Deer in the Headlights: Commercial Real Estate Markets at Standstill
Richmond, VA (PRWEB) January 24, 2008 -- Following a year when originations for commercial mortgage-backed securities in the United States exceeded $240 billion, the market today is running at its lowest level since 2004. This slowing trend for CMBS originations, which takes the market back to the halcyon days of post-recession, pre-liquidity crisis, has an enormous impact on real estate developers who rely on liquidity to finance property transactions.
In its most recent podcast "Deer in the Headlights," Richmond-based John B. Levy & Company targets these borrowers in an effort to help them understand the need to explore new sources of capital to finance their developments. This podcast continues the discussion initiated in a presentation broadcast in early January entitled "The End of Free Money."
"In 2008, we'll be lucky to reach $100 billion in CMBS originations," says John Levy, principal of John B. Levy & Company, "and that's a 60 percent reduction from the level we achieved in 2007." Levy continues, "The market today resembles a deer in the headlights. While sellers are hoping to see the good old days of 2006 and 2007, buyers are reminded of the early '90s. The result? Nothing is moving."
For real estate developers seeking liquidity in this market, Levy suggests they look at their portfolio differently. "Rather than selling properties with no debt or prepayable debt," Levy suggests, "look at properties that have relatively new debt. That means these properties will have below market rates and above market leverage, making them extremely appealing."
Levy's well-timed podcast indicates that in this time of tight markets, real estate borrowers would be well advised to look for new sources when raising capital. The most obvious is the institutional market, which is populated by insurance companies and pension funds.
"Based on our nationwide Internet underwriting survey of 25 of the largest pension funds and insurance companies, we can say that most participants are running at full tilt and are now producing new annual originations in the range of $40 to $50 billion," says Levy. "Though that's substantial, it's still off the pace of $240 billion set by the CMBS market in 2007. Life insurers are especially good providers of short-term debt for 3, 5, and 7 years, and their servicing is superior when compared with loans from the CMBS market. For sophisticated borrowers, they also offer fixed-rate, construction-permanent loan combinations."
Firm Background
John B. Levy & Company, Inc. is a real estate investment-banking firm headquartered in Richmond, Virginia. The firm has structured over $3.5 billion in financing for developers and owners of commercial and multi-family projects nationwide, often investing its own proprietary funds into transactions with its clients. He is the originator and author of the Barron's/John B. Levy & Company National Mortgage Survey, a monthly survey of more than 30 of the country's largest institutional investors, as well as buyers and sellers of commercial mortgage-backed securities, which Barron's published for 23 years. Mr. Levy is also co-creator of The Giliberto-Levy Commercial Mortgage Performance Index (sm), the first and pre-eminent index to measure and analyze the performance of investments in the commercial mortgage industry.
For more information about John B. Levy & Company, please visit the firm's website at www.jblevyco.com or call Andrew Little at 804-644-2000, extension 260.
###
Related Articles:
Elevating your profits with Commercial Real Estate
Investments in commercial real estate is good way of elevating your profits. But these investments have to be intelligent and thorough otherwise you will be risking bankruptcy. A well planned and intelligent investment can make wonders for you. Investors tend to make mistakes while dealing with commercial real estate but these mistakes can be avoided once you are clear about what you are doing. There are some hints and tips which every investor should follow in order to save his precious investments.
Profit From Commercial Real Estate Investments
Property investors have now turned their attention towards the lucrative deals presented by the commercial properties. This sudden interest is the result of the option to diversify your property investment portfolio, along with a high income and tax breaks. However, it is advisable to conduct a research before taking the plunge.
What to Look For in Commercial Real Estate
Purchasing a piece of company with Shop for rent is a major expenditure for business persons. The preferred way to ensure that you purchase the ideal sort of Shop for rent is to evaluate your requirements. Explore the following:
Think Property First For Commercial Real Estate Mortage
Make sure the condition of the property you want to buy will survive market conditions before seeking a commercial real estate mortgage. When you go to purchase a new residence, a good lender does a thorough financial background check on the individual seeking to borrow money. On the other hand, when you go to apply for a commercial real estate mortgage, the lender?s greatest concern is the property. Some of the most important issues include your credit score. But that?s not enough. The lender wants to make sure the property is in pristine condition and will survive tumultuous market conditions.
MyNextDeal and Catylist, Inc. Form Partnership to Extend Reach of Commercial Real Estate Listings Online
The listing exposure options expand for Catylist members as the company partners with commercial real estate listing service MyNextDeal.
Navigant Partners, M&A Partners, align to Provide Specialized M&A Services to Commercial Real Estate Industry
Navigant Partners announced today a new partnership with Dallas-based M&A Partners to provide a more systematic approach to mergers and acquisitions in Commercial Real Estate. Navigant Partners builds business platforms in the Commercial Real Estate industry through mergers, acquisitions, and new business formation and launch. M&A Partners brings tools and methodology embedded in proprietary software for comprehensive due diligence and rapid integration.
Commercial Real Estate Investing For Dummies®: Learn How to Break Into the Business and Invest Like the Pros
Real estate development, done correctly, can be incredibly lucrative. The key is to get it right by choosing valuable properties, making successful offers and selling for maximum profit. In Commercial Real Estate Investing For Dummies (Wiley, January 2008, 358 pages), real estate investment experts Peter Conti and Peter Harris provide the ins and outs of the process in a straightforward way that both beginners and experienced investors will find useful.
NetGain Brings Web 2.0 to Commercial Real Estate Investing
NetGainRealEstate.com has added a host of interactive social tools to its top-rated site creating an international income property community.
New ways to find Commercial Real Estate for Rent
New ways to find Commercial Real Estate for Lease
The Latest on Residential and Commercial Real Estate
Mike Larson examines the real estate marketplace in the U.S. and how neither commercial or residential is ready for a turn around. In this issue of Money and Markets, Mr. Larson takes a closer look at the U.S. real estate markets and determines the troubles that might lie ahead.
Three Dynamic Deal-Makers in Commercial Real Estate Transactions
Commercial real estate can be a very lucrative field for investors, especially if an investor knows how to get a great deal When investing in commercial real estate, you want to make sure that you will get a deal that will quickly get money in your own pocket
Commercial Real Estate Lending Industry Grinding to a Halt, Says Private Commercial Lender Hamed Elbarki
Real estate loan approvals have significantly slowed in the past three months, with U.S. banks severely narrowing lending standards. Private lending expert and Aventura Trust Investments CEO Hamed Elbarki offers comment on the current state of the commercial lending industry.
Norton & Associates Inc. Provides; Global Private Investment Funding, Carbon Offset Credits, Commercial Real Estate Investment for Retirement, Resort
Robert H. Norton, President of Norton & Associates Inc., providing P & L Investment Management, Commercial Real Estate Development announcement of a P & L contract to provide private investment funding for a 3,100 acre, Waterfront Sportsman Retreat known as Currituck Point, Hyde County, North Carolina. This Phase I , $30M investment package brings the total asset management over $600M using Global Private Investment Funds.
Former Colleagues Open Cutting Edge Commercial Real Estate Law Firm to Serve Long Island, NYC
Former law colleagues, Keith Patrick Brown and David N. Altman have opened a new Garden City, NY-based law firm specializing in commercial real estate serving local and national clients on Long Island and in New York City
Where To Find Great Commercial Real Estate Deals
The commercial real estate is a hot product in this moment. Many investors see the massive potential for the income related to this type of property. It is not always clear, however, which type of commercial real estate to invest inside or which part of the country to be chosen. With a little of research, you can find the place perfect to buy.