Commercial Real Estate Loans & Investment Sales

How to maximize your commercial real estate portfolio

Building up a commercial real estate portfolio is one thing, maximizing its value is another. Many sponsors don't have a portfolio mentality as they view their commercial real estate portfolio as an assembly of a number of different indvidual assets as opposed to a true operating portfolio.

The ability to optomize financial engineering at every level of the capital structure is greatly enhanced when you consider all assets in the portfolio as opposed to individual one-off transactions. In fact, financing assets without taking into account the ramifications on the overall portfolio is a critical mistake that many sponsors make.

Understanding not only how to unlock the trapped-equity in a portfolio, but how to pool assets for trading, create operating lines for acquistion and how to lower overall cost of funds are just of few of the things that can be acheived by working at the portfolio level as opposed to the individual asset level.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How to leverage commercial mortgage brokers in the capital formation process

As a direct lender, Pacific Security Capital is often contacted by commercial mortgage brokers to provide commercial real estate loans or structured financing for their client's projects.

Reputable commercial mortgage brokers can provide borrowers with an entree to lenders that they may not have otherwise had access to thereby broadening the borrower's ability to expand their lender network.

A good commercial mortgage broker can not only provide access to lenders, but should also add-value to the transactional process as well. "We have spent a great deal of time creating a nationwide indirect channel consisting of commercial mortgage bankers and mortgage brokers," said Mike Myatt, executive managing director of Pacific Security Capital. "We have found that mortgage brokers and mortgage bankers can provide us with consistent deal flow from quality sponsors that may not have found us on their own," said Myatt.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How to gain a competitive buying advantage with the appropriate use of commercial real estate financing

With institutional investors, TIC Sponsors, REIT's and foreign investors all paying top dollar for commercial properties it is becoming more difficult for the average commercial real estate sponsor to acquire income producing property at reasonable prices.

One method of insuring that your acquisitions have upside to them is to find a commercial real estate lender who can provide acquisition financing on non-stabilized properties. This will allow you to look for repositioning opportunities that allow you to acquire properties at a discount due to either poor operating history and/or poor current performance. Once the property is acquired you can improve the operating performance of the property and then sell it at a premium to the institutional buyers mentioned above.

While a repositioning strategy affords substantial profit opportunities for the sponsor it all begins with identifying a lender who can provide a short term, high leverage bridge loan that will allow a non-stabilized property to be acquired and repositioned in a cost effective manner.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How Asset Class Rotation Impacts Commercial Real Estate Lending

Understanding influencing factors such as asset class rotation and their resultant impact on commercial capital markets can help developers/sponsors to achieve the most favorable commercial real estate loans available in the market.

Many factors may have influence over which asset classes are in favor with lenders/investors at any given point in time. However as a particular asset class rotates into favor in the capital markets the flow of funds increases, underwriting scrutiny decreases, the amount of leverage available goes up and the pricing improves.

Developers and sponsors who properly align their portfolio mix with assets in favor with lenders and investors will always have the best financing available to them.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Spreads on Commercial Real Estate Loans Continue to Narrow

Current market conditions are causing spreads on commercial real estate loans to narrow. We are currently seeing pricing that we have not experienced in recent times. Spreads on low leverage loans can be priced as thin as 55 over the 10 year treasury with market leverage loans as thin as 85 over the 10 year.

This type of pricing can provide borrowers with greater cash flow and and can be the needed difference in pulling sponsors off the sidelines on refinances that have been on hold.

Not only is pricing of spreads getting tighter, but lenders are also moving up the leverage curve using various structured financing scenarios to compete more favorably on suitable transactions. It is not uncommon to see many lenders moving up the curve in excess of 90% CLTV in today's market.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Filed under: structured finance, commercial loans

Strategic Considerations Surrounding Foreign investment into U.S. Commercial Real Estate Assets

The fact that commercial real estate in the United States has historically been recognized as a favored asset class yielding steady appreciation without the fluctuations that are characteristically present in competing asset classes have long made commercial real estate an attractive investment to foreign investors. The political and economic stability of the U.S., the absence or threat of government appropriation or nationalization, and the recognition of the historical strength of the US Dollar have no doubt also been contributing factors to the lure of foreign investors.

Given the attractive market characteristics described above, there has been a tendency for foreign investors to allow the sense of urgency surrounding the placement of funds and the desire to maintain competitive yields to drive their entry in to US commercial real estate markets. While resulting in great velocity with respect to time to market considerations, this scenario is regrettably akin to letting the tail wag the dog. If either ignored or misunderstood, navigating the complexities of international real estate finance with respect to the structuring of foreign investment into the US commercial real estate market can lead to a veritable plethora of increased costs and risks.

