Owners and investors face steep obstacles on the path to financing.
Written by William E. Jones, CIRE Magazine [Nov. Dec. 2010 issue]
Capital availability has improved since the dark beginning of the recession. This year the real estate capital markets came off life support, although they still remain in intensive care. Well-capitalized firms and owners are taking advantage of inexpensive money. Real estate investment trusts have been able to raise funds in both the unsecured and secured debt markets, and although the commercial mortgage-backed securities market has not returned, class A office owners in major markets have been able to refinance assets through securitization programs.
The multifamily market has benefited from a surge of lending activity from the government-sponsored enterprises Fannie Mae and Freddie Mac and the Federal Housing Administration. Many multifamily owners have been able to finance their assets at rates below 4.4 percent, and in the case of FHA/U.S. Department of Housing and Urban Development financings, the rates have been below 4.0 percent with 35-year fully amortizing terms. For new construction of multifamily developments, FHA/HUD has provided owners and developers with construction loans below 5.2 percent for the balance of 2010.
Rumors persist of new lending platforms offering new capital infusion into the commercial real estate market, but the evidence of these ventures is scant. Very few new players have entered the market this year. Instead, 2010 has been more about waking up the old players: banks and insurance companies.
Regrettably, most banks — overwhelmed by regulatory challenges and problem loans — have not returned to commercial lending.
To read this article in its entirety click HERE.
Chris Shaheen is a graduate of Louisiana State University where he obtained a Bachelor of Science in Business Management. Shaheen obtained the Louisiana Real Estate Sales License in 1995 where he began work as a consultant with Saurage Company Inc. and remains today as a specialist in development, land valuation, and financing with Saurage Rotenberg Commercial Real Estate.
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).