Who’s Hot In Commercial Mortgages Today?

We are commercial mortgage advisors. We speak with lending sources all day long everyday, in order to find the answer to this question. Commercial mortgages in Florida come in many forms. Local banks, regional & national banks, foreign banks, life insurance companies, hedge funds, mortgage REIT’s, CMBS lenders, as well as government and quasi-governmental agencies, credit unions and corporate balance sheet sources have all had their varying days in the sun in Florida and the southeast… But who is hot today?

Yogi Berra said “when you get to a fork in the road… take it”. The same goes for commercial mortgages in Florida today… every direction is a good one, ‘but some are better than others’. Which is best, depends on your strategy, which may be an incorrect one for the southeast.

We find that many out of state borrowers come to Florida and emulate their home market strategy (in a market that is vastly different). New York, Philadelphia, and Boston have ‘real estate families’, who may be on their third or fourth (or more) generation of ownership and accumulation.

While that is normal up north, down here, it is rare… almost unheard of. Due to rapidly fluctuating markets, even the most steadfast of long term holders won’t refuse an offer that they can’t refuse. How do you say no, when the offer is outrageous with no contingencies? In my experience, everybody is a long-term holder until something happens where the short terms looks too good to pass up.

The members of Banyan Commercial Capital are in their third iteration of seeing offers that can’t be refused. With rapid value swings, does it even make sense to employ the same type of financing that you would employ in long-term hold markets?

So again, “who is hot?” The hot lender is the one that gives you what you want, but also plans for what you don’t foresee. We call these items ‘bells & whistles.’ If you are not constantly on top of lending sources, you are missing out on the good stuff. CMBS, FNMA, Freddie, Life Companies, Banks, Foreign Banks, Credit Unions, Mortgage REIT’S and hedge funds. If you are not on top of these sources full time, than you are out of the loop. No bells or whistles for you!

For example, a full leverage CMBS loan without lock box or cash management triggers… is that even possible? Yes, if you know where to look. How about a non-recourse bridge loan with full funded rehab dollars pricing in the 3.70% range… again, non recourse… Yes, we are doing these today. And, what about a 10-year fixed rate non-recourse loan with a step down prepayment penalty and 4 years open? Yes, we do them too, but again, you have to know where to look.

The loans that I reference here generally satisfy the long term holder, while giving them flexibility to accept the offer that they can’t refuse (without decimating their profits.

As advisors, our role is to advise. To allow a client who is less connected tap into our knowledge and contact base, to achieve the best results for themselves. So, to answer the question “who is hot today?”… the answer is clear. Those with the contacts and the knowledge of what is available and who is providing it and also have the ability to advise on ownership and financing strategy together.

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