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The NC-CCIM 2013 Charlotte

The NC-CCIM 2013 Charlotte. Commercial Real Estate Market Forecast. Charlotte and Raleigh Loan Production Offices 13 People 4 CCIM’s 1 MAI, 1 CFA, 1 CPA 6 Licensed Brokers. Grandbridge in North Carolina. Carolinas Production 2010 - 2012. $1.77 BB in closed financing assignments

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The NC-CCIM 2013 Charlotte

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  1. The NC-CCIM 2013 Charlotte Commercial Real Estate Market Forecast

  2. Charlotte and Raleigh Loan Production Offices 13 People 4 CCIM’s 1 MAI, 1 CFA, 1 CPA 6 Licensed Brokers Grandbridge in North Carolina

  3. Carolinas Production 2010 - 2012 • $1.77 BB in closed financing assignments • 190 transactions • 50 / 50 Multifamily and non-multifamily • #1 arranger of debt in the Carolinas by volume

  4. Current Market Composition

  5. Outstanding CRE Debt • Total commercial and multifamily = $2.42 Trillion • Insurance companies = $338 BB (14%) • GSEs = $369 BB (15.25%) • CMBS = $579 BB (24%) • Banks/Thrifts = $811 BB (33.50%) • Other = $319 BB

  6. CMBS Maturities • CMBS maturities 2015 - 2017 = $350 Billion (60%) • CMBS multifamily maturities next 5 years = $75 BB = 9,600 + loans

  7. 2012 Estimated Lending Volume • Fannie/Freddie = $63.6 BB • 85% of MF in 2009; 57% in 2011 • FHA = $16 BB • Insurance companies = $55 BB • 2007 = $43 BB • CMBS = $45 BB • 2007 = $230 Billion

  8. Insurance companies Significantly increased volume for 2013 Freddie Mac Mandated 10% volume decrease from 2012 Fannie Mae Mandated 10% volume decrease from 2012 HUD Insurance authority will exhaust 3/27 Bridge lenders Banks Flush with deposits; struggling to invest cash Private capital Mezzanine and P/E lenders CMBS Lender Types Active Today

  9. Loan Types Available Today • Immediate funding interim and permanent loans • Acquisition, static refinance, new construction • Fixed and variable rate • Loan terms of 3 to 25 years • 15 – 30 year amortization schedules • Full term and partial interest-only available

  10. Loan Types Available Today • Forward funding permanent loans (3-12 months) • Acquisition/transitional bridge loans • Construction and construction/permanent loans • Mezzanine and preferred equity • High leverage first/mezzanine combinations • Flexible prepayment options available

  11. 10-Yr Treasury, 90-Day LIBOR,Federal Funds History (since 1980)

  12. Interest Rate Yield Curves

  13. Pricing • 5-year conventional = 2.75% -- 3.25% • 7-year conventional = 3.25% -- 3.75% • 10-year conventional = 3.75% -- 4.25% • Mezzanine = 10 – 12% • FHA = 2.50% refi; 2.90% (d)(4); both add 60 bps MIP • Bridge = LIBOR + 275 – 500 bps

  14. Underwriting

  15. Valuation • In today’s market it takes a net income movement of 15-20% to offset a 1% movement in cap rates Example: Net Income: $1,350,000 Cap Rate: 5.50% Value: $24,545,000 New Cap Rate: 6.50% Required NOI: $1,595,500 (18.2% increase) Initial Value @ 6.50%: $20,770,000 Initial Value @ 7.50%: $18,000,000

  16. Amortization, anyone? A 10-year loan with a 30-year amortization schedule will repay: -- At a 6% interest rate -- 16.3% principal reduction -- At a 5% interest rate -- 18.67% principal reduction -- At a 4% interest rate -- 21.22% principal reduction -- At a 3.50% interest rate -- 22.57% principal reduction However, from what starting point………………?

  17. Underwriting

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