Remington Capital – Brad Sweet

Thank you to all the brokers I’m working with for your interest and participation in the Distressed Owner Recapitalization (DOR) Program. I’m elated that we can help you find financing even in these market conditions!

The good transaction flow that Remington has been able to maintain is a result of creativity, hard work and our unmatched access to commercial capital. And we’re not stopping here. The Capital Markets Group at Remington continues to expand our access to active lending institutions – making the lives of our brokers and their clients better every day.

We have a backlog of funding that we’re busy with our brokers finding commercial property owners.

Three web seminars are available 24/7 that explain how you too can benefit from our access to funding at part of the DOR Program.  Here they are – feel free to contact me any time and let’s discuss how we can help you.

1) Distressed Owner Recapitalization Program intro video from Remington by Tyler Hufford https://remingtonfg.ilinc.com/register/zrwpcvp

2) Webinar on Recapitalizing Distressed Owners is now available online, by Donavon Ostrom of Remington https://remingtonfg.ilinc.com/register/jyyfswv

3) Webinar on Marketing to Distressed Owners for the DOR Program is now available online, by Shayne Fowler of Remington https://remingtonfg.ilinc.com/register/xhcwzpv

Thank you!  Brad Sweet – Remington

This week I was reading in MBA Newslink about the upswing in hotel deals. The good news is that it can’t get worse!

At Remington we have continued the transaction flow in the hotel segment, and we look forward to working with brokers to continue funding viable hotel investment opportunities.

Hotel deals reached their lowest point in 2009, and now experts forecast an increase of $3.5 billion in 2010 as owners are being forced to recapitalize assets and significant equity is entering the market. Seller financing and private money will hold the stage in 2010. Read more here.  http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=10503

At Remington www.remingtonfg.com we are focused on financing hospitality and other commercial real estate transactions, and we forecast a continued improvement in our ability to support brokers with hotel owners – both distressed and new.  Let’s talk about new opportunities built off financing funds that we need to deploy this quarter.

Thank you!  Brad Sweet – Remington

On behalf of Remington clients I work closely with our Capital Markets Group. They are responsible for identifying, nurturing and expanding our unmatched global network of active working relationships with traditional lenders and investors, as well as public and private sources of available capital in the U.S. and abroad.

Our access to capital for commercial real estate projects distinguishes Remington from others in the financial services industry. Since 1993, Remington has provided hundreds of commercial real estate brokers and their clients with ready access to all types of capital, arranging billions of dollars of financing for even the most challenging debt, mezzanine and equity transactions.

Key to our clients’ success in obtaining capital is the use of a global network of capital sources that are ready, willing and able to deploy capital for viable commercial projects requiring minimum loan amounts of $500,000 in the U.S. and $5 million from sources abroad.

The Capital Markets Group also manages special projects including the Secured Capital Income Fund LP, a planned initial capital markets entry by Remington with a joint-venture equity fund specializing in bridge loan financing.

It was refreshing to read some good news this week in Michael Murray’s article for Mortgage Bankers newsletter regarding the hospitality sector. We’re in for a little better year in 2010.  Among the forecasts:

1. Global hotel transaction volume will increase by 20 percent to 40 percent, or up to nearly $4 billion by next year, said Jones Lang LaSalle Hotels, London.
2. In its Hotel Investment Outlook 2010 report, JLL Hotels forecast the first increase in transaction activity since 2007, following a 64 percent decline predicted for this year.
3. “Asian conglomerates are poised to emerge as one of the primary global acquisition groups in 2010 as they seek prime assets in gateway markets, especially in the United States and United Kingdom, playing to currency fluctuations,” de Haast of JLL Hotels said. “Furthermore, sovereign wealth funds, primarily from the Middle East but also Asia, will aim to place capital in hotels as a hedge against inflation, and will therefore become more active buyers again.”
4. The focus for investors, de Haast said, will be three or more months of consecutive year-over-year room yield growth as a sign of stabilization to “underpin valuations and boost confidence” as hotel recovery varies based on world geography.
5. “Savvy buyers who are in a strong cash position and can be aggressive will be able to benefit from the buying opportunities that emerge,” de Haast said. “Overall, bids will continue to be conservative in 2010, but the early movers stand to capture the most value.”

Read more here: http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=9759#full

If you’d like to discuss how we can help arrange commercial financing in hospitality or other sectors, please contact me today. Thank you – Brad Sweet, Remington

A commercial construction loan is any loan used to finance the construction of commercial real estate such as office complexes, retail centers, apartments, hotels, warehouses, and other commercial properties. In general, construction loans are short-term and meant to be paid off when construction is completed.

