News
ON THE GREEN
June 10, 2010
| A metaphor all RE pros can relate to is golf, right? (We'd ask you in person, but half of you are mysteriously not at the office). So here goes: If you have a performing property with good sponsorship that needs debt and reasonable leverage, the fairway is narrow and sloping, says Deloitte Financial Advisory Services managing director Tino Korologos. |
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| You can get a competitive loan, Tino says, though the number of borrowers who can get the property or loan to the middle of the fairway are few. The good news is that there's liquidity and demand to put debt out. Foreign players are in the market. Big names like Wells Fargo, RBS, and JPMorgan are looking to lend. There's real origination for multi-borrower CMBS deals, and banks are securitizing loans on multiparty deals. The fairway continues to widen, but now as many as 90% of loans are missing the fairway-non-core assets in secondary and tertiary markets with marginal or undercapitalized sponsors will have a hard time, he warns. |
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| Tino with Deloitte Real Estate Consulting directors Steven Gottlieb and Scott Hileman. On the investment side, there's a drive to create a floor in the market-once the market feels this floor, there will be more demand for US real estate, he says. But to get there, we need job growth, and we still haven't seen major hiring announcements. The unknown cost of doing business in NYC will also have an impact on how investors look at potential deals. They're looking at price PSF and whether buildings can work at that number-more price discovery will create more transactions, he says. Many investors Deloitte is working with are interested in distress, but the wave hasn't hit yet-and when it does, it may have a different impact than initially thought. |
