My wife and I are traveling the United States. You can follow our adventures here; staciandjordan.blogspot.com

This is my final day with NBS Financial. I have enjoyed learning, growing and working with of all of you. I will make sure you all have my new contact information very soon. In the interim, please feel free to email me at jordan@jordancrouch.com. I will make sure we stay connected; your good will and knowledge will be much appreciated. Within the chaos and distress around us, there are and will be opportunities and I’m hopeful we can find new ways to help each other. I am sincerely grateful for your help and support during the last five years.

Jordan

Peter Maclennan recently posted the blog post “Nine Questions to Ask a Commercial Lender“. While it is directed to mortgage brokers, it is good food for thought for anyone currently in commercial real estate.

1. What are your minimum and maximum loan amounts?
2. Do you have a geographical limitation?
   
3. What property types do you prefer?
   
4. How long does your average loan take to close? What is the shortest amount of time you have personally seen a deal close?
   
5. What is your maximum loan-to-value ratio?
   
6. What is your minimum debt-service coverage ratio?
   
7. What information do you require from the borrower in a loan package?
8. What is the best way to contact you if I have a deal?
   
9. What loans are you the most competitive on?

If you read the headlines, listen to others and mope about, this year will be exactly what you expect it will be…bad. But if you focus on the positive aspects of this market, there is the potential for 2009 to be a great year. What are those positives???

• Lenders with Money – Though banks and others are on the sidelines, Fannie Mae, Freddie Mac, and Life Insurance companies are still lending. Each January Life companies get a new bucket of money to lend. They are not lending on every deal but for the right one, there are lenders out there. Fannie and Freddie are (for the moment) government controlled, so they won’t stop lending either.
• Opportunities to Buy – With many Commercial Real Estate owners struggling, properties will need to be sold quickly or lenders will take them over. And since lenders are in the lending business not the property owning business, lenders will divest these properties as soon as possible. Someone with real estate experience and a solid team of experts (lender, RE broker, attorney, etc.) can take advantage of these opportunities to purchase real estate at a great deal.
• Opportunities to Refinance – Rates are still at historical lows compared to a decade or two ago. If you are a property owner, the ability to lock in these low rates  for 10+ years is a fantastic opportunity. It is hard to say if/when rates will be this low again.

I’ve updated the list of events for January under the Events tab. If you know of something that is not listed, please let me know.

• ECONOMIC NEWS: Uncertainty greets the new year as investors grapple with a volatile market, President-Elect Obama presents his proposed stimulus package, and bond yields, especially the Ten Year Treasury Bill, are at all time lows. The continued fallout from Barry Madoff’s Ponzi scheme is also affecting the market.
• LENDING MARKET: With Banks licking their wounds from 2008 and conduits still a distant memory, Life Insurance companies look to be the dominant lender for 2009 in addition to Freddie Mac and Fannie Mae. Expect more conservative underwriting, higher cap rates and lower loan to values in 2009. Most property types will be financeable in ’09 with apartments, industrial and officer properties being the preferred type (in that order).
• REFERRALS: My business is built on referrals. For those that referred someone to me in 2008 I deeply appreciate it and thank you for trusting me with your recommendation. I’m always looking to educate and assist people with financing commercial real estate. If you know of a client, associate or yourself who would like to look at a refinance or purchase, I’d love to help. If you’re comfortable sending me their name or giving my name out, please do so. Thanks again. I appreciate your support.  Here’s to a successful 2009!

http://finance.yahoo.com/news/Fed-cuts-target-for-key-rate-apf-13846723.html

The SquareFeet Blog has an excellent post detailing how the shifting treasury yields are affecting prepayment penalties. Read the article here. One thing the post does not mention is that for a borrower that is forced to sell a property, one way to avoid these hefty prepayment penalties is to have the new borrower assume the loan. This usually can be done with a 1% fee versus paying the prepayment penalty of 10% (using the example in the post).

Apartments rank as best investment among institutional investors.

This is a quick summary of lending attitudes for each of the main property types specific to the Seattle area at this particular moment (Dec. 2008).

Apartments – Love them. People have to live somewhere. With rising interest rates and fewer condo developments, people are moving back into apartments.

Industrial – Good. Easy property to take care of; sweep the floor, maybe a new coat of paint, and its

Office – Ok, as long as it’s leased. It’s a tenant’s market, therefore if your building is fully leased, it shouldn’t be a problem.

Retail – No, unless it’s fully leased, long term tenants, grocery anchored, on a main arterial without other retail competition. In other words, not likely.

Hotel - No.

Condo – **Click** (as in the lender just hung up).