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Capital Markets Overview

Capital Markets Overview. Dennis Williams Managing Director NorthMarq Capital April 2012. Key Themes of 2012. CMBS Delinquency has leveled off but could spike again. Originations have picked up pace again but remain vulnerable to market shocks.

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Capital Markets Overview

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  1. Capital Markets Overview Dennis Williams Managing Director NorthMarq Capital April 2012

  2. Key Themes of 2012 • CMBS Delinquency has leveled off but could spike again. Originations have picked up pace again but remain vulnerable to market shocks. • Total delinquency rate currently 9.5% as of April 2012 • Defaults likely to increase when aggressive originations from 2005-07 mature. • New underwriting standards and projected loan volumes still not sufficient to rollover debt maturities (but getting closer). • 2012 has seen much more activity from life insurance companies, commercial banks and value add lenders. • Underwriting more aggressive and “strike zone” widening

  3. Commercial/Multi-Family Less Than ¼ of All Mortgage Debt Mortgage Debt Outstanding ($ Trillion) Source: Federal Reserve Flow of Funds Report Q4’11

  4. GSE’s Nearly Half of Multi-Family Market & Growing Multi-Family Outstanding ($Billion) Source: Federal Reserve Flow of Funds Report Q4’11

  5. Banks Hold a Majority of CRE Loans Commercial Outstanding ($ Billion) Source: Federal Reserve Flow of Funds Report Q4’11

  6. CMBS Market: Maturities Through 2017

  7. Commercial Mortgage Delinquency Rates by Lender Type Year End 2011 Source: Mortgage Banking Association CMBS: 8.56%; Life Companies: 0.17% Fannie Mae: 0.59%; Freddie Mac: 0.22%; Banks and Thrifts: 3.55%

  8. A New World: Commercial Mortgage Underwriting 2007 to Present

  9. Looking Ahead: • Agencies Remain Reliable: • Rates and terms remain attractive, and underwriting guidelines less conservative. • Rebirth of Life Companies and Banks: • In 2012 most life companies in the market and originating at or near 2007 levels. • Most large banks remain active, while regional banks starting to lend again. • CMBS Doing Some Business: • Rates have dropped from the high 5’s to high 4’s, up to 75% LTV, all property types. • Underwriting: • Special attention to rollover (reserves/cash flow sweeps). • Single tenant problematic. • LTV: 50-70% on real cap rate • DSC: 1.30x–1.50x.

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