Browse Month: December 2010

NAR’s Bill Armstrong: Get Involved With Your Local Issues In 2011

2010 04 26 - 2182 - Washington DC - Oberstar

As 2011 approaches, NAR’s Treasurer Bill Armstrong had some positive things to say about the state of the commercial RE market in a recent podcast. Market reports show that the average commercial deal’s price tag rose 27% to $1.4 million between 2Q and 3Q 2010.  While 3Q sales were flat over year previous, they weren’t any lower – and leasing activity shows a bump of 4%.

As Bill mentioned, NAR is not letting any grass grow under its feet in Washington – taking up the cause to Congress including educating new members about the needs of the market and working “every angle possible” to loosen up credit and bring opportunity to every market.

In 2011, the effort has to be local as well as national – and that’s where you come in.  As the commercial real estate professionals in your market, you can get mobilized too by taking advantage of your state and local REALTOR® associations.  You can receive education, financial assistance and technical support.  And you can manage issue campaigns to make sure the special needs of your market are being met by government and lenders.  No two markets are alike, but NAR provides support for your market no matter where it is through our Issues Mobilization Program and Public Advocacy Program.

NAR’s Issues Mobilization Program helps REALTORs® promote public policy through a range of means including mobilization support,  a process for managing the tricky task of advocacy and up-to-date information on Government Affairs.

Policy promotion during election cycles is supported by our Public Advocacy program, which is designed to influence voter perceptions on clearly identified federal issues and candidates by employing a variety of communication tactics. The program is intended to affect the legislative outcome of an issue in Congress and/or election results of targeted federal candidates without expressly advocating the support or opposition of that candidate.

Get involved in 2011 – to hear more about either program, contact Lisa F. Scott at 202-383-1270.

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Giving Credit Where It’s Due: TNP Retail Trust Lands Major Credit Deal

The inside view of a Shopping Mall
Image via Wikipedia

The economic downturn’s longest-lasting effect is in the chilling of the credit markets.  Without the lubricating capital to finance acquisitions, expansions and development, the commercial real estate economic engine sputters or halts. Loud concerns about unavailable credit were heard from nearly every commercial RE pro in attendance at NAR’s annual this past November. Yet, as 2011 approaches, there are strong signs of the engine turning over again.  Will we leave the ditch behind?

TNP Strategic Retail Trust’s recent deal with KeyBank National Association securing $35M in revolving credit seems to qualify as good news on that front, suggesting that investment in shopping malls across Main Street America is back in vogue.  From David Bodamer at RetailTraffic.com:

TNP Strategic Retail Trust Inc. entered, through certain of its wholly owned subsidiaries, into a secured revolving credit facility with KeyBank National Association. The facility has an initial aggregate leading commitment of up to $35 million. It replaces TNP’s existing $15 million credit facility, which matured on Dec. 17. The new facility includes an accordion feature that allows for an increase in commitments of up to $150 million as the company continues to grow. It has an initial maturity date of Dec. 17, 2013, subject to extension.
The facility will be secured by certain TNP-owned properties and will be subject to a number of financial covenants, including minimum and maximum limits on the company’s total leverage ratio, interest coverage ratio, fixed charge coverage ratio, liquidity and tangible net worth. TNP may use the facility for acquisitions and investments in real estate-related assets, capital and tenant improvements at existing and future properties, debt refinancing and other general working capital purposes.

“We are pleased to expand our relationship with KeyBank and appreciate their continued support and confidence in our company,” said Anthony W. “Tony” Thompson, CEO of TNP, in a statement. “Additionally, we expect that this increased flexibility and borrowing capacity will allow us to compete for almost any [appropriate] property.”

Lenders And Special Servicers Avoiding Foreclosures, Managing Recovery

Commercial property in Carnotstr., Berlin.

Securitizing commercial real estate financing into CMBS was a trend that hit a peak before the economic downturn of 2008.  Defaulting on financing that underlies instruments from which shares were sold to investors calls for the use of “special servicers” – management companies who, upon the event of a default of a given loan, represent the interests of those clients who own pieces of the troubled commercial mortgage-backed security.   These companies are, in much the same way as banks in similar situations, under great pressure to avoid foreclosures.  These specialists in dealing with defaulted mortgagel oans have been leading the way in creative methods to do just that.

The burst of creativity is timely.  A recent Wall Street Journal piece by Anton Troianofsky and Eliot Brown spells out that the workload for special services has jumped as the total of CMBS defaults have risen – around 16% over 2009 year-end numbers.

The firms, known as special servicers, are dealing with an influx of souring loans backed by commercial-mortgage-backed securities, or CMBS: a total of $90.9 billion as of the end of September, compared with $73.8 billion at the end of last year, according to credit-rating firm Fitch Ratings. But the pace at which those loans have been resolved has picked up at an even faster rate, with $27.9 billion recovered by special servicers from bad loans in the third quarter, compared with $8.9 billion in the first quarter, according to Fitch.

Many of those bad loans are simply getting modified and extended, pushing the borrower’s day of reckoning to a day into the future when, both sides hope, the market will improve to a point at which the property owner can refinance. But in other cases, servicers are trying more unusual methods to dispose of properties through sales or other means as they work through a volume of distressed loans that is testing the legal apparatus built up by Wall Street’s boom-time securitization binge.

Read the entire article here.  Looking for definitions of special servicer or CMBS?  Check out C-Loans databank.