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: 8 Borrower strategies Substantial upfront cash equity still required Expect impounds and leasing reserves Covenant parameters must allow for restructure while equity still at risk Emphasis on: Tenant financials Tenant rollover Lease analysis Historic operations 14 Utilization of TALF TALF will be utilized most by large sponsors and upstart the CMBS market with single borrower transactions done on a “best-efforts” basis While TALF may help revive the securitization market, aggressive underwriting found in short term loans originated since 2005 will likely preclude them from refinance risk without significant equity infusions Investor confidence in the CMBS market necessitates participation by the originator (retention of the B-piece) and more stringent risk-assessment 15 Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA
Tracy B. Edgers of Wells Fargo Bank Speaker 3: 9 Opportunist strategies Have Plenty of CA$H Know the Status of the Asset Review: “Policy Statement on Prudent Commercial Real Estate Loan Workouts” http://www.federalreserve.gov/boarddocs/srletters/2009/SR 0907.htm Wells Fargo REO Assets: https://www.wellsfargo.com/com/cgi/properties.jhtml 16 What will CMBS 2.0 look like? Minimal issuance that will be predominantly single-borrower and large loan transactions Conduit pools will be significantly smaller than 2006 – 2007 transactions Underwriting will be ‘back to basics’; true 70% LTV and 11% debt yield loans will be the standard New issue CMBS will be viewed in a different light due to structural improvements and tighter underwriting standards Mandatory cash management Full impounds Limited to no additional leverage Higher subordination levels; although ratings shopping may still continue Heightened regulatory environment may cause bumps in the road for new issuance 17 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 and 26: Tracy B. Edgers of Wells Fargo Bank
- Page 27: 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
- Page 76 and 77: Joseph P. McCarthy of Stoel Rives L
Tracy B. Edgers of Wells Fargo Bank Speaker 3: 8<br />
Borrower strategies<br />
Substantial upfront cash equity still required<br />
Expect impounds and leasing reserves<br />
Covenant parameters must allow for restructure while equity<br />
still at risk<br />
Emphasis on:<br />
Tenant financials<br />
Tenant rollover<br />
Lease analysis<br />
Historic operations<br />
14<br />
Utilization of TALF<br />
TALF will be utilized most by large sponsors and upstart the<br />
CMBS market with single borrower transactions done on a<br />
“best-efforts” basis<br />
While TALF may help revive the securitization market,<br />
aggressive underwriting found in short term loans originated<br />
since 2005 will likely preclude them from refinance risk<br />
without significant equity infusions<br />
Investor confidence in the CMBS market necessitates<br />
participation by the originator (retention of the B-piece) and<br />
more stringent risk-assessment<br />
15<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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