Commercial Chatter: Hits and Misses
What’s true? What’s not? The devil — and the deal — often is in the details
By Fred Hollister, senior vice president, director of commercial lending, Global Fundings
There is no shortage of real
estate news these days. You’ll find
an avalanche of information on
the Internet, television and radio and in
newspapers and magazines.
But is all of it true? And more important for commercial brokers and their
clients, how does it relate to the income-property business?
If you dig deeper into the mainstream
news, you’ll find hits and misses. Hits are
accurate and relevant to the commercial
business; misses are not. Understanding
what applies to the commercial mortgage
industry, as well as what doesn’t, can help
brokers succeed in finding funding for
their clients in today’s market.
Consider the following common news
themes that you or your clients may
come across — and whether they are hits
or misses.
Miss: Income-property loans are not
available from banks, thrifts and other
institutional lenders.
Many institutions still are lending actively. Historically speaking, interest rates
are still low and terms are reasonable. Certainly, many lenders have left the market
or reduced the number of loan programs
they offer, but good loans are available to
good borrowers for good projects.
Miss: Underwriting standards are too
rigid to permit deals to get funded.
Indeed, many lenders have tightened
their underwriting guidelines. Market
participants who understand what lenders are looking for, however, can succeed.
The essence of successful borrowing is to
match deals with the right lenders.
Today, most lenders look for positive cash flow. As such, break-even or
Fred Hollister is senior vice president, director of commercial lending, for Global
Fundings, a nationwide broker of institutional and private-money commercial
mortgages. He has more than 25 years’ experience in all aspects of income-property lending, having been a commercial mortgage broker, bank commercial
loan officer, underwriter, asset reviewer and compliance officer. Reach him at
fredhollister@gmail.com or (510) 207-8333.
negative-debt-service transactions are
hard to place. Investors who seek to
purchase properties that produce positive cash flow likely will find a loan for
their deals.
Hit: There are still plenty of good deals
available to work on.
In addition, providing a comprehensive, professional executive summary with
There are many doable commercial
real estate transactions. Business-owners
are buying their own buildings. Owners
with loans that are shifting from fixed
to adjustable interest rates — and whose
prepayment penalties
have burned off — are
seeking new fixed-rate
loans. Property-buyers
who have been sitting
on cash waiting for
the market downturn
are now purchasing
“The essence of successful
borrowing is to match deals
with the right lenders.”
your loan is crucial. The lenders that are
still making loans are flooded with deals,
and they don’t want to spend a lot of time
trying to figure out what someone seeks.
income-property investments below replacement cost, and many are seeing immediate positive cash flow.
Concise initial packages can help lenders understand the transaction, see if it
fits their current requirements and make
an intelligent initial decision. Each executive summary also should include at least
six clear color photos of the property —
one each that looks at the subject from
all four sides and two street scenes from
the entrance (looking “up” and “down”
the street).
There also are sellers who are placing first-class properties on the market
that haven’t been offered for years. These
transactions will often require a loan
to close.
Miss: We benefit from so much real es-
tate news being readily available.
There are two main reasons much of
the available real estate news doesn’t relate to our particular businesses. First,
Continued on Page 34
SUMMIT FINANCIAL AND INVESTMENT GROUP
LOAN TYPES
• Construction
• Acquisition and Development
• Permanent
• Bridge
• Renovation/Rehabilitation
• Refinancing
• Land — only with horizontal or vertical
construction (no land-only loans)
• Conversions
EQUITY PARTICIPATION
• SFIG can arrange equity participation
to facilitate a transaction in conjunction
with debt financing.
PROPERTY TYPES
• Mixed Use
• Retail (Anchored and Unanchored)
• Office Buildings
• Hotels
• Apartments
• Resorts
• Single Family Subdivisions
• Golf Courses
• Condominiums
• Industrial
• Marinas
• Office Condo
• Condo Hotel
• Special Purpose Properties
LOAN PARAMETERS
• LTV 60%-75% subject to property type
• LTC 65%-75% subject to project type
• Minimum loan amount for USA-based
transactions is $4MM USD.
For selected International transactions
the minimum is $10MM USD.
• Maximum loan amount is unlimited and
subject to underwriting.
Broker Submissions
Accepted
Phone: 800.649.0311 or 801.944.4320
Fax: 801.944.4322
E-mail: info@sfig.com
www.sfig.com
10421 South Jordan Gateway, Suite 600
South Jordan, Utah 84095
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