:25:00.000-07:00

New commercial loan rates posted today with minor fluctuations, still solid numbers available for qualified deals although the capital market is moving quite slowly in anticipation of changes in valuation throughout 2009. Multifamily loans are the strongest of the property types at this juncture, along with our new distressed asset program, we'll keep you posted.

Cap Rates for Commercial Real Estate

2009-04-30T07:20:00.000-07:00

Source: Wall Street Journal

According to this recent article from WSJ, most major banks haven't disclosed the cap rates they are using.

One chunk of exposure is commercial real estate; banks and thrifts hold about $1.7 trillion of commercial mortgages. A benchmark used to value such assets is the capitalization, or cap, rate. This determines property values on the basis of rental income. Take an investor buying an office building with annual income of $15 million. If they offer $200 million, they are using a 7.5% cap rate, which is derived by dividing income by value. Increasing the cap rate implies a lower value for the building.

Cap rates fluctuate depending on the economy and supply and demand for commercial property. During the last real-estate collapse in the early 1990s, cap rates increased to an average of more than 9%. But at the market's peak in 2007, investors were willing to accept cap rates as low as 4% on prime property, partly on the assumption that rents would keep rising.

As banks conduct their stress tests, one big question is what cap rate they are using to value the properties that back their commercial-property portfolios.

Read the full story »

Loopnet Stock Looking for a Comeback

2009-04-30T07:00:00.000-07:00

Source: Motley Fool

According to the latest "Five Stocks Under $10" article on the Motley Fool website, Loopnet may be poised for a comeback:

LoopNet (Nasdaq: LOOP) -- Being the leading online marketplace for commercial real estate is a lot like being crowned King of Cooties these days. Commercial properties may have held up relatively better than residential realty when the market began to falter, but vacant office buildings now stand next to foreclosed condo towers.

The upside for LoopNet is that it has held up reasonably well, financially. It also helps that the company is cash-rich and debt-free. Once commercial real estate prices begin to stabilize -- and we may be closer than the market's worrywarts think -- LoopNet will be the hotbed of activity again.

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Defaults in Commercial Loans Expected to Rise

2009-04-30T06:44:00.000-07:00

Source: CoStar Group

An uptick in both the number and average loan size of new defaults resulted in a one-quarter point climb in March CMBS delinquencies to end the month at 1.53%, and there are significant indicators that point to record climb in defaults in April as well, according to Fitch Ratings.

In recent months, Fitch has observed a notable increase in the rollover rate of loans that move from 30-days to 60-days delinquent. As such, the current 30-day delinquency is reliable measure of loans that could go into default.

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Apartment Conversions Down, Condo Leasing Up

2009-04-29T07:21:00.000-07:00

Source: Columbus Dispatch

About four percent of housing complexes that were sold in the U.S. this year for more than $5 million have been converted into apartments, up from less than 1 percent for most of the decade, and no apartments have been resold as condos this year, according to Real Capital Analytics, a New York consulting firm.

Read full story »

Commercial Loan Rates for 04.21.09

2009-04-21T08:31:00.000-07:00

New commercial loan rates posted today with minor fluctuations, still some good numbers available for qualified deals although the capital market is still moving quite slowly. Some indicators show possible improvement later this year, we'll keep you posted.

Distressed Assets & Commercial Loan Solutions

2009-04-01T15:17:00.001-07:00

Given the strain on clients brought about by the current liquidity crisis Steelhead Capital has been searching for solutions to meet our clients' needs in these challenging times.

Steelhead Capital is currently working with multiple groups whose focus is aiding owners and developers in re-capitalizing assets in order to de-leverage or complete business plans. These loan programs are designed to provide flexibility to meet the owners needs and will allow them to survive the immediate crisis in hopes of achieving better long term outcomes for their original equity positions.

Are you under-capitalized? Are your distressed assets over-leveraged? Is refinancing not an option? Is selling your property in today's difficult divestiture market your only option? In today's distressed debt market more and more property owners need alternate solutions for their troubled assets, and Steelhead Capital can help. Find out how »

If you are interested in discussing any of these solutions, please call Matt McLeod,
Vice President of Steelhead Capital, directly at (415) 398-2271.

Defaulting Commercial Properties Major Concern for Banks

2009-03-25T14:55:00.000-07:00

SOURCE: Bloomberg

U.S. banks, battered by record losses from the worst housing slump since the Great Depression, now must weather increasing loan delinquencies from owners of skyscrapers and shopping malls.

The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt.

“The only thing we are facing today in commercial real estate is the fact that we have a weakening economy,” Kovacevich, 65, said in a March 13 speech at Stanford University in Palo Alto, California. “In a weakening economy, you have higher unemployment, you have fewer people who need to occupy office buildings, you have fewer retailers who need to exist.”