Experience shows that a rush to place capital on the part of foreign investors will result in the selection of the wrong assets in the wrong markets and in a resultant sub-par investment performance. This scenario coupled with poor tax planning, insufficient infrastructure and the lack of a hedging strategy has caused many a horror story about what can happen to foreign investors with an ill-conceived investment strategy.

To maximize returns, create operational leverage and manage economic risk the foreign investor should assess the following items prior to expatriating capital into US investments:

· Financially engineer a business model that leverages the best of both foreign and domestic strategic tax planning;

· Assess the need for, and cost of currency hedging;

· Determine best practice methodology for accessing deal flow in alignment with investment strategies;

· Understand the increased costs and complexities of logistics and operations;

· Choose a business model that will lend itself to maximizing US capital markets access

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How to use structured financing to release trapped equity in a single property or entire portfolio

The concept of "Trapped Equity" is a common misconception in today's commercial real estate market. In most cases equity is only "Trapped" if you don't know how to free it up. Granted, the growth of the CMBS market (specifically understanding the impact of securitization as it relates to more uniform and restrictive loan documents and the increased complexity of servicer, sub-servicer and special servicer relationships) since 1996 has made monetizing on the appreciation of an asset more complex, however not at all unfeasible.

Pacific Security Capital's advisory group can assist you in releasing "Trapped Equity" by using anyone or combination of the following strategies:

• Defeasing Assets or Portfolios of Assets; 
• Using Preferred Equity, Mezzanine or other structured finance solutions; 
• Making entity level investments, or; 
• The use of other synthetic or derivative financial engineering strategies.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Filed under: trapped equity structured finance, commercial loans, commercial real estate, preferred equity, mezzanine finance

Current conditions within the commercial real estate capital markets leads to excellent borrowing opportunities

With more commercial real estate lenders and excess capital chasing too few quality transactions, 2005 is poised to become one of the strongest borrower's markets in recent history.

The dwindling investment performance of other asset classes at the same time commercial real estate investment performance is experiencing record returns has caused a rotation of capital into commercial real estate the likes of which has not been seen before.

This excess flow of funds looking for a home in commercial real estate capital markets has created a disequalibrium between supply and demand that has real estate owners/developers smiling ear-to-ear.

The competitive feeding freenzy that has evolved is causing lenders to have to sharpen their pencil to win business. It is not uncommon to see lenders climb the leverage curve at very thin spreads in order to secure business.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How to use commercial real estate advisory services to leverage efficiency and increase ROI

Outsourcing to professional services companies that provide subject matter expertise is regarded as best practice methodolgy in virtually every industry sector. However this usual and customary practice for most businesses has been adopted slowly in the commercial real estate sector.

Outsourcing allows a commercial real estate owner/sponsor to add leverage, gain economies of scale and increase efficiencies by cost effectively securing skill sets and core competencies that would otherwise have to be organically developed or acquired at higher costs.

By utilizing an outsoured relationship for commercial real estate advisory services developers of all sizes can assemble world class talent that will translate into higher project returns and more efficient execution at every level without any loss of control.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

How to use structured financing to maximize capital formation efforts

Many real estate sponsors view capital formation as the last peice of the transaction to worry about. It is our opinion that a project will come together much better if capital formation drives the deal, rather than the deal driving the capital formation.

Understanding how to maximize the use of all levels of the capital structure through the use of structured financing when financially engineering your next transaction will help you create a successful project. The following items are just a few of the benefits of understanding how to engineer the right capital structure:

1. Use all levels of the capital structure to move up the leverage curve: By using the proper combination of senior debt, subordinated debt and third party equity it is possible to realize leverage well in excess of 90% of total project cost while maintaining control of the investment.
2. Use different levels of the capital structure to prevent project ownership dilution: By using mezzanine financing to fill as much of the equity gap as possible you will lower your overall cost of capital while not being forced to give up as much ownership in the project as you would by closing the entire equity gap with a joint venture equity partner.
3. Negotiating the proper type of equity joint venture can be critical to the financial success of a project: If you move up the leverage curve with the proper combination of senior and subordinate debt the amount of equity needed from outside investors is minimized. Using the right pari-passu, or preferred equity investment structure can leverage the sponsor co-invest to as little as 2% -5% of the project equity requirment while still leaving them with the majority of project ownership.

More information on how to design the proper capital structure is available from Pacific Security Capital.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Providing Commercial Real Estate Financing for TIC Sponsors

We are often asked if we can add value to TIC ("Tenants In Common") Sponsors who are seeking to leverage their real estate investments. The answer is quite simply yes...

Most TIC Sponsors require low to moderate leverage commercial real estate loans to complete their acquisition of commercial real estate investments. Commercial Real Estate Lenders not familiar with working with TIC Sponsors have issues with the number of TIC investors on title, as well as the fact that these investors can trade in and out of the asset being financed. This fact pattern causes many lenders not to work with TIC Sponsors, or if they do lend to them they do so with wide spreads and complicated legal documention that leads to poor execution and higher cost debt.

