Lecture 15 Jeff (Eastdil) - Mar 10 09

Lecture 15 Jeff (Eastdil) - Mar 10 09 - Capital Market...

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Unformatted text preview: Capital Market Update Opportunities / Overview March 2009 Table of Contents t Section I. Capital Market Overview t Section II. There Is Some Hope! t Section III. Outlook for Loan and REO Sales t Section IV. Loan Sales Pricing, Volume and Buyers t Section V. Actions of a Special Servicer t Section VI. San Francisco Office Market Overview 2 Overview 3 U.S. Sales Volume, Transactions > $25mm Source: Real Capital Analytics 4 Private Market Office Sales are Beginning to Reflect Pricing Changes Office Sales > $25 million Source: Real Capital Analytics & Morgan Stanley $197 $204 $227 $263 $320 $304 8.2% 7.6% 6.5% 6.0% 6.5% 6.0% 7.0% 6.7% 5.5% 7.5% 5.4% 5.5% $150 $175 $200 $225 $250 $275 $300 $325 $350 2003 2004 2005 2006 2007 2008 5.0% 5.3% 5.5% 5.8% 6.0% 6.3% 6.5% 6.8% 7.0% 7.3% 7.5% 7.8% 8.0% 8.3% 8.5% $/SF Ca p Ra te 10 Yr. Borrow ing Cost 5 Net New Origination Year Over Year Net Increase in Commercial Mortgages (Excludes Govt Agencies) Q308 figures reflect the change from Q208. Year end figures not yet available. Source: Mortgage Bankers Association $157,545 $129,675 $168,690 $35,872-$13,124 $61,483 $98,818 $96,916-$9,057 $117,576 $152,674 $12,036 $12,160 $2,257 $14,782 $17,627 $2,308 $18,847 $8,035 $4,896-$20,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2004: $222 Bil 2005: $288 Bil 2006: $300 Bil 2007: $298 Bil Q 3 2008: $-18 Bil Millions CM BS Com m e rcia l Ba nks/S a vin gs Ba nks Life Co 's All O the r 6 $0 $100 $200 $300 $400 $500 2009E 2010E 2011E 2012E $ billions B anks Insurance C o's C MB S Total $305.7 $320.4 $369.4 $419.9 Projected Originations1 $105.7b Shortfall $102.4b Shortfall $169.4b Shortfall $219.9b Shortfall Loan Maturities will Continue Deleveraging Trend 1 Origination projections based on the average 3-year historical gross originations from all non-commercial CMBS lenders. 2 CMBS total includes both fixed and floating rate loans to first maturity. Source: Wachovia 2 Cumulative Shortfalls 2009-2012: $615.4 billion 1 1 7 In-Place Debt May Be Your Most Valuable Asset 2008 Eastdil Secured Property Sales 2008 Eastdil Secured Property Sales 23% - 33 Deals No Debt 77% - 55 Deals Existing Debt /Seller Financed 8 Todays Debt Market What Can Get Done 1) Top 10 Markets 2) Moderate Leverage (50-55% LTV) 3) Class A Assets 4) Strong Sponsors 5) In-Place Cash Flow (1.30x DSCR on 9.0% constant, or 12% debt yield) 6) Under $200 Million Nominal Rates: 5-Year Fixed: 7.50% 7-Year Fixed: 7.75% 10-Year Fixed: 8.00% 5-Year Floating: L + 3.50- 5.50% Libor Floor: 2.0% Amortization: Required 9 Deleveraging will Force Sales and Recapitalizations 10 There is Some Hope! 11 Unparalleled Government Support t $825 billion potential Stimulus Package t $700 billion Troubled Asset Relief (TARP) t $200 billion Term Asset-Backed Securities Loan Facility (TALF) 12 GSE Liquidity has been the Saving Grace for Multifamily Sector 95% of Total MF Secured Financing 66% y-o-y Increase in Agency Pending Source: Mortgage Bankers Association and Green Street Advisors....
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Lecture 15 Jeff (Eastdil) - Mar 10 09 - Capital Market...

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