Real Estate Financing

  • ID: 3099002
  • Book
  • Region: Global
  • 140 Pages
  • PEI Media
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How to scale the heights of private real estate’s refinance mountain:

The $2 trillion worth of real estate loans due in the next five to six years would be a steep challenge even in fully functioning banking and finance markets. But borrowers also have to navigate the contracting supply of bank debt and other finance products, as well the escalating costs of other sources of capital.

Property valuations are becoming a real issue too. Trepp estimates between 50 percent and 75 percent of loans have loan-to-value (LTV) ratios well in excess of 100 percent.

With additional first-mortgage lending beyond 65 percent LTVs are unlikely to be available, the funding shortfall is going to create tremendous opportunities for subordinated lenders, distressed opportunities and potential losses for existing owners of these loans.

Real Estate Financing contains a unique collection of practical papers written by banking and finance practitoners, as well as interviews with industry-leaders, this publication can help you make better informed and robust investment strategies.

Key areas covered:

- Bank lending and commercial real estate in the US and Europe
- Real estate debt capital markets
- Commercial mortgage securitisation
- Financing Japan’s private real estate market
- Government-supported multifamily housing finance programmes in the US
- Mortgage REITs: Real estate finance through public markets
- Private lending in the US
- The rising appeal of note sales in real estate
- The sale-and-leaseback market explained
- The role of life insurance companies
- Regulatory considerations in real estate finance

This publication is tailored to the needs of:

- Real Estate Investment Managers
- General Partners
- Institutional Investors
- Bankers and Financiers
- Transactional Lawyers
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1 Real estate debt capital markets
By Ethan Penner, CBRE Capital Partners

- When the debt capital markets sneeze, commercial real estate gets sick
- The commercial real estate capital stack – debt is debt and equity is equity
- The hybrid investment – mezzanine debt and preferred equity
- A brief history of commercial real estate finance
- Securitisation – CMBS
- Banks Life companies
- Mortgage REITs
- A history of volatility and many scars
- The particulars of commercial real estate finance
- Personal guaranties
- Fixed or floating rate?
- Debt service coverage
- Summary The global financial system is fragile
- Globalisation and the internet destabilise property income

2 Bank lending and commercial real estate in the Americas
By Sam Chandan, Chandan Economics

- Introduction
- A period of rapid growth in US bank lending
- Performance issues
- Renewed bank lending
- References

3 Commercial real estate lending in Europe
By Zoltan Szelyes, Swiss National Bank

- Introduction
- Cross-border activity and the emergence of European CMBS
- CRE lending market structure
- Increased risk in the banking system
- What is shaping the European banking system?
- Real Estate Financing
- Lower CRE valuations and tighter lending
- The debt funding gap
- Impact on different lenders: Continental banks; German Pfandbrief banks; UK banks; Insurance companies
- Outlook: Macro environment and lending terms; Regional differences to exacerbate; New business models for lenders

Capital sources

4 Commercial mortgage securitisation
By Sam Chandan, Chandan Economics

- Introduction
- The evolution of CMBS
- CMBS: present and future
- Conclusion

5 Life company lending in commercial real estate
By Greg Michaud, ING Investment Management

- The context of life company lending
- From the 1990s to the next crisis
- Weathering the financial crisis
- Outlook for life company lending

6 Mortgage REITs: Real estate finance through public markets
By Calvin Schnure, National Association of Real Estate Investment Trusts

- Introduction
- Mortgage market structure
- Mortgage REIT business model
- Defining a mortgage REIT
- Assets and liabilities
- Investment performance
- Reform of the market for home mortgages
- Regulatory uncertainty
- Investing in mortgage REITs
- Conclusion
- Contents

7 Q&A: Private lending in the US
How private lenders will finance US real estate over the next few years will depend largely on just how traditional lenders and the capital markets react to the asset class. PERE’s Anthony O’Connor talks to New York-based Chris LaBianca of RCG Longview about private lending today and how it is likely to pan out over the next two years to 2014

8 Q&A: Financing Japan’s private real estate market
Lending levels to Japan’s main private real estate market located in and around Tokyo remain liquid and competitive. However, Japan is a complex real estate market where investors should be prepared to overcome numerous challenges to succeed, William C. Hunter of Aozora Bank in Tokyo tells PERE’s Anthony O’Connor

9 Government-supported multifamily housing finance programmes in the US
By Daniel J. Hogan & Joseph M. Mandeville, Red Capital Group

- Federal multifamily mortgage guarantee programmes
- Loan terms and operational structures
- Public policy rationale for GSE multifamily programmes
- Apartment markets: underserved by private sources of mortgage capital?
- Credit performance of GSE multifamily mortgages
- Government-supported and -subsidised multifamily lending programmes outside the US
- Future of GSE multifamily lending programmes

10 Regulatory considerations in US real estate finance
By Brian Olasov, McKenna Long & Aldridge LLP

- Introduction
- Capital sources and regulatory responses
- The impact of Dodd-Frank
- Securitisation and CMBS regulatory reform under Dodd Frank, Regulation AB
- Bank regulatory agencies and guidance on CRE lending and servicing
- Real Estate Financing

Financing alternatives

11 Note sales
By Robert A. Knakal, Massey Knakal

- Introduction
- New York City capital magnet
- Economic slowdown created constrained supply
- The rise of broker opinions of value
- Questionable performance: New York’s receivers
- The rise and rise in appeal of note sales
- Conclusion

12 The sale-and-leaseback market explained
By Benjamin P. Harris, Annaly Capital Management

- Introduction
- Devising the optimum structure
- Market history: the making of the 2007 peak
- The credit bubble stimulates greater demand
- The credit crisis and the market today
- Risks and strategies: a practitioner’s checklist
- Conclusion

13 Distressed debt investing
By Tim Wang and David Lynn

- Commercial real estate debt and its innovations
- Preferred equity
- Mezzanine debt
- A/B-notes
- CMBS/conduit loans
- Whole loans/first mortgage/senior debt
- Loan terms and underwriting standards
- Debt maturity and refinancing needs
- Distressed debt investment strategies
- 1. Purchase distressed debt
- 2. Exploit failed developments
- 3. Provide fresh capital

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