Update from CCIM Refocus Conference Part Deux

Panel: Where to Find Financing? (Panel Members: ING, Wells, American Momenum Bank, Mercantile Capital)

ING:

1. Typical financing terms: 30 year amortization/3-10 year terms; 65% LTVs; 1.35-1.5 DSCR; Avg deal size of $25M ($2-200M) – Debt Yield of 10-12%.
2. Turning Points – typically when there are high or low liquidity levels
3. Focused on primary markets – competition is high in these markets
4. CRE is off the lows but still has a long way to recover with many potential pitfalls along the way.

Wells:

1. Active in CMBS market – they are putting together their first CMBS issue ($750M) directly
2. High quality deals for the right people
3. Underwriting is the new/old method – everything goes back to borrower and asset quality
4. Debt Yield requirements minimum of 10%

Ammercian Momentum Bank – Personal attention with creative loan structures in today’s environment.

Mercantile Capital – SBA 504 Loans

1. Blended rates of 5.5%
2. Can use for refinancing
3. Potential to refinance an upside down borrower (up to 125% LTV) if there is other collateral

Panel – Ken Riggs and KC Conway

Ken Riggs:

1. Keep expectations low – Warren Buffett
2. 2007/2008 was casino money
3. “Things ar so bad now that they can’t get any worse” – New Optimist Definition
4. If asset has been repriced, they have seen a 6% increase in value
5. It took 18 months to reset (NCREIF) – last time took 6 years
6. “Betting against the US has no worked since 1776” – Warren Buffett

KC Conway:

1. If USA started creating jobs at a rate of 170k/month, it would take until 2014 to replace all jobs lost
2. charge offs don’t peak until about 1 year after recession has ended andwill remain elevated for 3-4 years
3. CMBS has to come back
4. 3 special servicers control 70% of the market
5. Worst state for CMBS = AZ
6. $12T in residential loans compared to $3.3T in commercial (a) Commercial was $800B before run up (b) 24% of all residential mortgages have negative equity (c) trulia.com great info source
7. Nationwide – 6 year land supply of finished/vacant lots
8. Cash flow correction is still coming (Cap Rates rising to historical norms has already begun)

Let me know if you have any questions about notes! I hope they help you!