We are able to provide TIC Sponsors with competitive spreads, streamlined documentation and superior execution on loans with up to 35 TIC investors on title.

For more information on loans for TIC Sponsors, please contact a loan officer at 800-844-6085 or visit our website at www.PacificSecurityCapital.com

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Commercial Real Estate Loans Provider Pacific Security Capital launches PacificElite

Debuts Commercial Real Estate Industry's First Preferred Borrower Program

Beaverton, OR - Pacific Security Capital ("PSC"), a leading provider of commercial real estate loans, structured finance and advisory services announced today that it has pioneered the commercial real estate industry's first preferred borrower program by launching PacificEliteTM.

PacificEliteTM is a client loyalty program designed to reward borrowers who place substantial amounts of transactional volume with Pacific Security Capital by providing them with the most elegant selection of awards ever put together.

"Trust me when I say that we're giving away more than a toaster", said Mike Myatt, executive managing director of Pacific Security Capital. "Our clients are made up of some of the most sophisticated and elite sponsors in the commercial real estate  industry and for the program to be of any interest we had to create something very special that hasn't been done before."

Some of the awards available to PacificEliteTM members include fractional interests in Lear Jets and Yachts, Adventure Vacations, Luxury Automobiles, trips to the Masters, Wimbledon and the Super Bowl, Rolex watches and more.

To receive awards commercial real estate borrowers need to apply for PacificEliteTM membership and then each time they close a financing transaction with Pacific Security Capital they receive points that qualify them for different award levels.

"We felt is was high time somebody in our industry did something more than just talk about how much they appreciate business given to them so we decided to put our money where our mouth is. PacificEliteTM is just another example of our intention to maintain our industry leading reputation for providing red carpet client service and satisfaction", said Myatt.

Authored by Mike Myatt
Executive Managing Director of Pacific Security Capital
Contact Pacific Security Capital today 1-800-844-6085

Tags: commercial loans, commercial real estate, loans

Exclusive interview feature of Real Esate Media, Inc.

Pacific Security Capital's Mike Myatt featured in "Up Close" an exclusive interview feature of Real Esate Media, Inc.

Pacific Security Capital sees tremendous growth in 2004.

Pacific Security Capital (“PSC”) announced today that its Executive Managing Director, Mike Myatt was recently interviewed by Real Estate Media Inc's John Salustri in an exclusive feature published on GlobeSt.com. The interview will appear in the "Up Close" feature which appears on the home page of GlobeSt.com and is reserved for Q & A sessions with industry leaders.

Some of the topics covered during the Q & A session were Pacific Security Capital's focus on structured finance and professional services, as well as Mr. Myatt's view of the commercial real estate capital markets and Pacific Security Capital's positioning. When asked about the success of Pacific Security Capital Mr. Myatt said, "In an industry where 20% sequential year-over-year growth is considered exceptional we experienced more than 100% growth in origination volume between 2003 and 2004."

In addtion to accelarating market demand drivers, Pacific Security Capital's growth has also been driven by solid recuiting efforts nationwide that has resulted in more than a 40% growth in its origination staff. "Our clients are fiercely loyal to Pacific Security Capital and in turn deserve the commitment we have made to keep pace with their needs," said Myatt. "We have long taken the approach that our clients needs are critical in our strategic planning as demonstrated by our positive response to requests for increasing focus on structured finance, portfolio lending and professional services," said Myatt.

About Pacific Security Capital
Pacific Security Capital (“PSC”) is a leading commercial real estate investment banking firm. PSC provides debt, equity and hybrid capital for the acquisition, development, construction, renovation, bridge, mezzanine, and permanent financing of commercial real estate projects located in the United States and most parts of Canada requiring more than $3MM in financing. PSC is headquartered in Beaverton, Oregon with other offices around the United States. More information about the company can be found on their commercial real estate loans website.

Contact Pacific Security Capital today 1-800-844-6085

Real Estate Links

The links below are to other real estate/industry related sites.  While PSC believes these resource web sites to offer valuable and relevant content we make no representation as to quality or type of service you may receive from them.

Commercial Mortgage Rate Estimates (U.S. only)
provided by RealWebFunds Commercial Mortgage

Paul Knight Chartered Surveyors
Paul Knight Chartered Surveyors and Estate Agents.

Winter & Company

LesMod
Lease Analysis Software

MBA Commercial

Hedge Fund Information

Institutional Real Estate, Inc.

TheUSBroker.com
Top Commissions, Quality Products, and Lead Services. Providing fully refundable UL & LTC policies, bonus fixed annuities and electronic insurance application systems.

Commercial Real Estate Australia
King Street Wharf is Sydney's major commercial, residential, retail and tourist precinct, which has the added benefit of being embedded in a spectacular maritime setting. See us for your real estate in Sydney Australia.