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Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

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Page 1: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Comprehensive Capital Market SolutionsFor Commercial Real Estate

NC CCIM – 2013 Commercial Real Estate Forecast

Page 2: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval. Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Commercial Banking 34%

CMBS, CDO, and other ABS Issues 24%

Age

ncy

and

GSE

s 16

%

Life Insurance

Cos 14%

State & Local Gov 2%

Others 10%

$2.38 Trillion, Q3 2012

Commercial / Multifamily Debt Outstanding Comparison By Investor Group

Commercial Banking 33%

CMBS, CDO, and other ABS Issues 26%

Age

ncy

and

GSE

s 14

%

Life Insurance

Cos 13%

State & Local Gov 7%

Finance Companies 2%

Others 5%

$2.37 Trillion, Q3 2011

Page 3: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval. Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Commercial and Multifamily Mortgage Flows Net Change in Commercial and Multifamily Mortgage Debt Outstanding, by Sector (in Millions)

Page 4: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Compared to Q3 2011……

• Q3 2012 origination volumes 7% lower.

• Borrowing slowed in Q3 despite low interest rates due to moderate pace of commercial transactions (retail and office) and a continued drop in loan maturities. Property types that increased were hotels (4%), industrial and healthcare (19%), multifamily (30%).

• Among investors, life company loans decreased by 32%, 8% increase for commercial banks, 30% increase for GSEs, no change in volume for CMBS.

Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Commercial and Multifamily Mortgage Loan Originations

Page 5: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Outstanding U.S. CRE Debt

Total Commercial and Multifamily = [$2.42 Trillion]

Insurance companies = [$338 Billion (14%)]

GSEs = [$369 Billion (15.25%)]

CMBS = [$579 Billion (24%)]

Banks/Thrifts = [$811 Billion (33.50%)]

Other = [$319 Billion (13.25%)]

Page 6: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval. Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Quarterly Originations

Page 7: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Quarterly Issuance of CMBS Billions of Dollars

Page 8: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

• $2.38 trillion in outstanding commercial/multifamily mortgage debt in Q3 2012, $6.6 billion higher than Q2 2012, as three of the four major investor groups increased their holdings.

• Fannie, Freddie, FHA, life insurance companies, and banks all increased their holdings and/or guarantees of commercial and multifamily mortgages, outpacing a decline in the balance of commercial and multifamily mortgages held in commercial mortgage backed securities.

Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Commercial and Multifamily Mortgage Loan Market Share

Page 9: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Based on UPB by Investor Group at end of Q3 2012

• Life Companies 0.12% (60+ days) (0.19% in 2011)

• Freddie Mac 0.27% (60+ days) (0.33% in 2011)

• Fannie Mae 0.28% (60+ days) (0.57% in 2011)

• Banks 2.93% (90+ days) (3.76% in 2011)

• CMBS 8.86% (30+ & REO) (8.92% in 2011)

Source: Commercial Quarterly Data Book – 3rd Q 2011 Mortgage Bankers Association

Delinquency Rates• DQ rates decreased for commercial and multifamily mortgage loans in Q3

• DQ rates on bank-held loans is at lowest level since beginning of 2009• DQ rates for CMBS continues to stabilize.

Page 10: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

CMBS Maturities$492 Billion over next six years

CMBS Maturities (In Billions)

  Total ≤ 1.0x 1.0x - 1.19x > 1.20x LTV > 100%80%-100%

LTV LTV < 80%

2013 $ 55.75 $ 6.36 $ 5.35 $ 44.04 $ 14.49 $ 3.85 $ 37.35

2014 $ 44.10 3.35 4.85 35.94 3.70 3.09 37.31

2015 $ 83.05 7.06 9.05 66.94 7.14 5.90 70.01

2016 $ 121.09 11.02 8.48 101.60 11.62 7.02 102.44

2017 $ 142.77 18.56 26.13 98.08 17.56 16.70 108.50

2018 $ 22.15 0.75 0.91 20.48 0.60 0.84 20.71

2019 $ 23.14 0.88 1.57 20.68 1.69 1.23 20.22

Source: TREPP

Page 11: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

2012 What Was HotMultifamily – 80% LTV, 4% rate

Grocery-Anchored Retail – 75%, 4.25%

Office – 70%, rollover, TIs

Industrial – 70%, 20 year amort

2013 What’s HotMultifamily – 85%, 3.50%

Grocery-Anchored Retail – 75%, 4%

Office / MOB – 75%, rollover, focus on TIs

Industrial – 75%, rollover

Hospitality – 70%, 10.75% DY, 235bps over

Self-Storage – 75%

Credit Retail – fully amortizing to lease term

CMBS – 75%, A-B Structures down to 1.10x

2012 What Wasn’tUnanchored Retail – 60%, rollover

Hospitality/Lodging – go away

Self-Storage – 65% @ 9% caps

2012 What’s NotUnanchored Retail – 65%, historical tenancy

Page 12: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Historical 10 Year Treasury Yield Curve, 1962 – 2013

July 198115.84%

1.38%July 2013

Page 13: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

10 Year Treasury Yield Curve, March 2011 to March 2012

10 Year Treasury Yield Curve, March 2012 to March 2013

3.54%

1.71%

2.27%

2.37%

1.38%

2.03%

-99bps

Page 14: Comprehensive Capital Market Solutions For Commercial Real Estate NC CCIM – 2013 Commercial Real Estate Forecast

Loans are subject to credit approval.

Bob Hukill, Senior Vice President [email protected] | 919.871.6300

Velinda Dismukes, Assistant Vice President [email protected] | 919.871.6300

Wesley Fricks, Analyst [email protected] | 919.871.6300

Grandbridge Real Estate Capital – Raleigh Office

700 Spring Forest Rd, Suite 325Raleigh, NC 27609