Read full story »

Offerings of Commercial Distressed Assets Rising

2009-03-24T14:43:00.000-07:00

SOURCE: Bloomberg

About $11 billion of defaulted or foreclosed commercial properties were being offered for sale last month as landlords struggled to refinance loans, Real Capital Analytics Inc. said.

About $5.7 billion worth of properties defaulted, were foreclosed upon or entered bankruptcy in February, the New York- based research firm said in a report today.

The situation “is likely to only worsen over the near term since behind the statistics are sellers that are rapidly morphing from pressured to distressed, while buyers are content to wait,” Real Capital analysts said.

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Partial Sale-Leasebacks Rise in Popularity

2009-03-12T14:57:00.000-07:00

SOURCE: GlobeSt.com

Global information technology firm Unisys Corp. disposed of a 356,000-square-foot suburban Philadelphia office property in a $19.5-million sale-leaseback that closed late last year. But unlike your traditional sale-leaseback transaction, in which the seller continues to occupy the entirety of a facility, Unisys leased back only about half of the space at the Malvern, PA asset.

Such partial sale-leasebacks aren’t an entirely new phenomenon, but they appear to be on the rise, at a time when increased interest in sale-leasebacks in general is anticipated.

“A lot of corporations have identified that using a sale-leaseback is a great way to take capital they have tied up in real estate and invest that in their business,” says Jones Lang LaSalle capital markets senior vice president Suzanne Martinez, who along with managing director Mindy Berman and corporate solutions SVP Ken Zirk represented Unisys in its deal.

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PODCAST: 2009 Outlook with Dan Fasulo from RCA

2009-01-22T09:27:00.000-08:00

In this interview, Darbi and Dan speak candidly about the year ahead and what kind of challenges face commercial real estate investors in 2009 and beyond.

DARBI: So, Dan, obviously at this point we are no longer talking about if the commercial real estate investment market is in trouble. But the question really is, how much, how much trouble?

DAN: Well, it's pretty difficult to sugarcoat what's going on right now. This is the most difficult time I've seen in my 10-year career as a commercial real estate analyst. The debt markets are very much tied up right now. There is a significant amount of dislocation in this space. And as everyone knows, the commercial real estate industry is an industry that relies on debt in its normal course of business. So it's not a surprise to me that the industry would be under a lot of pressure given the state of the financial markets.

Read full transcript or listen now »

Apartment Sector Still Hanging In There

2009-01-14T09:21:00.000-08:00

SOURCE: WSJ Online

Owners and developers of multifamily buildings are trying to stay afloat as the deteriorating economy and escalating job losses create difficulties in raising rents and shortfalls in projected revenues from these buildings.

While sharp declines in retail and office sectors of commercial real estate have commanded attention in recent months, some analysts say deterioration in the multifamily sector is may soon be catching up.

Read full story »

Commercial Loan Rates Fluxuate Again

2008-12-01T21:35:00.000-08:00

Many of our rates and terms are changing along with the rise and fall of the current market conditions. This week saw some of multifamily rates climb back up a little (5 year with 80% ltv under $5mm is now 6.26%). However most of the NNN/Retail/Office rates dropped significantly. Of course the rates can go up and down all day long until the credit market loosens up again. Be sure to check out the latest commercial loan rates here.

Commercial Loans Facing More Challenges Ahead

2008-12-01T18:47:00.000-08:00

Source: Bloomberg

Commercial property loans originated in 2005 to 2007 that increasingly carried risky terms are likely to see a significant increase in defaults in 2009 due to lack of credit, falling property values and reduced cash flow, said Alan Todd, head of commercial mortgage bond research at JPMorgan, in published research.

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Paulson's Troubled Asset Relief Program Update

2008-11-18T08:04:00.001-08:00

SOURCE: Bloomberg

In this commentary by author John M. Berry we learn about the current status or the TARP proposal and the political challenges that exist at this critical point in time.

Treasury Secretary Henry M. Paulson Jr. is up to his ears trying to make the Troubled Asset Relief Program work. That's what he should be doing. He also ought to be pushing a really big economic stimulus plan.

Politically, it may be impossible, given a distaste for such a plan in the White House, the brief life left for the Bush administration and the intention on Capitol Hill to have only a short lame-duck session.

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Fitch: CMBS Delinquencies Up 6 BPs on Maturity Defaults

2008-11-17T10:15:00.000-08:00

An uptick in non-performing matured loans drove overall U.S. CMBS delinquencies six basis points (bps) higher in October to end the month at 0.51%, according to the latest U.S. CMBS loan delinquency index by Fitch Ratings.

"With CMBS issuance at a standstill and portfolio lenders cautiously managing their balance sheets, borrowers are facing increased difficulty accessing capital to refinance maturing loans," said Susan Merrick, Managing Director and CMBS Group Head.

"Given the illiquidity in the market, we expect the proportion and dollar balance of maturity defaults to continue to grow at a fast pace with delinquencies approaching close to 75 bps by the end of this year."

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