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

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Presentation on theme: "Capital Markets Overview Dennis Williams Managing Director NorthMarq Capital April 2012."— Presentation transcript:

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

2 Key Themes of has seen much more activity from life insurance companies, commercial banks and value add lenders. – Underwriting more aggressive and “strike zone” widening 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 mature. New underwriting standards and projected loan volumes still not sufficient to rollover debt maturities (but getting closer).

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

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

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

6 CMBS Market: Maturities Through 2017

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

8 A New World: Commercial Mortgage Underwriting 2007 to Present 2007 Underwriting2009 UnderwritingNew Underwriting 5% NOI Decline NOI$5,000,000 $4,750,000 Purchase Price$100,000,000$62,500,000$79,200,000 Lender Cap Rate5.00%8.00%6.00% Loan to Value80%55%70% Loan Amount$80,000,000$34,375,000$55,400,000 Equity$20,000,000$28,125,000$23,800,000 Interest Rate5.75%8.00%4.25% AmortizationI/O30 Debt Service$4,638,940$3,026,779$3,270,000 Debt Service Coverage1.08x1.65x1.45x

9 Looking Ahead : 1.Agencies Remain Reliable: –Rates and terms remain attractive, and underwriting guidelines less conservative. 2.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. 3.CMBS Doing Some Business: –Rates have dropped from the high 5’s to high 4’s, up to 75% LTV, all property types. 4.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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