LSI 2010 Real Estate Joint Ventures conference materials.pdf
LSI 2010 Real Estate Joint Ventures conference materials.pdf LSI 2010 Real Estate Joint Ventures conference materials.pdf
Tracy B. Edgers of Wells Fargo Bank Speaker 3: 6 U.S. CRE debt maturities 900,000 800,000 700,000 Fixed Rate CMBS Floating Rate CMBS Commercial Banks & Savings Inst. Insurance Companies GSEs & FED-Related Mtg. Pools Other 600,000 $ (Billion) 500,000 400,000 300,000 200,000 100,000 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 Maturity Year Sources: Federal Reserve and Intex Solutions, Inc. 10 Near-term CMBS maturities 70.0 60.0 0.13 50.0 $ (in Billions) 40.0 30.0 20.0 18.34 14.96 33.76 0.12 43.51 58.05 0 41.9 10.0 13.57 0.0 2009 2010 2011 2012 2013 Year Fixed-Rate CMBS Floating-Rate CMBS Existing CMBS maturities show $32 billion in refinance debt-capital needs with an additional $49 billion scheduled to mature in 2010. Approximately 30% of CMBS loans that were slated to mature in 2009 have failed to be refinanced. Property types have exhibited mixed performance as retail properties experience the most stress at only a 52% refinance rate. Multifamily loans, meanwhile, have experienced a nearly 90% refinance rate. Sources: Wells Fargo Securities, LLC, Citi Investm ent Research and Analysis, Intex Solutions, Inc., Trepp, LLC. . 11 Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA
Tracy B. Edgers of Wells Fargo Bank Speaker 3: 7 Need for deleveraging $650 billion worth of commercial real estate mortgages will come due by the end of 2011 Investors and developers will have trouble selling and/or refinancing many loans due to falling rents and declining property values Deleveraging Example Cap NOI NOI < 5% NOI < 10% Rate NOI $1.50M $1.425M $1.35M Value @ 6% $25.00M Loan @ 75% $18.75M $18.75M $18.75M Debt Yield 8.0% 7.6% 7.2% New Value @ 8% $18.75M $17.81M $16.88M New LTV 100% 105% 111% Req. $4.69M $5.39M $6.09M Remargin New Loan @ 75% $14.06MM $13.36MM $12.66MM New Debt Yield 10.7% 10.7% 10.7% Remargin % of Value 19% 22% 24% 12 Lending strategies Lend to borrowers with cash equity and access to capital Provide incentives for borrowers to support transactions Warm body guarantors Non-recourse carve-outs such as bankruptcy Level of analysis depends on level of recourse Get paid for taking risk 13 Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA
- Page 1: L A W S E M I N A R S I N T E R N A
- Page 4 and 5: Monday, February 08, 2010 Real Esta
- Page 6 and 7: John W. Hanley, Jr., Ste
- Page 8 and 9: Table of Contents Topic Speaker # L
- Page 10 and 11: Faculty for Real Estate Joint Ventu
- Page 13: L A W S E M I N A R S I N T E R N A
- Page 16 and 17: John W. Hanley, Jr. of Davis Wright
- Page 18 and 19: Steven L. Wood of Century Pacific,
- Page 21 and 22: Tracy B. Edgers of Wells Fargo Bank
- Page 23 and 24: Tracy B. Edgers of Wells Fargo Bank
- Page 25: Tracy B. Edgers of Wells Fargo Bank
- Page 29 and 30: Tracy B. Edgers of Wells Fargo Bank
- Page 31 and 32: Steven L. Wood of Century Pacific,
- Page 33: L A W S E M I N A R S I N T E R N A
- Page 36 and 37: Gregory K. Johnson of Wright Runsta
- Page 38 and 39: Gregory K. Johnson of Wright Runsta
- Page 40 and 41: Gregory K. Johnson of Wright Runsta
- Page 42 and 43: Gregory K. Johnson of Wright Runsta
- Page 44 and 45: Gregory K. Johnson of Wright Runsta
- Page 46 and 47: Gregory K. Johnson of Wright Runsta
- Page 49: L A W S E M I N A R S I N T E R N A
- Page 72 and 73: Joseph P. McCarthy of Stoel Rives L
- Page 74 and 75: Joseph P. McCarthy of Stoel Rives L
Tracy B. Edgers of Wells Fargo Bank Speaker 3: 7<br />
Need for deleveraging<br />
$650 billion worth of commercial real estate mortgages will come<br />
due by the end of 2011<br />
Investors and developers will have trouble selling and/or<br />
refinancing many loans due to falling rents and declining property<br />
values<br />
Deleveraging Example<br />
Cap NOI NOI < 5% NOI < 10%<br />
Rate<br />
NOI $1.50M $1.425M $1.35M<br />
Value @ 6% $25.00M<br />
Loan @ 75% $18.75M $18.75M $18.75M<br />
Debt Yield 8.0% 7.6% 7.2%<br />
New Value @ 8% $18.75M $17.81M $16.88M<br />
New LTV 100% 105% 111%<br />
Req.<br />
$4.69M $5.39M $6.09M<br />
Remargin<br />
New Loan @ 75% $14.06MM $13.36MM $12.66MM<br />
New Debt<br />
Yield<br />
10.7% 10.7% 10.7%<br />
Remargin % of Value<br />
19% 22% 24%<br />
12<br />
Lending strategies<br />
Lend to borrowers with cash equity and access to capital<br />
Provide incentives for borrowers to support transactions<br />
Warm body guarantors<br />
Non-recourse carve-outs such as bankruptcy<br />
Level of analysis depends on level of recourse<br />
Get paid for taking risk<br />
13<br />
Law Seminars International | <strong>Real</strong> <strong>Estate</strong> <strong>Joint</strong> <strong>Ventures</strong> and Funds | 02/08/10 in Seattle, WA
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