SBA Financing - The Recovery Act provides $730 million to the SBA to make changes to the agency's lending and investment programs. The Act provides $375 million for the temporary elimination of fees on SBA-guaranteed loans and increased SBA guarantee percentages of up to 90 percent on certain loans. In addition the Treasury Department is committing up to $15 billion to help unlock the secondary mortgage markets. These changes will result in lower financing costs (more than 3% of the loan amount) and an increased supply of credit, as lenders enjoy increased credit protection and secondary market liquidity.
Commercial Mortgage Consulting Services - Commercial real estate owners and lenders are facing a complex set of circumstances that are creating stress in even the most conservatively underwritten real estate investment. The current economic conditions are challenging all areas of commercial real estate property management and lending compared to the peak years of 2006-2007. Robert T. Gibney & Associates has assembled a team of seasoned professionals to review, analyze, and restructure commercial real estate loans.
Your real estate clients may benefit from these services:
• Objective analysis of the subject property in relation to competing properties in the sub-market
• Develop strategies to reduce the risk of loan default for loans maturing in the next 3-5 years
• Assist in negotiating Loan Workouts and Modifications
Link for additional information
Underwriting Update – New financing continues to be available from a select group of balance sheet lenders. These lenders use their own capital to fund loans. In addition they retain loans on their balance sheet for the entire loan term. In contrast to recent years, lenders are using a traditional approach to underwriting using the following criteria:
• Actual Cash Flow – trailing 12-month data (Net Rent Collections, Operating Expenses, Vacancy Rate). Consideration is given to declining trends in net operating income.
• Debt Coverage Ratio – 1.25 to 1.5 debt coverage ratio
• Reserve for Debt Coverage – Reserve account held by lender to be used in the event that existing tenants default or fail to renew their leases
• Global Cash Flow – A detailed evaluation of the borrower’s cash flow for all real estate investments, businesses, and personal obligations
• Exposure to Short-Term Liabilities – Evaluation of the potential risk associated with the borrower’s need to payoff loans in the next 1-3 years
• Post-Closing Liquidity – The availability of cash and marketable securities is an important consideration for many lenders. Loans may include a covenant requiring the borrower to maintain a minimum amount of liquid assets during the term of the loan
IN THE NEWS
MULTIFAMILY - WSJ April 8, 2009 - The nation's apartment market deteriorated in the first quarter as rising unemployment dashed landlords' hopes that the housing downturn would create a soft landing by bringing former homeowners back as renters. The vacancy rate for the top 79 U.S. markets jumped to an average 7.2%, a full percentage point increase over the past two quarters and the highest level since the first quarter of 2004, according to statistics from Reis Inc., a New York real-estate-research firm. The jump in vacancies came even as landlords reduced rents. Asking rents, which exclude concessions and are often the starting point for rent negotiations, fell 0.6%, the largest fall since Reis began its count in 1999. Effective rents, or the rents that landlords actually collect, fell 1.1% in the first quarter to $984.
COMMERCIAL – WSJ April 8, 2009 - Commercial landlords continue to lose retail tenants at an accelerating pace, indicating that the industry's troubles are worsening. The amount of occupied space in U.S. shopping centers and malls declined a net 8.7 million square feet in the first quarter of 2009, according to real-estate-research company Reis Inc. The amount of occupied space lost in that one quarter was more than the total amount of space retailers gave back to landlords in all of 2008 and any other year in recent history, according to Reis.
All of this information was made available to me from
Robert T. Gibney & Associates
4300 N. Miller Road, Suite 212
Scottsdale, Arizona 85251
Phone (480) 429-3642 Mobile (602) 315-5671
Mortgage Broker Lic. MB0904411
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