While construction loan programs offer differing features, they also have a number of characteristics in common. For example, construction loans generally require interest only payments during construction; terms typically are for 12 to 36 months; most lenders require a 12-month interest reserve; and pay off occurs when a certificate of occupancy is issued.

Because borrowers usually require follow-on financing when a construction loan comes due, lenders sometimes offer construction-to-permanent loan programs that provide construction loans during the building phase and longer-term fixed-rate financing that kicks in upon issuance of the certificate of occupancy.  This two-in-one loan process tends to be more convenient and less costly for borrowers in that there is only one loan application and one closing, with associated fees, instead of two. 

Because of the complexity of construction loan financing, borrowers may find it difficult to compare construction-to-permanent loan financing with the two-loan process. That’s where the experts of Remington can help.

The combined market-focused expertise of the Structured Finance Group at Remington and our Capital Markets Group, with its global network of public and private capital sources, takes the guess work out of construction lending so that commercial real estate clients are able to secure the best possible interest rates and terms consistent with their objectives and market conditions at the time.

Let’s discuss construction loans at your convenience. Thank you – Brad Sweet, Remington

http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=9339

In today’s Mortgage Banker Newsletter we learn that multifamily lending was 40% lower in 2008 than in 2007. This is not a surprising statistic for any of us in commercial financing.  It’s gotten tough out there!

Getting qualified for a multifamily loan in 2007 was not nearly as difficult as it became in 2008 and through 2009. Making things more difficult today is that owners who received loans in 2006 and 2007 now have properties that have decreased in value significantly – as much as 40% or more – and many of these loans will mature in the next 12 months. What if the lenders are not willing to roll over the loans?  That will be a painful awakening for many owners, and so we’re here to help them directly or through local brokers.

It is a highly fragmented market: 26% of lenders that made multifamily loans in 2007 made just one loan.  These lenders are struggling today as are owners who face an uncertain future.  I’m certainly always here – please engage our expert advisory team to help you get it done with the best access to commercial capital in the industry.  One option is our Distressed Owner Recapitalization Program.  It’s already helping owners and developers with financing that makes use of the capital stack, and allows them to see light at the end of the commercial property investment tunnel. And our brokers are closing more transactions.

Thank you!  Brad Sweet – Remington

As a broker you’re not in this to work for free. This is not a charity operation that you’re running – it’s about getting paid for your good work. The worst thing that can ever happen to a mortgage broker is that you get to the finish line, the loan closes and you don’t get paid. That is why it’s important to get a good fee agreement in place with the borrower. Whether you have one drafted up by an attorney or it is a verbal agreement, some borrowers just have bad intentions.  

Because of this, Remington can guarantee you a percentage of our origination fee so you don’t have to deal with the hassle of invoicing a client or harassing a lender. We have all the contracts in place with our investors to make sure we get paid at closing.  And by having a fee-agreement drafted up with us, you can too. This way, when your deal closes you can expect a check or wire transfer from Remington within 5 business days of closing.

The percentage is subject to increase as the deal-flow increases as well. Traditional brokers like to arrange a fee agreement with their clients and we stand behind those agreements and will work to protect you in every scenario. We’re here to help close more financing transactions and get you the broker paid for your work.  Our access to capital and other services help you get there.  Thank you!  Brad Sweet

One of the timeless dilemmas in commercial lending that we see at Remington is determing loan to cost vs. loan to value.  We’ve been calculating those in commercial property lending since our firm was founded in 1993.

When determining the risk in a particular investment, emphasis will be placed on the value of the collateral. For a new purchase this is a simple process because the borrower will be bringing a percentage of the acquisition price in as a down payment.

However in today’s market, how do we determine the value of a commercial property when it is often being purchased for pennies on the dollar?

An example is a borrower purchasing an apartment building for $6,000,000 from a bank when the apartment building is worth $7,000,000. If the borrower brings a down payment to the purchase that satisfies the commercial lender’s traditional requirements, there is no problem and the loan is approved.  A problem will arise if the borrower wants the difference between value and cost ($1,000,000) to be considered as a down-payment.

Most lenders take the stance that a property’s value is the purchase price. So if a buyer can purchase a property for $6,000,000 it is worth $6,000,000. In situations like this where the borrower is looking to get credit for purchasing under the perceived market value, we must be able to sell the lender/investor on the story that this property is worth more than the purchase price.

Three standard methods for determining the value of an apartment building in this situation would be to

1. Use a gross rent multiplier
2. Use the capitalization rate for the area
3. Determine the value using price per unit

The experts at Remington have long and deep experience is these scenarios and can help borrowers structure commercial lending transactions like this. We have lenders actively pursuing and completing financing deals across the entire range of the capital stack up to 100% Loan to Cost. For further information, apartment financing or any other types of commercial transactions please feel free to contact me directly.

Thank you!  Brad Sweet – Remington